Petr Mlsna - Opening Speech for the European Competition Day on 10 October 2022

2022-10-10
Ladies and Gentlemen, Dear Guests. After thirteen years, the Czech Republic holds the Presidency of the Council of the European Union and after thirteen years the Office for the Protection of Competition organises the European Competition Day. This time not in Brno, like in 2009, but in Prague, in the very historical centre of the Czech state, at Prague Castle.

 

Allow me to give you all a warm welcome. In particular, welcome to the honoured guests who will be opening the conference with me. The Executive Vice-President of the European Commission, Margrethe Vestager, and the representative of the Czech Government, the Minister of Justice, Pavel Blažek. It is especially a great honour for me to have representatives of the Ukrainian competition authority present and I would like to express our support for Ukraine in these hard times. I also thank all the members of the expert panels who are ready to share their thoughts with us. Last but not least, I welcome all those for whom competition law is a profession, whether they practise it within public administration, in academia or in the private sector.

We are in an era where the volume of economic interaction is constantly growing, business models and markets are more complex, new industries are emerging and business is moving more and more into the online world. The market power of well-established players, especially digital platforms, is growing and data is an essential resource for business success. However, at the same time, we are also in a time not only affected by positive technological progress and development, but also a time heavily affected by the COVID pandemic, energy crisis, the ongoing unprecedented Russian aggression in Ukraine.

Consequences of these events on the European economy are enormous. Many markets are experiencing dramatic changes or even failures. Prices are rising, inflation is out of control and European consumers are calling for regulation, price caps and social aid. In particular, this is necessary in the area of energy prices, which have skyrocketed, mainly due to dependence on Russian gas. Governments across Europe and, of course, the European Commission are therefore looking for solutions to mitigate and resolve this crisis.

In particular, the common European State aid rules are proving to be crucial in the short-term perspective, allowing for rapid and targeted aid to the most affected entities. We are therefore pleased that the European Commission has reacted quickly by adopting the Temporary Crisis Framework, which sets out clear guidelines on which State aid will be considered compatible with the internal market when dealing with high energy prices.

Important Projects of Common Economic Interest are one of the themes of this conference. The concept of these projects is one of the European Union's responses to global competition in key industries of today such as electro-mobility, chip manufacturing and the development of 5G networks. These projects could also contribute to addressing the consequences of these crises.

Nevertheless, the conceptual solution for European energy independence is the planned shift to sustainability as part of the long-term Green Deal strategy. This objective should be fully supported and generally promoted. However, the problem is that, unlike direct aid, this objective takes time. Therefore, in a situation which is unprecedented and which requires a quick solution, it is advisable to consider, for example, the postponing of such a transition and the longer use of fossil fuels. It is absolutely necessary to provide countries, businesses and, above all, European citizens with their basic needs, which certainly include energy. Of course, eventual postponing must be limited only for the time necessary to overcome the current crisis.

In no way I am suggesting that we should abandon the path to sustainability. But in an unprecedented situation which no one could have predicted when formulating existing policies, we need to consider crisis solutions and to respond to the "new reality". I fully support the search for and incentives towards alternative sources in the energy sector, i.e. the need to invest in research and development. This could bring new possibilities, whether in the area of direct generation or efficient energy storage.

What should be the main role of the Competition Authority in such circumstances? Clearly, it is not shaping sustainability policy. Competition authority is primarily a guardian of functioning competitive markets. Therefore, the main role of the competition authorities is protecting competition against anticompetitive actions of undertakings. However, it is equally important for the competition authority, especially at a time of strong calls for all sorts of regulation, to assist other public authorities in their regulatory efforts and to seek solutions so that potential regulation distorts competition as little as possible.

In order to be able to perform their primary function responsibly and effectively, competition authorities need to have sufficient capacity, expertise, technical equipment, but also adequate legal instruments. The minimum standard in this respect was brought about by the ECN Plus Directive. This legal act unfortunately has not been transposed in the Czech Republic yet, but a proposal has already been submitted and I firmly believe that, despite the difficult situation, it will be approved in the nearest future.

Our proposal also contains some institutes beyond the scope of the directive. These include, for example, the possibility of using leniency for vertical agreements, more effective securing of the complainant identity, or the more effective banning on participation in public procurement. After all, bid rigging and the fight against cartels in public procurement is one of the Office's long-standing priorities. I can say that we are succeeding in this fight, whereas  we are also taking advantage of the unique synergies of also being a body which reviews the public procurement awarding process.

There are many novelties in the area of competition protection that need to be explained and communicated to businesses as much as possible and they need to be encouraged to comply with them. This necessary transparency is sought by the Czech Competition Authority. We are doing our best to promote prevention and education, to communicate and cooperate. Our partners are universities, state administration bodies, chambers and associations of undertaking as well as political representation. 

When I mentioned prevention, we have changed our policy and decided to take robust compliance programmes into account as a mitigating factor in the calculation of fines. I should note that this is not a blank cheque for a discount.  We are only prepared to consider fine reductions in cases where the undertaking in question has successfully applied for leniency or settled with the Office. This approach should encourage undertakings to invest in prevention while making institutes of leniency and settlement even more attractive.

As a new approach to motivate faster and more efficient investigation where the leniency programme cannot be applied, we have introduced the possibility of voluntary submitting self-incriminating evidence with added value like in leniency of anticompetitive conduct in the area of vertical agreements or abuse of dominant position. I have to say that, particularly in the area of vertical agreements, there is considerable interest in using this type of cooperation with the Office and we expect the first cases of this quasi-leniency in the near future.

Competition authorities now find themselves in a difficult period where they have to carefully assess which policy direction to pursue, how to use their limited resources, what types of cases to investigate, which markets to investigate and which tools to use. I believe that the current situation requires us to look first and foremost at where the negative consequences are most apparent and where the very structure of the market allows for potential collusion or abuse of dominant position. It is in this area where undertakings may be tempted to compensate for increased costs by collusive behaviour to the disadvantage of consumers. In this respect, I strongly caution that any finding of distortion of competition in this way in markets for essential goods will be pursued by the Office in the strictest possible manner.

Ladies and gentlemen, I hope that today's conference, the presentations and discussions you will see/hear, will inspire you and that together we will contribute to the future direction of competition policy in the European Union.

Thank you for your attention.

 

 

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