Turning "incomplete Europe" into competitive Europe

#CriticalThinking

Picture of Joaquín Almunia
Joaquín Almunia

Visiting Professor at LSE and Sciences Po Paris and former vice-president of the European Commission

Europe’s Single Market remains a work in progress, a work that needs to be accelerated in telecom, digital, energy, services and other sectors if we’re to realise our full potential from globalisation and not fall victim to it. Both the consumer and businesses stand to gain if we can progress from an “Incomplete Europe” to a Competitive Europe.

By detecting and punishing abuses and cartels in our internal market of half a billion citizens, the Commission and National Competition Authorities can have a powerful and direct impact on competitiveness. Indeed, European businesses are the first victims of antitrust infringements which artificially inflate their production costs, for example when the price of an important input increases because it is cartelised. That, in turn, impacts consumer prices.

Just think about the cartels in car parts which the Commission has recently found and sanctioned, imposing fines totalling over a billion euros. Competition is also an important driver for innovation, which in turn boosts productivity. Competition encourages existing market players to stay competitive by innovating, and it stimulates new entries into the market to challenge established positions.

Therefore, thanks to competition policy, businesses in the Single Market can thrive based on their own merits. Robust enforcement of competition rules through all instruments – i.e. the fight against cartels and abuses of dominant positions, the examination of mergers, state aid control – is therefore an important part of the effort to improve competitiveness and boost economic growth.

Europe should also tap the full potential of an open, dynamic and fully integrated Single Market. It is obvious, for example, that  existing barriers in telecom and digital markets prevent EU companies from competing on a European scale, reach out to a customer base of half a billion potential users and invest faster in new technologies. The U.S. and China do not have that problem, because their respective markets do not have the internal barriers that we still have: they are overseen by a single regulator and spectrum is allocated by a single authority.

Similarly, the EU needs a determined push to complete the internal market in energy, including by investing more in interconnectors. This is essential if we want to preserve the competitiveness of European businesses at a time when some international competitors have energy bills about 50 percent cheaper due to the shale gas revolution.

Finally, the services sector is also one area where we still do not have a genuine Single Market, with a direct impact on many other industries. In all these areas the “costs of non-Europe” – or I should say, of “incomplete Europe” – are still much too high, and they are impairing our ability to grow today. In these difficult times, the EU and its Member States cannot afford to leave this potential unexploited. The globalised economy leaves us little choice.

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