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09 March 2010

EU competition policy: time to rethink fines strategy and tackle state aid


The extraordinary amounts of state aid granted recently, albeit necessary, will distort competition, says the EP resolution. It is therefore calling for an independent report on the potentially distortive effects of state intervention in the financial sector.

Time to crack down on state aid and protectionism
The extraordinary amounts of state aid recently granted, albeit necessary during the worst of the economic crisis, are not only swelling public deficits, but will also distort competition, says the resolution, which calls for an independent report on the potentially distortive effects of state intervention in the financial sector. The resolution also calls on the Commission to publish a report on the effectiveness of state aid granted under the "green recovery" programme and for environmental protection. "Two years ago we were told that the recovery package would bring about the long overdue shift to a sustainable economy.  Has the money brought about that shift? Have state aid beneficiaries become greener?" asked rapporteur Sophia in 't Veld (ALDE, NL) during Monday’s debate with the Commission.
State aid to banks must be reduced as a matter of urgency, but in a co-ordinated way in order to avoid creating unfair competitive advantages around the EU, says the resolution, which also broadly supports a strong EU-level supervisory framework for cross-border crisis management in the financial sector. More specifically, it also backs the idea of a European deposit guarantee system and a European bail-out fund.
"Fines only" policy
The resolution disputes the Commission's reasoning that the only instrument to ensure compliance is that of imposing ever-higher fines.  "As a single instrument, high fines may be too blunt", said Ms in't Veld. The resolution notes that the fines instrument has a negative side, since it also can cause job losses. Instead, it calls for more sophisticated tools to be developed and, in particular, the use of individual liability.
Sector-specific inquiries
The Commission should institute sector-specific inquiries at Parliament's recommendation, as well as on its own initiative, says the resolution. Specifically, the resolution calls for comprehensive sector inquiries into online advertising and the dairy product distribution chain. It also calls for more action to prevent the pharmaceutical industry from blocking the market entry of generic medicines and a further inquiry into the telecoms industry.


© European Parliament


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