Vice President of the European Commission responsible for Competition Policy
International cooperation to fight protectionism
11th Annual Conference of the International Competition Network
Rio de Janeiro, 18 April 2012
Ladies and Gentlemen:
This is the third time I have the privilege to address the ICN Annual Conference since I took office as European Commissioner for Competition, but today it’s a bit special.
Thanks to our trip to Rio, we can touch first-hand one of the biggest stories of our time; the emergence of a new global economic player on the world scene.
The rise of the new giants of Asia, Africa and Latin America has transformed the global economy over the past twenty years and will continue to shape it in the future.
The world has seen other transitions in the past, but this time the changes are a lot faster and touch the lives of many, many more people.
The vitality of the emerging markets is steering global growth and the global marketplace is becoming increasingly integrated.
These developments have an impact on the operations of competition authorities; over the last couple of years, the European Commission has worked with other agencies in about one third of the decisions it took on mergers, 40% of cartel cases, and half of its antitrust decisions.
It is clear that – to carry out our duties responsibly – we must strengthen our bilateral and multilateral channels of worldwide cooperation.
And we should not be deterred by the fact that our agencies operate under different systems; we can always agree on the basic principles, continue our convergence efforts, and find efficient ways to work together.
This is what we do in the International Competition Network, which represents the vast majority of the world’s competition agencies.
Together with cartels, mergers are one of the most advanced areas of cooperation within the ICN, as testified – for instance – by last year’s deals in the market for hard-disk drives.
The European Commission’s decisions in the Seagate/Samsung and Western Digital/Hitachi cases were prepared by extensive contacts with a number of authorities, including those of Japan, Korea, and the US.
I am convinced that we will see an increased number of mergers with global impact in the future and not just in the high-tech sector but in other markets as well.
I don’t know many other public policies that can match our achievements in the ICN; competition is one of the few broadly agreed policies on a global scale. In a sense, it is a tool of global economic governance.
Many people in this room have first-hand experience of how our cooperation works in practice.
Shortly before Easter – for instance – I was in Washington DC where I could see, once again, the excellent level of cooperation with our sister authorities in the US.
The latest tangible example are our respective antitrust cases involving Apple and a group of leading international publishers in the fast-growing market for e-books.
Last week, the European Commission received proposals of commitments from Apple and four publishers while – in parallel – three of these publishers had reached a settlement with the DOJ.
I praise the positive spirit of collaboration which, in spite of our different systems and traditions, allows us to work together on the most important cartel, merger and antitrust cases.
Another example of practical cooperation involves our hosts today. Closer contacts have been established over the years between DG Competition and Brazil’s competition agencies; and I am sure that our links will become even closer when the reform of your system takes effect.
Let me take the opportunity to commend your reform. I believe that the new, consolidated structure you are putting in place will make Brazil’s competition policy more effective and will allow it to grow in pace with the size of your economy and your country’s new role on the international scene.
In particular, the introduction of the new ex-ante review of mergers with strict deadlines will allow the agency to find good remedies, speed up the procedure, and give better legal certainty to business.
Reforms like this send a message to everyone. To ensure proper control in our rapidly changing environment, competition authorities must strive to become more efficient and more independent.
And to make this happen, they must have the resources, the staff, and the legal arrangements they need to carry out their work effectively.
A credible and independent competition authority can promote growth and create jobs because it creates the best conditions to do business and to foster innovation – and it can do so at little or no cost.
Another reason why the European Commission supports the processes that lead to stronger and better connected authorities is the significance of competition policy for international trade.
We know that tariffs, quotas and other protectionist barriers are not the only factors that weigh down on trade. The anti-competitive practices of public- and private-sector firms can be just as damaging.
Think, for example, of the extra costs imposed by the 14 companies recently fined €169 million by the European Commission for fixing prices in international air freight forwarding services. From 2000 until 2007, these companies had been running cartels on important trade lanes between Europe and the USA as well as between Europe and China.
State subsidies must also be strictly controlled. They are regularly denounced as unfair and distortive – and in many cases with good reason.
As you know, in Europe we use State aid control to make sure that the internal market is not closed off and that competition is not distorted in favour of certain companies.
Well-designed subsidies can be perfectly legitimate means to fix market failures and reach objectives of public interest; for instance, they are often used to protect the environment or to encourage research and innovation.
But even targeted subsidies must be designed in a non-protectionist way, so as not to create barriers to trade and growth.
Our ultimate goal must be a concerted effort to fight protectionism. Governments everywhere were tempted to raise barriers during the crisis, but protectionism is not the answer.
Every country has an interest in minimising the distortions caused by protectionist barriers; building a level playing field in international trade will bring benefits to all.
The EU – for its part – remains committed to its G20 pledge to refrain from protectionist measures and will continue to make the case for open markets in its bilateral and global relations.
My time is up, but I cannot close without a good-bye note for two colleagues.
First, to Sharis Pozen, who is stepping down from her position at the DOJ at the end of the month.
In these times of crisis, when competition enforcers have come under unusual pressure, you have steered your organisation with a firm hand. It has been a pleasure to work with you and I wish you every success for the future.
I would also like to pay tribute to John Fingleton, who hands over the Chairmanship of the ICN Steering Group here in Rio.
John has promoted the ICN's efforts to better explain the benefits of competition to governments, legislators and society, and a number of other new projects were launched since he took office in 2009.
He has led a fast growing organisation and has made sure that the new members have a real say in the activities and future prospects of the Network. In short, John has contributed to turn the ICN into an inclusive global forum for competition agencies.
Finally, I want to thank our Brazilian hosts for their warm hospitality, which is another reason why – as I said at the start – this year’s ICN conference in Rio feels a bit special.