EU Competition Policy Enforcement: Commission’s Evolving Role and Constraints
The Expanding Role of DG Competition in EU Policy
The European Commission’s Competition Directorate-General (DG Competition) is vital to the running of EU competition policy. Over the years, its powers have grown, and it has become increasingly bold in trying to ensure that the market is as open and competitive as possible. There have been three main aspects to this assertiveness:
- Increased Malpractice Examination: DG Competition has become more active in examining cases of apparent malpractice. Using its powers as investigator, prosecutor, judge, and jury (though its decisions are subject to appeal to the EU Court), it has been more willing to take action against Member States in connection with State Aid.
- Broadening Legislative Base: Legislation designed to broaden the competition policy base and, with it, the powers of the Commission, has been approved. A particularly important instance is the 1989 Merger Regulation (revised in 2004), which gives considerable powers to the Commission to disallow or set conditions on mergers that it judges will have an adverse effect on competition. Other examples of legislation are the directives designed to open up public procurement—an area of activity that accounts for around 15% of EU GDP.
- Breaking National Monopolies: The Commission has used the momentum provided by the spirit of economic liberalization that has spread across the Western world since the 1980s to use its competition powers to break up long-established and well-protected national monopolies in policy spheres such as energy, postal services, and telecommunications markets. This has been a difficult policy challenge that has met with stiff political resistance, but considerable progress has been, and continues to be, made.
Constraints and Tempering Factors on Competition Policy
The Commission’s role in advancing competition policy has not been completely unbridled. It has long had to be tempered by several factors:
- The EU’s regional and social policies.
- Political pressures, requiring care when an anti-competitive ruling on State Aid could result in major political problems for the government of a Member State.
- Economic realities.
Responding to the 2008 Global Financial Crisis
The tempering effect of economic realities was clearly seen in the positions the Commission took in response to the global financial and economic crisis that unfolded in 2008. Working with, and on the basis of instructions given to it by, the European Council and the ECOFIN Council of Ministers, the Commission has, since the autumn of 2008, promoted and approved a number of what might be thought of as “anti-competitive” regulatory measures in the financial sector.
These measures had the objectives of ensuring financial stability and restoring lending to the real economy while safeguarding the internal market, minimizing distortions of competition, and paving the way to a return to normal market functioning when possible. Prominent amongst the measures promoted and approved were:
- Public guarantees (amounting to €2.9 trillion between October 2008 and July 2009).
- Recapitalizations (amounting to €313 billion).
- Legislation regulating financial sector institutions and operations in areas such as capital requirements, credit rating agencies, and solvency.