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European Commission

Joaquín Almunia

Vice President of the European Commission responsible for Competition Policy

Better working markets at the service of growth

2nd International Competition Forum/ Warsaw

27 September 2012

Ladies and Gentlemen,

It is a pleasure to be in Poland again and I thank Ms Krasnodebska-Tomkiel for her kind invitation to address this conference.

I know that your Office is busy preparing the ICN Annual Conference that you will host next April. I hear that the preparations are well under way and that you are putting together a rich agenda for us; so I very much look forward to that event too.

In my presentation today, I would like to stress the role of competition policy given the present European context, and then broaden the horizon beyond our borders to say a few words about international cooperation between competition authorities.

But first, let me give you a brief update on the general environment in which our work as competition enforcers is carried out these days.

The challenges that the euro area is facing – in particular due to the sovereign-debt crisis – are well known. Many important decisions have been taken since 2010, and more are in the pipeline.

A few days ago, Europe’s economic ministers started discussions around the Commission proposals for the establishment of a banking union.

In parallel, the four Presidents – Messrs. Barroso, Van Rompuy, Draghi and Junker – are working on a road map designed to give Europe further economic and political impetus.

These are good news. If they produce concrete results – as we all hope – Europe will have used once again a difficult crisis as a springboard for more integration.

More integration means more solidarity and more attention to the common interest. This is what we need to lay the foundations for sustainable growth in Europe.

President Barroso’s State of the Union address two weeks ago was also about more Europe – and in the clearest of terms.

It is the vision of the European Commission that restoring growth in Europe and furthering the integration in the Single Market are two sides of the same coin.

This is why our growth strategy and the completion of the Single Market are part of the same political project.

And when we think of the means we have at hand to achieve these goals, competition policy comes immediately to mind.

In fact, there are many ways in which competition policy can be used to strengthen concretely the Single Market and defend the interests of European consumers.

Today, I would like to talk about some of these ways from two points of view:

our work to safeguard the benefits of liberalisation and

the challenges posed by our investigations of the practices of large global companies.

Over the last fifteen years, liberalisation processes in Europe have opened up key industries to competition and have brought innovation and cheaper prices.

Along the way, the work of competition authorities has often been precious to safeguard the benefits of liberalisation on the ground.

In particular, the Commission has given a close look at the behaviour of incumbents – the former monopolists – which may be tempted to adopt anti-competitive practices to preserve their market power.

On the State aid front, the Commission has also been vigilant in ensuring that Member States do not grant aid to certain hand-picked champions, distorting competition in the Single Market.

There are many examples that I can refer to from sectors as diverse as telecoms, energy and transport.

Here in Poland you are familiar with the prohibition decision we took last year in the Telekom Polska abuse case. I am confident that our work will contribute to bring cheaper and more diverse broadband services on the market.

This is part of our continued work in telecoms, where we have had other similar cases such as the one against Telefónica in 2007 – the old incumbent in my native Spain – which the EU Court has fully endorsed this summer.

Last May we also issued formal objections against Slovak Telekom and its parent company Deutsche Telekom. Here, our concerns are that a margin squeeze and technical obstacles may make it very difficult for alternative operators to offer broadband services to customers in Slovakia.

Competition policy also complements the regulatory push to achieve an EU-wide Single Market for Energy in 2014.

Recently, our action has been helping to foster a more competitive energy environment in Central and Eastern Europe and we have a string of cases under way.

We have just market-tested structural remedies on the CEZ case to prevent foreclosure in the Czech electricity market. We also are looking into the practices of BEH gas in Bulgaria. And a few weeks ago we have opened proceedings against Gazprom.

We are not investigating Gazprom for any political reason, but simply because we have to make sure that the company has not abused its dominance in upstream gas supply markets in Central and Eastern Europe, especially given that it is virtually the only supplier in some countries.

Specifically, we need to verify that Gazprom has not raised obstacles to the free flow of gas between EU countries; that it does not prevent the diversification of sources of gas supply; and that it has not imposed unfair prices.

What I can tell you today is that if our concerns are confirmed, we will have to enforce EU competition rules accordingly.

I’d like to seize the opportunity to thank our colleagues from the Polish Competition Authority for their assistance during our inspections in this case.

In the transport sector, to take a different example from the domain of State aid, we are ensuring that EU governments do not indefinitely support airlines in distress using direct subsidies.

We are working on a number of European flag carriers to make sure that all subsidies comply with the requirements of our rescue and restructuring guidelines.

In the case of Poland’s airline LOT, for instance, we are verifying whether a private investor would have accepted the same conditions as the State has accepted. Our investigation is well advanced and I hope we can take a decision soon.

Ladies and Gentlemen:

I have shown how competition enforcement can complement liberalisation efforts, and many of my examples are from Central and Eastern Europe where the consolidation of a fully-fledged market economy is crucial to leave the past behind for good.

The other aspect of our work that I would like to illustrate today are the challenges we meet when our investigations involve large, global companies.

When it comes to implementing competition law, a good authority must be blind to where the headquarters of a firm are located or how much influence it has on world markets.

This is crucial if we are serious about protecting the interests of all European citizens and I imagine it is also quite reassuring for investors to know that we treat all companies alike.

In the past, we have taken on companies such as Microsoft. To meet one of our concerns, the company pledged to let consumers choose which web browser they would use with its Windows operating system.

By its own admission, Microsoft has failed to keep its promise. I take compliance very seriously and we are now considering the next steps.

Two years ago we have also opened an investigation against Google – another world brand – on concerns that it had used its dominance in online search to foreclose advertisers and rivals.

We are discussing with the company to see whether we can solve this case with effective commitments in the interest of users. Otherwise, we will need to pursue formal proceedings.

Naturally, it is often preferable when a firm can propose swift and satisfactory commitments, especially when they are needed to restore competition in fast-moving markets.

You may have heard that the Commission cleared a few days ago the merger between the record companies Universal and EMI.

Following extensive negotiations, Universal proposed a very comprehensive and solid set of remedies and we were reassured that the deal would no longer have negative effects for customers and for the development of new digital services in the music business.

The stories I told you today come from sectors that straddle national borders and from companies that in many cases have global operations. One can no longer imagine air transport, energy, or the digital sectors in purely national terms.

Consequently, competition control cannot be effective in these and many other industries if it remains within national or even regional limits.

Competition authorities must work together to face the challenges posed by globalisation and international corporations.

In Europe, national competition authorities and the Commission already work very closely together within the European Competition Network and we constantly look for ways to further our coordination.

On a global level, the main forum to ensure an effective and coherent application of competition law is the International Competition Network.

I am pleased to share this panel with Mr Pérez Motta, who has recently taken up the chairmanship of its Steering Group and who is a dedicated advocate for increasing the visibility of competition policy internationally.

Effective cooperation requires efforts towards convergence or at least a degree of ‘interoperability’ between different regimes – if I can borrow a term from the high-tech jargon.

Bilateral relations between competition authorities are also very important, as they allow for tangible and innovative results.

For instance, we are in the process of concluding an agreement with the Swiss Confederation which, for the first time, would cover the exchange of evidence obtained by our competition authorities during the investigation phase.

In addition, a few days ago we signed a Memorandum of Understanding with China’s antitrust authorities. The Memorandum creates a dedicated framework to strengthen cooperation between our authorities and will give new impetus to our relations with China.

Ladies and Gentlemen:

I have come to the end of my presentation. Before I close I would like to stress again that in an increasingly interconnected world, no European country can effectively steer the course of events on its own.

To cope with this reality, the Union must come closer together and give itself the right tools, starting by a genuine Single Market.

Unfortunately – as we saw during this crisis – there is the temptation to fall back on populist and nationalist positions. We must resist these temptations and continue to build an ever more integrated Union.

Competition authorities are in the front seat in this process. It is the duty of competition enforcers to make sure that companies do not reintroduce from the back door the barriers that European governments and institutions have torn down.

Competition policy has been a major force for growth and for economic and political integration in Europe. I want to make sure that this remains the case in the future.

And beyond Europe, I am sure that our bilateral cooperation initiatives and the work carried out within our multilateral fora such as the ICN, the ECN, and the OECD will be put to good use.

Thank you.

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