The European Union and the United States

Several of the world's largest firms are headquartered in the European Union and the United States of America. According to IMF figures, the 28 EU member states have a combined economic output that is bigger than that of the United States and China. In 2014, the EU countries, including Iceland, Norway, and Switzerland, had a total economic output of 25.4% of global GDP. The United States, on the other hand, accounted for 22.5%, while China accounted for 13.4%. Figure 1 shows that household expenditure in the EU has continuously increased over the years and has now overtaken that of the US. The wealthy consumers in the EU have become a major allure for US companies, hence the increase in acquisitions and merger activities. This article will seek to compare and contrast the antitrust policies and laws in the EU and US, while trying to steer clear of the making a conclusion on which regime is better than the other.

Figure 1 below: European Household Consumption Expenditures

Currently, both the United States and European Union, posses a body of laws and policies that aim to discourage anti-competitive behavior. Whereas the two jurisdictions share similar goals with regards to these laws, there are a number of differences and similarities. Similarly, the number of cross-border mergers and acquisitions between the EU and US has significantly increased. In a May 2017 article by Reuters, it was reported that deals worth $171.8 billion between the two territories had been announced in 2017 alone. This was a ten-year high, as most firms within the EU and US sought to position themselves in light of reduced economic growth. This further puts the topic of antitrust policies between the two regions at the forefront of economic discourse.

Before delving into the differences and similarities between the EU and US antitrust policies, it is important to note the increasing level of cooperation and consultations between the two. This cooperation involves senior level consultations and meetings as well as the exchange of information between the Atlantic with regards to mergers and acquisitions. The enhanced collaboration has inadvertently driven potential merging entities to voluntary provide relevant information to authorities in the EU and US.


To begin with, one of the major differences between the two sets of policies is that the American body of laws and regulations are much older in comparison to the EU. The first known legislation in the US prohibiting trusts (or monopolies) and anti-competitive behavior, and sought to protect the consumer from the effects of such practices, was the Sherman Act of 1890. The law was enacted during Benjamin Harrison’s Presidency, and was hailed as a landmark federal legislation in the area of US antitrust policies. The spirit of the law was to encourage “free competition as the hallmark of trade”. This law, in combination with the Clayton Act of 1914, set out stiff penalties for small companies, corporations and individuals found guilty of conspiring to stifle competition within the borders of the US, or with foreign firms operating within American territory.

In Europe, country-specific antitrust laws started developing after the end of the Second World War. The European Coal and Steel Community (ECSC) at the time, which eventually played a major role in the formation of the EU, developed the region’s first ‘experiment’ in supranational antitrust laws and policies in the early 1950s. Although it was confined to the steel and coal industries, over the years, the ECSC provided a framework for analyzing and scrutinizing international business relationships with governmental authorities.

Secondly, a major difference between the two supranational policies is that the European Union still does not contain, or seem to overtly indicate criminal culpability on the part of an offender when it comes to antitrust enforcement. In the United States, criminal culpability for the offender was enshrined in the relevant laws from the outset, thus providing for public awareness and education from the beginning. In fact, in the 1912 US presidential elections, antitrust issues were thrust to the forefront, and triggered deep public scrutiny. The incumbent, President Taft, had favored judicial interpretation of antitrust laws, while the eventual winner, Woodrow Wilson, favored the creation of a specialized agency to handle anti-competition issues. This body, the FTC (Federal Trade Commission) was eventually formed under his presidency, and exists to date.

Another difference is in regards to cross-border policy enforcement of mergers and acquisitions. Whereas the US is one federal jurisdiction, the EU has to contend with not less than 28 different country jurisdictions in the development and enforcement of antitrust laws. After the Second World War, and during the formative stages of the EU formation, cross-border mergers and deals between would-be EU countries were encouraged to strengthen ties and increase economic output through economies of scale. It wasn’t until 1989 when the EEC introduced the continent’s first merger control laws.

Before the year 2004 when the EU Antitrust modernization approach came into existence, the focus of EU merger and acquisition was mainly on the parties’ economic freedoms and interests as opposed to the consumer. This led to seemingly restrictive agreements being ruled as lawful, since regulators exempted them on the basis of economic freedom, while overlooking consumer rights. European regulators therefore had an incentive to authorize such mergers, as opposed to American regulators, who focused on the competitive nature of the merger outcome. The European Antitrust Modernization of 2004, particularly Article 81(1) has now put the focus firmly on the ‘competitive’ element of the merger outcome, thus putting it in line with the letter and spirit of US antitrust regulations.

Another difference is the role of the State in the merger and acquisition processes in the two jurisdictions. Due to the more extensive involvement of European governments in the economies of their countries, for example in the Banking, manufacturing and service industries, European Supranational institutions are more heavily involved in antitrust processes, whereas in the US, the process is majorly driven by private entities. Subsequently, the member States sought to protect themselves from some provisions of EU antitrust guidelines. For example, article 86 (2) of the European Commission, precludes antitrust laws from public utility and service companies, which are mostly owned by the State in European countries. Most of these exceptions were included with political expediency in mind. In Germany for example, the Secretary of Economic Affairs, which is a federal and political entity, can authorize a merger in light of “extraordinary public interest”, even though it may have anticompetitive effects. In the year 2003 for example, two of Germany’s largest gas and public utility companies E.ON and Ruhrgas merged in a $ 10 billion deal, despite heavy criticism from other competitors. National security was sighted as one of the major reasons for authorizing the merger.

In the United States on the other hand, the independence and autonomy of agencies like the FTC is paramount, and is enshrined the constitutional and legal system of checks and balances. This does not mean that the State does not get involved in antitrust issues in the US. It definitely is involved. However, the scope is different. The FTC and the prosecutorial system enforce the prevailing antitrust laws in the US in cases of culpability. Therefore, when the US congress intervenes, it does not do so under the guise of antitrust laws, but under special laws. This may be premised on the age-old American suspicion of their government, where the citizens prefer very minimal governmental role in the affairs of the citizenry. In Europe, the citizens are more welcoming to government interventions and control, perhaps due to historical reasons.

Perhaps a clearer distinction between the EU and US antitrust policies exists in their treatment of vertical and horizontal mergers. Horizontal mergers tend to reduce competition between companies of the same product or services, whereas vertical mergers are between firms in different stages of production and which more often depend on each other in the production ecosystem. The European Commissions vertical distribution framework, which was launched in the year 2000, tends to align EU policies with US policies, after a realization that the two merger systems portend different outcomes for the consumer.

Another difference between the EU and US antitrust policies is in the treatment of monopolies. In the US, the Supreme Court rulings in this regard have conveyed a clear message that it is not illegal for a firm which is in a monopolistic market, to undertake exclusionary steps which have no clear economic ramifications to the consumer, but whose only aim is to lessen or exclude competition in its market. On the other hand, Article 82 of the Rome Treaty clearly prohibits any abuse of a “dominant position”. Under this law, a dominant firm’s actions, which sought to increase efficiency and discourage entry or competition, are looked at as anti-competitive.

Another difference in the policies is in the approach regulators take when dealing with competitors’ complaints. In the EU, competitors’ complaints are taken seriously, and tend to form a major reason for allowing or disallowing a merger. For example, in the General Electric and Honeywell merger, European regulators paid particular emphasis to competitor complaints when annulling the merger. In the United States, regulators tend to look lees favorably at competitor complaints, on the basis that competitors are more likely to raise objections to a firm’s economic move that may render it more efficient and profitable. The only case where American regulators may align with the competitor is when there is strong evidence to suggest that the competitor’s interest is also in the best interest of the American consumer. Such cases have proved to be rare thus far.

Finally, another difference is in the way European antitrust regulators use data and apply economic theory when analyzing potential mergers. Whereas their American counterparts put a premium on the availability of hard facts when seeking to nullify a merger based on potential anti-competitive practices, the EU regulatory regime officials tend to rely more on economic theory and models.


A common aspect of both the EU and US antitrust policies is that they both exhibit international reach. An antitrust violation in the US or the EU often means the offender will be found culpable and eventually extradited, regardless of the country he/she has found sanctuary in. This is due to the fact that both jurisdictions have fairly robust legal and technical agreements with government across the globe, making it easier to enforce judicial decisions emanating from them.

Secondly, both antitrust regimes seek to enforce a common good, i.e. the elimination of anti-competitive behavior. Though the approaches towards achieving this goal may differ as illustrated in the differences, the overarching principle remains the same. The US agencies seek to analyze potential antitrust situations on a case-by-case basis. The dominant firm usually has the advantage of arguing that it needs to recoup loses made from the merger. However in Europe, the competitors can argue that the dominant firm is practicing predatory pricing, and thereby curtailing the right to compete fairly.

Finally, a similarity between the two policies exists in the judicial mechanisms. The US judicial system depends on the District circuit judges to rule on antitrust issues, based on their understanding of American Laws. These circuit judges also rely on the Federal government policies and Supreme Court rulings. This system can be said to be replicated in the EU, where Country-specific laws also play a part in the regulatory framework, with the European Commission being the final arbitrator. This in essence is a two-step State and Supranational system, which is similar in theory in the US and EU.

In conclusion, this paper has sought to demonstrate the increasing need for European and American collaboration in their antitrust framework moving forward, as a result of ever increasing mergers and acquisitions between the two territories. Furthermore, whereas there have been fundamental differences in the antitrust laws from inception, significant steps have been advanced in bridging the differences, and coming up with a robust framework that can stand the economic and political rigors of the 21st Century.

Works Cited

Abbott,Alden F. “A Brief Comparison of European and American Antitrust Law”. The Competition Law & Policy Guest Lecture Programme - Paper (L) 02/05 Visiting Fellow, All Souls College, Trinity Term 2005

Bryan, Bob. “Europe Is Bigger Than The US”. Business Insider. Jun 30. 2015. . Accessed on 8th December 2017

Gregor, Erbach.“EU and US Competition policies Similar objectives, different approaches”. European Parliamentary Research Service 140779 REV1. Accessed 7th December 2017.

Hawk, Barry E. “International Antitrust Law & Policy”. Fordham Competition Law, 2013

Schmitt, Hans A. “The European Coal and Steel Community: Operations of the First European Antitrust Law, 1952-1958”. The Business History Review, Vol. 38, No. 1, International Government-Business Issue (Spring, 1964), pp. 102-122

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