Watch on the EC: investment opportunities. (includes related article) (Europe: East and West) (Cover Story)

To the surprise of many observers, the European Community is not a fortress. Though it's not exactly an open house, this enormous, diverse, and now unified market has clearly got a drawbridge out, ready to facilitate free trade.

At one time, fears of a fortress Europe were directed specifically towards activity in mergers and acquisitions, where it was thought that European states would seek to protect such heavier industries as steel, automobiles, and engineering equipment from corporate takeover. Such fears have already proved unfounded as the EC has taken the lead in international activity on this front.

The Financial Times reported that in the first half of 1992, two-thirds of all cross-border mergers and acquisitions by value took place in Europe. With the Single Market, there are further incentives for international mergers and acquisitions in Europe.

A legal framework known as the European Economic Interest Grouping (EEIG) was adopted in July 1989 to facilitate joint business ventures in the coming Single Market. Under EEIG regulations, two or more partners from different countries can form a group to promote cooperation on a common project. Recognized by all members of the EC, the activities of an EEIG are not subject to legal and tax barriers that have discouraged cross-frontier projects in the past.

An EEIG itself is a nonprofit entity whose constituent members retain their identity as independent partners. Membership is open to individuals, companies, firms, and other legal bodies that meet the qualifications laid out in the 1989 legislation. Access is not denied to non-EC enterprises that are legally established within the Community.

Other M&A legislation has included directives on patent and trademark protection, the common taxation of mergers, and the pooling of …