EN Official Journal of the European Union C 44/83

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Report on Competition Policy 2011’

COM(2012) 253 final

2013/C 44/14

Rapporteur: Thomas PALMGREN

On 30 May 2012, the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Report on Competition Policy 2011

COM(2012) 253 final.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 4 December 2012.

At its 485th plenary session, held on 12 and 13 December 2012 (meeting of 12 December), the European Economic and Social Committee adopted the following opinion unanimously.

1. Conclusions and recommendations

1.1 Each year the European Economic and Social Committee evaluates the Commission's report on competition policy, and in this connection would like to take the opportunity to put forward a number of comments and suggestions. The EESC welcomes the new, functional structure of the Commission report, along lines that the Committee has recommended in previous opinions.

1.2 It regrets, however, that the report fails to cover a series of issues which the EESC has flagged up in the past, confining itself to the traditional questions that have been the concern of DG Competition and thus revealing a narrow, limited view of what the most important elements of competition policy are. The issues warranting attention go far beyond the usual topics addressed by this annual report: mergers and concentrations, monopolies, state aid and mechanisms for promoting competition to consumers.

1.3 One important priority is to combat the unfair imported competition from some foreign trading partners, who exploit their lack of compliance with fundamental social and environmental principles and rights to acquire market shares in the EU area.

1.4 A renationalisation of policy due to the crisis and possible conflicts between Member States' interests, along with protectionist measures by governments, present a potential threat in that they could have serious consequences for the single market and competition policy. In the current economic situation especially it must be ensured that the market is functioning and that the business environment creates the conditions for renewed economic growth. Competition policy must be coordinated and integrated with other policies, as in the case of foreign trade policy and internal market policy, forming a coherent whole that effectively protects the interests of European producers and consumers in the framework of the social market economy, pursuing goals for economic growth and jobs. Competition policy, trade policy, industrial policy and single market policy must balance the interests of consumers and businesses, always ensuring fair market conditions for all parties.

1.5 Competition policy should reflect the EU’s integrated industrial policy, since it is only possible to ensure sustainable growth and the wellbeing of EU citizens if Europe has a strong, diverse, competitive and job-rich industrial base.

1.6 This year's report is the 41st in the series, and sets out the key milestones in the development of competition policy and their significance to the EU's objectives.

1.7 The EESC agrees with the Commission that competition enforcement and advocacy serve wider longer-term objectives such as enhancing consumer welfare, supporting the EU's growth, jobs and competitiveness in line with the Europe 2020 Strategy for smart, sustainable and inclusive growth.

1.8 Cooperation between the Commission and the national competition authorities is of the utmost importance, both in terms of monitoring state aid and regarding the impact of implementing restrictions on competition and the credibility of the entire competition policy system. Cooperation between authorities needs to be flexible and involve active communication.

1.9 The EESC urges the Commission to cooperate actively with non-EU competition authorities to defend open and fair markets. The EESC supports the assessment on the modernisation of the state aid system currently under way since the EU should strive to ensure that competition conditions are as uniform as possible globally, so that its businesses are not put at a competitive disadvantage in relation to their rivals from third countries, which are not obliged to follow strict specifications and comply with rigorous regulations and limits (e.g. food market, energy-intensive industry), but still have free access to the EU and global market.

1.10 The Committee has repeatedly drawn attention to the need to improve systems for protecting consumer rights. It therefore regrets that the legislative proposal on anti-trust damages actions was not adopted in 2011.

1.11 It is important that the Commission's antitrust action and the regulatory measures are complementary, with the aim of ensuring safe, sound and efficient financial markets, especially for the Single Euro Payments Area (SEPA), in the financial services data sector and in the credit rating agencies sector.

2. Content of the 2011 report

2.1 2011 was a year of turbulence. The financial crisis turned into a sovereign debt crisis in parts of the euro area, threatening the banking sector and the fiscal sustainability of many European governments. It also severely impaired credit flows towards the real economy.

2.2 The Commission's report is divided into three sections: competition policy in the current economic context, competition policy in the broader context, and competition dialogue with other institutions. It focuses in particular on the financial services, food and airline sectors. The new structure aims at better explaining how the Commission implements competition policy and how the policy contributes to the European economy and to increasing the welfare of EU citizens.

2.3 The new structure of the Commission's report, along lines that the Committee has recommended in previous opinions, works well. The report is focused, concentrating on key issues and development trends, and provides an excellent overview of the main elements of competition policy, with numerous descriptive examples. It could be expanded with quantitative data, so that the relative importance of different actions and issues can be better assessed. It is useful that a lot of further information supplementing the report can be obtained from the internet pages of the Commission's competition DG.

2.4 The communication presents how in 2011 the Commission used competition policy as an instrument in the resolution of the financial and debt crises and how, generally, competition policy and enforcement actions taken during the year contributed to the wider policy objectives of the Europe 2020 strategy.

3. Competition policy in the current economic context

3.1 General comments

3.1.1 At the current time, there may be calls to set up protectionist lines of defence. This is understandable, given the many injustices noted by the public, particularly the fact that Europe continues not to act on this matter in the same way as some of our international partners. Although history has confirmed that competition enforcement and advocacy cannot be reduced in times of economic crisis, a naive, unilateral approach on the part of Europe, respecting principles that others do not follow in this key area, would lead to weakening of the competition framework and exacerbate even further the medium- to long-term growth trend.

3.1.2 Competition policy can play an important role in a successful exit strategy from the crisis and in shaping a post-crisis environment that will prevent possible competitive distortions.

3.1.3 The financial crisis has had a dramatic effect on the real economy, through reduced lending to households and businesses, with serious knock-on effects on investment and employment. Several Member States had to implement austerity measures and cuts in their public spending, instead of further investing in measures aiming at re-launching the economy. The crisis has ultimately had, and is still having, an impact on all citizens, consumers and employees, as well as on businesses and the conditions in which they operate. Good, effective and balanced competition policy has a significant impact on the welfare of all groups.

3.2 Specific comments

3.2.1 Since the beginning of the crisis, and until 31 December 2011, EUR 1.6 trillion of state aid has been used to rescue and restructure European banks. The Commission has taken 39 decisions on restructuring, for which the Commission monitors the effective implementation of the restructuring plans. Despite massive support efforts, the crisis has progressively deepened.

3.2.2 From the perspective of all social and economic stakeholders, it is important to ensure that the markets continue to function in a situation where states and their banking systems (i.e. banks) are receiving massive support. It is also in the interest of the general public for bank support to be monitored properly.

3.2.3 The performance of the single euro payments area (SEPA) is closely tied to the level of development of the banking system in the various countries, and the differences are significant. In many countries, the challenge is to develop the payment systems so that the benefits of SEPA can be exploited. This requires the banking sector to be customer-focused and to be willing to assist smaller businesses, in particular, with preparations. In many countries, such as Finland, the introduction of SEPA ran almost completely smoothly. One highly publicised problem was that the costs of banking transactions multiplied because cards that worked simply as bank cards were discontinued.

3.2.4 One topic that the Commission highlights is the standardisation of e-payments. There are significant economies of scale in electronic payment services, which means that market concentration is intrinsic to the nature of the sector. An effective payment transfer system obviously benefits the entire economy, and it is therefore important for the Commission to be attentive to electronic payment services as an economic sector. The basic principle should be to ensure fair conditions for competition. It is worth noting that the market both for payment transfers and for credit and payment cards is dominated by just a few operators.

3.2.5 Financial markets provide more efficient service when they are transparent, open, competitive and regulated in a way which enables them to fulfil their function of financing the real economy. This is exactly what the Commission is striving to accomplish through its antitrust investigations in the over-the-counter (OTC) derivatives market, the payments services sector, and the distribution of trading data and financial information to the market. The report could include some figures showing the extent of the OTC derivatives issue. There are grounds for stricter regulation and supervision of the derivatives market.

3.2.6 Moreover, the tightening-up of bank regulations now and in the near future should not reduce bank lending, which restricts business investment and makes it more difficult to access operating capital.

3.2.7 The EESC calls on the Commission to continue to monitor the competitive situation in the market of credit rating agencies, given their modus operandi and potential conflicts of interest with their clients which may give rise to distortions of competition.

4. Competition policy in the broader context

4.1 General comments

4.1.1 A major part of the Commission's actions in the field of competition policy addressed the effects of the crisis in the financial markets. Competition enforcement and advocacy also serve other wider objectives such as enhancing consumer welfare, supporting the EU's growth, jobs and competitiveness in line with the Europe 2020 Strategy for smart, sustainable and inclusive growth.

4.1.2 The Commission's intention is to enhance consumer welfare and the interests of equal opportunities for economic operators when applying its merger policy, striking a balance between the economic benefits of the merger and other parameters such as price, choice, quality or innovation. This approach has proven fairly effective in the telecommunications sector and should be extended to as many sectors as possible. However, we have to be realistic and acknowledge that increasingly large conglomerates have emerged in recent decades, leaving less room for SMEs in some sectors and thus considerably limiting the possibility of new operators with potential emerging, which, of course, dampens the drive, innovation and, above all, creativity that at different levels benefit society as a whole.

4.1.3 The Committee emphasises that competition policy is closely linked to other policy areas, in particular measures for better regulation, industrial policy and SME policy. Legislation that takes account of the needs of smaller businesses and the conditions in which they operate provides a guarantee of functioning markets.

4.1.4 The Commission's publication, this year, of ‘operational guidance for assessing impacts on sectoral competitiveness within the Commission impact assessment system’ was a positive step. This toolkit is to be welcomed, not least from a competition policy perspective.

4.1.5 The EESC notes how important it is for the Commission to cooperate actively with non-EU competition authorities. This is a basic precondition for effective implementation of competition policy and also ensures that competition conditions are as uniform as possible globally.

4.1.6 The EESC calls on the Commission to continue to improve rules for compensation of public service obligations, covering services which meet social needs, as is currently the case with health and long term care, childcare, access to/reintegration in the labour market, social housing, care and social inclusion of vulnerable groups.

4.1.7 The EESC calls for competition policy to include coordination with the other DGs whose work impacts hugely on the competition situation throughout the EU. This will contribute to bring about realistic modernisation of the WTO. Mechanisms are needed to counterbalance the different situations and ensure compliance with social, environmental, product safety etc. rules, with measures to effectively (rather then merely theoretically) combat abuse of their dominant position by large distribution chains that gradually destroy their smaller competitors and small-scale suppliers, to oversee negotiations which often do no more than impose conditions; to break down (and sanction) abuses of dominant position, whatever the sector, and to establish mechanisms to level the distorted playing field for operators located in major consumer hubs and those located on the periphery, whose additional costs cannot be ignored.

4.2 Specific comments

4.2.1 The EESC hopes that the single European patent will be put into effect, and trusts that the Commission's initiatives will slash transaction costs, particularly for patents (1). The European patent would replace the current system in which patents have to be filed separately in each EU country. Patent costs can easily reach EUR 32 000, according to Commission estimates, whereas in the US they are just EUR 1 850.

4.2.2 The EESC believes that the European standardisation process should be accelerated, simplified, modernised and made more inclusive (2). It will be necessary to assess on a more regular basis if the European standardisation system is sufficiently able to adapt to the quickly evolving environment and to contribute to Europe's strategic internal and external objectives, in particular in the field of industrial policy, innovation and technological development.

4.2.3 Food is one of the most tangible expenses faced by consumers on a daily basis, and it is therefore very important for there to be real competition within the food sector. However, it is worth remembering that many factors, most of which fall outside the scope of competition policy, can affect food prices, the main one being rising commodities prices.

4.2.4 The imbalance in negotiating strength along the food supply chain, with primary producers and small operators being in the weakest position, should also be noted. The EESC therefore awaits with interest the results of the high-level forum for a better functioning food supply chain set up in 2010.

4.2.4.1 It would also be helpful if in view of the single market a more harmonised approach could be introduced at EU level in the implementation of competition law and definition of relevant markets.

4.2.5 European producers are obliged to follow fairly strict specifications, but other competitors from other continents selling with free access to the EU market fall under a much less rigorous legislative framework. The result is essentially a distortion of competition because the cost of production in third countries is lower. This is also the case for European energy-intensive industries, which have to comply with strict environmental regulations and energy efficiency targets requiring massive investment, while their competitors, still operating in the same global market, do not have to bear the same cost burden. The state aid system should therefore be modernised with a view to establishing a global level playing field. This reform should be coordinated with the action that the Commission is taking using trade policy instruments (3).

4.2.6 Competitive markets are best placed to deliver firms that are equipped for long-term success. A strong competition policy is a key element of a coherent and integrated policy to foster the competitiveness of Europe's industries. One of the challenges of global competition is having to compete against countries where the legislative framework is much less rigorous and costs, working conditions and social security laws are different. In opinion CESE 1176/2011 (4), the EESC noted that certain forms of state aid to shipbuilding were justified and that, for example, green technologies should be incorporated into the framework. The EESC considers the current state aid initiative as an important step towards a new dynamism in industrial policy, in line with the Europe 2020 strategy. Regarding the reduction of greenhouse gases, which is one of the five key objectives of this strategy, the EESC supports the guidelines the European Commission has adopted on national aid for energy-intensive industries such as steel, aluminium, chemicals and paper manufacturing (5). Designed to avoid ‘carbon leakage’, this state aid is intended to offset the rise in electricity prices resulting from the change in the rules of the European Union Emissions Trading System (EU ETS) in 2013 and to promote investment in high-efficiency power plants.

4.2.7 The book publishing sector is undergoing a process of modernisation, due in particular to digitalisation. This sector is critical not only for the flourishing of European culture but also for innovation. It is currently transitioning to digital media, a process with significant consequences. The range of e-books available is increasing, and it is therefore quite right for the Commission to respond to attempts to restrict competition and development.

4.2.8 There is growing demand for meeting energy requirements from sustainable sources. The EESC supports the Commission's proposals aiming to modernise and develop European energy infrastructure as a prerequisite for a secure, stable and sustainable energy supply for the EU.

4.2.9 Energy will in future have to be transported across great distances more frequently and in greater quantities than today. Only if there is a trans-European energy infrastructure can all the EU Member States make use of locational advantages in terms of national sources of energy. This applies to renewable energy sources such as hydro-electric, wind and solar power. Such an infrastructure would also optimise the use of fossil energy sources like oil, gas and coal (6).

4.2.10 The EESC advocates a standardised EU legal framework for the entire aviation sector, which prevents uncontrolled subsidy practices and ensures a level playing field for all market participants, including at local level (7). The EESC recommends that state aid for investment in airport infrastructure and start-up aid for airlines should only be possible in strictly defined cases, and be limited according to the period of time and intensity. It also calls for a long-term policy regarding the development of regional airports, and believes that aviation guidelines can be enforced successfully only if clear policy priorities for regional airport development are agreed. The maintenance of regional airports is a major enterprise policy issue. The Committee points to the opinion on the Better Airports Package, which was about the allocation of slots and groundhandling services at airports in the EU.

4.2.11 The Committee has repeatedly drawn attention to the need to credibly improve systems for protecting consumer rights in this connection. It therefore regrets that the legislative proposal on anti-trust damages actions was not adopted in 2011, and is unlikely even to be adopted by the end of 2012.

4.2.12 The EESC welcomes the consolidation of the institutional framework for the enforcement of competition law, by which an administrative organ such as the Commission takes decisions which are subject to full judicial review, ensuring an adequate protection of the fundamental rights of the persons concerned by those decisions.

5. Dialogue with other bodies on competition matters

5.1 While the Commission has full competence for the enforcement of EU competition law, subject to the control of the European Courts, the Commissioner for Competition and his services take part in a continuous structured dialogue on competition issues with the European Parliament. The Commission keeps the European Economic and Social Committee informed about major policy initiatives, and participates in study group and section meetings. The EESC welcomes the explicit mention in the report of cooperation with the Committee.

Brussels, 12 December 2012. The President of the European Economic and Social Committee Staffan NILSSON

(1) OJ C 68, 6.3.2012, p. 28.

(2) OJ C 68, 6.3.2012, p. 35.

(3) EU State Aid Modernisation, 0J C 11, 15.1.2013, p. 49.

(4) OJ C 318, 29.10.2011, p. 62.

(5) Communication from the Commission – Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post-2012 (2012/C 158/04), OJ C 158, 5.6.2012.

(6) OJ C 143, 22.5.2012, p. 125.

(7) OJ C 299, 4.10.2012, p. 49.