Examination of Witnesses (Questions 400
- 414)
THURSDAY 13 DECEMBER 2007
Mr Jean-Claude Thebault, Mr Michel Servoz, Mr Marcel
Haag, Ms Jacqueline Minor and Ms Elizabeth Golberg
Q400 Lord James of Blackheath:
We have noted that the Reform Treaty has omitted the words "free
and undistorted competition" and that sends a shiver down
our spines, I am afraid, because it would seem to us that those
very words ought to go to the core of what a single market sets
out to be. Why have they gone and how on earth is it going to
affect the consequences going forward?
Mr Thebault: I can give you a good answer on
this because I had the privilege to be at the European Council
when we discussed this. We continue to say that it does not change
anything. Why? Because this reference was in the Constitutional
Treaty but does not exist in the Nice Treaty. It has been introduced
there and so today it is not considered as an objective. Some
Member States have said that it is not an objective, it is just
an instrument, and it is true, a very important one, but the objective
is much more the single market and it is an instrument to enable
the single market to work. During the discussion we asked our
legal service and those of the Council to make sure that it does
not change anything and that, of course, competition policy will
not be affected by this, and their analyses were very clear. I
know that it has been sometimes misunderstood but our competition
policy is still there and we use it and where necessary we open
proceedings against Member States, so I can reassure you that
there is nothing new there. The novelty was in the Constitutional
Treaty.
Q401 Lord James of Blackheath:
You say that it does not alter anything but surely the absence
of the words removes a frame of reference within which you could
bring to discipline any national governments which allowed a breach
of the fairness of competition, or indeed some who might be encouraged
to the view that they could go and escape down the route of state
aid to assist a favourite business of theirs because it had some
national prestige issue attached to it. One thinks, obviously,
of airlines where the record of state aid has been seriously disruptive
to competition in Europe in the last 20 years, and I speak as
somebody who ran an airline for a large part of that time. I would
be very concerned about how it would be interpreted locally. You
might think it has not changed anything. Others might seek to
take the opportunity of making sure it does change something.
I am not quite sure what disciplines you are going to be able
to control for it.
Mr Thebault: No, I do not think that this is
the opinion of all Member States and we have some good examples.
We have opened a great deal of state aid cases. We are not against
national champions, you understand, but it must not be done in
a way which is a sort of protectionism. We do not accept this
and the competition rules are applied, I can assure you. I would
just like to mention also that the words are not there any more
and they were not in Article 3, but, of course the competition
policy is still in the treaty, so nothing has disappeared. It
was a question of presentation but it has not changed anything
for us, I can assure you. Maybe my colleague can give some examples.
Mr Servoz: I just want to say that indeed it
could be seen as a symbol that the words have been removed but
the reality is different because the reality is that competition
law is implemented every day and it is implemented in the same
way as it was before these words were present, so I think there
is no change. This is not only the opinion of the Commission;
this is also the opinion which was voiced by all Member States.
Mr Thebault: One other thing I would say on
this is that maybe we have not been as clear as possible in this
document. What we must do is explain to citizens but also enterprises
that our competition rules are there to protect them against those
who do not apply the same rules because in some Member States
in particular competition rules are seen as something which is
damaging for industry, for people and so on, so we must explain
that it is not true. There is no game if there are no rules and
so we have more to do and we intend to pursue it in this way.
Q402 Lord James of Blackheath:
I think I have to leave you with the sense that I am still concerned.
Mr Thebault: I am sorry.
Q403 Lord James of Blackheath:
I hear your words and I thank you for your words.
Mr Thebault: But ask, for instance, some Member
States what they think about it because there is no change in
our policy and in our behaviour, I can assure you.
Q404 Lord James of Blackheath:
I have suffered greatly from this sort of problem in my career.
For example, I never ever seem to be able to do business in the
heavy engineering end of plant and equipment supply without coming
up against a competitor somewhere who has got a soft loan package
from his government, which is not always very easy to detect.
It is often quite invisible at the point of sale when you are
making the final contract negotiations and this is particularly
prevalent in sales out of Europe into the Middle East and the
emerging countries. I wonder just how you are going to be able
to exercise that sort of overview and detailed control to make
sure that that sort of abuse of the system does not apply because
it almost gives a green light to say, "Yes, you can do it",
by removing those words.
Mr Servoz: If you look at the Single Market
Review, and this is something that Jean-Claude insisted on very
much, we made sure we made a very strong statement in favour of
competition rules. If you look at the text you will see a very
forceful statement from the Commission saying competition is useful,
including for citizens and small businesses, so we have tried
to make that very clear indeed.
Q405 Lord Walpole: We were
pleased to see that the Commission's review and our report on
the single market are in agreement when it comes to the role of
regulators. We both recommend greater independence and powers
for national regulators and more co-operation between national
regulators. However, we are not really in support of your feeling
for "super-regulators". Can you explain why a "super-regulator"
is appropriate, say, in the telecommunications industry?
Mr Thebault: First of all, I am pleased to note
that we are in broad agreement on the national regulators. For
financial services and financial markets we have put in place
some regulatory committees. This is an issue which is regularly
discussed: is there a need for a more centralised regulator or
super-regulator or regulatory agency? We say no, but what is important
is to be sure, and I come back to what I was saying before, that
rules are applied in the same way in all countries, that enforcement
and implementation are still done and above all that the rules
are applied in a consistent manner among all Member States, so
there is a need for co-operation, of course, between regulators
and the more integrated a market you have the more co-operation
you have at the level of regulators. Concerning the telecommunications
sector, maybe my colleagues could say a word on this. I would
not say that we wanted to put in place a super-regulator. It is
much more a pragmatic approach based on the facts, that there
we need to have more co-operation between regulators. We do not
call into question the national regulators, but we consider there
is a need for improvement and so the message may have been interpreted
by some as a tentative effort, as it were, as someone wanting
to put in place this super-regulator. No. Our message is to say
there is not enough co-operation and we must develop a pragmatic
way of doing that.
Mr Haag: The term "super-regulation"
implies that we are introducing a new level of regulator and that
is clearly not the case. As Mr Thebault has already explained,
we need a high degree of co-operation in the single market for
electronic communications because our experience is that this
has not functioned in an optimal way in the current structures
and that is why the Commission had to take a number of decisions
where solutions to problems could not be found at a national level.
What the Commission is proposing now aims at improving the better
functioning of national regulators and improving their co-operation
among themselves but also with the Commission which we expect
will ultimately allow the national regulators to work better.
Q406 Lord Walpole: So basically
you are not setting up a super-regulating organisation? You are
letting them do it among themselves?
Mr Haag: This is a structure that aims at assisting
national regulators in improving their regulatory decisions.
Lord Walpole: I think that answers that very
well.
Q407 Lord Paul: Would it not
be better, instead of scaring people by having a "super-regulator",
to call him a co-ordinator amongst these other regulators?
Mr Haag: We have called it the European Regulatory
Group so far, which is not a very telling title.
Q408 Lord Paul: A "super-regulator"
just scares the life out of everybody.
Mr Haag: We did not call it a super-regulator;
you called it super-regulator.
Chairman: We were trying to be a tad
provocative, but certainly in the energy fields we are well aware
of that co-operation and that is something we strongly favour.
Q409 Baroness Eccles of Moulton:
Mr Thebault, I do not think my question is provocative at all;
I think it is a subject on which we are very close but we have
to find solutions, and that is the position of the SMEs in the
single market and how this whole move towards becoming a more
effective single market does not seem to be having the benefits
for the SMEs that have been hoped for. I wonder if you could give
us a bit more detail about what measures the Commission might
be intending to take in order to rectify this position. I also
have one or two detailed questions which might well be answered
in your general answer but if they are not I will come back if
I may.
Mr Thebault: It is our intention to put citizens
and SMEs at the heart of this single market review. We fully agree
that they have not reaped all the benefits they could have had.
There are concrete measures which are proposed. One, we have to
develop still, is what we call a European Small Business Act,
which is not necessarily what is applied in the United States,
for instance, but this is something we have to put in place according
to the issue we want to tackle, to solve, and it is something
that we will set up. In fact, yesterday the Commission adopted
the Lisbon Strategy and there we will introduce this, so we will
have to work on it. It is not just a question of procurement;
it is a process aimed at facilitating small business enterprises
to participate in all these bids, which is not always the case.
Yes, it is about procurement but it is also about financing, for
instance, for start-up enterprises and so on. We want to develop
a package for SMEs or even to indicate what existing instruments
they can use. There are other measures we would like to have.
I will mention one to help small businesses, which is what we
call one-stop shop assistance. This is very important and we want
each Member State to establish such a one-stop shop to give them
all the information and assistance they need and maybe also to
help solve issues.
Q410 Baroness Eccles of Moulton:
How would the Commission go about seeing that there was an effective
one-stop shop in every Member State? We talked about SOLVIT earlier
in this meeting and they are doing a great job but they are under-resourced,
under-staffed and under-funded, and as there seems to be no other
place that small businesses can go to for help at the moment in
a number of countries SOLVIT can only do as much as it is resourced
to do. There is another aspect to this also which has been lightly
touched on already, and that is that if you are a small or medium-sized
business operating in a Member State you have to understand the
framework of the legal system of the country within which you
are operating rather than, certainly while you are only temporary,
still being under the jurisdiction of your own country. This puts
a huge burden on small businesses who have not got the resources
that large businesses have and I think one of the effects of this
so far has been that small and medium sized businesses are just
not being attracted into cross-border activity. It is very good
to hear that the Commission is very much in support of one-stop
shops but what can you do, because presumably it is up to the
Member States to run them in the same way as SOLVIT presumably
has to find its own resources to a large extent? What can the
Commission do to make these rather wide-ranging support systems
for SMEs happen and happen quite quickly?
Ms Minor: Without disagreeing at all with anything
you have just said about SOLVIT, and I think we are meeting this
afternoon to discuss that in more detail, SOLVIT is really only
one aspect of the support which is provided to small businesses
because it deals with concrete questions which arise in cross-border
dealings. There are other networks. There are networks which have
just changed name and I cannot remember their name, unfortunately,
because it is not run by my part of the Commission, which is a
sad insight. It is the Enterprise Network which used to be called
the Euro Info Centres but they have just been given a new and
renovated name. There is, I think, a problem that we provide too
many sources of information to small businesses and citizens,
that there are a great number of resources available to support
them but sometimes the difficulty is that they do not know at
which door they should be knocking. One of the things we have
proposed in the Single Market Review is to create a unified portal,
probably a virtual portal in most cases, through which everybody
can come and then be directed behind that portal to the appropriate
service. When we talk about support for small businesses we are
not just talking about solving their problems. We are also talking
about assistance in creating a small business, and part of the
Lisbon recommendation has been to increase the speed at which
you can create a small business and many Member States have acted
upon that. It is also about providing them with assistance in
acquiring financing and providing them with assistance in moving
into new markets, whether they be other Member States or third
country markets. I agree, as with SOLVIT, that the Commission
can provide some of this resourcing. For example, this network
is financed partly out of the Community budget. It works very
closely with local chambers of commerce, but there comes a limit
to that. In terms of company creation, for example, those are
national procedures and that is a matter of Member States deciding
to simplify their registration requirements and also to put in
the resources, the electronic systems or the people to operate
them, that are needed. We can exercise pressure through the Lisbon
process again through peer pressure and comparative naming and
shaming, but the bottom line is that it is a national budget which
will pay for this.
Q411 Baroness Eccles of Moulton:
That seems to me the rub. It is obviously inevitable that it will
be the national budget that has to kick in with a large part of
the support, and therefore inevitably the spread of support is
going to be uneven; there is no escaping from that, so this presumably
is the reason why the ease with which an SME can set up in a Member
State should be as simple and straightforward as possible, which
is why, coming back to the legal aspects of it, I do not know
what the Commission can do to simplify that. It seems that, having
abandoned the country of origin principle, it has made the matter
more complicated.
Ms Minor: We are going to be proposing next
year a European private company statute, and the contours of that
proposal are still being worked out. We are currently preparing
an impact assessment. One of the questions which we will have
to address is whether there has to be some cross-border element
in order for companies to be able to use that form, whether, for
example, you have to have shareholders from at least two Member
States in order to be eligible to create your company in this
way. That would mean you could not have a single shareholder company,
which has its drawbacks as well, but we would certainly intend
that whatever the final proposal it should be a model for corporate
form for smaller businesses and that may offer an alternative
form, as has the European trade mark, for example, in a completely
different field. The fact that there is a European trade mark
has meant that national trade mark offices have had to sharpen
up their act in terms of providing a service to their customers.
Should there be an alternative European form then presumably national
company registries and national legislators would have to think
about making sure that the national form survived in the market.
Q412 Chairman: I think you
have probably given us a suggestion for our next inquiry.
Ms Minor: I think you are meeting my Commissioner.
Please do not tell him I gave you the idea!
Q413 Chairman: I have written
it down! My final question is about what the Americans call "the
vision thing". Specifically what can the Commission do to
explain to both consumers and employees in the European Union
that the single market and the improvements that are being made
which we have talked about today really can benefit them? At the
moment the concept of the single market is a bit dry, it is a
bit economic, it is a bit business, but for the ordinary man and
woman in the street how do we make it seem like reality?
Mr Thebault: This is a very good question and
I fully agree with you, and I said this previously, that for the
man and woman in the street the single market is something which
is very striking—"What are the benefits for me?"—but
they do not realise that they benefit in terms of prices and in
terms of choice and jobs. I would say that our credo is the Europe
of results and so we think that if we have concrete results citizens
will make the difference. We have some measures that I think will
be very important and maybe will help people to have another view
of the internal market, in particular in the financial sector
and in the retail financial services where we have already taken
a measure three or four years ago concerning cross-border payments
and this was really appreciated. Now we will come with new elements
and I will not go into detail, but for instance we will adopt
next week a document on the mortgage credit, something which is
very concrete for people when they want to do cross-border business
on this, and something also on financial education. I think it
is very important because we know that people are not really well
informed and able to understand exactly what the banks offer them.
We have already mentioned that there is a scoreboard for the internal
market, but there will also be a consumer scoreboard which will
give visibility and comparability between Member States. This
is very important and we will come with this at the beginning
of next year, I think we will contribute to developing a better
perception of the internal market and its benefits but there is
huge work to do there and it is not only for Brussels to do this.
Maybe I have forgotten some very important initiative we want
to take. This is for us a real concern because what we want is
to empower consumers, and we have written this in the paper, that
we really want to make them realise that it is not just for big
business or something like this; it is a reality for everybody.
Q414 Chairman: I think we
agree with you very much and it will be one of our key recommendations,
and it must be pursued at national level—national press,
national parliaments. That is where we come in. Thank you very
much indeed. You have been very helpful.
Mr Thebault: Thank you very much for the pleasure
and we will be very interested to read your findings. It is very
important work which is very much appreciated.
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