Margrethe Vestager

Rethinking a greener, digital economy

Rethinking a greener, digital economy

Margrethe Vestager, Executive Vice-President of the European Commission, presents the major upcoming projects of European competition policy.

Faced with an unprecedented public health and economic crisis, how has the European Commission supported Member States, in particular on the issue of State aid, and what actions are you planning to take to boost the recovery from the crisis?

First of all, I would like to mention that we have recently exceeded 100 million vaccines administered in Europe, and the vaccination programme is continuing at a rapid pace. We are finally starting to see light at the end of the tunnel of this unprecedented crisis, but we continue to accompany Member States in the crisis as long as it lasts, as we have been doing for over a year.
In March 2020, we rapidly adopted the temporary framework for state aid to support the economy in the context of the current Covid-19 outbreak. The temporary framework has since been modified five times to meet the changing needs of Member States and businesses.
The temporary framework recognises that the EU economy as a whole is facing large-scale disruption, and therefore allows Member States to make full use of the flexibility provided by the state aid rules to support their economy in such a situation. The rules make it possible to buttress the European economy, while maintaining the integrity of the single market and a level playing field. As regards larger individual aid measures, such as recapitalisations of major companies, the temporary framework contains strict conditions to limit possible distortions. These conditions include a ban on the distribution of dividends and a cap on managers’ salaries. For companies with market power, the granting of subsidies is also accompanied by additional conditions. In effect, it is important to ensure that the economy preserves its competitive structure. This is one of our best assets because the recovery and growth will be faster and stronger if our markets are competitive.

Thanks to the cooperation with Member States, the Commission has adopted more than 500 decisions to support businesses affected by the Covid-19 crisis. These decisions cover more than €3 trillion of state aid. The temporary framework is in place until the end of 2021. We will continue to assess the situation to decide on an exit strategy at the right time and in the right way.

It is not about rebuilding the world as it was before, but building a new and better world.

We are also working on the recovery. It is not about rebuilding the world as it was before, but building a new and better world. The Recovery and Resilience Facility represents a historic opportunity to make Europe greener, more digital and more resilient. We are also working closely with Member States on their national recovery plans, to ensure that these plans cover the green and digital ambitions of Europe. Supervision of state aids will also play an important role in the deployment of the funds. In order to facilitate the work, we have published 13 documents to guide Member States and allow them to easily assess the investment projects corresponding to the “European Flagships Initiatives” of the Commission’s Annual Sustainable Growth Strategy 2021. These documents explain when state aid rules do not apply or which types of investments do not have to be notified. And we are examining as a matter of priority all state aid notifications received from Member States under the Recovery and Resilience Facility. We want to ensure that the process is as agile and effective as possible for the recovery of the European economy, in full compliance with competition rules.

The reform of European competition law is in progress. What are the main strands of this, and what is the time frame?

European competition law is based on fundamental principles of fairness, choice, openness and opportunity for all. These principles are as relevant today as they were when the Treaty of Rome was signed 60 years ago. But the rules for applying these principles must be adapted to economic developments and the challenges we face. Our priorities are also changing. This is the case in particular with regard to the ecological and digital transition. That is why, during this mandate, we have launched a comprehensive review of our rules for our three instruments: the control of anticompetitive practices, mergers and State aid. Our review is based on three pillars: the development of new instruments where gaps have been identified in our existing tools; the updating of our existing body of regulation and processes; and the clarification of existing rules in areas, which are often new, where competition rules seem to be perceived as a barrier to beneficial activities.

Firstly, with regard to the gaps that have been identified, we have already introduced, with the Digital Markets Act, draft legislation on digital markets in order to address issues such as unfair competition from the largest online platforms (the “gatekeepers”). The legislative work is progressing intensively, with excellent contributions from national competition authorities, including the French Autorité de la concurrence, which is very active. I sincerely hope that the ambition to finalise the legislation during the French Presidency of the European Council in 2022 will be realised. Moreover, we are working on a very important project to ensure healthy and fair competition with the European Union’s trading partners, who grant subsidies without the same controls as those we apply to Member States. We published our White Paper in June 2020 examining the problem of unfair competition in the internal market due to foreign subsidies, and proposing several solutions. Following the public consultation, we are close to adopting a legislative proposal. Secondly, as regards the review of our body of regulation, we have carried out an assessment of the judicial and procedural rules and processes in merger control, focusing on turnover thresholds. The objective is to gauge whether they are effective in capturing the transactions which are most damaging to competition (including “predatory acquisitions”). Our ambition is also to simplify our current procedures.

Rethinking a greener, digital economy

Rather than adapting turnover thresholds or adding new thresholds, we decided on 26 March 2021 to issue guidance on the referral mechanism under Article 22 of the Merger Regulation. As such, the Commission will revert to accepting referrals from Member States that are not competent to examine a transaction. In the future, we hope to develop our practice of referrals under Article 22 in specific cases, thanks to our cooperation with Member States, and to refine our approach based on the experience gained. This mechanism will allow us to examine problematic transactions that would have escaped merger control in the European Union under the current thresholds – without creating more notification obligations for the large amount of non-problematic transactions.

On the same day, we launched a public consultation to identify opportunities to further simplify our processes. We envisage different options to broaden the scope of the simplified procedure and to streamline the treatment of simplified and, if possible, non-simplified cases.

We are also evaluating the Notice on the definition of relevant market, from 1997, which is an important tool used both in the area of mergers and in the control of anticompetitive practices such as cartels or abuses of dominant position. The initial feedback confirms that the fundamental principles set out in the Notice are sound, but that, given its age, the Notice could do with an update, to reflect changing market realities and our application practices. Such an update would ensure that the Notice provides up-to-date and adequate guidance on how we define markets in practice. As regards our antitrust rules, we are continuing our examination of the rules of exemption for certain horizontal and vertical agreements. These rules are very useful tools to facilitate the assessment of agreements and ensure that they comply with the competition rules in force.

For vertical agreements, our aim is to clarify the current rules, for example to take account of new business models and provide further guidance on newly emerging online restrictions. We plan to publish a draft of the new rules for public consultation in mid-2021. As regards horizontal agreements, our evaluation indicates that certain provisions could be clarified to provide more legal certainty. For example, updates are needed and further guidance is required as regards information and data exchange, joint purchasing agreements or agreements promoting the green transition. The next step will be the adoption of a Commission Staff Working Document, which will be published in the coming months.

As regards the requests for clarification of our rules, we have initiated a consultation process to ensure that the competition rules do not act as an obstacle to collective bargaining between self-employed workers (considered as an “undertaking” under competition law) and their employers.

Together with President Von Der Leyen, we have decided to give new impetus to the idea of a digital single market.

This debate has been prompted by the explosion of work via digital platforms, which has led to new forms of precariousness. And we have launched a reflection process on the role of competition rules in the fight against climate change and environmental protection. I will address this process in more detail in another question. Finally, in the area of state aid, we are also in the process of revising many of the guidelines. We have recently adopted the guidelines on regional state aid, which aim to ensure that Member States support the less developed regions of Europe in order to reduce disparities in economic development, income and employment. Protecting cohesion between Europe’s regions is at the heart of our Union. Some regions, which are more affected than others by the ecological transition or by depopulation, will be able to receive support. As such, these guidelines will contribute to the ecological and digital transition, while ensuring a level playing field.

We are also in the process of revising the Guidelines on state aid for environmental protection and energy, which include specific rules for supporting decarbonisation efforts, the Guidance on state aid rules in research, development and innovation, the Guidelines on State aid to promote risk finance investments and, finally, the Communication on important projects of common European interest. As this long list demonstrates, the process underway is a highly ambitious one and we are very proud of the work that has already been accomplished, especially as it runs in parallel with our casework, which continues unabated and in the particularly difficult circumstances of recent months. I would also like to take this opportunity to pay tribute to my teams in DG Competition, who have shown exceptional professionalism.

The regulation of the major digital platforms is at the heart of the European Commission’s concerns. What are the various initiatives and/or projects in this area?

The implementation of the Digital Single Market in the European Union has been a priority of the European Commission for several years now. Together with President Von der Leyen, we have decided to give new impetus to the idea of a Digital Single Market. For example, on 15 December we presented two legislative proposals which constitute the most ambitious draft digital regulation ever undertaken by the Commission. The new rules will make it possible to better protect consumers and their fundamental rights online and make digital markets fairer and more open for everyone. They will also prohibit online platforms that are ‘gatekeepers’ in the market from imposing unfair conditions.

In the context of our review of the rules on vertical and horizontal agreements, we will also look at relationships between companies in the digital field. Indeed, the platforms play an ever-growing role in the distribution of goods and services and some of the business models they enable cannot be easily understood according to the concepts traditionally associated with vertical relationships between manufacturers and distributors in the physical distribution environment. Nonetheless, it is important for manufacturers, distributors and platforms to correctly interpret our rules so that they know when their agreements are exempt and when they are not.

The issues of data sharing or licensing essential patents will also be evaluated in our review of the rules on horizontal agreements. While our regulatory work is essential in ensuring the proper functioning of the markets in which large digital platforms operate, we are continuing our individual investigations. These investigations provide us with in-depth knowledge of the markets in question and allow us to address the identified competition concerns, through remedies. For example, we are at various stages of progress in investigations into Google, Amazon and Apple.

Rethinking a greener, digital economy

The Commission has ambitious plans for the environment, with the Green Deal in particular. What role can competition policy play in this area?

Europe’s ambition is to fight climate change and push forward the Green Deal. This is also the European Union’s growth strategy. For this strategy to succeed, we need suitable laws and regulations, but also innovation and functioning markets. This requires a robust and vigorous competition policy. We see competition policy as a “subcontractor of the Green Deal”. The competition rules are already helping make our economy greener. Our rules on state aid encourage governments to invest in renewable energy. We have witnessed an unprecedented fall in the cost of supporting renewable energy, because state aid rules now require calls for tender to distribute this money. The cost of supporting solar energy has fallen by 50%. Some offshore wind projects are now being implemented without any subsidies.

Our rules on anticompetitive practices and mergers help maintain competitive pressure on companies to use resources efficiently and to innovate. In order to open up the debate on the role of competition policy in the fight against climate change to a broader audience, we launched a reflection process through a call for contributions and organised a major conference on 4 February 2021, bringing together different perspectives on the subject: academics, public authorities, including competition authorities, economists, lawyers, businesses and civil society organisations. In general, the role of competition in promoting innovation was confirmed by a wide range of speakers and contributions.

State aid control has emerged as an important instrument to contribute to the greening of the economy and environmental protection, with a range of suggestions, such as prohibiting aid to activities that harm the environment, requiring mitigating measures from Member States or beneficiaries if the supported activity has negative environmental impacts, and requiring Member States to systematically assess environmental impacts in their state aid notifications. With the ongoing revision of the guidelines on state aid for environmental protection and energy, we plan to put in place a framework that allows Member States to support their green ambitions while maintaining a level playing field within the internal market.

As regards antitrust rules, we have understood the need for clear rules and more legal certainty, in order to maximise the potential for companies to contribute to efforts to make our economy greener. We also understand that cooperation between companies can help accelerate these efforts. Our reflection process to identify the necessary clarifications is ongoing. As such, we are currently working on a document that will review the lessons learned from this process and present the changes envisaged in the context of our review of the competition rules. We are working towards its publication in the near future.