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What Europe needs today is exactly the opposite of laxer competition control and protectionism. What we need is a pro-active approach, not a defensive one, to reinforce the foundations of a credible and sound EU strategy for growth. A strategy whose goals must include a fully-fledged Single Market and a real Economic and Monetary Union equipped with the instruments that were missing in its original design.
Realising the full potential of the Single Market is of the essence. Any temptation to go backwards trying to find protection behind old national economic borders is a recipe for disaster. It is obvious that dismantling the remaining barriers in the internal market is mainly the task of ex ante regulation, which aims to increase economic integration across the EU. However, my experience as Commissioner for competition shows that – despite the regulatory efforts carried out since the 1980s – competition enforcement is absolutely necessary to remove the obstacles that still encumber many sectors.
Let me refer to the situation of Europe’s banking and financial sectors. The Banking Union will enhance financial integration in the euro area. Yet, until this ambitious project is fully in place, capital markets will remain fragmented, which prevents the optimal allocation of capital across national borders. At the same time, venture-capital markets are still underdeveloped in Europe, which makes life unnecessarily difficult for start-ups and for anyone who has an innovative product or service to bring to the market.
Effective competition contributes to productivity – and therefore to economic growth – mainly through three channels:
Corrective, preventive and policy action
I have said many times that the main priority of the action of DG Competition in antitrust is our fight against cartels. But not all agreements between competitors are as damaging as cartels; some may actually be growth-promoting. Enforcing competition policy, therefore, means being able at all times to tell pro-competitive agreements from anti-competitive ones.
Through the careful assessment of proposed mergers, we make sure that they do not end up creating market structures with one or several firms having excessive market power. Bad mergers are those that result in a larger firm that can increase prices substantially because it is no longer constrained by rivals. Good mergers are those that create a more efficient and more innovative player. As was the case with pro- and anti-competitive agreements, what counts here is being able to sort out good mergers from bad, and give the green light to the deals that raise no competition concerns and, arguably, may have a positive effect on growth.
In terms of State aid, favouring underperforming companies or keeping them alive upsets the entry and exit process and hampers productivity and therefore growth. But State aid can also foster growth and strengthen the internal market when it is designed well. The reform of the State aid framework is now approaching its final stretch. A couple of days ago the Commission approved the new guidelines that will help Member States promote access to risk capital for SMEs, especially when they are in their early development stages.
Better-functioning markets are needed to reconcile the market economy with the aspirations of our citizens. And the best way to achieve this is completing a real Single Market at EU level. New entrants are needed to replace old and inefficient parts of our productive system and develop new sectors and activities. A simpler but robust State aid control is the best guarantee to preserve a level playing field and at the same time to make the best possible use of scarce public resources.