Vice President of the European Commission responsible for Competition Policy
Taking stock and looking forward: a year at the helm of EU competition
Revue Concurrences conference: “New Frontiers of Antitrust 2011”
Paris, 11 February 2011
Ladies and Gentlemen:
It has been a year, this week, since the Barroso II Commission took office and it is also a year since I addressed this conference's first edition.
The speech of 15th of February 2010 was my first as Commissioner for Competition. I thank very much the organisers to allow me again to address such a distinguished audience. This is the perfect opportunity to look back at what I have done over the last twelve months and to trace the way forward.
Last year, I shared with you my vision of competition as a vital policy area to help Europe overcome the crisis and – farther ahead in time – to boost its competitiveness, promote growth and create jobs.
One year later, I fully confirm that vision.
I have seen first-hand that the fair and robust enforcement of EU competition law helps business and consumers make the most of the internal market, which is a key asset for Europe.
The importance of enforcement is clearest in our fight against cartels, which I regard as the most serious offence in competition law.
Take the decision we adopted last November, for instance, when 11 airlines were fined for imposing significant surcharges worldwide to transport cargo.
On this occasion, some public voices expressed their astonishment at the size of the fine – although it was a reflection of the value of the sales that were cartelised.
By the way, the fines imposed in the US were roughly the same for, in effect, a narrower infringement.
What I find astonishing is that the voices of their customers did not receive the same coverage in the media. Customers who were outraged by the fact that these cargo operators had fixed the price for transporting the goods of Europe's exporters for as long as six years.
Cartels are bad for everybody, except for those who participate in them! They increase the price for companies, often SME's, as they often concern intermediate products, and directly or indirectly hurt Europe's consumers.
Today I want to repeat that during my tenure I will not weaken the fight against cartels. This should be clear.
Please, don't look at that as a prejudice of the Commissioner. The reason why I always will be tough on cartels is very simple, and has to do with the priorities of the Commission policies.
Our priority number one is to help increase our competiveness in the world, our growth potential and the ability of our economies to create jobs – all urgently needed in view of the lasting damages created by the economic and financial crisis.
Competition policy will make a substantial contribution to this, by encouraging companies to compete on the merits and innovate, which they are more likely to do if they operate in a sound and undistorted environment.
Some argue that we should take into account the difficult economic times and be more lenient. I cannot agree with this.
These are difficult times for everyone; why should we allow cartels or State subsidies that would make life easier for few and more difficult for everyone else?
Of course, when deciding on cartels and calculating the fines we look carefully into any inability to pay claims. My purpose is not to put companies out of business. If the claim is valid, we reduce the fine to a level the company can pay. In total, ten companies had their fine reduced last year.
I hasten to add that inability to pay is not an open door for cartelists to escape or evade fines through corporate sleight of hand. Let me be clear: if you want to avoid our fines, respecting the law remains the safest strategy.
In 2010 – and for the first time – we have also taken two settlement decisions in the DRAMs and Animal Feed cases, saving a great deal of time and money. We are discussing settlements in a number of other cases, which shows that the new tool works well and is becoming a practical option to handle cartel cases.
Apart from cartels, we have also worked hard to protect the single market from the harm done by restrictive agreements and abuse of dominant positions.
In some instances, our analysis has led to positive decisions, such as in the Oneworld case. Last July, we approved a joint venture between British Airways, American Airlines and Iberia on transatlantic flights on condition that the airlines gave access to their airport slots.
The commitments have already produced results; thanks to the slots received from these airlines, in March Delta will launch new flights from London to Boston and Miami.
We also looked carefully at the proposed joint venture between BHP Billiton and Rio Tinto, as these two players would have controlled almost half the global iron-ore market, a strategic raw material for our economy.
As to abuses, the four decisions adopted in the energy sector since I took office speak for themselves.
In the most recent of these decisions – taken last September – ENI took the commitment to open up the Italian gas market. As a result, its competitors will now have access to the transport capacity they need to enter the market.
Finally, let me turn to the digital world. Competition policy has a strong role to play in the digital economy, which is one of the most promising industries for Europe’s growth.
The digital economy poses fresh challenges to antitrust enforcement, with its rapidly evolving markets, innovative products, and new business models. What is required of us in each case is careful analysis of the facts and of the underlying economic implications.
It is in this spirit that we have launched an investigation in the Google case. Careful analysis will allow us to make a thorough assessment of the allegations made against the company.
Regarding the assessment of mergers and acquisitions, we have cleared the vast majority of cases in 2010. It is our policy to accept remedies or block mergers only when we conclude that they would seriously impair competition and harm European customers.
But above all, over the past year I have seen that our merger-control system is objective, fast, and proportionate. It prefers prevention to the cure, as shown in the recent case involving Intel and McAfee.
Just over two weeks ago, I authorised the proposed acquisition of McAfee by Intel accepting Intel’s commitment that its hardware will remain open to the security solutions McAfee’s competitors will find in the future.
This decision shows our ability to intervene before problems actually occur. Complex antitrust investigations and Court proceedings take time and can come too late to restore competition.
It also shows our ability to close even complex cases within the tight Phase I deadline, thanks to the cooperation of the parties.
Finally, it shows our good relations with sister agencies outside the EU. In this case, cooperation with the US Federal Trade Commission has been excellent and has led to a swift clearance in both jurisdictions.
But although we rarely do it, we must block mergers when necessary; as occurred on the same day of the Intel/ McAfee clearance.
I am referring to the proposed merger between Aegean Airlines and Olympic Air – the two leading airlines in Greece – which would have created a quasi-monopoly for domestic air transport in this country.
The details of the case are well known; what is perhaps less known is that the decision was well received in Greece, a country in which additional price increases to citizens would not have been acceptable.
Last but not least, I want to mention the huge work we have done to oversee the subsidies that governments have given to Europe’s banks to cope with the financial crisis. Since the crisis erupted at the end of 2008, we have reacted swiftly setting up an extraordinary State aid regime which was due to expire at the end of last year.
Our action made sure that Member States coordinated their measures; as a result, a level playing field for financial markets was preserved even in these difficult circumstances.
But a lot of work remains to be done, so the temporary regime will stay with us until the end of the year to prepare for a gradual return to normal market functioning. Market conditions permitting, the new deadline is January 1st, 2012.
Enforcement was not the only area of operation that kept us busy in 2010. Over the last year we have also updated our rules to provide better guidance and legal certainty. Let me mention briefly our main decisions in this domain.
In April we adopted new rules for the assessment of supply and distribution agreements. Our policy was revised in line with market developments, in particular as regards on-line sales – which I present to you as yet another step to promote a digital internal market.
Towards the end of the year, we also updated our rules on the so-called horizontal agreements between companies to facilitate pro-competitive agreements, notably in the field of research and development, and standards.
Thanks to our updated rules, it will be easier for market operators – and I am referring especially to SMEs – to adapt their behaviour in a pro-competitive way.
Before I turn to the future, let me say one word on our work in cooperation and advocacy.
In 2010, we have continued our dialogue with competition agencies in the EU and across the world with excellent results.
As to advocacy, I will have to use myself as an indicator: after our first meeting last year, I’ve had more than 50 public events with audiences of all kinds across our Union.
It’s been an important and instructive part of my job, especially because it confirmed the relevance of competition policy for many EU initiatives: from the Single Market Act to the projects included in the EU 2020 strategy.
Ladies and Gentlemen:
So far, I have given you a bird’s eye view of my first year as Commissioner for Competition; but what will the future hold for us?
My many trips across the Union and my conversations with fellow policy makers, stakeholders, and ordinary people have confirmed that, in the present economic climate, competition policy is an extremely valuable policy instrument.
We need more competition, not less, to get out of the crisis.
Competition policy has the potential to become a driver of growth; to train European companies to become world champions and, at the same time, to bring us closer to a genuine internal market.
It goes without saying that respecting competition rules is not enough to improve the competitiveness of Europe’s economy. But if the rules are relaxed, our internal market will come undone and we will never be competitive on a global scale.
Promoting a healthy competition environment in Europe is good for consumers, who will benefit from lower prices and wider choice, and it’s good for business too.
An open and fair business environment equips our companies to gain market shares both in Europe and around the world, especially in the emerging markets.
In my opinion, spreading the notion that European business should be shielded from competitive pressure is a big mistake and a serious threat for the future of our economy. A robust competition regime helps companies adapt to a fast changing reality, innovate, and grow.
As you can see, my views against protectionism apply both to European and world markets. I believe that engaging our world partners in dialogue and towards a growing convergence of our competition policies and enforcement is the way forward.
This – together with a sensible trade policy – is the best means to prevent a protectionist tit for tat, which would be damaging for everyone.
But we Europeans need to do the right thing at home as well. In this light, I can see three main areas of development for competition policy.
First, as I said before, I intend to bring my full contribution to extend and deepen the internal market. We will follow the conclusions of the latest European Council on energy and innovation and redouble our efforts in the network industries.
Also, if we are to ensure that our internal market is truly open to European companies, we need to step up our control of entrenched incumbents and other dominant companies, including in the new Member States.
Finally, I intend to increase the protection of consumers and SMEs, which are often the first victims of the restrictions and the higher prices brought about by anticompetitive practices, such as cartels.
SMEs deserve special attention, because of their importance for regional development and their role in the social fabric of many parts of Europe.
As to State Aid, we are in the process of updating our rescue and restructuring guidelines. In this important process we are identifying the lessons learned in our effort to support the financial and non-financial sectors during the crisis.
Thinking that we can turn back the hands of the clock to before the collapse of Lehman Brothers is folly. Our new guidelines are being designed with this principle in mind; they will have to match the new market environment that is gradually emerging as we leave the worst of the crisis behind us.
We will also need to review our approach towards public services.
The crisis has had two effects in this area;
on the one hand, it has made many people more dependent on public services of good quality for their everyday needs;
on the other, it has depleted public coffers; many European governments are strapped for cash and are planning deep cuts to their budgets.
As a result, governments need to make a more efficient use of their resources focussing on the services that bring more direct benefits to their citizens, such as transport, postal services, and energy.
This is why I will launch a debate with the stakeholders, the Member States, and the other institutions of the EU to review our State aid rules on the financing of the Services of General Economic Interest.
One of the principles I have in mind for the reform is making the degree of State aid scrutiny dependent on the nature of the services provided – which means simplifying the rules for certain social and local services.
It also means that we take better account of efficiency and competition issues for large-scale commercial services with a European dimension.
Besides SGEI's, what I have in mind is an update of our State Aid rules that can promote the contribution of public authorities to the recovery and to the objectives of our Europe 2020 strategy.
These considerations look to the medium and long term. As to the more pressing needs, I believe that my main challenge as Commissioner for Competition is dealing with the huge amount of taxpayers’ money that went to rescue the financial system.
My goal is to make sure that our fellow Europeans pay the smallest possible price for the rescue and that the sacrifices we have all done to save our banks produce the expected results as fast as possible.
Before I close, I would like to quickly review two areas where we will see fresh developments in the next few months.
First, I will be ready to review and improve our procedures where necessary. We have listened to our stakeholders’ suggestions and have already been testing some of them this year. In 2011 we will finalise the ongoing work and present a revised version of our best practices.
Private enforcement is another area of development. A public consultation on collective redress has just been launched as part of a process started last year by the Commission.
Collective redress is an issue that goes beyond the Competition portfolio; it involves environment, product liability, consumer protection, and perhaps other policy areas too.
Once the College will establish a horizontal position on this issue, I will put forward proposals for private enforcement through collective actions.
Private enforcement does not substitute but complements the public enforcement of EU competition law; which will remain the bulk of our everyday work.
At the same time, we need to make sure – as requested by the European Parliament – that SMEs and citizens get fair compensation when harmed.
Ladies and Gentlemen:
Competition is an instrument, not an end in itself. But it is indeed a vital instrument in very many respects.
Without fair, robust, and effective competition policy and enforcement, I don’t see how we Europeans can overcome the crisis rapidly and shape up to compete with the other, dynamic players that are increasingly present on the world scene.
Of course, Competition is not the only tool we should use to pursue this goal. But we need a vibrant and competitive environment in the single market if we are serious about leading in the information age.
We need competition to be equal partners with the US, China, and the other leading global players; we need competition to grow; we need competition to preserve our social model for the benefit of our citizens and of the future generations.
Considering our demographic trends and the imperative task of building sustainable and green economic and social models, Europe needs all its resources and resourcefulness.
The EU competition system is one of the best, if not the best in the world. My commitment is to use it to the full extent of the law, because I am convinced that this is what I must do within my area of responsibility to contribute to a better future for Europe.