A renewed commitment to competition policy in Europe

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Neelie Kroes

European Commissioner for Competition Policy

A renewed commitment to competition policy in Europe

Conference on the Place of Competition Law in the Future Community Legal Order

Brussels 8th November 2007

Minister Jouyet,

Ladies and gentlemen,

My thanks to Concurrences Review, the Global Competition Law Centre and the Institut Montaigne for bringing us together today. I am very pleased to be here.

Our hosts have certainly shown strong ‘first mover’ skills in the timing of this debate. The ink has not yet hit the pages of the Reform Treaty, let alone dried!

But happily, the huge success of the Informal European Council already lets us look forward to what the future Treaty holds in store.

This morning we are invited to look at the place of competition law in the future Community legal order. Our hosts have cut to the chase in asking us: “Is there a need for a new competition policy for Europe?”

I hope they will forgive me when I say that this question frankly misses the point.

Last week I was over in the United States. The questions they are asking themselves are not about the place of competition in the future Community legal order. They are asking about the future of European competition policy in the future world order.

They are not asking themselves about the need for a new competition policy for Europe. They are asking themselves whether Europe’s competition policy is the new global standard.

I think they would possibly find it slightly amusing that we are here today – engaged in an exercise of what they might call ‘navel gazing’.

The simple answer to the first question on the table today is yes. Yes, competition law has a clear and solid place at the heart of our Union’s legal order. But no, there is no need for a new competition policy for Europe. Instead, there is a need for renewed commitment to competition policy in Europe.

A renewed commitment to the principles on which Europe’s greatest success stories - our Internal Market and our Economic and Monetary Union – have been built. A renewed effort to get the best out of free but fair markets, and pass these benefits to Europe’s citizens. And a renewed approach which meets citizens' needs in the wider context – the global village in which we live today.

The agreement on the Reform Treaty is enormously welcome. It brings to an end half a decade of institutional wrangling. Since 2001, the stability, the predictability of our European legal order has been open to debate. It is more than time to move on.

I know what makes business tick. Companies need a sound and stable environment, with rules that are both predictable and durable. That is the right climate for investment and growth. That is the climate that this long-awaited institutional settlement brings.

But a deal at any price is never a good one. I stand firmly behind the Reform Treaty because it does so much more than just delivering stability and predictability.

This Treaty really does what it says ‘on the label’. It delivers the institutional reforms we need to keep a Europe of 27 working effectively and efficiently, with more transparency and more democracy.

And crucially, it also delivers reforms which look to the future. It lays the groundwork to allow Europe to deliver in our new – globalised – world. It takes stock of the realities of today – and the challenges of tomorrow – and delivers the means for Europeans to take the lead, to get the ‘first mover’ advantage.

But we have not been waiting for the new Treaty to be signed on 13 December to start thinking about all this. The week after next the Commission will present our Review of the Single Market. There is still plenty of unused potential which we need to tap. We need to think about how to build on what we have and adapt it so that it becomes a real springboard for European business to go global. And we must be clear about our responsibilities and make proper provision for social and other public interests that markets alone cannot deliver. No-one should be left behind.

The Reform Treaty's Protocol on Services of General Interest represents a significant new step forward in setting out for the first time ever the shared principles for services of general interest. Reflecting the vital role that public services play in economic and social life in our Member States, the Commission will present a Communication on services of general interest in parallel to the Single Market Review.

And our renewed Lisbon Strategy is already changing things, arming and preparing Europeans and European business for inevitable change.

The State Aid Reform I have made my priority over the past three years uses refined economic analysis to help Member States focus state support where it gives best value for money, in support of the Lisbon Strategy objectives.

Yes, that means being tough on aids which artificially prop up the industries of the past. But yes, it also means new rules to support the ‘first mover’ industries of the future: through better access to risk capital and aid to help overcome the market failures which too easily put a halt to innovation.

And yes, it also means focusing on training aid that really helps workers to develop the skills that will make them employable in the future, rather than just assets to their current companies.

And yes, it means making sure that regional development aid is really focussed on the areas that need it most, since our Internal Market starts and ends with the principles of equality and solidarity.

So the process of reform and adaptation to match new global realities is already very much underway. But throughout the process, the substance of the economic provisions of the Treaty – our open Internal Market including, in the words of the founding fathers, its 'system to ensure that competition is not distorted' – has remained firmly intact.

Why? For me the answer is simple. These principles work. Don’t fix what ain’t broke!

The story of European integration – from Rome to Lisbon, via Maastricht, Nice and Amsterdam – has been grounded in one firm conviction. A commitment to open markets with free competition. Pursuit of this conviction has led to the political reunification and economic prosperity of a continent over fifty years. Where the European Defence Community fell, the Internal Market was born. And this has spawned the most unique and the most successful example ever of what you could call regional globalisation.

Against this background, there has inevitably been some debate about the why and wherefore of the Protocol on the Internal Market and Competition. I've heard those who considered the Constitution part of some neo-liberal plot, and who now claim that – just because the Constitution text is not repeated word for word – the Reform Treaty in some way changes the current situation, or downgrades open market principles and competition policy. Let’s look at the facts.

Fact one: the starting point for any reasonable analysis is not a Constitutional Treaty which we all know never entered into force. The only true comparator has to be the current Treaty texts. And no-one can argue that they specify competition as an objective in its own right.

Fact two: the Protocol is a legally binding affirmation of the current situation. For the first time ever it is written black on white that a system to ensure undistorted competition is an integral, an inseparable, part of our Internal Market objective, as provided for in Article 3 of the revised Treaty on European Union.

Fact three: two Member States voted against the Constitution, and in at least one of them a fundamental concern was that Europe was taking ever increasing power over political choices which had previously been made nationally. This concern found a clear reply in a declaration about the limits to the use of Article 308 of the current Treaty – the provision that allows action to promote common objectives in the absence of a dedicated base.

In my view, this was not an unreasonable step. But because direct reference is now made to objectives set out in the new Article 3 of the Treaty on European Union, there was a need to clarify that the Union can continue to act under all the powers it always had in the area of competition policy. That includes action under Article 308 - the basis on which the Merger Regulation is founded.

So I simply do not agree with the scaremongers who argue that the Protocol is the end of European competition law as we know it. The Protocol maintains in full force the competition rules which have served European citizens so well for fifty years.

And it confirms the duties of the European Commission as the independent competition enforcement authority for Europe.

It is time to stop the navel-gazing and get on with the job.

That means a renewed commitment to European competition policy and fair and effective enforcement, since that is what keeps markets fair and effective. And at the end of the day better functioning markets provide consumers with better goods and better services, at better prices.

So the European Commission will continue to make companies play fair when they operate on our patch. The economic benefits of growth and innovation in open European market must reach consumers, and not be creamed off as illegal profit for companies' own pockets.

So by the end of the year we will take further decisions to punish cartels, beyond the action we have already taken this year in markets as diverse as elevators, zips and beer. We estimate that our cartel enforcement work saves the European economy around 4 billion euro each year. The OECD puts the figure higher. And that is before you factor in the considerable benefits of deterrence.

And I think it is also clear that we are determined to ensure that dominant companies – particularly in core sectors for the future like telecoms and IT - do not abuse their positions to foreclose competition and harm consumers. Three years after the Commission's enforcement action in the Wanadoo case, broadband retail prices halved to some of the lowest in Europe, and penetration increased.

I have already mentioned our state aid reform, through which we are creating a sound and stable framework to target support where it is really needed whilst giving companies guarantees that their competitors are not getting an unfair 'leg-up'.

And since fair markets mean equal opportunity for all, I will continue to insist that cross-border mergers are not wrongly put into question simply because national governments prefer to see their crown jewels stay 'at home'.

You see, the bottom line is about keeping our European markets open and working well. The European Commission cannot do the job alone. We rely on the day to day work of national competition authorities in all our Member States, cooperating within our European Competition Network. Together we are delivering more and better enforcement, and more proactive work to get our European and national markets functioning well in the interest of consumers. I'm not just thinking of the Commission's sector inquiries at European level. National initiatives such as the Attali Commission's interesting work on the retail sector in France have a crucial role to play if we are to get the best from open markets at all levels in the Union.

But our markets need to be open to outsiders too, provided they are ready to play by the same rules of the game.

We cannot afford to pull the duvet over our heads and hope the world outside will leave us alone. We cannot afford to think that we can buy a sustainable future for European companies with endless subsidies – no-one's pockets are that deep.

But being open does not mean being a light-weight. Indeed, it is the key to being a global heavy-weight. Our rules work, and our European approach is setting the new global standards. Through our strong European presence in the International Competition Network, we are nurturing the spread of a competition culture world-wide. When countries such as China are designing and implementing new competition regimes, they increasingly turn to Europe for support and exchange of good practice.

We should have confidence in our principles and our practice. And we should not be embarrassed about actively seeking to export them through an active multilateral and bilateral trade policy.

Because a renewed commitment to European competition policy also means a renewed commitment to gradually shaping the global regulatory framework in line with our standards. That is the best way to shape globalisation.

And the Reform Treaty gives the best possible launch-pad from which to take on this challenge and win.

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