French skepticism of EU competition rules gets Moscovici makeover

31 January 2017 9:55am

25 January 2017. By Lewis Crofts and Matthew Newman.


EU competition policy has long been a useful scapegoat for French politicians, who argue that over-the-top rules and narrow-minded enforcement from Brussels have left European companies hamstrung and unable to compete globally.

In June, French President François Hollande was at it again, saying EU competition rules need "adapting" if they are to foster the emergence of "global leaders" among European companies.

Hollande's predecessor, Nicolas Sarkozy, was of the same mind, seeking in 2007 to water down references to "free competition" in a new EU treaty. He justified doing so on the grounds that he wanted to put an end to "competition as an ideology and a dogma."

Then, most notably, in 2014 a former industry minister and recently eliminated presidential candidate Arnaud Montebourg described EU enforcement as a "liberal Taliban from Europe" — that's "liberal" in the European sense of favoring free markets and individual liberties.

In short, France's complaints against EU competition policies have been wide-ranging. Paris cares little for Brussels' policing of state aid; it wants tougher scrutiny of American tech companies; it dislikes fines on its flagship companies.

But times are changing, and the image of an EU-hating Gallic politician is a caricature. And Pierre Moscovici, who is currently the EU commission for economic affairs and France's former finance minister under Hollande, is part of that change.

Moscovici believes that competition law can be modified, but only as it applies to companies active outside the EU in countries that don't play by the same rules. For companies operating within the EU, the Frenchman says the rules should remain as strict as ever. And that includes French companies.

But whether Moscovici's take on competition amounts to a genuine belief in unfettered, well-regulated markets — or is merely an attempt to update France's traditional disdain for the Brussels bogeymen — is still unclear.


It's almost unheard of for a sitting commissioner, whose portfolio doesn't cover competition policy, to ask for a change in that policy.

Yet Moscovici, who joined France's Socialist Party in 1984, did just that in speeches he made in the UK and the US.

But while he put forward his competition proposals in official speeches as EU commissioner, his suggestions are born more of his personal writings than of an official EU policy agenda.

In November, Moscovici published a book entitled 'S'il est minuit en Europe' — Midnight in Europe — in which he argued that the problem with EU competition law was its obsession with providing fair rules of the game to companies within Europe, while failing to adopt a more pragmatic approach for companies competing outside the bloc.

When powerful European companies seek to compete abroad, in countries such as China that don't play by the same competition rules, a different approach should apply, he has argued.

"We need to reorient competition policy by redefining the notion of the relevant market," Moscovici said in a lecture at Harvard University in November.

"What I mean by that is that, although it is crucial to maintain strict and fair competition rules within the European market, this should not hamper the creation of European 'champions' able to operate globally; able to win market shares in China, India, Brazil or the US."

"This is what US law allows, and this is one reason why US companies such as Apple, Google and Coca-Cola dominate global markets," he said.

Moscovici's argument is that Europe's largest companies — in his book, he mentions Siemens and EDF — have a "national flavor" and struggle to transform themselves into European champions.

And when they are competing for business in China, for example, they shouldn't be held back because EU laws prevent governments pumping money into individual companies. After all, Chinese companies competing for the same business will be dosed up on state money.

France's Left

The commissioner is said to have a good relationship with EU competition chief Margrethe Vestager, so his comments aren't an attempt to undermine her.

Rather, his book is aimed squarely at France's presidential elections this year and a debate over the direction of the Socialist party.

In seeking a more pragmatic approach to competition policy for European companies active abroad, Moscovici's comments are inspired by the same objections as some of his fellow French politicians — they are, ostensibly, positions from the left of the political firmament.

But the commissioner's willingness to distance himself from voices of the left criticizing EU competition policy, as it applies within the EU, puts him at odds with a number of left-leaning candidates from the center-left Socialist Party.

In the course of the party's primary campaign, former members of the Hollande government, notably Benoit Hamon, severely criticized the government's embrace of market reforms, such as a revamp of the country's complex working rules.

Moscovici isn't backing down, but ahead of the candidates' debates this month he pleaded for party unity. In December, the commissioner said in an interview that he wanted candidates to present "ideas of the European left, for France," ensuring that he "will see to it that this program is European."

"There can be no irreconcilable lefts, there must be conciliatory lefts," he said.


Moscovici's comments on competition can be seen as trying to put a European spin on the notion of market intervention. It is an approach that might resonate electorally, but which politicians and enforcers in Brussels and elsewhere are unlikely to view favorably.

The problem for regulators is that loosening rules to allow one company to better compete abroad smacks of picking winners — something the EU has consistently argued should be left to market forces.

Also, allowing companies special dispensation from rules so they can compete in, say, Brazil, by no means isolates the impact the leg-up would have within the EU. If Siemens wins business in São Paulo, it will inevitably bring benefits to the German company's HQ, to the detriment of rivals.

And what's to stop Germany pouring money into a German conglomerate, while the French government does the same to one of its own leading companies, when both are competing for the same foreign business?

This kind of subsidy arms' race contravenes the very philosophy that underpins the EU's state-aid regime.

Moreover, markets are becoming more global and enforcers are increasing their cooperation. This means they are converging in their analysis of mergers: a trend that would undermine attempts to grant special favors.


This year, France will have a new president, now that Hollande has announced he won't be running for re-election. The specter of Brexit, worsening US relations and the populist uprisings across Europe will be more immediate challenges to any newcomer than competition policy will.

But as the EU prepares to move forward without the UK — traditionally the strongest proponent of strict competition enforcement — there might at least be a chance to discuss how the policing of market abuses could evolve.

In short, these uncertain times might suit Moscovici. With US President Donald Trump promising to the put the interests of US companies ahead of all other policy considerations, Moscovici's views on state support for European companies attempting to compete globally may resonate.

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