The Finnish Competition and Consumer Authority (FCCA) held its annual FCCA Seminar on 23 October 2014. This year’s theme was economic growth. The seminar focused on examining the tangible impact that competition and consumer policy have on economic growth. The event was held in the Helsinki Scandic Paasitorni, and participants included the FCCA’s own staff as well as more than 100 stakeholder representatives.
Director General Pekka Timonen LLD, who spoke at the event on behalf of the Ministry of Employment and the Economy, talked about the importance of maintaining competition in the domestic market and its implications for economic growth. According to Timonen, competition policy needs to be complemented by competitiveness policy in order to remove structural and normative barriers to competition.
Mika Maliranta DSc (Econ.) from the Research Institute of the Finnish Economy talked about mechanisms for generating growth. He emphasised the importance of innovation and “creative destruction” for growth. According to Maliranta, both stem from inter-business competition. In addition to competition, growth requires innovation and know-how as well as the ability of staff and other resources to move seamlessly within and between industries.
Both policies support growth
“Competition policy and consumer policy prioritise slightly different stages of the market life cycle,” said the FCCA’s Research Director Martti Virtanen, DSc (Econ.). Consumer policy measures typically focus on new sectors where trading standards have not yet become established. Their aim is to help new sectors get onto a smooth growth path, which will ultimately allow them to boom through marketing processes such as product differentiation.
According to Virtanen, competition policy enforcement typically focuses on more mature sectors where operators may attempt to limit competition by entering into illegal partnerships or by artificially excluding competitors from the market. Competition policy enforcement also promotes growth, at least in real terms, as preventing these kinds of arrangements forces businesses to give their customers more for their money. Virtanen nevertheless believes that sustainable growth and maintaining consumer sovereignty and business autonomy also require support from other areas of social policy and legislation.
“Consumers’ faith in the functioning of the market is one of the key contributors to economic growth”, explained Consumer Ombudsman Päivi Hentunen. In order to maintain consumers’ faith, regulation has grown rather detailed in some respects. The Consumer Ombudsman also talked about the six theses that she published a year ago, four of which related specifically to consumers’ faith in the market.
Working together towards better welfare
“In public debate, competition policy enforcement has sometimes been said to cause labour cuts and reduce economic activity”, said the FCCA’s Senior Research Officer Emmi Martikainen DSc (Social Sciences). Based on empirical studies, however, efficient competition policy enforcement increases productivity and therefore also boosts growth. The effectiveness of competition policy enforcement is measured by how successfully it prevents barriers to competition, which are damaging to society’s welfare.
In addition to enforcing competition policy, other measures that promote competition, such as removing unnecessary red tape, are also needed. Inexpedient regulation can damage economic growth by making it more difficult for new businesses to enter the market, by raising the prices of productive inputs or by slowing down the dissemination of new technologies. According to the FCCA’s Senior Research Officer Olli Kauppi DSc (Economics), studies show that excessive regulation lowers productivity.
In his closing speech, the FCCA’s Director General Juhani Jokinen thanked both the speakers and the audience. According to Jokinen, competition and consumer policy has a lot to offer as Finland begins to turn its economy around. He sees challenges in both the private sector and in increasing competition across the economic activities of the State and local authorities.
All the presentations were videoed and can be viewed here.