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The Difficult Path to an Economic Rule of Law: European Competition Policy, 1950–91

  • LAURENT WARLOUZET (a1) and TOBIAS WITSCHKE (a2)
Abstract
Abstract

A historical retelling of European competition policy is crucial to understanding the discrepancy between the rules in the treaties and their implementation. The historian must navigate treacherous waters between contrasting treaty stipulations in the ECSC and in the EEC Treaties, initial attempts at rigorous implementation but with limited effect on the ground, and a complicated relationship between the supranational institutions. Only in the 1980s did the Commission enjoy the benefits of the ECJ's supportive case law. These benefits came due to a fortunate conjuncture of political, economical and administrative factors.

Le difficile chemin vers un droit économique européen: La politique de la concurrence communautaire, 1950–91

L'histoire de la politique de la concurrence est marquée par un décalage entre les règles des traités et leur application. L'historien doit dépasser des contradictions entre des dispositions très différentes dans les deux traités CECA et CEE, une tentative d'application rigoureuse mais avec des effets limités au début, et une relation complexe entre les institutions supranationales. Il faut attendre les années 1980 pour que la Commission bénéficie pleinement de la jurisprudence de la Cour de Justice. Cette situation est liée à une conjonction de facteurs politiques, économiques et administratifs très spécifique et exceptionnelle.

Der schwierige Weg zu einem wirtschaftlichen ‘Rechtsstaat’: Die europäische Wettbewerbspolititk, 1950–1991

Eine historische Analyse der Wettbewerbspolitik verdeutlicht die Unterschiede zwischen den formellen Regeln und der Rechtswirklichkeit. Der Historiker muss die Unterschiede und Widersprüche der verschiedenen Regeln im EGKS- und EWG Vertrag herausarbeiten: anfangs der Versuch einer entschlossenen Anwendung, mit noch begrenzten Ergebnissen und komplexen Beziehungen zwischen supranationalen Institutionen. Erst in den achtziger Jahren wird die Kommission vom Europäischen Gerichtshof voll unterstützt. Diese Situation erklärt sich auch aufgrund günstiger politischer und wirtschaftlicher Rahmenbedingungen.

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1 The book of reference on competition policy is Cini Michelle and McGowan Lee, The Competition Policy in the European Union (London: Palgrave Macmillan, 2008).

2 For a general overview of the history of European competition policy see Laurent Warlouzet, ‘The Rise of European Competition Policy, 1950–1991: A Cross-disciplinary Survey of a Contested Policy Sphere’, European University Institute Working Paper, 80 (2010); the purpose of this article is not to discuss the competition policy implemented by the Commission from a normative point of view.

3 Pitzer Frank, Interessen im Wettbewerb. Grundlagen und frühe Entwicklung der europaïschen Wettbewerbspolitik, 1955–1966 (Stuttgart: Franz Steiner Verlag, 2009), 341411; Hambloch Sybille, Europaïsche Integration und Wettbewerbspolitik: Die Frühphase der EWG (Baden-Baden: Nomos, 2009), 79–126; Warlouzet Laurent, Le choix de la CEE: L'Europe économique en débat de Mendès-France à de Gaulle (1955–1969) (Paris: Cheff, 2011).

4 Seidel Katja, The Process of Politics in Europe: The Rise of European Elites and Supranational Institutions (London: I. B. Tauris 2010).

5 Gerber David. J., Law and Competition in Twentieth Century Europe: Protecting Prometheus (Oxford: Oxford University Press, 1998); Kassim Hussein and Aman Pinar, ‘Myths and Myth-Making in the European Union: The Institutionalization and Interpretation of EU Competition Policy’, Journal of Common Market Studies, 48, 1 (2010), 111–32; Schweitzer Heike, ‘The History, Interpretation and Underlying Principles of Section 2 Sherman Act and article 82 EC’, in Ehlermann Claus-Dieter and Marquis Mel, eds, European Competition Law Annual 2007: A Reformed Approach to Article 82 EC (Oxford: Hart, 2008), 119–64.

6 For example Dehousse Renaud, The European Court of Justice: The Politics of Judicial Integration (New York: St. Martin's Press, 1998), 83–4.

7 Gerber, Law and Competition, 342.

8 Motta Massimo, Competition Policy: Theory and Practice (Cambridge: Cambridge University Press, 2004), 13; Bishop Simon and Walker Mike: The Economics of EC Competition Law (London: Sweet & Maxwell, 2010), 52ff. and 354ff.

9 Alter Karen J. and Steinberg David, ‘The Theory and Reality of the European Coal and Steel Community’, in Meunier Sophie and McNamara Kathleen R., eds, Making History: European Integration and Institutional Change at Fifty (Oxford: Oxford University Press, 2007), 89104, here 90.

10 McGowan Lee, The Antitrust Revolution in Europe: Exploring the European Commission's Cartel Policy (Cheltenham: Edward Elgar, 2010), 84 and 90.

11 See as an example: Bishop and Walker, The Economics, 347ff.; Akman and Kassim, ‘Myths’, 111–32.

12 Motta, Competition Policy, 13ff; Leucht Brigitte, ‘Transatlantic Policy Networks in the Creation of the First European Anti-Trust Law: Mediating Between American Anti-Trust and German Ordo-Liberalism’, in Kaiser Wolfram, Leucht Brigitte and Rasmussen Morten, eds, The History of the European Union: Origins of a Trans- and Supranational Polity 1950–1972 (London: Routledge, 2009), 5673; Cini and McGowan, Competition Policy, 16.

13 McGowan, Antitrust, 90.

14 For the number of mergers allowed by the High Authority, see Europäische Gemeinschaft für Kohle und Stahl, Ergebnisse, Grenzen, Perspektiven (Luxembourg: European publication office, 1963), 363. This study carried out by a group of experts, among them the future French Prime Minister Raymond Barre, presented a report to the High Authority on results and perspectives of the ten years existence of the ECSC in 1963.

15 Buch-Hansen Hubert and Wigger Angela, The Politics of European Competition Regulation: A Critical Political Economy Perspective (London, New York: Routledge, 2011), 51.

16 For the wording of the article, see http://ec.europa.eu/competition/antitrust/legislation/art66_1g1gen.html (last visited 19 April 2012). See also Gerber, Law and Competition, 340; Goyder D. G., EC Competition Law (Oxford: Oxford University Press, 1998), 23.

17 Berghahn Volker, The Americanization of West German Industry (New York: Berg, 1986), 144 ff.; Kipping Matthias: La France et les origines de l'union européenne, 1944–1952 (Paris: La Documentation Française, 2002), 225ff; Wells Wyatt, Antitrust and The Formation of the Post-war World (New York: Columbia University Press, 2002), 173 ff.; Leucht Brigitte, ‘Transatlantic’, 56–73; Nicola Giocoli, ‘Competition Versus Property Rights: American Antitrust Law, the Freiburg School, and the Early Years of European Competition Policy’, Journal of Competition Law and Economics, 5, 4 (2009), 747–86.

18 Warner Isabel, Steel and Sovereignty: The Deconcentration of the German Steel Industry, 1949–1954 (Mainz: P. von Zabern, 1996); Griffiths Richard T., ‘The Schuman Plan Negotiations: The Economic Clauses’, in Schwabe Klaus, ed., The Beginnings of the Schuman Plan (Brussels: Bruylant, 1988), 3571, here: 61–6, Herrigel Gary, Manufacturing Possibilities: Creative Action and Industrial Recomposition in the United States, Germany, and Japan (Oxford: Oxford University Press, 2010), 51f.

19 Gillingham John, ‘Solving the Ruhr Problem: German Heavy Industry and the Schuman Plan’, in Schwabe Klaus, ed., Die Anfänge des Schuman-Plans 1950–1951 (Brussels: Bruylant, 1988), 151–68, here 156.

20 Buch-Hansen and Wigger, The Politics of European Competition Regulation, 51.

21 Palayret Jean-Marie, ‘Jean Monnet, la Haute Autorité de la CECA face au problème de la reconcentration de la sidérurgie dans la Ruhr (1950–1958)’, Revue d'Histoire diplomatique, 105 (1991), 307–48; Witschke Tobias, Gefahr für den Wettbewerb? Die Rekonzentration der Ruhrstahlindustrie und die Wettbewerbspolitik der EGKS (Stuttgart: Akademieverlag, 2009), 72–8; Poidevin Raymond, Robert Schuman: Homme d'Etat 1986–1963 (Paris: Imprimerie nationale, 1986), 284ff. On the weight of the ‘German question’ in the French Parliament, see Wenkel Christian, ‘Inquiétudes parlementaires: La perception du problème allemand à travers les débats de la commission des Affaires étrangères de l'Assemblée nationale, 1949–1955’, Relations Internationales, 129 (2007), 85102.

22 European Coal and Steel Community, High Authority, Sixth General Report (Luxembourg: European Publication Office, 1958), 2, 104. See also Spierenburg Dirk and Poidevin Raymond, The History of the High Authority (London: Weidenfeld and Nicolson, 1994), 291 ff.

23 ECSC, Sixth General Report, 99.

24 Spierenburg and Poidevin, High Authority, 525f.

25 Motta, Competition Policy, 150f.; Diebold William, The Schuman Plan: A Study in Economic Co-operation 1950–1959 (New York: Praeger, 1959), 238ff.

26 Burn Duncan, The Steel Industry 1939–1959: A Study in Competition and Planning (Cambridge: Cambridge University Press, 1961), 504 f.; Philips Louis, Competition Policy: A Game-Theoretic Perspective (Cambridge: Cambridge University Press, 1995), 119 f.; the effect of Article 60 is not mentioned by Leucht, Cini or McGowan; see also Martin Stephen, ‘Building on Coal and Steel: European Integration in the 1950s and 1960s’, in Dinan Desmond, ed., Origins and Evolution of the European Union (Oxford: Oxford University Press, 2006), 126–39.

27 Griffiths, ‘The Schuman Plan negotiations’, 35–71.

28 Diebold, Schuman Plan, 254–61; Witschke, Gefahr, 297–304. Judgment of the Court of 21 Dec. 1954. French Republic v. High Authority of the European Coal and Steel Community. Case 1–54.

29 Diebold, Schuman Plan, 265f. See also Lister Louis, Europe's Coal and Steel Community (New York: Twentieth Century Fund, 1960), 237240f.

30 Spierenburg and Poidevin, High Authority, 174 f. Witschke, Gefahr, 186–93.

31 Historical Archives of the European Union (HAEU), ECSC archives, CEAB 2/722 Records of the meeting of the High Authority, 22 Dec. 1954.

32 Lefèvre Sylvie, Les relations économiques franco-allemandes de 1945 à 1955: de l'occupation à la coopération (Paris, Cheff: 1998), 390ff.

33 The implementing provision of Article 66 only came into force in the summer 1954 after the acquisition of the Harpener Bergbau AG by the French Steel Industry. Spierenburg, High Authority, 223–36.

34 Archives of the Foreign Ministry, France (MAE): MAE DE-CE 542, Haut Commissariat de la République française en Allemagne. Direction Générale des Affaires Politiques, 23 Sept. 1953; HAEU CEAB 4/83 Division ‘Ententes et concentrations’, Luxembourg 1 Oct. 1953. Witschke, Gefahr, 181f.

35 Diebold, Schuman Plan, 369. ‘Le “Pool” Charbon-Acier, banc d'essai du Marché Commun’, Le Monde, 23 June 1957; Palayret, ‘Jean Monnet’, 338; Witschke, Gefahr, 207–12.

36 Communauté Européenne du charbon et de l'acier. Assemblée Commune. Exercice 1956–1957. Session ordinaire; Rapport fait au nom de la Commission du Marché Commun sur les concentrations d'entreprises dans la Communauté par Henri Fayat, Document N° 26, 1956–1957; Witschke, Gefahr, 209f.

37 Swann Dennis and McLachlan Donald L., Competition Policy in the European Community (Oxford: Oxford University Press, 1967), 205.

38 German Federal Archives (BA), BA B 136/8364 Adenauer an Debré 19 Dec. 1959, Witschke, Gefahr, 273ff.

39 HAEU CEAB 4/817 Note Betr. Zusammenschluss ATH/Phoenix – Beschluss der Hohen Behörde vom 16. März 1960, gez. H. Matthies, BA B 136/8364 Sohl an Globke, 19 Apr. 1960; Witschke, Gefahr, 276ff.; Spierenburg and Poidevin, High Authority, 711ff.

40 Witschke, Gefahr, 280; HAEU CEAB 2/313 Records of the meeting of the High Authority 20 and 27 Apr. 1960.

41 Company archives Thyssenkrupp (TA), Sohl, Sohl an Ferry, 22 Apr. 1960.

42 BA B 136/8364 Malvestiti an Adenauer, 4 May 1960, Sohl an Adenauer 28, Apr. 1960, Malvestiti an Adenauer, 27 Sept. 1960; Witschke, Gefahr, 281.

43 HAEU CEAB 02/2453 Note fuer die Herren Mitglieder der Hohen Behörde, 18 Apr. 1963; Witschke, Gefahr, 305–10.

44 Spierenburg and Poidevin, High Authority, 717f.

45 See the explanations of the Chief Executive Officer of the ATH, Hans Günther Sohl to Heinrich von Brentano, former German Minister of Foreign Affairs, who was acting as political and legal adviser in this case for ATH, TA A 7569, Sohl an von Brentano, 28 Dec. 1963; Witschke, Gefahr, 305.

46 ‘Spaak Report’ or Rapport des chefs de délégation aux ministres des Affaires étrangères, Brussels, 21 Apr. 1956, 1st part, title 2, chapter 1 (www.cvce.lu, last visited 30 Oct. 2011).

47 Other European countries (the Netherlands, the UK) had competition policy provisions but their influence on the debate were limited: Künzler Adrian and Warlouzet Laurent, ‘National Traditions of Competition Policy: Their Influence on EU Competition Law and the Influence of EU Competition Law on National Competition Law Thinking’, in Patel Kiran and Schweitzer Heike, eds, The Historical Foundations of EU Competition Law (Oxford: Oxford University Press, forthcoming).

48 Gerber, Law and Competition, 232–65.

49 Erhard Ludwig, Prosperity through Competition [Wohlstand für Alle, 1957] (New York: Praeger, 1958), 128.

50 See his memoirs: Müller-Armack Alfred, Auf dem Weg nach Europa: Eirnnerungen und Ausblicke (Suttgart: Poeschel, 1971), 114; and the archives of the Treaty of Rome negotiations concerning competition policy: HAEU, CM3/Nego/236, note on the debates of 3, 7 and 13 Sept. 1956; more in: Warlouzet, Le choix de la CEE, 274–5.

51 Seidel, The Process of Politics, 155–63.

52 See note 46; HAEU, CM3/Nego/236, note of 20 Nov. 1956; and a historical analysis in: Warlouzet, Le choix, 273–6; Warlouzet, The Rise, 7–8.

53 See above for evidence that the High Authority's failure in this area was widely known in France. De Gaulle said about the ECSC: ‘la CECA n'a apporté aucun changement profond . . . En fin de compte, la CECA n'a eu d'effet que dans des domaines secondaires’, in MAE, PA-AP 314, 1, note on an interministerial meeting of 10 June 1958.

54 Müller-Armack gave up on his most ambitious wishes: Vermerk betreffend die Konferenz über den Gemeisamen Markt vom 05.11–07.11.1956, Bonn, 8 Nov. 1956, in Schulze Reiner, Hoeren Thomas, eds, Dokumente zum Europaïschen Recht, vol. 3: Kartellrecht (bis 1957) (Berlin: Springer, 2000), 204–5.

55 On the Regulation 17/62 negotiation, several archival-based accounts exist: Pitzer, Interessen, 341–411; Hambloch, Europaïsche, 79–126; Warlouzet, ‘The Rise’, 8–9; Warlouzet, Le choix de la CEE, 288–324.

56 The strong increase in the Commission's power – and the ‘rather revolutionary institutional machinery’ which was created – was recognised even by its staunchest opponents in this negotiation, the French government: French National Archives, 1979.0791, 265, note of Jean-Marc Boegner, 21 Dec. 1961.

57 William Vaughn, ‘Cartel Policy in the EEC. 1958–1970: The Growth of a Regulatory Network’, Ph.D thesis, University of Washington, 1973, 126–9.

58 Decision 64/566/CEE, 23 Sept. 1964.

59 Judgment of the Court of 13 July 1966, Consten and Grundig vs. Commission, joined cases 56 and 58–64, ECR 299.

60 ‘Conclusions de l'avocat général M. Karl Roemer, présentées le 27 avril 1966’, Recueil de jurisprudence de la Cour de Justice des Communautés européennes (Luxembourg: Cour de justice des Communautés Européennes), 1967, 507–56.

61 Billy Davies, ‘Meek Acceptance? The German Ministries’ Reaction to the Van Gend en Loos and Costa decisions’, Journal of European Integration History, 14, 2 (2008), 64; Morten Rasmussen, ‘The Origins of a Legal Revolution – The Early History of the European Court of Justice’, Journal of European Integration History, 14, 2 (2008), 92–3; Antoine Vauchez, ‘Judge-made Law: Aux origines du “modèle politique communautaire” (retour sur Van Gend and Loos et Costa c. ENEL)’, in Olivier Costa and Paul Magnette, eds, Une Europe des elites? Réflexions sur la fracture démocratique de l'Union européenne (Brussels: Université de Bruxelles, 2007), 147.

62 Judgment of the Court of 30 June 1966, STM vs. MBU, Case 56–65. ECR 235.

63 On this attempt in 1971–3, see an archival-based account in: Warlouzet, ‘The Rise’, 13–15.

64 Continental Can, case IV/26811, 9 Dec.1971, JO, 1971, L282/46.

65 HAEU Archives, BAC 71/1988/1/274–276, note DG IV, Van Schlieder for Borschette, 23 Jan. 1973.

66 Judgment of the Court of 21 Feb.1973, ‘Europemballage Corporation et Continental Can Company Inc. contre Commission des Communautés européennes’, case 6–72; it was clearly interpreted as a success by the Commission: HAEU, COM (73) PV 241, 21 Feb.1973, point XIX.

67 Continental Can decision, Grounds, point 37; on the relevant market: points 31 to 37.

68 On Babcock and Wilcox: Rollings Neil, British Business in the Formative Years of European Integration, 1945–1973 (Cambridge: Cambridge University Press, 2007), 210–12; on the CGE: Yves Bouvier, ‘La compagnie générale d'électricité: Un grand groupe industriel et l'État. Technologies, hommes et marchés. 1898–1992’, Ph.D. thesis, University Paris IV, 2005, 514.

69 Künzler and Warlouzet, ‘National Traditions’; van Waarden Frans and Drahos Michaela, ‘Courts and (Epistemic) Communities in the Convergence of Competition Policies’, Journal of European Public Policy, 9, 6 (2002), 928–31.

70 The forceful Prime Minister instilled competition in previously sheltered sectors, such as the state monopolies in the utilities, but she did not reinforce the fight against cartels in other sectors (except through a 1980 law with limited consequences); Wilks Stephen, In The Public Interest: Competition Policy and the Monopolies and Mergers Commission (Manchester: Manchester University Press, 1999), 41–3.

71 Nicholas Crafts, ‘British Relative Economic Decline Revisited’, working paper, Centre for Competitive Advantage in the Global Economy, 2011, 11; George Ken, ‘United Kingdom Competition Policy: Issues and Institutions’, in Comanor William S. et al. , Competition Policy in Europe and North America: Economic Issues and Institutions (London: Harwood Academic Publishers, 1990), 128.

72 Warlouzet, ‘The Rise’, 18; for the Cockfield Report (Completing the Internal Market: White Paper from the Commission to the European Council, COM (85) 310 final, 14 June 1985), compare the very small section on competition policy (39–40 on state aids) and the bigger section on the necessity to foster co-operation between companies (34–8), which could justify a tolerance towards cartels; in the SEA, there was no explicit change in competition policy provision but rather an ambitious article 130 on industrial policy which could have decisively limited the impact of competition policy.

73 Hubert Buch-Hansen, ‘Rethinking the history of European level merger control: A critical political economy perspective’, Ph.D. thesis, Copenhagen Business School, 2008, 163.

74 Middlemas Keith, Orchestrating Europe: The Informal Politics of the European Union, 1973–1995 (London: Fontana Press, 1995), 145, 228–30, 300.

75 Pollack Mark, Engines of European Integration: Delegation, Agency, and Agenda Setting in the EU (Oxford: Oxford University Press, 2003), 288–91.

76 Council Regulation (EEC) No 4064/89 of 21 Dec. 1989 on the control of concentrations between undertakings; Official Journal L 395, 30/12/1989, 1–12.

77 On the Philip Morris case: Time Büthe and Gabriel T. Swank, The Politics of Antitrust and Merger Review in the European Union: Institutional Change and Decisions from Messina to 2004 (Centre for European Studies Working Paper Series 142: 2007), 25–6; see also: Hubert Buch-Hansen, ‘Rethinking’, 164–7; Cini-McGowan, Competition Policy, 118–99; Pollack, Engines, 285–6; Bulmer Simon, ‘Institutions and Policy Change in the European Communities: The Case of Merger Control’, Public Administration, 72, 3 (1994), 431.

78 ECJ (1987), British-American Tobacco Company Ltd and R. J. Reynolds Industries Inc. v Commission of the European Communities, 17 Nov. 1987, cases 142 and 156/84, ECR 4487.

79 Ken George and Alexis Jacquemin, ‘Competition Policy in the European Community’, in Competition Policy in Europe, 235–7; Bulmer, ‘Institutions’, 431.

80 Pollack, Engines, 285.

81 UNICE Position papers: Merger Control, 10 Nov. 1987; Amended proposal for a merger regulation, 4 May 1988; Merger regulation, 4 Nov.1988; Draft regulation regarding the control of concentration, 17 Nov.1989; Draft regulation on concentration control, 14 Dec. 1989.

82 Commission decision of 2 Oct.1991 declaring the incompatibility with the common market of a concentration (Case No IV/M.053 – Aerospatiale-Alenia/de Havilland).

83 Ross George, Jacques Delors and European Integration (Cambridge: Polity Press, 1995), 179.

84 Jenny Frédéric, ‘Droit européen de la concurrence et efficience économique’, Revue d'économie industrielle, 63, 1 (1993), 202–3.

85 Commission Decision of 3 July 2001, Case COMP/M.2220 — General Electric/Honeywell.

86 The first fine of more than €1 billion was levied against Intel in 2009; decision of the Commission of 13 May 2009, case COMP/C-3/37.990, Intel.

87 See as an example: Pérez Sigfrido M. Ramirez, ‘La politique de la concurrence de la Communauté Économique Européenne et l'industrie: l'exemple des accords sur la distribution automobile (1972–1985)’, in Bussière Eric and Warlouzet Laurent, eds, La politique de la concurrence communautaire: origines et développement, special issue of Histoire, économie & société (Paris: Armand Colin, 2008), 6377.

88 See a synthesis of these heated debates in Gerber David J., ‘Two Forms of Modernization in European Competition Law’, Fordham International Law Journal, 31, 5 (2007), 1235–65.

89 Air Tours/First Choice (6 June 2002) and Schneider/Legrand (22 Oct. 2002).

The authors wish to thank the editors, Bill Davies and Morten Rasmussen, and two anonymous reviewers for their helpful comments. Responsibility for the information and views expressed in the article lies entirely with the author(s).

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