Opinion of the European Economic and Social Committee – A competition policy at the heart of EU’s competitiveness (own-initiative opinion)
Date: 2025-01-22
Institutions: European Economic and Social Committee
Subjects: State aid, anti-trust legislation, competition policy, competitiveness, control of State aid, economic concentration, innovation, investment, merger control, restriction on competition








C_202501182EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2025/1182


21.3.2025







Opinion of the European Economic and Social Committee


A competition policy at the heart of EU’s competitiveness


(own-initiative opinion)

(C/2025/1182)


Rapporteur: 
Isabel YGLESIAS






Advisor


Iratxe GURPEGUI (for the rapporteur)




Plenary Assembly decision


15.2.2024




Legal basis


Rule 52(2) of the Rules of Procedure




Section responsible


Single Market, Production and Consumption




Adopted in section


12.12.2024




Adopted at plenary session


22.1.2025




Plenary session No


593




Outcome of vote (for/against/abstentions)


222/3/2




1.   Conclusions and recommendations









1.1.


In this opinion, the European Economic and Social Committee (EESC) stresses the important role of competition policy in strengthening EU competitiveness and proposes ways in which competition rules could adapt to the new economic reality.












1.2.


Regarding merger control, merger assessment could evolve to further take into consideration the specific nature of markets where infrastructure investments, innovation or sustainability play a crucial role. Furthermore, a solution should be put in place to allow for the control of innovation-driven mergers that today do not fall under the Commission Merger Regulation thresholds. Mergers should never be used to defend national interests and all stakeholders’ views should be taken into consideration in merger analysis.












1.3.


State aid can reliably support EU companies in their transition efforts, leveraging the massive investments needed to achieve this collective goal. To avoid the negative impact on the EU’s competitiveness of the dispersion of state aid among Member States, it is essential to ensure that public support is used as efficiently as possible, enhancing spillovers and reinforcing European value chains.












1.4.


To that end, the review of the rules on Important Projects of Common European Interest (IPCEIs) must build a tool with a true European approach that ensures that such tools are real game changers and the European Competitiveness Fund must be designed and deployed with a European perspective. Furthermore, the capacities of and coordination between national administrations and the Commission must be enhanced to make procedures smoother and ensure the efficient use of existing and new tools.












1.5.


Finally, businesses need visibility and legal certainty. While new competition approaches are developed, further efforts should be devoted to streamline antitrust, merger and state aid procedures and create clear guidelines. An approach based on already existing tools to deepen the single market should be prioritised.




2.   General comments









2.1.


This own-initiative opinion is a contribution to the ongoing debate on the role that competition policy should play in making the EU more competitive, while maintaining the European model of a social market economy that has, so far, delivered high levels of prosperity, growth and social cohesion.












2.2.


The global economic context has changed radically in recent decades. The 2008 financial crisis and the COVID-19 pandemic had severe effects on our financial systems, industries and social protection systems. Within these context, public intervention was crucial to survive difficult times.












2.3.


Moreover, the EU’s economy is currently facing a threefold challenge: digitalisation, climate change and resilience, while the EU’s economy is lagging behind the US and Asian economies in productivity terms. The EU has progressively adopted a number of policy and budgetary initiatives to make the EU’s economies and society fit for the digital age and fight climate change.












2.4.


While competition law enforcement has proven to be an essential tool to secure consumers’ welfare and the level playing field within the EU during decades, and there is a general agreement about the central role that it should play in the EU’s future competitiveness, there are different views as to the how this should be achieved. Enrico Letta proposes (1) building a stronger and more integrated single market allowing companies to scale up and consolidate, respecting fair competition and consumer protection principles: achieving real market integration in the electronic communications, finance and energy sectors is key for the EU’s economy to thrive. Mario Draghi calls for competition rules to be revamped to allow EU firms to adapt to the currently changing world. Draghi raises concerns about European firms’ inability to compete without similar scaling opportunities to those offered to foreign firms, stressing the role that competition law should play in closing the innovation and productivity gap.












2.5.


Ursula von der Leyen’s political guidelines for her second term (2) advocate for a new approach to competition policy that will support companies scaling up in global markets, while ensuring a level playing field. This should be reflected in merger assessment so that innovation and resilience are fully considered, while stressing that market concentration resulting in higher prices or lower quality should be avoided.












2.6.


There are also different views regarding the role that public aid should play in addressing the current challenges and how it should be designed. Letta proposes progressively expanding EU funding support by creating a state aid contribution mechanism, requiring Member States to allocate a portion of their national funding to financing pan-European initiatives and investments.












2.7.


The recently adopted competition instruments, the Digital Markets Act (DMA) and the Foreign Subsidies Regulation (FSR), play a key role in supporting the EU’s competitiveness by introducing new rules to increase contestability in digital markets and to address distortions caused by foreign subsidies in the EU single market.












2.8.


The Commission (3) and national authorities are listening to the current debate and the calls for a new competition policy approach. They have already undertaken major efforts to address new economic challenges, specifically in the digital economy, and to streamline their procedures while facing increasing staff and resources cutbacks.












2.9.


The EU’s competition enforcement and policy initiatives are closely observed in international forums and often considered as best practices. This has a very positive impact on EU businesses competing abroad. The EU should further leverage its international role in the current economic and climate transition.












2.10.


The EESC calls for a deep reflection on these questions.




3.   Specific comments

3.1.   
Merger control and horizontal cooperation agreements










3.1.1.


In order to facilitate scale for companies competing in global markets, while ensuring necessary protection for competition and the transformations needed for a successful ‘threefold transition’, the Commission could consider adapting its merger assessment standards to the specific needs of markets.












3.1.2.


For instance, in infrastructure-intensive markets, such as telecommunications, the savings on fixed costs resulting from a merger could increase cash flows, thereby enabling investments to be made in infrastructure capacity and quality to the benefit of consumers. While the Commission has not rejected this argument in principle, it sets a high standard of proof for parties to demonstrate such a positive impact. The current legal framework for assessing efficiencies is, however, sufficiently flexible to accommodate and make it less burdensome for parties to bring forward such claims. The Commission could consider:






—


increasing the two- to four-year time period for assessing merger efficiencies. A longer period of assessment for sectors where investments cycles are long would allow efficiencies stemming from economies of scale to be captured, along with greater infrastructure quality and wider coverage, opening up access to innovative services for European consumers and businesses;










—


longer time frames would increase uncertainty, which is already intrinsic in the ex-ante analysis. Therefore, it would be useful to agree on valid models to quantify and assess evidence on long-term quality improvements resulting from innovation or infrastructure improvements. That would allow merging parties to bring forward solid, reasonable and successful arguments related to non-price benefits;










—


merger assessment should also take into consideration arguments regarding resilience in the supply chain, as an efficiency-enhancing element.
















3.1.3.


When monitoring merger remedies, careful attention should be devoted to making sure that remedies regarding investment and industrial plans have been fully implemented and that remedial action is taken where this is not the case. It is equally important to ensure dialogue with stakeholders through established channels, to ensure that all relevant views are taken into account.












3.1.4.


The Commission could also consider a less restrictive approach to out-of-market efficiencies that are driven by sustainability goals in mergers or cooperation agreements. Further to what is envisaged in the recent guidelines on horizontal cooperation agreements, a similar approach to that adopted by the Dutch Competition Authority (ACM) could be considered: (not intervening against agreements that prevent environmental damages benefiting a group of consumers which is broader than that affected by the competitive restriction) (4).












3.1.5.


Regarding acquisitions of European start-ups by foreign companies and their impact on innovation in the EU, the Commission could consider adopting rules or specific remedies to protect European innovation. There is evidence that local innovation spillovers (i.e. innovation by one firm fostering innovation by neighbouring firms) decline rapidly with distance (5): remedies could therefore require the centre of innovation to stay in the EU. The Commission could also consider creating a rebuttable presumption of harm when the start-up is acquired by a company with a strong dominant position: the merging parties would need to provide evidence that either the merger does not raise any significant competitive issues, or that expected efficiency gains are sufficiently strong to justify the acquisition (6).












3.1.6.


Following the Illumina/Grail judgment (7), the Commission will not be able to leverage the referral mechanism to review innovation-driven mergers that fall outside the EU merger thresholds. The Commission should find a way to review these mergers in order to avoid killing innovation strategies.












3.1.7.


However, concentration may be seen as necessary in strategic sectors facing strong competition from global markets. Some stakeholders propose that, in certain cases, the approval or veto of mergers could be subject to an EU-level political decision rather than a decision solely based on a competition analysis (this is already possible in certain EU jurisdictions). If this solution, which has been questioned by several experts, was retained, safeguards would be necessary to restrict it to extremely exceptional circumstances and for very specific reasons. In addition, it should not be used to protect national interest against the progress and integration of the EU’s single market.




3.2.   
Antitrust (Articles 101 and 102 TFEU)










3.2.1.


Retaining talent is critical for Europe’s economic resilience, innovation capacity, strategic independence and societal welfare and should be one of the priorities. The mobility of talent is also key to disseminating knowledge among firms and sectors and, thus, to fostering innovation and productivity while ensuring that we bridge the gender gap in the European labour markets (8). In the past few years, cracking down on restrictive practices in labour markets, namely wage-fixing and no-poach agreements, has become a priority for many competition authorities (9). Competition enforcement agencies should be vigilant regarding aggressive poaching strategies by dominant companies that would prevent rivals from hiring workers and, thus, from effectively competing in the market.












3.2.2.


Leniency is a powerful detection tool for competition authorities to fight cartels (the most harmful conduct for competition and competitiveness). Despite a previous decrease in the leniency applications, they have increased since 2020 mainly due to, according to the Commission, a pick up of its ex officio cases. The Commission has devoted resources to training ‘non-competition’ public officials (e.g. those dealing with public procurement or internal controls) to detect anticompetitive behaviour and has also developed new detection techniques, such as data scraping and the use of algorithms to spot suspicious patterns. Further resources should be devoted to new detection techniques, including artificial intelligence.




3.3.   
State aid










3.3.1.


State aid can reliably support EU companies in their transition efforts, leveraging the massive investments needed in this collective goal. To do so while protecting the level playing field within the single market, state aid must be well targeted, transparent, proportionate, limited in time and carefully monitored. Design and granting of state aid measures must be based on efficiency, ensuring that they create incentive effects and can, when appropriate, be based on excellency criterion, to better achieve their goals. To reach these objectives, the EU must strive for more streamlined, improved and faster state aid procedures, reducing administrative burdens and speeding up decision-making.












3.3.2.


The relaxation of the EU state aid framework during the recent COVID-19 and energy crises has proven to be successful in helping Member States recover from the economic shocks, while certainly having an impact on the level playing field between the Member States, which needs to be avoided in the future (10). While a clear distinction should be drawn between the ordinary framework and the crisis framework, the current geopolitical and competitive global environment calls for adjustments regarding the existing state aid rules and approach. The EU single market and EU’s resilience must be strengthened through state aid measures that create spillover effects and reinforce European value chains and industrial clusters.












3.3.3.


The dispersion of state aid among Member States also has a negative impact on European competitiveness. Recent studies show how the lack of coordination of subsidies within the EU reduces their potential positive impact, while coordinated subsidies would lead to an increase in productivity of more than 30 % (11). Analyses also show how state aid provided simultaneously to support net-zero-related industries by multiple Member States results in higher positive economic impact (12). Therefore, it is necessary for the current reflection to generate tools which include greater EU-level coordination to minimise misallocation and enhance productivity, while increasing the integration of EU countries’ economies.












3.3.4.


This could be achieved through different means. Letta proposes a levelling system under which, at the end of each year, Member States having granted aid above a certain threshold have to contribute to a common fund to pursue EU objectives, while others advocate for the creation of a fund financed from the EU budget. The new European Competitiveness Fund announced by President-elect Ursula Von der Leyen on 18 July seems a step in the right direction. This fund should be devoted to supporting common EU objectives (especially in high added-value sectors) and be managed at EU level, with a view to reinforcing European value chains and increasing procedural efficiencies. Support at national level would still be needed to account for the specific national and local situations.












3.3.5.


IPCEIs have gradually developed from a tool for specific cross-border infrastructural and innovation projects into a tool for large-scale sectoral initiatives to develop industrial capabilities. However, despite the European frameworks, these projects continue to be designed according to national objectives and national funding, putting some active Member States always at the forefront. Certain elements should be improved to transform these tools into game changers and to ensure they are built with a truly European perspective:






—


the Commission should propose a widening of their scope beyond cutting-edge innovation projects, by identifying specific strategic sectors in which joint funding could be envisaged and encouraging as many Member States as possible to participate. Alternatively, IPCEIs could be built from the bottom up, starting from an industrial alliance between EU companies, which would then engage with the Commission and the Member States together;










—


funding for the IPCEIs should be available to all firms in the EU, or at least to all firms in the participating Member States, breaking the link between funding and allocation that impede European spillovers, while focusing on productivity and efficiency.
















3.3.6.


Regarding the need to streamline state aid procedures, good lessons can be learnt from some of the elements of the original Temporary Crisis Framework. Furthermore, the current trends in state aid control call for the capacities of Member States to be enhanced in the field. This would complement the Commission’s competencies, streamline procedures, increase agility and coordination and step up monitoring, multiplying the resources and increasing efficiencies of EU state aid control. Solutions could include the appointment of single points of contact. Stronger national capacities would allow the Commission to concentrate on bigger cases, while Member States could work on robust notifications, enhancing uniformity and coherence and making an overall better use of public resources.












3.3.7.


Services of General Economic Interest (SGEIs) play an important role for the EU’s competitiveness, as key contributors to economic, social and territorial cohesion. It is essential that the new competitiveness strategies consider the modernisation of its framework conditions in strategic SGEI sectors such as energy and raw materials; mobility and public transport; and telecommunications and digital accessibility (13). The focus on end-users of SGEIs should concern not only price but also quality and accessibility. It is relevant to enhance the use of existing tools by national, regional and local administrations, while strengthening their capacities.




3.4.   
New instruments










3.4.1.


The FSR aims to tackle foreign subsidies that would distort the European single market. It has three key elements for scrutinising foreign subsidies: (i) prior notification of a certain size of merger transaction with significant foreign state support; (ii) in the context of EU public procurement, prior notification of any foreign subsidies received in the preceding three years; and (iii) ex-officio investigations based on the Commission’s own initiative. The DMA was adopted to ensure fair and contestable digital markets, containing a set of rules that apply to large digital operators that have been designated as ‘gatekeeper’.












3.4.2.


Both the FSR and the DMA have entered into force very recently. The European Commission will now need sufficient resources to successfully enforce these two instruments, while there is still legal uncertainty as to the specific compliance measures and initiatives that would meet the Commission’s standards. As to the FSR, while it is essential to counter foreign subsidies that would distort the EU level playing field, the Commission should pay attention to streamlining procedures and avoiding burdensome notification requirements.












3.4.3.


Draghi proposes creating yet another competition tool that would allow the Commission to conduct market investigations to identify structural competition problems and to determine remedies together with businesses. Before adopting a new competition tool that would require further resources and increase the regulatory burden for businesses, the Commission should focus on adapting existing ones to new economic realities and the needs of specific sectors.






Brussels, 22 January 2025.


The President


of the European Economic and Social Committee

Oliver RÖPKE
               





(1)  In the report 
Much More than a Market
.

(2)  Available here Europe’s choice: Political guidelines for the next European Commission 2024–2029.

(3)  See, in this sense, the report Protecting Competition in a Changing World, by DG COMP.

(4)  
            See the ACM’s policy rule on the application of competition law to sustainability agreements.

(5)  See, to this end, Becker, B., Roper, S., and Vanino, E. (2023) ‘
            Assessing innovation spillovers from publicly funded R&D and innovation support: evidence from the UK
            ’, International Journal of Technological Innovation, Entrepreneurship and Technology Management, 128.

(6)  This is in line with the proposal of two former Commission chief economists, paragraph 143: https://one.oecd.org/document/DAF/COMP(2020)5/en/pdf.

(7)  
            EUR-Lex - C-611/22 P - EN - EUR-Lex.

(8)  
            The gender employment gap was at 10,2 % in 2023, and costs the EU around 370 billion euros a year. Thus, women’s full participation in the European labour market is an untapped source of potential and economic gain for the bloc.

(9)  Wage-fixing agreements consist of employers agreeing to fix wages or other types of compensation or benefits; no-poach agreements involve employers agreeing not to ‘steal’ employees from each other.

(10)  See, in this sense, the Special report by the European Court of Auditors 21/2024.

(11)  See The Hidden Cost of Uncoordinated Green Subsidies, Carlo Altomonte, Giorgio Presidente, IEP@Bru Policy Brief, February 2024, Università Bocconi.

(12)  See Boosting EU’s clean tech industries: how would state aid impact the Single Market? (Joint Research Centre, 13 August 2024).

(13)  Opinion of the European Economic and Social Committee on ‘Developing a new European Strategy for the Internal Market: helping our companies face the technological, social, environmental and competition challenges’ (exploratory opinion) (OJ C, C/2024/2096, 26.3.2024, ELI: http://data.europa.eu/eli/C/2024/2096/oj).


ELI: http://data.europa.eu/eli/C/2025/1182/oj
ISSN 1977-091X (electronic edition)