Sat. Jul 13th, 2024
4 November 2021

Ladies and gentlemen

I want to give my warmest thanks to Jakob Hald and the Danish Competition and Consumer Authority, for inviting me to be here today. It does my soul a lot of good to be here in Denmark, talking with you about the future of competition.

So if I speak today in English, not Danish, I hope you won’t take that as a sign of ingratitude for this invitation. It’s just that the things we’re discussing today don’t only affect people here in Denmark. They affect the whole of Europe.

Of course, here in the Nordic countries, we’re well used to being part of a much bigger world. I’m sure you all saw the news the other day, that a team of researchers have dated the first Norse settlement in North America, not just to the nearest century, but to a precise year – 1021.

They did that by using new carbon-dating techniques on some offcuts of wood that were found at the site – a branch here, a tree stump there. Because the first thing those Vikings did, when they arrived in the land they called Vinland, was to prepare the ground.

And I’d like to take inspiration from that, and kick off today’s discussions by preparing the ground. Which means asking the most fundamental question of all: What are the competition rules for?

In a way, of course, we already know the answer to that question. We know that, when our founders signed the Treaty of Rome, they wanted to build a new kind of Europe – one that would bring prosperity and fairness, not just to a few, but to all Europeans.

And competition policy was – and still is now – an essential part of that project. Competition makes markets fairer, giving consumers lower prices, better products, more innovation. It makes sure that suppliers or customers aren’t dependent on too few companies for the products or services – or the markets – that they need.  Itmakes our economy more efficient, and our industry more competitive in Europe, and beyond – because being challenged at home is the best way to prepare to be challenged abroad, and make the most of global markets.  

But the world is changing. As we start to emerge from the pandemic, we need to rebuild our economies, after the deepest recession in a century. And we can’t do that just by going back to the way things were before. We don’t have much time left, to build an economy that runs on low-carbon energy instead of fossil fuels – so we can stop climate change running out of control. And at the same time, we have to adapt to a digital revolution that’s changing every part of our economy and our society.

I don’t think it’s fanciful to see this green and digital renewal as our generation’s peace project. Like the founders of our Union, we know there’s no future unless we can transform the way we do things. And that calls for a huge social mobilisation. It calls for us to pull together on a European, even global scale, to build the new world that we want.

So we can hardly be surprised if that brings up tough questions about where exactly  competition fits in. We can hardly be surprised if people start to ask if the time has come to stop competing with each other, and instead work together.

But that very question betrays a serious misunderstanding of what competition does. In the dictionary, solidarity and competition may be opposites. But in the real world we live in, competition helps us to reach our shared goals. It helps us to use our scarce resources more efficiently, to the benefit of consumers, businesses and society as a whole. It helps us develop innovative products and services. And it helps to make sure that companies operate in a way that’s good for us all – not just for themselves.

At a moment like this, when households and businesses face the costs of adjusting to a green and digital future, they shouldn’t also have to pay high prices, simply because competition is weak. At a moment when taxpayers need to find large amounts of money to invest in the recovery, the companies that get that money shouldn’t take any more than they actually need. And we also have to make sure state aid is targeted and proportionate, so it doesn’t create zombie companies that are only kept afloat by taxpayers’ money.

Because the last thing we can afford right now is to see our scarce resources diverted from supporting the green and digital transitions, to instead fill the pockets of rent-seeking cartels and monopolies, or to give out state aid that doesn’t help us reach our goals.

So there’s nothing old-fashioned about competition policy. Quite the opposite – it’s one of the keys to our future.

That’s especially true, because this transformation has to happen at a time of intense global competition. So our success will depend on building strong, competitive businesses that can be Europe’s champions in global markets And to do that, we need competition here at home.

I know there are those who believe just the opposite – that the way to build European champions is to have fewer, bigger European companies. And that can be fine, as long as European customers still have other suppliers to turn to. The problem comes when customers’ choice gets so limited that their suppliers no longer have to care about what those customers want.

Because the effects of market power like that are – and always have been – very bad for customers. For them, it means higher prices, less innovation, less choice.  Because more market power means more dependence for customers. That’s why dealing with market power is at the core of what we do; and why the champions we need are those that are still sufficiently challenged, not taking anything for granted, but always working to serve their customers better.

And so the benefits of competition – the fair, efficient, competitive markets that competition policy has guaranteed for two generations – are even more relevant now than they’ve ever been.

But that’s not the whole story. As we’ll explain in more detail, in a Communication that we plan to publish in the coming weeks, competition rules can also actively help us to build a greener, more digital economy.

The pressures of competition can be an excellent way to drive companies to do less harm to the environment, by cutting back on the resources they use. Meanwhile, a growing number of consumers want to know that the products they buy aren’t harming the climate and the environment. And that consumer demand for greener products can be another powerful reason for businesses to operate in a more sustainable way.

That’s why it’s especially important that we take action, if companies are colluding to resist that demand for greener products. In July, for example, we fined five German carmakers more than 875 million euros, for indicating to each other that they wouldn’t compete to produce cleaner cars than the law required.

Our rules can also help to guide public investment in ways that benefit the climate and the environment. Since 2014, our rules on state aid for energy and the environment have channelled more than 200 billion euros of national investment towards our climate targets – especially by supporting new renewable electricity plants, when private money alone wasn’t enough. And in the last few years, by requiring support for big new renewable plants to be given through competitive tenders, the rules have also helped to bring down the costs of supporting those plants, getting the same results for the climate, but at less cost for taxpayers.

But this isn’t a time to rest on our laurels. With so much to do in such a short time, we need to make sure that we’re doing all we can, to help protect our climate and our environment.

That’s why, a year ago, we launched a debate to help us understand how the competition rules could support Europe’s green policies even better than they already do. And we’re using the insights that we gained from those discussions, to contribute a green perspective to the review that we’re doing at the moment to make sure that all our competition rules are fit for the challenges of the future.

The centrepiece of that will be the new rules on state aid for climate, energy and the environment. These new rules will vastly expand the types of project that governments can support, to cover the full range of goals of our Green Deal. And right across the board, the new rules will allow for much larger amounts of state aid when that’s needed to support these goals – along with tighter conditions to preserve the level playing field, making sure that companies don’t get more aid than they really need.

And our antitrust rules can also do their bit, to support the green transition.

The car emissions cartel gives a hint of the damage that collusion can do to our environment. But at the same time, cooperation can sometimes actually help to produce greener, more sustainable products.

So our antitrust rules allow these sustainability agreements – just as long as the benefits they bring to the consumers of a product outweigh the harm they suffer from the loss of competition.

Of course, we know that it’s not always easy for companies to judge which side of the line their agreements fall on. And we don’t want to see them shy away from cooperation that would be good for the planet, just because they’re not sure what’s allowed. That’s why we’re encouraging them to talk to us, if they find that more help would be useful – and in the right cases, we’re willing to give them individual guidance to help them make sure their cooperation is legal. At the same time, we’re also planning to give more general guidance in the new guidelines on horizontal agreements between competitors, which we plan to put in place next year.

And competitive markets also play a vital role in the digital transition.

Because in an age when digital technology is changing at an incredible rate, the only way to stay competitive is to keep innovating at the very highest level. And competition helps us do that. It means that there’s room for startups and innovators of all sizes, and from all over Europe, to bring new products to the market – with a fair chance of success. And that, in turn, gives the biggest and most successful companies a reason to invest in innovation – knowing that, if they don’t, then someone else will.

That’s why we need to keep taking firm action against dominant companies that misuse their power, to drive smaller, innovative rivals out of the market.  Because dominant companies are too often champions gone wrong – champions that seek to fend off rivals and protect their position.  So stopping those companies from abusing their power has been a priority for several years now – and the pandemic hasn’t slowed it down at all. In the last year, we’ve issued Statements of Objections to both Amazon and Apple, with our preliminary view that the two companies abused their dominance, and broke the competition rules. And we still have several other investigations under way, involving Google and Facebook as well as Amazon and Apple.

We’ve also been working to make sure we stay ahead of new risks to competition and innovation. Earlier this year, we published the preliminary report of our sector inquiry into the consumer Internet of Things – those everyday objects, from speakers to fridges, that now have the Internet embedded into them.

The responses to that inquiry suggest that these markets may be developing in ways that could shut out competition. Many businesses are worried that a small number of voice assistants are becoming gatekeepers in these markets – and that they may be using that position to make it harder for other companies’ smart devices to compete.

It’s interesting how familiar these issues are. They go back to a problem we’ve seen over and over in digital markets – the problem of gatekeeping.

When a search engine, or a digital marketplace, or an app store becomes a vital way for businesses to connect with their customers, then simple choices, like how users can pay, or how the site ranks different sellers in search results, can effectively determine who succeeds and who fails. Which is why we’ve put forward our proposal for a Digital Markets Act, with rules to make sure that big digital gatekeepers use this power in a way that keeps markets open for competition – and innovation.

Meanwhile, we’re also helping companies draw the line between cooperation that helps them to innovate, and harmful collusion.

A lot of today’s digital innovation depends on having access to large amounts of data. That’s why the Data Strategy that we published last year aims to make it easier to pool and share data. And as part of our review of our guidelines and rules on horizontal cooperation, we’re planning to update our guidance on information sharing, so it’s clear exactly how companies can share data, without harming competition.

None of this means that competition policy has become a sort of shadow version of our green and digital policies. Our first duty, after all, is still to competition – and to the businesses and consumers who rely on us, to make sure that markets work fairly and well. The Treaty gives us that task – and if we don’t take care of it, then no one else will.

But like everyone else, in this time of great change, we need to do our job with an eye on the future. And if there are ways that we can help Europe go faster and further on its journey, to a green and digital economy – well, then that’s what we should do.

That journey will be a long one – as long and uncertain, in its way, as the ones that took the Vikings from Scandinavia to North America, a thousand years ago. But we’ll get there – if we all take an oar, and start rowing.

Thank you.

Source – EC

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