Competition policy: Help or hindrance to Europe’s economic recovery?

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

Competition policy is essential for sustainable growth and a pillar of economic recovery, while those who want to relax competition during the economic downturn or protect national markets and support inefficient national businesses are "wrong", said Joaquín Almunia, European Commissioner for Competition, at a European Policy Centre (EPC) briefing on 19 April. Extraordinary public support measures were introduced to help the EU through the crisis, but these are now gradually being reduced and markets will start to function normally again, writes the EPC in its report of the event.

The following report was produced by the European Policy Centre.

''Joaquín Almunia, European competition commissioner, said the 'number one priority' is to get out of the economic and financial crises, and 'Europe 2020' presents a strategy for growth and dynamism in Europe to do so.

Competition policy benefits consumers and drives business and innovation, making 'competition policy and a Single Market the two pillars for recovery'. It enables companies to operate more efficiently, to innovate and to expand their markets. Despite the success of the single market, it has been argued that the EU must relax its competition policy, and that member states must protect national markets and set up barriers to outside competition. This is wrong, as it impairs EU competitiveness and could compromise Europe’s lasting recovery.

Rules are important in ensuring that state aid is appropriate for correcting market failures, and since the onset of the crisis this aid has helped maintain a level playing field, particularly in the banking sector  However, as Europe exits the crisis, these measures must be reduced and markets allowed to function normally again.

The temporary framework adopted in 2008 will remain in place until the end of 2010, but once the extraordinary aid instruments are phased out, normal state aids will continue, mostly in the form of horizontal aids to support R&D, regional development and environmental measures.

In May the Commission will adopt a block extension for vertical agreements in the automobile sector, revise horizontal agreements between companies and reopen the consultation process on collective redress for the private enforcement of competition policy. In the financial sector it wants a transparent Single European Payments Agreement for goods and services across European boundaries and a simplified payment card system.

In the energy sector, where liberalisation has failed to deliver the expected benefits to consumers, a Commission anti-trust action prevented German energy company E.On and French energy company EDF setting up cartels in the German and French energy markets, which will improve European markets and encourage investment.

In the digital sector high-speed broadband is important in economic recovery, and the next generation framework must ensure the gains of liberalisation continue and private investors avoid 're-monopolisation'. In order for EU consumers to reap the full benefits of the Internet, we must work towards an online single market for contents and services and enforce EU competition rules.

In the transport sector, where clouds of volcanic dust from Iceland have grounded flights across Europe, the EU is likely to agree to the use of state aids to help stricken aviation companies, provided these are applied in a non-discriminatory way, in the same way as after the September 11 attacks.''

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