Commission guide: Competition 'enforcement' key to supporting growth

Margrethe Vestager says competition policy can contribute to the EU’s broader policy objectives.

By Desmond Hinton-Beales

09 Feb 2015

The "best way to prepare for competition abroad is to be competitive at home", Margrethe Vestager tells the Parliament Magazine, and, for the Danish official, this process has "a key role to play in support of competitiveness and growth". As Denmark's economic affairs minister during her country's EU council presidency in 2012, Vestager has experience at the highest levels of EU decision making. For her, competition "induces firms to invest and be more efficient - to stay ahead of their rivals", while a proper enforcement of the rules "is central to achieving structural reform and growth".

Europe's competition commissioner sees the importance of her brief in many aspects of EU policy and activity, saying, "I do not consider my file to be a lonely portfolio. It is important to make markets work better. That is a common goal. We need as much market as possible and as much regulation as necessary - targeted and proportionate to the problem identified. As such, a fact-based analysis - something that competition law is founded on - is the starting point in getting that balance right."

"We need as much market as possible and as much regulation as necessary"

This view of the competition brief as being interlinked with those of other commissioners is reflected perfectly in the commission's new working structure, which Vestager believes will "lead to a closer cooperation between the different policy fields and may lead to a better European solution". Addressing concerns over the need for independence in the competition portfolio, she says, "in respect of individual cases, the new commission's working arrangements ensure that concrete competition cases and appropriate proposals to the college are dealt with by the commissioner for competition. I will act independently in competition cases. When it comes to concrete cases, impartiality, neutrality and fairness are extremely important to give legal certainty.

All companies should not only abide by the same rules but also be treated equally." However, she underlines that the new working procedures will allow a "maximising of the contribution from competition policy initiatives - such as legislation and guidelines - to the EU's broader policy objectives". "This will also increase the knowledge and awareness of other members of the commission on the benefits of competition; and contribute more effectively to the policy initiatives of the other commissioners."

It is not just her fellow commissioners with which Vestager is anticipating a more involved and productive working relationship. "Based on my experience so far," she says, "I am very optimistic about the future when it comes to cooperation with the European parliament. While we each have our own distinct missions - mine being the impartial enforcement of the law - we can learn from one another. I am already engaging with the parliament in a regular and constructive manner which is important because MEPs represent the European citizens and their concerns. I inform parliament about new policy documents before I put pen to paper so that we can hold a debate and exchange views.

Likewise, my services will continue to brief MEPs and their staff about our policies and, of course, answer questions."

Many in Europe are looking to the landmark Google antitrust case which Vestager inherited from her predecessor Joaquín Almunia, who reopened the investigation during the final months of the Barroso II commission. The Danish official won't be drawn on the details of the case, but instead issues a call for clarity. "Many concerns are raised about Google's conduct, only some of which relate to competition policy," she stresses. 

"All companies should not only abide by the same rules but also be treated equally"

"It is therefore very important to define clearly what is for competition policy and what may be more appropriately considered under other policy areas. The case before us is very important in today's digital economy, and it attracts much interest. As such, we have a duty to fairly enforce our competition rules on the basis of the legal framework. What is critical for me therefore is to do so in an objective way and on the basis of the facts before us."

Probably the most controversial and crucial issue in Vestager's 'in-tray' is her investigation into member state tax evasion following the damaging 'Luxleaks' revelations that uncovered low levels of tax being paid in the Grand Duchy of Luxembourg by some multinational corporations. With commission president Jean-Claude Juncker - in his own words "weakened" by the scandal - facing criticism over any possible role he may have played in the deals, the former Luxembourg prime minister stressed that he was "in favour of an in-depth investigation in all countries". Juncker also underlined his "complete confidence in Vestager" and his commission's commitment to "fight against tax evasion and tax havens". 

Asked whether she was equipped with the tools to properly investigate and tackle tax evasion, Vestager again straight bats the question, saying, "The commission has for many years pursued its obligation to control state aid granted in the form of tax measures as part of the objective of reducing distortions of competition in the single market. In general," she adds, "fiscal aid does not differ from other forms of state aid. In fact, about one third of all non-crisis state aid in the EU is given in the form of fiscal measures." 

However, she did admit that "tax rulings can involve state aid if the administration appears to apply a more favourable discretionary tax treatment compared with other taxpayers in a similar factual and legal situation."

With parliament's economic and monetary affairs committee pursuing two reports on tax fairness and negotiations underway for the creation of a special committee of enquiry into the matter, this issue is not going away. As Vestager herself says, "Competition policy has a key role to play in support of competitiveness and growth [and] competition enforcement is central to achieving these goals."

Margrethe Vestager is European competition commissioner

 

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