Buoyancy of competition in the large European market
The very essence of the large market of the European Union is the liveliness of competition. The large market actually enables undertakings to produce on a large scale, to put in hand modern methods of production and to reduce their costs, to the benefit of consumers. Thanks to the common market, consumers have a choice between domestic products and products from partner countries, imported free of quantitative restrictions and customs duties. Their choice naturally turns towards better-quality products, taking into account their price, irrespective of their origin. Consumers are therefore the judges of the performance of businesses in the large market. The least viable firms are obliged to modernise or shut down.
However, in spite of the disappearance of unprofitable firms in the common market, the number of undertakings actually in competition with one another in a specific market increases and the possibilities for market domination decrease, as partners' products compete with domestic products on equal terms. In the enlarged market, national monopolies become oligopolies and the number of firms in oligopoly-type markets increases. This results in a tendency towards a drop in the economic clout of national monopolies and oligopolies. Competitive pressures spur firms to greater efficiencies and reduce the prices in high price Member States to levels nearer those in lower priced Member States.
The increase of competition as a result of the creation of the common market involves the upheaval of supply conditions, the renunciation of traditional habits and behaviour and, in some instances, the loss of monopoly profits. Such developments cannot leave businessmen indifferent. Their attitude may be positive or negative. In most cases, they will endeavour to preserve or even increase their share of the market by reducing their cost prices through restructuring, investment outlay and rationalising production and distribution methods [see section 17.1]. Such an approach is in the interest both of consumers, who benefit from plentiful supply on the best possible conditions, and of the businessmen themselves, as they learn to live with the common market and to cope better with international competition. Vertical agreements between producers and local distributors can be used pro-competitively to promote market integration.