Italy’s former Prime Minister is pushing for a major overhaul the EU’s approach to competition – will the new Commission support his remedies?
The paper published this week by Italy’s former Prime Minister and former Governor of the European Central Bank week is pushing for a major overhaul the EU’s approach to policing monopolies and mergers. In The Future of European Competitiveness, his criticism is scathing and his remedies radical.
The thrust of his arguments is:
- Scale is key to being competitive and innovative
- Allow companies to invest collaboratively with rivals
- Tackle problems as they arise rather than trying to head everything off at the pass so, for instance, police potentially troublesome mergers after the fact instead of spending an eternity trying to predict what effect their combined might could have
- Look at the impact of consolidation across the EU rather than simply within one or a few countries – and telecoms gets a special mention here because it tends to be regulated on a market-by-market basis, but many telco groups needs to compete regionally and/or globally
- Stop obsessing about potential impacts on consumer prices – it is not the only benchmark that matters, nor even the most important
- Harmonise spectrum auctions, licensing rules and processes to help create scale.
Naturally not everyone is a fan of his proposals and some are thoroughly alarmed, never mind that the established thinking isn’t working.
Nor will it be a balm to those who oppose change that Draghi insists his recommendations do not necessitate rewriting the EU’s competition goals state-aid rules or those to control mergers.
Reading between the lines, it’s more about how they are interpreted and not starting out with a mindset that is agin consolidation on principle. For instance, to balance the potential of scale and innovation against a combined entity acquiring greater market power. Or as Draghi puts it, all that is needed is an overhaul the Commission’s own guidelines for how the rules are put into practice.
The blocked merged that is referenced most frequently in the debate is the proposed merger of two huge forces in the train industry, Germany’s Siemens and France’s Alstom. Their merged was blocked in 2019. The Financial Times [subscription needed] quotes an unnamed EU official pointing out that due to the deal being prevented, “We have not just one but two international champions” which sums up both the mentality and the problem.
Will the new Commission, shortly to be announced, be any more forward thinking?
And the winners are…?
The recently reappointed President of the European Commission, Ursula van der Leyen, will soon announce her 26 new Commissioners – the inauguration of the College of Commissioners’ takes place on 1 November. Margrethe Vestager spent a decade in charge of competition in the bloc, and oversaw what has been a financially ruinous decade for many of Europe’s telco groups. Will her successor bring any fresh thinking, or will van der Leyen’s appointments simply be rearranging the deckchairs?
So far there is no clear leader for the Competition brief, according to Politico. Some of the names that have been mentioned as possibilities include Latvia’s Valdis Dombrovskis, Spain’s Teresa Ribera and Austria’s Magnus Brunner.
Currently they are respectively: EVP, chairing the Commissioners’ Group on an Economy that Works for People; VP of the government of Spain and Minister for Ecological Transition and the Demographic Challenge – and likely to be the only socialist with any real clout in the new Commission; and the Federal Minister of Finance of Austria since December 2021.
The question is will whoever the new Commission for competition turns out to be, will they have the imagination, guts and power to push through radical change around monopolies and enforcing fair competition within the Union, including and beyond in-country consolidation?
Whoever finds themselves in the hot seat might also discover they have an ally in France’s Thierry Breton, if, as predicted, he’s made EVP for Industry and Strategic Autonomy.