Toespraak Eurocommissaris Kroes over belang concurrentiebeleid voor toekomst Europa (en)

European Commissioner for Competition Policy

EU competition rules – part of the solution for Europe's economy

European Competition Day

Paris, 18th November 2008

Ladies and Gentlemen,

It is a pleasure and an honour to be at this European Competition Day.

One of the best things about being Competition Commissioner is knowing that each and every day the competition rules do something for consumers in Europe. So although I can talk about the benefits of competition policy in general terms - better goods and services, more choice, and lower prices – I can also talk about the benefits of competition enforcement in far more specific terms. In terms of what the competition rules do every day for consumers both as buyers of goods and services, and as taxpayers.

For example, in the last years, the Commission has acted against more than a dozen cartels on markets worth billions of euros. I have mentioned before the 6 billion euros of direct benefits for consumers and businesses through cartel enforcement in the last four years, and the 20 billion euros of indirect savings through deterrence.

Just last Wednesday we prohibited the car glass cartel, a cartel which affected the more than 14 million new cars bought each year in the five year lifetime of the cartel. Putting an end to this cartel put an end to illegal behaviour that affected millions of consumers. The cumulative cost to the fourteen million buyers of new cars each year may have been considerable. That is why I published the White Paper on damages to make private enforcement viable for consumers.

And this only looks at the benefits to consumers from cartel enforcement. To take just one merger case, when we prohibited Ryanair's acquisition of Aer Lingus in 2007, it was because of the real risk of higher prices for consumers taking 14 million journeys each and every year to and from Ireland.

I also want to mention one case where competition enforcement has had a particular impact on consumers here in France.

French people now enjoy among the lowest prices in Europe for their broadband access, in large part because of the European Commission's Wanadoo antitrust case, and the later action by the French competition authorities. The Commission's action brought a 30 per cent reduction in wholesale prices charged by France Télécom. Since the EU and national cases, prices are lower, and penetration is higher.

This kind of work brings tangible and enormous benefits.

But these benefits and these numbers pale when we look at what has happened in respect of the financial markets in recent months. The work of President Sarkozy, President Barroso, and other leaders has been formidable in devising and implementing a common strategy to face the financial crisis.

And I am proud to say that that work was helped by the knowledge that the State aid rules were there as a backstop, as a guarantee of a level playing field. Were it not for the State aid rules, there was a real risk that national governments would have been forced into a costly and damaging subsidy race, wasting billions upon billions of taxpayers' money competing with each other's largesse rather than focussing the money where it was most needed. Were it not for the state aid rules, we could have been faced with beggar thy neighbour policies that could have undermined the solutions that governments were putting in place. The consequences for the economy and for every single consumer could have been dire.

We are not out of the woods yet, but we are fortunate to know that competition policy not only has a proven track record in enforcement, day in and day out, but has proven to be part of the solution to this once in a lifetime financial crisis.

It is only part of the solution because competition policy cannot do everything – but what competition policy can do, it can do very well. That is something we have to bear in mind for the future as we look to the lessons to be drawn from the financial crisis.

Understanding the role of competitive markets and how competition policy can affect those markets is crucial for our future and for Europe's future competitiveness. Competitive markets drive growth. Competitive markets can improve total factor productivity growth by 4 percent. Faced with the risks of recession: isn't it important to know that the difference between competitive and uncompetitive markets can mean a 4% difference in growth rates?

Going beyond this, if Member States focus their state aid at horizontal objectives such as R&D, they are likely to see further growth. A 1% increase in R&D is associated with an increase of 0.6 % in total factor productivity growth.

And just as the right type of state policy can benefit the economy, the wrong type can make it worse. Let us leave macro-economic growth numbers and look more specifically at consumer purchasing power - pouvoir d'achat. That has been on the minds of many consumers in 2008. And rightly so. I have seen estimates that, compared to the United Kingdom, lack of competition in France created a loss of purchasing power of 5 % for French people over the past 10 years.

One reason for this was the 1997 Loi Galland, which banned retailers from passing on discounts offered to them by brands. This anti-competitive measure created inflation, when there could instead have been lower prices. When the law was amended in 2005 – lower prices are exactly what happened. In the period May 2006 to May 2007 retail prices for branded products fell 3.2%, while the Consumer Price Index was between 1 and 2%.

This demonstrates the benefits of competition and of adopting legislation which does not hinder that competition.

But that does not mean we should leave markets entirely alone. Competitive markets require competition enforcement. This is what our enforcement record and independent evidence shows, and it is the only practical approach to take.

Competition policy has worked well for 50 years – for Member States, for Europe, for consumers and for law-abiding companies everywhere. It has spread to more than 100 economies, including every major economy in both the developed and developing world – and for one reason: because it helps to increase and protect prosperity. This is not ideology or dogma. This is not vague thoughts or theories. Competition and competition policy work. And each day I am impressed with the vision of the founding fathers of Europe. I am talking notably about Jean Monnet, a Frenchman who worked with the Americans first to win the war and then to win the reconstruction of our great continent. It was his foresight to think about a single market including competition policy as a way to unite Europe and to boost economic efficiency, innovation, to the benefit of consumers and of citizens at large.

The European Single Market's role is all the more vital during periods of economic difficulties – together we stand, divided we fall. The Single Market will attenuate any economic downturn and accelerate recovery. Which is why, despite siren calls to the contrary, we need to ensure that the Single Market functions as well as possible at this crucial moment, which means enforcing the antitrust and state aid rules as diligently as ever.

We have to maintain a level playing field, and we have to invest in the future and not in the past. The state aid reforms that we have carried out have helped focus Member States' attention on the challenges of competition, and on the best way to meet those challenges. Research and Development aid, innovation aid, environmental aid – particularly in light of the further challenges of climate change, and aid to small businesses: this is the type of government support that looks to see where our entrepreneurs need help and what government can do to help them; that looks to make a real long-term difference; that looks to the future.

Competition works and competition policy makes it work better. That is what it is all about – making markets work better for consumers.

We can do all this and more while maintaining the competition rules in place. We need a clear level playing field for European consumers and businesses, and the competition rules deliver that time and time again.