Opening Remarks by Angel Gurría, OECD Secretary-General
Paris, 17 February 2011
Ladies and Gentlemen, good morning to you all:
Welcome to the 10th meeting of the OECD’s Global Forum on Competition. Let me introduce and welcome Mr Otaviano Canuto, Vice-President of the World Bank, who will be our keynote speaker today, and Mr Frédéric Jenny, Chairman of the OECD Competition Committee. Otaviano, Frédéric, your support and commitment have been instrumental to the success of this Forum. Thanks for being here.
Ten Years After: A New (Challenging) Economic Scenario
The world economy today is in better shape than it was the last time the Forum met in February 2010. The recovery has firmed up, but we have not yet recovered most of the ground lost during the crisis. Unemployment is still unacceptably high, at 8.3% on average in the OECD area. Youth unemployment is almost twice as high. The output gap is close to 3%.
The crisis left other permanent scars. The financial sector in many of our countries is still not functioning properly. And public accounts are in bad shape, to put it mildly. With an average deficit of 7.6% of GDP and average debt of 100% of GDP, there is a dire need for fiscal consolidation in most of the OECD.
But how to consolidate the public finances without killing the recovery? It’s a difficult balance to achieve. In order to square this circle, we need to push for structural reforms, to increase the efficiency of government spending, to promote more competition. It’s the only way. And that’s where you come in. That’s why your work is so fundamental in the current context.
Falling prey to protectionism to stimulate local growth and employment would be a big mistake. Competition is a fundamental ingredient for a strong and job-rich recovery.
The Heightened Importance of Competition
Vigorous competition stimulates productivity and the innovation that is vital for fostering new sources of growth and competitiveness. It prevents market capture by incumbents or large firms. Competitive markets create new employment opportunities, and increase the access of consumers to cheaper and better quality products.
Fair competition is one of the oldest pillars of economic progress. This has been an issue since Roman times, when heavy fines were imposed to those who were deliberately obstructing competition. Many centuries later, we are still struggling to ensure a level playing field. But that playing field is much more complex today.
As economic globalisation has intensified, the scope of competition policy has grown as well. We now face the daunting task of creating level playing fields both domestically and internationally. The crisis was a tough reminder: a global economy needs global rules, and these global rules have to be adhered to by all parties.
So if we really want to create a stronger, cleaner and fairer global economy, we must continue the search for international best practices and common competition principles.
The Role of the Global Forum: Cooperation for Competition
The Global Forum on Competition is the place where we can make this happen. After 10 years of existence, it is now one of the most plural and effective incubators of innovative competition policies. This year we brought together policymakers, experts and officials from close to 90 economies, inter-governmental and non-governmental organisations.
The Forum provides support to competition authorities. It addresses some of the most complex challenges in this area, like fair competition in public procurement or the communication challenges between regulators and competition enforcers; two crucial topics that we have addressed in previous sessions.
This is done through an increasingly open and inclusive approach. Today, there is a growing convergence of interest with our developing and emerging economy partners. We can learn a lot from each other. For instance, our discussions today will also focus on the particular challenges many countries face in dealing with cross-border merger control.
As developing and emerging economies have become more integrated into the global economy, they have been exposed to increasing international merger activity. In reaction to this surge, more countries have introduced merger control rules. But reviewing cross-border transactions is demanding. This may be more so for new and younger competition regimes dealing with institutional and enforcement challenges.
Today’s discussion is an opportunity to consider how international cooperation in cross-border merger control can help countries overcome these challenges.
We will also discuss the issue of crisis cartels, in a session chaired by Mr. Parashar, a member of the Competition Commission of India.
Effective cartel deterrence remains a top international priority. The 1998 OECD Recommendation on Hard Core Cartels was the basis for very important achievements. However, in these difficult times, government reactions to adverse economic conditions or transitory shocks may lean towards restricting competition.
This leads us into new dilemmas. For example, should governments allow or promote cartels as a means to restore stability during a food crisis? What are the alternatives? This is an important issue today, with food prices reaching new heights and several countries, including at the G20, considering policy options.
Ladies and Gentlemen:
We are living indeed a most interesting and challenging moment. The financial and economic crisis has changed our playing field, and some of our ideas about the logics that govern economics. “Principles and practices that were once accepted wisdom are now in doubt or discredited”, as Mr. Otaviano Canuto put it in an excellent book that he recently edited, entitled “The Day After Tomorrow”.
The essential importance of competition certainly remains, but will our vision of this subject change after witnessing the massive corporate governance and risk management failures in the financial system? Can we go back to business as usual in competition policy advice?
I say this is time for new thinking. And I am confident that a lot of that new thinking will happen here, amongst you.
Have a most productive and interesting Forum.