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Neelie Kroes European Commissioner for Competition Policy Opening address at conference: "Competition and Consumers in the 21st century" Brussels, 21st October 2009

European Commission - SPEECH/09/486   21/10/2009

Other available languages: none

SPEECH/09/ 486

Neelie Kroes

European Commissioner for Competition Policy

Consumer welfare: more than a slogan

Figures and graphics available in PDF and WORD PROCESSED


Opening address at conference: "Competition and Consumers in the 21 st century"

Brussels, 21 st October 2009

Ladies and Gentlemen,

Firstly I want to thank you for being here. The range of people here today – never mind the waiting list – shows the Commission has made an important choice in putting consumer interests at the centre of our competition work.

This is about more than just good intentions. The Commission has concrete successes to point to, and today we have the right political context for promoting consumer welfare - the need to bring the European institutions closer to the European people.

It is now up to all of us to capitalise on this base for action.

Consumer benefits from active competition policy

For the Commission's part, competition policy is about more than lowering prices for consumers. Our effect on choice and quality is just as important.

We must also consider the benefits of more dynamic efficiencies associated with innovation and increased productivity.

This is not to say that our work delivers these benefits directly. We are not a one-stop-shop for consumer demands - that should be the job of companies.

But we do occupy an important space: we enable a functioning market.

And we step in when companies rip-off consumers, in one way or another.

This is the right thing to do. Consumers are not always able to protect their own interests in the market, so a market referee is essential. It's not as simple as protecting the weak or small against the big and strong. We step in when European market rules are broken, regardless of how big or small the company is.

For these reasons our policy outlook is comprehensively pro-consumer.

Delivering for consumers

Over the past five years the Commission has brought successful actions against a wide range of companies because of harm they have caused to consumers.

We have seen the end of many price-fixing cartels, over products as diverse as bananas and car windows in 2008 alone.

We also ended cartels in industries away from the limelight - like elevator repair. With consumers facing overcharges of up to 25% on cartels, this work makes a real difference to the daily lives of millions of Europeans.

It's not enough to break cartels thought. We are also including consumer perspectives into all our instruments, on issues ranging from online retailing to access to cheaper generic drugs and merger cases – for example in sectors such as airlines and milk products.

I must touch on the IT sector in particular here. In IT we have stopped dominant companies abusing their position to restrict consumer choice. No matter how big those infringers are - we have consistently said that no company is above the law.

Our message to these companies is: You can't run away or spend your way around Europe's rules.

Speaking of this - promising news on Microsoft, don't you think? In the New Year we hope that hundreds of millions of consumers in Europe will get a choice of which web browser to use on their computers.

Online music

And this week we have had a great breakthrough in online music – thanks in no small part to some of the people in this room.

BEUC have been involved in a series of roundtables designed to create a common roadmap across the industry for getting more online music opportunities to European consumers

There were many key players at the table in addition to the consumer champions: Amazon, BEUC, EMI, iTunes, Nokia, Universal and societies representing artists.

The group recognised that current licensing mechanisms are too complex and burdensome, and that simpler licensing solutions are needed. This will not only help expand the market and tackle piracy, but also give consumers access to more of the music they want.

We've already heard of a number of concrete steps taken by the companies to back up their joint statement. Apple looks set to make iTunes available in more EU member states and Amazon is now enabling delivery of all physical product categories into all 27 Member States. I look forward to more good news in the coming months.

The members of this roundtable came a long way in a short time. They went from fragmented views to some basic but important shared ground.

There is another issue that will require similar hard thinking and negotiation and common sense. I am talking about private damages actions.

Private damages

Many of you are also keenly waiting for consumer redress to become a real right across the EU. You are not alone.

But we must recognise that this is a long game. We have been working towards effective compensation rights for several years already and nobody said it would be an easy task to complete.

There are several more steps before our damages actions proposals make real the consumer rights defined by the European Court of Justice in 2001.

But know one thing: as competition enforcers we are committed to this idea.

We are committed because we know how much harm competition infringements cause. And we know that that our work does not deliver compensation for the harm suffered by victims.

The only way make amends for this harm is to have an effective private actions system .

At the same time, we must avoid excessive litigation. That is why our plans are loaded with safeguards and focused on creating the most efficient system possible.

It will not be a US-style system; it will be a European system.

So we must stay focused on the facts. We cannot continue to accept a situation that robs the weakest, and which the Court has required us to fix.

It is like accepting a world where a person can rob your house and be caught by the police, but still keep your television and your laptop computer!

If you are ripped-off you deserve your money back – that is all we are trying to achieve

We can't give some people these rights and not others. That is not the European way, and that is why European harmonisation is needed. You are part of the majority that supports our common sense approach.

It is the right thing to do, and I urge you to continue making your voices heard.

Tur ning now to the economic crisis....

The human face of our crisis response

The current crisis reminds us that market failures can have devastating human consequences. European values of solidarity and the social market mean we cannot turn a blind eye.

There are ways to respond to those in need without wrecking the level playing field, and that is what we have been seeking to do with our state aid approach.

Support, yes , but we do not need to sacrifice the benefits of competition or shift the problem from one member state to another as we do it.

We did indeed act quickly to co-ordinate efforts to stabilise the financial system. We introduced a range of schemes that not only protect savings but prevent an unintended collapse of the whole financial sector.

And beyond that our Temporary Framework for state aid is facilitating access to finance. This is especially aimed at supporting consumers and Europe's 23 million SMEs.

I think the Swedish Presidency of the EU has captured this mission in their theme of "welfare through efficient markets".

You can also see this thinking through our efforts to make it simpler to grant training aid, for example, and to channel public funds into broadband investment which will help close Europe' digital divide.

Such policies do not always have an immediate dividend, but they are better for consumers than allowing governments to bribe companies to keep or create jobs.

They are better than allowing companies to cut corners and break competition rules at the expense of consumers.

Every time we think there is a short cut, or a way to protect our own interests but not Europe's interests, we must remember that there is no such thing as a free lunch.

We only need to look at the length of the Great Depression or compare the economic history of East and West Germany after World War II to see what happens when competition is scaled back or economies retreat behind borders.

It is through a strong Single Market and a united voice against protectionism that we will maximise growth and help consumers.

That is the message I am sending to banks, the car industry and Member State governments too. Consumers and taxpayers should not be left paying the bill for mistakes they did not make.

But as we help to clean up this mess, we are highly aware of the social impacts of our policies. And we ask for your support when competition policy is attacked.

An attack on our work is also ultimately an attack on consumers as they will pay the costs of non competitive markets, and we need to work together against such views.

Livret A case example

It is not all gloomy news!

The benefits of competition do emerge in some surprising places. Let me use the French 'livret A' example to explain …

More than half of French citizens participate in a tax exempt saving scheme known by the name of its savings books - the "livret A" and the "livret bleu."

The money is deposited by citizens and, in return for an intermediary’s fee, is transferred by banks into social housing finance schemes.

Until the Commission took action, only three banks were allowed to conduct such transactions.

This drove up the administration costs of the scheme - as there was little competition - and it discouraged savers with other banks from participating in this important initiative.

Since 1 January 2009, all banks may now distribute these accounts and the brokerage fees have been cut by nearly half. This has driven a €23 billion increase in deposits - to €187.3 billion in just the first four months of the scheme.

The moral is that finding a way to ensure real competition has delivered billions to social housing. This is what win-win means .

Communicating with consumer s

Communicating the full range of benefits of competition policy is difficult, I’ll be honest. We can't always make the case as simply as I have done with the Livret A. Some of our work takes years to bear fruit, and it’s hard to measure.

Indeed, many do not want to hear from a competition agency about long-term benefits when, in this uncertain era, they are more focussed on things like whether they have a job tomorrow.

Nor can we know everything about what consumers think and want. So building a competition culture requires a constant dialogue.

That is why I set up a dedicated Consumer Liaison unit in DG Competition last year. And through initiatives like today’s conference and direct communication with consumers the conversation is growing.

My colleague Meglena Kuneva has also been a fierce advocate in the Commission of the views of consumers and their representatives. This is all part of a clear and positive trend in Commission policy-making.

I encourage you to use the new consumer website that the Commission is launching today. All the details are in the conference materials.

The website is very easy to use. You might have seen that the main DG Competition site is very detailed. This new site is interactive and highly visual, including a short video aimed at consumers.

Users can also learn about our work by product or country in friendly, plain language. This is about showing consumers that competition is worth the effort involved.

A website cannot take the place of our relationships with all of you in this room. You are own main means of ensuring consumers understand the benefits of competition policy.

And by listening to you we can ensure competition policy continues to serve those consumers.

Conclusions

After five years of hard work, building on that of Mario Monti and Karel Van Miert, we can see the fingerprints of consumer welfare over everything in the Commission's competition system.

But complacency is not an option - don’t let the fingerprints be wiped away.

Consumers are the easiest people to ignore in a market with many powerful and organised actors. Indeed, the debate on damages actions shows how willing certain interests are to trample on consumers.

But in difficult economic times, consumers need robust competition more than ever. Protectionism and slack enforcement would weaken the single market.

That would be the worst possible outcome for all citizens, particularly in their role as consumers.

So I think it is right that we are maintaining competition enforcement. I think it is important that our work often improves the situation of the most vulnerable.

And I think that with your involvement and support the Commission will continue to move in the right direction.


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