13 October 2022
“Check against delivery”
Introduction
Good evening, everyone. And Thank you to Chairman Schmitz-Schwarzkopf for the kind invitation to speak tonight.
Whether it’s kicking the football around with friends, or staying in with family for cards, most of us enjoy playing games. That’s because competition is something very human. It hones our minds and keeps us healthy. It makes us better at what we do.
The same is true in business. By competing, companies train their business muscles to produce better quality products, reduce costs and waste, and deliver excellent service at the lowest price. This doesn’t just benefit consumers; in fact it also benefits workers: some studies have shown that job satisfaction is higher in smaller firms and in sectors of the economy where market concentration is lower.
But as every footballer or card player knows, the game only works well if everyone plays by the rules. In the EU, this rulebook is the Treaties, legislative acts, guidance and case law that make up EU Law. These rules have been developed over the course of many decades to ensure fair and efficient competition in the Single Market.
Competition policy – three instruments
First of all, for competition to be fair, the playing field must be level. Our competition rules are there to make sure that happens – in other words, to make sure that what determines the winners and losers is how well they play the game, and nothing else.
All three of our competition policy instruments do this. The first instrument, antitrust, is there to stop dominant players from abusing their position, for example through predatory pricing that blocks new entrants from getting into the market or companies engaging in other anti-competitive agreements. A blatant example of this is cartel collusion – where a number of players work together in an unfair way, for example by carving up the market so they each enjoy a ‘local monopoly’.
Our second instrument is merger control. Here we make sure that mergers and acquisitions which exceed a certain threshold do not lead to a lack of competition down the road. Contrary to antitrust which punishes illegal behaviour after it has taken place, merger control gives us the power to block or impose remedies on transactions that would harm consumers and customers. We rarely block mergers because we can usually find solutions that address our concerns. But this year for example, we vetoed two mergers – one merger between the two major Korean shipbuilding companies producing LNG carriers and one merger between Illumina and Grail which would have reduced competition in the race for developing cancer detection tests.
The final competition policy instrument is State aid control. This is different to the other two – it is unique to Europe. The idea is to make sure EU countries do not distort competition in the Single Market by giving subsidies to specific companies. But the core principle is the same: we want competition that is fair – fair to businesses of another EU country, fair to the taxpayers who must pay these subsidies; and ultimately also fair to consumers, who will be the real losers if we allow our businesses to get hooked on state support.
Other kinds of fair EU regulation
Of course, our rulebook evolves as the game becomes more complex. Today, we live in a digital age, and this is creating a new kind of challenge for keeping markets fair. When large digital platforms can act as ‘gatekeepers’, they can wield enormous power. But with great power must come great responsibility. That is why we passed a new regulation, called the Digital Markets Act, to ensure they meet their responsibilities and allow businesses to access their platforms under fair terms. The DMA – as we call it – was published in the Official Journal yesterday and is now the first global big tech regulation.
Many other changes to EU rules are happening too in the digital sphere. Under the Data Strategy we are creating safe and secure data spaces. With the Data Act, we want to promote data sharing between companies. With the Digital Services Act we want to make the Internet safer for our citizens and protect them from illegal content while securing their freedom of expression. The Artificial Intelligence Act will govern the rules around how we can deploy AI safely and fairly.
Another update to keep our rules fair relates to harmful Foreign Subsidies. If EU based companies are not allowed to receive subsidies under State aid rules, then it is only fair that a similar restriction should apply to subsidies received from outside the EU by firms operating in the Single market.
Conclusion
In a little over a month, the World Cup begins, and both Germany and Denmark are in it. If our teams do meet, it will not be until the semi-final. Of course, I will be hoping for a repeat of the European Cup final of 1992.
But as a referee of Competition Policy, what I hope for most of all is fair play. May the best team win!
Thank you.
Source – EU Commission