Fingleton, John --- "Competition Policy and Competitiveness in Europe" [2010] ELECD 367; in Mateus, M. Abel; Moreira, Teresa (eds), "Competition Law and Economics" (Edward Elgar Publishing, 2010)

Book Title: Competition Law and Economics

Editor(s): Mateus, M. Abel; Moreira, Teresa

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848449992

Section: Chapter 19

Section Title: Competition Policy and Competitiveness in Europe

Author(s): Fingleton, John

Number of pages: 8

Extract:

19. Competition policy and
competitiveness in Europe
John Fingleton

INTRODUCTION

In looking at competition policy and competitiveness in Europe, the Irish
experience is relevant in two key ways. Firstly, with enlargement, the
European Union now has a number of smaller Member States (including
Portugal), who as small, open economies face very similar issues, both
within Europe and globally; secondly, operating as part of a globalised
world the European Union itself has characteristics not unlike a small,
open economy.
As a very good example of a small, open economy, Ireland dismisses
one persistent myth, which is that trade, or openness to trade, automati-
cally drives competition in an economy. Ireland has been open to trade for
some 30 years but the domestic economy has been riddled with restrictions
on competition.
Primarily using examples from Ireland, I will argue that competition
policy is good industrial policy and that strong, politically independent
national competition policies contribute to the competitiveness of Europe
as a whole. More specifically, I will address some of the flaws I see with the
arguments for national champions and national ownership, and I will then
draw some policy conclusions.


COMPETITION IS GOOD INDUSTRIAL POLICY

There is now a range of literature showing the strong relationship between
competition and productivity growth.1 The core relationship is explained
through three mechanisms: (i) within firm effects dealing with issues like
principal ­ agent problems, cost reduction within the firm and questions


1 See, eg., Aghion and Griffith (2005) and OFT (2007c).

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