EU and competition - A state of confusion The European Commission is sending out mixed signals on its competition policy By Poulomi Mrinal Saha in London Ethical Vorporation | 25 Oct 05 For related pix please visit: http://www.ethicalcorp.com/content_print.asp?ContentID=3933
"In a free market, business is a competitive game The European Commission acts as a referee to ensure that all companies play by the same rules." So said a document published last year by the European Commission on "EU competition policy and the consumer". But there seems to have been a slight change of mind since then. At September's "EU competition and consumer day" in London, the European Commission looked as determined as ever to drive home the message that it was all for being much more active than the US government on the issue of big companies and fair competition. Speaking at the event, EU competition commissioner Neelie Kroes highlighted the part the European Commission hoped to play in increasing competition, with a view to increasing consumer choice and providing better goods and services at lower prices. "We want to help create a virtuous circle of economic growth and social welfare," she said, highlighting the recent heightened activity on mergers and monopolies in the EU. Software giant Microsoft was fined a record 497 million last year for impeding the progress of industry competitors by not providing them with the information they needed to allow their software to work with Microsoft systems. On cartels too, the Commission has been extremely active. In its latest move, four Dutch brewers including Heineken and Grolsch were charged with fixing the price of beer in cafés, restaurants, hotels and supermarkets in the Netherlands. If found guilty, they could face a fine of up to 10% of their annual income. "Our aim is simple: to protect competition in the market as a means of enhancing consumer welfare and ensuring an efficient allocation of resources," Kroes said. But speakers at the London event were unanimous in admitting that such enforcement action should be preceded by attempts to remove all barriers to a single market caused by over-regulation. Market solutions preferred "Only after market solutions have been exhausted should regulatory choices be considered," said Sir Callum McCarthy, chairman of the UK's Financial Services Authority. What remained unspoken of at the conference was that in the near future, the "regulatory choices" might not be that many after all. They face opposition from within the Commission itself. The Financial Times reported last week that from as early as June, the European Commission has been planning a "sweeping overhaul" of anti-trust laws within the EU. Referring to documents the newspaper had acquired privileged access to, the FT said Brussels wants to change the way big companies were prosecuted for anti-competitive behaviour. According to the proposed changes, big businesses like Microsoft or Coca-Cola could escape being penalised for their bullying tactics if they are able to prove their behaviour creates "efficiencies" by providing consumers with either lower-priced or better quality goods and services. Neelie Kroes, at a conference last month in New York said the Commission wanted to focus future investigations on companies that hurt consumers rather than competitors. So, while the Commission's agenda to make available cheaper and better quality goods for consumers seems unharmed by this proposed reform, the claim to protect consumer choice may not be the same. There appears not much big companies could fear when exploiting their dominant position in the marketplace and trampling their peers, as long as they gave customers `everyday low prices'. Companies would be pushing their luck too far only if the rivals they hurt were as "efficient" as the dominant company, says the Commission document. The message from the European Commission on competition is now as unclear as ever. It looks like the competition regulator's firm stand against all kinds of anti-competitive behaviour has wavered in the face of on- going de-regulation activity at the European Commission, under pressure from business lobby groups. It remains to be seen if EU anti-trust laws are also to be sacrificed at the altar of the diluted Lisbon agenda. Time will tell. o o o o o o Useful links: www.oft.gov.uk/default.htm www.competition-commission.org.uk/ http://europa.eu.int/comm/competition/index_en.html o o o o o o Write to Poulomi Mrinal Saha in London at [EMAIL PROTECTED], or write to the Editor at [EMAIL PROTECTED] ------------------------ Yahoo! Groups Sponsor --------------------~--> Get fast access to your favorite Yahoo! Groups. 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