Competition policy should match the EU's new ambitions

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The EU's full range of competition policy tools - merger, antitrust and State aid control rules - and even its most basic concepts, such as market share, relevant markets and level-playing field, should be overhauled to serve the Union's climate and digital ambitions and the goal of resilience, which will require massive investment. Two new EESC opinions explain how this overhaul should be done.

A debate held on 19 May at the European Economic and Social Committee(EESC)'s plenary focused on two new reports addressing EU competition policy and State aid to health and social services in the changed global context.

In an opinion on the Commission Communication "A competition policy fit for new challenges", the EESC urged the European Commission to go further than ever before in the revamp of EU competition policy currently underway.

The EESC acknowledges that competition policy has helped build the EU's economic prosperity, and that measures taken as a matter of urgency to address the COVID-19 crisis and later the Russian aggression in Ukraine have hugely helped businesses weather the storm. But these measures need to be improved and Member States guided through them. There is also a need to ensure that eligibility criteria allow all sectors to benefit and do not close the doors to the hardest hit businesses.

As for the general framework of competition law, while it has adjusted to a number of challenges, it has not gone far enough in taking up the EU's strategic aims – i.e. the green and digital transitions but also resilience to shore up the weaknesses exposed by recent crises. These ambitions require huge public and private investment and should be given maximum support, stresses the EESC.

This means overhauling the full range of competition policy tools. Right now, as the EU is faces the consequences of its strategic dependence on non-EU countries, there needs to be a genuine equality of treatment between European and global players. Measures to control concentrations and mergers sometimes seem to stand in the way of remaining competitive in relation to American and Chinese companies. Provisions on abuse of dominant position are not necessarily tailored to the new challenges of the digital and green transitions.

We suggest some technical adjustments to ease access to support and make the transition possible, but also better ways of taking into account innovation and digital developments. We've also made suggestions to allow all sectors to benefit, not just industry. I'm thinking in particular of the trade sector and SMEs, says opinion rapporteur Emilie Prouzet (Employers, France).

State aid: special exceptions for a special sector

In a second opinion the EESC addressed State aid for health and social services, suggesting ways to help a sector that proved vitally important while being placed under huge pressure.

The COVID-19 pandemic has that health and social protection systems need to be able to adjust swiftly to any changes, says rapporteur Giuseppe Guerini (Diversity Europe, IT), "and the measures we propose would help simplify and speed up the provision of State aid."shown

The EESC points out that this sector does not really have much of an impact on cross-border competition. Health services and most social care services are organised locally within individual countries and are essentially availed of where they are provided. Consequently, State aid to companies in this sector should be considered compatible with the single market and not distortive of competition.

Another important proposal concerns the maximum amount of State aid allowed (the "de minimis" regulation). The EESC says the ceiling for notifying State aid to the European Commission (currently at EUR 500 000 over three fiscal years), which triggers a lengthy and complex assessment process, should be higher for these services than for other services of general interest (SGEI). This would be justified by the public interest role of social and health services, their limited impact on trade between Member States and the return of inflation at macroeconomic level.

The Commission is currently conducting an evaluation of State aid rules applying to SGEI, which have been in force for 10 years. Based on the outcome of this exercise it could decide to revamp them, and the EESC hopes to weigh in on this possible revamp.

Views on the proposals

In the debate that followed, EESC members voiced their views on the proposals.

Colin Lustenhauer (Employers, NL) stressed that now more than ever competition policy needs to be constantly updated and adjusted to economic and commercial developments. We should not be more Catholic than the Pope and have stricter competition rules in the area of mergers and acquisitions that our competitors outside the EU. We have to look at what is happening in the real world, he said.

Luigi Ulgiati (non-attached, IT) said: We can build a united Europe with shared ambitions and objectives. But we can only do that if we can provide a strong social response.  The social pillar, more than the digital and green transitions, is the best way of ensuring such a path.

Wautier Robyns (Employers, BE) called on the European Commission to provide as much guidance as possible on granting state aid. In the COVID crisis we saw that sometimes the Member States had to try and guess what the Commission's intentions were in terms of the admissibility of state aid. Guidance will contribute to greater transparency, equal opportunities and the prompt delivery of aid to the areas affected.

Janica Ylikarjula (Employers, FI) praised the Commission's work in shielding businesses and jobs during the recent crises while striving to keep competition distortions at a minimum. At the same time, we shouldn't start building our competitiveness on business subsidies. We need to avoid politicization of competition law and its enforcement, she said. Also as regards unfair foreign state funding for companies operating in the EU market, the Commission has chosen the right path by not competing through subsidies. We would lose at that game, she said.

Klaas Johan Osinga (Diversity Europe, NL) drew attention to the EESC's call on the Commission to clarify the new CAP derogation from antitrust rules which allows farmers to form agreements on matters of sustainability: So there's an opportunity for win-win between the economy and sustainability, also in the interest of farms, he concluded.

Bernardo Hernández Bataller (Diversity Europe, ES) pointed to the need to delve into the shortcomings of competition policy in relation to services of general interest, and particularly social and health services.

Angelo Pagliara (Workers, IT) wrapped up the debate. In Europe reforms sometimes mean that you have to look at taboo subjects, and competition policy has been one of them." he said. "Competition policy is basically a building site at the moment. More work needs to be done on this because reform of competition law has become an absolute imperative.

 

The EESC opinions will shortly be available on the EESC website.