Ladies and gentlemen
Our world has never been better off. Freer trade has brought competition to markets that used to be closed. It has made us more productive, and helped people and ideas to circulate, creating innovations that have changed our lives.
But despite this, many people are unhappy. They see the executives and shareholders of big companies getting richer, and they ask – is this economy for everyone, or only for a lucky few?
That’s a fair question. And a crucial one. Because unless we can show that an open economy is good for everyone, that openness will be challenged more and more fiercely.
I’m convinced that open markets can give everyone their fair share of the benefits of growth. But that will only happen if we choose the right policies, and work to make them a success. And one of those policies is competition.
Competition enforcement certainly can’t provide all the answers on its own. But it can make a difference. A very important difference.
Because it’s competition that makes companies cut prices, so we all get a share of the benefits of free trade. That helps the least well off, for whom every cent counts, most of all. According to the World Bank, if competition could reduce the cost of basic food items in Africa by just 10%, that would take half a million people out of poverty in just three African countries.
Competition gives people choice. It stimulates innovation. It can drive companies to make the most of scarce resources, helping us to face big challenges like climate change.
And competition enforcement also sends a message of fairness. That public authorities are here to defend the interests of individuals, not just to take care of big corporations. And that everyone, however rich or powerful, has to play by the rules. That’s what President Juncker referred to last week as the social side of competition law.
And that means that as competition enforcers, we have a responsibility to make a difference. We have the power to do a lot of good. And we need to make sure we use that power to answer people’s most pressing concerns.
So we have to think, not just about what we do, but about how we do it.
We need to be clear about how competition benefits people. We need to work on taking decisions more quickly. And we need to work together to protect consumers throughout the world.
It takes an effort to explain what we’re doing. Because there’s no way around it. Competition enforcement is complex.
Before the Commission decided to block the recent merger between Hutchison and O2, we looked closely at every aspect of the British market for mobile networks. We considered every argument, both for and against the merger. And we ended up with a decision that was this high and weighed two and a half kilos – or five and a half pounds, if you prefer.
But this is what it takes to reach good decisions. We have to look carefully at all these details – not just because the courts demand it, but so we can be confident that we’re doing the right thing.
And we need to be sure that we keep up with new challenges, by discussing and debating what new developments mean for competition policy.
But we need to be careful. We mustn’t let all this complexity blind us to the fact that what we’re doing is actually very simple.
We’re making sure that someone is there to speak for the consumer. That powerful companies don’t misuse their power in a way that benefits them, but hurts the rest of us.
The merger between Hutchison and O2 involved a complex investigation. But in the end the issue was straightforward. Two companies wanted to merge so they could become more profitable. But those profits would have come at the expense of British mobile customers, who would have paid more for their subscriptions. That would not be fair.
Cartels are another way for companies to protect their profits at the expense of consumers. So companies that form a cartel mustn’t get away with just a slap on the wrist.
In July, we imposed the biggest cartel fine in the Commission’s history on five European truck makers, who will have to pay nearly 3 billion euros. Those five companies made around nine of every ten medium and heavy trucks sold in Europe. For fourteen years, they colluded on the gross list prices for trucks, and delayed the introduction of new, greener technology. And the fine reflected the scale and the length of the cartel.
Or look at the decision – which the European courts confirmed earlier this month – to fine the drug company Lundbeck, and several makers of generic drugs, for a number of so-called pay for delay agreements.
Back in 2002, Lundbeck was facing a huge hit to its profits when the basic patent on a blockbuster antidepressant expired. That would have allowed other companies to sell generic versions of the drug. So Lundbeck decided to pay generic drug companies to leave the market, or not to enter in the first place.
That way, Lundbeck kept prices high, and the generic companies got their payoff. It was depression sufferers, and health systems, which lost out by paying too much for the medicine. And it was their interests that our decision protected.
And in Europe, competition law is not just about antitrust, cartels and mergers. We also have rules, to stop governments giving favours to a handful of companies, at the expense of everyone else. So our cases on illegal State aid, in the form of special tax treatment, have the same basic goal as the rest of our work.
Our rules don’t stop governments applying a low tax rate to every company. What they can’t do is to select just a few favoured businesses, and give them special treatment which their rivals can’t get. So when we ask national governments to reclaim unpaid taxes, all we’re doing is ensuring that everyone has an equal opportunity. That is only fair.
And I think that’s what people expect of their public authorities. Not to get cosy with special interests, but to have the courage to defend the public interest. And that’s an area where competition enforcers can lead by example.
The challenge of timeliness
To do that, what we need are not words, but deeds. To win people’s trust, we have to take action that makes a difference to their lives.
But antitrust cases take time. It takes time to collect evidence. And it takes time to make sure companies have the chance to defend themselves.
We can’t cut corners on those things and still respect the rule of law.
But we do need to find ways to deal with cases as quickly as possible. So we can end the harm to consumers. And so we can turn our attention to other important cases.
So if a company, when it’s faced with the evidence from our investigations, is willing to help us reach a quicker conclusion then we should welcome that. A company might be willing to admit its guilt, or at least help us to prove our case. And we should encourage others to do the same, by reducing fines for companies that cooperate.
For example, our settlement procedure for cartels cuts fines by 10% for companies that admit their guilt. That encouraged five members of the trucks cartel to settle, which helped us move on quickly to deal with other cartels.
And there’s no reason why this approach should be limited to cartels.
That’s why earlier this year, we invited companies that we were investigating under the antitrust rules to talk to us about getting a lower fine in return for cooperating with our investigation.
And we took a decision today which was based on exactly that sort of cooperation.
The case involves ARA, an Austrian waste management business. ARA owned a unique collection infrastructure, without which no company could provide waste management services throughout the country, as the law required. So by stopping others having access to its infrastructure, ARA denied them a chance to compete.
But by admitting that it had broken the law, ARA allowed us to take a quicker decision. It also helped us solve the competition problem, by proposing to sell the infrastructure that it owned.
That cooperation helped us produce a better result for consumers. So we decided to reduce the fine by 30%.
I hope that this type of cooperation will be the start of a trend.
Because if more companies follow ARA’s lead, we’ll be able to do more to protect consumers.
But it’s not enough for competition authorities to work well in isolation. We also need to work together.
Because companies are increasingly global. In all kinds of businesses, from crop protection to cement, a few big companies are market leaders throughout the world. Here in the United States, the Council of Economic Advisors has warned about the risks of markets that are increasingly dominated by a few large companies.
For many people, these huge companies are the most visible sign of our open markets. Some fear that they are now so big that no government can control them.
We need to prove that fear wrong. As companies go global, so must competition enforcers.
The good news is that this is already happening. By working together, we can hold multinationals to the same high standards as any other business.
We work together on cartels, like the global cartels in car parts which authorities around the world are investigating. To make our work more effective, we’ve coordinated the timing of our investigations, so a dawn raid in one country doesn’t warn companies in other countries to destroy evidence.
We work together on big mergers, so the decisions we take are well coordinated. When General Electric bought Alstom’s energy-related business last year, we worked closely with the US Department of Justice. We made sure that the company that bought Alstom’s gas turbine business was acceptable, both in Europe and in the US.
And we work together through organisations like the International Competition Network, to come up with shared answers to the problems we all face. That means practical issues, like how to work together on merger cases. But it also means taking a common approach to the decisions we make, with work such as the recommended practices on predatory pricing, which the Network adopted in 2014.
So the idea that global companies are beyond the reach of competition rules is clearly untrue. And I think it’s important that we let people know that. Because it gives the public confidence to see us working together on the issues that don’t stop at national borders.
The fact is that the issues we face have a lot in common, wherever we are in the world.
People don’t just want to be told that open markets make us better off. They want to know that they benefit everyone, not just the powerful few. And that is exactly what competition enforcement is about.
So for competition enforcers, there’s a lot at stake. We can make a real difference. But to do that, we have to make sure that our work counts.
We have to work together, to make sure companies comply with the rules.
We have to find ways to take quick decisions, without harming companies’ rights.
And we have to show that competition makes markets work more fairly for everyone.
So that we play our part in keeping our world free and open.
Compliments of the Delegation of the European Union to the United States