Foreign Policy Association – NYC 1 October 2015
*Check against delivery*Introduction
Good evening ladies and gentlemen and many thanks for the kind invitation to talk about Europe’s competition policy.
The European Union has had a lot of media coverage in the past few weeks and months – and not all of it is flattering.
First, Europe was in the news because of the long Greek crisis – linked to the euro crisis that erupted a few years back.
After the rounds of negotiations in the summer and the very recent general elections in Greece, things look more stable and a bit more promising than what we faced earlier this year.
We have also seen and will continue to see hundreds of thousands of refugees seeking shelter from war-torn areas. In the EU we have taken concrete steps to respond to the unfolding humanitarian crisis. To be able to help people – human beings in a desperate situation with need of international protection.
Europe’s responses to these crises are watched closely across the Atlantic and around the world – and for good reasons.
Global financial markets want a stable and healthy euro. As to the migrant crisis, the White House decision to accept more refugees over the next two years shows it is a challenge of historic and global proportions, not just for Europe and neighbouring countries but globally.
I believe that the responses will also have profound implications for Europe’s future.
But beyond the news and the front page headlines, there is also a lot of work done in the machine room - a European Union that works; takes decisions together; and delivers.
This is important both for Europe and for the rest of the world. Because a strong well-functioning Europe is a factor of stability in today’s World. But a working machine room generally does not make it to the headlines.The values of Competition policy in Europe
Today I would like to tell you about the part of this work that I represent– competition policy. I have been working with the enforcement of antitrust law in the EU for almost a year now.
I'm often asked about the values underpinning our competition policy. More specifically, people ask about the role of politics.
We can look at the politics of competition enforcement from three angles, starting from whether competition policy is based on political values and principles. The answer is, obviously, Yes.
Keeping markets fair, level, and open is good for our economies and societies. It establishes a good environment for business in Europe where companies can generate wealth, create jobs, and invest in the future.
The second question is: Does competition enforcement relate to wider political priorities? And does it inform regulatory and other action taken to implement such priorities? Again, the answer is: Yes, it does.
The Juncker Commission is a political Commission with a clear set of objectives and the College of Commissioners plays as a team.
Competition policy – and I as Competition Commissioner – clearly have our own space in it. But there should be no doubt that I will do my part to help achieve the Commission’s broader objectives.
The final question is; is competition enforcement in individual cases politicized? Here the answer is a resounding No.
We enforce the law and serve the common interest. We are committed to the principles of fairness, good administration, transparency and due process. There is simply no room to spare for political interference.
I'd like to share my position on each of these points.Antitrust law crosses the Atlantic
Antitrust law is an American invention from the late 19th century. And when our founding fathers were laying the foundations of a united Europe, they saw the need to protect consumers and honest businesses from the anti-competitive practices of rivals.
So, we imported antitrust law, but we gave it a new and specifically European angle. Since one of the pillars of the union would be a European free-trade area, enforcement of EU competition law across the internal European market was given to a central authority, the Commission.
Devolving competition control to an EU-wide authority – sometimes exclusively, as in the analysis of large mergers – ensures that the EU can talk with a single voice to large multinationals and other jurisdictions.
This facilitates enforcement in the EU and effective cooperation across borders between the EU and its main partners, like the US.
Antitrust law was also extended to include the control of government subsidies. Governments were major economic actors in post-war Europe. They had the potential to undermine the internal market as much as private companies.
This is why in the EU competition enforcers make sure that government support does not tilt the playing field – we call it State aid control. So, competition policy is very much at the core of the process of European integration. Our work is based on Treaty articles that have not changed since 1958.
The founding fathers of Europe understood that there would be no genuine integration without a Single Market – and no functioning Single Market without a central competition authority.
Six decades later, here we are. The Single Market has been – and still is – a powerful engine of European integration in the economic sphere and beyond. And this will continue into the future.
Of course, our first goal is preserving good competitive conditions in the markets, which translates into lower prices, better quality and wider choice for consumers.
Therefore, every time the Commission takes a competition-policy decision, we defend the interests of the citizens of the EU. Competition policy brings the Union closer to the people in a very tangible way.
When we bust a cartel – say – or make sure that a merger between two companies does not turn them into a monopoly, we also show to all European citizens that the EU is on their side. We bring the Union closer to the people.
Take our latest cartel decision. Last June we fined a group of manufacturers and distributors of the trays used for packaging food in shops and supermarkets.
These companies had colluded to keep prices artificially high for years. Dismantling the cartel was like repealing a hidden tax that millions of unsuspecting consumers in Europe were made to pay. When it comes to competition policy keeping markets fair, level, and open is good for our economies and societies and first and foremost important to the people
The same goes for law-abiding entrepreneurs.
The immediate effect of our decisions is making sure that everyone plays by the rules. At the same time, the way we implement competition law and our decisions affirm that the EU is built on the Rule of Law.
In Europe, might is not right.
When entrepreneurs see rivals break the law, it is important that they can turn to the competition agencies in Europe to have their rights and legitimate interests protected.
Success in the internal market should depend only on the ability of a company to innovate, become more efficient, and bring to the market what consumers want. Keeping the internal market fair and level is also empowering.
Doing-business conditions improve as competition culture spreads. Europe becomes a better place where to do business and invest. And we want Europe to attract investment from abroad.
Take the acquisition of the energy-related business of the French company Alstom by General Electric. There were concerns about this deal on both sides of the Atlantic, but the companies offered good remedies and we cleared the takeover.
The deal was cleared by the European Commission and the Department of Justice in the US on the same day – which is evidence of our very close co-operation.
Europe becomes more attractive to investors when the application of competition rules is objective, consistent and even-handed – and I am determined to keep them that way.Competition policy supports a broader strategy
Competition enforcement is also, as I mentioned earlier, related to wider political priorities. For instance the agenda to help Europe create growth and jobs.
When President Juncker introduced the Commission he underlined that this would be a political Commission. For competition policy this means using its tools to support our collective efforts to boost the economy. This is policy, not politicisation.
But of course there are very clear limits. Enforcing competition rules follows strict procedures – especially to respect the rights of defence of the companies involved – and we make sure that the limits are not trespassed.
But competition policy can help reach the objectives of the European Commission.
Take, for example, the policy packages launched by the Commission over the past few months to leverage the power of the internal market in the digital industries and develop a truly European energy policy.
To sustain these policy drives, the competition department has launched large fact-finding exercises in the e-commerce sector and on the subsidies that some EU governments grant for energy generation.
These fact-finding exercises – we call them sector inquiries – will give us clear and updated pictures of the obstacles to competition in these markets.
We will then use the results to set our enforcement priorities and fine-tune our policies. And this is important in itself, because public policy only works when based on facts.
Finally, a few pending investigations are contributing to the fight against tax evasion – another priority of the Juncker Commission.
We are looking into the deals that some multinational companies have struck with tax authorities in the EU to reduce the taxes they have to pay on their profits – or eliminate them altogether.
I know this issue is as hot in Europe as it is in the States – we all follow the debate on corporate taxes and inversion with interest.
This is yet another example that a strong and united Europe can join forces with our global partners and pursues common objectives.Core principles are off-limits
Ladies and Gentlemen:
So far we have seen that antitrust enforcement is a political endeavour in the EU in at least two respects: it plays a role in the process of European integration and it helps the European Commission reach its overall goals.
But this is only part of the picture. In one respect, antitrust enforcement and politics are like oil and water: they do not mix.
Decision-making in individual competition cases cannot be bent to political priorities.
The European Union is based on the Rule of Law, and competition policy is implemented within our Union of Law.
When we look at individual cases and the Commission takes decisions on them, competition enforcement follows its own principles and rules – and they are cast in stone:
- It must be impartial;
- It must be blind to the nationality of the companies we investigate; and
It must be impeccable – if only because practically every decision we take must pass the muster of the European Court. Our decisions are subject to very close scrutiny – internally and by the Union courts – on the facts, on process and on the law.
Those affected by our decisions have important procedural rights, not least extensive rights of defence. This is crucial because it helps ensuring that our decisions thorough.Impartiality
Our investigations and decisions are based exclusively on legal and economic analysis, the jurisprudence of the Court, and the facts of the case – the relevant facts.
I listen to everyone, of course, because antitrust enforcement does not happen in a vacuum.
But not all the wishes and views of commentators, politicians and business representatives are relevant to our assessment and to the decisions of the Commission. They must have foundation in facts and law.
This means that impartiality is simply non-negotiable. Because we know that our legitimacy, our credibility and – ultimately – the impact of our action depend on it.Indifferent to origin
The nationality of companies plays no part in our decision-making.
Nonetheless, some claim that our cases involving internet giants such as Apple or Google are evidence of bias. Well, that is a fallacy.
Yes US companies are often involved when we investigate the digital industry. But you will also see many Japanese firms in our car-part cartel cases.
And because we are the EU competition authority, chances are that EU companies are involved more than others across the board.
Between 2010 and 2015 we adopted 34 cartel decisions involving 208 companies and imposed fines for €9.2 billion.
Of these, €5.4 billion – about two thirds of the total – went to European companies. In contrast, €500 million went to twelve US-based companies.
And this applies across our instruments. Statistics on merger interventions also confirm that there is no geographic bias.
These are the facts. Now I hope nobody will construe them to accuse us of anti-European bias. Because there is no bias. These figures are just the result of a fair-handed application of the law. They are the facts.
In the past year, I have been struck by the strength and solidity of the working relationship between the European Commission and US anti-trust agencies. The importance of this transatlantic cooperation cannot be questioned. But we need to reach out more broadly.
Globalization and the growing number of competition authorities across the world means that the importance of common values in regards to competition policy is growing. The importance of due process, of impartiality, of rigour on the facts, the law and the economics is growing. And will only grow further in the years to come.
Competition policy is no longer a purely domestic preserve. And reaching its full potential requires recognition of the importance of international cooperation.
Therefore, I hope that we can work together to build a global community of practice within the rule of law.