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Neelie Kroes

European Commissioner for Competition Policy

European Competition Policy in the age of globalisation – towards a global competition order?

First Symposium in Innsbruck, Forschungsinstitut für Wirtschaftsverfassung und Wettbewerb (FIW)
Innsbruck, 7 February 2008

Sehr geehrte Damen und Herren,

lassen Sie mich zunächst ganz herzlich für Ihre Einladung zum 41. Innsbruck-Symposium des Forschungsinstituts für Wirtschaftsverfassung und Wettbewerb [FIW] danken.

Angesichts der wunderschönen Kulisse rund um Innsbruck wäre ich zwar eher geneigt, mich mit alpinen Sportwettbewerben zu beschäftigen, als über die Chancen der Errichtung einer globalen Wettbewerbsordnung nachzudenken. Doch wissen wir alle - wir Wettbewerbsbehörden, Wirtschaftspolitiker, Unternehmer und Wissenschaftler, die heute in Innsbruck versammelt sind – wie wichtig es ist, dass wir glaubwürdige und erfolgreiche Antworten auf die Frage finden, wie wir mit unseren nationalen und regionalen Wettbewerbsordnungen auf die Globalisierung der Wirtschaft reagieren können.

Deshalb freut es mich auch ganz besonders, heute vor Ihnen zu diesem wichtigen Thema sprechen zu dürfen.

Allow me now to switch to English.

Before looking at the role of European competition policy in the age of globalisation and the perspectives for a global competition order, let me quickly go back to basics. Why is the European legal and political order so attached to competition and this since its very start in 1957? No doubt the competition enforcers present in this room all understand the key role competition plays in ensuring Europe's wealth and prosperity. Free trade and undistorted competition are among the main drivers of economic growth. Competition within the single market and competition with other markets give consumers access to a wide range of high quality products and services at low prices.

But we must not assume that everyone automatically sees it that way. There are and will always be voices even inside Europe which question the need for robust competition enforcement at national as well as at European level. So we need to communicate more and better about why competition is at the heart of our European project and in particular our Single Market.

Day by day, our enforcement actions should prove the benefits of a well-functioning competition system to our citizens. We should all be capable of explaining these benefits clearly in a way that captures the attention of the woman and man in the street.

It’s easy to explain the good that comes from smashing a cartel in an area like beer. But it becomes harder to explain why Europe remains committed to free competition when citizens see factories close and activities move to countries where subsidies are easy to get, or where environmental or employment standards are perhaps lower. Part of the fear caused by 'globalisation' stems from the fear that someone is pulling our European legs: we focus on playing by the rules whilst the others focus on surviving and profiting from the global market. And similar fears are even voiced on certain transactions inside Europe – just think of Bochum and Nokia...

These concerns are not new. But they have been heightened by the growing pace of international economic integration and the integration of new and dynamic players – think for example about the recent emergence of Sovereign Wealth Funds - into the world economy. And some concerns may even be justified in cases where European players are exposed to anti-competitive conduct by foreign companies or to protectionist interference by foreign governments.

This is why, if European business wants to continue to benefit from the opportunities globalisation brings, European regulators and policy-makers need to deliver open and competitive markets. Not only at home, but also abroad. And without resorting to protectionism or putting our internal competition system on the sidelines.

In terms of economic governance, this means that we have to ask ourselves how best to keep a grip on global actors in a global economy, if their anti-competitive behaviour is damaging the interests of the Union, its businesses or its citizens.

Ideally, faced with global problems we would design truly global solutions. But unfortunately, as we all know, attempts to introduce an international competition order within the WTO have failed so far.

Around the world, competition rules are still national, bilateral or at best regional, and they are enforced by numerous authorities each acting on its own respective territory.

That is a fact of life we have to take into account if we are to continue to ensure that competition policy really delivers in today’s world. If we want to protect European consumers and businesses from the harmful effects on the internal market of global cartels, abuse of dominance, restrictive agreements, and foreign subsidies. And if we want to see competitive markets develop abroad and ensure European companies do not face unfair competition in third country markets.

So what does this imply for Europe’s strategy for managing globalisation? Put simply, it shows the clear and tangible benefits to be gained from fostering coherence in competition law and enforcement right around the globe.

I’m of course biased: I come from Europe and have a certain amount of experience with our European competition system. But personally I think that even the most objective observer would find our European approach a rather healthy model.

We should not and indeed cannot impose our model on others. But all the same, ours is a model of which we can be proud. So it is certainly no sin to encourage others to import its best features. In short, as part of Europe's response to globalisation, we have to make sure that our competition policy plays a greater role on the international scene.

What does that mean in practice?

First and foremost, we have to properly enforce our competition rules to 'global companies' operating 'at home'. The European Commission will continue to protect consumers from the anticompetitive behaviour of foreign business by firm but fair application of the antitrust rules. Our rules apply in the same way to every undertaking whose behaviour produces effects in the EU, whatever their nationality.

Second, just as multinational companies operate across national and regional boundaries, so too must competition authorities. At present there are too many jurisdictional barriers which hamper efficient antitrust enforcement. Take for example the numerous legal and practical obstacles to obtaining the necessary evidence and imposing appropriate sanctions on global cartels. Worse still is the risk that, because of different substantive laws or administrative practice, two competition authorities may issue conflicting decisions in relation to the behaviour of a single company.

So the effective enforcement of competition rules in an international environment requires that authorities in Europe cooperate with authorities outside. Through bilateral and multilateral co-operation, the Commission is promoting international convergence of competition policy and seeking to prevent any potential inconsistency with the decisions taken by competition authorities elsewhere.

Tomorrow, Professor Möschel will present a paper on conflicts between competition regimes, along the apparent dichotomy of (and I cite in German): "Harmonisierung des Rechts oder Kooperation der Behörden?" [Harmonization of laws or cooperation between authorities?].

Personally, I do not think that harmonisation and co-operation are alternatives, let alone mutually exclusive. Even if achieving a truly global competition order remains a rather distant objective, I do believe that there is great scope for convergence – de facto harmonisation even -through co-operation. Co-operation and dialogue are key tools to find common ground with colleagues from other jurisdictions.

That is why, as you know, the Commission works on a bilateral basis with the competition authorities of the Community's major trading partners. We already have dedicated cooperation agreements with the United States, Canada and Japan, and contacts with their authorities are frequent and intense. Not only as regards individual cases, but also on policy issues, to build a common understanding of the principles we apply.

Regrettably, at this moment we are still unable to share actionable evidence, the kind of information that is most useful for cartel investigations. The time has come to explore ways to enhance some of our bilateral agreements and to share such information among a small number of enforcers.

We also cooperate closely with the competition authority of South Korea, on the basis of a Memorandum of Understanding – and I hope we will in due course have a dedicated competition agreement. I am very happy to see that Chairman Kwon will speak here tomorrow, and I am sure he will agree that deepening our cooperation is an objective fully shared by both sides.

Over time, the Community has also insisted on including commitments on competition law in a raft of association or partnership agreements with countries as diverse as Chile, Russia, South Africa, and our Mediterranean partners.

Our informal dialogue with Russia has been very constructive. For example we were pleased to share our experience of competition law enforcement with Russia, and were delighted that some of our input inspired recent competition legislation in Russia. China too has just adopted new national legislation – in this case its first anti-monopoly law. From the early stages of the drafting process onwards, we established a structured dialogue on competition policy issues with the Chinese authorities, and this has influenced the content of the law. Now, in the crucial implementation phase, we intend to continue working closely with our Chinese counterparts where they would find this helpful.

I would also like to mention here the clear inter-relation between delivering internal market objectives including competition and the Community's trade policy. In all our bilateral relationships, combined and more coherent efforts of competition and trade policy are needed to give the necessary push to the forces of competition. We are actively reflecting on how best to achieve that, not only as regards foreign subsidies, but also other trade barriers where external action may be required.

For example, the Commission is determined to push competition issues, and introduce subsidies discipline, in the context of the new generation of market-access driven Free Trade Agreements currently under negotiation with important trading partners, like South Korea or India. These agreements would constitute a further tool to reach common understanding on important competition matters, contribute to greater convergence of substantive rules and help ensure reciprocal fair and open access to our respective markets.

As the above examples show, I think it is fair to say that bilateral agreements and cooperation deliver good results. But bilateralism has clear limitations. There are now about 100 national competition systems and competition authorities around the world. So creating more convergence must also imply going multilateral.

And this is where the International Competition Network, the ICN, comes in. Over the past few years it has proved itself as a very worthwhile initiative. Its output of Recommended Practices, case handling handbooks, reports, and templates for legislation is considerable. And in a number of cases, ICN recommendations have led to national legislative changes and thus to increased convergence among jurisdictions.

Mention should also be made in this context of the Competition Committee of the OECD. Over the years, this has helped its members develop principles on international cooperation in competition matters. In areas such as merger review or information sharing in international cartel cases, OECD recommendations have become widely accepted best practices. The Competition Committee's roundtables have proved a key forum for dialogue between competition authorities from all over the world.

Ladies and Gentlemen,

I hope to have demonstrated that whilst a global competition order is yet far from reality that does not mean that we currently live in some sort of international competition anarchy. Far from it! Through our bilateral and multilateral efforts, the European Commission is at the forefront of promoting competition in the age of globalisation.

We are deploying a range of tools to help move towards comparable competition standards around the globe. These range from the proper application of our own rules at home, to international co-operation on a bilateral, regional or multilateral basis, to better integration of competition policy in the other policies of the Union which have an external dimension.

All this is crucial to ensure that the globalisation process can deliver on its promises. Strong competition authorities across the globe sharing similar enforcement principles have a crucial role to play in global governance in the interest of businesses and consumers everywhere.

So, we are 'going global', as you see – and this without becoming a 'fortress Europe'. But we want to exercise appropriate political influence on the global scene for the benefits of the common good.

I said at the start that some of the fear of globalisation is that others are pulling our European legs, letting us play by the rules while they play dirty. I hope to have convinced you that the truth is rather that by promoting our experience and by working together, it is Europe which is encouraging others to dance to our tune.

Thank you.

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