Competition policy and institutional politics in the European Community: State aid control and small business promotion

Abstract. The article examines EC competition policy from a political science perspective, analyzing the political and institutional considerations which inform the development of the Commission's controlling capacities in competition. It concentrates on policy towards small businesses in manufacturing. We argue that the Commission's general capacities in the formation and the administration of competition policy have been growing in both the merger-controlling aspects and in the control of state subsidization. Against this background, the handling of state aid to small businesses presents us with a paradox: the more developed the enforcement system in competition, the less the Commission applied it to national subsidization of small-scale production. The role of EC competition policy and particularly the subtle handling of state subsidies should be analyzed as part of the developing system of Community policy vis-à-vis small business, encompassing measures at the EC and national levels. Community policy has emerged as a result of an accommodation between different EC institutional and domestic political objectives, and to some extent this accommodation has been achieved at the expense of policy content. The article traces the development of Community policy in this area from the early 1970s to the adoption of the first-ever detailed policy guidelines in 1992, and suggests an analytical scheme for explaining the emergence of small business promotion as an issue in EC institutional politics.     

ATTITUDINAL EFFECTS OF PUBLIC-PRIVATE COOPERATION IN ECONOMIC DEVELOPMENT

Using data from a national mail survey, opinions on the local economic development process held by economic development practitioners working for a city, chamber of commerce and public-private agencies are compared. The data show that public-private agency officials bridge the gap between the perspectives held by chamber government officials. Economic develop- ment practitioners working for public-private agencies have more respect for both governmental employees and business people than do other economic development practitioners. They feel that it is possible to gain more control over the economic development process than do their business or governmental counterparts. And, they indicate the advantages for the local community of maintaining such control; for example, being better able to stop businesses from whipsawing disorganized communities into making unnecessary concessions.     

Mandating Social Change: The Business Struggle Over National Health Reform

This article explores the conditions under which business managers endorse human resource investment policy drawing from the recent national health reform episode. In order to generate corporate support, a business community must develop corporate policy capacity, or the ability to grasp complicated social issues and to act in support of this social agenda. Corporate support is also influenced by the business–related strategies of government leaders who can encourage businesses to organize around legislative issues. The bid for national health reform met neither condition. Corporate policy capacity was inadequate to sustaining business support for health reform at the point of translating general corporate anxiety into specific legislation. Because U.S. business groups are weak, fragmented, and compete for members, they tend to cater to strong, vocal minorities and are often unable to act on majority positions. In health reform although a majority of business groups' members wanted reform, minority objections prevailed. In addition, where the Clinton administration's business mobilization efforts were complicated by its campaign for mass support, the Republicans organized a formidable corporate lobby against the bill.     

New corporate agendas

Globalisation is changing the public affairs agenda for businesses operating in a more interdependent world. As the roles and responsibilities of government are being redefined, and the boundaries between business and government become less clear cut, today's business leaders are facing a daunting array of challenges. In the new age of corporate social responsibility, the needs of shareholders, consumers, employees, national as well as international regulators, watchdogs, NGOs and activist groups have to be satisfied. The number of variables that could affect the bottom line appears to be growing at an exponential rate; and losing the trust of stakeholders can be fatal. Business leaders should step up to the challenges that these developments are creating. They should be unapologetic about countering anti‐globalisation activists by demonstrating the real value that business can bring to the developing as well as the developed world. They should help to promote the virtues of greater transparency and accountability to their stakeholders. They should be actively engaged in fashioning new regulatory architecture that is pro‐competitive, one that makes trade possible. Business leaders should support efforts to develop better quality regulation of the increasing number of trans‐national issues that call for co‐ordinated, international responses. Ignoring or down‐playing these challenges carries a price: it plays into the hands of cyber cohorts and single issue groups, that are accountable to none but themselves, and leads to weaker public policy outcomes. Copyright © 2003 Henry Stewart Publications     

The Implications of National Competition Policy

The Competition Policy Reform Bill 1995 is part of a national policy package which aims to free up competition in Australian markets. The objective is to systematically remove anti-competitive behaviour so that efficiency is improved to the public benefit.
While one can endorse the concept that economic efficiency is best served in a purely competitive market, where businesses can get on with their responsibilitiy to maximise profits, concerns exist as to whether it is possible to impose legislatively and unilaterally an economic principle or philosophy on a nation that will achieve its lofty objectives.
These proposals were developed before the 1996 federal election.     

The use of EU soft law by national courts and bureaucrats: how relation to hard law and policy maturity matter

Abstract

Soft law instruments account for a sizable share of EU legal acts, with growing importance over time. Yet, while the implementation of hard EU law has been widely studied, little is known about the use of EU soft law at the national level. In the article, it is firstly argued that the type of soft law instrument will affect national usage. Administrators and judges may welcome interpretative guidelines to complicated pieces of legislation, while more open-ended instruments may be ignored. It is further argued that the maturity of the policy field matters. National actors in mature policy fields will be routinely exposed to EU rules and they are socialized into responding to impulses from Brussels. The article probes the plausibility of these expectations in case studies on the use of EU soft law instruments by German administrations and courts in four policy fields: financial market regulation, competition, environmental protection and social policy.     

Domestic regulatory reform and transgovernmental networks: Brazil and China in the global competition regime

Developing countries increasingly participate in transgovernmental networks of global regulatory governance, but they do so in different ways. This article aims to provide an explanation for this variation for two of the major emerging powers in the world economy, Brazil and China, in their transition toward more active players in the global competition regime. Distinguishing between bilateral and multilateral transgovernmental networks and examining the domestic factors conditioning the transition of their national competition agencies from rule-takers to rule-promoters or rule-makers through these networks, the article makes theoretical contributions to the linkage between transgovernmentalism and the regulatory state. I argue that differing political needs and the incomplete process of regulatory state formation push domestic agencies to join transgovernmental networks, with a need for greater legitimacy steering the Brazilian regulators to multilateral networks and facilitating their transition from rule-takers to rule-promoters. The Chinese agencies' primary need for expertise rather than legitimacy, by contrast, led them to pursue technical assistance and cooperation via bilateral relationships. The Chinese approach has slowed its transition from rule-taker to rule-promoter where its norms and practices are aligned with the established powers. Such approach will further impede its transition into a global rule-maker in areas of competition law and policy where China's preferences diverge.     

The war on cartels and the social meaning of deterrence

The global war on cartels has had much success in introducing tough sanctions for cartel conduct, such as price fixing and market sharing. The policy rhetoric justifying criminalization assumes that compliance can be induced through deterrence. This, in turn, assumes that business people know about the law, believe that they are likely to be caught and face enforcement action and jail if they break the law, and calculate that they should comply. This paper problematizes these policy assumptions using evidence from a survey of a random sample of Australian business people and in‐depth interviews with 25 cartelists. This paper argues that business people's knowledge about the law is less important than their relationship with (or distance from) the law. Corporate elites see themselves as intimate with the law and, therefore, able to strategically “play” the law; while small business people and managers lower down the corporate hierarchy see themselves as “innocent” of any knowledge of the law. The impact of a policy of increased sanctions for misconduct cannot be understood solely in terms of marginal difference in aggregate levels of deterrence. It must also be understood in terms of how it interacts with people's experience of the law to create and maintain or contest and destabilize social segmentation and inequality.     

National Competition Policy

Economic reform in Australia certainly did not start with the Hilmer Report — it has been underway for the last 15 or so years. It began with financial deregulation and floating of the Australian dollar in the 1980s and the reduction of tariff protection, and includes more recent initiatives such as moving from the centralized wage fixing system to more flexible enterprise bargaining arrangements, restructuring of government business enterprises, developments in public administration and most recently the focus on competition policy.     

Managing business political activities in the USA: bridging between theory and practice

The political arena in the USA is portrayed as a marketplace in which businesses and other groups compete to influence public policy decisions. Managers can view this political market as an opportunity to shape the rules of the game by which they operate but must realise that it is a very competitive arena. Drawing on concepts from business strategy advocacy activities like lobbying, making campaign contributions, and organising grassroots efforts are analysed in terms of opportunities for gaining competitive advantage. Results from case studies indicate that many businesses miss opportunities to build support among employees for political advocacy because few firms use bottom up approaches for political action committees or grass‐roots efforts. Suggestions for managers interested in improving the effectiveness of their business advocacy efforts are discussed. Copyright © 2001 Henry Stewart Publications     

Capital Blight? The Regulation of Financial Institutions in Italy and Canada

The pressures of globalization and capital flight create two sets of challenges for national state structures. They are seen fo limit the boundaries of state action, and within those boundaries, they lead to a transfer of regulatory capacity to supra and/or subnational structures. The article explores the second set of challenges and asks whether globalization has led to uniform changes in the regulatory capacity of national states in the area of financial institutions. It argues that the Italian and Canadian experiences suggest that political and institutional factors may shape how national states respond to the pressure to shift regulatory capacity to structures at some other level. In the Italian case, the emergence of a single market for banking in Europe led to a strengthening of the state's policymaking capacity. In Canada, on the other hand, the federal government's authority was limited by competition with provincial regulatory regimes. Globalization may limit the boundaries of state action, but this does not necessarily mean that those boundaries will not be occupied primarily by national state structures.     

Elites and Regimes in Comparative Perspective: Indonesia, Thailand, and Malaysia

Because of the diversity that characterizes politics in Southeast Asia, area specialists hasve lacked a framework for comparative analysis. Drawing on some of the recent transitions literature, this article argues the worth of investigating political regime forms, the extent to which a country's politics are stable or unstable and democratic or authoritarian. It then focuses on three important Southeast Asian countries — Indonesia, Malaysia, and Thailand — analyzing stabilitylinstability in terms of state elites and their rules of the game, while considering democracylauthoriturianism in terms of societal audiences and legitimating "mentalities." Briefly, Indonesia's authoritarian regime (and its strong appearance of stability) is attributed to astute personalist leadership, muted elite rivalries, and control over societal audiences. In contrast, Thailand's unstable democracy emerges from uneven national leadership, perennial elite disunity, and episodic surges in societal pressures. And Malaysia's semi-democratic regime — in some ways bordered by the outcomes in Indonesia and Thailand — is explained by skilful national leadership and sustained elite unity, offsetting the country's ftuctuating levels of societal tensions and claims.     

Is ABCM Destined for Success or Failure in the Federal Government?

The days of ballooning federal budgets are over. Today, both the president and Congress continue to strive for a balanced budget, while encouraging federal agencies to improve service delivery of the various programs and entitlement benefits provided to their customers. Stakeholder involvement and public opinion about how agencies run their "businesses" are increasingly scrutinized. Trends such as competition for service delivery through franchizing, privatization, and outsourcing are causing an entirely new way of looking at how support and program services are managed. This article explains how the success or failure of activity-based costing management (ABCM) is dependent upon its ability to link the resolution of these external factors with internal business needs, while providing government managers with a better understanding of how to use ABCM to steer their organizations into the future. We also describe the current and future status of ABCM installations at various federal entities where ABCM was recently introduced and where interviews, conducted a year ago, were updated to describe how ABCM is helping these entities align external factors to internal needs. These federal entities are the Immigration and Naturalization Service, the Financial Management Service, and the Veterans Benefits Administration.     

The Potential for Local Diversity in Implementation of the National Competition Policy

Australian governments have embarked on a major effort to improve the competitiveness of the economy by adoption of a national competition policy (NCP). The policy extends the scope of trade practices legislation to encompass the public sector and professions, modernises policy in the areas of pricing and access powers, and is intended to revitalise the microeconomic reform agenda. The intended result is an integrated national economy, more uniform and consistent business regulation across the country and improved levels of competitiveness. But, there is an inherent tension between the imperatives for harmonisation, uniformity and reduced regulation on the one hand and tendencies for local diversity and increased regulation on the other. This article explores this tension with illustrations taken from three key aspects of the policy — opportunities for institutional diversity, treatment of the public interest and the prognosis for an integrated national, competitive market. The potential for each jurisdiction in Australia to take diverse and problematic approaches to the implementation of competition policy is then re-examined through the mechanism of a specialised case study involving the regulation of access to gas pipelines in Western Australia.     

Business Value in Public-Private Partnerships: The Positive Impact of Trust and Task-Relevant Competencies on Business Outcomes in PPPs

ABSTRACT

Governments and businesses enter public-private partnerships (PPPs) to achieve better outcomes, but successful partnerships are not easily accomplished. Because businesses’ expectations about PPP outcomes affect how and whether they participate as partners, managing PPPs effectively requires knowing not just what governments lose or gain, but also the value businesses receive. This article demonstrates how structural, collaborative, and participant factors associated with both public and private partners affect business value in PPPs. Based on a mixed-methods approach, this study tests four hypotheses on how PPPs influence value creation for businesses. The findings show that PPP experience, trust, and size have significant effects on business value. However, they only increase certain types of value, depending on the presence and performance of other factors. Moreover, the results show that businesses gain more intangible values, such as network development and knowledge, than revenue.     

European companies between globalization and localization: a comparison of internationalization strategies of British and German MNCs

This paper assesses the extent of which British and German multinational companies have moved on a continuum between nationally embedded MNCs and globally oriented TNCs. Degree of national embeddedness and implantation into national economic and policy networks is held to influence the internationalization strategy of companies - the degree of FDI undertaken, the kind of competitive advantage they seek to derive from it and the way in which they combine nationally based and globally focused activities. It is shown that the different national business systems of Britain and Germany influence the responses of MNCs in their management of the tensions between pressures for globalization and established, nationally shaped business strategies and patterns of activities. In both cases, however, exaggerated claims about globalization of company activities and assets are shown to be misguided. But the paper also recognizes that some more globalized structures and strategies have begun to emerge in the second half of the 1990s. The study is based on a small number of case studies of British and German companies, complemented by official statistics and secondary data.     

Disentangling governance: a synoptic view of regulation by government, business and civil society

Governance became a catch-all concept for various forms of steering by state and non-state actors. While it pays tribute to the complexities of steering in poly-centred, globalised societies, its fuzziness makes it difficult to oversee who actually steers whom and with what means. By focussing mainly on actor constellations, the article disentangles governance into seven basic types of regulation, four of them representing public policies with varying degrees of government involvement and three depending solely on civil society (civil regulation), on businesses (industry or business self-regulation) or on both (civil co-regulation). Although each of the seven types is well known and extensively researched, they are rarely joined in a synoptic view, making it difficult to grasp the totality of contemporary governance. After introducing the seven basic types of regulation and co-regulation, the article addresses the interactions between them and it adds the widely used concepts of hybrid regulation and meta-governance in distinct ways. The synoptic view provided here helps to comprehend how governmental deregulation has been accompanied by soft governmental regulation as well as “societal re-regulation”. The concluding discussion emphasises that this “regulatory reconfiguration” is the cumulative product of countless, more or less spontaneous initiatives that coincide with forceful global trends. It also stresses that the various forms of regulation by civil society and business actors are not simply alternatives or complements to but often key prerequisites for effective public policies. Although the essentials of the typology developed here can be applied universally to a variety of policy issues, I focus it on how businesses are steered towards sustainable development and Corporate Social Responsibility.     

Lobbying by Law Firms: A Study of Lobbying by National Law Firms in Canberra1

This article examines the way in which national law firms lobby the federal government from their Canberra offices. It is based on extensive interviews with lobbyists from those law firms, other commercial lobbyists in Canberra and legal professional bodies. The article begins by establishing the unique nature of law firm lobbying. In particular, it looks at the technical skills law firm lobbyists possess, their access to specialist legal knowledge and their preference for administrative, over political, lobbying. The development of law firm lobbying is then discussed. This centres around changes to the legal profession, federal business laws and federal government decision-making. The article concludes by suggesting that law firm lobbying both reflects and stimulates changes in government decision-making and will grow in importance as the legal profession in Canberra grows.     

TECHNOLOGICAL INNOVATION

In capitalist reality as distinguished from its textbook picture, it is not that kind of competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organisation (the largest-scale unit of control for instance) — competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives (Schumpeter 1981).     

Coordination in Youth Affairs: The Politics of Non-Decision-Making

One of the components associated with the widely heralded shift to 'new managerialism' in the public sector has been an increased emphasis on coordination between government departments as a means to enhance effective service provision. This article examines the capacity for coordination to fulfil this objective. Drawing upon a case study of coordination in youth affairs in Western Australia, the article examines the process by which the coordination mechanisms become enveloped in the 'politics of non-decision-making'. By this is meant that a set of power relationships create tensions at a number of levels — between commonwealth and state government agencies; between state government agencies and within individual agencies — which act to prevent effective decisions from being taken. The implications of this case study for the capacity of 'new managerialism' to produce effective policy outcomes in complex social policy areas is highlighted. Evidence from this study suggests that, in an era of restricted resources and heightened competition within the public sector, agencies are pushed to more clearly define their boundaries.