Astrid Cousin - Contribution to workshop

FRANCE STRATÉGIE & OECD WORKSHOP ON NEW INDUSTRIAL POLICY TOOLS Paris, 17 October 2022

Session 2: Can industrial policy be consistent with open and competitive markets?

Astrid Cousin Head of Unit, DG COMP; European Commission

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What type of industrial policy do we need in Europe?

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About to celebrate the 30th anniversary of the single market: most precious asset for the EU industry: scale effects both in addressing the EU market and world market through common trade policy.

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Openness to trade and investment is one of the key strengths of the single market; but the crises also revealed the long-standing vulnerability of the EU Member States economies in terms of dependencies on certain global value chains.

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Additional challenges are for our industry to deliver on our longer-term green deal objective of climate neutrality by 2050 and to lead the digital transition. And to recover stronger and more resilient from those crises.

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What cannot be our industrial policy: favouring on shoring in one single Member State, or favouring one type of sector, or picking the “national darling” or letting companies with market power killing innovation. Detrimental for the single market. Not an effective policy in the long run.

Efficient EU industrial policy is about: •

Equip EU industry with right framework conditions to make it resilient, versatile, and innovative: on innovation, skills, access to capital market, crowding in private investments, structural reforms, fostering smart diversification, infrastructure. Necessary framework conditions for our industry to flourish.

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Invest in industries for the future: The question is whether we can have at EU level an industrial policy favouring reshoring or a specific sector. Not a valid systemic policy, but for some specific strategic value chains (batteries, Chips), it can make sense: Recovery & Resilience Facility, Chips Act, Alliances, RePower EU.

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Protect the single market: ensure our industry remains competitive globally; fair, predictable rules to increase the attractivity of operating in Europe and smart diversification: A well-functioning internal market, where supply, from domestic to foreign suppliers, is not too concentrated, and with low barriers to entry and cross-border trade, enhances resilience. It is about fostering diversification, not concentration of production that will make Europe more resilient when the next emergency hits: review of strategic dependencies; upcoming Critical Raw Material Act.

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This is why the Commission’s priority is to reinforce the EU open strategic autonomy. This is part of our long-term industrial policy.

Complementarity of industrial policy and competition policy •

Competition policy’s objective goes hand in hand with the industry policy’s objectives: creating an environment that is open and attractive for innovative sectors. Ensuring smart diversification by diversifying sources for key inputs, by fostering an open competitive industrial fabric that prevents overreliance on a few players/products.

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Pursuing autonomy do not mean self-sufficiency. Crisis has shown that we may be vulnerable if supply chains depend on a single or very few suppliers at any given level (be it inside the Single Market or outside). The biggest enemy therefore is dominant market structures, which are precisely those that competition rules and enforcement are trying to prevent.

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This is also achieved by ensuring that sufficient alternatives remain after mergers, that companies do not abuse the market power they have achieved by growing dominant and that rivals do not agree to artificially inflate prices or share markets.

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Competition policy is undergoing quite a substantial review in all its instruments to fit with the green and digital transitions and build a resilient single market. Like the single market, in 30 years competition policy has evolved considerably to adapt to the new priorities and challenges.

But the core principles remain, and those core principles are fully aligned with the objective of an agile EU industrial policy.

It is about: •

Investing in the future and thinking long-term: Important Project of Common European Interest - IPCEIs (batteries, ME, hydro-more to come), SA investment in semiconductors (STMicroelectronics decision), remedies in merger to protect innovation, use of article 22 of the EUMR to scrutinise potential killer obligation, change of our antitrust rules (Horizontal Block Exemption Regulation update) to foster agreement for sustainability

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Complementing regulatory policies to achieve twin transition and enhance resilience: Climate, Energy and Environmental Aid Guidelines (CEEAG), broadband, Digital Market Act, Recovery & Resilience Facility.

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Protecting the single market: ensuring level playing field amongst Member States by avoiding subsidies races. This is particularly topical at the moment. It is also making sure that no vested interests are winning against common European interest. We are also adding a tool, with the foreign subsidies regulation, that allows scrutinizing third country subsidies for their distortive impact on the Single Market.

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Accompanying industry in times of crises: Competition policy is crisis-proof: we dealt with three major crises in the last 15 years and adaptation in record time our rules: financial crisis, Covid-19 pandemic and now energy crisis. It also accompanying recovery: Temporary Framework, Temporary Crisis Framework.

Conclusion To conclude, our competition policy review agenda is ambitious, ensuring that the competition policy toolbox is up-to-date and effective to tackle todays and tomorrow’s challenges. Its adaptation is also fully geared towards supporting EU competitiveness and open strategic autonomy.

But the competition policy and enforcement cannot do it all. And it is not substitutable to a modern industrial policy. Therefore, both set of policies, the industrial strategy and competition policy, should not be looked at as standalone policy initiatives, but are to be shaped in full complementarity; both align with broader EU objectives and work towards prosperity in the single market