Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Almunia addresses importance of global cooperation on competition policy in promoting innovation, (Nov 21, 2013)
By Linda O’Brien, J.D., LL.M.
Joaquin Almunia, Vice President of the European Commission for Competition Policy, discussed the importance of global cooperation among competition authorities in the promotion of innovation in a speech before the Third BRICS International Competition Conference in New Delhi, India on November 21.
Almunia began his speech, entitled “Competition, innovation and growth: an EU perspective on the challenges ahead,” by stating that there are very good reasons for representatives of the competitive authorities from industrialized countries and from BRICS (Brazil, Russia, India, China, and South Africa) to meet together in light of the rise of emerging economics. Almunia noted that Brazil, Russia, India and China rank among the largest ten national economies in the world and South Africa is in the top 30. The dynamism of emerging economies offers mutual opportunities for growth provided there are continued integration, open markets, and global cooperation.
Common challenges. The EC strives to stay ahead of market developments and constantly update its policies and investigative tools. The EC also continues to engage with its sister agencies around the world, including emerging jurisdictions, to keep the global playing field as level as possible. Almunia urged that it is extremely important that competition authorities keep the channels of communication open to tackle common challenges as businesses integrate internationally and supply chains span the world. A solid competition regime and an independent system of enforcement are essential to the economic development and welfare of societies, both in developed and emerging jurisdictions.
Convergence. Almunia acknowledged that countries operate within different legal frameworks and their rules do not always overlap. Competition agencies should advance towards international standards and promote convergence to minimize the risk of diverging outcomes when they investigate the same cases.
Bilateral cooperation. Another way of preventing diverging outcomes is by sharing work on individual cases, according to Almunia. This is a common practice at the EC which has in recent years worked directly with other competition agencies in many of its major merger and cartel cases. Today the largest cartels are worldwide and the coordination of the EC’s investigations across jurisdictions by synchronizing inspections has been critical for its success. To give cooperation a more robust framework for the long term, the EC has negotiated a number of bilateral agreements.
Alumina highlighted how competition enforcement is essential for innovation and the success of European economies and how it applied to the European Union (EU). One threat to innovation is the collusion of established companies to share markets or fix prices. The EC has been active against cartels. Alumina cited several investigations in the automotive sector against parts suppliers to auto manufacturers, air cargo and freight companies which artificially raise the costs of doing business in Europe, and high tech industries that manufacture cathode ray tubes that were used for TC and computer monitors. The EC is currently investigating the suspected manipulation of the Libor and Euribor benchmarks.
Protecting innovation. Another of the EC’s priorities is to ensure that incumbents do not keep new competitors away from the market to protect themselves from disruptive and innovative products and business models, Almunia noted. The EC also encourages innovation in the new industries that will be a springboard for growth in Europe. Regarding merger control, the test for reviewing mergers in the EU is a strict competition test which focuses on the likely impact of the deal on the market. Almunia believes that it is essential to keep markets truly open to innovative entrants and ultimately competitive in the interest of commercial partners and final consumers.
Competition authorities have an important responsibility to ensure optimal and timely coordination. Competition policy is best positioned to show what transparent and effective cooperation can do in the multipolar order that is emerging from the progressive integration of the world economies, Almunia concluded.
News: Antitrust