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Neelie Kroes
European Commissioner for Competition Policy
How competition policy benefits SMEs
"Craft and SME Convention" of UEAPME (European Association of Craft, Small and Medium-sized Enterprises) at European Economic and Social Committee
Brussels, 27th April 2009

Commission Européenne - SPEECH/09/203   28/04/2009

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SPEECH/09/203












Neelie Kroes

European Commissioner for Competition Policy




How competition policy benefits SMEs
























"Craft and SME Convention" of UEAPME (European Association of Craft, Small and Medium-sized Enterprises) at European Economic and Social Committee
Brussels, 27th April 2009

Ladies and gentlemen,

Thank you for inviting me today.

I have wanted to speak directly with the SME community for some time, and while not all of Europe's 23 million SME owners could be here today – I think your convention is a good start!

SMEs have been part of my life since I was a small child, with my family’s transport business.

I’ve seen how SMEs work, their difficulties and the difference the European Union can make to daily operations.

What do I observe now that I am at the Commission and dealing with the crisis each day?

Firstly – I know the headlines and the government attention often goes to the large manufacturers.

Let me assure you that we aren't fooled by those who shout the loudest.

We know that Europe's economy can't grow unless SMEs grow.

SMEs have always been the home of successful innovation – which we need more of - so supporting SME must be a priority for the Commission.

I must admit that knowing these facts, it is a good wake-up call to see they do not match with news from Gerhard (Huemer) that SME confidence is at an all-time low.

Let me start with the big picture, so to say, and then move through to the specific temporary assistance we are offering to SMEs in this crisis.

Why we need the single market

Our main asset in times of recession, just like in expansion times, is Europe's Single Market.

With 500 million consumers in Europe, SMEs have a wonderful potential for growth that they should try and exploit.

By comparison with the US, our SMEs still have an unexploited growth potential.

So let's not retrench into national markets and indulge in protectionist rhetoric, because there is a crisis out there.

A crisis is also offering some opportunities and I am sure SMEs can grab a few, because they can adapt better to changing conditions.

I know Günther (Verheugen) is doing his utmost in promoting cross-border activities for SMEs.

I am also trying to play my part to help you benefit from the Single Market.

Competition policy is vital to avoid that smaller players are not the victims of larger competitors, who simply abuse their dominant position, or who get preferential access to state aid.

Competition policy is essential to make sure that there is a level playing field and that all national markets are open for all competitors, whatever their size.

In case you had any doubt, let me insist that I do not intend to stop enforcing the rules.

I will not be intimidated by large Member States or large companies who use the pretext of the crisis to try and escape the rules of competition.

That is my pledge to you!

Otherwise, the most useful thing I can do for SMEs in 2009 is to use my role to help fix the fundamental problems that remain in the banking sector.

If the banks aren't working, and don't have a viable business model for the long-term they cannot serve their function of lending to the real economy.

And we all know that in a credit crunch it is SMEs are amongst the first to disappear from a bank's lending portfolio.

So we are working day and night on fixing the banks.

General Block Exemption Regulation (GBER)

Finally, and most importantly, the Commission has tried to provide Member States with a tool-kit of state aid measures to support SMEs in a targeted manner.

Before the financial crisis and recession hit us, the Commission put in place the 2008 Small Business Act to promote SME entrepreneurship.

The General Block Exemption Regulation is a critical part of that package.

This is the Commission putting in practice the principle of "Think Small First". SMEs are eligible for all 26 types of aid covered by the GBER - and it is the single biggest exercise in cutting red tape in my term as Competition Commissioner.

More than that, simplification it is also about supporting SMEs at all the different stages of their development:

  • accessing finance
  • moving into R&D
  • going green
  • innovation
  • investing in your employees no matter what their background
  • supporting entrepreneurship

Now - I can't control how national governments promote and use these opportunities – but I want you to leave here knowing the opportunities exist.

Handbook

And in fact, sometimes it is the simple ideas that can make the most difference.

Knowing that SMEs often lack information about what opportunities exist, we have published a Handbook on State Aid for SMEs.

This handbook is a 'one-stop shop' with details on all the incentives we offer.

We have copies here today, and it is on the DG Competition website.

In some cases my services may even be able to visit you to present on the subject.

Our active crisis measures for real economy

Since the crisis hit we have also announced a Temporary Framework for state aid measures.

This is our attempt to ensure direct and immediate assistance to SMEs while we address the deeper, longer-term issues around the banks.

Access to finance was a problem for many SMEs before the credit crunch - so of course it is essential that we offer extra measures now to offset these increased difficulties in accessing credit.

In my mind – and I would like to know your thoughts - the most important change we have made is the working capital exemption.

Giving firms the breathing space to make salary payments or cover a short-term shortfall is the sort of practical help I want the Commission to excel at.

With up to € 500.000 per undertaking to cover investments and/or working capital over a period of two years (compared to € 200,000 previously), I hope you agree.

There is also the possibility of subsidised loans and risk capital. Loan guarantees at reduced premiums may also be offered up to € 2.5 million per year.

These opportunities are not the answer to every SME problem, but they can help.

If you think that Member States, despite these many possibilities, simply do not want to support SMEs, I believe that you should say it, and that you should say it loud.

The Commission is not the master of governments' budget spending. But knowing what they do is essential to stir the right policy framework.

Together, your voice can be very strong. Do not hesitate to report back.

Conclusion

As we go about making this case, there is no room for complacency.

It would be very easy to take a wrong turn and end up in an even bigger hole.

So we have to work together – governments, businesses, the Commission – to make sure we take a sensible road to recovery.

Despite all that, I am optimistic.

Europe has the right long-term policies for competitiveness: our Single Market, state aid control and the wider European jobs and growth strategy. SMEs win from each of these.

And with your hard work I am optimistic we can get through this.


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