Competition law must evolve with global economy, EU leaders say after French-German pressure

5 April 2019 11:52am

22 March 2019. By Lewis Crofts, Michael Acton and Madison Czopek.

EU laws governing mergers, antitrust and state aid must take account of the challenges of a globalized economy and new technologies, the European Council said today after France and Germany pushed for changes to a summit communiqué.

National leaders today discussed how to rebalance economic relations with China, pledging to “continue to update our European competition framework,” in wording that MLex understands to be a compromise between, on the one sid, Paris and Berlin, which are pushing for an overhaul, and more liberal economies.

Earlier in the week, a draft communiqué of the Brussels summit steered clear of any reference to changing EU competition laws. But today’s final version of the document included the one extra line at the behest of France and Germany, MLex understands.

“We will continue to update our European competition framework to new technological and global market developments,” the conclusions to today’s European Council read.

The European Commission and more economically-liberal countries such as Denmark and the Netherlands have been reluctant to change the competition rulebook, saying it serves the economy well.

These countries will likely argue that EU officials already update their rulebook as new technological challenges emerge. For them, the first part of the sentence is a statement of the obvious.

But the win for France and Germany is the inclusion of “global market developments” in the final wording, diplomats say.

French president Emmanuel Macron argued today that the current competition rules weren’t in line with the challenges posed by the rise of state-backed Chinese companies, according to an EU official.

Competition rules

Last month the French and German governments unveiled a manifesto for a European industrial policy “fit for the 21st century,” including proposals to overhaul the EU’s competition rules to take a “more dynamic and long-term approach.”

This followed a fall-out between the European Commission on one side, and France and Germany on the other, over whether to allow Siemens and Alstom to merge their rail businesses in the face of Chinese rival CRRC. The EU blocked the deal.

“We have embarked upon an adaptation of our competition rules at the new global context,” Macron told reporters after the summit.

At a separate press conference, German chancellor Angela Merkel also spoke of the need for changes to address imbalances in the economic relationship, where China has more access to European markets than European businesses have in China.

But she didn’t mention the need for competition-law changes.

Eyes on China

European Council President Donald Tusk and European Commission President Jean-Claude Juncker both stressed that China was both a partner and a competitor for the EU.

Tusk said the EU hopes to achieve “a balanced relation which ensures fair competition and equal market access” during a summit with China due to take place on April 9.

Juncker said trade between the EU and China is “asymmetrical,” which has led to economic imbalances that have prevented the two nations from establishing a stable trade relationship.

He also added that one reason the EU hopes to reach an agreement with China on investments is because competition between the EU and China is currently unfair.

“Chinese markets are not sufficiently open to European products. Chinese markets exclude us to a great extent,” he said.

Meanwhile the commission is pushing ahead with the introduction of tougher public-procurement rules to restrict the ability of Chinese companies to bid for projects in Europe. The Franco-German manifesto reaffirms support for a “reciprocity mechanism” to ensure that EU market access is responded to in kind.

Earlier this month EU governments also signed off on new screening rules for foreign investment, creating a framework for monitoring and blocking foreign investment in critical sectors.

ABA 2019