Remarks by Angel Gurría
26 February 2020 - OECD, Paris
(As prepared for delivery)
Ladies and Gentlemen,
It is my pleasure to launch the first edition of the OECD Competition Trends 2020. Allow me to take this opportunity to thank our partners in the competition authorities, many of whom are here today. Without your valuable input, this report would not have been possible.
It is now widely accepted that strong competition contributes to a country’s competitiveness and economic growth. Well-documented benefits of competition include lower prices, higher productivity, more innovation and job creation, and in some cases, more responsible business conduct.
Recent OECD research also shows how more competition can be a tool to reduce income inequality. This is because poorer people suffer disproportionately from the exercise of market power. Market power has been estimated to increase the wealth of the richest 10% by 12-21%, while it reduces the income of the poorest 20% by 11% or more.
The past 50 years have seen a remarkable growth in competition law enforcement around the world. In 1970, only 12 jurisdictions had a competition law, and only seven had a functioning competition authority. Today, more than 125 jurisdictions have a competition law regime, and the large majority has an active competition enforcement authority. The OECD is proud to have contributed to this great achievement, including through our Competition Assessment Toolkit and our country reviews.
The proliferation of competition laws and competition enforcers around the globe has also led to a vast – and ever increasing – amount of activity in terms of investigations, decisions, advocacy initiatives and events. There is a lot of data available to analyse and a lot of knowledge to be gathered. All this information was not available in one, comprehensive source, until now.
Analysing the activities of competition authorities has allowed us to understand better what we do, why we do it, and how we can do it even better.
Data is at the heart of what we do here at the OECD, designing and developing evidence-based policy advice. Collating reliable data and analysing it rigorously is today more necessary than ever. And this is particularly important as the role and scope of competition law and policy continues to evolve.
Similarly, tools and resources of competition authorities must constantly develop and adapt to effectively address different challenges. Some are traditional, such as detecting cartels, but there are also new issues, like those posed by the digital economy.
Moreover, in the current troubling economic and social context, competition policy is increasingly coming ‘under fire’, ranging from questioning the adequacy of the consumer welfare standards, to concerns about the current merger control standards. For instance, competition authorities face questions about whether competition may be skewed, favouring large firms to the detriment of smaller ones or in favour of certain economic classes of the population over others.
The report that we are launching today can help us tackle many of these challenges.
OECD Competition Trends builds on two recently developed OECD databases, the CompStats Database and the OECD International Cartel Database (ICStats). It presents unique insights into global competition trends – in an aggregate fashion – based on an analysis of data from more than 50 OECD and non-OECD jurisdictions. Let me highlight some key trends.
Competition authorities are doing more with less. Despite governments recognising the core role of competition policy for modern economies, average budgets of competition authorities have decreased in real terms by approximately 5% between 2015 and 2018.
Nevertheless, competition authorities continue unabated in their efforts to detect cartels, investigate abuse of dominance cases and review proposed mergers. In particular, the number of merger decisions taken by competition authorities have accelerated, and were up by 14% in 2018, compared to 2015. At the same time, the overall number of cartel and abuse of dominance decisions remained stable.
Geographical differences exist. In particular, Europe has been the epicentre of abuse of dominance enforcement activity. The number of investigations, decisions and dawn raids as well as imposed fines are highest in Europe when it comes to abuse of dominance cases.
Moreover, when looking at international cartels – where at least two of the cartelists are from different countries – the report shows that an average of 50 cartels are uncovered every year by competition authorities, and this number seems to be on the rise. Historically, Europe has seen the largest number of discovered international cartels, but other regions such as Asia and Africa are catching up. This only makes it more urgent that competition authorities are equipped with adequate and sufficient human and financial resources.
And we have evidence that demonstrates the Value for Money of competition authorities today. Our research shows that fines imposed by a competition authority exceed its budget by six times, on average.
Of course, competition agencies do not have an objective to “earn back” their budgets. Indeed, most of the effects of competition authorities’ actions are more difficult to quantify. But even without considering the significant impacts of identifying and eliminating anti-competitive behaviours that are hurting economic growth, competition authorities make a very direct monetary contribution to the public purse.
We urge governments and other stakeholders to reflect on this business case. We call upon your continued support to this vibrant community. We look forward to expanding the number of jurisdictions covered by our databases, and will be working with countries to increase the type of data that we collect.
Ladies and Gentlemen,
In the spirit of collaboration, the more of you that join this initiative, the more value Competition Trends will have for everyone. This is what you – the competition community – like to call “positive network effects”! Together we will support the design, implementation and enforcement of better competition policies for better lives. Thank you.