Almunia said that the main objective of the State aid modernisation initiative which he launched a month ago is to help Europe’s governments spend more wisely to prepare the ground for the recovery, boost growth while keeping the right priorities in times of fiscal consolidation and mitigate the social effects of the crisis. To this end, he said, the regime that will emerge from the reform will encourage aid that targets market failures, has a real incentive effect; does not waste taxpayers’ money; and has no better market alternative.
"These are the defining features of what I call ‘good aid’. The aid must target the promotion of environmental protection; support research and development; and give incentives for the development of the digital economy. Conversely, we want to discourage the bad aid we can no longer afford, such as spending that keeps inefficient companies on the market.
"In the context of the modernisation initiative, Member States will have a larger responsibility to identify and quantify the economic and social losses that the aid is designed to avoid and to select the cases that deserve the public support with greater care. We will also transfer in these guidelines some of the lessons learned in the rescue and restructuring of banks and financial firms, such as the introduction of burden sharing. The initiative will thus result in more focused and better quality aid and will produce a leaner and clearer regime."
Almunia went on to talk about market abuse and mergers:
"Last year, the Commission stepped up its antitrust work in another vital sector of the economy that had largely escaped scrutiny: the financial sector. We are currently investigating abuses by investment banks and market information providers aiming at foreclosing competition in the market of derivatives and market-data information, respectively. Also in the financial sector, we have open investigations against the excessive fees charged by payment systems, notably credit card schemes.
"Let me turn to mergers. It is very rare that we have concerns that prompt a prohibition decision. But this did happen in the Deutsche Börse/NYSE Euronext deal this year, where we found that the transaction would have created a de facto global monopoly on derivatives with European underlyings. In that case, we rejected the efficiency claims that money would be saved by the netting of margins, in part because there was no evidence that without competition these savings would be transmitted to the investors."
He then talked about regulation:
"The recent crisis resulted in a growing consensus that markets do not always self-regulate. The regulatory drive is therefore likely to increase in the next few years. The interaction of competition policy and regulation will have to be carefully calibrated.
"Regulation and competition policy are complementary. In some sectors, established patterns of behaviour or technological characteristics impede efficient competition. In such instances, case-by-case antitrust enforcement is not efficient and a regulatory approach can be more effective to remove the problem. But regulation sometimes pursues other objectives than competition such as financial stability, broadband coverage, and safety requirements. In such cases, good cooperation between regulators and antitrust authorities is necessary to ensure that competition does not get inadvertently and unnecessarily damaged."
He concluded by saying:
"My main message is that competition policy remains an essential instrument for growth and it must not be forsaken because of fear, reactionary instincts, or the promotion of special interest. The organisation of economic activity is becoming increasingly complex and the supervision and regulatory drive of governments might very well increase in the coming years. Competition policy must be part of the regulatory mix and must not be unnecessarily subordinated to other economic objectives.
"In Europe’s very difficult circumstances, competition policy can help achieve a successful restructuring of our productive capacity and encourage innovation. Most important of all, competition policy is an essential tool to integrate European markets into a single economic area and this would contribute in more ways than one to a deeper and more ambitious integration of Europe."
Full speech
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