Analysis of EU regulation of markets leads into ‘the seventh circle’ (of hell, purgatory, or paradise, depending on individual taste) of European neo-liberalism. The EU's core function is regulation and it is the leading exponent of neo-liberal regulation in Europe. Since the 1980s, it has developed a dominant set of ideas centred on competition to achieve a ‘single European market’ that is sufficiently integrated and coherent to be called a ‘model’.

Although the neo-liberal content of the regulatory model is often taken for granted in public and academic debates about the EU, this chapter argues that it was not legally or ideationally inevitable. Indeed, between the 1960s and 1980s, attractive alternatives were available and neo-liberalism appeared to be an unlikely candidate for ideational dominance. However, a powerful coalition of the European Commission, European Court of Justice (ECJ), national governments, and large firms has formed to support the EU's neo-liberal regulatory model. The coalition is heterogeneous, and it has widened and deepened over time as key actors have altered their position.

Thus, the development of a powerful coalition that favours neo-liberal ideas requires analysis rather than simply being presumed on the basis of the EU’s legal and institutional framework. Equally, changes over time must be accounted for. In response, the analysis shows how and why the key features of neo-liberalism – its breadth and ambiguities, the combination of competition and a strong state, and its apparent political neutrality through reliance on rules and ‘markets’ –make it attractive at the EU level.