Some common sense from the Commission

Here's an encouraging proposal:

As we reported in our press summary yesterday, the European Commission has announced plans to revise its Byzantine state aid rules, potentially making life a bit easier for local and regional authorities. Currently, local bodies have to comply with the EU's jungle of rules, designed to ensure fair competition on the Single Market, even when subsidising or contracting out small projects such as swimming pools, playgrounds or crèches - which is just silly (and which adds unnecessary costs for taxpayers).

But, under the new rules, the Commission would lower the threshold on public procurement rules which - or so we hope - would let local authorities off the hook for public tenders for small-scale public services. As the competent EU Commissioner for Competition, Joaquin Almunia, put it.

"Our state aid rules currently apply also to local services organised by very small municipalities. It seems quite obvious to me that among these services, there are some that will have little impact on trade between member states and little potential to distort competition. I think that we need to adjust our scrutiny here and focus it on the cases that have a clear impact on the single market."

That makes sense. An official quoted over on Euractiv was even blunter:

"Most people [in DG Competition], they are not happy having to deal with a state aid complaint against a Dresden swimming pool. To be honest, it's more a pain in the ass than anything else, because they know very well that these matters should not be dealt with in Brussels."

The Commission says it wants to revise the regime in November (which it can do without asking member states or MEPs, since the EU has exclusive powers over this area). This is exactly the type of common sense that we want to see from Brussels.

But we need more of it - much, much more.

Incidentally, Open Europe will soon publish a list of examples of EU laws and measures that we feel should be revised on similar grounds. So watch this space.)

EU Competition policy out of control?

A leader in this week's Economist looks at one of the areas where the EU is rarely criticised: its competition policy.

EU Competition policy can broadly be divided into two main areas.

The first area deals with state aid - it is the job of the EU to prevent member states from subsidising their favorite industries. This task has proven particularly challenging in the crisis , as the Opel-Vauxhall case illustrates.

But that is not what the paper is criticising.

The article deals with the second area of EU Competition policy: fighting cartels, monopolies, and abuses of dominant market positions; and controlling proposed mergers, acquisitions and joint ventures. This area deals with firms rather than states.

The leader argues that “by acting simultaneously as investigator, prosecutor, jury and sentencing judge, the commission is denying defendant firms the basic right to be heard by an impartial tribunal”, adding that “In no other area of law would it be thought acceptable for the outcome of such important cases to be determined by a bunch of politicians.”

Another article notes that the EU’s antitrust case against Microsoft, which resulted in a €1bn fine, revealed that investigators failed to keep record of a meeting with an executive from Dell, raising suspicions that Commission staff overlook potentially exculpatory evidence.

This is indeed extraordinary: Politicians in the European Commission have the power to impose a €1.06 billion fine on a company without proper due process. €1 billion is a lot of money. It is more than the annual net contributions to the EU of countries such as Austria and Denmark.

What's more - and what isn't mentioned in the article - the EU can "hoard" the money it raises in fines by lining its own pockets, as Ashley Fox MEP recently pointed out. He said Competition Commissioner Joaquín Almunia had told him that the fines would be held by the Commission and used as part of the EU budget - and that Almunia had no plans to reform the practice. Fox proposed - quite sensibly - that instead: "Monies raised from anti-competition fines should ideally be returned to those consumers who have paid over the odds for products and services. However, as this would be virtually impossible to implement the best alternative is to return the money to the member states."

Apart from the EU's heavy regulatory burden, if unreformed, EU competition policy might become another factor deterring business from coming to, and staying in, the EU.