Cani Fernández, former president of the CNMC
“We must reduce regulatory barriers to facilitate innovation among SMEs, which are key to Europe’s competitiveness”
The former president of the National Commission for Markets and Competition (CNMC), whose mandate ended on June 16, is one of Spain’s most influential jurists in competition law and in adapting the regulatory framework to the digital economy. Under her leadership, the CNMC has argued that well designed regulation can boost productivity and innovation, provided it acts as a last resort and avoids creating unnecessary barriers. Her approach has combined active competition enforcement with regulatory simplification, in line with European priorities and with the aim of facilitating economic activity, especially for SMEs.
Faced with the rapid advance of AI, digital platforms and the data economy, the CNMC has maintained under her mandate that regulators must first understand competitive dynamics before intervening, using all the tools of competition policy —including interim measures— to prevent concentrations of power that are difficult to reverse. In a global context where the United States prioritises litigation and China opts for direct intervention, Europe seeks its own balance: protecting innovation without abandoning open, competitive and safe markets. We interviewed her, while she was still in office, to gather a key perspective in the debate on productivity and competitiveness promoted by the IPI.
To what extent can well designed regulation be a driver of productivity and innovation?
Competition is the best mechanism to guarantee consumer welfare, encourage business effort and ensure stronger economic growth. Regulation should be used as a last resort when certain failures cannot be resolved through market dynamics. A recent success story is the telecommunications sector, which shows how good regulation, together with well designed subsidies and the efforts of operators, can lead Spain to become one of the OECD’s leading countries in fibre broadband connections or number portability. Once an optimal level of competition is reached, regulation can be phased out, as is happening in this sector.
What seems clear is that poorly designed and excessive regulation, by contrast, results in low productivity and a lack of innovation. This is highlighted in the Draghi and Letta reports, and Europe is working in this direction through its regulatory simplification process via the so called “omnibus” packages.
At the national level, at the CNMC we have worked daily to prevent regulation from introducing barriers to competition and economic activity, challenging rules and administrative acts below the level of law that disproportionately or unnecessarily restrict competition or economic activity. At the same time, we advise public administrations —through instruments such as regulatory impact reports— to ensure that new rules comply with the principles of good regulation.
AI, digital platforms, the data economy: how should a regulator position itself when technologies advance faster than the regulatory framework?
The application of competition law is the first tool to ensure the proper functioning of the market. And this means using all the instruments at our disposal, including interim measures. At the CNMC, we have considered that before regulating, it is advisable to understand the competitive dynamics of the sector, and we contribute to this through the analytical work of our Competition Promotion department, which is currently conducting studies such as the one on the cloud services sector.
In markets with rapid innovation, multi sided platforms, free services…, the task of a competition authority is not easy, and there is always a risk of overreach, of slowing innovation or of intervening where markets could self correct. However, we should not underestimate how far we have come. We now understand digital business models much better, as well as the specific economic characteristics that make these markets prone to tipping towards excessive market power: network effects, data accumulation or behavioural biases, among others.
Nevertheless, a few years ago Europe reached the consensus that competition policy alone was not enough to address all the challenges posed by digital platforms. And this is the main reason behind regulations such as the Digital Markets Act (DMA), which applies alongside competition law.
Is Europe too regulatory compared with the US or China? Does it pay a price in innovation?
In the United States, rather than regulating, authorities tend to focus on sanctioning companies that have breached the law, as well as on compensatory litigation for damages. In Europe, we tend to consider that in fast moving sectors such as technology, it is advisable to complement this ex post enforcement with ex ante regulation that prevents market harm that is impossible or very difficult to repair or reverse.
Beyond these sectors, SMEs represent more than 99% of European companies and employ more than 85 million people. They are the core of innovation and entrepreneurial spirit and are therefore essential to Europe’s competitiveness. Making their lives easier is a priority for the CNMC. Proof of this is the recent publication of a study on barriers to the creation and growth of SMEs and to their participation in public procurement, which analyses the main obstacles they face and proposes solutions to overcome them.