The Sherman Act is legislation written to impede free competition in the United States. In clear contrast to this, the member-states of the European Union did not have anti-trust legislation until the 1950s. The reason is at the time European governments’ favorite pastime was emptying their citizens’ wallets by setting up every imaginable type of monopolistic company. However, when they established the European Coal and Steel Community, member-states did not want other member-states passing legislation that would impose hidden taxes or levies on their own citizens by monopolizing certain activities. In this way, the first European anti-trust measures were born to avoid political control of economic activity.   

 

One need only look at Gas Natural’s hostile takeover bid for Endesa to realize how little remains of the well-intentioned beginnings. For example, remember Gas Natural receives rent from the legal entry barriers thrown up by the Spanish administration. It wants to use these rents to buy the largest electricity company in Spain. Unfortunately, this political submission apparently does not merit attention from European anti-trust authorities.

 

As is well known, the main shareholder in Gas Natural is La Caixa, a saving and loan bank that, like every other one in Spain, is controlled by the ruling regional political power. The banks are financial institutions whose mission is to expand the Money suplí to satisfy the hunger for political control of its masters. Considering their ignorance of private property, they are incapable of finding better uses for their resources. As incredible as it may seem, the European Commission did not think this political control of financial institutions merits its attention.   

 

Not even the Minister of Industry’s (the man responsible for regulating the sector) failure to repay a succulent loan granted by La Caixa has been deemed important. Political power is trying to intervene in the free market and nothing is done. The only thing that matters is keeping up appearances. Companies must not be “too large”. Who cares if it happens because a company offers consumers fantastic products they want to buy, uses monopoly rents or receives the financial backing of an institution controlled by politicians?  

 

The European Commission also determines its cases by volume. The rule is that it only studies takeover bids where one of the companies in question does a third of its business in the rest of Europe. Curiously, Endesa overshoots this percentage according to the new accounting rules imposed by the EU. But no rule has ever stood in the way of a high level political meeting.

 

For its very nature, political power leads to high octane interventionism. If we want to promote free competition, we have to, once and for all, get rid of the savings banks and the political institutions designed to defend perfect competition by eliminating the free market.