Why not restarting from true competition?

Article Highlights

  • What are the conditions of our country that have failed to secure a truly and fully open and real workable competition?

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  • The waving of a constitutional reform is reasonable provided we consider Article 41 a “manifesto principle”

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  • Article. 41 is so little “soviet oriented” that it went through the hurricane of European integration

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On these quite intensive days for Government and the Parliament we deem it relevant and appropriate to reflect upon the issue of competition. This word has been frequently abused and idolized as the goal of any market process instead of being considered an instrument, a process regulated for the benefit of businesses and consumers (and this is interesting also on a comparative perspective, as the European model is historically more sensitive to competitors in a certain market, while the American model is more consumer friendly, and therefore it focuses on the benefits of competitive processes downstream).

Italy today appears to cross a transition time, where it needs a clear, straight and mid-long term industrial strategy so to restore real growth. But what are the conditions of our country that have failed to secure a truly and fully open and real workable competition?

This question recalls a basic consideration that as Tocqueville-Acton Centre Studies we particularly care about, i.e. the anthropological perspective, and the goal of any competitive process. The impact of the crisis (strictly related to a privatization process which has not been perfectly carried out) on the anthropological sphere further than the economic one was unavoidable.

The so-called three dimensions of the “economic man” (producer, buyer, investor) have come into a conflict because the Italian worker works in a company where he does not buy products because he does not find them competitive, and where he does not invest because the company does not offer enough return. If then such person buys products of a competitor, perhaps investing even his savings, his company is destined to fail and he will soon be out of work and consequently will lose the dimensions of consumer and investor.

So the main question remains as such, and it requires further investigation. We discussed such issues during a conference entitled “The state of competition in Italy, analysis and perspectives”, organized by Tocqueville Acton Centro Studi and the Antitrust Observatory of Trento University, which was held in Rome in the wonderful “Certosini Hall” at Diocletian Baths. Prominent speakers have intervened such as Antonio Pilati (former commissioner at  Italian Competition Authority), and Professor Alfredo Macchiati of Luiss University. At the same time Professor Giulio Sapelli of Milan University managed to send a message being unable to attend the conference.

If we could sum up, it was very effective the statement provided by Giulio Sapelli, witty and very stimulating as usual: Sapelli recalled how the privatization process of the nineties in Italy was basically a missed opportunity. Without the liberalization made in order to restructure the public debt, they have turned out into a sort of “deprivation” of an important part of industrial heritage under the overdetermination of the international financial “oligopoly” and national interest groups. According to Sapelli a great deal of reasons for the missed endogenous growth in Italy (which by the way the current crisis rises up) lies precisely in the wrong policy of privatization carried out in those years.

Whereas then Antonio Pilati recalled the need to reform energy and utilities on a local basis, so the Alfredo Macchiati has moved soft but substantial criticism to the liberalization measures just approved by Parliament nowadays: these measures would appear to insufficient to overcome the stagnation phase crossing over.

The conference was also an occasion for dusting off the “shelved” issue of the constitutional amendment to Article 41 of Italian Constitution (i.e. the article embodying the principle of economic initiative).

Indeed, the mismatch between Article 41 and free market principles founding the EU is certainly clear: we refer to the four basic freedoms set out in the Treaty, as well as the old Articles 81, 82 and 86, or article 98 (today after the renumbering, article 120), and we also may refer to the relevant EU case-law which has applied and interpreted these principles in accordance to a ordo-liberal vision of social market economy. So we may notice that EU free market principles come into Italy through a European way (and through an ordinary law which implemented the EU Treaty), “despite” the Article 41, which as a matter of fact is set forth as a result of compromise achieved within the Christian Democratic Party between Dossetti and De Gasperi currencies (unlike what was stated a few days ago on television by Professor Stefano Rodotà, who mistakenly imputed to Luigi Einaudi the paternity of Article 41…), far from being characterized by principles of social market economy.

However, we wish to remark that Article 41, although it reflects especially at par. 3 an invasive view of the role of the State in economy, as a matter of fact it has not impeded the crucial reforms in Italy through the years (for example, the passage from the “regulatory state” to the “manager state”).

After all, as someone has properly pointed out, Article. 41 is so little “soviet oriented” that it went through the hurricane of European integration, and it proves to have nothing to do with bonds and knots of bureaucracy, which instead depend on the inability of politicians to simplify it seriously.

Indeed many different laws have been enacted along the years under Article 41: for instance in the sixties it has been approved a piece of legislation regarding “economic planning”, but we also notice that 30 years later it was established the Antitrust Authority (whose law 287/90 reflects the substance of the principles of free competition embodied by Treaty and a basic vision of social market economy!).

The waving of a constitutional reform is then reasonable provided that we consider Article 41 a “manifesto principle”, but it should not obscure the need for real and tangible reforms aimed to growth and development. Moreover, we should not forget that nowadays reference to EU principles by the Italian courts already enables direct enforcement of the free competition rules set out in the EU Treaty.

On this topic, we as Centro Studi tried to provide a contribution to the debate in order to put back to perspective Article 41, considering it a flexible manifesto having a relative impact. At this purpose we proposed to amend the third paragraph thereof as follows: «The law guarantees the protection of consumers and the provision of services of general interest in a free competition context, punishing anyone who works to prevent, restrict or distort competition. It is incompatible with the free market regime any abuse by one or more undertakings having a dominant position in the domestic market or a substantial part of it».

The above shall not disregard the basic assumption, namely that Article 41 does not represent in any way whatsoever the medication for pulling the country out of the crisis, but it may simply represent a more coherent and appropriate legal endorsement to a desired period of reforms that this country urgently requires.

Flavio Felice is Adjunct Fellow American Enterprise Institute and President of the Tocqueville-Acton Centre Studies

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