Transforming European Capitalism? The European Union and the Governance of Companies

Abstract It has been argued that since the mid 1990s the European Commission, with the support of the European Court of Justice, has launched a concerted attack on the institutions of ‘organised’ or ‘non-liberal’ capitalism in member states. In combination, these two institutions are said to possess both the will and, more importantly, the capacity to enforce a liberal transformation of national economic governance institutions across much of Europe. This article evaluates these claims, firstly, through an analysis of the EU's efforts to strengthen the rights of shareholders within the governance of corporations. It identifies the principal political factors that mediate and mitigate the impact of this reform programme through an examination of the fate of the Commission's efforts to create functioning markets for corporate control and for firm incorporation. It then, secondly, assesses the related but broader question of the viability of narrowly focused regulatory reform programmes as a mechanism for transforming governance institutions, through the conduct of a case study of the impact of shareholder protection reforms on corporate governance in Italy. While acknowledging the extent of the obstacles to coherent reform and the limited impact of the reform programme, it finds that the capacity of Commission and ECJ activism to ‘dis-organise’ national governance systems is real and significant.