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SPEECH/ 11/785

Joaquín Almunia

Vice President of the European Commission responsible for Competition Policy

Competition Policy : Work Programme for 2012

Presentation at ECON, European Parliament

22 November 2011

Madame Chair,

Honourable Members,

Ladies and Gentlemen:

I wish to thank the ECON committee and its Chair for inviting me to present the Commission Work Programme for 2012 as regards competition policy.

To open my presentation, I would like to tell you why enforcing EU competition law is more important than ever in these difficult times.

Protecting a borderless and level European market can boost growth and competitiveness and can give our companies – especially SMEs – scale and new business opportunities.

The discipline imposed by competition is the best tonic for business; it promotes efficiency; prepares our firms for global competition; and fosters innovation.

Regulatory measures are vital to achieve these goals, but competition policy is just as essential because it prevents and prohibits the business practices that can reintroduce new barriers from the back door.

We will also have to be vigilant against any attempt to raise a protectionist wall around the internal market – which is a stronger temptation during a slowdown.

Finally, we need to keep an eye on mature sectors, where firms may collude against their customers to protect their rents.

The two main initiatives and the other policy innovations included in the Work Programme are all part of this wider effort to create a system of open and fair competition that will strengthen Europe’s growth potential.

But before I move to these initiatives, I would like to thank the European Parliament for the constructive dialogue on the reform of our rules for the Services of General Economic Interest, which is planned for adoption in December.

The reform package is in its final drafting stage. I have taken into account many of the comments received in the last public consultation and more will be considered when I discuss the package with my fellow Commissioners in the coming weeks.

I have taken good note of the Simon Report the plenary voted last week. The report regards the new de minimis Regulation as a major tool for simplification but it argues that a threshold based on the size of the municipality would not be necessary.

The report also suggests to cover more social services than those currently included in the Decision.

Beyond the SGEI reform, from 2012 onwards I will continue my efforts to rationalise and update our control of State aid – which is one of the two main competition initiatives of the Work Programme.

Starting next year, I will launch a broad initiative to better reflect in our policies the contribution of State aid to growth and the constraints of the fiscal consolidation strategies implemented in the majority of our Member States.

I will also take measures to make our control simpler and more efficient.

At present, the Member States and the Commission deal with a very large number of cases. Our goal is to relieve them of this burden and focus on the aid that causes significant distortions of competition in the internal market.

I am also planning to consolidate our rules, which are now scattered among many guidelines, notices, frameworks and regulations. The measures included in this initiative will be adopted over two or three years.

The other major initiative is about the right of individuals and firms to seek compensation for the damage caused by breaches of EU antitrust law.

I will propose to the Commission an initiative designed to remove the major obstacles for damages actions before national courts.

I will also seek to clarify the relations between private and public enforcement. In particular, following last June’s Pfleiderer ruling of the European Court of Justice, there is a need for European legislation to protect its leniency programmes while at the same time ensuring an effective right to damages – and I have no doubt that we will find a good balance between these two interests.

As regards collective redress, the Commission will in parallel decide on the follow up to be given to the public consultation launched last year. It goes without saying that – should there be any specific provision on collective actions in antitrust – they would be fully consistent with the principles that will be established.

The ongoing sovereign debt crisis, and its effects on the capital and liquidity of banks, clearly show that the EU as a whole continues to experience a serious disturbance in its economy.

It is therefore appropriate, as the Commission has already stated in its “Roadmap to stability and growth”, to extend the application of the special crisis rules for State aid to banks beyond 2011.

In a few days’ time, I will propose to the College to extend these rules into 2012. On this occasion, we will also update the pricing of State guarantees on banks’ liquidity, to better reflect the risk that States take when they guarantee a debt instrument issued by a bank and to reflect the different value of the State guarantee offered by different sovereigns.

We will also clarify the pricing of the State recapitalisations when these take the form of ordinary shares, to better protect the interest of taxpayers.

When market conditions permit, we will adopt the new Rescue and restructuring regime for financial institution that will apply when this crisis is over.

Next year I will also propose new rules for the rescue and restructuring of industrial firms.

Given the current tight budgetary constraints, my main goal here is to find more incentives for market-based solutions as an alternative to State aid.

I also aim at tightening the control of rescue and restructuring aid so as to limit its distortive effects. To do this, we will draw from the vast experience that we have gathered over the last few years in the restructuring of banks.

In 2012, I plan to introduce several policy innovations in the State aid domain. Among other initiatives, let me mention our new guidelines on:

  • Aviation – covering both airlines and the financing of airport infrastructure - and Maritime Transport, on which a public consultation will be launched at the end of the year;

  • On Risk Capital and Broadband Networks, two fields that are closely linked to the EU 2020 strategy; and

  • Two initiatives that will likely be adopted in 2013; the reviewed guidelines on Regional aid and the new Research, Development and Innovation framework.

By the end of 2012, we will also have to review the Communication on State aid for Short-Term Export Credit Insurance and the Cinema Communication.

In closing, I would like to highlight one policy innovation in this area; the new guidelines that will be introduced early next year ahead of the entry into force of the new Emissions Trading Scheme in 2013.

Because the amended scheme will likely push up electricity prices, firms will have an incentive to move energy-intensive operations outside the EU.

To seal the borders of the EU against this carbon leakage, I expect that Europe’s governments will want to help their companies shoulder the higher costs.

In this likely scenario, new State aid rules are needed to prevent subsidy races within the EU and to make sure that the public support does not harm competitors in non-subsidised sectors.

It will also have to balance the subsidies and the costs that will have to be borne by the companies themselves to create an incentive for them to innovate, save energy, and demand green electricity.

Thank you.

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