Over the short history of European integration, the European institutions and social partners have set up structures where social dialogue takes place, at cross-industry, sector and company level. When compared to collective bargaining bodies in each national system of industrial relations, it is clear that these European structures do not have the same role. However, they formally hold a capacity to define joint rules that can be implemented in the Member States. To what extent does this capacity lead in practice to regulation of employment relations, or at least to potential for regulation? The article addresses these questions by the means of close examination of the European sectoral social dialogue. It shows that the potential for regulation at this European level not only depends on institutional settings but, rather, that it largely depends on ‘vertical relations’ between the European-level bodies and national social partners.