European Business – Pre-release
Question 1:
To what extent does support for the banks and car industry go against the main objectives of competition policy within the European Union?

Introduction
EU competition policy (defined and explained)
The success of the single market ultimately relies on an effective competition policy, ensuring that companies do not become too big in concentrated markets, that supplies are not limited by segmented markets, and that national governments do not give domestic companies unfair advantages through subsidies and tax breaks.
Competition policy was built in the Treaty of Rome, and this has turned out to be an area in which the EU has clearly intervened in the economic life of member states, and even of non-member countries where mergers and acquisitions are seen to pose a threat to competition.

Basic Idea - Free market economy - The market regulates itself. - Supply and demand lead to an equlibrium - No support - Wider consumer choice in markets for goods and services. - Technological innovation which promotes gains in dynamic efficiency. - Effective price competition between suppliers. (http://www.europa-digital.de/dschungelbuch/polfeld/wettbewerb/instrum.shtml)

EU competition policy has four key objectives (which the Commission supervises): • Discouraging the development of monopolies and cartels • Merger control Important for this question: • Promoting the competitiveness of European companies by o protecting intellectual and industrial property o reducing the bureaucratic burden o providing help with research and development o providing aid to small and medium enterprises • State aids (!!!) o Monitors the provision of subsidies, loans, grants and tax breaks to companies (To ensure that they are not given an unfair advantage over competition o Temporary aid in times of real need, aid for research and development and for regional