How to Preserve Trust in Anti-trust

08 October 2009, 18:16 CET

By Ben Van Rompuy

Let it be known: yesterday was European Competition Day. With a one-day conference in Stockholm, hosted by the Swedish EU Presidency, the European Commission wanted to enhance the visibility of EU competition policy (or anti-trust policy, in American terminology) and explain its achievements to the general public.

The idea for a European Competition Day grew out of the concern that European citizens are in general poorly informed about the benefits they can derive from EU competition policy. In light of the current economic crisis, consumer education and awareness-raising has never been more crucial. In order to preserve public confidence in competitive markets, and in the benefits derived from them for our everyday life, a better understanding of the importance of competition policy is invaluable.

In Europe, the U.S. and elsewhere, the crisis has generated much debate about the reliance on market forces to provide the best outcome for consumers and the economy as a whole. It has poked holes in the idea that financial markets will self-correct. Extending this concern to markets in general is not a big leap. Many industries in distress have already requested greater tolerance towards cartels, abuses of dominant positions and other anti-competitive practices and, as the social impact of the recession unfolds, political pressure to retrench competition enforcement is expected to intensify. As a response to these calls, the EU and U.S. competition authorities declare that they continue business as usual. However, the European Commission already showed flexibility in the application of the rules under which state aid is monitored (it approved over 2,900 billion Euro of state guarantees in favour of banks). Furthermore, if history can tell us anything, it is that no government has reacted to a crisis by calling for a more vigorous anti-trust enforcement. In the face of the Great Depression, the U.S. government suspended the anti-trust rules and put in its place a system of industry-sponsored codes. Similarly, albeit less radical, the European Commission relaxed its stance on competition issues in response to the oil crises in the mid-1970s.

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