European Integration Theories: the Case of Eec Merger Policy

1 EUROPEAN INTEGRATION THEORIES: THE CASE OF EEC MERGER POLICY Patricia Garcia-Duran Huet London School of Economics and Political Science PhD UMI Number: U615564 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U615564 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 I l+£S^S F IS llo 7 o \ l i n - 2 ABSTRACT Political scientists have been searching for a comprehensive theoretical framework to explain the dynamics of European integration since the European Communities came into being in the early 1950s. European integration theory was dominated by neo-fiinctionalism in the 1960s and by realism in the 1970s and early 1980s. In the late 1980s these two paradigms were finally confronted. As a result of this confrontation, there seems to be an emergence of a new approach based on the idea that neither neo-functionalism nor realism alone can explain European integration but that each perspective provides fundamental insights. Multi-level governance models and even state-centred models tend to recognise that both theoretical frameworks have something to offer. Is it possible to view neo-functionalism and realism as complementary instead of competing theories of European integration? If both approaches contain some elements of truth but neither taken on its own is sufficient, insights from each may be needed to really understand the dynamics of integration. This piece of work tries to establish whether the idea that these two explanations need to be combined is worth considering at all. This hypothesis is tested in relation to European merger policy. The European Economic Community’s (EEC) Merger Regulation represents the single most important extension of Community competition law since its inception. Merger control was explicitly contemplated in the 1951 Treaty of Paris but the EEC was created in 1957 without any reference to these policy arrangements. For the first time in 1973, the Commission submitted to the Council a proposal for an EEC merger regulation. Yet it was only after five amendments and sixteen years that, in 1989, a merger control regulation was agreed upon. Why was an agreement on European merger regulation possible in 1989 rather than before? This research addresses this question using both neo-functionalism and realism as explanatory theories. 3 CONTENTS List of Figures and Tables 5 List of Abbreviations 6 Acknowledgements 7 Preface 8 PART I. THEORY, IMPORTANCE AND METHODOLOGY Chapter 1. European integration theories: shaping an hypothesis 12 1.1. The neo-functionalist theory 12 1.2. The realist theory 23 1.3. Shaping a new hypothesis of European Integration 26 Conclusions ‘ 29 Chapter 2. The case study: nature and importance of merger policy 30 2.1. The nature of mergers 30 2.2. The nature of merger policy 39 2.3. The importance of merger policy as a case study 48 Conclusions 53 Chapter 3. Specific purpose of research and methodology 55 3.1. Specific purpose of research 55 3.2. Methodology: how to test the hypothesis 61 Conclusions 74 PART H. WHY WAS AN AGREEMENT ON EEC MERGER REGULATION POSSIBLE IN 1989 RATHER THAN BEFORE? Chapter 4. The facts 76 4.1. 1970s: the first attempt 76 4.2. Early 1980s: the second attempt 96 4.3. Late 1980s: the third attempt 112 Conclusions 131 Chapter 5. Analysis 132 5.1. 1970s: the first attempt 132 5.2. Early 1980s: the second attempt 148 5.3. Late 1980s: the third attempt 160 Conclusions 189 4 Chapter 6. Interpretation of the results 191 6.1. Comparing the results: the role played by each factor 191 6.2. Comparing the results: factor intensity 196 6.3. Links between the neo-functionalist and realist conditions 200 Conclusions 203 CONCLUSIONS: TOWARDS AN EXTRAPOLATION OF FINDINGS 205 Bibliography 213 Annex A. Interview data. 254 Annex B. Documentary data. 258 Annex C. Data distribution. 260 Annex D. Coding framework. 262 Annex E. National merger laws. 269 Appendix. Treaty of Amsterdam renumbering 273 5 LIST OF FIGURES AND TABLES Figures 6.1. Factors’ role 195 Tables 1.1. Neo-functionalism versus functionalism 13 2.1. The nature of mergers 38 2.2. The nature of merger policy 47 2.3. Why choose EEC merger policy as a case study? 52 3.1. Specific purpose of research 60 3.2. Possible findings for each period 69 3.3. Possible general outcomes 70 3.4. Research design 73 4.1. The 1970s period 95 4.2. The early 1980s period 111 4.3. The late 1980s period 130 5.1. First period findings 147 5.2. Factors occurring in the 1970s 147 5.3. Second period findings 158 5.4. Factors occurring in the early 1980s 159 5.5. Third period findings 187 5.6. Factors occurring in the late 1980s 188 5.7. All period findings 189 5.8. Factors occurring in the three periods 190 LIST OF ABBREVIATIONS DG IV Directorate-General IV in charge of EC competition policies EC European Community ECSC European Coal and Steel Community EEC European Economic Community EU European Union Euratom European Atomic Energy Community OECD Organisation for Economic Co-operation and Development SEA Single European Act UNICE Union of Industrial and Employers’ Confederations of Europe 7 ACKNOWLEDGEMENTS This research would have not been possible without the support of several institutions, academics, family and friends. I would like first to thank both La Caixa and the British Council for their financial assistance in my first two years of research. I would also like to thank the administrative and academic members of the London School of Economics’ Government Department for their availability, aid and advice. I am especially grateful to Dr. Schonhard-Bailey for reading early drafts of this manuscript and for providing very useful comments and suggestions. I wish to express my gratitude to the staff of the British Library of Political Science for their invaluable helping hand in gathering vital material to enable me to carry out this research. I am also in debt to all the interviewees for their invaluable guidance and generosity despite their overburdened agenda. My warmest gratitude to my supervisor. Dr. Robert Leonardi. This study owes much to his patience, precision and suggestions. At the International Law and Economics Department of the University of Barcelona, my warmest thanks to Dr. Joaquim Muns, Dr. Montserrat Millet, Dr. Juan Ortega and Mrs. Ma Luisa Justo whose support, advice and encouragement has helped me so much throughout the last years of my research. My ability to carry out this dissertation was profoundly helped by my family and closest friends. My parents, Jose-Antonio and Rosa-Maria, my brother Marc, my sister Mireya, and my friends Isabel Fernandez, Monica Fite, Antonio Pey, Gita Subrahmanyan, Sheila Shamir, Jordi Cais and Raquel Gallego were each in their own way enormously supportive to my work. Last but not least, I owe everything to my husband, Pedro, to whom I dedicate this work. Thank you for always being there. Patricia Garcfa-Duran Huet 8 PREFACE The European Communities came into being with the Rome Treaties in 1957, establishing, in addition to the already existing European Coal and Steel Community (ECSC- Treaty of Paris 1951), a European Economic Community (EEC) and a European Atomic Energy Community (Euratom). In 1965 an agreement was reached to merge the institutions of the three Communities; this came into effect in 1967, and, although legally they were still separate entities, it became common to collectively refer to them as the ’European Community’(EC) (George, 1991). Lastly, in 1991, the Maastricht Treaty created the European Union (EU) establishing a three pillared structure, of which the EC is just one, albeit the most important, pillar. The two other pillars are: the Common Foreign and Security Policy and the Home Affairs and Justice Policy. European integration, from the ECSC to the EU, has implied the development of a European legal framework, the creation of new European institutions such as the European Council (1974), the reinforcement and democratisation of others such as the European Parliament, the entrance of new members such as the United Kingdom or Spain, and new transfers of power and sovereignty to the European institutions through agreement on new common policies such as the 1989 EEC Merger Regulation. For Lintner and Mazey (1991: 1): ’The result has been a complex intermeshing of the Community’s and the member-states’ economic, legal, and political systems.’ Today’s EU has achieved a strong role both in the world as a whole and in the economic, social and political daily life of its member states. As Urwin (1991: 245) states: ’...the EC has become a fact of life.’ This growing significance of the EU makes it essential to find a clear answer to questions such as the following: Which are the forces leading towards integration? Why is integration possible at one moment rather than at another? How do policy responsibilities of the European Communities develop? It is only by finding answers to such questions that the ability to understand recent Western European history becomes possible, and this in turn enables future predictions. Political scientists have tried to answer these and other related questions by identifying constant backgrounds or conditions upon which European integration is contingent.

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