In the last two decades, national and regional as well as global policies have been made in order to improve competition in the market. For this purpose, several regional agreements have been introduced, initiated or are in the process of negotiation in order to improve a competition framework. Research suggests that more than 70 percent of the agreements in terms of competition have been developed in developed countries (Lever, 1999, 1035). In the same manner, European Union has also defined its competition law, which it first introduced about forty years ago (Kuwayama, 2005, 114). The new aspect of EU competitive policy is that it promotes regional competition and cooperation in terms of business. This leads to several questions. What is the need of competition law? Should regional and local competition be promoted or limited? What is the impact of competition law on the regional and local markets? Is it possible to enhance competition through national and local economies by introducing such provisions? The aim of this paper is to analyze European Union Competitive Law and its impact on regional and local competition, in the lights of broad and diverse academic resources.
Background and Overview
In recent times, organizations in local and regional domains are calling for increasing the competition in the business arena. Majority of the stakeholders emphasize on the importance of competition as the main condition for the establishment and laying down the foundation of an undistorted and operational market in business domain (Lever, 1999, 1038). The European Union Competition Policies concentrated on creating an infrastructure, which is feasible and does not monopoly. The competitive policies in terms of local and regional market, concentrates on promoting liberalization of the market and allow new entries to penetrate itself in order to increase competition (Yeats, 2008, 115). During the nineties, the member states of European Union concentrated on analyzing and redefining their policies related to competition. This perspective emerged because of the entry of central and eastern European countries in European Union and with increasing number of states; the existing member states feared that it would not be able to apply competition law. In the year 1999, amendments were made in the European Union competitive law and it introduced a completely diverse and innovative framework, which concentrated on replacing monopoly and concentrated on the promotion of oligopoly (Geradin, 2003, 153). Furthermore, it required cooperation among the member states in terms of competition.
EU and National Policies on Competitiveness
The policies of European Union and other national policies emphasize on the significance and importance of regional and local competition as well as international competition. These policies have been identified in order to promote decentralized markets, promote liberalization, remove monopoly and increase competition. The policies of competition by EU and other counties specifically concentrate on the integration of economies at all levels (Geradin, 2004, 178). The aim and objective of competition policy devised by EU aims at meeting the following objectives:
The market sharing must be in equilibrium and for this purpose; it is essential that at regional level, market sharing is achieved.
Partners must compete with one another.
Market nature must be based on oligopoly and must eliminated monopoly.
The marketing agreements must be based on vertical marketing in order to target regional markets.
Markets must be decentralized in order to improve regional competition, which would effectively contribute towards the global economy.
The concentration must be improving the market access.
The law of completion based on region to region must be established and improved in order to enhance competition.
The framework of EU and United States in terms of competition legislature concentrates on the harmonization of competition rules in order to ensure that cooperation is achieved in terms of issues related to competition. Gal (2003, 114) asserted that “EU bilateral agreements provide for harmonization of competition rules of the contracting parties. In contrast, agreements signed by the US and Canada include provisions that provide for cooperation on competition matters”.
National and regional competition policies require harmonization. Harmonization is an important aspect of competition where cities become responsible for changing their competition laws in order to improve city and regional competition. However, it should be noted that the aspect of harmonization in some of regional EU agreements cannot be found. For this purpose, it is essential that EU agreements or other national policies incorporate the cooperation provision in terms of competition policy and framework (Geradin, 2004, 189). The European Union framework asserts that every regional network has competitive and uncompetitive organizations and there are certain factors which influence competitiveness of a particular local area. From this perspective, the concept of regional and local competition is not based solely on the firm’s productivity.
Do Cities Compete with One Another?
The question arises whether cities and regions compete with one another or not? If they compete, should this competition be limited? What are the outcomes of this regional and local competition? In this regard, there are two opposite views. One perspective asserts that cities and regions are in constant competition with one another (Lever, 1999, 1040). The nature of this competition is not the same as that of corporation competition or international competition.
Furthermore, it is believed that this competition is based on “mobile investment, population, tourism, public funds and hallmark events such as the Olympic Games. They compete by, for example, assembling a skilled and educated labour force, efficient modern infrastructure, a responsive system of local governance, a exible land and property market, high environmental standards and a high quality of life”( Lever &Turok, 1999, 791). Lever & Turok (1999, 791) quote Porter and assert that the nature of competition in cities calls for special expertise, support between institutions and customers. Thus, this leads to innovation. Cities compete with one another for cooperation as well and this cooperation is just like the cooperation between private and public sector (Lever, 1999, 1039, D'Arcy & Keogh, 1999, 922).
On the other hand, the second perspective in this regard is that cities do not compete with one another. Cities are considered to be the centre point where organizations and corporations compete with one another. Furthermore, assets that are developed by cities do not provide competitive market for firms. On the whole, cities just provide some basic conditions for the organization to compete but these conditions may not be sufficient (Budd & Edwards,179).
Research suggests that through the eighties and nineties, several researches had been conducted in order to study the nature of competition and cooperation in cities. Marcuse (2006, 251) asserts that cities are in constant competition with one another and thus, policies have been identified for this purpose. The policies of competition are governed by particular business and political groups in order to conduct business and to devise policies related to tax. The general towards regional and city competition is based on the fact that it is believed that they are the main actors of the new economy in the age of globalization. Cox (1995, 219) asserts that cities need to compete with one another in terms of events and contribute towards the economy of the world.
Marcuse (2006, 252) quoted Sassen and asserts that globalization has been successful in identifying the role of cities. The role of the cities is to compete with another and to contribute towards urban economic development. Other researchers assert that cities need to compete and cooperate with another in order to contribute towards the national economy on the whole. Jessoph (1998, 89) asserts that cities and regions in United States and European Union in terms of competition are actors, which compete with one another.
In terms of globalization, it is believed that it is essential that cities compete with another as they represent the global economy. In this regard, it is believed that the cities play the role of entities and not actors. The concept of “‘globalist city’—the city viewed as nothing more than in terms of its relationship to globalization. Certainly cities vary in that regard; there is indeed a difference between ‘global cities’ and ‘non-global cities”’ (Marcuse, 2006, 253).
Should Competition between Cities be Encouraged or Restricted?
Competition needs to be improved as it contributes towards improvement in economy. At different levels, cities are engaged in competition. Literature suggests that the factors leading to cities competition is because of globalization, technological revolution and the changes in the structure of market on basis of competition among different cities. “Jockeying for position between the large financial centres such as London, New York and Tokyo has been recognised for some time. European integration impels cities to be more alert to the opportunities and threats that arise from establishment of the single market” (Gal, 2003,198) The question arises whether such competition should be promoted or not? It should be noted that the financial and economic performance of cities differ from one another on basis of income and the employment that is generated. This represents the ability of the region to compete itself with other cities is dependent on the features of cities such as locality, area, advantages and disadvantages of organizations and other agents of economy.
From the works of Geradin ( 2004, 289), during the last two decades, the competition between cities have increased significantly in order to gain power, promote themselves and to ensure that they get the investments. The increasingly fierce competition has several explanations. Competition has mainly increased because industries have become more fragmented and diverse and this allows organizations to select the most ideal location in order to ensure that their stage of production can initiate there. Geradin (2003, 178) suggest that “territorial competition may be conceived of as involving attempts by agencies representing particular areas to enhance their locational advantage by manipulating some of the attributes which contribute to their area’s value as a location for various activities”.
The concept of competition is important in terms of policy and competition level. According to Kuwayama (2005, 199), competition among urban economies must be promoted. Yeats (2008, 192)asserts that urban economies and competition must be promoted as they seek to create diverse, specialized and well paid jobs, they contribute towards the global economy, production of good is based on the demand, economic growth rate of cities increases employment without putting stress on the market, the competition allows each and every cities to specialize in its activities so that it can meet the future challenges and its significantly helps cities to move towards the urban hierarchy (Budd & Edwards, 1997, 176).
Competitiveness and Urban Economies
Competitiveness is needed in order to improve urban performance in terms of economy. There is need to urban competition for the following reasons:
Research suggests that the total performance of national economy can influence individual city.
Structural changes can have an influence on the urban economy and thus, competition is needed to deal with these changes.
National policies change with respect to time and thus, they make an impact on city. For instance, changes in exchange rate have a significant impact on trading companies. Rise in rate of interests significantly impact on firms. All of these activities have an influence on the economy of urban area and for this purpose; there is need for cities to compete with one another.
To become part of the global economy, competition among cities is required. “Today’s simultaneous global and local focus creates a new framework of ideas and opportunities” (Geradin, 2004, 22). Regional and local need to work and compete with one another in the entire structure that has been created by globalization. The entry of new organization in a city can have a significant impact on the life of its citizens as well as the entire economy. International networks and structures require cities to compete and cooperate with one another in order to meet challenges.
Local competition represents individualism and in recent times, it is the new paradigm of economics and development. Thus, regional competition promotes individualism of each region and enhanced urban growth and development assist it to maintain its individualism in the global structure. Regional and local competition promotes cooperation and merging and this has occurred in European Union. This has significantly assisted in increasing partnerships between public and private organizations and has allowed them to work collaboratively. The trend of local competition concentrates on acceleration, which is influenced by technological revolution.
National and regional as well as global policies have been made in order to improve competition in the market and several regional agreements have been introduced to improve a competition framework. Organizations in local and regional domains are calling for increasing the competition in the business arena. Policies have been identified in order to promote decentralized markets, promote liberalization, remove monopoly and increase competition. The policies of competition by EU and other counties specifically concentrate on the integration of economies at all levels. Harmonization is an important aspect of competition where cities become responsible for changing their competition laws in order to improve city and regional competition.
The role of the cities is to compete with another and to contribute towards urban economic development. Other researchers assert that cities need to compete and cooperate with another in order to contribute towards the national economy on the whole. In terms of globalization, it is believed that it is essential that cities compete with another as they represent the global economy. Competition needs to be improved as it contributes towards improvement in economy. At different levels, cities are engaged in competition. Literature suggests that the factors leading to cities competition is because of globalization, technological revolution and the changes in the structure of market on basis of competition among different cities. The increasingly fierce competition has several explanations. Competition has mainly increased because industries have become more fragmented and diverse and this allows organizations to select the most ideal location in order to ensure that their stage of production can initiate there. Competitiveness is needed in order to improve urban performance in terms of economy.
In recent times, the general trend of competition has given rise to the concept of regional and city competing against one another. National policies have been developed in this regard to promote local and regional competition. Regional economies must be promoted to increase competitiveness and to ensure that they contribute towards global economy. Inter city competition must be encouraged as it represents individualism and meets the needs of technology and creates employment and improving the quality of life.
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