Attempts are currently being made to create a European Higher Education Area and a European Research Area, which are the two pillars of the so called "knowledge-based society". Since 1998 there has been a flurry of EU initiatives affecting higher education. Out of these, the Bologna Process is probably the most well known. Related to this, there is a growing interest in what has been labelled "Europeanisation" of higher education. This paper examines whether the European Union (EU) has a legal competence in higher education and explores the extent to which EU institutions are involved in policy-making in this area. The paper also considers briefly whether there is some evidence of a gradual move from inter-governmental towards supranational cooperation in this field.