EU competitiveness: a game of two halves

Among the many thousands of supporters keeping an ear cocked for the result of Leeds' champions cup showdown with AC Milan in…

Among the many thousands of supporters keeping an ear cocked for the result of Leeds' champions cup showdown with AC Milan in the San Siro this week was Europe's top competition watchdog, Mr Mario Monti. To football fans in the European Union, Mr Monti's enthusiasm may come as a surprise. The quietly spoken former academic has, of late, found himself in football's firing line. Clubs throughout the length and breadth of the EU are crying foul over Mr Monti's decision to review soccer's transfer fee system - a move they fear threatens to cut the financial lifeline that keeps many small clubs afloat. National politicians have jumped on the bandwagon and even in Brussels, Mr Monti notes wryly, every Euro MP who visits his office in Rue Joseph the Second cannot resist slipping a soccer question into the back of the net.

But in recent weeks, Mr Monti - an AC Milan fan since the age of four - has detected a change of tone in the debate. Sound and fury have given way to a more reasoned approach and proposals from the sport's governing bodies, FIFA and UEFA, to bring the system in line with EU rules on the free movement of workers are now on Mr Monti's desk. Though tempers may have cooled, Mr Monti is clearly bruised by the experience. The normally cool, rather reserved, commissioner reckons some of the tackles have been over the top.

"The issue of transfers has been a marvellous example of deliberate misinformation," he says, some of it from high-level political sources. "What I cannot accept is the campaign [characterising] the Commission as being against the world of football, wanting to abolish the transfer system altogether and thereby bringing about the death of football as we know it."

The sea change in sentiment came at the end of August, when the governing bodies and players' representatives met in Zurich and conceded that they had to respond to the Commission's decision, taken by Mr Monti's predecessor, to put the transfer system under the spotlight. "The world of football decided, for the first time, that it should react, that it could not ignore the Commission and that, after all, there was perhaps something to be changed and modernised in the transfer system." Though he is cagey about the Commission's intentions, Mr Monti insists that he is not seeking to do away with transfers altogether. There must, he believes, be a system that allows clubs to be compensated for the costs of bringing on new talent - and not simply on an individual basis. The fire may have gone out of the transfer issue for now but Mr Monti has plenty of other battles to fight. In recent months, his department has been putting the system for selling new cars in the EU through its MoT test. This week's leaks of the results don't make happy reading for Europe's car makers. Price differentials were off the clock, parallel trading (buying a cheaper car in another country and bringing it home) was not as easy as it should be and would-be new entrants, such as supermarkets faced too many obstacles in selling cars.

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In short, the report says, consumers are not getting the full benefits of the fabled single market. Mr Monti would not comment ahead of the report being made public but, given that his previous job in Brussels was as single market commissioner, he is unlikely to tolerate what is effectively a flawed single market in car distribution. However, he can expect a rough ride from big car makers such as Volkswagen, Fiat - where he used to be a director - Ford, GM, Renault and PSA. Auto manufacturers will probably argue that consumers can't have price harmonisation if they don't accept tax harmonisation - something the British Chancellor of the Exchequer would block with Britain's veto.

Mr Monti, like his boss Romano Prodi, believes that national vetos should be scrapped and the sooner the better.

"Some countries are intellectually and politically scared about any step away from unanimity in tax matters but they should consider that a number of day-to-day nuisances to consumers' lives in Europe do derive from the system being unable to deliver a more harmonious tax regime," he says. Mr Monti is, by all accounts, a workaholic. His top-floor Brussels office enjoys a magnificent view of the crane-infested skyline but it has an austere feel. Long tables are neatly piled with reams of files and books, and its walls are plastered with work-related photographs. Only a pair of modernist prints offer a personal touch.

In Brussels, the donnish Italian commands respect. In September, he outbruised two telecom heavyweights, MCI-WorldCom and Sprint, who wanted an $80 billion merger (€93 billion).

Mr Monti blocked the deal, which would have created an Internet colossus. He may come across as an affable man but he is tough. He is untroubled when faced with irritating lobbying by every corner of industry. "Listening is something very different from being influenced. The more one listens in an open and balanced way to different parties, the more one feels comfortable with one's conscience when the proposal comes out."

The duty-free industry discovered Mr Monti's implacability the hard way. "The prime ministers of key member states were asked to believe by lobbyists that as many as 140,000 jobs might be lost but duty-free has gone and there has been very little negative impact," he explains. He is rarely given to excitable outbursts. His sense of humour is as dry as some of the subjects with which he has to grapple. When facing questions he makes neat, careful notes. The methodical Mr Monti sent to two US senators - who had accused him of anti-Americanism in his merger decisions - a precise rebuttal, including a case-by-case breakdown of all EU competition decisions involving US firms. His turn of phrase may be reminiscent of a 17th century academic but Mr Monti's political skills are finely honed. He is one of the few people to have survived the mass resignation of the last scandal-ridden Commission only to come back with an even better job.

That suggests he is not only extremely able but also hints at a certain teflon quality.