No loosening competition rules
The European Commission shouldn’t give in to temptation and calls to loosen competition policy to boost competitiveness, Zach Meyers, associate fellow at the Centre for European Reform, told Aude. “Competition policy has generally been kind of a force for good and a force for innovation in Europe,” he said.
Still, there are areas where improvements are needed, certainly when looking at it from a single market perspective, he said. Meyers co-authored a policy paper last week laying down a reform agenda for the internal market, which includes some ideas on the competition side. While Europe likes to boast that there are more competitors on the markets than in the US, these competitors operate in smaller national markets. The more concentrated US markets are more dynamic, with companies that are either growing or shrinking. Meanwhile, Europe lacks this dynamism with “kind of pretty stagnant [companies] in terms of size,” Meyers said.
Antitrust policy needs to be “more innovation-friendly,” the paper reads. However, Meyers said that the innovation defense needs to be understood in a “quite narrow” way. “It’s really more about tone and about kind of sending a pro-business signal out to investors,” he said, adding that he doesn’t see many cases in which implementing a more innovation-friendly competition policy would lead to loads of changes.
Meyers warned that “when we see that Europe’s under such a competitiveness crisis, we tend to think everything has to change rather that what are the specific problems.” Not everything needs to change, he said, adding that there’s a risk the reforms would go too far and “end up leading to consolidation that puts less pressure on businesses to innovate.”
Somewhat looser competition rules might be justified in certain sectors to allow for scale, Meyers said, adding that the telecom sector isn’t one of them. “This argument that you should loosen competition policy and allow scale makes more sense in industries like the digital sector that are riskier and less sense in telecoms and other sectors,” he said. For Meyers, telecom companies seem to be doing well while the technology rollout is “pretty good.”
Still, Meyers said that from a broader single market perspective, there are rules, such as data retention, that make it difficult for companies to have operations in two different countries. “There are really concrete measures like that where an inconsistency in rules means that you have to make extra investments,” he said, meaning that there’s not much for companies to be gained by expanding across borders.
Allowing European companies to compete with one another in a true European single market is a “no-brainer,” Meyers said, as “this is going to supercharge the incentives to be innovative and to get the scale that you need to then compete internationally.” However, completing the single market will not be easy, certainly as a lot will rest on EU countries to push things forward. “It’s the sort of thing that everyone gets behind until you start looking at the details of what it means, and then everyone starts to have reservations,” he said.