Summary: Workshop on New Industrial Policy Tools to Support European Economic Convergence

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

Workshop Summary Pierre Beynet, Head of Division, OECD

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2| There was a broad agreement among participants on the need for Europe to revisit its industrial policy to deal with long-standing challenges such as subdued productivity growth and insufficient income convergence, but also new ones. Many externalities generated by those new challenges can justify industrial policy: innovation (digitalisation), the green transition, strategic autonomy and even the creation of “good” jobs. There was also a consensus on new industrial policy tools to internalise those externalities without resorting to approaches that have failed in the past. In particular: •

supporting sectors rather than firms is more efficient (a “national champion” can fail while successful companies can emerge from a sector).

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subsidizing technology development should facilitate the development of new products or new markets, notably for the green transition.

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improving framework conditions (better skills, enhanced cooperation between enterprises, bottomup approaches, etc.) would support industrial development while maintaining a level playing-field.

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developing public institutions to speed-up industrial transition in Europe: better procurement policies or the creation of agencies similar to DARPA or BARDA in the United States.

There was, however, a debate on potential contradictions between competition and industrial policies.

Some pointed out that new industrial policy tools may still entail the risk of capture by vested interests, requiring competition policy to remain the main safeguard against unintended consequences of industrial policy. For those, competition policy is still the best “industrial policy” by favouring innovation and selection by market forces. Other believed that European competition rules were still too strict compared to other jurisdictions to allow mergers with relevant industrial implications. Following discussions, the consensus was that both industrial and competition policies would need to keep adapting to avoid those contradictions, but also to adjust to a fast-evolving environment (notably in the digital sector). Some areas that required particular attention in Europe in the current juncture were identified in that respect: •

mergers and acquisition rules: should European competition give more weight to “behavioural” remedies vs. “structural” remedies?

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state aid rules: are recent exemptions, notably for Important Projects of Common European Interest (IPCEI) sufficient?

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Rules on killer acquisitions and the new Digital Market Act: are those regulations sufficient to deal with digital “gatekeepers”, notably how do they use data to extract excessive market power?

Finally, participants agreed that a growing challenge for both industrial and competition policies was trade policy. There was a consensus that current trade policies were not sufficient to deal with unfair international competition, notably policies that subsidize domestic firms. This could be the focus of future seminars.