Competition Policy 2005 (debate) 
President
The next item is the report by Mrs E. Ferreira, on behalf of the Committee on Economic and Monetary Affairs, on Competition Policy 2005.
I have been informed that the rapporteur has had problems with transport and will be arriving late. I propose, therefore, that we start with the Commission and then continue with the other speakers. As soon as the rapporteur arrives, she will be given the floor.
Neelie Kroes
Madam President, I would like to thank the rapporteur, Mrs Ferreira, and the committee for this excellent report. Once again, this annual report proves the added value Parliament brings to competition policy development, and I am grateful for that.
As you rightly point out in the report, an effective competition policy plays a key role in achieving the Lisbon Strategy goals. To remain effective, competition policy needs to keep up with the evolving world around it. I am very pleased that Parliament supports the Commission's efforts to modernise competition policy, and in particular the work we did in 2005 to pursue a more refined economic approach.
I agree with the report on very many issues, so I shall just mention three points where your comments really struck me.
First, as you note, state aid control is essential to maintain a level playing field in the internal market. Through our ongoing reform, we are redesigning our rules to make them more simple, more transparent, more user-friendly, more coherent and more predictable. Our rules focus on the areas where limited amounts of aid can have most added value - competitiveness, the environment, training, regional cohesion, research, development and innovation. We have made good progress with the reform, but Member States must also do their share, as you say, particularly when it comes to recovering illegal state aid quickly and effectively.
The second point that struck me was that 2005 was the year we launched two major sector inquiries. I agree with you about the value of these tools for a forward-looking policy. In the energy sector, you are right to be concerned that the facts show serious barriers to competition. The Commission will continue to pursue individual competition cases, working in cooperation with our colleagues in the national competition authorities. Regulation in this sector needs to be improved, with the requirement of ownership unbundling a priority.
Third, you are right that, in today's globalised world, competition authorities need to cooperate more than ever before. Europe has a key role to play in encouraging strong competition cultures elsewhere in the world. At the same time, Europe needs to be able to respond to unfair foreign subsidies. The common commercial policy - rather than matching aid - is the proper tool to address this. Subsidy competition would undermine Europe's cohesion, create damaging subsidy races within our internal market, and bring serious risk of WTO litigation.
I am looking forward to the debate.
Pervenche Berès
Madam President, Commissioner, as you know, this meeting between the European Parliament and the Commission is an important event in terms of competition policy, for it is the time when we evaluate one of the most important policies in the Commission's hands, whilst defining only the general outline for the others, on the basis of which you will take this or that decision.
While the report that we are putting forward this year is a balanced one, it does need to be completed by an answer to the question as to what is meant by 'fair and undistorted competition', as the Treaty itself puts it. In fact, the situation in the business world, in which there is an increasing and underhand trend towards a way of working in which, no doubt for the sake of flexibility, trainees' contracts are renewed month after month and, for the sake of providing the trainees with access to professional training, the difference between them and those subject to labour law is accentuated, is a real issue in terms of competition, and one that you need to consider closely.
We in the Committee on Economic and Monetary Affairs are also concerned about the conclusions that are going to be drawn from the sectoral surveys that you have been carrying out, and specifically in connection with the potential impact on the structure of this or that segment of the market. I am thinking, for example, of the situation of local banks, or of mutual banks in relation to the retail banking sector, but we would also like you to consider other sectors, which may well be more difficult to tackle. Three sectors about which we are particularly concerned are investment banks, rating agencies and auditors' firms. We think that, if competition is to be required to be free and undistorted, one must also be bold enough to take a look at these sectors in the same way as the Commission has sometimes done with actors of equally considerable weight.
If this takes place, you can count on our support, although you must never forget that competition policy can never be an end in itself, but is in the service of a strategy of the European Union which is, today, defined not only by the Lisbon Strategy, but also by the objectives set out on 8 March 2007, those being the fight against the effects of climate change and the will to endow the European Union with the capacity for shaping its own independent energy policy.
Sophia in 't Veld
on behalf of the ALDE Group. - (NL) Madam President, first of all, I should like to pay tribute to the absent rapporteur who has, as I see it, compiled an excellent document which meets with broad support in our committee. I should also like to give Mrs Kroes credit for what she has done, because, as Mrs Berès said a moment ago with very good reason, competition policy is not an end in itself, and I think that the European Commission, precisely under the guidance of Mrs Kroes, has launched a new pragmatic approach, something which we greatly appreciate.
Sometimes, people overlook the fact that competition rules are not there to bully businesses or thwart national governments. Competition rules are designed to ensure that the same rules and equal opportunities apply to everyone who operates in the internal market. These competition rules are therefore there to ensure that Europe can adopt a strong position in the world, in the face of global competition. As such, we should not compete with each other, but instead ensure that we create an internal market that functions well.
I too am a staunch supporter of the sector inquiries, and where energy policy is concerned, you can count on this Parliament's support. I should nevertheless like to make one observation. At the moment, everyone in the Member States is busy preparing for the summit that is coming up this weekend, where once again, energy policy will feature as one of the new key areas on the agenda. One of the few positive points in the whole discussion. At the same time, I have noticed that, whilst the leaders of the national governments are saying that we should have a common energy policy, they are not prepared to stop protecting their national favourites. Perhaps they should practise what they preach.
With regard to state aid, as rapporteur for state aid for public services and for innovation, I can say that we have discussed this subject before. Actually, I cannot wait to see if there is a first assessment of the impact of these exemption regulations and if, more generally, an assessment is being made of whether state aid is suitable or not.
Finally, as for the matching clause, this too has been the subject of previous discussions. It is, of course, a problem if generous levels of state aid are made available outside of the European Union. At the same time, I would prefer to reinforce Europe's competitiveness by other means. It is highly improper, to my mind, to start giving out generous levels of state aid and subsidies, whilst we have not yet sorted out other measures, including patents, making the labour market more flexible, opening up the market for services and many other measures of this kind; mistakes like this cannot be put right with state aid.
Jeffrey Titford
on behalf of the IND/DEM Group. - Madam President, it has always been my contention that, far from encouraging competition, the EU in its drive for the mythical 'level playing field' wants to stamp it out altogether. This report does little to change that perception.
Paragraph 13 supports a common consolidated corporate tax base, which is another step towards a compulsory EU-wide corporation tax, which is fundamentally anti-competitive. This idea is enthusiastically supported by France and Germany, two countries with higher corporate tax rates, which must be salivating at the idea of getting everybody else's rates up to their level.
One of the most stupid pieces of EU jargon that I have ever heard is 'unfair tax competition', which is what this clause is all about. There is nothing unfair about some Member States having more business-friendly taxation regimes than others. This encourages competition. State aid gets a bashing in this report, as you would expect, but the report makes the false assumption that all state aid is bad. In Britain, because of EU state aid restrictions, we are rapidly losing the Royal Mail postal service, to the detriment of consumers, particularly in remote areas.
José Manuel García-Margallo y Marfil
(ES) Madam President, Commissioner, in my speech I plan to use the so-called case method, that is to say, I am going to try to draw conclusions from a single specific event that may be applicable in a general sense.
As the honourable Member knows, on several occasions I have concerned myself with the issue of the takeover bids that have taken place in Spain against the Endesa electricity company. My fellow Member from the Group of the Alliance of Liberals and Democrats for Europe has referred to national champions and I believe that this case fits perfectly within that context.
As you know, the current Spanish Government did everything it could to prevent a German company, E.ON, from acquiring a stake in Endesa, and that conduct has already led the Commission to open up two procedures. One against the general decision empowering a particular committee to lay down specific conditions, and the other relating to those specific conditions. The Commissioner is perfectly aware of what I am talking about.
Then a stake in Endesa was acquired by an Italian company, which is partly public, incidentally. I put a question to the Commissioner and received a reply today in which she says that the restrictions to the right to vote laid down by the Spanish Government are being investigated.
The third chapter in this case is that the person responsible, the President of the National Energy Commission, the Spanish regulatory body, appointed by the Socialist Government, has handed in his resignation to that same Socialist Government, in protest against what he considers to be violations of his independence. That is what he explained to the Spanish Parliament. Unfortunately, we have not been able to get him to explain it in this Parliament, although I have not given up hope that there will be full and open transparency here as well. I would like to know whether the Commissioner, the Commission, is worried about this issue that affects the proper operation of the entire European market, and is an issue for the whole of Europe, and which, if you will allow me, also affects legal security, the good name and good credit in the international markets of my country, and please believe me, Commissioner, that is what is of most concern to me.
I would like the Commissioner to tell me whether she has carried out any investigations, whether she intends to do so, whether she intends to address this problem with the Socialist government and whether she intends to carry out reforms with a view to combating it.
Thank you, Madam President, I have exceeded my speaking time somewhat because my spokesman, Mr Evans, has not been here and I felt that I could make use of his time; in any event I would like to thank you.
Neelie Kroes
Member of the Commission. Madam President, I am as impressed with the report as everyone who has already spoken. I greatly appreciate the report itself, but I appreciate even more the annual debates, particularly with the honourable Members present at this sitting.
The report itself makes a vital contribution to the further development of this policy. I would like to assure you that I am not only listening to you, but am taking many of your remarks - which make a lot of sense - into account. Indeed, if competition policy is to really deliver in creating growth and jobs in Europe, we need to continue working together. That means involving all the stakeholders - Parliament as well as the outside world - and taking into account the point touched upon by Sophia in 't Veld. It is not a matter of making fun of anyone but rather to set a level playing field in which everyone, both the consumer and the business world, may finally share the advantages.
I would like to respond to a few specific issues raised in our debate this evening. Mrs Berès had some interesting ideas for new sector inquiries and I will indeed consider the subjects she touched upon: rating agencies, auditing firms and large investment banks. We have not yet made up our minds and are still discussing the matter, so I will put this on the list. It is more a matter of resources than a lack of sectors in which it might make sense to start a sector inquiry. At present the Commission has no grounds for a wide-ranging review of competition in these particular sectors, but this does not mean that we cannot take a couple of thoughts out of it. I would welcome further discussion with Parliament on these issues. Of course, the Commission is always ready to look carefully at any evidence of anti-competitive behaviour which is brought to our attention in individual situations.
Mrs Berès also spoke about competition on non-traditional grounds, for example salaries. The report also mentions tax. I note that many of you are concerned by so-called tax competition among the Member States. It is correct that the Commission has powers to assess tax measures affecting competition. However, and I would like to make this quite clear, that is the case only when these measures are considered to be state aid and essentially when they are selective in nature, meaning that they do not constitute general measures.
I now come to the point that Sophia in 't Veld touched upon. For the last 10 years the Commission has been reviewing potentially harmful tax schemes. We have challenged a series of national measures targeting, amongst others, offshore intragroup activities.
As regards salary competition, my answer is quite clear: if measures relating to salaries can be considered as state aid, the Commission will use its powers.
Turning to state aid issues, in particular in reply to Sophia in 't Veld, state aid is in principle, as we are all aware, banned by the Treaty to avoid distortions of competition in our single market. State aid can indeed be a legitimate tool to deliver outcomes which are in the general interest, for example regional cohesion, research and development, as well as innovation and high-quality public services which markets themselves will not deliver. That is why our approach is to design a new set of state aid rules, which we did with the review. It uses a more economic approach to assess where market failures exist and to target appropriate aid measures on them. That is a balanced and a realistic view. It reflects the need to help Member States get the best out of taxpayers' money - state aid is, at the end of the day, taxpayers' money.
The Commission publishes its state aid scoreboards twice a year. As you are aware, this presents data and analyses of Member States' expenditure on state aid measures. It includes a focus on Member States' progress towards the Lisbon goals of less and better aid. The next edition will pay close attention to the question of recovery. In addition, a series of indicators and statistical tables on our Europa website gives scope for further discussion. But Sophia in 't Veld is right: we need to do more to evaluate the effects of state aid, whether it makes sense and how. That is how the new more economic approach could help us.
I can be brief in response to Mr García-Margallo y Marfil: we have discussed this before and we know exactly what the dossier is about. We have taken the Member State concerned to Court for not respecting our two Article 21 decisions under the Merger Regulation. My colleague, Charlie McCreevy, is taking parallel action under the internal market rules.
I am always open to your suggestions for further improving the way in which competition policy makes markets function better. I badly need your ideas and your creativity. We are doing our utmost to complete this process, and I am grateful for your continued support and valuable contribution. We are not there yet but are on the right track.
President
The debate is closed.
The vote will take place tomorrow, 19 June 2007.
Written Statements (Rule 142)
Elisa Ferreira 
Madam President, Commissioner, ladies and gentlemen, in Parliament's report on Competition Policy 2005, we acknowledge the efforts made by the Commission to modernise competition policy.
I should like to highlight the main recommendations of the report.
In the crucial area of energy, we support the Commission's action on ownership unbundling.
We reiterate the call on the Commission to clarify at Community level the public service obligations to which operators of services of general economic interest should be bound, with regard to strategic security and universal coverage.
We also believe it is important to ensure that the EU's external dimension is consistent with competition policy when it comes to negotiating bilateral trade agreements.
In spite of the Commission's efforts at harmonising practices and guaranteeing transparency, it is a fact that there is competition in terms of incentives between EU regions and Member States, which, along with the absence of tax harmonisation, foments the artificial relocation of companies.
These and other challenges illustrate the need to strengthen the EU's ability to deliver effective competition rules and to improve flexibility of response to new challenges. Hence the importance of continuing to give the European Competition Authority the resources it needs.
