“Check against delivery”
Good morning, ladies and gentlemen.
My sincere thanks to you for organising this conference, which this year is taking place in the shadow of war so close to us here in Prague. I wish it were not so, but the simple fact is we cannot choose the times we live in.
What we can choose, is how we react to what is happening. I have been doing quite a bit of travelling lately – from Dublin to Copenhagen, from Italy to here in Prague. What strikes me is the sense of solidarity, resolve and courage I witness all across Europe. It gives me hope and confidence that we will rise to the challenges we face. And when we come out the other side, we will be more united and stronger than we were before.
Competition as an instrument of efficiency
As competition policy enforcers, we are not always on the cover pages of Europe’s newspapers. Most of the time, our work to keep markets running efficiently goes unnoticed – much like air traffic controllers, to whom the passengers in the planes don’t give a second thought. Nevertheless, we have a vital role to play at all times, whether to do with energy and cost of living issues, the damage caused by Putin’s aggression, or with the longer term challenges like the green and digital transitions.
Because the proper functioning of our markets is precisely what will allow us to adjust to change, in a way that minimises the costs, and maximises the benefits. Crisis can cause mismatches in supply and demand. But when markets work efficiently, price signals direct investment in a way that brings markets back into balance. Thanks to competition, markets work efficiently, and that gives companies the incentive to innovate. And innovation can, for example, turn the green transition from a cost to the economy, into a series of business opportunities that make us better off. This is what will allow us to decouple our economy from insecure energy supplies, creating more long-term resilience and giving Europe a stronger hand to play on the global stage.
That is why I would stress a simple point, which in the current debate is worth making: Competitive markets are not a luxury to be enjoyed on calm sunny days. They are a necessity; all the more so when the weather gets stormy. And any exceptions we make in the name of crisis must be well justified and contained within the flexibility arrangements provided by our existing competition rules.
Competition as an instrument of fairness
So protecting competition is about efficiency, but not only. Fundamentally, it is a question of fairness. Fairness is a concept I am pleased to say has been gaining traction in the competition policy community in recent weeks, and rightly so.
We don’t often think of our work in terms of social policy, but in fact that is what it is. By keeping prices close to cost, this generates consumer surplus, benefitting low-income households the most. When you look at the sectors where our cases are taken, you can see that in antitrust, for example, a significant number of large cases are taken in consumer sectors where high margins can have an immediate impact on households. We are on the side of the people, sometimes when no one else is.
That is only part of the story. We also know that keeping markets open to smaller players and new entrants benefits female entrepreneurs and entrepreneurs with a migrant background. In this way, properly functioning markets become an instrument of social change and progress, against a historic background that has not always been so fair.
The concept of fairness as applied to competition policy is well recognised both in the Treaties and in EU case law, and with the full transposition of the ECN+ Directive, it will also become a uniform, guiding principle informing the work of the National Competition Authorities in the Member States.
Fairness is what motivated us to take a look at the working conditions of the solo self-employed. Last month, we issued new guidance to provide legal certainty for when competition policy will not stand in the way of their efforts to engage in collective bargaining.
And fairness is what we considered first in our design of the Temporary Crisis Framework – avoiding subsidy races while ensuring those most affected by the crisis can receive the support they need. Fairness is also at the heart of the Digital Markets Act, which seeks to ensure fair conditions for all businesses.
It is also why we are hosting a conference in Brussels on the 27 of this month, on ‘Making Markets Work for People’, in which leading academics, enforcers and practitioners can come together to explore the ways in which markets can better serve our people.
A social market economy avoids trade-offs
On one thing, however, we should be cautious. There is at least the risk of viewing efficiency and fairness as opposing objectives for competition policy enforcers. This leads us to see a fundamental trade-off in our work between these two policy goals. But it would be a mistake to overplay this idea, because in a social market system, the two goals are most often aligned. It’s true that competition, by its very nature, involves winners and losers. But as long as the social market economy is working properly, the efficiency gains that accrue from this process can be fairly and justly shared across all stakeholders. Then there is no contradiction between defending efficient markets and promoting good social policy.
Of course, it’s possible to find some examples where efficient market outcomes result in apparent unfairness. But we must remember that competition policy is not the only tool for ensuring fair outcomes. Often times it is not best suited to do so. In the EU’s social market economy, we provide and promote universal healthcare, minimum income to ensure everyone can enjoy a decent standard of living; as well as consumer protection laws and product safety standards that oblige companies to do the right thing, regardless of the structure of the market in which they operate.
In a sense, therefore, whenever a trade-off between efficiency and fairness begins to show, that may signal a need to put more ‘social’ into the social market economy – using our full toolkit.
The right theories of harm lead to fair and efficient enforcement
As much as anything else, the devil is in the details. Enforcement that is both fair and efficient depends on applying the right theories of harm in the cases we run. For example, in the Illumina/GRAIL case, the ultimate objective of our decision to block the deal was to have an efficient market for cancer detection. Taking action at this crucial stage of product development means fairness for tomorrow’s citizens – giving them a fair chance to benefit from the widest possible choice of tests to detect the disease early.
Today, we have another good example. We have just sent a Statement of Objections to Teva for suspected antitrust breaches in the market for a multiple sclerosis medicine. Here we employ two theories of harm, the first of which is novel. This relates to our concerns about how Teva may have gamed the patent system to artificially extend market exclusivity, and thereby delay the entry of competing medicines. Those medicines, in turn, would have led to efficient price competition. If confirmed, this implies the national health systems have for years been overpaying for this treatment. And of course, it’s unfair to the patients who suffer from this chronic illness.
The second theory of harm concerns a systematic disparagement campaign we have indications Teva has led against a competing multiple sclerosis medicine, by misleading doctors and health bodies about its safety and efficacy. This is a theory of harm that resonates in a world where misinformation is endemic. Ultimately, both pursue fairness objectives.
I would encourage all colleagues in the enforcement community to be willing to explore the boundaries, and not to shy away from novel theories of harm, where these are relevant.
Because by finding and exploring the boundaries, we have more scope to deliver the kinds of win-win outcomes that result in concrete benefits to consumers and households, while also protecting the efficient markets that make us strong in the longer term.
With all of the turbulence, with the digital transition continuing, and with new technologies playing a bigger role in market dynamics, pursuing these goals will mean we will have to stay creative in our thinking.
It won’t be easy.
But the sense of common purpose that I feel all around Europe is also present in our work as competition policy enforcers. With ECN+, and with the new application of Article 22 of the Merger Regulation, the Commission and the National Competition Authorities are more a team now than ever before. And when you look around the room, it’s clear that this is a very good thing indeed.
Because even faced with uncertainty, even under the shadow of war; every case we take, every decision we issue, improves the competition ecosystem, making our markets stronger and more resilient. That, in turn, brings us one step closer to exiting this time of crisis together. As a stronger, fairer Union.