Comparing International EU Competition Cases: What Can Business and Politics Learn?

Damro, Chad and Guay, Terrence (2009) Comparing International EU Competition Cases: What Can Business and Politics Learn? In: UNSPECIFIED. (Unpublished)

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Abstract

The European Union’s (EU) involvement in high-profile and controversial competition disputes has raised questions about the Union’s decision-making in the regulation of international business activity. Why does the EU decide to pursue such cases that hold the potential to destabilise bilateral and multilateral trading relations? This paper investigates the role of international and domestic factors that influence the EU’s competition decisions as applied to foreign corporations. To explain the EU’s decisions in external competition policy, the paper considers the causal influence of economic internationalization as well as the domestic pressures exerted by firms and politicians during the merger review process. Empirically, the paper analyses two merger disputes between the EU and the United States of America (US)—the 1997 Boeing-McDonnell Douglas merger and the 2001 GE-Honeywell merger—that provide useful insights and lessons for practitioners and academics alike. The paper finds that, despite its destabilising potential, the EU decides to pursue a vigorous external competition policy primarily as the result of international economic pressures and domestic political dynamics. While the preferences and strategies of individual firms play only a limited role in the EU’s decision-making in external competition policy, they seem to play a more significant role in US politicians’ decisions to intervene in transatlantic merger review cases.

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