In a note published last May, the Economic Analysis Council (EAC), a committee of experts charged with advising the French government, argued that “Europe must not sacrifice its competition policy”, but rather “be more demanding in defending its interests and enforcing the rules, while respecting its international commitments”.
While a conference on competition and the digital economy was held in Paris on Monday 3 June in the framework of the OECD and in preparation for the G7, the EAC published last May some ideas on European competition policy.
In its note, this body of economists reporting to the French Prime Minister suggests strengthening the EU's trade defence in order to improve reciprocity and the ability to compete on a level-playing field and thus better defend European interests.
Unsubstantiated criticism
According to the authors, European competition policy “is rather showing signs of success”. They therefore denounce the tendency to question this policy, in particular its “effectiveness and purpose” and the accusations that it hinders the emergence of large companies. In their view, these criticisms are unfounded, they demonstrate in the document, with figures to support them.
Moreover, corporate concentration has been relatively stable over the past 15 years in the EU, while its increase is much more pronounced across the Atlantic. This lower concentration of industries has not affected EU investment and productivity, experts say.
Accelerate procedures
However, delays in dealing with abuses of dominant position in a foreign market can be detrimental to European economic operators. Instruments exist in EU texts “to take swift action, which freezes the market in a state compatible with the survival of competitors”, the authors note. Their use should therefore be facilitated, they believe.
The report also points to cases of “killer” acquisitions of innovation: ex post control of certain concentrations by the competition authority could help to remedy this.
Towards a more aggressive trade defence
“We recommend greater vigilance and strictness in the application of the principle of reciprocity in market access”, the authors urge, followed by a discussion of European trade policy.
The reform of the World Trade Organization (WTO) and, in particular, the agreement on subsidies to counter the trade practices of non-market economies, must remain a priority for the EU, says the EAC.
Strengthening transparency obligations on non-tariff measures, subsidies and regulatory enforcement must be an important focus of negotiations to reform the WTO, experts note.
The creation of a “refutable presumption”, which would make any unnotified subsidies harmful to trading partners and therefore susceptible to countervailing measures, would also be a “powerful lever” to encourage members to better comply with their transparency obligations, which are struggling to be respected.
A more strategic and offensive use of the consultation and dispute resolution system in the event of breaches is also desirable, when breaches are identified. However, the EU has been particularly timid in this respect, according to the EAC. The Commission must therefore act more aggressively on these points, by immediately strengthening its ability to put pressure on its partners to ensure that this principle of reciprocity is respected.
Nevertheless, experts recognise that this evolution will take time. It is therefore “imperative” to shift attention to the defence of European interests, in order to “consolidate” it.
It is also necessary to focus on the implementation of trade commitments in order to enforce them, the authors note.
The French researchers also suggest that the Commission should appoint a European commercial prosecutor: equipped with the means of investigation, he would be empowered to take measures to remedy the shortcomings identified. Where appropriate, its conclusions should also be taken into account in decisions on public procurement and direct investment.
Finally, this issue involves the question of access to EU public procurement: the proposal for an international procurement instrument (or ‘IPI’) must be used in this sense.
To read the document (in French): https://bit.ly/2HRylhN (Original version in French by Hermine Donceel)