Toespraak Neelie Kroes voor de verenigde vergadering van consumentenorganisatie BEUC (en)

SPEECH/06/691

European Commissioner for Competition Policy

Competition Policy and Consumers

General Assembly of Bureau Européen des Unions de Consommateurs (BEUC)

Brussels, 16th November 2006

Mr President, Ladies and Gentlemen,

Thank you for inviting me to your General Assembly and giving me an opportunity to explain how the Commission works to enforce competition for the benefit of consumers.

I know that I do not have to convince you of the importance of effective competition enforcement. The European Consumers organisation and its members are already very active and have many contacts with my services. I would like to thank you for that, and encourage you to continue making your views known. The Commission can best serve your interests only when we know what you think. And we value your opinions highly.

Consumer Welfare is the standard of anti-trust enforcement

The consumer is at the heart of competition enforcement. We want markets to work better, not for an abstract notion of "free competition", but because better functioning markets provide consumers with better goods and better services, at better prices. Whether we are looking at the actions of dominant companies, breaking up cartels, vetting mergers, or approving State aid - the potential harm to consumers is at the heart of what we do. We are applying this 'consumer welfare standard' through better use of economic analysis in our work.

Consumer associations have a vital role to play. You help identify markets that are not performing as they should, and markets that are of most concern to consumers. In large part because of the impact on consumers, we have focussed on sectors like air transport, telecommunications, electricity and gas. In some areas - flights and phone calls - the benefits of competition are manifest. In others - energy markets throughout the EU - there is still much more to be done. Opening markets to competition is a long process - a marathon race, and not a 100 metre dash. But with your continued help and support, we will reach the finish line.

I hope and trust that this close co-operation will continue. Because it is vital that when competition authorities talk about consumers, it is not just empty rhetoric. That is why we have a dedicated Consumer Liaison Officer in DG Competition. That is why we look closely at information provided to us by associations and individual consumers. And that is why we continue to strengthen the role of consumers in our procedures.

I'll take just two examples. First, we are improving the dialogue between consumers and competition authorities. The European Competition Network authorities have each named a consumer correspondent to coordinate action and strengthen the dialogue between ECN members and consumer organisations. Second, a Competition Working Group has been set up within the European Consumers Consultative Group.

Green Paper on Antitrust Damages Actions

This cooperation and dialogue are most welcome and part of our core business. But just as important are the questions of substance - the specifics of what we are doing to benefit consumers.

The ongoing debate about facilitating damages actions for breaches of the competition rules is a good example. Antitrust damages actions are an essential complement to the enforcement actions taken by competition authorities. Competition authorities can put an end to anti-competitive behaviour by companies, but they have to set priorities and cannot deal with every case. And it is only through private litigation that consumers can get compensation for the loss they suffer as a result of antitrust infringements. So both public and private enforcement actions are needed.

Consumers have a right to be compensated for the damages suffered. But in most, if not all EU Member States, there have so far been very few cases in which damages have been awarded. In last year's Green Paper on damages actions for breach of EC antitrust rules the Commission analysed the key obstacles to an effective antitrust damages regime in Europe. I would like to thank the BEUC for its most useful contribution to the public debate that followed the Green Paper. Both your written submission to the public consultation and Mr Murray's intervention at the workshop of the European Parliament ECON Committee in June were most helpful. Parliament is still working on this subject and I look forward to its opinion early next year.

As you know, the Green Paper dedicates a full chapter to defending consumer interests. We look at the potential benefits of introducing representative actions by consumer associations because individual consumers will almost never make it to the court room. I am happy to see that a number of Member States are currently considering legislative changes. But I have listened carefully to those who caution against a US-style opt-out class action. And I want to take the debate on this forward in the wider context of the work on consumer policy led by Markos Kyprianou and soon - I trust - Meglena Kuneva.

I am convinced that if we want to offer genuine recourse to the victims of competition law infringements, it is necessary to have more effective private antitrust enforcement. As a follow-up to the Green Paper, I have proposed - and the College has endorsed in its 2007 work programme - the preparation of a White Paper on antitrust damages actions, to take the debate forward with some concrete ideas on follow-up.

Sector inquiries

Turning to two markets which I know are a source of great consumer concern: financial services and energy. Our sector inquiries in both areas are nearly complete. You have expressed a great deal of interest in our work in the banking sector inquiries in particular, and I'm grateful for the excellent contributions that you've made during the public consultations.

On payment cards , w e have already set out clear findings on fees, profits and the level of competition:

First, in some countries high card fees result directly from lack of competition in the market.

Second, card fee levels can vary up to 400% across the EU.

Third, firms and consumers are paying more for their cards than they should.

Finally, high card fees to firms - particularly SMEs - seem to produce high profits for banks.

In a first stage, we have asked industry to come forward with proposals to address the market problems we have identified.

The preliminary findings from the core retail banking inquiry show evidence that EU retail banking markets are fragmented, restricting market entry and consumer choice with wide variation in prices and profitability across the EU. Competition could be strengthened by improving the operation of the market on the supply side by examining the entry barriers in the Member States, and also on the demand side, where customer mobility is low and customers rarely switch bank.

Turning to energy: the sector inquiry has increased our knowledge and understanding of the electricity and gas markets, and possible ways to overcome the problems identified. We have already launched separate investigations into possible violations of the competition rules. The final report and recommendations will be published early next year, as part of the Strategic Energy Review.

State aid reform to give better value for taxpayers

I'd now like to say a word about the top priority of my mandate: state aid reform. It's relatively easy to see why antitrust enforcement is good for consumers. The role of state aid policy is less well known, but is just as vital. State aid control aimed at promoting better use of less state aid contributes to the long term health of the economy by ensuring lower prices, higher quality and wider choice for consumer in the same way as other competition policy tools. But uniquely, it also takes into account wider goals: State aid policy gives Member States plenty of scope to target support, at SMEs, research, innovation, environment, employment, training and regional development.

But we do have to set boundaries. State aid is a powerful means to change the incentives of market participants, but it should only be used:

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  when it is an appropriate instrument for meeting a well defined objective of common interest
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  when it creates the right incentives and is proportionate to the problem and
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  when it distorts competition to the least possible extent.

Our economics-based approach to state aid control helps to ensure that scarce public resources - taxpayer's money - are used to support structural change and new market developments instead of hampering it, whilst allowing the provision of quality public services.

Working for better regulation on Professional Services

Finally, I want to turn to an area where the Commission working by itself can do little, and where I really need consumer organisations to keep up pressure for change. I'm talking about the professional services sector, where we are encouraging Member States to reform overly restrictive national regulations to pave the way for better services for consumers.

Our approach has been to stimulate debate between all stakeholders (national regulators, professional bodies and consumer bodies) by setting out the issues and promoting voluntary reform by Member States, since regulation of the professions is developed and impacts at national level.

The majority of national competition authorities are now involved in proactively promoting change in this area and have been carrying out relevant casework using the competition rules.

We want Member States to go further and screen national professional regulation - both State regulation and self-regulation - using a proportionality test. Under this test they should define the legitimate public interest objectives which the regulation is supposed to safeguard, and then assess whether there are better, less restrictive ways to achieve this goal.

I would like to see you become more involved and give lend support to the reform effort. You could be very useful allies of the Commission and national competition authorities in pushing for reform of this sector. Reform would benefit consumers most directly by opening up real choice in these hitherto very restricted areas.

Ladies and gentlemen, I have shown how consumers are at the heart of competition enforcement, and that if we continue to work closely together we can continue to improve the everyday lives of consumers throughout Europe. I am now very interested to hear your comments, reactions and contributions.

Thank you.