Despite the achievements of the European single market, the single market is far from becoming complete. The unavailability of the European common regulatory framework and a common supervisory authority results in a difficulty for the establishment of effective European capital markets. As a result, investors and firms are not able to efficiently use capital since capital does not smoothly circulate in the market-based financial system.
Equally, the nonexistence of certain member states, like UK, from the usage of single currency stands as a major hindrance to the completion of the Single European Market. A difference in currency makes economic integration and movement of people, services and capital difficult.
The difference in level of economic development in member states hinders single European market completion. Member states thus compete against one another to be economically developed. At times, member states resort to own national interest as opposed to that of interest of the European Union. In the process, they restrict movement of certain services, goods and capital because they compete with each other economically.
Member states speak different languages. The language barriers impede free movement of human capital. It restricts human capital movement and thus makes it difficult to complete the internal European Market since free movement of capital is one its pillars.
Member states establish discrimination principles on entry and exit regulations. Existence of such high legislation barriers to entry and exit as well as the different regimes in place in various member states make cross border industry dynamics difficult which consequently makes internal European Market completion difficult.
2. Although the EU developed the competition policy, it has not been effectively enforced in the internal European market.
The goal of European Union competition policy is to protect and develop effective competition in the common market. There are five areas of action: prohibition of agreements that restrict competition, prohibition of abuses of a dominant position, prohibition of mergers that create and or strengthen dominant position, strict liberalization of the monopolistic sectors and stunt of the state aid.
There is a prohibition of agreements that restrict competition. Still, there are agreements between medium sized and small enterprises. Such agreements derail the functioning of the Single European Market which always champions for fair completion.
The competition policy has also not been enforced strictly enough to protect the single European Market. In fact, companies still dominate positions in the market. Different companies or groups of companies still have a large proportion of their businesses in particular markets and thus command dominant position in such markets. The companies have economic strength of acting without taking into account their competitors. Some of such companies however abuse their dominant position and thus impinge the functioning of the Single European Market.
The competition policy has also not been enforced strictly in the single European market due to the fact that companies still do not compete fairly and equally on their respective merits. In particular, even though companies should not club together in sharing the market, the policy still give them room in doing so even though it is a prohibition. Companies constantly merge together and share the market between them and tactfully act in a manner that totally excludes potential competitors.
Reference
Delgado, J., 2007, New Challenges of the EU Single Market, Retrieved 19 May, 2012 from http://ec.europa.eu/internal_market/strategy/docs/bruegel/jdelgado_en.pdf
The European Commission, 2002, Competition policy in Europe. The competition rules for supply and distribution agreements, Retrieved 19 May 2012 from http://ec.europa.eu/competition/publications/brochures/rules_en.pdf
