Brussels turns up the heat on EU competition laggards

The European Commission has stepped up calls on EU member states to slash protectionist barriers to economic competition.

A Brussels report published on Monday highlighted national failures to open up professional service sectors, such as architects or the legal profession, to competition.

The moves follows attacks by two free market European commissioners who used weekend speeches to attack protectionist trends in France and Italy.

Commission findings published on September 5 found that most of the EU’s 25 members had failed to match words with action on reforms to Europe’s professions.

European Competition Commissioner Neelie Kroes contrasted national rhetoric on improving economic growth to real competition measures.

“They now need to turn that political commitment into real action and tackle anti-competitive regulatory restrictions in the professions and give that reform strong political backing domestically,” she said.
 
“Professional services are a key sector of the EU economy and getting rid of anti-competitive regulatory restrictions will stimulate competition, providing consumers and businesses with better value for money, higher quality services and more choice.”

The commission values professional services - lawyers, notaries, engineers, architects, pharmacists and accountants – at eight per cent of EU GDP, €1.3 billion.

In Italy the cost of professional services to exporters runs at six per cent and Rome has not gone beyond “analytical work” on reforms.

Currently, Kroes is prepared to deal with problem at the national level but her spokesman indicated that some EU capitals could find themselves in court in years to come.

“If it appears that in a couple of years time there is no substantial progress the European Commission may review its options,” he said.

“We are pointing the finger where problems persist. We will continue to keep the situation under close surveillance and we will see in future whatever options might need to be pursued.”

Denmark, Britain and Netherlands are the only countries out 25 that are regarded as “making good progress with ongoing reform programmes”.

Austria, France, Germany, Ireland, Estonia, Hungary, Latvia, Lithuania Slovenia, Portugal and Slovakia have made only superficial reforms.

And, no reforms have been made in Belgium, Italy, Luxembourg, Poland, the Czech Republic, Cyprus, Finland, Greece, Malta, Spain and Sweden.

Speaking on Saturday, Kroes attacked moves in Paris “to protect their industrial or financial crown jewels from takeovers by companies from other countries”.

The Dutch commissioner regards recent French signals to protect key industries
As “ironic when one considers that… the country of origin of companies responsible for the largest value of takeover deals in Europe as a whole was – France”.

“All such measures, be they "economic patriotism", illegal state subsidies to keep companies artificially afloat or placing companies off-limits to foreign takeovers, risk taking Europe into a 1930s-style downward spiral of tit-for-tat protectionism,” she said.

Also speaking on Saturday, European Internal Market Commissioner Charlie McCreevy singled out Italy’s record on financial services and the French plans to protect strategic sectors.

“Recent cases in Italy just highlight what can occur. We need to learn and draw conclusions. There will now be a long overdue debate on the need for transparent, non discriminatory rules,” he said.

Unfortunately it does not seem to be only financial services where protectionist tendencies are evident… I can envisage difficulties with another major member state which seems to want to protect certain segments of its industry from takeover.”

“I won’t pass judgement until I see the details. But I will vigorously pursue any such measures that are contrary to EU law.”

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