Executive Vice-President Vestager’s keynote speech at the 25th IBA Competition Conference, delivered by Inge Bernaerts, Director, DG Competition
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Ladies and gentlemen
I’m delighted to have the chance to speak to you today. I’m only sorry that I can’t be there in person. The IBA Antitrust Committee did incredible work last year, to allow this whole conference to happen online. But two years is a long time to go without getting together.
In those two years, it’s often felt as though time has stood still. But of course, that’s an illusion. Though our economies have slowed, and our lives have been put on hold, the pace of climate change has hardly missed a beat. And the floods and fires that have devastated so many communities this summer – in Belgium, Germany and Greece, the US and China – are a powerful reminder that this isn’t just about the world we leave our children. The climate crisis is happening right now.
Meeting the challenges of climate change and environmental damage
So what we need now is a green revolution. We’re going to have to transform the way that we power our lives. We’ll have to replace a linear economy with a circular one, and make huge investments in infrastructure – in wind and solar plants, in energy-efficient buildings, in networks of filling stations to charge electric cars or fill up with green hydrogen.
Here in Europe, we showed how we plan to rise to that challenge, when we put forward our Green Deal two years ago. With that Green Deal, we aim to make Europe the world’s first climate-neutral continent by 2050, decarbonising not just electricity but also buildings and transport, agriculture and industry. We plan to make better use of resources, stop pollution, restore the ability of our water and land to support biodiversity.
To support those goals, we now have a binding legal commitment to cut our carbon emissions by at least 55% by 2030. And in July, we published our “Fit for 55” package, which will put the regulations in place that will get us to that goal.
To transform our economy so thoroughly will also need investment – and lots of it. So 30% of the 1.8 trillion euros from Europe’s new long-term budget and our recovery instrument, NextGenerationEU, will be spent to tackle climate change.
Competition policy and the Green Deal
Green policies like regulations, taxes, and investment are the key to the Green Deal. But with so much to do in such a short time, all of us – including competition enforcers – also need to make sure that we’re doing what we can to help.
That’s why, just under a year ago, we launched a debate on how the competition rules work with green policies – and how they could support those policies even better.
The response to our consultation was fantastic. We got 200 contributions from businesses and governments, NGOs and competition experts across the EU, and beyond. Some 3000 participants joined us in February for an online conference. And later today we will publish a Policy Brief that sets out the conclusions we’ve drawn from that debate, about what a greener competition policy could look like. And I’d like to share a few of the main points with you.
The starting point here is that a green competition policy still has to be – well, a competition policy. We still need to carry out our fundamental task, of keeping markets open and competitive – not least, because competition helps to make our economy greener.
Companies today face powerful incentives to find more sustainable ways to do business. Consumers are demanding greener products from them. And environmental taxes and rules make it expensive for companies to operate in ways that harm the planet.
But it’s competition that actually transmits those pressures to the boardroom. It’s the need to compete that pushes companies to do more to meet consumers’ needs, and use less costly resources – changing business models, for instance, or investing in green innovation. And so one of the main messages from our consultation and the conference was the need to support the green transition by enforcing our rules more vigorously than ever.
For instance, several contributors urged us to enforce our merger rules strictly, to protect green innovation. And I agree with that. In the last few years, we’ve already had to step in several times, to protect innovative efforts to find less toxic pesticides, or to develop more energy-efficient turbines. And we’ll go on vigorously defending innovation in the future.
Of course, in a system like the one we have in Europe, where we only review mergers that are notified to us, we first have to get to see the mergers that matter. And I sympathise with the worry that big businesses could buy up green innovators, and kill their new ideas, while those companies are still too small for the mergers to have to be notified. In March this year, we published guidance to encourage Europe’s national competition authorities to refer mergers that they think we should review – even if they don’t have the power to review those mergers themselves.
Antitrust enforcement also supports the green transition, by protecting the competition that drives companies to innovate more, and to operate more sustainably. This July, we fined a group of carmakers 875 million euros, for agreeing not to compete to produce cleaner cars. But at the same time, the rules shouldn’t discourage companies from working together, to make their products more sustainable – especially when that cooperation doesn’t have much effect on the way companies compete with each other.
In practice, that could involve companies setting joint standards for what counts as a green product, or pooling resources to speed up green innovation. It could even mean companies agreeing to cut dirty products out of their supply chains, without being forced to do that by regulation.
There’s huge scope to set up these agreements in line with the antitrust rules. Many sustainability agreements just don’t harm competition – like some agreements on open standards for green products, for instance. Others can be legal, even though they do restrict competition, so long as the benefits they bring for consumers outweigh those restrictions.
Of course, every agreement is different. To decide if a sustainability agreement is legal, we need to carefully weigh the benefits it brings against the harm it could do to consumers. That’s why the best form of guidance for business comes from our decisions in individual cases – like our car emissions cartel case in July, which gave some important pointers on what is and isn’t allowed. It’s also why we want to encourage companies to ask us for our assessment of specific agreements. And in the right cases, we’re ready to give individual guidance – or even take a formal decision that an agreement is legal.
At the same time, as part of our review of the antitrust guidelines and rules on agreements between companies – both horizontal agreements between competitors, and vertical ones between different levels of the supply chain – we also want to give companies more general guidance. In July, we launched a public consultation on the options for revising the horizontal rules. We’re also engaged in detailed discussions with Europe’s national competition authorities. And we plan to have new rules in place by the end of next year.
In particular, we want to be clear about when an agreement to produce more sustainable products can count, under our rules, as one that delivers benefits for consumers that can justify some restrictions of competition.
There are three main situations that we want to cover here. First, a sustainability agreement could benefit consumers simply because a more sustainable product is also a better one – like a toy made out of durable wood instead of plastic.
Second, the benefit for consumers might come from knowing that they’re doing their bit for the environment. Many of us already pay more for fair-trade coffee, for instance, not because it tastes better, but because it’s produced more sustainably. And as we become ever more aware of our impact on the planet, we may find that becoming a more sustainable consumer is worth a certain extra cost.
The third kind of benefit comes when an agreement helps society as a whole – like an agreement to cut the pollution or carbon emissions from a product. Of course, those benefits are welcome. The trouble is that to get a better environment for everyone, a limited set of consumers have to pay more. And that could mean those agreements contradict a fundamental principle of the competition rules – the principle that restricting competition for a product can only be justified if the consumers of that product are not worse off on balance. That’s why we think that these agreements should only be legal if the consumers of the product get a fair share of the benefits they produce – a share that outweighs the extra price that they pay.
These rules apply right across our economy. But some industries, like agriculture, have an especially vital role to play in the Green Deal – and they’ll have their own specific rules.
Green farming methods can mean less pollution from pesticides, less carbon from livestock, better protection for biodiversity. So in Europe’s new Common Agricultural Policy, agreements to improve sustainability in agriculture beyond what the law requires will be exempt from the competition rules – so long as those agreements don’t restrict competition more than is necessary. And we’re now starting to put together a set of guidelines, to help farmers navigate these new rules.
State aid control
Clear, up-to-date rules are even more important when it comes to state aid. In the years to come, European governments will have to invest billions of euros in greening the economy – and our rules need to give them room to do that, while also making sure that we get the best results for the planet from the money that’s spent.
This summer, we consulted on a set of draft guidelines on state aid for climate, energy and the environment – and we plan to adopt the final guidelines soon. Those new rules will vastly expand the scope for using state aid to help reach the goals of the Green Deal – and allow governments to fund, where necessary, a larger share of the cost than before. At the same time, we’ve also expanded the scope of our general block exemption regulation, creating new ways for governments to invest in green infrastructure, like charging stations and energy efficiency, without needing our approval in advance. And we plan to expand the block exemption even further, in line with the new guidelines.
But greener state aid doesn’t just mean more money for sustainable investments. It also means that we shouldn’t use state aid for projects that will make climate change worse. That’s why the new rules will guide governments away from investments that use the most polluting fossil fuels, like coal or lignite or oil. And even for gas, the rules will discourage support that’s more than a strictly temporary solution.
With so much to do, and only finite resources, it’s also vital that we get the most from every euro we spend. One very effective way to do that is with competitive tenders. Since we started to require more use of tenders for renewable energy subsidies, we’ve seen a huge fall in the cost of those subsidies. So under the new rules, aid to help industry decarbonise should also be given through competitive tenders. And to help make our green investments even more efficient, governments should also be transparent about how many euros of subsidy it takes, for each project, to save a tonne of CO2. That way, we can focus our limited resources on the projects that produce the biggest benefits for the climate at the least cost.
Meanwhile we’re also reviewing our whole portfolio of state aid rules, to make sure they’re in line with our green goals.
For instance, our state aid rules on important projects of common European interest help governments across Europe come together with industry, to fund infrastructure and breakthrough innovation – including in new green technologies. In the last two years, we’ve approved investments of more than 6 billion euros by 12 EU countries to develop innovative, greener batteries, unlocking another 14 billion euros in private investment; and new projects are in the pipeline, to develop the infrastructure and innovation needed for hydrogen to decarbonise industry and transport. And we’re now reviewing those rules to make them even more effective and inclusive, and to make sure that projects under the rules are in line with the aims of the Green Deal, and other key EU policies.
We’ve also adapted our rules to help make sure that the costs of greening our economy are shared fairly across Europe. Europe’s Just Transition Mechanism will make as much as 75 billion euros available, to support the European regions that face the biggest challenges in adapting to the green transition – regions that rely on coal mining, for instance, or on industries that produce a lot of emissions. And the new state aid rules for regional aid, which we adopted in April, will make it easier for governments to direct state aid to these areas – and allow more aid for projects in the poorest of these regions.
Today, as the effects of climate change become ever more visible, I think a lot of us have a sense that our world has been turned upside down. We see the temperature in Canada reaching nearly fifty degrees; smoke from fires in California choking the air in New York; summer in Europe bringing not only heat, but also devastating floods.
That’s forcing us all to think really hard about what we can do to help turn things around. And that’s as true for competition enforcers as anyone else. We need to find ways to help tackle these threats – without rushing into actions that will just make things worse.
These are tough choices to make. But if two heads are better than one, then 3000 heads are much better still. So above all today, I want to say thank you. Thank you to all the thousands of people and organisations who’ve helped us to think about how the competition rules can best support the Green Deal.
Those rules, on their own, won’t solve all the problems we face. But they will allow us to answer the call that’s going out right now to every member of our global society – to do what’s in our power, to make a difference.