European Commission presents new industrial policy package

The package of policies, announced on 10 March, aims to be “Making Europe’s businesses future-ready” and to be “A new Industrial Strategy for a globally competitive, green and digital Europe”.

Executive Vice-President Vestager summed it up succinctly as a plan "for all, to be green and to be based on fair competition". It is the Commission's response to the European Council's March 2019 call for the Commission to develop a detailed and long term EU industrial policy strategy. Thierry Breton, Commissioner for Internal Market, commented that “Managing the green and digital transitions and avoiding external dependencies in a new geopolitical context requires radical change - and it needs to start now.”

Vestager noted a "shared feeling of uncertainty" from global trends over the past year or so such as trade disputes, rising protectionism, digitalisation and climate anxiety; hence this package comes only 2 ½ half years after the Commission's previous industrial policy (her comments came after she separately addressed Coronavirus, stating that the issues related to the virus are another risk dimension which will necessitate a coherent and co-ordinated EU-wide response).

The package contains a wide range of measures, categorised broadly into 3 main areas:

• A new Industrial Strategy. This will help deliver 3 priorities: maintaining European industry’s global competitiveness and a level playing field, at home and globally; making Europe climate-neutral by 2050; and shaping Europe’s digital future
• A dedicated strategy to empower and support SMEs, to reduce red tape and enable them to do business across the single market and beyond, access financing and help lead the way on digital and green transitions
• A Single Market Action Plan for better implementation and enforcement of the Single Market. This seeks to address obstacles preventing the full potential of the single market from being unleashed, as identified in the newly published Single Market Barriers Report. The Commission will review single market legislation to ensure it is fit for purpose, and propose actions to ensure consistent application on the ground and a rigorous enforcement of existing rules

Key actions

The “fundamental enabling conditions” for the “twin industrial transformations” of “climate neutrality and digital leadership in an ever-changing world” are: creating certainty for industry through a deeper and more digital single market; upholding a global level playing field; supporting industry towards climate neutrality; building a more circular economy; embedding a spirit of industrial innovation; ensuring skilling and reskilling; and investing and financing the transition.

Competition, State aid and public procurement

EU competition rules are one part (of the many) in the Commission’s toolbox of existing and new measures proposed in the package. The package also shows that this Commission is acting in a joined up manner using all its policy and enforcement tools to achieve various goals. Competition is part of the toolbox. Parties involved in specific competition cases will need to take into account the wider policy agenda in particular industrial policy, the green deal and digital issues.

With regard to specific competition initiatives, the package does not appear to contain new announcements on EU competition law, but refers to the following actions:

• the ongoing/upcoming consultations/reviews on the horizontal, vertical and merger guidelines;
• the review of the market definition notice;
• initiatives as to how to improve case detection and speed up investigations;
• use of the tool of sector inquiries in new and emerging markets;
• the ongoing “fitness check” on the State aid guidelines.

These existing workstreams within DG Comp should thus now be seen in the context of the wider industrial policy package.

The package also ties into the Commission’s “Strategy on Shaping Europe’s Digital Future” and “European Strategy for Data”, launched last week, in which it “set out its vision for how Europe can retain its technological and digital sovereignty and be the global digital leader” (we blogged about these here) and its renewed focus on climate and environmental protection initiatives in its “European Green Deal.”

Another important element of the industrial strategy is the need to make use of trade defence tools, including in order to tackle foreign subsidies. The action in this area will take the form of specific legislation.

The Commission will publish a White Paper in mid-2020 outlining how it may address the "distortive effects" of the foreign subsidies in the single market. It will propose legislation to tackle these impacts in 2021.

The White Paper will also address how the EU may impose restrictions on access to EU procurement markets and funding to tackle the issue of lack of reciprocal access for European firms to the procurement markets of foreign, State-owned companies.  Measures in this area had been proposed by the Commission already in 2012 in the form of the “International Procurement Instrument” but political agreement at the EU level has not yet been forthcoming – the Commission will now renew efforts to move this forward.

On State aid the Commission has announced that it will, in particular, put in place revised State aid rules for IPCEIs (Important Projects of Common European Interest) in 2021 will which further clarify the conditions under which joint Member State-led projects in key sectors can move forward in a timely and pro-competitive manner.

As regards public procurement, the Commission states that it will propose further legislation and guidance on green public purchasing, in order to help lead the shift towards sustainable consumption and production.

Much, much more

Whilst much of the package is about competitiveness, the EU competition rules are only a small part of the overall package.

For example, it contains a wide range of measures (and buzzwords) including to modernise and decarbonise energy-intensive industries, support sustainable and smart mobility industries, promote energy efficiency, strengthen current carbon leakage tools, secure a sufficient and constant supply of low-carbon energy at competitive prices, secure the supply of critical raw materials, and develop strategic digital infrastructures. The Commission will have a renewed focus on innovation, investment and skills, expand digital innovation and create hubs to empower SMEs to integrate digital innovations. And much, much more, including measures to address obstacles in the single market.

Conclusion

The package is ambitious, containing a very wide range of different projects to tackle major challenges facing the European economy. As is often the case with new Commissions, bold strategies are announced early on.

The challenge, as previous Commissions have found, is delivery.

But this Commission should be applauded for its vision: if even some of these measures come to fruition, the Commission will be closer to its goal of putting in place a comprehensive framework to promote a more digital, competitive and green economy.

Links

In addition to the sources lined above, see also the Commission’s press release, Q&A, and factsheets Industrial Strategy for a globally competitive, green and digital Europe, Unleashing the full potential of European SMEs, and A single market that delivers for businesses and consumers. Audio-visual of the Commissioners’ press conferences is here.