The Euro Revolution

The launch of the Euro in January has turned out to be a quiet revolution. Though the event had been much anticipated–call it an outpouring of europhoria–the introduction of the new common currency in 11 European nations has brought about few dramatic changes, at least in the first few months. Still, over time, the revolution will roll forward rapidly. The Euro will change not only the way that European countries trade with one another, but it will also transform the way that the world views–and does business with–Europe. Above all, it will sharply step up the pace at which sovereign nations are being melded into a unified market, notes Karel Van Miert, Europe’s commissioner for competition.

Van Miert should know. As a former head of the Belgian Socialist Party who has long had a ringside view of European politics, he has aggressively been using his position as Europe’s competition czar to blast open markets that were hitherto closed–or at least closely protected. In the process, he has acquired the reputation of being something of a monopoly buster and cartel killer. As the world economy prepares for a new millennium, Europe should continue to see its markets become increasingly competitive in fields ranging from telecommunications to banking.

Van Miert, who visited Wharton last fall to speak at the Wharton School’s Gruss Public Policy Forum, shared these views in a panel discussion with three Wharton faculty members from the Public Policy and Management Department–Chairperson Elizabeth Bailey, Professor Gerald Faulhaber and Associate Professor Arie Schinnar. "Competition policy is perhaps the best instrument we have to integrate Europe’s national economies," he said. "Over and over again, when governments do something in favor of their national companies, we have to step in because of discrimination."

In the past, Europe was dominated by old-fashioned monopolies and state-run companies that were treated as so-called national champions. Increasingly, however, European regulators have been intervening to ensure competition, Van Miert says. For example, in Italy, European Commission officials helped dismantle a state-owned bureaucracy that had dominated the economy with impunity since Mussolini’s times. Similarly, in France, regulators prevented a state-funded bailout of Credit Lyonnais, a major bank. "That is why I say that we do have a full-fledged competition policy," Van Miert says.

In the coming days, as more and more trans-Atlantic mergers occur–such as the one between Daimler Benz and Chrysler–expect greater cooperation between Europe’s competition officials and those in the U.S. Van Miert strongly favors what he calls "the excellent cooperation we have with our American friends in the Department of Justice and the Federal Trade Commission." Such cooperation has also existed in the past–for example, when European and American regulators cooperated in their investigation of Microsoft in 1994, and came up with what Van Miert describes as "an identical remedy." This should continue in the future.

Van Miert believes that while Europe has seen major changes during the past decade, much more remains to be done. "We have been very successful as far as telecommunications is concerned," he says. "We did not put an end to monopolies, but competition policy did play a major role." The establishment of the Euro zone will help solidify these changes further. "What is now occuring is the single currency and economic and monetary union, and that is a very strong impetus for change," he adds. "Once you have adjusted to the new situation, you can’t go back. In the steel sector, we [Europe] used to have national companies. That is finished. We see French companies buying Belgian companies, and a company in Luxembourg buying a Spanish companiy. These transactions are happening across borders. And then, there is a point of no return."

 

Citing Knowledge@Wharton

Close


For Personal use:

Please use the following citations to quote for personal use:

MLA

"The Euro Revolution." Knowledge@Wharton. The Wharton School, University of Pennsylvania, 27 March, 1999. Web. 16 December, 2017 <http://knowledge.wharton.upenn.edu/article/the-euro-revolution/>

APA

The Euro Revolution. Knowledge@Wharton (1999, March 27). Retrieved from http://knowledge.wharton.upenn.edu/article/the-euro-revolution/

Chicago

"The Euro Revolution" Knowledge@Wharton, March 27, 1999,
accessed December 16, 2017. http://knowledge.wharton.upenn.edu/article/the-euro-revolution/


For Educational/Business use:

Please contact us for repurposing articles, podcasts, or videos using our content licensing contact form.