Four steps to make Europe more competitive
Tuesday, 10 July 2007
Andrea Canino
THE European Council of government heads, at its summit last month, decided to withdraw the reference to anti-trust policy from the draft constitutional treaty, a clear indication of the unease over this vital aspect of European Union policy. It is not surprising that this issue was also at the heart of discussions during the meeting of the Council of Economic Co-operation - which I chair - convened by France's President Nicolas Sarkozy at the Elysée Palace to prepare for the summit.
Whether or not one approves of the decision taken in Brussels, it constitutes a clear break with current policy with consequences that require an immediate follow-up if we are to maintain our international credibility. A priority is to put strong and credible new guidelines on anti-trust policy to the new EU Portuguese presidency. There is nothing more damaging to the future of our European businesses than to persist with indecision.
Since our meeting with Neelie Kroes, the EU competition commissioner, at Berlaymont in February, the CEC, with the assistance of major associate groups, has been working to prepare a series of concrete proposals regarding EU competition policy to be put before the Commission and national governments in September. However, the urgency created by Mr Sarkozy impels us to present our initial ideas and suggestions at once.
With regard to key principles, the new European framework must obviously continue to ensure that consumers are scrupulously protected and that competitive markets are maintained. There is absolute consensus on these points. But more must also be done to ensure that greater emphasis is placed on business competitiveness. It is clear, in fact, that if European economic effectiveness is to improve, any damaging regulatory or administrative impediment has to be removed. Quite simply, this presents four possible measures.
First, shorten the time taken to examine merger dossiers. It goes without saying that the time currently taken - from six months to a year - has a damaging effect on companies, be it their finances, key personnel or interest in the venture.
Second, to avoid causing irreversible and unnecessary harm to companies, decisions by the EU competition authorities should not be implemented until every last avenue of legal action has been explored. This whole process will have to be speeded up (as Germany is doing with its Cartel Office fines). Cases such as the BMG-Sony and Schneider-Legrand mergers, in which European Commission decisions were subsequently overturned by the European Court of Justice, have done too much harm to the system for reforms to be put off any longer.
Third, make the various current levels of control tolerable and compatible. This means ironing out the powers of local and national authorities. It is appalling, for example, that retail companies in Spain are subject to 22 separate definitions of floor space and 700 rules governing competition - a sure recipe for confusion; or that a carmaker has to produce a different version of the same model for each region in Italy.
Fourth, adopt a "foreign policy" on competition that is worthy of its name. We should impose on our foreign partners a strict policy of reciprocity when opening up our respective markets. Some countries, such as Japan, have too many projectionist regulations; others, such as the US, permit practices we have banned; others still, such as Chinese companies, employ anti-competitive practices. We can no longer open up to competition without fully taking into account uncompetitive behaviour on the part of foreign administrations and businesses. Our task is to get European rules on competition adopted at international level.
Our updating of competition policy must be guided by three further criteria. First, a keen sense of balance. We must not wreck the building we want to restore: EU competition policy is respected, feared even, by our international partners. It is an asset that needs protecting. Next, we must not be seen to be weak, since the changes that are necessary will come up against powerful lobbies. Finally, we must determine to bring things to a rapid conclusion, because our competitors will be the ones to profit from Europe's inability to introduce reforms.
On the competition issue, we are not, as some would have us believe, witnessing a battle of wills between free traders and projectionists. From Mr Sarkozy to Ms Kroes, we all have the same objective: to protect consumers and promote world trade, while at the same time facilitating the expansion of the greatest possible number of European companies capable of becoming world leaders. There are different opinions on how this can be achieved. The French president has echoed some concerns. Let us sort things out together. The future of European jobs is at stake.
(The writer is chairman of the Council of Economic Co-operation, a European organisation under the patronage of the French, Italian, Portuguese and Spanish governments and of MC Partners. )
.................................................................................
— Under syndication arrangement with FE
THE European Council of government heads, at its summit last month, decided to withdraw the reference to anti-trust policy from the draft constitutional treaty, a clear indication of the unease over this vital aspect of European Union policy. It is not surprising that this issue was also at the heart of discussions during the meeting of the Council of Economic Co-operation - which I chair - convened by France's President Nicolas Sarkozy at the Elysée Palace to prepare for the summit.
Whether or not one approves of the decision taken in Brussels, it constitutes a clear break with current policy with consequences that require an immediate follow-up if we are to maintain our international credibility. A priority is to put strong and credible new guidelines on anti-trust policy to the new EU Portuguese presidency. There is nothing more damaging to the future of our European businesses than to persist with indecision.
Since our meeting with Neelie Kroes, the EU competition commissioner, at Berlaymont in February, the CEC, with the assistance of major associate groups, has been working to prepare a series of concrete proposals regarding EU competition policy to be put before the Commission and national governments in September. However, the urgency created by Mr Sarkozy impels us to present our initial ideas and suggestions at once.
With regard to key principles, the new European framework must obviously continue to ensure that consumers are scrupulously protected and that competitive markets are maintained. There is absolute consensus on these points. But more must also be done to ensure that greater emphasis is placed on business competitiveness. It is clear, in fact, that if European economic effectiveness is to improve, any damaging regulatory or administrative impediment has to be removed. Quite simply, this presents four possible measures.
First, shorten the time taken to examine merger dossiers. It goes without saying that the time currently taken - from six months to a year - has a damaging effect on companies, be it their finances, key personnel or interest in the venture.
Second, to avoid causing irreversible and unnecessary harm to companies, decisions by the EU competition authorities should not be implemented until every last avenue of legal action has been explored. This whole process will have to be speeded up (as Germany is doing with its Cartel Office fines). Cases such as the BMG-Sony and Schneider-Legrand mergers, in which European Commission decisions were subsequently overturned by the European Court of Justice, have done too much harm to the system for reforms to be put off any longer.
Third, make the various current levels of control tolerable and compatible. This means ironing out the powers of local and national authorities. It is appalling, for example, that retail companies in Spain are subject to 22 separate definitions of floor space and 700 rules governing competition - a sure recipe for confusion; or that a carmaker has to produce a different version of the same model for each region in Italy.
Fourth, adopt a "foreign policy" on competition that is worthy of its name. We should impose on our foreign partners a strict policy of reciprocity when opening up our respective markets. Some countries, such as Japan, have too many projectionist regulations; others, such as the US, permit practices we have banned; others still, such as Chinese companies, employ anti-competitive practices. We can no longer open up to competition without fully taking into account uncompetitive behaviour on the part of foreign administrations and businesses. Our task is to get European rules on competition adopted at international level.
Our updating of competition policy must be guided by three further criteria. First, a keen sense of balance. We must not wreck the building we want to restore: EU competition policy is respected, feared even, by our international partners. It is an asset that needs protecting. Next, we must not be seen to be weak, since the changes that are necessary will come up against powerful lobbies. Finally, we must determine to bring things to a rapid conclusion, because our competitors will be the ones to profit from Europe's inability to introduce reforms.
On the competition issue, we are not, as some would have us believe, witnessing a battle of wills between free traders and projectionists. From Mr Sarkozy to Ms Kroes, we all have the same objective: to protect consumers and promote world trade, while at the same time facilitating the expansion of the greatest possible number of European companies capable of becoming world leaders. There are different opinions on how this can be achieved. The French president has echoed some concerns. Let us sort things out together. The future of European jobs is at stake.
(The writer is chairman of the Council of Economic Co-operation, a European organisation under the patronage of the French, Italian, Portuguese and Spanish governments and of MC Partners. )
.................................................................................
— Under syndication arrangement with FE