Dear Executive Vice President Vestager, Chairman Jenny, Ambassadors, Colleagues,
Welcome to the 19th OECD Global Forum on Competition. I am pleased to see that the global competition policy community remains closely connected despite these difficult times.
We are facing a historic challenge. The social and economic impacts have been staggering. More than 1.5 million lives have been lost, while the global economy will contract this year by 4.2%. Even if we project a rebound in global GDP by around 4.2% in 2021, we still expect it to be USD 6 trillion lower, by the end of 2022, in comparison with our pre-COVID projections.
Many governments have taken decisive action to cushion the effects of the crisis. This has included grants, loans and guarantees of up to 30% of GDP in some countries, in support of workers, firms and healthcare.
Such measures have been necessary to ensure the survival of firms and the livelihoods of people. They must be managed carefully, however, to ensure that market competition is not distorted.
Indeed, our analysis shows that market dynamism has suffered. In some OECD countries, new business creation has declined as much as 20% relative to last year, while at the same time fewer companies have exited markets.
Competition policy has a paramount role to play in the recovery, to keep markets open to entry, and to advocate against government support measures that hinder economic adjustments by keeping low-productivity, “zombie” firms in the market.
As we discuss ways to “reset” and strengthen competition policy, we should always remember that it is an incredible force for good in our economies and societies.
Competition drives productivity growth and innovation, and ultimately economic growth. Weak competition results in higher prices, which lowers the purchasing power of families, especially of lower income families. It also worsens inequality, as it generates economic rents for the few, while curtailing opportunities for the many.
There may be disagreements in this room about how much change is needed, but we are all committed to the promotion of competitive markets and we need to remain open-minded on how to best deliver on this essential objective.
We must focus on tackling important challenges to competition. Over the past year, we have witnessed large, influential companies at the centre of a widening range of investigations focusing on anti-competitive conduct in multiple jurisdictions. Policies that favour certain firms over others, and undermine the level playing field, will be counterproductive at best, and harmful at worst.
Amid widespread increases in concentration and mark-ups in OECD economies, the ability to include competition into industrial policies is paramount. Calls are growing for competition authorities to incorporate other dimensions into their work, including inequality, sustainability, and the welfare of workers. The pandemic has exposed the urgency of these challenges.
There is also a need to consider changes to strengthen competition enforcement in digital markets. The pandemic has accelerated the digital transformation, so these changes are as vital as ever, and could include increasing digital expertise within competition authorities, considering the optimal burden of proof in digital cases, and strengthening merger control to address so-called “killer” acquisitions.
Last but not least, competition authorities must consider new tools, like market investigations, that help address competition problems in markets, outside the context of enforcement proceedings.
The task ahead for competition authorities is a significant one. You have an important role to play in the design of the economic recovery to ensure markets remain open and competitive.
The Global Forum on Competition remains an opportunity for “group therapy” among competition authorities, led by your distinguished Chair. I encourage you to think boldly about the challenges we face. More than ever, competition policy is a vital part of the path forward – to promote a sustainable, resilient, and inclusive economic recovery.