The Eu Reform Treaty 2007

Introduction

On 18 October 2007, EU leaders agreed on a final text of the new EU Reform Treaty during the summit in Lisbon. After two years of stalemate, all 27 member states consent to this new Treaty, even though some political issues still had to be resolved. The target date for ratification will be June 2009 (EurActiv, 2007b).

Although the Reform Treaty was praised by most EU leaders, it also has to face criticism (EurActiv, 2007c). On the one hand, critics find fault with the rash com-promise concerning the “last-minute problems”, for example, Italy’s unhappiness with the reallocation of European Parliament seats in the Treaty or Poland, which was demanding more changes to the bloc's voting rules (International Herald Trib-une, 2007). On the other hand, critics argue that the new EU Reform Treaty could be seen as the “same old EU constitution in a different package” (The Scotsman, 2007).

Of course, besides the items which are kept or dropped, there are new elements determined in the new Reform Treaty so it is obvious, that there are differences in comparison to the old EU constitution. But how will these differences, changes, have an effect on business? How significant are they? Stephen Mulvey describes the critical uncertainty concerning the new Reform Treaty and its changes as fol-lows:

The question here is whether the essential qualities that made the constitu-tion a constitution have been removed, or whether the things that have been changed are mere details. (Mulvey, 2007)

This report will have a closer look at the possible effects of the new EU Reform Treaty concerning competition and the importance of competition as a part of the internal market.

Competition and the possible effects of the EU Reform Treaty

After the publication of the new EU Reform Treaty’s items, several questions might have been arisen due to France’s request to leave out a reference to “free and undistorted competition”. The French President Nicolas Sarkozy argued that com-petition was not an end in itself and this reference should not be seen as an objec-tive of the EU. As an agreed consequence, it was moved to a protocol (EurActiv, 2007b). France’s fear of a free market in Europe was one of the main reasons for the rejection of the constitution in 2005. Critics were afraid that this change to the Treaty could influence the European Competition Commission (Olson, 2007). Jerome Chauvin from lobby group Business Europe says that this change “is an important aspect of the internal market and we are concerned that it is removed” (Ritson, 2007).

As a result, there might be an uncertainty concerning the movement of “free and undistorted competition”: Will this cause any changes? Angela Merkel assured:

Since the free market is mentioned and the internal market is mentioned throughout this mandate, I think we can say there has been no change.

(Merkel, 2007)

When the EEC Treaty was agreed in 1957, the commitment to promote a competi-tive market was a significant step, because European economies had seen high levels of state control, legal cartels and protectionist policies (Monti, 2007:1). Therefore, the competition policy is fundamental to the effective functioning of the single market for the benefit of consumers (European Commission, 2007b).

Competition Commissioner Neelie Kroes confirms the importance of the competi-tion policy as follows:

The Commission will continue to enforce Europe's competition rules firmly and fairly: to bust cartels and monopolies, to vet mergers, to control state subsidies. That is in the interests of our Internal Market. It is in the interests of European citizens and consumers, it is what Europe's business community quite rightly expects and deserves, and it is a firm foundation for Europe's prosperity, notably by ensuring fair conditions for international investment.

(Kroes, 2007)

The basis of EU competition law is dealing respectively with anti-competitive agreements between companies and abuse of a dominant position (European Pol-icy Analyst, 2002:91). Furthermore, due to globalisation, cartels, mergers and companies are very international and may affect competition within the EU when they base their activities outside the EU.

In a well functioning SEM, the removal of barriers to trade would increase competi-tion. Lower Costs will allow lower prices, and wider competitiveness as well as increasing trade will have more jobs as a result (Delgado