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The following OECD assessment and recommendations summarise chapter 5 of the Economic survey of the European Union published on 20 September 2007.
The Commission has been working hard to improve the consistency of competition policy among national agencies. It has begun to undertake sector inquiries that have helped to understand problems in certain industries. It has revised its guidelines for setting fines and has hit some cartels with heavy penalties. And it has led a forceful defence of the internal market by taking a tough line on member states that try to protect “their” companies. It is important to continue doing so. When dealing with hard-core cartels, international experience suggests that corporate fines may not be enough of a deterrent on their own. For this reason some member states use individual criminal sanctions, but others are more reluctant due to concerns that it might have adverse impacts on enforcement. To enhance deterrence, the Commission is pushing for more private enforcement. It should continue doing so, and should encourage member states to make it easier for private individuals to challenge anti-competitive behaviour through collective actions.
State aid should be reduced
State aid can distort competition in the internal market. The EU has a commendable system for state aid control that is binding, uniform and transparent. The Commission is revamping state aid policy, moving away from a rules-based approach and towards greater reliance on economic principles. As well as reining in the level of aid, the Commission wants it to be better targeted, especially towards innovation and human capital, and is streamlining administrative procedures so it can focus on the most distorting measures. This is welcome, but there is a danger that unless the new approach is administered with vigilance, it could open the door to a re-nationalisation of industrial policy. The key is to take the politics out of state aid decisions; hence, state aid policy would be more effective if member states were to make more use of independent granting agencies. When dealing with aid granted by foreign competitors, it would be better to deal with this through the World Trade Organisation rather than by getting involved in subsidy races.
State aid remains too high
In the EU15, per cent of GDP
Source: EC (2006), State Aid Scoreboard, autumn 2006 update.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of the EU 2007 is available from:
For further information please contact the EU Desk at the OECD Economics Department at email@example.com. The OECD Secretariat's report was prepared by David Rae, Boris Cournède and Marte Sollie under the supervision of Peter Hoeller.