Bosses call for shake-up in EU competition laws

Date: 21/12/1995

By Michael Mann

THE European employers' confederation UNICE is calling for extensive changes to EU controls over state aid payments and simplification of the EU competition laws.

In two discussion papers submitted to Competition Commissioner Karel Van Miert, UNICE criticises the over-burdensome way in which competition rules are applied in the EU.

It argues alterations have become particularly crucial in view of the sweeping changes to the European business environment since state aid regulations were finalised.

“The existing framework in which competition policy operates remains adequate for eliminating unduly restrictive business practices, but the way it is interpreted and administered is less well-suited to the need to develop cooperation between businesses. This is an important handicap for European enterprises,” claimed UNICE President François Perigot.

Confederation officials were upbeat about the reception the discussion paper had received. “The Commissioner seemed to think this was a valuable contribution to the EU policy debate and agreed that we should deepen our discussions,” said one.

The organisation hopes the Commission will take account of its views when it finalises its Green Paper on “vertical restraints of competition” and its ideas on “minor agreements not caught by Article 85(1)”, promised in its work programme for 1996. The Green Paper is expected to appear by early spring.

Among six central proposals in its paper Refocusing the scope and administration of Article 85, UNICE stresses that agreements between firms should not automatically fall within the scope of the article if their anti-competitive effects are outweighed by positive effects.

It also believes that the Commission should cut the time it takes to decide on the legality of agreements which raise no doubts about their compatibility with competition rules.

UNICE says changes of this sort would not only reduce the burden on business, but on the Commission services as well, removing the need for further decentralisation in the application of Article 85 of the Treaty of Rome.

While accepting the importance of a system of checks, employers stress that regulation should be limited only to cases where the market itself does not provide a sufficient competitive mechanism. Often cumbersome administrative procedures mean that costs are restrictive, even for relatively innocuous agreements, argues the paper.

UNICE remains unconvinced that the Commission's attempts to encourage companies to turn to national courts rather than relying on the usual administrative competition procedures will have the desired effect.

This is particularly true because of what UNICE calls a “lack of cohesion in the interpretation of Community law between national courts”.

Its proposal on reforming state aid controls results from dissatisfaction within the business community with current methods of assessing state aid and a recognition that the whole background has changed since the rules were originally agreed.

For a start, the establishment of a single market means that aid granted within national borders now has a much more pronounced effect in neighbouring states.

In addition, the GATT Uruguay Round agreement has established a new subsidies code, making it doubly important that EU rules are adjusted so that the Union is not unduly handicapped compared with its trading partners.

UNICE believes that the current economic recovery presents a vital opportunity to sort out several structural problems which became “painfully apparent” during the 1993 recession.

It concentrates on four main objectives: a reduction in the overall level of state aid, improved assessment through strict economic criteria, greater transparency and greater rights for firms “to defend themselves against arbitrary incursions by the state”.

This it believes to be perfectly feasible without changing the treaty. “The overall policy objective is to enhance European competitiveness and wealth creation - the motor for growth and jobs,” stresses the confederation.