1) What are the objectives of a single European Market for European Businesses?
Before creating a single European market, the main aim of forming the European Union was make war impossible in Europe (Europa.eu, 2010). The single market was formed in 1992 has been very act and beneficial to the European Union (Europa.eu, 2010). The single market in the European Union rests on four main factors also known as the pillars. These Pillars include;
- The free movement of goods, services, capital and persons between the member states of the European Union (Politics.co.uk, 2008). For example, a individual of any member state of the European Union can come to England to work freely without immigration restrictions.
- A common European Union policy of competition that will be administered by the Commission (Politics.co.uk, 2008). This policy has been implemented to encourage competition and fair pricing system by all companies
- A Close relation of relevant administrative provisions, regulations and laws between member states (Politics.co.uk, 2008). This means members of the European Union should have laws that are similar to one another.
- A system with member states having Common External Tariffs (CET) (Politics.co.uk, 2008). This means member states will have a common custom tariff (Politics.co.uk, 2008)
A good example of an objective can be seen in the plan that was implemented by the European Union for the financial service industry. In the plan for financial services meant for the European Union integrated market was first implemented by 2005 to cut cost of borrowing for businesses and consumers offer them with a great chance to safe of a wide range on investments (Europa.eu, 2010). This plan also reduced the charges banks put on transferred made across border (Europa.eu, 2010). This means that businesses can carry out activities in other countries within the European Union.
2) How can the single market in service become more successful as it has already been so far?
The services market in the European Union has been growing rapidly over the years until 2008 when all industries were hit by the economic crises. The financial service policy of a single market for the European Union was created to achieve an efficient, secure and stable financial market in the financial industry in member states (Europa.eu, 2010). For example, the financial service industry became vulnerable in 2008 when it was greatly hit by the financial crises and therefore needed special attention considering how much it contributes to the growth of the member states. The financial system has become so broken that people have lost confidence in the system. Today consumers decide on what they want to do with their money and how they want to shop. The spending power of consumers will greatly affect the circulation of money and help to grow the financial sector.
Despite the success in the service market, there is still little stability in the sector. This makes it difficult to attract investors and consumers. In order for the market to become more successful, consumers have to gain more trust in the service industry. This can be done by reinforcing consumer protection laws to protect consumers (House of Lords, 2010). This will help to create confidence in online banking and shopping and protect those who carry activities online (House of Lords, 2010). Another thing the European Union Commission can do is to simplify the existing rules and bring down barriers that will help businesses and consumers to gain better access to services (House of Lords, 2010). This will help business to operate more freely.
3) Review the range of laws and regulations aimed at encouraging competition by preventing abuses in European market and industries.
The European Union has a range of laws that encourage free competition in the economy. There are rules that are applicable to particular sectors, firms and regarding state aid. Rules by sectors include laws for sectors such as agriculture, energy, telecommunication, postal service and transport (Europa.eu, 2010). For example there are rules under the agricultural sect that companies have to following in order to apply for agricultural aid. The law states that benefit fisheries are not allowed to apply for financial aid from an EU member state to co-finance their business with finance from European Fisheries Fund (EFF) (Europa.eu, 2010). In the energy industry, a gradual change has been made where since July 2004 industrial consumers can now choose their suppliers and in from July 2007, domestic consumers can as well do same (Europa.eu, 2010). This has increased competition in the making and causing energy companies to set reasonable prices for consumers (Europa.eu, 2010). These laws are written to encourage competition within the EU in order to avoid a company taking advantage of consumers and changing their prices and supply whenever they feel like.
4) Refer on one example to critically reflex on the effectiveness of the EU competition policy
In 2008 the EU commission approved a merger of Martinair by KLM after careful investigations were made. This in-depth investigative was carried out as a result of a research carried out in Amsterdam that showed the Merger will have little impact on competition between routs like Amsterdam and Curacao and Aruba (Europa.eu, 2010). Mergers have to create a significant level of competition (Europa.eu, 2010). After careful investigation of this merger, the commission discovered that Martinair has been declining before its merger with KLM and need this merger to be successful in order for the company to regain strength and be able to compete well in this environment (Europa.eu, 2010). The investigation also showed that any price increase will lead to no success for the merger as ArkeFly was also a big competitor in those destinations. The commission also assessed the prices of the seat and proposal made on the concentration on other routes (Europa.eu, 2010). The investigation led the commission to a conclusion that the merger will not bring any concerns concerning competition.
The laws for competition are to be respected by every company that is member of the EU states. This was to make sure that KLM does not take advantage of its customers by increasing pricing.
- Europa.eu (2010). The single Market. Lesson 6 http://europa.eu/abc/12lessons/lesson_6/index_en.htm date accessed 14/12/2010
- Europa.eu (2010). Competition. Agriculture and Fishery. http://europa.eu/legislation_summaries/competition/specific_sectors/agriculture_and_fisheries/l66054_en.htm date accessed 14/12/2010
- Europa.eu (2010). Mergers: Commission clears proposed take-over of Martinair by KLM http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/1995 date accessed 14/12/2010
- House of Lords (2010). The EU Single Market. Written Evidence. http://www.parliament.uk/documents/lords-committees/eu-sub-com-b/singlemarketinquiry/singlemarketwe221010.pdf date accessed 14/12/2010
- Politics.co.uk (2008). European single market http://www.politics.co.uk/briefings-guides/issue-briefs/foreign-policy/european-single-market-$366685.htm date accessed 14/12/2010