This article looks at the development of the two main features of the party system in the European Parliament (EP): the organization of the party groups, and the nature of competition between these groups. On the organizational side, we examine the foundation of the party groups in the Common Assembly and the evolution of party organization from the appointed to the elected Parliament. On the competition side, we focus on the main axis of competition: the relationship between the Party of European Socialists (PES) and the European People's Party (EPP). We develop a set of competition propositions about PES-EPP collusion, and test these arguments in a statistical analysis of PES and EPP roll-call voting since 1979. We conclude that, contrary to what might be expected, the party system in the EP has become more consolidated and more competitive as the powers of the EP have increased.