INDUSTRIAL POLICY AND COMPETITION
ENFORCEMENT:
IS THERE, COULD THERE AND SHOULD
THERE BE A NEXUS?
NICOLAS PETIT AND NORMAN NEYRINCK
9 NOVEMBER 2012
GCLC ANNUAL CONFERENCE 2012
WWW.CHILLINGCOMPETITION.COM
Purpose of the Presentation
 Should there be a nexus between EU competition law
and industrial policy?
Outline
Variants of Industrial Policy
II. A Review of the Economic Literature
III. What does EU law say about this?
IV. Enforcement Implications?
I.
I. The Two Variants of Industrial Policy
Targeted Industrial Policy
Competitiveness Policy
 Picking winners, saving








losers
Supports specific
domestic firms/sectors
State aid and
government sponsored
mergers
Reactive (Alstom) or Proactive (EADS)
Strong anticompetitive
potential
Horizontal policies
Correct market failures
Smart regulation
Competition policy as
part of competitiveness
policies
 Less anticompetitive, in
principle
 But non price
competitiveness
II.
Review of the Economic Literature (1)
Targeted industrial policy
Competitiveness policy
 Pros
 Safeguards domestic
employment; keep capital
national; big is beautiful;
“infant industry” theory;
etc.
 Pros
 Less documented
 Avoid the pitfalls of
industrial policy
 Cons
 Asymmetrical
information; rent seeking;
public choice issues;
distortion of investment
incentives
 Cons
 Poor empirical evidence
 Winners and losers
 Rent seeking
 “Sprinkling” of resources
II.
Review of the Economic Evidence (2)
Targeted individual policy
Competitiveness policies
 Confirmative examples
 Alstom, EADS, etc. (+
China, Brazil and India)
 Confirmative examples
 Silicon Valley, Hartz
reforms in Germany
 Unsupportive examples
 Bull, Nokia (?), etc.
 Unsupportive examples
 The Lisbon Strategy, and
the EU 2020 Agenda…
III. What does EU law say about this (1)?
 Treaty Law
 Article 173(1) TFEU: “The Union and the Member States shall
ensure that the conditions necessary for the competitiveness
of the Union's industry exist”.
 But Article 173(3), industrial policy ‘”shall not provide a basis
for the introduction by the Union of any measure which could
lead to a distortion of competition”
III. What does EU law say about this (1)?
 Case Law (post introduction of Article 173 TFEU)
 GC, T-17/93, Matra Hachette SA v. Commission, [1994] ECR
II-595
 See also GC, T-112/99, Métropole télévision (M6), 2001, ECR
II-2459, para 118
 Bottom-line: competition policy does not apply in a
vacuum
 Best practice => EU competition enforcement should pay heed
to industrial policy considerations
IV. Enforcement (1)
 So far, no space for targeted industrial policy:
 “The price of creating a European champion cannot be to let a
de facto monopoly dictate its commercial conditions on
thousands of European firms operating with European
derivatives” (J. Almunia, re. Deutsche Börse/NYSE
prohibition)
 And competitiveness?
 “Competition enforcement and advocacy also serve other
wider longer-term objectives such as enhancing consumer
welfare, supporting the EU's growth, jobs and
competitiveness in line with the Europe 2020 Strategy for
smart, sustainable and inclusive growth” (Annual Report on
Competition Policy for 2011)
IV. Enforcement (2)
 Hot air?
 Not so sure
 “the EU [must] develop a stronger horizontal coordination of
its various instruments and policies. A more in-depth
articulation of competition, trade and industrial policies has
to be developed, in order to ensure a coherent and consistent
approach to the protection of industrial value chains” (2011
Competitiveness Report).
 Four strategic interests where adjustments may be deserved
IV. Enforcement (3)
 Access to Resources
 Enforcement priority under 102 TFEU (EFD-style theories of harm)
 Leniency against joint purchasing agreements 101(3) TFEU
 Increased scrutiny of mergers that involve the acquisition of EU input
manufacturers, by State-controlled foreign firms
 Fact finding
 Innovation
 Build larger innovation capacities in Europe => more lenient towards
innovation-efficient mergers between EU firms, than re. mergers
between non-EU firms
 State aid => lower thresholds for industrial research and experimental
research => avoid “Valley of Death”
 Access to Markets
 Restructuring
 … And the Competitiveness Defense?
Thank you!