Commission resists competition reform plans until 2021

European Commission Vice-President in charge of 'Europe fit for the Digital Age', Margrethe Vestager (L), European Commissioner in charge of Economy Valdis Dombrovskis and European Commissioner for Internal Market and Services Thierry Breton give a press conference in Brussels on 10 March 2020. [EPA-EFE/STEPHANIE LECOCQ]

The European Commission will not look into the possibility of revising the bloc’s competition rules until at least 2021, despite recent pressure from a group of EU member states.

The executive’s industrial strategy, published on Tuesday (10 March), aims to bolster Europe’s competitiveness and its ‘strategic autonomy’ amid testing global markets and future challenges related to sustainability and digitalisation.

The document highlighted the importance of an independent EU competition policy and noted that the current rules were being looked into, but stopped short of making any significant strides in the field, despite a recent joint letter from Germany, France, Poland, and Italy to Vice-President Commissioner Margrethe Vestager, calling for more urgency in updating the bloc’s competition framework.

The letter came after a period of frustration for the French and Germans after Vestager blocked a merger deal between rail firms Alstom and Siemens. And, although Vestager previously stated that reform in the competition arena would come, Tuesday’s industrial strategy notes that any such plans will only be evaluated, reviewed, and, ‘if necessary’ adapted as of 2021.

European Champions?

The Commission also maintained a safe distance from applying the now politically-sensitive phrase ‘European champions’ for fear that it may provoke a backlash from those working across Europe’s small and medium-sized enterprise landscape – a field the executive is attempting to bolster through of its SME strategy, which was also presented on Tuesday.

“Personally, I don’t use the word champions, except for sports. Never for companies,” Internal Market Commissioner Thierry Breton told reporters on Tuesday. “I think it’s inappropriate, but that doesn’t mean that we don’t believe that through clear competition rules it’s important to have leaders in Europe.”

The review of the Commission’s competition framework is ongoing and is examining expects of the policy field related to anti-trust solutions, whether rules governing horizontal and vertical agreements and the market definition notice are “still fit for purpose,” as well as case detection and investigation efficiencies. Updated state aid rules will also be put in place in 2021.

While countries such as Germany, Poland, France and Italy calling on the Commission to modernise and make room for additional ‘flexibility’ in competition guidelines, on Tuesday a contingency of member states including Sweden, the Czech Republic, Estonia, Finland, Ireland, Latvia, Lithuania and the Netherlands put pressure on Vestager to refrain from doing so.

“Any moves to soften and politicise EU competition rules would be detrimental for the whole European Union,” the letter wrote.

“We are fully confident that an update of our current rules will be considered by the Commission in a careful and thorough way, and we would caution against an overly speedy process.”

Meanwhile, a further statement delivered on Tuesday from Austria, Bulgaria, France, Germany, Greece, Italy, Luxembourg, Romania and Spain, welcomed the Commission’s intentions to water down competition rules and the state aid framework in the context of ‘new technological and global market development.’

In response to the Commission’s potential updating of the competition framework, EPP MEP  Christian Ehler called for moves to be made, but with a global perspective.

“We should also have to look at modernising the competition law, but we have to carefully adapt the competition law and the framework should be the global market and no longer the single market,” he said following the Commission’s announcement on Tuesday.

Digital Policy 

Elsewhere, in the digital arena, the industrial strategy presented a fairly light-touch approach.

Reaffirming calls outlined in the executive’s recent Digital Strategy plans, Tuesday’s document highlighted the need for key investment in research and development across artificial intelligence, 5G, data and metadata analytics, as well as building up a critical Quantum Communication Infrastructure to “protect key digital assets of the EU.”

The strategy also cited the lack of take-up in the utilisation of big data and cloud computing services across Europe’s private sector.

Along the lines of promoting Europe’s strategic autonomy, the industrial strategy also outlined plans for an Intellectual Property Action Plan to be presented in the near future, stating that “smart IP policies are essential to help all companies to grow, create jobs and to protect and develop what makes them unique and competitive.”

In the wider digital economy, the strategy also noted the Commission’s forthcoming attempt to regulate the online ecosystem as part of the Digital Services Act, to be presented in Q4, and states that an initiative to improve the working conditions for platform workers will be forthcoming.

SME Strategy

In terms of the Commission’s attempt to foster a healthy SME landscape in Europe, a series of measures will be put forward.

They include capacity-building and support for the transition to sustainability and digitalisation, reducing regulatory burden and improving market access through better enforcement of the Late Payments Directive and by creating opportunities in third-country markets through SME chapters in Free Trade Agreements, and improving access to financing for SMEs by establishing an Initial Public Offering in 2021 and ‘simplifying’ the existing State aid framework.

Moreover, the Commission has also launched a new political initiative, entitled the EU Start-up Nations Standard, which aims to make it easier for startups to scale up across the continent and attract a skilled workforce by introducing stock options.

The plans received the approval of a range of tech business leaders on Tuesday.

“We applaud the EU’s ambition of seeking a pan-European solution to address the needs of startups,” read a letter penned by a conglomerate of leaders including BlaBlaCar’s Nicolas Brusson, Taavet Hinrikus of TransferWise, and Stripe’s John Collison, read.

“We are also encouraged that the Commission has specifically called out the treatment of stock options as one of the key issues…The inability of startups to use stock options effectively to attract and retain talent is a major bottleneck to the growth of startups in Europe,” it said.

[Edited by Zoran Radosavljevic]

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