ABSTRACT
The progressive reduction of trade barriers to create a single European market (SEM) has exposed many firms in the European Union (EU) to increased competitive pressures (see Chapters 7 and 8). There are two possible responses to this change in the competitive environment. Firms may take advantage of the opportunities offered by the larger internal market to become more competitive, so benefiting consumers. Alternatively, they may react defensively to protect themselves from increased competition by acting anticompetitively through restrictive agreements and monopolistic practices, for example. National governments may also try to protect their domestic firms from the increased competition by granting subsidies and other forms of assistance.
