Introduction

While the major aim of completing the European market is the removal of a plethora of barriers to the free movement of goods and factors in order to realise significant static improvements in resource allocation, a clear secondary aim is the enhancement of dynamic efficiency, and these are clearly seen as complementary rather than competing objectives.

The Cecchini Report (1988) thus paints a glowing picture of a virtuous circle whereby market liberalisation spurs greater innovative activity, which in turn leads to enhanced competition and the regaining of technological leadership:

The emphasis on cooperative R & D arrangements reflects this new-found enthusiasm for cooperation. Thus while Art. 85 of the Treaty of Rome condemns agreements between firms and collusive practices which may restrict trade, the White Paper on the single market, Completing the Internal Market, states that ‘the removal of internal boundaries and the establishment of free movement of goods and capital and the freedom to provide services are clearly fundamental to the creation of the internal market. Nevertheless, Community action must go further and create an environment or conditions likely to favour the development of cooperation between undertakings’.