European Market Regulations Essay

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Updated: Jan 1st, 2024

The single European market

The single European market has provided a lot of opportunities for business organizations. The various business opportunities that have been availed by the European single market have accelerated the levels of growth for several multinationals operating within the European Union.

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To begin with, business managers can enjoy the increased prosperity presented by the single market by creating a close link with their clients within the union. The fact that the market has been bridged, it is quite easy to reach out for customers and other stakeholders with much ease.

It is imperative to note that the opportunities presented by the single market are vast. For instance, a GDP growth of 2.15% has been experienced within the European’s Union single market over the past 15 years. This implies that the single market has increased business earnings tremendously. It is upon the business managers to get in close touch with clients in this region. A strong relationship with customers can also be improved using monthly newsletters that describe various offers and opportunities.

Secondly, the progress of a business entity should be monitored regularly by business managers to take advantage of the existing opportunities in the single market within the European Union. Since the single market was initiated, over 2 million employment opportunities have been created. It would not have been possible to create all these jobs in the absence of proper business management. The progress of any business organization depends on the management style adopted by a firm (Balta & Delgadoy 2009, p.130).

The performance of employees and their overall productivity is a critical factor of production within a business organization. Even in the presence of a single market, the productivity of employees at the workplace should be put into consideration by business managers (Smith & Wanke 2001, p. 536). For example, the hiring process should be carried out in the most effective manner. Also, talent management is vital when working out on the capacity building and training of employees.

Business managers also have a vast marketing opportunity with a single market portfolio with the European Union. Therefore, it is highly recommended for business organizations in the European Union to expand their level of operations (Young 2004, p.410). In other words, additional subsidiaries can be opened to reach out for consumers confined within the single market platform.

It is pertinent to note that the single market arena has eliminated several business restrictions and therefore, it is quite easy for business entities to expand their operations without incurring surplus costs (Fligstein 2001, p.276). Through such expansions, business organizations will be in a position to increase their net revenue earnings and consequently be able to expand to foreign markets.

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Most global business organizations have managed to reach their international statuses largely through capital accumulation. The EU’s single market platform has enabled several businesses to accumulate adequate capital in readiness for global operations.

Product differentiation is instrumental in making sure that the demand for the targeted market is met. Even though business managers may opt to specialize in one line of production, it is imperative to mention that the single market opportunity in the European Union has myriads of needs that need to be satisfied. As much as business organizations may specialize in one or a few areas of production, it is also necessary to dwell on product differentiation so that customer satisfaction can be met (TaÅŸan-Kok & Korthals 2012, p.1274).

Diversification in production will also make sure that competition from other market rivals is kept on check throughout production. Companies that do not meet the demand of the market may not compete favorably, and as such, their levels of profitability may equally be low. Product differentiation is one of the platforms that business entities use when expanding their activities in the global arena.

The quality of production within the single market opportunity in the European Union is a critical factor of production that businesses must put into account. Such a consolidated market is quite delicate in the sense that a bad reputation can spread very fast (Tobler, Beglinger & Wessel 2011, p.32).

In terms of quality production, managers should make sure that the end products meet the expected quality standards. Irrespective of quality checks instituted by the standards organizations within the EU trading bloc, it is the responsibility of individual business entities to set their own higher standards that meet the needs of customers. One of the broad objectives of business entities operating within the European Union’s single market should be to receive a positive response from consumers.

The single market in the EU has led to less red tape when it comes to starting and running businesses. Hence, there are minimal national laws and complexities that used to impede business activities in the European Union. However, business managers should fully comply with these laws to reap the benefits of the single market portfolio (Fligstein & Mara-Drita 1996, p.14).

Competition in the EU

Article 101 TFEU of the EU legislation prohibits the existence of cartels. The presence of cartels has been known to spoil healthy competition within any trading bloc. The existing law regarding the operation of cartels is very clear, especially in terms of agreements that are usually made between business partners.

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The main reason why cartels are restricted from this single market domain is that they act as brokerage firms that mostly exploit business by several unlawful agreements. In most cases, cartels hamper free and fair trading deals since they may destabilize the markets by creating artificial scarcity or supply of goods and services.

Secondly, dominance and monopoly within the EU single market have been restricted. The tendency of holding a vintage or dominant point of operation has been addressed by Article 102 of the EU best trading practices. All undertakings that tend to place some business entities in advantageous positions are against the current law. It is not proper for a single business entity to create a monopoly at the expense of other market players.

If exclusive monopoly and dominance are permitted, the fair competition will cease to exist. Also, such vantage positions may hamper the well being of consumers since a single provider in the market may fail to meet the expected standards due to lack of competition from other rivals.

Moreover, it is prudent to mention that the presence of monopolies in any market hinders upward growth due to the absence of competition. The European Union’s laws are quite categorical that business activities among member states should not interfere with any business undertakings that lead to market dominance at the detriment of other market players. However, a monopoly can only exist if it adheres to the best business practices as recommended by the EU legislation and code of conduct.

Mergers and acquisitions have also been noted to be key aspects of business operations that may either promote or impede healthy competition within the single market platform in the European Union. Mergers and acquisitions often avail additional market strength to business entities, and as such, they may use their market dominance in an abusive manner.

Nonetheless, EU laws still encourage mergers and acquisitions even though they are not supposed to use their market power to interfere with the healthy competitive structure. The market behavior of well-established business organizations is actively controlled by the existing EU laws. Before any takeover, acquisition or merger is allowed to operate within the EU single market, the European Commission has to offer approval.

Economic or market power is usually concentrated under the jurisdiction of fewer stakeholders than it was originally. The Merger Regulation 139/2004 of the European Union stipulates that the relevant government authority has to endorse the operations of mergers and acquisitions (Whish 2008, p.39). Perhaps, it is necessary to underscore that mergers and acquisitions have the massive potential of accelerating competition in any marketplace.

This also explains why they are fully discouraged in the EU single market platform. The only condition is that they should not use their powerful market dominance to suppress competition and curtail the operations and profitability of other traders. In the case whereby all the rules and regulations are followed to the letter, productive competition can indeed be enhanced (Jones & Sufrin 2007, p.81).

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The competition law regime of the European Union is also unique in the sense that individual business organizations within the EU can receive aid from member states even though this type of monetary assistance is fully controlled to enhance effective and healthy competition (Monti 2007, p.43).

As much as the respective member states can empower their business communities through loans and grants, they cannot do so freely without adhering to the stipulated competition policy adopted by the European Commission. This is the same commission that was charged with the role of establishing a common market under the EU bloc.

The commission works closely with the Directorate General to discharge the mandate of the entire union. If the direct and indirect assistance advanced to businesses by member states were to be allowed to take place without restrictions, then the entire objective towards creating the single market would have become less effective or completely failed.

Finally, the liberation policy adopted by the entire European Union business network has vastly opened up space for competition. A liberalized market runs its affairs without much interference (Jones & Sufrin, 2007, p.76). Nonetheless, it has been quite a challenge to harmonize the ideas of liberalization and the existing sector regulation laws.

Worse still, the internal market has been significantly liberalized through the adoption of positive integration measures by the European Union. Whereas there is a need to maintain high standards and delivery of desired services to the EU community, a liberalized market has posted a gross challenge in terms of enforcing competition laws.

References

Balta, N, & Delgadoy, J 2009, ‘Home Bias and Market Integration in the EU’, Cesifo Economic Studies, vol.55 no. 1, pp. 110-144.

Fligstein, N 2001, ‘Institutional entrepreneurs and cultural frames – The case of the European Union’s Single Market Program’, European Societies, vol. 3 no. 3, pp. 261-287.

Fligstein, N, & Mara-Drita, I 1996, ‘How to Make a Market: Reflections on the Attempt to Create a Single Market in the European Union’, American Journal Of Sociology, vol. 102 no. 1, pp. 1-33.

Jones, A. & Sufrin, B 2007, EC Competition Law: Text, Cases and Materials, Oxford University Press, New York.

Monti, G 2007, EC Competition Law, Cambridge University Press, Cambridge.

Smith, D, & Wanke, J 2001, ‘Completing the single European market: An analysis of the impact on the member states’, American Journal Of Political Science, vol. 37 no. 2, pp. 529-554.

TaÅŸan-Kok, T, & Korthals, W 2012, ‘Rescaling Europe: Effects of Single European Market Regulations on Localized Networks of Governance in Land Development’, International Journal Of Urban & Regional Research, vol. 36 no. 6, pp. 1268-1287.

Tobler, C., Beglinger, J. & Wessel, G 2011, Essential EU Competition Law in Charts, HVG-ORAC / E.M.Meijers Institute of Legal Studies, Leiden University, Budapest.

Whish, R 2008, Competition Law, Oxford University Press, Oxford.

Young, AR 2004, ‘The Incidental Fortress: The Single European Market and World Trade’, Journal Of Common Market Studies, vol. 42 no. 2, pp. 393-414.

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IvyPanda. 2024. "European Market Regulations." January 1, 2024. https://ivypanda.com/essays/european-market-regulations/.

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IvyPanda. "European Market Regulations." January 1, 2024. https://ivypanda.com/essays/european-market-regulations/.

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