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British finance minister Gordon Brown urged European governments on Saturday to set up a tougher competition regime to combat protectionism, but the idea was dismissed by France and the EU's top antitrust watchdog.
Against a backdrop of rising protectionism and actions by EU states in support of "economic nationalism", Britain wants the European Commission to establish an independent panel of experts to investigate sectors that fail to liberalise.
"Too many sectors in the European economy continue to shelter behind barriers that reward inefficiency," the UK Treasury said in a paper presented to EU finance ministers in Vienna.
The document said failure to open up the gas market to competition, for example, meant that Europe's energy consumers will pay an estimated 40 billion pounds ($70 billion) of extra costs this year.
It pointed to European Central Bank research which suggests further reforms to encourage competition in telecommunications, gas and electricity markets could push prices down in EU network industries by as much as a third.
The panel of independent experts should investigate all such areas where competition is not functioning effectively and report back publicly to the Commission, the paper said.
Their enquiry should include evidence of market failures and suggestions on how competition law can be used to tackle them.
The Commission would then be given a deadline to respond, setting out where action will be taken.
"We must have a better system for ensuring that where these issues are raised they can be properly investigated," Brown told Reuters in an interview late last month.
"And we can have the completion of the single market in energy, telecoms, utilities and services as quickly as possible without some of the embarrassing incidents of the past few months."
The EU is contesting moves in Spain and France to create "national energy champions", partly to hinder take-over bids by foreign firms.
France and the European Commission dismissed the idea of a new panel.
"It would be better to stick with what we have with the Commission ... rather than trying to recreate another extra layer," French Finance Minister Thierry Breton told reporters on the sidelines of the Vienna meeting.
The Commission is the EU's top antitrust regulator with exclusive powers to rule on large cross-border mergers, and its decisions can be overturned only if EU courts find it has made serious errors.
EU Commissioner for Economic and Monetary Affairs, Joaquin Almunia agreed with Brown on the need to open up markets, but said the system in place was working.
"The most efficient and respected experts in Europe on competition are in ... the European Commission under the responsibility of Commissioner (Neelie) Kroes," Almunia told a news briefing after the meeting.
"I think everybody agrees that the Commission is enforcing competition rules with absolute independence," Almunia said.
"The best thing we can do is support the efforts and work of Commissioner Kroes... It's the most efficient way to achieve the good functioning of the internal market," Almunia added.
Kroes warned gas and electricity suppliers in February that they face a new antitrust crackdown to break open their industries to competition.
Last week the EU executive took 2,000 legal actions against 17 member states for failing to follow EU rules that aim to open up the 25-nation bloc's gas and electricity markets, and improve customer service and competition in telecommunications.

Copyright Reuters, 2006

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