Toespraak Eurocommissaris Kroes over het concurrentiebeleid voor goedfunctionerende markten (en)

SPEECH/07/714

Neelie Kroes

European Commissioner for Competition Policy

Helping Europeans get the best deal: a sound competition policy for well-functioning markets

2 nd Lisbon Conference on Competition Law and Economics

Lisbon, 15 th November 2007

Introduction

President Cavaco Silva

Professor Mateus,

Ladies and Gentlemen,

It is my real pleasure to be here in Lisbon today. I would like to congratulate the Presidency and the Portuguese Competition Authority for bringing us together for this second Lisbon Conference. Today we also celebrate European Competition Day, and I am pleased to see so many national competition authorities and ministries represented here, alongside judges, academics and practitioners from both sides of the Atlantic.

It is apt that we are meeting here in Belém, just up the road from where the great Portuguese explorers set off to discover what lay on the other side of the ocean. I'm sure that over the next two days we will once again see that the links across the Atlantic are stronger than ever. I am convinced that the similarities of our approaches to competition far outweigh the differences. In particular, we all agree on one basic and fundamental fact: competition policy is first and foremost there to serve the consumer.

But it requires constant commitment and constant efforts to get the best out of free but fair markets, and pass these benefits to our citizens. Over the next two days you will be looking at how we all can further adapt and improve our competition tools so that they remain effective and pertinent in today's truly global world.

You have a packed and stimulating agenda ahead of you, and I cannot do justice to all of the themes you will debate. So I would like to focus my comments on the topic for this morning - state aid reform. Then I'll touch briefly on some of the other themes you'll be addressing later: globalisation and merger control in regulated markets. I'll close with a few words on private enforcement, and I am sure that Meglena Kuneva will say more about the importance of collective redress in this context.

Towards more efficient and more effective State Aid

So first to the theme of this European Competition Day: state aid. As you know, the fundamental overhaul of our European state aid rules has been the ongoing priority of my mandate.

None of our Member States has unlimited resources. None of them can afford to waste tax-payers money. What is more, state aid by nature distorts competition in our internal market, which is why the Treaty bans it in principle. At the same time, when granted wisely and in limited amounts, state aid can be a useful tool in tackling real market failures. Less and better targeted aid, as the European Council has put it, can make all the difference for important shared objectives including social and territorial solidarity, environmental sustainability, and economic growth and jobs

Our reform uses refined economic analysis to help shape rules which encourage Member States to focus support where it gives best value for money, in support of the Lisbon Strategy objectives. The principal idea is to first evaluate the positive and negative effects of the aid separately and then to balance them.

Economic analysis shows that on balance we should be tough on aids which artificially prop up the industries of the past. But it also shows the overall positive effect of new rules to support the `first mover' industries of the future: through better access to risk capital and aid to help overcome the market failures which too easily put a halt to innovation, particularly by Europe's millions of SMEs. This also shows the benefits of focusing on training aid that really helps workers to develop the skills that will make them employable in the future, rather than just being assets to their current companies.

I believe that refined economic analysis strikes a good balance between efficiency and equity and gives an approach that is more consistent, more coherent and more professional.

And our reform is not just about changing the rules so that state subsidies are used more effectively and more efficiently. Importantly, it is also about applying better regulation principles - simplification, predictability and reducing unnecessary administrative burdens. Our refined economic approach helps us determine in advance in which situations the effect of aid will on balance be positive. This has underpinned our proposed broadening of the Block Exemption Regulations, which discharge Member States from their obligation to notify some aid. This will significantly reduce the bureaucratic burden on both Member States and the Commission, and will allow us to focus our resources on those cases that potentially involve the greatest distortions of competition in the internal market.

I am pleased with the progress we have made with the State Aid Action Plan, and next year we will deliver still more: new Environmental Aid Guidelines and the new General Block Exemption Regulation. We are really empowering Member States to use state aid wisely, to prepare and accompany the changes needed for long-term growth and sustainability in Europe. But it is the Member States who need to actually use the rules in practice.

Competition and industrial policies in a globalised world

I am of course aware that some people ask why we should be so insistent on our internal rules on state support when international competition is made more difficult by unfair foreign subsidies. The final session of this Conference will be looking at these and other aspects of competition and industrial policies in today's globalised world.

Europe of course has a modern and vibrant industrial policy, named after a modern and vibrant city: the Lisbon Agenda. This agenda is the best possible launch pad for Europe to take full advantage of the opportunities offered by globalisation.

Next week the European Commission will present a review of the Single Market. In it we will discuss how to make the best use of the opportunities offered by globalisation, including the gradual shaping of the global regulatory framework in line with EU standards. The motto, if you like, is look out, not in.

Let me be clear: relying on matching aid resulting in subsidy races at a global level is not a sound reaction to the challenges of international competition. No-one has pockets that deep! And subsidy races with the rest of the world can soon turn into subsidy races within Europe itself. We can all think of examples from history which show how damaging that can be.

Shielding off European companies from competition through artificial entry barriers is also the wrong approach because - put quite simply - it will not work. Companies shielded from competition at home cannot hope to compete abroad. And it is the domestic customers of those companies that end up paying the price: less innovative products, less choice, higher prices

Instead of looking backward, we need to look out, to be rightly proud of our internal competition policy and to promote its principles and practice elsewhere. An active EU trade policy - including international discipline on subsidies - is therefore a necessary complement to internal competition policy.

We would prefer a multilateral approach in order to get to an international level playing field. The WTO is the obvious place to start. However, we should not wait for that: we are reviewing our trade defence instruments in order to tackle effectively imports that benefit from unfair subsidies, and we have opened negotiations on Free Trade Agreements with countries like South Korea and India. These Agreements look at behind the border barriers, which will complement our work to spread a real competition culture through fora such as the International Competition Network.

An open outward-looking approach is the best way to ensure that European companies and European consumers get the best deal from globalisation.

Merger control in Regulated Markets

But whilst we must stay open to the outside world, we must also of course make sure that our own markets stay open inside.

Regulated markets, such as network industries, often show particular competition problems, as you will be discussing tomorrow. There may be legal or regulatory barriers to entry, which simply do not allow competition to develop. Even in network industries that have been recently liberalised, competition problems may persist in the absence of intervention. Continuing control over legacy infrastructure that is impossible or difficult to duplicate, together with significant network externalities and extensive economies of scale and scope: all these factors make it difficult for new-comers to get a foothold in the market.

It is often not enough to abolish the legal barriers to entry. For example, in the field of energy, high levels of market concentration, vertical integration of supply, generation and infrastructure and insufficient investment in infrastructure do not allow competition to develop even in the absence of legal entry barriers. Therefore, the European Commission has proposed a comprehensive energy package to improve the conditions of competition. The proposed measures include changing the structure of the market through the separation of production and supply from transmission networks and reinforcing the powers of regulators by measures guaranteeing their independence.

But even in markets where competition is facilitated through regulation, competition policy may need to intervene to ensure that markets remain open. In the area of merger control, the Commission pays particular attention to ensure that open markets are not foreclosed as a result of structural changes and that the benefits of a liberalised market environment are preserved. These are amongst the issues that the Commission has been closely looking at in mobile mergers, such as T-mobile Austria/Tele.ring, T-Mobile/Orange or France Telecom/One.

Conclusions

President, Ladies and Gentlemen,

I promised to close with a few comments about private enforcement of the competition rules, this afternoon's theme. Our Single Market, Europe's greatest and best achievement, is delivering for consumers on a daily basis. When market forces work properly, when markets work well, consumers are the first ones to benefit: from more choice of better quality goods and service, at better prices. That is what our competition policy is all about.

But public authorities can only do so much. In particular, here in Europe our public enforcement of the competition rules can never deliver compensation to those who have suffered as a result of breaches of the law. So in parallel and as a complement to public enforcement, Europe needs an effective system of private actions for damages, so that all victims, particularly consumers, can exercise their right to compensation.

That is why early next year I plan to present a White Paper presenting specific recommendations for making it easier for private damages cases to come successfully to court. Portugal has one of the most advanced approaches in this area of all our Member States, and I am sure we all have lots to learn from tomorrow's discussion on this most important subject.

I wish you all a very fruitful and interesting two days, and again, my sincere thanks to the Portuguese Presidency for having organised such a stimulating and wide-ranging conference to mark European Competition Day. Thank you very much for your attention.