EU competition policy stands strong 

Anyone who has followed the competition debate will be familiar with the power struggle that has played out in Europe in recent years. In one corner, those demanding a relaxation to competition rules and greater scope for government control and intervention through greater public support and regulations designed to “protect” the EU and make us more self-sufficient. This includes France and Germany, as well as Commissioner Breton. In the opposing corner: those who want to safeguard strict regulations and who want to strengthen rather than dilute competition in the single market, and who advocate free trade and diversification as a way of protecting value chains. This group includes several smaller member states, including the Nordics, and at EU level, Commissioner Vestager.

Against this background, the recent statement presented by the Commission was highly significant. Would Franco-German pressure bear fruit?

Overall, the answer is a resounding “no”! The Commission reiterates that strong and effective competition supervision provides the best basic conditions for creating growth and meeting the challenges created by the green and digital transitions. It is only when markets function well, when companies are able to compete on equal terms and when efficient and innovative companies can succeed and less successful ones are allowed to fail, that the necessary dynamic and burgeoning business climate can be created. Well-functioning competition increases the driving forces for investment and creates benefits for consumers. In addition, strong and vibrant competition in the single market is the best “practice” for companies to become strong enough to grow and compete on the global playing field.

So, to some extent, we can relax.

But was everything the Commission said positive? The answer is, again, no.

• On the one hand, the Commission announces that the temporary framework for state aid due to Covid-19 will be extended until the end of the first half of 2022. This extension is necessary, not least given that infection rates are unfortunately rising in most countries. However, extending the framework to enable investment support for recovery is an unfortunate development because state aid regulations already include ample scope to provide support for suitable investment where it is necessary and proportionate. Extending these regulations is wrong-headed and increases their complexity.
• The Commission also said that it would give member states special dispensation to provide investment aid for new factories to manufacture microchips. This is of course happening against the background of the acute shortage of chips that has hit many companies, including several Swedish ones. Usually, this type of support should be given where there is a market failure – however, the fact that chips are not manufactured in the EU does not constitute a market failure because the chip market is global, and the current shortage is temporary. The risk is that more such opportunities to provide investment support will be given to commodity production that is considered important or “strategic” for the future. However, politicians are not best equipped to make these sort of decisions – the business community in conjunction with consumers are.

In addition, the Commission describes in detail the extensive revision of the entire regulatory framework that is currently underway. The list can be read here. It is safe to say that Commission staff will not be at risk of unemployment in the coming years.