The Structure of Regulatory Competition in European Corporate Law

Abstract

In its opinions in the cases Centros, Uberseering and Inspire Art, the ECJ has begun to open European corporate law for regulatory competition, as it has been discussed in the US for several decades. This article analyzes the structural conditions of competition, on the supply and demand sides of the market for corporate law, and the impact of supranational influence. In doing so, it identifies several factors that have received little attention in the incipient European debate. The supply-side analysis shows that a European Delaware is implausible because of the interdependence of competitive advantages and incentives to compete. On the demand side, an analysis of the effects of differences of financial structures indicates that a race to the bottom is more likely in Europe. The comparatively weak threat of supranational intervention in Europe makes actions and decisionmaking an unlikely factor to affect the decisions of national actors.

Keywords: regulatory competition, corporate law, European Union, Centros case

JEL Classification: G34, G28, H73, K22