Europe Economy

10 Pages 2602 Words

th the completion of the Single European Market (SEM) at the end of 1992 and the consequent removal of all barriers to trade, EU domestic firms faced increased competition in their product markets. In the run-up to the establishment of the SEM, companies across Europe as well as in the rest of the world prepared themselves to the challenges posed by operating in a more competitive environment. To this end, some companies concentrated their operations by divesting or selling off non-core lines of business; while other companies rationalised their production, and tried to achieve cost synergies and efficiencies by merger (European Commission, 1994). Moreover, many companies strengthened their market position by undertaking cross-border acquisitions: Between 1983 and 1987 the increase in merger activity involving EU companies as both buyers or targets was enormous (Geroski and Vlassopoulos, 1993), despite the fact that cross-border as compared to domestic merger activity was small.

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