Ambrosetti Forum, Villa d’Este, 2 September 2017

"Check against delivery"

Introduction

Thank you very much for inviting me to be with you today.

Europe’s future depends on being competitive.

It depends on jobs for our young people. On the growth that creates opportunities for them. And to produce those jobs, and that growth, we need businesses that can compete in markets all around the world.

Right now – ten years after the financial crisis began – jobs and growth are back in Europe. Every EU economy grew last year. Some 234 million people have jobs in the EU – that's more than ever before.

To build on that recovery, so it makes life better for all Europeans, we need to make our economy even more competitive.

And we have what it takes. Of the top 20 countries in the World Bank’s “Doing Business” rankings, nine are members of the European Union. In the World Intellectual Property Organisation’s Global Innovation Index, ten of the top 20 countries were from the EU.

So Europe starts from a strong position. With skilled people, and innovative businesses. And being competitive is really about making the most of those strengths.

Competition and competitiveness

It's about having a single market where innovative businesses can thrive. And for that, we need competition.

Competition keeps down the cost of the things our businesses rely on. Last year, our decisions on cartels and mergers saved customers – including businesses –  some 30 billion euros.

Those are cases like a cartel that fixed gross list prices of trucks for fourteen years. Or the merger between two shipping companies, Maersk and Hamburg Süd, which would have raised shipping costs if we hadn't stepped in.

Defending competition also means dealing with government subsidies. So that every business in Europe can compete on equal terms. And so success goes to the companies that are most efficient and innovative – not to the ones that get most help from government.

That's what's at stake when we deal with state aid in the form of special tax treatment. Or when we make sure that state support for banks uses as little public money as possible, and doesn’t undermine competition.

Competition and innovation

Because competition gives our most innovative companies a chance to thrive. But the link between competition and innovation goes even deeper. Because it's competition that drives companies to innovate.

Look at our decision involving Google.

In most European countries, Google’s search engine has more than 90% of the market. And we don't object to that success – after all, it inspires others to innovate.

But we do have a problem with Google using that dominance to deny others a chance to compete. By making sure its own comparison shopping service was always at the top of the first page of its search results – and its rivals, on average, only on page four.

Because that sort of behaviour discourages innovation. There’s no point innovating, if consumers will never know your service is there. And if successful companies can hold back innovation, we won't get the most out of Europe’s potential.

We deal with the same issue when we look at mergers. Earlier this year, we found that the merger between Dow and DuPont would not just raise prices, but also hold back innovation. Because they were two of only five companies that were active in all stages of developing pesticides, to meet the needs of farmers throughout the world. And we found evidence that they were planning to cut back their research efforts after the merger.

So we only approved that deal after the companies agreed to sell large parts of DuPont’s pesticide business, which brought in revenues of about 1.4 billion dollars last year, and which included DuPont’s worldwide research arm for pesticides.

Financing innovation

But competition alone isn't enough.

To get new ideas to the market in the first place, our innovators need money. And this Commission is determined to help them find that money.

That’s why our plan for a Capital Markets Union will unlock new sources of money for growing companies. In May, the European Parliament and the Council reached agreement on our proposal to make it easier for venture capital funds to invest in smaller companies.

It's why innovation is an essential part of the Juncker Investment Plan. The projects that have already been approved under that plan could trigger more than 225 billion euros of investment – and more than a fifth of that is aimed at research, development and innovation.

And it's why the Horizon 2020 programme – our biggest ever programme for research and innovation – will provide money to help take new ideas from the lab to the market.

State aid rules and innovation

Of course, when EU governments hand out support for innovation, they need to follow the state aid rules. We have to make sure that support really does help innovation, without harming competition.

But there’s no reason why that should stop money getting where it's needed, quickly and efficiently.

In the last few years, we’ve been working to make it even simpler for EU governments to give state aid that doesn't harm competition – including state support for innovation. Last year, almost all state aid measures for research and innovation were given without needing our approval in advance.

And even when support does need our approval, that doesn't stand in the way of innovation. We’ve approved projects like the more than 350 million euros that France and Germany are providing to help Airbus develop an innovative new helicopter.

Under our rules, governments can cover up to 90% of the costs for small companies doing applied research. The rules allow even higher levels of support, if a similar project outside the EU is supported by state aid.

And for multinational projects of common European interest – projects where a number of EU countries and companies cooperate, and which benefit Europe as a whole – governments can provide up to 100% of the missing funds.

Because state aid rules shouldn't get in the way of supporting innovation. And we take that pledge very seriously indeed. It's why, for example, we’re about to launch a study, to collect evidence that will help us better understand how the state aid rules affect public support for innovation.

International control of subsidies

But of course, to give European companies a real chance to succeed, we need fair competition, not just in Europe, but all around the world.

In many areas, like dealing with climate change or preventing tax avoidance, the EU has given the lead that has made international agreement possible. We should do the same when it comes to the rules that make international trade not just free, but also fair.

Our state aid rules can be a model for a better international approach to subsidies.

In the last few months, the leaders of the G7 and the G20 have made clear that we need to deal with subsidies that undermine competition.

We’ve signed an agreement with China, to set up a dialogue on state aid that will help us discuss subsidies that can harm competition. And we’ve reached agreement in principle on a free trade agreement with Japan, including a commitment to be more open about subsidies, and to avoid the most harmful types of support.

Those experiences can help us to work with partners around the world, to improve the WTO rules that deal with subsidies. So transparency about those subsidies really works in practice. And so the rules cover more of the support that harms competition the most.

Conclusion

Because we know that fair competition is the way for Europe to succeed. But it needs to be based on a real level playing field.

In the last few months, we’ve heard concerns about foreign – often state-owned – investors taking over European companies that control key technologies.

This issue isn't simple. It needs careful consideration, before we decide how to act. We’re working on this issue now, and we plan to put forward concrete proposals in the autumn.

Because European businesses have what it takes to succeed. Our job is to build the right conditions, so they – and we – can make the most of that potential.

Thank you.