INTERVIEW: FRANCE - PUBLIC SERVICE - COMPETITION - DEMOCRACY - DIGITAL

Sébastien Soriano: Competition must conduct its self-examination

Interview conducted by:

The video interview can be consulted at the end of this page.

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Nicolas Charbit: Sébastien Soriano, hello! You publish A Future of Public Service. In it, you talk about the State’s capacity to reinvent itself. Can you tell us more about your thesis?

My thesis is based on an observation which, I think, is unfortunately shared by many of our fellow citizens. There are a number of inadequacies or uneasiness within the state itself. As we saw during the yellow vest crisis, there is a form of divorce between the supply and demand for public services. The health crisis also showed a state that could appear to be overwhelmed, despite the quality of the response. Doubts have emerged about the credibility of the State, in its form of a welfare state. And there is the malaise of civil servants. One could say that it is a category of public servants that is affected, but when there is a malaise among teachers, caregivers, social workers, police officers, there may be something systemic. I wanted to start from this observation, a bit harsh, but with a positive approach, by showing that there were other ways of doing things, other positions within the state, other ways of conducting public policy, that could help bridge the gap that has grown between the state and society. Competition is one of these new postures, but it must also conduct its own self-examination. It is a matter of doing our job better where a number of French people, because of a broken-down social elevator or less public services, feel abandoned.

To renew the promise of public service, there is not necessarily a need for more money or the deployment of new battalions of public servants, especially since the new challenges before us will not be resolved in this way. For example, with regard to ecological transition, we are not going to send civil servants to dig up land in France to convert it to permaculture. It is society that will solve the most important of the challenges before us. Through this new position of the state, we must find a way to involve society. This State, which yesterday was an authority State, a provider State, must become a partner State, a driving State, which involves active forces, be they local authorities, associations, the market, obviously, or even citizens who want to participate in a certain number of actions. I have conducted this work in a positive way, trying to draw inspiration from the approach of this magnificent film, Tomorrow. That is to say, by showing that it is also by a sum of miracles coming from the base that it is possible to do otherwise. In the book, I therefore review a certain number of concrete examples of public actions that embody this new way of doing what I call "networked state" to achieve this training.

Vincent Jaunet: In your book, you take telecoms regulation as an example of renewed intervention by the State both in its relationship with the market and in its relationship with citizens. Could you give us some concrete examples of this conversion?

The most striking thing about telecoms is that 25 years ago it was a public service, the PTTs, that provided telephone service and sent telephone bills to 34 million French people. It is impressive to think that a competitive market, with essentially private players, is now providing the service. There is a first stage in this matter, which is quite obvious, and that is to say that the government has changed its position. It has gone from being a service provider to a regulator, an architect of economic forces. In this position of architect, through a certain number of combinations, obligations and incentives, it has allowed this competitive market to emerge and it has emulated a form of public service. In other words, it is as if the market brought what we were interested in in public service, that is to say, a quality service, an affordable price, which is as universal as possible in terms of territorial coverage, while at the same time providing us with choice.


"With the yellow vests and the management of the health crisis, a doubt has emerged as to the credibility of the state"


This approach means that the State no longer thinks in terms of means, but in terms of objectives. In order to provide access to telecommunications under good conditions, the State does not start from the premise that it is going to do it by itself, it is going to form alliances to achieve it. That, I would say, is the first great virtue of telecoms regulation. Then there is a second feature which is more recent and which I find fascinating. It is the way in which the State has been able to support the emergence of an extremely varied ecosystem of players which, through the fibre project, to take just one example, is in the process of carrying out one of the biggest industrial projects of our time. Many major projects are falling behind schedule and often cost more than initially planned. Under the radar, our country is building an infrastructure that is fibre optics, an entirely new infrastructure financed largely by private funds, without significant delays and with extremely reasonable public budgets. I think one of the keys to this success is that we’re relying on a broad ecosystem of players.

Among these players are, of course, the telecom operators, the major operators, who will either build the infrastructure or operate it in any case to bring back the service. But there are also other types of players. On the one hand, there are the local authorities, which in areas of public initiative will build the network. This construction is done in partnership with the State to bring solidarity, to ensure that the networks are deployed without balkanisation of the networks or to establish a certain number of standards, both technical and economic in the construction of these networks. On the other hand, there is a whole ecosystem of operators who are partners with local authorities, concessionaires, to put it simply, consultants, and a whole galaxy of technicians and technical committees that make this system work. Several associations, including Infranum for example, are working particularly hard in this direction.

What is most rewarding is to see how many actors are involved in making this happen. In 2019, France will have deployed nearly 5 million optical sockets. In 2020, it managed to do more or less the same thing despite the confinement, which was still a real difficulty for operators. We are therefore in the process of succeeding, and one of the keys to this success is that we have placed our trust in a very broad ecosystem, that we have created cooperation and that we have been consistent in saying that it is not just the state that is involved in this matter. The state is working on its resilience and on encapacitating this ecosystem, rather than doing it itself. That is why this policy is very emblematic of this networked state logic.

Sylvain Justier: This allows me to rebound on one of the objectives that you stated at the beginning of your mandate, which was precisely to extend network coverage in the territories and to encourage investment. What are the levers that you have mobilized to achieve what you have just explained? In other words, this ecosystem, how did you set it in motion to achieve this deployment?

In 2015, when I take up my mandate at Arcep, the market is extremely competitive with very low prices. This is obviously a great success. It should be remembered that when Free entered the mobile market in 2012, the inflation figure marked a "Free effect" with an effect on household purchasing power observed in the national figures. So this is a major achievement. But deployments have also stagnated for a few years. And the mobile sector in particular was in an extremely worrying situation.

A double phenomenon occurred on the motive. Firstly, operators no longer wanted to implement the programmes that had been set up with the government, in particular the coverage of white areas in 3G. Secondly, the French people’s habits were transformed. This may seem obvious today, but in 2012, the majority means of Internet access was fixed-line. Mobile was still a complement. It is gradually that the mobile has become the majority usage. Search engine queries switched over to mobile in 2013, phone conversations in 2014, screen time in 2015-2016. By 2017, it has become the most widely used means of Internet access in France. This has happened in the space of a few years. Now, we in telecoms deliver authorisations to operators over 15 years in general, and the coverage obligations are defined at that time. Faced with such an acceleration in usage, you don’t have the legal levers to force the market to follow them. We then had a telescoping effect that resulted in a very strong expression of local elected representatives in the years 2013-2014 on this subject.


"Fibre optics and the New Deal Mobile make the intelligence of the terrain and the resilience of large ecosystems prevail"

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To change the situation, the government did two things: the first was to set up counterparties. In 2018, the government, together with the Arcep and the operators, made the New Deal Mobile, the reallocation of the operators’ 2G and 3G licences for a period of ten years, when it could have done so by auction. The same level of fees was maintained and a major programme of more than three billion euros of private investment in rural areas was developed. The second thing was to involve local elected representatives. Until then, local elected representatives had been "victims". In other words, they were dependent on the system. The idea was to rely on the intelligence on the ground and to make them actors of the solution. Before, the white zones were defined from Paris. Based on this, we made a map to say that there were X number of white zones to cover. This was legitimately open to challenge both in terms of method and result. So we turned the system upside down and gave local elected officials the task of identifying the zones they wanted to see covered. And there is no discussion as to whether it meets this or that criterion. As soon as they ask for it, it’s because they have a good reason to do so.

The size of the device is determined by the total number of towers to be installed. In other words, there is no magic wand that can make the whole network grow all at once. It is a gradual effort of 600 to 800 pylons per year and per operator to be deployed. So we have to arbitrate. The State, in discussion with local elected officials, arbitrates to say which site is a priority. In this way, we can draw on their local intelligence, where the real knowledge is, and we can make them responsible, which is the corollary of the power they have acquired. The mayor is often described as the favourite local elected official of the French. He is, as they say, "within earshot". He has the power of local democracy to get the demands of his citizens across, and the ability to make them understand when sometimes they have to wait, when there are priorities to manage. Thus, by giving a role to the local elected representative, we are giving life to this local democracy which will allow for a better acceptance of the reality on the ground. We find ourselves at the heart of the networked State logic: it is no longer from Paris that we decide everything, we take the field to success.

Vincent Jaunet: Precisely, you have on several occasions pushed for this "network State", of which we understand that the local elected representative is one of the links in this network. At the level of the authorities, how does this work, especially for an authority independent of ARCEP? How does this network work? Is it with the other authorities? In particular, with the Competition Authority, with which you wanted to improve the forms of collaboration.

First of all, I would like to reposition the idea of the network state because, when you propose something, you also have to say what you disagree with. This networked state can only come about if we profoundly question the way in which the state functions today. And the doctrine of the State, as it functions today, must be described. It must be given a name and things must be clearly stated. When we read about the reform of the state, its history, we see that in the 1990s a concept of the strategic state crystallized. And this strategic state is basically the French version of what is known as "new public management". What is it? It is the idea that we are going to take inspiration from the private sector’s way of operating to make the State work.

It is basically a state that has taken its inspiration from the private sector, mimicking a holding company. This strategic State crystallised in the 1990s at a time when the State was losing ground to local authorities and Europe, both of which were in a phase of increasing power. The strategic State is also a way for senior civil servants to regain their place, by telling themselves that in the end, in this shrinking State, they can regain power by piloting dashboards, contracts and performance indicators, as in a holding company. And that is when the separation of strategy and execution was put in place. In the twenty years that I have been working in the State, I have heard people say: "The agency model is very good. You have to separate strategy from execution." I want to say how bad I think it is today. I think it’s a bad idea. The State strategist is also sometimes incentive logics like the famous pricing of public hospitals.

The analysis of the book is that this strategic state has run out of breath. It has come to the end of its promise. It allowed one important thing to happen, which was to limit public spending, which was its vocation in the 1990s. And that is not insignificant. But it has profoundly upset the logic of public services and the way the state works. The pricing of public hospital activities is emblematic, since it has given incentives to hospitals, but the problem is that in the field the players are not in a logic of cooperation between public hospitals and private clinics, city medicine and medical-psychosocial services, they are all in a logic of competition where everyone tries to skim, to get the services that are the most remunerative, and then to pass the buck to the others. For me, the network state is an alternative to this strategic state. There are some things that can be done very differently.


"The State Strategist has run out of breath.It has upset the logic of public service."


I now come to the question of the authorities. In a strategic state logic, what do we do? Mergers. It is the creation of the major public hospitals, it is the RGPP, the general review of public policies, which has led to major mergers, it is the creation of Pôle emploi. These mergers, however, it must be acknowledged that in many situations they were desirable and they were quite successful. So even though there were real difficulties in carrying them out, we can see that there is still a virtue to mergers. But we also see all the difficulties of these operations, and sometimes the loss of a sense of the primary mission. When you create huge directorates of central administrations, covering a wide variety of subjects, you lose the salt of the primary mission. Let us give the example of the DIRECCTE, since they are concerned with competition: they deal with such a huge number of subjects that, in the end, we no longer know what they are defending, we no longer know whether they are really defending competition. Once again, what I am saying is not about the agents, but about the structure.

The limits of these mergers have been observed. When we look at the independent authorities, there is always this trade-off: should we merge, or is it better to get the independent authorities to cooperate? I’m not going to decide this question, I think it should be kept open, and we should not prohibit all forms of mergers. But when I look at the European landscape, I find, for example, the model of mergers between competition authorities and sectoral authorities rather questionable. In this respect, the Netherlands and Spain have led to very different results. While Spain is not a successful example, with very weak telecoms regulation, the Netherlands has managed to marry two different cultures and has a competition authority that continues to have this regulatory dimension, allowing problems on the market to be resolved quickly, and not just horizontally,ex post, which leads to a distance from the market.


"Independent authorities should consult each other more systematically for advice"

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Another model amounts to merging sector regulators, energy, transport, telecoms, postal, etc., into one another. This is the example of the Bundesnetzagentur in Germany, but which is found in other countries for reasons of critical size. What about the German example? It is quite disturbing, since basically, telecom regulation, BNetzA is very absent from digital issues, unlike the Bundeskartellamt. I find it a little surprising that a sectoral regulator of this importance is not more invested, more present. Without doubt this very transversal vision of infrastructures tends to limit projection capacity.

What about France? Historically, we have a very good relationship with the Competition Authority, which is due to people reasons and institutional complementarity, which has worked out very well. In other words, both authorities have understood that two jaws are more effective than one. They have coordinated themselves very well, by combining the action of both, in order to develop competition. There were some very strong decisions by the Competition Council in the late 1990s, early 2000s, including quite spectacularly in ADSL. The European Commission also took action in this area, but when it came to defining how wholesale offers worked, and defining the right tariff levels, we referred the matter to the regulator, because we were in a slightly more refined business, with regular contact. This is the great advantage of the cross-opinions between the authorities, which work extremely well.

If we were to propose a reform of our cooperation with the Competition Authority, it might be that these cross-opinions should be more systematic. Today, some of them are optional. We could imagine that they would become systematic, particularly in the area of merger control, where this is currently done on the initiative of the Competition Authority. Because of the people in post, there is cooperation between the teams, there is a dialogue that goes far beyond these informal referrals. That is the first pillar.


"With mergers between public entities, there is the risk of losing the sense of primary mission"


Much progress has been made with the establishment of a network of eight regulatory authorities, nine with Hadopi, created following the AAI law, which called for more mutualisation between the authorities. These nine authorities meet every six months at the level of their chairmanships with ongoing technical work. This works very well. Resource functions are mutualized, for example, server backups, mutual insurance companies, things like that. We share good practices, and we also circulate CVs. In terms of content, we have drafted a joint note on regulation "by data", a joint paper on regulation and environmental issues, and this will continue. This mode of cooperation really works very well. I have also seen it at the European level, at BEREC level. It is necessary to create a link between the leaders of these authorities, so that they can see the material interest they have in cooperating and can interact in a fluid cooperative relationship and not in long, vertical relationships, where everyone looks at each other like dogs and does not know if it is really in their interest to work with each other.

Finally, there is a common digital hub that has been set up between the Arcep and the CSA. How does it work? We were inspired by the example of the AMF and the ACPR, i.e. a convention that does not need to be overly institutionalized. This convention allows for in-depth interaction between the resource persons involved in this cluster, including a director who is one year a person from Arcep, one year a person from the CFS. Secondly, we have a joint work programme that has now been agreed upon. In July, we decided on this programme. These are studies, work subjects, a common reference system for our observatories. For example: who watches TV on DTT? Who watches TV on ADSL? We realized that we sometimes don’t watch completely the same thing. So we are trying to converge our measurements to have the closest possible metric. And then, we take up certain subjects together. For example, we have been given a mission by Cédric O and Adrien Taquet on the exposure of minors to pornographic content and so the Arcep is working with the CSA to promote the adoption of parental filters and tools to control this type of content. All in all, I would say that with willingness, strong cooperation can be created.

Sylvain Justier: Thank you, Mr. Chairman. So you have given us a better understanding of the concept of the networked state. Your work is in fact based on a triptych which is: the state, the market and the common. I would like to come back to the market and the common through the example of GAFA regulation. As you know, there is a lot of debate today at the level of the competition authorities, which consider that they are not able to correctly apprehend certain types of behaviour. The Competition Authority has set up a digital economy department. We are wondering. You were talking about mergers; now I am going to talk about company mergers and how to deal with killer acquisitions. What is your view on the subject? We know that you talked about perhaps regulating terminals or application stores. I wanted to find out more about this so that we could get into the realm of the market and the common good.

In order to understand this issue of GAFA regulation, I start from a rather brutal observation, and I apologise for this, which is that competition policy has failed. I think that if we do not start from this observation, we cannot reach the right conclusion. We are forced to conclude that competition policy has failed because the result today is that we have a sector dominated by monopolies. This means, basically, that the combination of the invisible hand and antitrust has not produced a competitive market, which is what we expect from competition policy. That is one thing. I myself have worked at the Competition Authority, at the Competition Council, and I am obviously very close to this milieu, and Isabelle de Silva has my full esteem and friendship. It is not a question of people or of how competition policy is handled, but a question of the structural inadequacy of competition law, including at European level.

Competition law cannot solve the situation we face in digital markets. Because there are structural phenomena, including network effects that are far too strong to allow competition law instruments to ensure that competition works. The effects of networks are all the stronger as they become stronger with each technological generation: we can see how the economy of platforms has made it possible to acquire data, how the economy of data makes it possible to be efficient in artificial intelligence, and so on. This phenomenon of continuous overconcentration is only getting worse. As a result, barriers to entry continue to be gigantic even if there is always the counterexample of TikTok or others who manage to make a place for themselves in the galaxy of ten monopolies. But this remains fundamentally an unsatisfactory landscape.


"In the digital world, I assume a rather brutal observation: competition policy has failed, the ordoliberal project has failed"


To respond to this challenge, instruments of a different nature are needed, tailored to combat the effects of networks. These instruments are of the same nature as those used in telecoms regulation, because telecoms are obviously very strongly characterized by network effects. And so I think the right way to answer this question is to define which are the instruments for the redecentralisation of economic power. This is what we should be looking for.

I would like to take the liberty of making a short parenthesis on this subject, in the light of Michel Foucault’s course at the Collège de France, in which he returns in detail to the question of ordoliberalism. What is ordoliberalism? Basically, Foucault sums it up with this formula: "Ordoliberalism is governing for the market". This is a very important difference with liberalism, which is: "Limit state intervention and let the market do its work". Ordoliberalism is to intervene with the aim of making the market work. And this has two consequences. It means refraining from intervention, since by definition it is the market that must be the solution. But the State must also be very attentive to the actual success of the market, beyond theory. If the market fails, the State must intervene, including with extremely powerful instruments. I find that we tend to lose sight of this salt and this ordoliberal requirement that, if we want a government for the market, we must give ourselves all the instruments to make the market work and to ensure that there is real competition to regulate it. As soon as the consumer cannot change creameries and entrepreneurs cannot really enter a market, we have failed in this governmentality.

Now, let’s turn to the question of commonality. Because, specifically on this issue of platforms, the mistake to avoid, it seems to me, would be to remain purely in a State-market duo and say, "The GAFA has taken over. We, as states, are going to take it back from them." Because we can see that there are absolutely fantastic risks when it comes to freedoms, because the GAFA now have - to put it simply - the extraordinary power to be organizers of freedom of speech and privacy. There is, however, a potentially very strong temptation for states to ally themselves with this centrality that the GAFA has recreated, which allows for censorship and surveillance, to regain this capacity for censorship and surveillance, as it were. That’s what we’re seeing in China in a frightening way, and that’s what we’ve also seen in the United States through what the Snowdencase revealed.

So the state-market duo is not the solution. Therefore, we need regulation that is not there to give power back to a State against companies, but to redecentralise. And in the digital field in particular, there is the possibility of the emergence of commonalities, that is to say a third sector that is neither public nor private. Obviously, the most well-known information commons is Wikipedia. It’s free software. The digital tool gives society the ability to cooperate, which allows the emergence of alternative organizations. And so, the regulation that we need to think about, it seems to me, for the Big Tech, is a regulation that must also give a chance to common logic.

In the book, I develop the issue of standards, which is linked to the issue of interoperability. One of the issues where the power of the GAFA is immense is that they have developed de facto standards and have created silos that do not communicate with each other. The typical example is instant messaging. With a purely telecom approach to this subject, it looks like we’re going to standardize, define interfaces and force services to cooperate.... But the problem is that this is not what people want. One of the interests of these messaging services is that they have become new directories, a kind of semi-open, semi-closed club. They each have something different, which has value for the user, and the user doesn’t necessarily want to be visible to all the clients of the different messaging services, which is everyone.


"The mistake would be to substitute the power of a public authority for that of the GAFA"


What is undoubtedly more desirable, however, is to re-emerge from the logic of technical standards. The Internet has been built around the IETF, which is standards-based, so-called RFCs, where technical consensus is formed by communities with what is called humming - that is, everyone goes: "Humming". That means everybody agrees. There’s no vote, there’s no governance rules, but a kind of technical consensus. There’s also the W3C, the forum that built all the web standards. By returning to this logic of technical standards on a certain number of things, we could already do great things. You’re asking me about OSes. One of the elements of OS power is that we have two systems, Apple’s iOS and Google’s Android, each with their own standards. When you’re an application developer, you have to develop two applications. When you want to access certain terminal features, like the NFC chip (which allows contactless payments for example), you end up with two different discussions. Remember when the French government, when StopCovid was launched, managed to get Bluetooth enabled in the background on Android phones, but not on the iPhone. Even though since then the situation has progressed relatively well, this remains a particularly notable fact.

Similarly, on the application layer, the W3C has developed a standard called "Progressive Web Apps", which allows you to do much the same thing as applications, but without going through the application stores. What did Google and Apple do? They put all their teams to develop their stores, and especially to make sure that we can’t rely on Progressive Web Apps. One of the ways to re-emerge commonalities in technology would be to impose on the most structuring platforms to pour their main technical platforms into standardization forums so that their developments become common and can continue to live within an open technical community. This is one of the proposals made in my book. It would be a way of creating this trilogy of State-market-common. The market has invented a remarkable innovation, which has become a de facto standard, but without interoperability. The State would only intervene to make the switch by saying: "You are a structuring platform, I have identified you as essential. My decision stops there and now, technical communities will take over to develop the next step." Then the state continues to oversee, but it’s not there to decide instead of the market or civil society. This is extraordinarily important because one of the difficulties of public intervention in these technological matters is the speed of innovation and the fact that the state does not necessarily have the capacity to chase after a moving target.

Sylvain Justier: Aren’t you afraid that this approach will disincentivize for the future those who today could create these new standards by saying to themselves: "But they’re going to be confiscated from me in the end. Because after a certain time, although I am deserving, although I have not implemented anti-competitive practices, etc., I have acquired too much market power and therefore I am forced to open up what I have invested in"?

It’s a political choice. Do we want to allow Silicon Valley managers to get rich or do we want there to be a capacity for innovation in France, start-ups that can launch their services and users who are not prisoners of silo systems? You have to choose.

Nicolas Charbit: Can France define an atypical policy at the global level?

I believe that Emmanuel Macron has a strong preference for finding solutions at European level. That is fully understood. But first of all, it must be done in a coherent way. Unfortunately, this was not the case when Laetitia Avia and the parliamentary majority worked in a much-discussed direction at the national level on online hate. While there was a report on the table, the Loutrel report, which had made extremely precise proposals on the subject, we took a very lonely and dangerous path, which fortunately came up against censorship by the Constitutional Council. As regards economic regulation, the subject is so important that it seems to me to be really risky to rely solely on one international forum or another. We can see this on digital taxation, a subject on which we have not yet reached a conclusion. And if we start the discussion by saying that we will not regulate the GAFA in France, it is not certain that we will succeed, including at the international level.


" Ordocommunalism means that the State must govern for the common people as it does for the market"


Nicolas Charbit: So, to come back to regulation, a notion of commonality that we have been talking about, and to ordoliberalism. In your book, you talk about moving towards an "ordocommunalism", i.e. putting commonality in regulation. What form could this pooling of regulation take?

The concept of ordocommunalism has its share of provocation. It is a way of questioning the fact that, since the post-war period and the rise in power of the Union, the relationship between the State and the market has been extremely sophisticated, without thinking of doing the same in the relationship with civil society. After the war, we must remember all the nationalisations that were carried out. And again, in the 1980s, the banks were nationalised. But today, it wouldn’t occur to anyone to say: "The state should drive the economy." Ordo-communalism is a way of saying that we must make room for the common, at least in our minds, as important as we make room for business.

It is true that I retain a broad understanding of the notion of commonality. I start from the definition of the common at the institutional level. Elinor Ostrom shows that human beings have been able to invent ways of establishing themselves to organise commons such as forests or fishery resources, when these commons were supposed to be subject to a form of "tragedy".

This is the common to which I am referring, that is, alternative modes of organisation to the market and the State. To take Michel Foucault’s quotation as a starting point, we could say that if we know how to govern for the market, we will also be able to govern for the common. To say in particular that the State does not necessarily have the vocation to do everything. If there are communities that can carry a certain number of ecological, solidarity or economic objectives, social and solidarity economy, short circuits, etc. the role of the State can be to do everything to enable the common to succeed. In the book, I take up a galaxy of actions that tend to favour the common. The logic of "public - common partnerships" and "calls for common action" in particular have been promoted by various municipalities. Cities recognize a certain number of functions in the city for structures, including non-associative ones. In Paris, for example, you have a permit to vegetate, thanks to which the inhabitants can ask for a certain area to be cut down and then be able to garden there. I think this cooperation is very interesting.


"We could regulate the "systemic" companies of the ecological transition"


Where my DNA as a regulator has regained the upper hand is on ecological issues, where I fear that the common man cannot triumph on his own. Indeed, as fantastic economic interests are rooted in the carbon economy, the transition is quite complex. The small bazaar around the great cathedral will not be enough. The big players will have to be plunged into the ecological bath. But I do not believe in taxation or regulation, because they are too horizontal, too undifferentiated and therefore fail to capture the particular complex situations. Furthermore, they have the perverse effect of targeting small, medium and large players in the same way. Potentially, the regulation will undifferentiatedly affect a large company that lives on oil and a small boss involved in a zero waste plant project.

On the other hand, I am inspired by the banking sector and the supervision of systemic banks. This is what we may be doing at the European level in the digital field through the regulation of so-called structuring platforms. We could ask ourselves if there is not a status of a company structuring the ecological transition to be created. This status would cover some twenty companies in the transport, energy, industry and agri-food sectors, which play such an important role in the circuits that we will not be able to make a successful transition if we don’t include them. And then to build transition contracts with these companies, why not?

This is finally what was done with Air France during the first containment, which was told to stop a number of domestic routes that are anti-ecological. Without necessarily handing over money, we can imagine a global discussion taking into account, in particular, existing aid. This global discussion could, if necessary, take the form of a sort of transition contract that would be legally binding and whose implementation would be guaranteed by an independent authority. Governing for the common good also sometimes involves the coercion of a few large firms.

Vincent Jaunet: I will come back to a subject closer to the Arcep. Last year, the regulator was given the task of supervising and regulating press distribution. However, within the framework of this competence, you have not been entrusted with everything concerning relations between publishers and news aggregators: Google News and Apple News. And given what you have just explained to us about relations with structuring platforms, don’t you think that, in some way, it would have been advisable to entrust you with this issue as well? And what could the intervention of a regulator on these issues have had to offer compared to the ex post interventions of the competition authorities?

Press distribution was a sector that was too much governed by self-management, at once customer, shareholder and regulator in a system designed after the war to avoid any takeover by a private company. Starting from a good intention, to ensure the distribution of newspapers in a cooperative model, this system, which worked well throughout the growth of the press market, became particularly complex when the sector began to show some backlash. A kind of irresponsibility was created. We owe it to no one; it was governance that created this irresponsibility. And in the end, what happens? The state pays.

What I see is that regulation can indeed help by bringing more responsibility and creating the right incentives. That is positive. Let us return to the issue of mergers between regulators, which was mentioned earlier. Previously there was a two-headed regulation - the ARDP and the CSMP - two entities that the Arcep absorbed. This is likely to work, in particular because we have been very attentive to this very particular sector, while drawing inspiration from our regulatory framework.


"The distribution of the paper press is being made responsible.But the digital component is a missed opportunity to open the black box of Apple news and Google news."


Obviously, we regret that digital has not been included in this matter, since it is clear that there are two types of regulation of digital: there is the regulation of GAFA, which has already been mentioned, and the regulation of digital when it extends the physical. It is clear that new forms of mobility, for example, are going to be managed by the ART, particularly since the LOM law. And that’s very good. We can see that the CSA, thanks to the AVMS directive, will finally be able to manage the continuity of television, which is video on the Internet. In the telecoms sector, the European code will soon be transposed, giving the Arcep responsibility for instant messaging in the extension of telephone networks. Regulation is modest in this area, but in any case, in principle, it is within the remit of the telecoms sector. It therefore seemed natural to me to say that the kiosks of the future should come under the jurisdiction of the same regulator. But the legislator has only come halfway there, since it has included digital kiosks, and therefore services such as Cafeyn, without going as far as news aggregators, which are the real bottleneck of the online press. That is a shame. All the more so as our intervention would have been entirely complementary to competition law, if we think of the Google case on neighbouring rights, for example. But the story is not over.

What could be the role of the Arcep? It would not be to work on these remuneration issues, at least not in the first place. As a first intention, it would already be to work on the subject of the promotion of content, which is today extraordinarily opaque. Why does one press article stand out more than another? We find the logic of the Bichet law of 1947 according to which, in a newsstand, all the press must be present. However, the selection we face on the Internet is not the assortment of the press of several hundred titles, but of far fewer, five or even ten articles. It is an extremely strong selection that is made, and it is made in the greatest opacity. What we could have brought is what we call regulation "by data", i.e. bringing transparency, collecting information, opening the black box, collecting information from these companies, restoring public information to help all the players understand and, if necessary, entering into a logic of "empowerment" to help the titles better understand how they are going to be referenced. This would have been a first step and would also have enabled us to refer contentious cases to the Competition Authority. That is the type of articulation that we could have imagined. This will remain a missed opportunity.

Nicolas Charbit: On 5G, you say that the public authorities are too techno-enthusiastic, and you invoke in particular the respect of privacy, the environmental impact of the technology, the concern about public health considerations. So, you call on regulation to take a greater interest in these issues of general interest. And in doing so, aren’t you afraid of going outside your specialties? We could also look at employment, look at foreign investment. If each regulator starts to go outside its own field, won’t we have a problem of the scope of action of the regulators among themselves?

You’re right. You’re right. The rappelling rope is the law. It’s the legislator who assigns tasks to regulators, and that’s fine. The reflection that we have conducted, following the debate on 5G, is precisely to know, on this environmental issue, whether there is room for regulatory action. What is a regulator? A regulator is an arm created by the political authorities to push, or even force, the market to respect certain objectives, when the market does not do so spontaneously. That is what a regulator is. The Arcep was created 23 years ago to proactively create competition in the telecoms sector. For the last 15 years or so, we have also been doing this in the area of regional planning. It has been done in small steps, there hasn’t been a big planning law that said: "The regulator has to deal with land use planning". No, it was done in bits and pieces. Law after law, we were given a number of sets of powers that allowed us to play this role. For example, when an operator initiates a fibre deployment in a medium-density area, there is a zoning and there is a certain time limit to finish that deployment so as not to blow a hole in the coverage. Who would have said at the time of opening up to competition that it would take a regulator to do that?

In this way, we have been entrusted with a certain number of missions, which make the Arcep today a de facto regulator, I would not say of regional planning, but at the service of regional planning, with tools that go in this direction. And at the same time, the policy that is there and well and truly there. The Minister of Telecommunications, in this case Cédric O, is leading the France Très Haut Débit plan. The New Mobile Deal was concluded in 2018 with the extremely strong involvement of the government and in particular of Minister Julien Denormandie. Then certain instruments were entrusted to the regulator, the armed wing necessary to make this regional planning policy a success.


"Thedebates around 5G may lead to the institution of an environmental regulation of digital"


Then, the European Union entrusted the Arcep with the mission of ensuring the neutrality of the Net, a more classic role of guardian. Today, the question before us is whether there is a place for action by the telecoms regulator as an armed arm of political power on these environmental and digital issues? The regulator intervenes when it is necessary to find the right balance and reconcile the two. In this case, we can clearly see that digital technology is being deployed in a logic of abundance, ubiquity and connectivity; it wants to offer us a world without limits. This world of permanent abundance is useful for ecological conversion since it allows for new uses. We can see this clearly with telework and there are a thousand examples in this register.

So it’s complicated to say in itself that digital would be good or bad for the environment. It has a footprint, but it is useful in a more general way. Faced with this observation, the political authorities may want to create staircases for the transport sector, for the housing sector, and then for digital technology. And in the slope it would create, it would take into account the fact that there are positive externalities. It would not necessarily be the same as the other sectors, but there would be a sort of ceiling to be respected. In this respect, one proposal that was discussed was to ban unlimited subscriptions, particularly mobile subscriptions - i.e. "unlimited data" services. The idea of putting a limit on this was defended. I am embarrassed that it should be the State that comes to say where the limit is on a subject where, precisely, a complex balance is being sought.

On the other hand, the sector can be given sufficient responsibility, or even forced to respect a certain energy consumption envelope, for example. It would then be up to the economic players to send the right signals to their consumers. And perhaps the economic players will then give up unlimited subscriptions. But perhaps they will find other energy efficiencies, that they will switch off antennas at night, that they will pool a certain number of resources. The idea of this regulation would be to provide fine mechanisms to enable the sector to embark on this transition, but without doing so in a brutal, arbitrary and punitive manner. This is a reflection that we wanted to be open and broad, beyond the networks alone, so we have launched a collaborative work platform welcoming both industrialists and operators, but also environmental players, measurement players, public authorities interested in these subjects, etc. The platform will be open to the public and to the private sector. The Ouishare collective helped us to create a very open animation. A first fruit is the report published on 15 December 2020, which contains the contributions of 42 of the very many participants in the platform, as well as eleven proposals put forward by Arcep.

Sylvain Justier: So, Mr. Chairman, I wanted to come back to the link between competition law and regulation, which has already been mentioned briefly. In your book, you summarize the philosophy of competition, you explain that competition law is not the law of the jungle, it is the law of the most deserving. And yet you say, "Competition law knows its limits." There would have been a kind of Chicago school deviation, where you would end up just focusing on price and accepting monopolies that were actually built, but are there today. And so you propose new remedies. The question I would like to ask you is: what are these remedies and how do they differ from those that competition law already allows today? I am talking about the existing ones: merger control, abuse of dominant position. I am talking about those that could happen tomorrow: tightening up thresholds - finally, lowering consumption thresholds, etc. - and the remedies that are already in place. And then, you have seen that, for example, last week, the Competition Authority called for a structural injunction on certain markets, as already exists overseas. So how does what you are proposing differ or is it necessary in relation to these existing powers to possibly strengthen competition authorities?

On the initial observation, indeed, I am concerned about the slope taken in the world of competition, where the need for economic evidence could take precedence over common sense. To paraphrase Olivier Fréget’s parable, it is as if in the highway code there were no longer any speed limit and the police could only stop you if they were able to demonstrate that you had engaged in dangerous behaviour. It’s a rather dangerous rocking movement.

Basically, this drift would cause the competition to lose its ambition. I invite the competition to take off again and to bear fruit beyond the sometimes somewhat narrow perimeter it tends to give itself. John Sherman once said, "If we do not want a king to govern our country, we cannot accept that a king should govern our production, our transport or the sale of our products". We have to get back to that spirit. There is no enlightened tyrant, neither in the economic world nor in the political world. Therefore, the only choice is competition and democracy. This brings us back to this quest for ordoliberalism: governing for the market. The risk would be that we would give that up. I fear a drift, due in part to intellectual porosity. As there is a great deal of sophistication in the thinking on the economics of competition - and that’s all very well, we obviously need to do some research - we tend to be a little admiring of this economic reasoning, we manage to make some magnificent models ... which in the end convince you that monopolies wouldn’t be so bad! Of course, you have to listen to that, it’s important, but you still need a little bit of common sense. At some point, you have to put speed limits on the road.

In the face of this drift, we must be ambitious. Finally, I mean, competition is a public policy that is becoming truly central in a globalised economy. We know that macroeconomic policies, the States are largely dispossessed of them today. Macroeconomics plays above all a role as a parachute for globalisation. When the IMF, the central bank, etc. stop the euro crisis, bring liquidity to overcome the coronavirus, that is very good and it avoids repeating the 1929 crisis. It is important, but it does not change people’s lives.


"I’m worried about the slope the competitive world is taking.We have to get back to common sense."


On the other hand, what can change lives is microeconomics. And in microeconomics there is competition policy. That’s why it’s important. It also has a potential social impact. Today, one of the things we are seeing is an increasingly precarious labour market. This precariousness is due in particular to the choice of certain companies to make much greater use of subcontracting and franchising. Is this taken into account in the competitive reasoning? The same applies to self-employed workers. However, competition has the immense power to act on these issues, with a goal that could also be social. Because governing for the market should also mean governing for the labour market.

Nicolas Charbit: So, listening to you, I don’t know on which foot to dance, or I don’t know on which foot you dance. Since you tell us on one hand: "All this is political, it is the State that decides." And at the same time, you say: "We must question the French more, we must question the communities more." You praise the "makers", the bazaar, and even the ZAGs: the self-governing zones compared to the cathedral state. So, all that is all very well, but aren’t you afraid that by giving so many initiatives to the common, to the field, we will lose the notion that we are not managing to achieve the "common good"? I see Jean Tirole’s book, Économie du bien commun; how can we achieve the common good if we ask everyone what they think of what the common good is?

That’s a nice question. I think we’ve come to the very end of ideologies. It is not necessarily at a state level that we will be able to crystallize common visions. We can have common values, the Republic is the bearer of a certain number of values. There can be ambitions. There may be a given course, of course. But I believe that we are at a time when we have to accept that many of our fellow citizens will first recognise themselves in their own actions. This is perhaps the time to say: "Let’s focus on human beings and collective intelligence, and give all these people the ability to act." Let’s recreate "deep democracy". It is often said that there is a deep-rooted State; I propose a deep-rooted democracy, that is to say action really from the bottom up, in a logic of trust.

I can see that there’s a loss of common sense that could result. But first of all, recognition through action is an essential element, I believe, of unity, even identification within the national community. The population is ready to get involved. We saw it during the first confinement, with extraordinary initiatives. We don’t give them enough prominence, whether it’s the "makers", for example, or the movements of mask seamstresses. These movements were interrupted by the fact that technical standards were put in place for the quality of the.... It is understandable that the state had to do this on a technical level, but could it not have acted in a way that would still take these communities on board?


"Let’s give ’deep democracy’ a chance."It is also the answer to the fantasy of the "deep state"."


It is by recognizing joint action that recognition is created in the Republic. And it is also because the State wants to do too much that it can no longer be dragged along on a few structuring subjects. And it is this, I find, that has been the most lacking in this period of the strategic State. The State is no longer a strategist at all, because it tries to do everything. And it is caught in this position because of the habit we have of asking it to do everything. Conversely, we could switch to a networked State logic, but this presupposes that it is fully assumed, politically supported, etc., in order to be able to do so.

Sylvain Justier: To come back, Mr. Chairman, and perhaps to sum up, you correct me if I am wrong, but I hear your message as a need for interventionism targeted at certain large companies or certain major sectors, which are sectors or considerations for the environmental future; your book talks a lot about that. And so you say that we need to select perhaps twenty or so companies on the basis of objective criteria, so you don’t define them, you refer to what has been done with the banks, but that is like a challenge. And you say: "These companies, in the end, we have to define a work programme", with this collective intelligence that you want to mobilise. I think that it is the horizontality that you want to bring to the project in order to develop with them, and for them, a programme that they would be responsible for implementing over five years, ten years, with objectives that would be monitored by an independent regulator who would ensure that they meet these objectives, which are important for the common good. And I wanted to know, how do you see this being put in place? And how would this specific authority be linked, if I understand correctly, with the sectoral regulators and the competition authorities?

What frightens me personally is the idea that we would force the users, the citizens, before attacking the major players, who have a much greater environmental impact. The idea of capping Internet subscriptions, which I have already mentioned, was in this vein. Instead of opening the bonnet of Apple, Google, Netflix and telecoms operators, we wanted to curb the good people. My starting point is that ecological concern must not mean less freedom for the population simply because it would be easier to attack them. Firstly for questions of freedom and secondly for questions of efficiency. According to a study by Carbone 4, even if everyone did the ten things they do every day - no more flying, no more eating meat, etc. - they would not be able to do so. Even if everyone did the ten things they do every day - no more flying, no more eating meat, etc. - the environmental footprint would only be reduced by a quarter compared to the objective to be achieved. Not bad, but not enough. Hence the need to get the companies. I do not believe in horizontal legal responses, I do not believe in taxation, I do not believe in regulation. I believe that it is "hand-stitched" that will allow us to move forward. It’s about recognizing that each company has a different issue. I think Monsanto represents different issues from Renault in the ecological transition. But both have an important responsibility. We must therefore be able to create a tailor-made way to support them both in the most relevant way.


"When it comes to theenvironment, there’s a tendency to coerce the good guys rather than go after the big polluting companies"


At the institutional level, it is first and foremost important that the political authorities take ownership of this type of issue. The regulatory authority can accompany the process but must leave the political power in the foreground. It is a technical expert who can help to define a trajectory and then become the guarantor of what has been agreed. From an institutional point of view, the subject can be divided between various authorities, just as a central authority can cooperate with the others. Anything is possible.

Nicolas Charbit: What are you going to do to carry this project and these proposals?

Exchange with the magazine Concurrences ! And I try to be active in a number of public innovation communities. There are a lot of groups in the public service. One that I’m involved in is called A Public Heart. There’s also FP21, Le Lierre, several communities of public servants who are each trying to promote practices. In the administration, the interdepartmental directorate in charge of public transformation is very much at the forefront. It is therefore a matter of promoting, along with others, the work of many innovators who are doing this "networked state" in the field. My message is to try to show the importance of what these people are doing.

Then, like any senior civil servant, I talk to the government administrations, to the control bodies as well, the Court of Auditors, the Council of State, which can play an extremely important role in changing the State’s software. Everyone has a piece of the answer, provided they are aware of the gap between current practices and the State and what the French need. It is on this gap that I modestly try to help raise awareness.

Nicolas Charbit: Thank you, Mr. Chairman.

Thank you. Thank you.

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Authors

  • National Institute of Geographic and Forest Information (Saint-Mandé)
  • Concurrences (Paris)
  • Magenta (Paris)
  • Magenta (Paris)

Quotation

Sebastien Soriano, Nicolas Charbit, Vincent Jaunet, Sylvain Justier, Sébastien Soriano: Competition must conduct its self-examination, February 2021, Concurrences N° 1-2021, Art. N° 98977, www.concurrences.com

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