Brussels plays down EU Treaty competition fears

Changes to the EU’s forthcoming Treaty, pushed through by French President Nicolas Sarkozy during the Summit, will not have significant implications for the EU’s free-market policy according to Competition Commissioner Neelie Kroes, who sought to allay fears of increased protectionism in Europe.

Fears were expressed among free-market supporters in the UK that the Treaty change would support French companies, such as state-owned goliaths EDF and GDF, in the face of Directives aiming to promote competition and free choice. 

The UK’s outgoing Prime Minister Tony Blair came under strong pressure by opposition Conservatives to secure separate wording to counter the possible effect of removing “undistorted competition” from the principles at the beginning of the Treaty.

Blair and German EU Presidency officials argued that the legal basis for free competition remains, as it is mentioned 13 times in EU Treaties.


French President Nicholas Sarkozy asked:  "Competition as an ideology, as a dogma, what has it done for Europe? It has only brought fewer and fewer people who vote in European elections and fewer and fewer people who believe in Europe."

But Competition Commissioner Neelie Kroes declared that she was "not worried" by the decision to move the commitment to "free and undistorted competition" from the objectives of the defunct draft Constitution into a Protocol in the newly proposed reform Treaty.

"The protocol to the Treaty is a legally binding confirmation that the system of undistorted competition is part of the internal market. Of course, competition is not an end in itself, but it is one of the best means to create conditions for growth and jobs. Putting it in a Protocol on the internal market clarifies that one cannot exist without the other. They have moved the furniture round, but the house is still there. The Protocol is of equivalent status to the Treaty," Kroes said.

Internal Market Commissioner Charlie McCreevy told the Irish Times: "Perception is everything in politics and life. On that basis, this is going back to a protectionist reflex. I don't think it's a good thing." 

German Chancellor Angela Merkel and European Commission President José Manuel Barroso played down the wording change: "It has been restructured, it hasn't been devalued," Merkel said. "Since the free market is mentioned and the internal market is mentioned throughout this mandate, I think we can say there has been no change." Barroso added: "From a legal point of view, the Commission's competences were not undermined...they are now even clearer."

Daniel Gros, director of the Centre for European Policy Studies (CEPS) told EURACTIV: "A lot depends on how the Constitutional Court judges will react to this amendment - what is much more important is that, in the eurozone, competition is increasing, reaching markets that were previously protected, in large countries such as France, and this is what is upsetting a number of politicians." 

Peter Sutherland, former competition commissioner and former WTO director-general, declared: "There is political significance to France’s request, but France does not wish an unfree and uncompetitive market. I don't know how courts will interpret the new text, but I think that EU competition powers are unaffected. You do need both sides: merger and anti-trust control on one side, state aid control on the other."

MEP Francis WurtzGUE/NGL president, said: "What is the decision taken by the EU-27...going to change? There are two things: either European leaders consider that this is just a communications exercise designed to reassure at little expense the growing number of European women and men who see in this obsession with competitiveness one of the sources of the constant erosion of social rights and the galloping growth of precariousness and, conversely, the explosion of profits, or this is a serious issue and we should know about its concrete implications."

Swedish MEP Gunnar Hökmark, vice-chairman of the EPP-ED Group in the European Parliament, said: "It was competition that once generated innovation and investment in Europe, leading to a development that changed our continent and that changed the world. It is not by safeguarding the old well-known structures of business that will once again make Europe a leading economy, but safeguarding fair opportunities for new and unknown ideas."

The FT's Wolfgang Munchau wrote: "Forget the 'reform treaty'. It is a done deal. The next, and far more important battle in the EU, is over Nicolas Sarkozy's mercantilism, which he plans to bring to the EU…I suspect it will have some impact in the long run, as the European Court of Justice must ultimately take this change of priorities into consideration. But this is not about the narrow remits of competition policy. This change of wording is important because it tells us how the EU perceives itself and what it intends to do in the future."


EU leaders agreed to a demand by French President Nicolas Sarkozy that the new EU Reform Treaty should not have "free and undistorted" competition as one of its objectives. While "full employment and social progress" are still central, free competition has been put into a separate Protocol.

Speaking after a tense Brussels summit that ran until 5am on 23 June 2007, Sarkozy said that his amendments were about giving the EU "some more humanity".

Following French voters rejecting the original draft EU Constitution in 2005, the competition debate was brought to the fore, with fears of globalisation playing a large part in the 'No' vote.


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