European Business Environment - Essay Example

Topic: Lecturer: Presentation: European Single Market The European single market was created in 1993 to curbmost of the barriers hindering the European community integration. The process began in 1957 through the Treaty of Rome which saw establishment of European Economic Community. It intention was removal of barriers to trade such as quotas and tariffs thus liberalising the European market. However, the elimination of non-tariff barriers was a challenge due to lack of integration; each country had own practices hence a single market was only possible in agriculture (McGowan, 2010).

For the system to work, financial stability was vital hence the introduction of monetary union through the Maastricht treaty of 1992 to harmonize currency. The single European Act of 1986 also played a role in management of the single market by establishing decision making procedures. The single market has had a lot of benefits for the citizens of the 15 member countries. The transport policy is crucial in enhancing movement of goods and people across border thus enabling individuals to obtain work at any member country.

The diplomas and professional qualifications of one country are recognized by others thus more chances to obtain a job. The common air transport policy has led to reduction of costs and reduced competition from major airlines. The mutual recognition of national rules allows manufacturers to sell products in any country within EU. Common currency leading to financial stability has led to reduced business costs, made it easier for consumers to compare prices thus variety of choices, made travel easy and also gave Europe a stronger voice in the world.

The EU also aims at ensuring better living standards for all hence emphasis on social security and equal opportunity in employment. The competition policy has also enabled fair competition hence delivering benefits to consumers in terms of reduced prices and quality. Another benefit is derived from the Schengen agreement which enables free movement in EU countries except UK and Ireland (europa.eu.int, 2012). Though the single market has brought a lot of benefits to individuals and businesses, there are still a lot of hindrances to its efficiency that need to be removed.

Some sectors of the economy are subject to national laws, for instance taxation and social welfare hence a single economic area has not yet been achieved (McGowan, 2010). Some countries still hinder mobility of people especially professional obstacles and this need to be dealt with. Recognizing equivalence of professional qualifications is vital. Financial services integration is another area that needs to be addressed for EU members to benefit from wider choice, better value and job creation.

National barriers to energy threaten benefits of a single market, industry competitiveness and supply of basic needs to citizens (Barysch, 2011 p. 22). Energy liberalisation could thus go a long way in improving efficiency and reducing prices. The EU could also rescind unnecessary rules and simplify others so that new laws can be drafted and implemented quickly (europa.eu.ent, 2012). EU Competition Policy The competition policy aimed at ensuring fairness in trading is implemented by the European Commission (EC) together with the court of justice.

By breaking down privately constructed barriers to trade between EU member states, then a fully functioning single European market can be realized (McGowan, 2010 p. 7). The policy is aimed at eliminating unfair monopoly by regulation such business practices as mergers, acquisitions, and joint ventures. If merging of two companies would result in unfair competition such as price fixing, the EC has a duty to take action against such companies. Before mergers are formed, the companies must notify the commission of their intentions.

The policy is also aimed at regulating government subsidies to avoid unfair competition. The country intending to give subsidies must notify the commission in advance and the aid should be justified; not aimed at giving unfair advantage to a company (McGowan, 2010 p. 12). The state may aid undertakings aimed at development or for protection of environment. The competition policy should also ensure agreements between undertakings are controlled. Any decisions taken by an association of undertaking and any practices by such undertakings aimed at distorting competition thus affecting trade between members should be eliminated.

These agreements could be between suppliers, retailers or suppliers and retailers and to safeguard the single market, the competition policy should regulate such agreements and penalise the offenders. It can do so by outlawing cartels through the cartels policy (p. 10). All shipping in EU countries is governed by the EU competition rules. This is aimed at combating unfair pricing practices that would undermine single markets. By harmonizing the conditions of competition in the transport industry, the competition policy can play a great role in enforcing a single EU market (europa.eu. int. 2012). This would create a level playing field for all traders irrespective of the country thus allowing traders to carry out their business anywhere.

The competition policy could also ensure opening up of markets especially those that provide services of public interest such as energy generation. This can be done by having a single European energy market where fair competition is emphasized. To ensure the competition policy is adhered to hence enforcing single market, the commission should investigate and track down those breaching the law and punish them. On the other hand, the court of justice should ensure uniform interpretation and application of the competition law across the EU (McGowan, 2010).

This will strengthen the single market as all member countries are subject to the same treatment as pertaining to trading practices hence no undue advantage is given to one country. Unfair treatment would jeopardize the single European market efforts. References Barysch, K. (ed). 2011. Green, safe, cheap: where next for EU energy policy? UK: Centre of European Reform. McGowan, L. 2010. The antitrust revolution in Europe: exploring the European commission’s cartel policy. UK: Edward Elgar, viewed on 28th Aug. 2012 at