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USCIB Video
Forum With
E.U.
Competition Commissioner
Mario Monti
July 20, 2001
(Transcript courtesy ITN SIGNAL
STREAM, New York)
View photos from this event
GEORGE
CUNNINGHAM
11:01:25 Hello, and
welcome to our Transatlantic satellite conference today, featuring the
European Commissioner for Competition, Mr. Mario Monti. My name is George Cunningham, the head of
press and public affairs for the European Commission delegation here in New
York, which is very pleased to be co-hosting this forum today with the U.S.
Council for International Business.
Tom Niles, the President of the Council, will serve
11:01:51 as our
moderator today. We look forward to a
relaxed discussion about current competition issues which face both of us
across the Atlantic. We hope this
will lead to a better understanding of the issues that we must deal with
together.
11:02:06 Now,
I'd like to turn the program over to Tom Niles and his guests.
TOM
NILES
11:02:16 Thanks very
much, George. And thanks to the
Commission Office and to Pfizer and AOL for making all of this possible. And thanks to my colleagues from the
Council for being here with us today.
Commissioner, we're delighted that you've been able to join us at the
end of your day in Brussels. We have
a lot of important issues on the agenda: how the United States and the
European Union should
11:02:42 work together
in the area of competition policy; the possibility that these issues might in
some way be a part of a new international
trade round, which we hope will be initiated by the WTO ministerial in Doha,
Qatar in November;
11:03:00 and the
important question, which I know you're very much involved in now, of state
aids – how the
11:03:08 intervention of
our governments and their economic policy decisions affect the area of
competition policy. These are a few
of the issues in which we're very interested. And we certainly look
forward to discussing them with you today.
Thank you again for being with us.
COMMISSIONER
MONTI
11:03:27 Thank you very
much Mr. Niles. Good morning, ladies
and gentlemen. I am delighted to be
with you and I wish to thank the U.S. Council for International Business and
the European Commission Delegation for inviting me. The reason I am delighted is that two priorities of mine
11:03:50 as Competition
Commissioner are: Dialogue with
business to make competition rules understood, not just enforced, and
Transatlantic cooperation. This video
conference deals nicely with both priorities at the same time. It's a privilege to have an opportunity to
discuss with key executives of American-based companies which happen in many
cases to be
11:04:21 key players in
the European single market. And have
indeed actually helped to construct the single market in Europe.
11:04:31 By way of
opening remarks, I'd just like to make three observations. One, rejoins very much what you Mr. Niles,
just said. That is, our concerns with
state aid. I know we will be
discussing mostly antitrust, but let me spend a word on state aids. The European Commission has one
peculiarity among antitrust agencies.
It is there also to control in a supranational way what the
governments of the member states do in
11:05:09 subsidizing
companies. This peculiarity helps us
when we administer antitrust rules to be insensitive to the nationalities of companies. We of course are insensitive also because
we have to be even insensitive to nations.
When we
11:05:39 enforce state
aid control rules over member states.
11:05:43 Just to make
the latest example, three days ago, we finally imposed to the Federal
Republic of Germany to eliminate a secular system of public guarantees to
their public banks.
11:06:19 Second point, is international cooperation. I think at this stage, and even more in
the future, international cooperation among antitrust agencies will be
absolutely essential. We are very
proud and grateful about the record of the bilateral cooperation agreements
we have with the Justice Department and the Federal Trade Commission and I
look forward to further developing this with the new heads
11:06:55 Charles James
and Tim Muris. And we are working
also towards, as Mr. Niles mentioned, towards having in the forthcoming WTO
round
11:07:06 a core
agreement on competition principles.
And we will also like to see in place a global competition forum among
antitrust agencies to deepen and lighten the dialogue in this particular
profession, which is market friendly and yet, based on public powers.
11:07:31 My last remark,
convergence with the U.S. We
cultivate this with all our will and effort.
We all know that one recent merger case has attracted a fair amount of
attention. It has been regrettable a
case of divergence. But let us
underline that this is clearly the exception, not the rule. Convergence
11:08:02 in the area of
merger control is particularly evident in so many cases we have been dealing
with in the last several years. In
particular, if we look at the way in which remedies in case of mergers are
tackled by on both sides of the Atlantic.
And also,
11:08:31 beyond the
merger area what has been done recently by the European Union, for example,
in the guidelines on vertical restraints or horizontal agreements really
narrows very much the gap. We have
approached the ... the U.S. model equally in the area of leniency in case of
cartels. And only two days ago, we adopted a new leniency program which is
... even closer than the previous one to
11:09:06 the U.S.
practice. Thank you, Mr. Niles.
TOM
NILES
11:09:10 Thank you very
much Commissioner Monti. I think
whatever we may ... and however we may differ on specific cases, I think we
can certainly all identify with the principles with which you enunciated. I'm certainly delighted to hear that two
of your key objectives will be to maintain a dialogue with the businesses,
including the United States companies active in Europe. And also, promoting cooperation between
the United States
11:09:38 and the
European Union in this extraordinarily important area. Let me now introduce to you the members of
our panel who would be posing questions to you, Mr. Commissioner. First, to my right, Mr. Drew Arena,
Counsel for International Legal Policy of Verizon Communications. To my left, Mr. Paul Cappuccio, Executive
Vice President and General
11:09:59 Counsel and
Secretary of AOL Time Warner Incorporated.
Mr. Michael Hodin, Vice President for Corporate Affairs of Pfizer
Incorporated. Miss Selina Jackson,
Director of International Public Affairs of the United Parcel Service. And Mr. Rudy de Leon, Senior Vice
President, Washington Operations of the Boeing Corporation. Mr. Abbott Tad Lipsky, Senior Competition
Counsel of the Coca Cola Corporation.
And Miss Shelley
11:10:29 Longmuir,
Senior Vice President , International Regulatory and Government ...
Government Affairs of United Airlines
11:10:37 Incorporated. Mr. Michael Reilley, Vice President for
... Taxation of Johnson & Johnson.
And Mr. Richard Steuer, a partner at Kaye Scholer here in New York. And that is our panel, Mr. Commissioner. And now without any further delay, I'd like to ask Mr. Arena if he would like to pose the first question.
DREW
ARENA
11:10:58 Thank you. Good evening, Signore Commissario. My question relates to the pending
directive on a new framework for regulation of electronic communication
services within the community. In
examining it seems to us that the national regulatory authorities in the
electronic communications area are being asked to “ex-ante” apply competition
11:11:33 rules in terms
of the calculation of significant market power and then to apply them to
definitions of relevant markets made by the Commission. My question is, what is the role of the
Commission, of your service, D.G.
11:11:54 Competition, in
the implementation of this complex system?
And as a follow-on, doesn't this really represent more rather than
less regulation in the electronic communications area?
COMMISSIONER
MONTI
11:12:17 Thank you for
your question, Mr. Arena. You point
to an important change in the approach.
Indeed, under the new proposed regulatory framework for electronic
communication services, which is currently discussed by the Council. The definition of significant market
11:12:39 power has been
aligned to the notion of dominance, which is the usual notion in competition
policy. Thus, national regulators
will have to impose ex-ante obligations only on undertakings who are in a
dominant position within the meaning of Article 82 of the EC Treaty. National regulators will have to consult
their counterparts in the national
11:13:11 competition
authorities. The Commission is
facilitating this whole process through a
11:13:19 guideline,
offering guidance to authorities which in fact so far, were not called upon
to apply competition principles. Now,
does this represent more regulation?
Frankly, I believe it doesn't.
I believe this goes in the opposite direction, in fact. Because as a sector is being liberalized, there will be a phasing in of the ordinary competition
rules,
11:13:11 to the detriment
in a sense of the patchwork of previous sector specific regulations. I see this as a delicate step but indeed,
a step in a sense of a lighter and more general regulatory approach.
Not more regulation.
TOM
NILES
11:14:20 Thank you very
much, Commissioner. And now, I'd like
Mr. Cappuccio to pose a question.
PAUL
CAPUCCIO
11:14:27 Good afternoon,
Mr. Commissioner and thank you very much
for participating in
11:14:33 this
roundtable. I'd like to pick up on
your point before I ask my question of the importance of dialogue between
companies and the European Commission. And I can say from a lot of experience
over there ... we’ve had deal that’s been approved, we’ve had a deal that did
not go through ... the EMI deal. But
I can say through all of this, that it’s been very important and very helpful
to have good dialogue with the commission staff. And I’ve found your staff to
be very open to talking through competition principles, giving us a clear
sense of where they think
11:15:10 competition
policy is going. And I think a lot
of the cross-oceanic issues can be made easier by the continuation of that
dialogue. So I applaud you and your
staff for doing that.
11:15:24 My question is
sort of similar to Mr. Arena’s, but from a different angle. And that is, in the United States, the
Internet exploded, and e-commerce grew in large part because consumers were
able to have access to the Internet with flat-rate pricing from the telephone
companies. So they could stay online for quite a long time, and they do. As you know, in Europe that’s not the
tradition. There have been some
member states like the UK that have moved towards flat-rate pricing, some
that haven’t - at least as quickly - like Germany.
11:16:01 My question is
whether you see an active role for the commission in opening up local access
markets in order to promote e-commerce and whether that is something that’ll
be scrutinized in the merger process or whether there’s a larger role for the
commission.
COMMISSIONER
MONTI
11:16:21 Well, thanks
you very much, Mr. Cappuccio, first of all, for your kind words, which I
genuinely would like to reciprocate.
The process which led to the implementation of the AOL Time-Warner
merger was indeed very interesting for us as well and the cooperation with your
people was always very constructive.
Actually in that case the largest merger ever.
11:16:53 It so happened
that the European Commission was able to approve the deal with remedies
before the American authorities were able to do so. The issues of developing the Internet economy and electronic
commerce in a way which should be as consumer friendly as possible is
something that we in Europe feel
strongly as a priority. And as you
know, the whole so-called Lisbon
process about creating a E-Europe is going in that direction.
11:17:41 It is true that
the flat rate would be an important component in that direction. It is true that the degree of
harmonization in aspects of the electronic communication framework is not as
advanced as we would like. Certainly we see it as one of the responsibilities
of the commission to try to facilitate this process.
11:18:19 For example,
the unbundling of the local loop is an important aspect of this overall
process. And we are intervening now
in the area of leased lines, of roaming, and the issue of flat-rate prices is
a particularly important one. Of
course we are having to deal with this structural transform in an integrated
set of countries, not in one country. This does not make things easier. But we see this really as one important
priority.
PAUL
CAPPUCCIO
Thank
you.
TOM
NILES
11:19:07 Thank you very
much, Commissioner. I’d like now to turn to Michael Hodin, from Pfizer, for
his question. Mike.
MIKE
HODIN
11:19:15 Thanks,
Tom. Mr. Commissioner, thank you
again, from Pfizer’s point of view, for participating in this wonderful
opportunity. We’d like to thank George Cunningham, at the Commission office
here in New York and the US Council.
Before I get to my sort of comment and question on the policy side, we
too, from Pfizer’s point of view, Mr. Commissioner, would like to
congratulate you and your staff on appropriate and rapid approval of the
acquisition that Pfizer made last year of Warner-Lambert. It has resulted in a wonderful integration
of two companies
11:19:54 which we
believe will be for the benefit of innovation and patients. And thank you again very much for your
great cooperation from your staff.
11:20:02 Mr.
Commissioner, the question I’d like to ask really first asks you to, in a
sense, to suspend your specific hat as Commissioner of your DG and perhaps
more put on your hat as a leader in Europe and in the EU itself. And because it relates to the fact that in
our sector, in the research-based pharmaceutical sector, and indeed in
pharmaceuticals in general, there is no marketplace. There is no competition in the way that
markets understand it.
11:20:40 Prices and
volumes of our products are controlled within each country. We understand
that is not the prerogative of the EU.
But it is a fact that pertains country by country. The fact that there’s price and volume
controls results in very little competition on the purchasing side. You have monopsony purchasing in a variety
of countries through institutional mechanisms such as sickness funds in some
of the Northern European countries, like a Germany, where there is no
competition among them.
11:21:17 The result of
that, as I think you’re well aware, is that you have an increased
facilitation of parallel trade around Europe. And while we understand the principle is in the context of the
free movement of goods, the fact of the matter is that this is a free
movement of goods on the basis of a non-market, or even anti-market, with the
countries. And so therefore that
overview from the European point of view, in effect, perverts the situation
and many times makes it worse.
11:21:52 And
so, Mr. Commissioner, my question is whether there is a way for us as an
industry, Pfizer would certainly like to take a leadership role, but as an
industry more importantly to really begin anew and sit down with leadership
in Europe and talk about the way this lack of competition, the lack of
markets operating is adversely affecting innovation, investment, and, most
importantly, patients are not getting the best quality care in Europe as they
do receive in America where there is a greater market that’s operating.
COMMISSIONER
MONTI
11:22:29 Well, thank you
very much for raising such an important
issue, Mr. Hodin. This is
important economically, it’s important, I’d say systematically. Because it does point to weaknesses of the
European construction or peculiarities of it. Due to the principle of subsidiarity, as you indicated
yourself, it’s not for the commission to interfere with the member states’ organization
of their health system.
11:23:07 The pricing and
reimbursement systems for drugs belong the real national sovereignty. Systems
do differ from member state to member state.
However, the lack of harmonization, which could be desirable, does not
mean that the industry can tell its wholesalers not to export from low price
into the high price countries or to make exports more difficult for
them. It is their independent
decision to set prices at the higher level in some member states. And there is no state regulation that
forces them to do so.
11:23:52 That’s why I
believe that it’s not really the case that the pharmaceutical companies have
no room for maneuver. Having said
that, I believe that there is a
problem. I would be definitely in favor of sitting down and discussing
together what can be done. The
disparate system that’s prevailing at the national level does make the single
market for pharmaceuticals a definitely
highly imperfect construction in Europe, to say the least.
11:24:49 Would this
generate better outcomes if in addition we were to accept impediments to
parallel trade? My firm conviction is
that it would not. But I’m not pretending that the overall system that we
have now in place in Europe is satisfactory.
And I would certainly be very interested in pursuing the discussion
with you and with other representatives from the industry.
MIKE
HODIN
11:25:24 Thank you, Mr.
Commissioner. We would very much like
to follow up with you and other leaders.
Mr. Liikanen and of course your fellow commissioner who has direct
responsibility for the sector.
11:25:59
COMMISSIONER
MONTI
11:26:00 I’d be very
pleased.
MIKE
HODIN
11:26:01 Thank you.
TOM
NILES
11:26:03 Thanks very
much, Mike. Commissioner, I’d like
now to turn to Ms. Jackson, of United Parcel Service, for her question.
MS.
JACKSON
11:26:13 Thank you. And thank you, Commissioner Monti. I’d
like to echo some of what my colleagues have said regarding the pure
appreciation for what you’ve done for many of the global companies. In particular I think you’ve made a number
of decisions recently that have been void of the political pressure under
which no doubt you are under. And we
just want you to know we appreciate those efforts.
11:26:48 My question
really revolves around the issues of state aid and government
monopolies. And we’ve talked a little
bit about a global competition forum, be it in the WTO or another forum. And I wonder if you believe that there is
space for some of these issues dealing with government subsidies and
particularly in the service area, in a sort of global forum?
COMMISSIONER
MONTI
11:27:18 Thank you very
much, Ms. Jackson. This is a subject
which, as I said in my preliminary remarks, occupies us a lot in the European
Union. By the way, because it is
instrumental to having a competitive market, but also because it is
instrumental to creating a single market.
And I think it was an act of foresight of those who wrote the treaty
in the ‘50s to establish these clear-cut powers not only for anti-trust but
also for state aid.
11:28:09 Now would it be
possible and advisable to extend in a global context these principles? One can see the attractiveness. Maybe one could gradually consider
discussing these issues, for example, in a global competition forum. I see at the same time one, intellectual
and institutional difficulty, which is probably not easy to be solved. Namely, there is one anti-trust agency
which does have power over state aids ... that is the European Commission ...
and it does have those powers because of its supra-national nature within the
European community.
11:29:07 Would
anti-trust agencies in country X be able to, exercise control over their
governments and parliaments who are the ultimate actors of subsidies to
companies. I believe there would be
constitutional problems, which in the constitutional set-up of European
integration were marvelously solved since the ‘50s. It’s not clear to me how
this could be done internationally on a global scale.
11:29:56 But again I
believe, Chairman Niles, that this video conference is also a creator of
issues. And this is another aspect
which I would like very much to pursue with Ms. Jackson and others.
TOM
NILES
11:30:18 Thank you very
much, Commissioner. I have a feeling
that we’re sitting now in that country X where some constitutional issues
might arise. But certainly the
problem of state aids, particularly when it relates to the role of former
government controlled monopoly service providers is one that I know is a
concern to you and certainly is a concern to many of our companies that are
active in the European Union and in these now liberalizing areas.
11:30:52 Let me now turn
to the next questioner, Rudy de Leon, of the Boeing. Rudy.
RUDY
de LEON
11:30:59 Thank you, Tom. Mr. Commissioner, thank you very
much. This is a very useful dialogue
and a chance for us to share thoughts. And I would also echo something that
you said in your opening comments.
And that is that the Transatlantic cooperation is so critical to the
United States and to Europe. And, in fact, our efforts really are to create
that bridge for the 21st century that goes both ways across the Atlantic.
11:31:28 You’ve raised a
number of issues just on the regulatory side and you called them
remedies. Having previously had
government assignments, we would sometimes call them “mitigation” with
respect to anti-trust issues, things of this nature. And I wonder if you
would just elaborate on this notion of remedies and mitigation. And should
the remedies be principally focused to assist the consumers that will be
purchasing these products or should the remedies be more tiered toward
producers.
11:32:10 I think your
views on this would be very insightful to us.
COMMISSIONER
MONTI
11:32:17 Thank you very
much, Mr. de Leon, for raising this specific point, for raising it so
delicately. There has been some hint
in recent weeks, perhaps not unrelated to a specific merger case, according
to which European competition policy for some reason could not be oriented
essentially on consumers’ interest.
11:32:45 Let me say very
frankly that this is indeed not the case.
The whole of competition policy has as a guiding star consumers’
interest. This is so in anti-trust,
this is so in mergers. And I would say this is also so in state aid. Concerning mergers and remedies, does
listening to competitors to the merging parties imply that an anti-trust
agency departs from consumer interests?
It might well, if listening to competitors would mean taking the
competitors’ word always as gold. Of
course this would be naive.
11:33:45 On the other
hand, not listening to competitors, not hearing competitors’ concerns would
deprive the process of assessing the merger from useful elements. It of course impinges on the
responsibility of the anti-trust authorities and their staff to be able to
discount for the vested interest that a competitor normally has and take on
board the elements of knowledge to deepen the analysis of the market without
paying undue attention to what may be a vested interest.
11:34:29 Now, this is
also relevant for the issue of remedies.
If, for example, competitors in the course of a merger procedure
suggest certain remedies because they might be interested in purchasing
certain divestitures, of course this is something that we should look at with
very skeptical eye. It would take specific cases and much more time than we
have available to go deeper into
this. But the guiding point is, of
course, consumer interest. And having
an ear also for competitors by no means detracts from the fact that what we
have to establish is whether there is in the case of a merger, a creation, or
a strengthening of a
11:35:39 dominant
position which would be detrimental to consumers.
RUDY
de LEON
11:35:44 Thank you,
Commissioner.
TOM NILES
11:35:47 Thank you very
much, Commissioner. Let me now turn
the questioning over to Mr. Lipsky, from the Coca-Cola Corporation.
MR.
LIPSKY
11:35:55 Hello, Mr.
Commissioner. I was very pleased to
hear you echoing the Commission’s support for the Global Competition Forum in
your opening remarks. I’d also like
to echo the remarks of some of the other members of this panel in
complimenting the high level of professionalism of the Commission and its
staff in their application of the European competition rules.
11:36:21 I had the honor
to say to your predecessor, Commissioner Van Miert, when he visited Atlanta
some years ago, that we’re one of your best customers. And I think we remain so, and pleased that
that’s so.
11:36:34 Commissioner
Monti, my question returns to a subject that you’ve already touched on,
namely state aids and application of competition rules to undertakings with
special and exclusive rights. You
alluded, I think, in your opening remarks, to the fact that these are
somewhat innovative powers for a competition agency to enjoy. And I think that with respect to any
innovation, the user is entitled to ask after several decades of use and
application what has been the success of the innovation, what are its
strengths, what, if any, are its weaknesses.
11:37:16 I would just be
curious in your general reaction. Is
the commission satisfied with the way those innovative powers have worked
out? Is Europe satisfied, are you
satisfied?
COMMISSIONER
MONTI
11:37:29 Thank you, Mr.
Lipsky, for the penetrating and provocative question. Certainly not everybody in Europe is
satisfied. Certainly on each state
aid decision there are deeply dissatisfied parties, and they invariably
happen to be our own shareholders so to speak. That is, the member states
which make up the European Union.
Each of them individually is deeply unhappy when we declare a state
aid illegal and incompatible with a treaty, we order recovery and so on.
11:38:09 But each of
them really believes that it is necessary for the European Union to continue
to apply, and apply even more and more rigorous state aid rules. To unveil a bit also the politics of this,
it’s not completely rare that the government of a country publicly and loudly
complains with the European Commission because we say no to a certain state
aid, and privately let us know that in fact that government is not entirely
unhappy because, for example, for budgetary reason it was better not to grant
that aid.
11:39:05 Then of course
one should not be too surprised if the European Commission, being rather
systematically the scapegoat of the process, becomes a bit less popular. But
never mind, I think this is our contribution to the European construction.
11:39:24 There is, I
believe, still considerable progress that can be and must be achieved in
state aid control. I would mention
two aspects in particular, Mr. Lipsky. There are state aids which are hidden,
and they must, first of all, be brought to light, and, secondly, checked
against the treaty and be authorized or not.
What we did concerning public guarantees to the German banks fits
perfectly into this category. A
guarantee was not perceived until recently as being a state aid. But it is.
11:40:08 A second form
of progress which is needed, and we started recently to work on this, is to
set in motion a, not only the legal control by the commission, but also a
sort of peer review process putting political pressure on member states. And we just recently started the
publication of a state aid scoreboard where we expose in a sense we name and
shame member states for their improper state aid behavior to the extent that
there is improper state aid behavior.
11:40:53 So I think this
is a moving target. I am not unhappy
with the progress achieved so far. I believe a lot remains to be done. And,
by the way, as many among you do know, it’s perfectly possible and it does
happen that non-EU companies - for example, American companies - come up with
complaints the aids provided to EU companies by EU governments. MR.
LIPSKY
11:41:35 Thank you.
TOM
NILES
11:41:36 Thank you very
much, Mr. Commissioner. I certainly
would like to see that state aid scoreboard some day. That should be a very
interesting document. In the area of
state aids, one sort of hidden state aid that you might want to consider in
the future would be below market rate loans by governments to companies, such
as, for example, in the case of aerospace programs undertaken by EADS. That strikes me as being a state aid that
could be considered anti-competitive in one sense.
11:42:15 Let me now turn
the questioning over to Ms. Longmuir from United Airlines. Shelly?
MS.
LONGMUIR
11:42:21 Thank you. Good evening, Mr. Commissioner. I fear I
am being redundant in echoing my colleagues’ expressions of appreciation for
you and your staff, but I also feel I’d be remiss if I did not similarly
express gratitude for the receptivity and the professionalism of your
staff. United, of late, has been a
frequent flier to the Commissioner’s and the Commission’s doorstep on whether
it’s an alliance or a merger case.
And we value that relationship.
11:42:50 My question
specifically, sir, is really to pose the query as a development of my
colleague from Boeing on remedies. Is a convergence of US and EU competition
policy really possible if there is an apparent divergence on remedies? Specifically I’m referring to behavioral
versus structural remedies. The US
DOJ has been receptive accepting behavioral remedies, for example, with
carve-outs. We saw that with the US, Lufthansa,
SAS anti-trust immunity case where the carriers were prevented from
cooperating on certain hub-to-hub routes.
11:43:39 And that was
accepted by the US DOJ.
11:43:44 And in certain
other cases I think there is a concern that the commission, perhaps out of a
lack of resources which has often been the cited reason, has looked more to
structural remedies to insure ongoing competition. And if that is in fact the
case and our observations are accurate, is there a possibility then for the
competition laws ultimately to converge if there is a disparity among the
views on remedies.
COMMISSIONER
MONTI
Thank
you very much Ms. Longmuir.
COMMISSIONER MONTI
11:44:56 Miss
Longmuir the issue of, well, first of
all, thank you for your positive remarks
on my staff and again vis-a-vis your company, United Airlines,
11:45:30 we have always
been facing a highly constructive climate of cooperation including very
recently. The issue of remedies,
structural, behavioral. Well, first
of all, in the antitrust area about agreements among companies about abuse of
dominant position we tend to accept behavioral remedies as a matter of
routine. In mergers it is true that
we tend to have a preference for structural relative to behavioral
remedies. That
11:46:15 does not really
have much to do with resources, although it is true that structural remedies
require less monitoring by definition.
But in the area of mergers there is an important difference relative
to the U.S., as you know. Mainly in
the U.S. system if the say, the Department of Justice sees a problem after a
merger has gone through it does not have consider it res judicata.
It can challenge also
11:47:06 subsequently
before the court the merger. In the
EC merger system in Europe we do not have that possibility. Companies have the advantage, as you know,
of a speedier process with time limits.
But once the Commission has authorized a merger it does not have the
possibility to go back with second thoughts.
That's one reason for our preference for structural
11:47:38 remedies. Having said that we are not categorically
against behavioral remedies in merger cases.
For example, in some mergers we have accepted as remedy the
commitment to grant third parties access to the essential network
11:48:06 infrastructure
of raw material. Such a remedy may
still be a promise. However, it is
easy for the Commission to police its implementation because the third party
concerned will of course notify the Commission of the non-compliance of the
merged entity. And we do not see the
issue of
11:48:34 remedies as a
serious impediment to cooperation and convergence with the U.S. And indeed our most recent product in this
area, which is the notice on remedies which we published in December 2000
owes a lot to the work of the joint working group Washington/Brussels on this
subject.
MS.
LONGMUIR
11:48:59 Thank you, Mr.
Commissioner.
COMMISSIONER
MONTI
11:49:01 Thank you.
TOM
NILES
11:49:01 Thank you,
Commissioner. Let me now turn the
question over to Mr. Reilly from Johnson & Johnson. Mike?
MIKE
REILLY
11:49:09 Thank you. Good afternoon, Mr. Commissioner. And I also would like to personally thank
you for joining us this afternoon.
Here at the U.S. Council for International Business the tax committee
looks with great interest on the efforts of the EU regarding tax competition
and the code of conduct, etcetera.
And not surprisingly the view of business is that the lower the tax
burden on business activity the greater potential for economic growth. And my question is whether or not within
the Commission there has been any discussion as you go forward with the
efforts to,
11:49:10 control tax
competition whether there is some concern that it would make the EU less
attractive for additional investment by both EU and non-EU businesses?
COMMISSIONER
MONTI
11:50:04 Thank you very
much, Mr. Reilly. I was very much
involved in this area. Especially in
the last few years. Before being in
charge of competition I was in charge, amongst others, of tax issues. Now there is indeed a lot of
discussion. The policy established by
the Commission and shared by the member states in the Council is not one of
fully fledged, across-the- board, tax harmonization. It is not a policy fighting
11:50:43 every form of
tax competition. We even see benefits
in an orderly process of tax competition.
What we have focused our action against is specified harmful or unfair
forms of tax competition which, as you know, have been defined in the code of
conduct and are being
11:51:14 closely
watched. Now, of course we understand
and share the view that Europe will be a more competitive location for
companies to the benefit of European growth and employment if it has a lower,
not a higher overall tax burden. And
indeed we see the process of fighting just those
11:51:39 harmful forms
of tax competition as a facilitator of an overall reduction of tax
pressure. Because it is the case that
if member states fight each other in competing for the location of companies
through these unfair instruments they have to apply higher tax rates than
they could otherwise do. So I am
firmly convinced and this is the Commission's position that this limited
fight to certain forms of tax competition will be a factor
11:52:21 helping member
states to bring tax rates down. And
of course will also be a factor creating a smoother single market in
Europe. So again let me reassure
everybody. And then the next
interlocutor, Mr. Steuer, will be aware that his family name, in German,
means exactly tax.
COMMISSIONER
MONTI
11:52:52 That the
purpose of the Commission's activity in this area is not to help member
states create a cartel against the markets and raise taxes - it's just the opposite.
MIKE
REILLY
11:53:09 Thank you, Mr.
Commissioner.
NILES
11:53:10 Thank you,
Commissioner. And now let me turn the
questioning over to Mr. Steuer. Rich?
RICH
STEUER
11:53:19 Thank you. I think I was predestined to be a tax
lawyer but you'll forgive me for having become an antitrust lawyer. Let me echo my colleagues' appreciation
for your willingness to engage in dialogues of this kind. My question, Mr. Commissioner, is similar
to one mentioned earlier involving competitors and consumers, but I want to
take a slightly different
11:53:40 focus that goes
beyond remedies. There has been a
great deal of relatively simplistic reporting in the press in this country
recently that European competition law is concerned with competitors while
American antitrust law is concerned with consumers. And yet American antitrust law has always taken into account
competitors, even in
11:54:03 merger cases
where there are genuine allegations of foreclosure. And at the same time European competition law, of course, has
given credence to concerns of customers, including both consumers and
customers at other levels of competition.
My question, Mr. Commissioner, is whether you see this type of
reporting as too simplistic and
11:54:24 whether you
believe that U.S. and EU competition law are really this far apart?
COMMISSIONER
MONTI
11:54:31 I do regard Mr.
Steuer, this sort of reporting as being too simplistic. I believe that it is not the case that
there is a fundamental divergence here.
I mean, it is the case that in
other policies in Europe over the last, decades that the focus on consumer
was less emphasized than in the U.S.
And I consider it a fundamental change for the better in Europe that
consumers' interests throughout our various
11:55:20 polices have
become higher in the hierarchy of values.
In many member states of the European Union in the not too distant
past there was more the protection of entrepreneurs and the protection of
workers relative to the protection of consumers' interest. From this point of view competition policy
since the 50s in Europe has been a forerunner of attention to consumers and I
am delighted that so many other
11:55:53 areas of policy
in Europe now are approaching this consumer-centered orientation which has
traditionally characterized the U.S.
Now in competition policy as you perfectly say, Mr. Steuer, on both continents there is attention to
competitors and to consumers and I believe on both continents the paramount
attention is
11:56:28 that to
consumers. One could mention
specific cases where the concerns of
competitors have not been finally taken into consideration. For example, in the AOL/Time Warner merger
there was strong lobbying from competitors but, as we all know, the merger
was finally cleared by
11:57:01 the
Commission. In another case when we
approved the Total/Fina/Elf merger about one year ago, we had as one of the
remedies the disposal of 70 motor way service stations by the merged
entity. And the European Commission
did not approve as purchaser a
11:57:39 company which
was already active in that market.
And which in our view would not have had the incentives to really
compete with Total/Fina/Elf. We did
finally approve the purchase of a large number of those gas stations by a
supermarket chain, Carrefour which had a
11:58:09 much greater
incentive to compete and to the delight of consumers it has started doing so
immediately and gas prices on French auto routes have come down. One could multiply the complete examples.
RICH
STEUER
11:58:21 Thank you very
much.
TOM
NILES
11:58:24 That is a very
good bit of news for drivers in France, Commissioner. Mr. Cappuccio wanted to follow up a little
bit on the point raised by Mr. Steuer.
Paul?
PAUL
CAPPUCCIO
11:58:33 Yeah, I just
wanted to say, having just gone
through the process of a merger that took a year and a day to be approved in
the United States, I'll say this directly as I can, it is simply false that
the U.S. authorities had less of a focus on competitors' views and more of a
focus on consumers than the European Commission. In fact, both sides of the Atlantic
11:59:02 listened to
competitors to hear what the theories were.
But, in my experience, I've got to tell you, I think the European
Commission was more skeptical of the views of competitors. It didn't mean they didn't listen to them
and didn't listen to the theory. But
in the end of the day they viewed them with the appropriate grain
11:59:20 of salt. And this feeds into a little bit of the
difference between a preference for structural remedies and a preference for
conduct remedies. Competitors are
usually seeking in the end of the day a grab bag of goodies for conduct
remedies. And the European
Commission, while they listen to competitors, certainly in our merger didn't
throw on a bunch of conduct remedies that would satisfy each
11:19:44 competitor once
they had reached the conclusion that the basic structural combination was
lawful. Whereas in the United States,
I think we're moving more towards a world where not only are competitors'
views considered ... and I
11:59:56 think that's
fine ... it's just not different from Europe. But also that the ... the preference for conduct remedies or
the availability of conduct remedies often times feeds into that and has the
competitors actually having more results and not less. And that's
12:00:12 not to say it's
wrong in the United States. I'm not
saying that. I'm just saying it is
simply and flatly in my experience false that the focus in the U.S. is less
on competitors' views and the focus in Europe is more.
TOM
NILES
12:00:28 Thanks very
much for that clarification, Paul. I
must say, Commissioner, as one who was sort of present at the creation of the
cooperation between the Commission and the FTC and the Department of Justice,
as the Ambassador to the European Community and now European Union in 1991,
I'm really pleased that this relationship in this very very important area
has developed as well as it has.
There are obviously
12:00:58 questions that
come up from time to time and it's a work in progress. But I think it's an area that we can be pleased
with the bridge that's been built
across the Atlantic. I wonder
whether perhaps you have any questions for us that you'd like to pose now,
since we've taken the liberty of posing questions to you, Sir.
COMMISSIONER
MONTI
12:01:17 Not really questions,
Mr. Chairman. But I would like to
underline that you have been all very generous in your comments and that
several hints have come up which will be very helpful for us trying to
improve our work. Of course there is
a lot of room for improvement. And I
believe the unifying elements of all of the
12:01:54 interventions
is the need to move ahead and to deepen rather than doing anything else
concerning the transatlantic cooperation in
antitrust. The European
Commission is of course a junior institution relative to the Justice
Department and the FTC in this profession.
12:02:17 We have still a
lot to learn. And I hope we have
something to contribute and certainly it has been an enormous pleasure for me
to cooperate with our American colleagues and also to have dialogue with
business. So if I have a
12:02:40 question at
all, Chairman Niles and, Mr. Cunningham, is would it be ever possible to
repeat something like this.
TOM
NILES
12:02:50 Well, we would
be delighted to do that, Mr. Commissioner.
We look forward to continued consultations with you and we welcome
your interest in working with business both in Europe and in North America. The reality is that when you talk about
working with business in Europe and North America you're talking generally
about the same companies. So it's
very good to hear that coming ... coming from the Competition Commissioner of
the European Commission.
12:03:23 Let me ask Mr.
Arena to close out for us.
MR.
ARENA
12:03:46 Thank you,
Tom. Signore, I didn't mean to be
ingracious in not thanking you at the
beginning so I will thank you now, not only on behalf of Verizon but all of
us here today really appreciate a person of your importance taking the time
to speak with us on these critically important issues of transnational
cooperation. I would just say I think
this and the
12:04:20 comments of
those with real knowledge give the lie to a lot of the media hype about the
differences between our two governments in competition policy. So again on behalf of all of us thank you
very much. Grazie e Buona Sera
COMMISSIONER
MONTI
12:04:39 Grazie
Mille. Thank you very much. And it was a pleasure.
TOM
NILES
12:04:41 Thank you. Thank you very much, Sir.
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