Challenges to the European single market at thirty: renationalisation, resilience, or renewed integration?

ABSTRACT

The European single market has been a flagship achievement of the European integration process. Nevertheless, 30 years after the launch of the single market, there are still instances of technical, legal, and bureaucratic obstacles to trade. In some areas of the single market, the EU has recently launched important new integration initiatives. At the same time, EU-wide crises have exacerbated already existing regulatory challenges, such as the development of common standards to ensure the interoperability of the underlying financial, IT, energy grid, and defence infrastructures. The introduction to this special issue puts forward two overarching hypotheses to examine how hybrid governance arrangements in the single market architecture have affected the dynamics of integration in a range of key areas, such as banking, digital single market, energy, defence, transportation, the network industries, and higher education. We distinguish between and analyse three different outcomes: renationalisation, renewed integration, and resilience.

KEYWORDS:

• Single market integration
• Commission
• private actors
• agencies
• hybrid governance
• multi-level governance

1. Introduction

The European single market has been a flagship achievement of the European integration process, seeking to ensure the free movement of people, goods, services, and capital across the Union (Egan 1998; Howarth and Sadeh 2010; Egan and Guimarães 2017). At the time of writing, 30 years after the launch of the single market on 1 January 1993, there are still instances of technical, legal, and bureaucratic obstacles to trade within the European Union (EU). Furthermore, important markets, such as the ones for financial services, energy, and transport are still predominantly national and e-commerce rules, standards, and practices vary significantly between the EU member states. Howarth and Sadeh’s (2010, 925) finding that the expansion of the EU to Central and Eastern Europe only increased the extent of soft, informal, and especially, multi-speed forms of differentiation within the single market is apt a decade later.

Recently, efforts to extend the scope and pace of single market integration have targeted new policy frontiers, such as energy and defence, where the member states have traditionally preferred national rather than cross-border markets (Camisão and Guimarães 2017; Genschel and Jachtenfuchs 2018; Mathieu 2020). At the same time, EU-wide crises, such as the Eurozone crisis, Brexit, and the recent COVID-19 outbreak, have revealed vulnerabilities in the design and operation of the single market and have thwarted some initiatives for further market integration (Genschel and Jachtenfuchs 2018; Schimmelfennig 2018). On the one hand, the Eurozone crisis has led to deeper integration in domains closely linked to the single market, such as the European Banking Union and EU economic governance (Bulmer and Quaglia 2018; Howarth and Verdun 2020; Voltolini, Natorski, and Hay 2020; Zeitlin, Nicoli, and Laffan 2019). On the other hand, Brexit and the COVID-19 pandemic have highlighted a move towards differentiated integration (Schimmelfennig 2018) and even renationalisation (Zeitlin, Nicoli, and Laffan 2019).

Against this backdrop, this special issue examines how hybrid governance arrangements present in the single market architecture have affected the scope of integration in a range of key areas, such as banking, digital single market, energy, defence, transportation, the network industries, and higher education. We seek to make a contribution to the literature that is both theoretically compelling and empirically rich. In some selected areas of the single market, such as banking, energy, digital market, and defence, the EU has recently launched important integration initiatives in order to take steps towards single EU markets. Yet some important challenges requiring more supranational harmonisation persist, such as the development of common standards to ensure the interoperability of the underlying financial, IT, energy grid, and defence infrastructures. Furthermore, there is a need for more investment to reduce the economic disparities between countries in the Union’s economic core and periphery so that all member states can benefit from their participation in the single market.

Concerning the range of possible outcomes of single market integration relevant for the special issue articles, we distinguish between three different outcomes: renationalisation, renewed integration, and resilience.¹ We observe renationalisation when there is a lack of implementation of single market commitments by the member states or when the member states abandon initiatives for supranational harmonisation (e.g. in joint standard setting in the single market) and revert to national solutions instead. In contrast, we identify renewed integration by the launch of new single market initiatives, such as white papers, directives or regulations promoting further single market integration. In addition, this outcome is visible when new bodies or institutions are set up or new financial instruments are launched to enhance single market integration. Last, we identify resilience in the single market when the implementation of existing single market agreements remains sound, despite pressures for renationalisation. This, in turn, contributes to safeguarding the achieved level of integration. Furthermore, resilience is linked up with measures to stabilise a governance system characterised by asymmetries, especially among the member states, and conflicts that create pressures for national rather than supranational solutions. At the same time, some observers may interpret evidence of resilience in single market integration as stasis or even stagnation (Riddervold, Trondal, and Newsome 2021), as indeed in our framework, resilience entails a lack of major new legislative, policy, or financial instruments promoting further integration.

To investigate these challenges comprehensively and systematically, one set of articles in this special issue focuses on selected single market areas (see Eckert; Schmidt and Krimmer; Stephenson; Pelkmans and Simonchini; Sabatino, This collection) complemented by another set of articles investigating closely related areas, such as competition policy that is essential for the proper functioning of the single market (Cini and Czulno, This collection), new investment mechanisms to promote further expansion and deepening of single market (Mertens and Thiemann, This collection), and new initiatives in policy areas connected to market-building processes, such as higher education (Cino-Pagliarello, This collection). Moreover, the selection of articles in this special issue allows us to take stock of the most recent developments regarding the four freedoms of movement at the core of the single market, namely, concerning people (Cino-Pagliarello, This collection), goods (Stephenson; Sabatino, This collection), services (Cini and Czulno; Pelkmans and Simonchini, This collection) and capital (Eckert, This collection).

The introduction is organised as follows: section 2 presents the two main hypotheses investigated in this special issue, drawing on the European integration literature more generally and the single market literature more specifically. Section 3 discusses and compares the main findings across the articles in the collection regarding the two hypotheses. To conclude, section 4 outlines the main findings about the current dynamics of single market integration and proposes areas for further research.

2. Dynamics of single market integration and main hypotheses examined in the special issue

This special issue analyses the factors that promote resilience in, or even give further impetus to, EU single market integration against the backdrop of the main recent crises affecting European economic integration. More specifically, inspired by the classical governance studies distinguishing between hierarchy and network as key mechanisms of coordination (e.g. Rhodes 2007; Thompson 2003) and drawing on the new modes of EU governance literature (Börzel 2010; Héritier and Lehmkuhl 2008; Héritier and Rhodes 2011; Tömmel and Verdun 2009), we will focus on the different governance configurations present in the EU single market, and we will examine the extent to which these foster (or impede) further single market integration.

We are particularly interested in how different hybrid modes of governance affect the dynamics of single market integration, focusing on the multi-level governance mix and on the public-private governance mix. The selected single market policy areas offer important variation in the predominant mode of EU governance used, such as the mix of intergovernmental and supranational governance arrangements and the mix of public and private governance arrangements. In turn, this presents different challenges for the next steps in single market integration. Our analysis seeks to build on Herranz-Surrallés, Solorio, and Fairbrass (2020, 2) finding that ‘EU governance is becoming more complex and unpredictable, giving rise to new battlelines and more hybrid institutional arrangements’. In light of the key insight in the governance literature, which postulates that different governance configurations are likely to affect policy choices and outcomes (e.g. Rhodes 2007; Thompson 2003), we can expect the key dimensions of governance arrangements (multi-level governance and private–public interactions) to have implications for single market integration as well. Below, we propose two overarching hypotheses about factors that may promote resilience in and further single market integration across different sectors. Conversely, we would expect the absence of these factors to make renationalisation more likely.

H1: Existence of an institutionalised coordination body in the hybrid multi-level governance architecture promotes resilience in or furthers EU single market integration.

This hypothesis draws on recent studies of EU economic integration that have shown that the Commission is a key factor in ensuring the integrity of the EMU and promoting closer economic integration (Kudrna and Wasserfallen 2020; Nugent and Rhinard 2019; Smeets and Beach 2020). The relevant actor(s) in this hypothesis are the Commission, an EU agency, or another public body at the EU or the national level, which acts as a hub or coordinator for the other actors in the governance system. The Commission has traditionally championed further single market integration (Quaglia 2010; Seikel 2014) but its competencies to do so vary across the selected sectors of the single market (Howarth and Sadeh 2010; Steinebach and Knill 2017). In most single market areas covered in this special issue, there are also EU agencies whose competencies are still evolving. This allows us to tap into debates about institutional design in EU governance, standard-setting, and harmonisation, and the so-called ‘technocratic governance’ by experts. Furthermore, Egan (2015) has shown that the politics of single market integration are rather contentious, involving political and judicial conflicts, as well as unintended consequences for different regions, industries, and social groups, which in turn mobilise and demand domestic protection from the impact of increased market competition.

Moreover, the European Parliament and other EU bodies may also provide an important impetus for further single market integration. For example, the Commission has spearheaded several high-profile initiatives since 2015 to ensure the completion and better enforcement of the single market following a rather critical report by the European Parliament (2015) on the so-called ‘costs of non-Europe’, areas of weak single market enforcement or lacking clear supranational rules (European Commission 2015).

Consistent with its responsibilities as a ‘watchdog’ of single market implementation, in March 2020, the Commission adopted a new ‘Enforcement Action Plan’ for the single market, placing a special emphasis on monitoring and information sharing tools, such as the annual ‘Single Market Scoreboard’ and a newly created Single Market Enforcement Task Force (SMET), which fosters a collaborative approach between the Commission and the member states in enforcing the single market rules, especially in crisis circumstances. The Commission convened the first SMET meeting in April 2020 to resolve differences among the member states and create a common approach to allow the free flow of goods, such as face masks, medical supplies, and food across the EU during the first COVID-19 lockdowns (European Commission 2020). These new initiatives build on earlier measures to ensure better implementation and enforcement of the single market, such as the SOLVIT network set up in 2002, following concerns about uneven enforcement in the complex EU multi-level governance architecture. SOLVIT helps EU citizens and businesses whose EU rights have been breached by the public authorities in another EU country to resolve common single market issues, such as the recognition of professional qualifications, pension rights, and cross-border movement of capital or payments.

All in all, the Commission plays a pivotal coordinating role in the revamped multi-level governance structure to ensure better implementation of the single market. In addition, there is evidence of a ‘network governance’ approach relevant for H2 discussed next. For example, the SMET will work together with a new EU-wide network composed of the national single market enforcement coordinators in each member state, drawing on the existing Internal Market Advisory Committee (IMAC) framework. The aim of this multi-level ‘network governance’ approach is to facilitate the exchange of information and best practices in handling important single market cases at the national, regional, and local levels. The national authorities responsible for single market surveillance and enforcement are also involved in this network.

In addition to the established vertical multi-level governance (MLG) perspective on how the supranational, national, and subnational levels interact (H1), the concept of MLG, from its inception, has also entailed cooperation between public and private actors (H2), which implies a more horizontal governance perspective (Knodt 2011; Piattoni 2009). MLG has been characterised as ‘a polycentric system, containing various centres of decision-making formed by functional networks’, where ‘public and private actors cooperate in multiple overlapping arenas’ (Knodt 2011, 421). Indeed, due to the increasing involvement of the private actors in the policy process, the notion of ‘network governance’ has been employed to paint a more accurate picture of the structures and processes of governance in the EU (Kohler-Koch and Rittberger 2006). As Egan (2001) has shown, single market integration involves not only the allocation of authority between different levels of government but also the delegation of authority to private actors for public purposes, especially in the area of standard-setting. We seek to understand how ‘traditional’ MLG issues intersect with the role of private actors in promoting or hindering EU single market integration. Hence, the second overarching hypothesis in this special issue seeks to unpack the impact of private actors.

H2: Presence of public–private interactions in the hybrid governance architecture promotes resilience in or furthers EU single market integration.

The Commission plays an important role as a broker for the wide range of private actors involved in the single market (Knodt 2011), but, at the same time, it also is dependent on their expertise and stakeholder support (Kohler-Koch and Rittberger 2006; Knodt 2011; Eikeland 2011). The Commission utilises private actor resources to enhance its action capacity and to also influence the member states (Börzel 2010; Eberlein and Grande 2005; Eikeland 2011). A range of studies has found that the Commission is especially dependent on such informational resources in the early stages of the policy-making processes, such as policy formulation and policy shaping, where private stakeholder involvement is significant through the extensive stakeholder consultations conducted by the Commission (Arras and Beyers 2020; Eberlein and Grande 2005; Eikeland 2011; Knodt 2011; Redert 2020). Indeed, in light of such motives, the Commission has played an active role in establishing consultation fora and networks including private actors (Eberlein and Grande 2005; Eikeland 2011), including regarding the future of the single market.

With that said, the increasing involvement of private actors in EU network governance is by no means uncontroversial. Their extensive role may raise questions of democratic legitimacy (Kohler-Koch and Rittberger 2006; Redert 2020). Furthermore, the interactions between the Commission, EU agencies, and (private) stakeholders, especially business interests, imply 'a risk of autonomy loss and may lead to regulatory outcomes favouring special interests’ (Arras and Beyers 2020, 836–837). The lobbying literature has found that in the current EU governance architecture and decision-making processes, large multi-national corporations tend to have more clout and access to policy-makers and, therefore, an advantage in influencing the policy decisions compared to SMEs, trade unions, and consumer organizations (Arras and Beyers 2020; Egan 1998; Mügge 2006; Redert 2020).

Private actors are especially visible not only in areas, such as energy, digital market, and finance but also in defence. H2 is anchored in recent findings about the relevance of private actors as a source of technical expertise in complex economic domains and as ‘an escape route’ to harmonised standard-setting and rule-making in the context of political contestation (see Eckert and Eberlein 2020). The extent to which public or private actors play an important role in contributing to the development of common standards and underlying interoperable infrastructures differ across the policy areas in this special issue. While many transnationally oriented private actors in the examined sectors tend to prefer cross-border markets and seek further market integration to take advantage of economies of scale, powerful private actors may also prefer national markets that shield them from international competition. As this is a less studied area of European (economic) integration, H2 is open to empirical testing; the findings could also point in the opposite direction. Public–private interactions can result from well-established long-standing interactions between public and (transnational) private actors in a single market area, from more recent but very intensive collaborations, or from the presence of many such interactions.

Given that soft law – in the form of standards, codes of conduct, and benchmarking – is increasingly important in EU governance, and, more specifically, in the single market (Börzel 2010; Kohler-Koch and Rittberger 2006; Mörth 2007), this opens more avenues for private sectors to actively shape the single market framework. The key role of private actors in EU policy-making and governance takes the form of lobbying and mobilisation during the Commission’s public consultations, although it can also go beyond that including co-regulation and self-regulation (Börzel 2010; Knodt 2011). Furthermore, private actors are often involved through the advisory committees of the EU regulatory agencies, which foster repeated interactions and deliberation (Arras and Beyers 2020, 839).

There is a broad range of private actors who are involved in the EU governance and policy-making, from social partners and civil society organisations to business actors (Börzel 2010; Eikeland 2011; Knodt 2011; Piattoni 2009; Redert 2020). In terms of potential influence, those civil society and business interests that have formed EU-level umbrella organisations have the most clout (Börzel 2010; Eikeland 2011; Pleines 2011). As Eikeland (2011, 247) explained it, ‘[s]uch transnational industry sector associations have access to expert knowledge needed by the Commission, and their opinions are considered more representative than those of individual firms’. The existence of formalised transnational associations between private actors in their specific sectors is likely to facilitate their involvement in European policy-making, compared to sectors where no such formal organisations exist yet (Eckert and Eberlein 2020; Egan 1998; Mügge 2006). As Egan (1998) has shown, the peak associations in the field of standards have played a major role in shaping the substance of EU regulations. In finance, the pan-European private associations actively advocated further single market integration (Mügge 2006). The actual influence of these ‘Euro groups’, of course, depends on the extent to which they are able to overcome collective action problems and interest heterogeneity within the association (Börzel 2010; Eikeland 2011).

Regarding the dynamics of EU integration, private actors may have different agendas in influencing policy-making, ranging from anti- to pro-integrationists ones. While many transnationally oriented private actors tend to prefer cross-border markets and seek further market integration to take advantage of economies of scale (Howarth and Quaglia 2020; Mügge 2006), some powerful private actors with national rather than transnational scope of activity may also prefer national markets that shield them from international competition (Grossman and Leblond 2011; Mügge 2006; Quaglia, Howarth, and Liebe 2016). For example, the financial industry was relatively united in pushing for an EU-wide single market in financial services and more EU integration in this area, while in the consultations for the capital markets union, private actors displayed much more heterogenous and diverging preferences, depending on the organisation of the financial system in their home country or the business models of their members (Quaglia, Howarth, and Liebe 2016). Some actors may also have rather mixed motives. As Eckert and Eberlein (2020, 66) demonstrate, transmission-system operators in the field of energy ‘remain nationally embedded’ but also have ‘a natural interest in expanding their asset base’, which may lead them to support further EU integration initiatives in the energy sector.

2.1. Theoretical expectations derived from H1 and H2

We aim to make a theoretical contribution by combining the multi-level governance dimension (H1) with the public-private governance dimension (H2). Taken together, the two central hypotheses in the special issue produce the following theoretical expectations regarding the three outcomes. First, renewed integration is more likely if the Commission, or another EU body, actively promotes new ideas, policy instruments, legislative proposals, and funding instruments that would further single market integration and, in addition, private actors support those ideas, are willing to provide information and expertise, and have converging rather than diverging interests in favour of further single market integration.

Second, resilience is more likely when the Commission, or other EU bodies, face opposition from some member states to new integration initiatives. In areas where soft law is used, the interaction with private actors and mobilising their expertise and support for further single market integration can help to maintain the achieved levels of integration and pursue more flexible modes of cooperation. An important caveat here is that, to some observers, resilience may appear as stasis or even stagnation of integration and, possibly, may suggest the presence of implementation deficits in the member states.

Third, renationalisation is more likely to occur when a significant number of member states are opposed to further integration initiatives launched by the Commission, or other EU bodies, and there is significant heterogeneity and divergence of the preferences of private actors, which in turn may prefer national markets rather than supranational ones. This dynamics may be reinforced by populist backlash domestically against cornerstone principles of the common market, such as the free movement of labour, which became highly politicised during Brexit. Similarly, the cross-border provision of services is also a contentious matter, as shown by the fraught implementation of the EU Services Directive.

While the articles in this special issue focus more on the regulatory dimension of the single market and H1 and H2 apply to these dynamics, the selection of policy areas allows us also to capture important trends in spending policies (Mertens and Thiemann; Sabatino, This collection). When it comes to spending instruments, resilience is the most likely expected outcome. Theoretically, both renewed integration and renationalisation are less likely in this area. On the one hand, spending policies create winners and losers and it is hard to move away from the existing status quo by launching major new integration initiatives. On the other hand, especially the winners of those policies are likely to defend them both at the domestic and at the supranational level, thus avoiding pressures to renationalise.² We now turn to taking stock of the empirical findings in this collection.

3. Comparative analysis of the main findings in the special issue

Concerning the three main single market integration outcomes put forward in the conceptual section, the articles in this collection do not offer evidence of renationalisation in the examined sectors. Instead, the recent dynamics of single market integration have been characterised by resilience or renewed integration efforts. Indeed, in some fields, we can see initiatives that are presented as ‘game-changers’ in their respective fields providing important new incentives for greater supranational cooperation in the single market (for defense, see Sabatino and for higher education see Cino-Pagliarello, This collection). Table 1 below presents the thematic focus of each article in the collection and the observed integration outcomes.

H1: Existence of an institutionalised coordination body in the hybrid multi-level governance architecture promotes resilience in or furthers EU single market integration.

Table 1. Overview of thematic focus and observed single market integration outcomes in the collection

Articles in the collection	Thematic focus	Observed single market integration outcome
Eckert	Single market in banking and energy	Renewed integration; Resilience
Cini and Czulno	Digital single market – regulation of online platforms	Renewed integration
Schmidt and Krimmer	Digital single market – large scale piloting projects	Renewed integration
Mertens and Thiemann	Investment in the single market	Renewed integration; Resilience
Stephenson	Single market in transport	Renewed integration; Resilience
Pelkmans and Simonchini	Single market in the network industries – freight rail, gas, electricity, eComms	Resilience
Sabatino	Single market in defence	Renewed integration; Resilience
Cino-Pagliarello	Single market in higher education	Renewed integration; Resilience

Overall, the articles in this collection provide support for H1 and the role of the Commission as a coordinating body promoting further single market integration across sectors as well as a policy entrepreneur promoting the creation of new financial instruments and incentives at the EU level. The articles also demonstrate the Commission’s strategic role in steering the relevant EU agencies in these sectors. Yet the authors draw attention to the limitations of these integration initiatives when it comes to EU legal constraints, such as the Meroni doctrine, as well as the strategic interests of the member states.

Stephenson (this collection) shows the important role of the Commission in pushing forward the trans-European networks (TENs) for over 20 years. Building on important policy legacies and achievements in the single market in transport, the Commission has been keen to improve the functioning of the single market in this area, particularly paying attention to developing its coordination and monitoring capacity. It has set up a high-level ‘European Coordinators’ forum and it has relied heavily on the TEN-T executive agency as well as other EU institutional actors to accomplish these goals.

Sabatino (this collection) highlights the importance of the Commission as a coordination hub when it comes to promoting further single market integration in defence. The latest integration initiatives in this area build on earlier non-binding harmonisation measures from the mid-2000s, such as the Code of Conduct on defence procurement and the Code of best practice in the supply chain and the then newly set-up intergovernmental European Defence Agency (EDA). At present, the Commission seeks to align the activities of the European Defence Agency with those of the newly created DG for Defence Industry and Space (DG DEFIS) in order to ensure a more coordinated approach between the different bodies promoting further single market integration in defence.

Eckert (this collection) examines the integration dynamics in the European Banking Union and the European Energy Union, as core integration projects for the last decade. The author finds evidence of resilience and even renewed integration when it comes to the formalisation and centralisation of networks of regulators. Informal networks or structures were replaced by formal networks and committees and were subsequently transformed into EU agencies in both sectors. The new bodies also engage in close cooperation with the European Commission and its relevant DGs, as well as with the European Central Bank (ECB) in the case of banking. The article shows that these networks of regulators have been successful in ensuring deeper market integration and enhanced inter-operability in banking and energy, albeit with important caveats.

Cini and Czulno (this collection) add nuance to our understanding of the Commission’s role as an advocate of further single market integration. The authors identify an important policy change in the Commission’s approach to digital single market regulation from purely ex-post enforcement to adding an ex-ante regulatory regime. Anti-competitive practices in the European Union (EU) fall under the purview of the European competition (or antitrust) regime that allows DG Competition to investigate and, where necessary, to sanction European-scale cartels, dominant practices, and anti-competitive mergers, as well as prohibiting unfair state aid granted by member states. In dealing with cases involving online platforms, the Commission maintained that the established regulatory approach of ex-post enforcement was sufficient, but the authors identify an important recent policy change in the Commission’s thinking. In December 2020, the Commission proposed new sectoral legislation, the Digital Markets Act (DMA), designed to supplement ex-post competition enforcement with an ex-ante regulatory regime. The new approach intends to set out broad goals in a proactive and comprehensive manner to correct market failure, rather than just to protect existing competition on a case-by-case basis. The Commission was acting to prevent fragmentation of the single market in the absence of EU legislation, as the member states were starting to regulate digital markets in divergent ways.

Similarly, Cino-Pagliarello (this collection) sheds light on the Commission’s new approach to advancing single market integration in higher education, which has traditionally been characterised by strong national competences and institutional complexity. The author points out three important features of the new European University Initiative (EUI): a pragmatic strategy to resolve the shortcomings of the Bologna Process; an economic strategy emphasising mobility and education as investment in industry, technology, and innovation; and, finally, a political strategy to promote common European values, thus potentially acting as a catalyst for advancing market integration.

Furthermore, a number of articles in the collection (Mertens and Thiemann; Stephenson; Sabatino, This collection) suggest that new financial instruments at the EU level have a lot of potential in furthering single market integration across different sectors. Mertens and Thiemann (this collection) highlight the crucial role of the European Investment Bank (EIB) in steering and implementing large-scale financial facilities at the EU level, such as the European Fund for Strategic Investments (EFSI) and, more recently, InvestEU. Stephenson (this collection) shows how the Commission sought to develop new financial instruments to help with the implementation of complex large-scale transportation corridors, such as the Connecting Europe Facility and EFSI (also examined by Mertens and Thiemann). It discusses an innovative feature of TEN-T financing – the so-called blending approach launched in 2017 – aimed at selecting actions combining CEF support with financing from EFSI, the EIB, a National Promotional Bank or a private sector investor. Sabatino (this collection) shows that the creation of the European Defence Fund (EDF), a major new financial instrument at the supranational level, may be a ‘game changer’ in ensuring deeper market integration in defence and highlights that for the first time the European Commission will manage defence-related research and development projects for the Union as a whole. At the same time, Sabatino argues that the strategic interests of the member states may interfere with the Commission’s actions as a ‘motor’ and a ‘hub’ when it comes to implementing large-scale supranational financial instruments that promote further single market integration.

Moreover, Pelkmans and Simonchini (this collection) point out the limitations of further single market integration in light of the delegation constraints enshrined in the Meroni doctrine. As the authors show, for over 30 years, the Commission has initiated significant policy and legislative packages in the four network industries aimed at fostering further single market integration. Despite these efforts, inevitably, ‘another new package was needed to complete the internal market’. This leads the authors to conclude that the single market is rather elusive and even, ‘unachievable’. Pelkmans and Simonchini conclude that in the absence of independent EU regulatory bodies in the network industries, it is very unlikely to see significant progress towards the completion of the single market. We now move to examining whether the articles in the collection show support for H2.

H2: Presence of public–private interactions in the hybrid governance architecture promotes resilience in or furthers EU single market integration.

Overall, the articles in this special issue provide mixed support for H2. Some articles (Eckert; Schmidt and Krimmer; Stephenson; Cino-Pagliarello, This collection) do find that public–private interactions in the hybrid governance architecture have fostered single market integration. Others present evidence to the contrary (Pelkmans and Simonchini; Sabatino, This collection) or document more nuanced impacts resulting from the involvement of private actors (Cini and Czulno; Mertens and Thiemann, This collection).

The clearest support for H2 can be found in Eckert (this collection), in the energy sector. In the case of the Energy Union, infrastructure operators have contributed significantly to market integration by performing a central role in the sectoral framework alongside the regulators. Eckert argues that the involvement of the private actors in the creation of the Energy Union was driven both by the technical competence these actors possessed and the political resistance by member states to shift power upwards to the EU level. Such resistance to vertical power shifts gave rise to more lateral power shifts to the private actors instead. In terms of governance arrangements in energy and finance, we can see a gradual change over time – evolution from informal cooperation to more institutionalised and formalised modes of network coordination. At the same time, Eckert notes that although there has been increased integration in institutional terms, this has not necessarily led to renewed market integration. Indeed, the author observes that in finance, the employment of stronger coordination mechanisms has not given rise to significant renewed integration in the single market for capital.

Beneficial involvement of private actors in the single market was also observed by Schmidt and Krimmer (this collection) who argue, using the examples of large-scale piloting, that the involvement of private actors like universities and businesses (alongside governmental entities) has proven beneficial for the advancement of the digital single market. The involvement of private actors helps to ensure that both supply and demand side aspects are covered and the technological and innovation elements pertaining to use, application, and deployment are taken into account. While the (public) universities have been able to contribute the necessary scientific background for the pilots, the engagement of private companies has enabled the deployment of technological know-how and flexible approaches for the development of the necessary ICT architecture and solutions.

Stephenson (this collection) points to Commission’s pivotal role in conceiving hybrid governance arrangements in the trans-European networks of transport. Setting up deliberation fora and the use of stakeholder consultation and evaluation have promoted the resilience of TEN-T and have helped maintain momentum in the implementation of cross-border transportation projects. Meetings with representatives of employers, workers, and civil society organisations have enhanced the informational resources of the Commission in implementing TEN-T. The Commission has also relied on private finance for completing the core network corridors. However, the full impact of blended financing schemes, combining public and private funding, on the completion of the corridors remain to be seen. Furthermore, the author argues that hybrid governance arrangements pose limitations with regard to securing reliable data for assessing and managing large-scale TEN-T projects.

Cino-Pagliarello (this collection) also identifies the potentially beneficial involvement of private actors and a diverse range of stakeholders in the European University Initiative (EUI). The initiative makes extensive use of the bottom-up projects of higher education institutions and envisages the involvement of diverse stakeholders in transnational alliances, including academic institutions, private actors, and public authorities, such as municipalities and local councils. The Commission acts as a coordination hub within these alliances by providing capacity-building action. At the same time, the stakeholders play a ‘double’ role both as recipients and agents of change. Given that EUI is still a novel initiative, the longer-term impact of such governance architecture is unclear. In particular, it remains to be seen to what extent private actors will act as advocates of the interests of the alliances and whether the EIU could lead to the ‘soft privatisation’ of higher education.

Cini and Czulno (this collection) show that self-regulation of the digital platforms was deemed insufficient by the Commission, which led it to propose the Digital Markets Act. The article documents the extensive attempts of the Big Tech to lobby against the Digital Markets Act, while some smaller platforms lobbied and argued for it, since the latter viewed it as legislation that may help rein in their large competitors. Interestingly, the authors find that the aggressive nature of lobbying by the Big Tech ended up being counter-productive and it did not manage to outweigh the expert advice and the Commission’s own learning experience. The article also indicates that NGOs, such as Corporate Europe Observatory, can be an important counterbalance to business interests in the digital sector. Such NGOs have invited the Commission to take a tougher stance on regulating the digital market, even though the scope of their activities was considerably smaller than the efforts of the commercial interests. All in all, the findings suggest that despite some critics claiming that the European institutions are captured by large corporate interests, the proposal of Digital Markets Act indicates that this may not necessarily be the case.

Mertens and Thiemann (this collection) demonstrate that existing disparities in the domestic capital markets of the member states have contributed to reinforcing the existing inequalities in the single market integration. This, in turn, has constrained the potential of the European Investment Bank to address the vulnerabilities of the common market project. Given that the funding model of the Investment Plan for Europe necessitates the mobilisation of finance in the member states, the absorption capacity depends heavily on the capabilities of private market actors and public financial institutions to participate and coordinate their activities. In particular, using such modes of ‘blended finance’, whereby EU budgetary means are used to mobilise private financial investors and intermediaries, has aggravated the core-periphery dynamic for Eastern European countries since these countries have not possessed sufficient capital market depth for utilising funds from the European Fund for Strategic Investments (EFSI). In EU-15 countries where public-private collaboration was feasible owing to more developed capital markets, the use of investments from EFSI was considerably higher than in EU-13 countries.

Echoing similar concerns as in Mertens and Thiemann (this collection), Sabatino (this collection) argues that despite the attempts of the industrial players to prevent deeper integration of the defence market, the Commission and the member states did create the European Defence Fund (EDF). Given the aim of the EDF to encourage the involvement of SMEs, stakeholders from the private sector are keeping an eye on the EDF, apprehensive that the budget might disproportionately benefit large companies. Finally, Pelkmans and Simonchini (this collection) note that, in the network industries, the incentives of the member states to resist supranational regulation have, inter alia, been shaped by their wish to guard their national industries. This, in turn, has hampered single market development in sectors, such as freight rail and eComms.

Overall, this special issue demonstrates that adding the axis of public–private interactions to the multi-level governance one in analysing single market integration provides important new insights. At the same time, the impact of public–private interactions on resilience and renewed integration can be complex. On the one hand, the articles demonstrate that private actors can offer information and expertise that would otherwise be lacking. Furthermore, coordination efforts to advance the single market can benefit from the established cross-border networks of private actors. On the other hand, the divergence in private actors’ interests and capacities can present considerable hurdles to further integration and, potentially, undercut the Commission’s efforts to advance the single market integration agenda.

4. Conclusion

We aimed to make a three-fold contribution to the literature with this special issue. First, on a theoretical level, we sought to synthesise two important dimensions (multi-level and public-private) of hybrid governance in the EU in order to understand more fully the drivers of further progress (or lack thereof) in European single market integration. While the multi-level governance lens has been used extensively in the analysis of single market integration and the public-private governance lens is increasingly compelling, very few academic projects have looked at both dimensions of hybrid governance at the same time and, from a comparative perspective, across different policy sectors (see Eckert and Eberlein 2020). Our special issue aimed to address this blind spot. Second, on an empirical level, we aimed to understand the recent dynamics of single market integration in key sectors, such as banking, the digital single market, transportation, energy, the network industries, and defense. Third, combining the theoretical and empirical lenses, we sought to conduct theoretically informed comparative analyses that map and assess the observed outcomes across different sectors of the single market.

Our special issue shows that juxtaposing the multi-level governance and public-private lenses does indeed provide an insightful lens for exploring, understanding, and explaining the dynamics of single market integration. In particular, the collection shows that the information provided by the private actors and their coordinating capacity arising from cross-border networks can play a crucial role in complementing the role of the European Commission in advancing single market integration. At the same time, the prevalence of strong national interests, weak absorption capacities, and uneven representation of private interests can undermine the Commission’s role as a broker. Thus, in the future research, the analytical framework we have put forth in this special issue could serve as a useful starting point for advancing our understanding of the impacts of different governance configurations on the scope and pace of single market integration.

The empirical findings of our special issue indicate that the proposed analytical framework is a useful starting point for a more nuanced understanding of single market integration across different sectors. Further theorising could take the following directions. First, it would be insightful to outline a more fine-grained typology of different outcomes in single-market integration and how different governance configurations affect these outcomes. Second, further theorising would be needed on whether increased coordination both in multi-level governance and private–public interactions can reach a tipping point, leading to a backlash against single market integration and, possibly, even renationalisation.³ Third, the findings suggest that further theorising is needed on how the interactions between different coordination mechanisms (i.e. the multi-level and private-public) affect single market integration with regard to different types of policies, especially when it comes to regulatory vis-à-vis spending policies. For example, as our special issue suggests, asymmetrical dynamics in spending policies may foster contestation of further EU integration by private actors, whereas in regulatory policies, public–private interactions can play a stronger role in supporting further integration efforts.

Regarding additional directions for further research, some articles indicate possible turf wars when it comes to policy coordination of the complex single market integration initiatives. This is especially the case for EU agencies with overlapping mandates (Stephenson; Pelkmans and Simonchini, This collection) and the interaction between the Commission, agencies, and other EU bodies, such as the ECB. While this trend has not endangered progress in single market integration as such, it may lead to poor implementation of the new single market initiatives and funding instruments, such as the European Defence Fund and InvestEU. The articles in this collection suggest that the effect of private actors is rather ambiguous and can go both ways – toward more supranational or toward more national solutions – depending on which level offers better business opportunities. Further research could shed light on potential problems of regulatory capture, especially in sectors with very powerful industry lobby groups and without a clear mandate for supranational regulation.

Acknowledgments

We would like to thank the contributors to this special issue for their dedication to the project and creative energy in times of an ongoing global pandemic that has upended our regular work schedules. David Howarth kindly shared his insights into EU single market integration and feedback on our work in progress during the Jean Monnet Network VISTA research workshop. A special thank you to the JEI editors for their guidance and interest in our project and to the two anonymous JEI reviewers who read the collection carefully and provided us with valuable and insightful suggestions for clarification and improvement of our conceptual arguments and empirical research. Ringa Raudla would like to acknowledge the support of Estonian Research Council (Eesti Teadusagentuur) Grant PRG1125. Both authors would like to acknowledge the support from ERASMUS+ Jean Monnet Network VISTA, Project number 612044-EPP-1-2019-1-NL-EPPJMO-NETWORK, Grant 2019-1609/001–001.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

Ringa Raudla would like to acknowledge the support of Estonian Research Council Estonian Research Council (Eesti Teadusagentuur) Grant PRG1125. Both authors would like to acknowledge support from ERASMUS+ Jean Monnet Network VISTA, Project number 612,044-EPP-1-2019-1-NL-EPPJMO-NETWORK, Grant Decision Nr 2019-1609/001–001

Notes

1. This is by no means an exhaustive list of outcomes and more fine-grained typologies could be proposed as discussed in the directions for further research.

2. We thank an anonymous reviewer for pointing out the theoretical significance of regulatory v. spending policy areas for our analysis.

3. We are very grateful to the anonymous reviewer for suggesting this insight.