Remarks by Angel Gurría
15 June 2020 - Paris, OECD
(As prepared for delivery)
My dear friend Frédéric Jenny, Colleagues, Ladies and Gentlemen,
I am delighted to open this special session of the OECD Competition Committee. Competition policy is one of the most important tools that governments have to build more resilient, inclusive, and sustainable economies. It is also a crucial tool to reduce inequalities and build public trust. The COVID-19 crisis has magnified its importance.
I would like to thank the many leaders and experts from competition authorities and government administrations that join us today. Let me take this opportunity, before we talk about competition policy, to briefly outline how the OECD and how governments have reacted during this time.
The OECD has been actively supporting our members and partners throughout the COVID-19 crisis. As part of our response, we launched a Digital Hub on Tackling the Coronavirus, providing a single entry point to the OECD’s analysis on the economic and social impacts of COVID-19. To date, we have published over 100 policy briefs in virtually all areas of our policy work.
We have also provided policy advice to global fora such as the G20; we have kept open lines of communication with other multilateral organisations to ensure a co-ordinated and coherent response; and we have organised a Ministerial Council roundtable, as well as targeted COVID-19 Ministerial briefings for a number of our Member countries.
Indeed, our competition team has also been particularly active. In addition to today’s meeting, the team has published eight policy briefs and organised five webinars to assist the competition community respond to the crisis. We are also bringing the discussion to the regional level through our Regional Competition Centres in Budapest, Seoul and Lima.
Governments have also been quick to respond and provide much needed relief. We recently published a policy brief on “corporate sector vulnerabilities during the COVID-19 outbreak” on our Hub. The analysis estimates that without any state intervention, 20% of the firms surveyed – in a cross-sector sample of almost one million firms operating in 16 European countries – would run out of liquidity in one month of lockdown measures. This number goes up to 38% after three months, which is almost how long the lockdown has lasted here in France. When unaddressed, significant liquidity issues can turn into a corporate solvency crisis.
Governments are also working together to do their best and cushion the negative impact of the crisis. For instance, the European Commission’s recent “Next Generation EU” recovery instrument proposal provides for EUR 750 billion; and the US Cares Act will cost around USD 2 trillion. These interventions have to keep various key elements in mind, such as inclusion, sustainability, gender equality. Competition is one of these essential elements
Competition authorities have a paramount role to play in designing rescue packages and helping our economies and societies exit the COVID-19 crisis. Let me briefly outline actions that can be taken along several fronts:
First, we need to ensure that governments respect the principle of competitive neutrality. State support should be based on objective criteria and, when possible, applied to all businesses in an industry to maintain a level playing field. Where possible, selective support to firms that were inefficient or had structural issues before the crisis, should be avoided. When, as a last resort, governments acquire equity ownership, those shareholdings should be used to help restore trust in business and be managed at arms’ length.
Second, competition authorities have an important role to play in informing governments’ exit strategies. This can ensure that exiting from ongoing support measures is done in a way that promotes competition. These measures should be offered for a limited time: long enough to restore the competitiveness of aided companies, but short enough to avoid disincentivising those companies to compete and innovate.
And third, certain forms of co-operation between competitors are necessary at this time. This is important in order to maintain – or revive – the manufacturing and supply of essential products, severely disrupted by the crisis and the confinement measures; and to also create new products. For example, rival pharmaceutical companies have agreed R&D collaborations to develop vaccines. They have also developed co-operation agreements to supply the drugs that are urgently needed. These forms of co-operation may be very beneficial for consumers and should be allowed, as long as they do not spill-over into hard core restrictions of competition, such as price fixing.
Finally, one of the few winners from this crisis are digital platforms. With the increasing digitalisation of our societies, their market power may continue to grow, with potential knock-on effects across the economy. Competition authorities need to remain vigilant to ensure these platforms deliver benefits for consumers and economies and not just for themselves and their shareholders.
To ensure recovery, competition authorities will have to be a part of the whole of government approach, helping governments identify and choose the least competition distortive alternatives when pursuing important public policy goals, such as inclusive growth or fighting climate change.
Furthermore, competition authorities need to be part of the solution, taking a dynamic longer-term view and looking at efficiencies in a broader sense, whenever possible and appropriate, including by considering resilience, social coherence and the environment in the analysis. Today’s forum can be a good place to discuss and identifying how to do that.
Ladies and Gentlemen,
Competition policy will be crucial in building the recovery. Today’s discussion will help guide and enrich our work to address the complex challenges created by the pandemic. Count on the OECD to continue working with you and for you to build the post-COVID-19 world in a fairer, more inclusive and sustainable manner, so that together we can “build back better”. Thank you.