What to expect from Ursula von der Leyen's second term as president of the EU Commission?

On 18 July 2024 Ursula von der Leyen was re-elected as president of the EU Commission for a second five-year term, having received the backing of 401 members of the European Parliament (41 more than required).  In her role as president of the EU Commission she will set the agenda for the EU's policies and priorities and the Political Guidelines (Guidelines) she published ahead of her election provide a steer on the upcoming priorities for the next EU Commission.  They are based on her consultations and common ideas discussed in the European Parliament and on the European Council's strategic Agenda for 2024-2029.  Announcing the Guidelines von der Leyen made it clear that:

"We must and will stay the course on all of our goals, including those set out in the European Green Deal….The next five years will define Europe's place in the world for the next five decades.  It will decide whether we shape our future or let it be shaped by events or by others."

We have set out below some key highlights from the Guidelines with focus on competition and trade related issues.

Completing the Single Market

The Single Market is seen as key to Europe's competitiveness but the Guidelines recognise that a new momentum is necessary to complete the Single Market in sectors such as services, energy, defence, finance, electronic communications and digital, to allow companies to scale up and make the most of the market.  In order to make business easier and faster in Europe there needs to be less red tape and the patchwork of national regulations that makes doing business in different Member States more complicated needs to be addressed.

A new approach to competition policy

In the Guidelines von der Leyen advocates for a new approach to competition policy, "better geared to our common goals and more supportive of companies scaling up in global markets – while always ensuring a level playing field.  This should be reflected in the way we assess mergers so that innovation and resilience are fully taken into account".  At the same time she recognises the need for competition policy to prevent market concentration from raising prices or lowering the quality of goods or services for consumers.  

Her statement therefore seems to acknowledge the tension around competition and industrial policy, but it remains high level and it is unclear to what extent she supports a change in competition policy that will address this.

Competition commissioner Vestager has always rejected calls for a reform of the EU merger rules in order to support the creation of 'European champions', saying the best way to create strong companies is to encourage and support competition.  "Our merger enforcement sets the stage for European companies to rise up and to become champions in their fields. So effective merger control is crucial to European businesses," commissioner Vestager said speaking at a conference celebrating the 20^th anniversary of the EU merger Regulation.

Speaking the day after von der Leyen's election, commissioner Vestager urged policymakers not to relax competition rules simply in order to allow certain companies to scale up.

We will have to wait for the appointment of the new competition commissioner to get some further clarity as to the direction we can expect this new approach to go.  France and Germany have typically been supporters of changes to the competition rules in order to support European champions and issued a joint statement, ahead of the European elections, setting out their vision for a new approach to competition policy, in order to allow for consortia and consolidation in key sectors (such as mobile network sector and airspace) to strengthen European resilience.  They also strongly advocate for changes to the current merger control rules in order to address the issue of killer acquisitions.

Digital and data

On digital technology, von der Leyen believes that 'insufficient diffusion' of digital technologies affects Europe's competitiveness as it impacts the ability to develop new services and business models.  Focus here will be on enforcement of the Digital Markets Act and Digital Services Act, which will be ramped up in the coming mandate.

Focus will also be for Europe to become a global leader in AI innovation.  An AI Factories Initiative will provide access to supercomputing capacity for AI start-ups and industry, in order to support AI development and its deployment.

Access to data is seen as essential for supporting the development of AI and as a key driver for competitiveness, productivity and societal innovations (such as personalised medicine and energy savings).  A European Strategy for Data, based on existing data rules and respecting privacy and security standards, will ensure there is a simplified, clear and coherent legal framework for businesses and administrations to share data seamlessly and at scale.

European Green Deal

In the Guidelines von der Leyen supports the European Green Deal with focus on implementing the existing legal framework for 2030 "in the simplest, fairest and most cost-efficient way".  The Commission will also step up its green diplomacy and engage more with non-EU countries, listen and respond to the concerns of those impacted by the legislation linked to the Green Deal.

Trade and FDI

The Commission will prioritise Europe's economic security by boosting competitiveness as well as being more assertive in protecting the economy from key technology leakage and security concerns.  There will be a complete review of the foreign direct investment screening framework, a coordinated approach to export controls and the risks from outbound investments will be addressed.

The Guidelines confirm that the EU is shifting its focus from free trade agreements to targeted partnerships.  In order to build diversified and resilient supply chains the EU will develop a new range of Clean Trade and Investment Partnerships and will deepen relationships on critical minerals and raw materials.

The Commission will propose a new Strategic EU-India Agenda and work with Japan, South Korea, New Zealand and Australia on common challenges in cyber and in the secure supply of critical minerals and technologies.

Next steps

The new Commission is expected to be in place in late Autumn with its college of 27 commissioners.  Von der Leyen will now focus on building her team of commissioners for the next five years and will request Member States to appoint two candidates, one male and one female, as her aim is for an equal share of men and women as commissioners.  Candidates will be interviewed by von der Leyen and will also have to go through a tough parliamentary vetting process, but the main battle will be over the sharing of the portfolios.