The political economy of European Union competition policy: A case study of the telecommunications industry

In the European Union (EU), competition policy is the first truly supranational public policy regulating market competition. It occupies a central place amongst other EU public policies. One of the stated objectives of EU competition policy is to prevent excessive concentration of economic power in the hands of a few. This dissertation investigates the political economy of EU competition policy by taking the European telecommunications industry as a case study. The main thesis is that EU competition policy has failed to achieve one of its objectives of preventing excessive market concentration in the telecommunications industry over the past quarter-century, for two reasons. First, EU competition policy foremost promotes an industrial policy that fosters the profitability of European firms. Second, EU competition policy is short of adequate theoretical and conceptual capacities to comprehend the working dynamics of market competition and the market behavior of firms, due to the contradictory foundations of the model of effective competition that EU institutions strive to achieve. Thus, EU competition policy objectives and its policy framework are not in line with possible efforts that might control monopolization. The dissertation takes the often-ignored concept of 'workable' or 'effective' competition as a starting point and investigates the phenomenon of market concentration with the aid of a theory of dynamic market competition (DMC). A detailed study of the European telecommunications industry between 1980 and 2004 is conducted to demonstrate EU competition policy's capacity to deal with market concentration as well as its broader public policy implications.