IBA 20th Annual Competition Conference, Florence, 14 October 2016

'Check against delivery'

Introduction

Ladies and gentlemen

Two weeks ago, I was in Strasbourg to see the European Parliament agree to ratify the Paris Agreement on climate change.

It was a proud moment. The EU’s ratification brings the agreement into force. The world came together in Paris and agreed to work together to address climate change.

Our job now is to make that a reality.

Investing in the future

And to do that, we need to invest.

We need to build new renewable energy plants. We need to develop smart grids, which adjust how much electricity we use to what the grid has available, not the other way round. We need to make our homes and factories more energy efficient.

All across Europe, building a strong economy for the future – one that creates jobs, without harming our environment – demands investment today. So energy is just part of a much bigger picture.

That’s one reason why fair competition is so important. Because competition helps drive companies to invest. Knowing that if they don't, their competitors certainly will.

When a new operator entered the French mobile market four years ago, the competition led to more investment in mobile infrastructure, and earlier introduction of 4G networks. The same company – Iliad – will enter the Italian market, to replace the competition lost from Hutchison’s joint venture with Wind earlier this year.

So by making sure mergers don't harm competition, we also support investment. The same goes for antitrust rules as well. Because if companies can misuse their power to shut out competition, there's less incentive for them to invest.

And our rules on state aid have the same goal:  they make sure public support doesn't take the place of private investment and that it does not give unfair benefits to some.

But private investment isn't always enough. We also need public investment.

European state aid rules recognise this.  They leave room for national governments to decide what to invest in - to make the economy grow, create jobs, and deliver the public services that people expect.  The political choices are for the Member States, our job is only to make sure that competition is not harmed.

And that's also why the Juncker Investment Plan is so important. It brings together European and national funding, public and private, to stimulate investment.

Encouraging national governments to take responsibility

We do need to step in when state aid threatens fair competition on a European scale. But a lot of the investments that national governments make don't have much effect in other countries.

So one of the best things we can do is to take a step back. To leave responsibility  with national governments for how they spend their money.

And over the last two years, we've gone a long way towards making that happen.

In 2014, the Commission confirmed that grants of less than two hundred thousand euros aren’t state aid at all. From a European point of view, those grants are de minimis – they’re too small to have an impact on cross-border trade.

But at the local level, they can make a big difference. In Poland, for instance, a fifth of all state support – nearly 1.6 billion euros – was de minimis in 2014.

And earlier this year, our Notice on the Notion of Aid set out the types of public support that don't need our approval, because they're not state aid either.

One of the most important examples is transport infrastructure. In 2014, EU countries invested some 78 billion euros in inland transport infrastructure. And a lot of that investment doesn't involve state aid.

Because if you look at roads, or railways, or inland waterways, you find that state investment is often the only investment there is. And it often doesn't make much sense to think of railway tracks or roads as competing with each other. So our Notice makes clear that those investments typically don't count as state aid.

In the last year and a half, we've also taken several decisions confirming that essentially local investments don’t  count as state aid. Because they don't really affect competition outside the country where they’re given.

I'm talking about investments like upgrading a small Dutch port, whose users are almost all local shrimp fishermen. Or like public support for news media in regional languages in Spain.   

We have also enlarged the scope of our General Block Exemption Regulation, cutting the number of state aid schemes that need our approval by two thirds. Now, nine out of ten state aid measures – that's nearly 33 billion euros a year – are put in place without our prior approval.

And we plan to go further. Yesterday, we launched a public consultation on a proposal to extend the General Block Exemption Regulation to cover investments in airports and ports. We plan to to block-exempt investments in regional airports, with less than 3 million passengers a year, and port investments of less than 100 million euros.

So investing in infrastructure is getting easier all the time.

But let me be clear. Governments should still be accountable for the way they spend money – to the people who elect them. 

That's why, since the first of July this year, we've had new transparency arrangements in place for state aid. Now, every state aid grant above half a million euros has to be published online. So taxpayers know who gets their money and how much they get.

And it's also why we expect governments to evaluate the effect of the aid that they give. Since 2014, we expect Member States to evaluate state aid schemes worth more than 150 million euros a year. So taxpayers will know if their money is well spent.

State aid and fair competition

We have worked to make public investments easier, and to make sure that our rules don't stand in the way of the policy choices that governments make.

But the Commission also has to protect fair competition in our single market.  So where state aid genuinely harms competition, EU state aid rules come into play. 

I will give you just four short examples.

We need to look carefully at aid for banks.

When the financial crisis hit banks around the world, practically everyone agreed that public money had to be used to shore up the system. Otherwise, we’d have found ourselves in a state of financial chaos.

But with no strings attached, that public money would have produced unfair results. Banks that invested carefully – and relied on their own resources to get through the crisis – were facing rivals that received public money to survive.  So right from the start, we insisted that banks didn’t use state aid to outgrow their rivals.

We also need to look at broadband investments.

Consumers need fast broadband connections at affordable prices, to get the most from what the Internet has to offer. And the EU Digital Single Market strategy aims to get ultra-fast broadband to at least half of all Europeans within the next four years.

We may well need public money to make that investment happen. And the state aid rules can help make sure that money is used in a way that doesn't undermine competition.

For example, Italy is planning to spend about 4 billion euros to expand access to ultra-fast internet. And we've worked with Italy to make sure that whoever builds those new broadband lines , all operators will be able to use them to offer services to consumers. That way, Italians can get ultra-fast broadband, and still pay competitive prices.

We also need to step in to make sure special tax breaks for certain companies don’t harm competition.

Nearly twenty years ago, the Commission established that corporate tax treatment can involve state aid. The European courts confirmed in 2006 that tax arrangements between group companies have to be on market terms to avoid state aid.

And yet, some governments have been giving special tax treatment, which amounts to state aid. Over the last two years, we have taken important decisions in this area.   And we continue our work to make sure that competition is not distorted by tax benefits in favour of a select few.

This bring me to my last example. I already mentioned energy.

The potential benefits of a true single energy market are huge. So our energy state aid rules are essential, to make sure that national subsidies don't get in the way of energy trade across borders. 

But we need to adapt to economic and technological realities.

For example, the cost of green energy would be lower if solar, and wind, and other renewables competed for public money in one single tender in each EU country.   

But that's not always realistic. It could get you the wrong mix of energy, and destabilise the grid, or make it too hard for new technologies to develop. So our rules allow separate tenders for green energy sources when there's a good reason.

To give you another example. One way to raise money to support renewable energy is a levy on companies’ electricity bills. But that could mean energy-intensive industries – like steelmaking – end up facing costs that they just can't afford. So our rules allow governments to exempt energy-intensive business from those levies.

At the moment, those rules don't apply to other levies on electricity bills that help to tackle climate change. Like levies to support investment in combined heat and power, which stops the heat from electricity generation going to waste.

But like renewable energy levies, combined heat and power levies might be so high that energy-intensive industries can't bear the costs. And that could threaten investment in combined heat and power. So we’re looking closely at how to deal with this question.

Conclusion

The role of EU state aid control is therefore important, but also limited. It is for the Member States to make the political choices and set the policies.  All we do is to ensure that competition is not harmed.

And when we do that, we know that State aid rules must not be an unnecessary obstacle to public investment. Because we need investment to make our economy fit for the future.

So we focus our state aid work on the measures which have the biggest impact on competition across Europe. And we keep looking for ways to simplify and clarify our rules.

So the General Block Exemption Regulation is an essential part of our work, and so is our effort to clarify when State support doesn't count as state aid at all.  Because of that work, billions of euros of public investment that would have come to us for approval in the past are now carried out without having to stop by us. The responsibility and accountability are with national governments.

Of course, we still need state aid rules to defend fair competition.

And we still need to work with countries all around the world, to promote fair competition on a global scale too.  That is an area I want to step up in the coming years.

Because fair competition helps our economy grow, and creates jobs for our people. So we need it to make sure Europe stays as strong in the future as it is today.

Thank you.