EN Official Journal of the European Union C 12/54

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 2013

(COM(2014) 249 final)

(2015/C 012/08)

Rapporteur: Paulo Barros Vale

On 1 October 2014, the 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

Report 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 2013

COM(2014) 249 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 23 September 2014.

At its 502nd plenary session, held on 15 and 16 October 2014 (meeting of 15 October), the European Economic and Social Committee adopted the following opinion by 127 votes to 1, with 5 abstentions.

1. Conclusions and recommendations

1.1 As is its practice, the EESC is carrying out an annual assessment of the Commission report on Competition Policy, one of the European Union's fundamental policies. The EESC welcomes the content of the report and, broadly speaking, supports it, but wishes to state its concerns about the current situation.

1.2 Free and fair competition, which safeguards the interests of economic operators, consumers and the general public, warrants every effort that can be made. The Commission's contribution is essential and the EESC is pleased to note the efforts made to comply with internal rules and to continue international cooperation in this domain.

1.3 The performance of the national competition authorities (NCAs) is deemed essential to this ongoing work, and they should therefore be given the resources, both human and material, to enable them to act in a way that is efficient and proactive rather than reactive, as is becoming the norm. A greater emphasis on preventive work can avert various illegal and destructive market situations that affect in particular small and medium-sized enterprises (SMEs) and consumers.

1.4 The EESC nevertheless thinks that adoption of the proposal for a directive on certain aspects of actions for damages in antitrust matters was an excellent move. Its transposition and implementation will have to be pursued diligently in the Member States, although the Committee regrets the fact that the proposal in question has not been accompanied by a legal instrument which is equally binding in respect of a horizontal legal framework for collective redress in the event of collective rights and interests being violated.

1.5 In addition to regulation, a role should be given to self-regulation, and this practice should be encouraged in particular through agreements between organisations representing producers, traders and consumers, the best existing European examples of which can and should be followed.

1.6 Since, in the light of the Treaty, the harmonisation of tax policies is not an option, competition policy should will have to ensure that taxation in the EU results in as few distortions as possible.

1.7 The energy market should continue to receive special attention, since the single market has not yet been completed. Steps to strengthen the European network, which allows for cross-border trade, and to invest in renewables, which, as well as having clear environmental benefits, allows other producers to access the network, should be the focus for developing genuine competition in the sector, making it possible to lower charges for businesses and households alike.

1.8 Consumers' free access to all markets is essential. The Digital Agenda's goal of universal broadband availability has a key role to play in achieving this. Access to the digital market, where prices are often lower than in conventional markets, would facilitate access to certain goods for consumers who would otherwise be unable to purchase them.

1.9 International cooperation has been the focus of a wide range of work, which has yielded laudable results. Sight should not be lost, however, of all the work that still remains to be done. In addition to bilateral work, the work in the WTO and the ILO should be continued. Europe continues to suffer as a result of unfair competition, both within its borders and beyond, from public and private enterprises based in countries where it is common practice to grant illegal state aid (especially in the energy industry), where environmental laws are more relaxed and where the same labour laws are not respected (often in clear violation of fundamental human rights).

2. Gist of the 2013 report

2.1 There were some signs of economic recovery in Europe in 2013. European policy measures continued to target increased confidence and competitiveness in order to encourage smart, sustainable and inclusive growth — a feature of the Europa 2020 strategy.

2.2 The 2013 Competition Policy Report makes reference to a European Parliament study on competition policy, which clearly demonstrates the importance the policy has for this objective: ‘... competition policy, which intensifies competition, will stimulate growth’.

2.3 The report has been divided into eight parts, with the following headings: ‘Promoting competitiveness by fighting against cartels’; ‘Ensuring effective antitrust enforcement and merger control in the interest of businesses and consumers’; ‘State aid modernization to steer public resources towards competitiveness-enhancing objectives’; ‘Fostering a fair and stable financial sector to support the real economy’; ‘Energy: the sector where “more Europe” is most needed’; ‘Competition enforcement in the digital economy to underpin the digital agenda for Europe’; ‘International cooperation in competition policy to tackle the challenges of globalization’; and ‘Competition dialogue with the other institutions’.

3. General comments

3.1 Without doubt it is SMEs which provide the backbone of Europe's economic recovery. Because of their size, they are also the most vulnerable to practices involving the abuse of dominant market positions, which in many cases means they are doomed to disappear. Abuse of dominant market position should warrant particular focus in competition policy, particularly when perpetrated by major retail groups who, little by little, have been wiping out small suppliers and small businesses, ultimately to the detriment of consumer interests. The directive on actions for damages based on the infringement of TFEU Articles 101 and 102 is to be welcomed and the Committee deems it to be most important; the prevention of such infringements has thus taken on even greater importance and requires careful thought so as to ensure preventive action is effective.

3.2 The EESC calls for the work of NCAs to be more proactive than in most cases to date, where they have intervened only in response to complaints from operators or consumers. Some negotiations — which should rather be called ‘impositions’ — could be monitored, and this might help prevent certain abuse of dominant positions. A prerequisite for achieving the progress that is needed is a considerable improvement in the exchange of information within the production chain.

3.3 Sectors strongly influenced by fluctuations in raw material prices also warrant particular attention from NCAs, since often an increase in the price of raw materials (or even just the threat thereof) is almost immediately reflected in the end price, whilst a reduction in raw material prices is not.

3.4 The EESC would draw attention to the need for competition policy to deal with public procurement problems; in most cases this remains a somewhat closed market. In fact, public procurement is still a fragmented market which only some parties manage to enter, despite current work on ‘straight-through’ e-Procurement. Poor competition is damaging public interest — the lack of alternatives does not allow public bodies any leeway, meaning that the same tenderers are selected time and again, sometimes meaning that overly cosy relationships develop between those firms and the political authorities.

3.5 However, it should also be borne in mind that firms operating in island and outlying regions are particularly vulnerable to competition, for the transport costs they incur in order to gain access to other markets hinders them when they compete with other operators. Here efforts could be made to find mechanisms to facilitate these firms' access to central markets, thus promoting healthy competition throughout the EU.

3.6 Moreover, of key importance is the competition facing European firms — both within Europe and on other markets — from firms (both public and private) in non-Member States, protected by illegal state aid that gives them competitive advantages, advantageous environmental standards and lax labour legislation which often jeopardises fundamental human rights and the rights of citizens and consumers. Continuity of international cooperation efforts, within and outside the WTO and the ILO, should remain a priority in diplomacy to counter these inequalities, dealing with the problem of competition and going further in the defence of human rights.

4. Promoting competitiveness by combating cartels and through antitrust legislation

4.1 Steps to combat cartels are particularly important in competition policy activities. The EESC therefore welcomes the efforts the Commission has been making to counter this practice, which affects the whole economy. Policy activities relating to financial markets, and most particularly to the raw materials and intermediate goods market, where price fluctuations not only affect the single market but also Europe's competitive capacity worldwide, are vital for growth at a time when it is essential to gain access to new markets. Worth highlighting are three cases where firms forming part of cartels have been identified and fines imposed: one in market for the supply of wire harnesses, one in the financial derivatives markets and one in the shrimp market. In addition, a Statement of Objections has been sent to a number of suppliers of smart-card chips.

4.2 The EESC has been endorsing the work on antitrust legislation, which it deems to be vital to competition policy. It reiterates its support for the Commission's work here, which has helped discourage artificial fragmentation of the single market and it welcomes the completion of the antitrust proceedings on standardisation of payments made over the internet; it is also pleased to see the Statement of Objections directed at banks for coordinated conduct hindering stock exchanges from accessing the credit default swaps (CDS) market and, most particularly, the conclusion of the enquiry on antitrust proceedings relating to the Libor, Euribor and Tibor benchmark rates, which have improved market security.

4.3 The year 2013 was hallmarked by the adoption of a proposal for a directive on actions for damages in antitrust matters. The EESC expressed its support for this proposal, which counters the disparities between national laws and the unequal treatment of victims and offenders and provides legal protection for consumers — a recurring concern voiced in EESC opinions.

4.4 Being in favour of standardisation, the EESC nevertheless highlighted the fact that the directive might be too soft on offending firms which benefit from leniency programmes, notwithstanding the recognised value of this instrument in detecting secret cartels. It also recommended that the proposed directive and the recommendation on collective redress be more closely aligned, expressing regret at the fact that ‘the introduction of a class action in competition matters, which should have been an effective mechanism for consumers, has been left out[,] but included in a recommendation — which is not binding — encouraging Member States to establish collective redress mechanisms’ (1).

4.5 The EESC welcomes the continuing coordination between the Commission, national competition authorities and the European Competition Network. It also calls for the exchange of relevant information between the different bodies concerned to be given a more decisive role. It would nonetheless point out its concern about the difficulty some national competition authorities have in properly regulating certain sectors, where collusive behaviour and/or abusive practices go completely unpunished.

4.6 Competition policy should tie in with the work of other DGs so as to effectively combat concerted action and the abuse of dominant market positions which flout social, environmental and product safety standards and make it exceedingly difficult for new operators to enter the market, placing them at a clear disadvantage.

5. Modernising state aid

5.1 The EESC welcomes the process of modernising state aid, coordinating it with the flagship initiatives of the Europa 2020 strategy. It is essential to use state aid properly: state aid which supports cohesion policy and targets those sectors which contribute to Europe's development. Scarce public resources must be deployed in accordance with the objectives outlined in the Europa 2020 strategy, allowing less-developed regions to catch up on more developed ones, investing in priority sectors, boosting the economy and employment, and facilitating funding for SMEs.

5.2 Steps to modernise state aid should not, however, leave out help relating to public services, which meet social needs such as health, education and training, access to the labour market and back-to-work schemes, care facilities for children and the elderly, and support for vulnerable groups to help them become reintegrated into society. Such needs must be viewed from a broader perspective than just an economic one. Rather, the specific nature of public service sectors should be considered: despite the importance of allocating ever-scarcer resources efficiently, service quality should take precedence.

5.3 Against a backdrop of substantial mobility, the case should be considered for giving people freedom of choice of health service providers, looking into possibilities which, without jeopardising service quality and protection for the most deprived groups, might prevent users being subject to the discretionary powers of either the State or insurance companies. This is issue is so important that it should be made the subject of an own-initiative opinion, so that it can be dealt with in greater depth.

5.4 The EESC has already spoken out in favour of modernising the EU's policy on state aid. In particular it supports the new guidelines on aid in relation to CO2 emissions trading scheme arrangements, which preclude the relocation of industry to countries where legislation is more lenient. It does, however, regret the failure to uphold the recommendation to increase the de minimis aid ceiling to EUR 5 00 000 instead of the current EUR 2 00 000, along the lines of what happened with services of general economic interest (SGEIs) (2).

6. Competition at sectoral level

6.1 Fairness and stability in the financial sector

6.1.1 The difficulties that the financial sector has been encountering are well known, as is their impact on financing the real economy and on confidence in the financial markets. Various efforts have been made to restore confidence and boost transparency, reducing systemic risks. Temporary state aid for the financial sector saved it from collapsing, but new scandals buffeting an already very shaky balance seem to hit the headlines whenever signs of recovery appear. For this reason it is essential that the authorities supervising the sector continue to impose strict controls so as to prevent irresponsible conduct on the part of financial institutions, whether or not they have received bail-outs.

6.1.2 Despite the fragile nature of the sector, steps should be taken to ensure that current investigations into illegal practices continue, although they are not having much effect on the financial titans who persist with behaviour which is damaging to the market.

6.1.3 Worth highlighting here is the proposed regulation on interchange fees for card-based payments, requested for quite some time, which will restore fairness in the European area by harmonising the costs incurred when paying with cards.

6.2 The energy sector

6.2.1 The single market in energy still has some way to go before being completed. Energy prices remain high, weighing heavily on firms' and households' budgets. Market liberalisation has not yet succeeded in enhancing competition and transparency, and Europe continues to suffer from the disadvantages of high energy prices compared to its competitors worldwide. Even cross-border energy supply warrants particular attention in order to safeguard the free internal market.

6.2.2 Advantage should be taken of the current consensus on the need for a common energy policy, investment in infrastructure, increased energy efficiency and the use of renewable energy sources in order to further development in the energy sector. Renewable energies are not in fact able to compete on a level playing field with fossil fuels and nuclear energy, which are still subsidised directly by public budgets and indirectly because environmental costs and the impact of the use of such fuels on health are not internalised. Renewables are still at quite an early stage of development and should be given greater support to enable them to compete, in a fair market.

6.2.3 Furthermore, renewables should not only be seen as a new source of energy. Their development opens up new opportunities for establishing a decentralised energy production model in which individuals and local communities can be both producers and consumers at the same time. This new model should be supported through the establishment of an appropriate regulatory framework that ensures easy access to the network for small electricity producers (3).

6.2.4 European energy connections are deemed to be essential from the viewpoint of competition policy. The effects of Europe's energy vulnerability have been making themselves felt with the recent Ukraine conflict, which could jeopardise gas supplies to central Europe. Linking up existing energy networks in the Iberian Peninsula to the countries of central Europe would not only bring the Iberian market closer to the rest of Europe, but would also avert problems flowing from interruptions in supplies from Russia.

6.2.5 Reform of European energy policy is essential, all the more so at a time when trade agreements are being drawn up with the United States of America, where energy costs are manifestly lower, placing European firms at a disadvantage from the outset.

6.3 The Digital Economy

6.3.1 This sector is particularly vulnerable to illegal competition practices, since high-tech companies, undergoing constant, rapid innovation, may not be able to wait the time it normally takes for decisions to be made, and therefore may go under.

6.3.2 The EESC would reiterate its support for the state aid guidelines on the broadband network, since they serve the goals of the Digital Agenda.

6.3.3 The single market in telecommunications has still not been completed. Despite the fact that charges have come down somewhat, they remain high, to the detriment of firms and households. The gradual fall in roaming charges, which will culminate in their abolition at the end of 2015, is to be lauded; focus should now be placed on a real reduction in remaining charges and steps to make high quality broadband available to everyone. The EESC would reiterate that it firmly believes that by setting up a single regulator in this domain, the EU could make a contribution to achieving these objectives.

6.3.4 Particular attention should be paid to universal broadband availability, since not all households have access to it yet, especially those of low-income families. This shortcoming prevents many people from accessing the digital market, who are as a consequence unable to access markets where prices are often favourable.

6.3.5 The EESE supports work being done on standard essential patents (SEPs), which is helping to combat the abuse of dominant market positions.

7. International cooperation

7.1 The EESC is pleased to note that negotiations have started up with the United States on a Transatlantic Trade and Investment Partnership (TTIP) agreement, and with Japan on a free trade agreement. It also welcomes the establishment of high-level dialogue with representatives of some third-country competition authorities. Likewise important is the signature of a cooperation agreement with Switzerland allowing the exchange of information between cooperation authorities, which could facilitate some current and future investigation processes.

7.2 Unfair competition from non-Member States where the most basic social and environmental rules, principles and rights are not respected puts fair foreign trade at risk. International competition should be developed at the highest level and within the framework of the WTO and the ILO so as to guarantee not only human rights, but also fair competition practices.

7.3 There is no doubt that globalisation is here to stay and exports are essential for Europe's growth. It is important to standardise practices so that the EU can compete on an equal footing in markets where state aid is still doled out illegally and where labour legislation remains poor.

8. Inter-institutional dialogue

8.1 Notwithstanding the fact that the Commission has full competence in matters pertaining to competition policy, DG Competition and its commissioner continue to engage in close consultation with the European Parliament. Both the EESC and the CoR have been kept informed about the work of DG Competition, with officials attending section and study group meetings.

8.2 The EESC welcomes the continuation of its cooperation with the Commission, but nevertheless notes that this could be improved, by developing closer relations between the institutions through more permanent work involving a monitoring group created by the EESC to prepare the final report, which would enable the Committee to react more swiftly to the Commission's work.

Brussels, 15 October 2014. The President of the European Economic and Social Committee Henri MALOSSE

(1) OJ C 67, 6.3.2014, p. 83.

(2) OJ C 67, 6.3.2014, p. 74.

(3) OJ C 226, 16.7.2014, p. 1.