My competition philosophy

In Europe, companies must play by Europe’s rules.

There is a reason why, in some European countries, competition authorities wear a double hat as competition and consumer-protection authority: Enforcing competition rules is to protect consumers. They ensure consumers are not harmed by artificially high prices or by limited access to the products they want. They allow consumers to enjoy a wider choice of goods and services at competitive prices.

Effective competition puts companies to a test — it makes sure they have an incentive to invest and to innovate, to keep up with their rivals. It also gives companies a fair chance — they can compete on their merits, without being pushed out of markets by unfair practices or by subsidized rivals. So they can contribute to job creation and economic growth, while allowing consumers to share the benefits of the single market.

I find it only natural that competition policy is political: protecting consumers, creating jobs, and promoting economic growth is at the center of the goals we work toward. In fact, to ensure growth and job creation we need competition policy. Just as we need research and development, investment and capital and a well-educated workforce. And of course, my work as competition commissioner can support the European Commission’s priorities in areas such as the digital single market and the energy union.

However, when it comes to the individual cases of competition enforcement, independence remains non-negotiable. There, the role of competition authorities is to enforce the law and serve the common interest. We are committed to the principles of fairness, good administration, transparency and due process. There is simply no room for political interference. Our actions have to be solely based on impartiality and rigor: On the facts, on the economics, and on the law.

The message is actually quite simple: if you do business in Europe, you have to play by our competition rules whether you are European or foreign, large or small.

How to turn these words into action? Competition policy offers a range of different tools — we can fix what is already broken in the market, and we can prevent markets from going wrong in the first place.

Fighting cartels is of course a top priority. Cartels are illegal and they do serious harm to both consumers and other businesses. We have recently fined producers of retail food packaging more than €115 million for fixing prices and allocating customers instead of competing with each other. These are everyday products that we all use — millions of consumers buying food for themselves and their families have potentially been paying too much over eight years as a result of the cartels. I am glad that we were able to put an end to this — and I hope that it will add to other companies thinking twice before they consider a cartel!

With the worst of the economic crisis behind us, merger activity is picking up. Another important part of my work is checking that the companies resulting from mergers and takeovers do not become too large or dominant, leading to higher prices for consumers.

The incentive to innovate

But it is not only about keeping prices low. Competition is also about ensuring that there is an incentive to innovate, so companies can come up with new and better products for consumers. One recent area of activity has been the pharmaceuticals sector — here especially, it is important that we think ahead and look at the drug pipelines of companies. We have to make sure that, also after a merger, the pharma companies have an incentive to invest in research and development of the medication that the world needs.

In the antitrust field, too, I have recently opened a formal investigation into Amazon’s contracts with e-book publishers to ensure they do not prevent Amazon’s competitors from developing new and innovative products and services. This is because the contracts, for example, contain clauses that require publishers to inform Amazon about more favorable or alternative terms offered to its competitors and offer Amazon similar terms and conditions.

Finally, by applying European state aid rules we make sure that taxpayer money is spent wisely. And that scarce public resources are not misused to distort the level playing field, either by artificially keeping companies in the market that are not competitive, or by giving certain companies selective advantages that competitors cannot enjoy.

For example, when it comes to energy, we must ensure subsidies tackle genuine problems effectively. They must not favor particular companies or technologies, or maintain barriers between national markets. In some cases it might be more efficient to improve electricity connections between EU countries than to build new power stations. This is why I launched a state aid sector inquiry (the first ever) into national measures that should ensure adequate capacity to produce electricity is available.

But state aid policy does not only “police” — it also enables the EU countries to channel public funds into those areas where they are most needed to promote economic growth. A recent decision approving €270 million of public aid to expand the Port of Calais will — literally — help to connect member states and facilitate trade exchanges between the U.K., Ireland and mainland Europe. Just like the €3 billion aid scheme in Germany that will make faster broadband services available also in areas where private investment is lacking. The Commission ensures at the same time that consumers have a choice of providers.

The single market is Europe’s single most important asset. Designing good competition policies for this market has a large role to play in sustaining the economic recovery in Europe. And robust enforcement of competition policy — be it cartels, mergers, antitrust or state aid — is essential to tap the power of the single market to boost growth and create jobs. After all it is home to over 20 million companies.

And it is also home to about half a billion consumers. At the end of the day, EU competition policy to me is about consumers. About people. About us all.

Margrethe Vestager is the European Commissioner for Competition.

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