INTRODUCTION

In this chapter we consider the application of EU competition law to the regulation of markets by Member States. Enforcement of competition law in this field was slow to emerge. The reason for the belated, and so far relatively cautious, intervention is threefold. First, there was change in the European Union's economic policy at the time of the Single European Act, favouring greater liberalisation of the economy. State intervention changed from a field where the Union did not venture, to being inherently suspect. Secondly, regulating sovereign states is more politically sensitive than regulating private firms; thus the Commission and Union courts had to move with more caution. Thirdly, there is a tension between the Union's aims of competition and liberalisation, on the one hand, and the duties that Member States owe to their citizens, in particular the duty to ensure the availability of certain services (e.g. water, telecommunications, energy, postal services), on the other. The Member States' concern is that competition may undermine the provision of these services.

Initially, it fell to individuals, wishing to take advantage of increasingly liberalised markets, to challenge anti-competitive state regulation, which led to the Court of Justice becoming involved in determining how far markets should be liberalised (a process which may be labelled ‘negative integration’).