Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for October 8th, 2012

SMP

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During the WE, I read Pascal Lamy’s excellent note entitled “The Future of Europe in the New Global Economy“.

There are dozens of good points in this note.

In particular, I really liked Lamy’s rebuttal of the argument that European high salaries are the cause of our competitiveness deficit.

As he rightly argues, “when we look at salaries, we have to set them against worker productivity“. And on this, there is still a profound gap between the EU and other trade blocks like China and India.

Lamy, however, makes a more surprising point. He contends that in the global trade arena, EU firms should strive for what he calls “non-price competitiveness“.

So far, so good… But in his own words, non-price competitiveness covers:

those characteristics that cause a product to stand out positively among its competitors, regardless of price. In particular, it comprises know-how, quality and innovation, which allow a company to sell the same products as its competitors but at twice the price“.

And Lamy further adds, that non-price competitiveness has this good that it:

shields manufacturers from having to worry about fluctuating global prices and competitor attacks“.

In my own professional language, I call this “market power“.

So here’s a nut to crack: can market power be the way forward for the EU in terms of achieving a comparative advantage on the international trade scene?

Written by Nicolas Petit

8 October 2012 at 3:22 pm