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Europe: Keep Those Markets Open


It has been a little more than a decade since the European Commission won the right to review large mergers, and even less time since it received police powers to investigate price-fixing cartels. Brussels has wielded its new authority to prevent monopolies from being formed and help create a free and transparent single continental market. When the Portuguese government tried to protect a bank from a Spanish takeover, European Union Antitrust Commissioner Mario Monti stepped in and allowed the purchase. He also has pressed the German government to stop subsidizing state-owned banks, opened the French electricity market to non-French suppliers, and fined Europe's shipping and auto companies for running price-fixing cartels.

Now Monti faces an even greater challenge--exporting his market-liberating policy. For much of the past century, the U.S. has taken the lead in trust-busting. But George W. Bush may introduce a new era of legal minimalism, potentially freeing U.S. giants to exploit their strong market positions. Monti is reinvigorating his investigation of Microsoft and refusing to rubber-stamp General Electric's takeover of Honeywell International. Instead of allowing GE to promise good behavior and then policing its conduct, as GE wished, Monti is insisting on structural remedies such as divestments of parts of GE's airline business.

GE now seems willing to change its pricing and sales policies. It probably will not bundle sales of engines and avionics. Monti was afraid that combining the two would give GE unfair advantage in competing, for example, against Rolls-Royce in engines. Keeping markets competitive is the right goal for Europe.


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