Some further reflections after “The Perfect Storm” conference. Competition enforcement as we know it is increasingly irrelevant. All very thin and modest, formulaic and narrow. Competition traditionalists, trolls and the faint-hearted – look away now.

The aftermath of the Draghi Report in competition circles remains limited to repetitive finger wagging from a small set of IO academics that “Draghi is wrong on telco mergers”[1],  homilies from Sir John Vickers on how pursuing “competition” should be the only goal for agencies (as everything else is extraneous and should be best left to politicians)[2],  and multiple postings from all corners of the competition Bubble (practitioners, academics, civil society) lamenting that the replacement of the Chairman of the UK CMA marks the end of “independence” for a once proud agency.

The common thread to much of the commentary is misdirection and lack of perspective. I continue to wonder how people are missing the mark so fully.  And how they did not see this coming a mile away.

The circumstances Europe finds itself in (as laid out in painful analytical detail in the Draghi Report) are dire. I won’t repeat the analysis here but he is essentially saying our whole economic model of the past two decades is unsustainable and we will not be able to preserve our economic and social contract if radical changes aren’t made.  He has a slim innocuous chapter on competition policy where he says competition is a good thing, usual apple pie stuff along the lines it drives innovation. And then has a couple of sections saying that much of European industry is lacking scale, using telco as one example where perhaps consolidation through mergers might be good.  The single-minded fixation of the purist side of the IO Bubble with tearing down this pronouncement is to me a sign of how narrow and misguided the whole discussion is.

The reality is we are in a truly dire predicament in terms of our entire economic model – export led, suppressing domestic demand to be more competitive on export markets and then smashing our faces against China’s hyper successful 10-year industrial plan (China 2025), while the US are unwilling to be our importer of last resort. As discussed copiously at the Perfect Storm event[3], this is so grave and serious that we should think of ourselves as almost on a war economy footing. 

Yet none of the “oh Draghi is so wrong” and “competition is our mission” responses from the competition community recognise at all the context Draghi is furiously pointing to: these are not “normal” times.  Our economic circumstances are unprecedented – Germany is having its “Detroit moment”, we are teetering on the brink of economic devastation of communities and sectors and yet, given these circumstances, the competition Bubble remaining focused on its conventional benchmarks (short term prices, consumer choice, level playing field blah). This is missing the point completely. No wonder the “other” economists – the macro and trade economists – look at us having these discussions and shake their heads – “details”.

What I am NOT saying

Let me be clear on what I am not saying (boring, said it before, but here again):

• I am not saying that competition enforcement should be actively wielded to pursue a variety of “other” goals – from environmental objectives to sustainability to reducing inequality and curing world hunger. This is nonsense and pushing back on these grounds is just tedious misrepresentation.

• I am not saying that competition enforcement can be wielded to engineer growth either. Of course competition enforcement alone is not going to kickstart growth in any sector of the economy. I have been saying for ages that regulation of digital platforms will not put points on GDP for Europe. But it also does not mean enforcers should just shrug and say “what can we do, there’s nothing in our legal toolbox that would really help, so we do what we always did”.  Not the point.

• I am not saying one should replace all analyses with “crude presumptions” – come on, I have been a competition economist all my life.

• I am not saying that merger control should be relaxed. Merger control is already so relaxed it is practically horizontal. In truth, and here I agree with Sir John Vickers, approving a merger in a concentrated market conditional on undertakings to increase investment may just be an investment subsidy from market power. This might be tolerable in selected exceptional circumstances, but not generally.  

But underlying the stock response of the “competition Bubble” is a very ideological stance

The stock argument is “we fought 20 years ago to strip competition enforcement from extraneous values and goals, now it is independent and pure, and we don’t want to pollute it again with politicization”.   Yes and no. It would be obviously undesirable for governments to override a reasonable analysis that a deal would have bad competition effects, based on some other considerations. But again, one should not be so absolutist and as long as the trade-offs were clear (again selectively and in strategic sectors) I don’t find that too disturbing.

What is certainly wrong, and denialist, is the position that somehow we have “arrived” to some “final state of truth”, a codification of the methods and goals of competition policy that is definitive and final, and we should stick to that always as a matter of absolute science and truth.  There is huge repetitiveness in the competition echo chamber: everywhere everyone repeats ad nauseam “our goal is to ensure consumer choice, protect effective competition and pursue a level playing field”.  This is a formula. Every one of these words is repeated ad infinitum in every speech, in every statement. “AMEN”? What does this mean? Is it invariant to states of the world? Said who?

My contention is these words are empty. First, they are empty because in practice competition enforcement has not achieved much along these lines, almost anywhere in Europe, for the last 20 years. It just did not deliver “much”. I can give countless examples from my own experience of fudges and compromises and bad analyses and covering up of tracks. The whole lot: the vast majority of mergers is approved with perfunctory remedies that don’t do very much, conduct cases pursue inapt theories of harm for years, then end in a fudge that does not move the dial, etc.  So to say “we focus on delivering this” without really being recognised by consumers and businesses as doing much that helps them, is a serious problem – a sign that not much is being done.

Second, they reflect a selective set of goals which is not god-given and unique. Yes, giving consumers choice and trying to create a level-playing field among competitors are jolly good things. But why should the objectives stop at that, instead of (say) include something like “pursue equitable growth, support small businesses, care for workers”? I tell you why. Because in the background, whether we say it explicitly or not, we have bought into the religion that the whole ultimate value underpinning competition enforcement ought to be “efficiency”. We economists have been so successful at pushing that line in the 2000s, it ended up sticking so hard.  Now it is received wisdom, it is the received truth.  But why should it be that way? Because we have economic models organized around that set of values?   This is ideology, not science. Does it mean we cannot question it?

How should competition policy update to reflect the Draghi mission?

My contention has been for some time that the reluctance of competition agencies to engage with the question of the economy’s performance (egged on by IO academics who want control of the field, and civil society who talk about “antimonopoly” when the problem here is a different one), repeating the mantra “we pursue consumer choice and level playing field”, would eventually attract the attention of politicians frustrated with their own lack of answers and keen to apportion blame somewhere.[4] And indeed we have seen Ursula von der Leyen bury competition policy under sustainability and green transition in formulating her Commissioners’ mandate. And we have seen the UK CMA replacing their Chairman with an Amazon former executive. This to me was entirely predictable (not the specific replacement, but that something was going to happen in that direction after the CMA pursued a progressive agenda which infuriated the City. And with a UK government under pressure and on its own, the City unsurprisingly prevailed. Read the room).

Traditional competition enforcement is becoming irrelevant – and frankly it has itself to blame. Broadly isolationist, siloed, conceited, and unaccountable. In the current economic predicament, there is a big question mark as to whether it has anything to say or contribute. My sense is in its current form it will just peter out into invisible routine, ignored by citizens and businesses. Good for corporates (continue to pursue their deals behind the scenes) but what a waste.

I keep hearing “ah but we have the legal tools we have”. But “the law” must inevitably capture some form of economic reality. It should express norms that reflect meaningful economic experience.  Competition policy is the tool of economic policy that deals with corporations with market power. That is a huge deal. It presides in principle on the reallocation of assets between these actors, and on the conduct of these actors. Economic policy tools cannot be paralysed in their evolution because they are codified into some “law”. That is like saying we cannot bring about developments in macro or monetary policies because we need to faithfully stick to the formulation of prior legal rules. Why is competition policy in a legal straightjacket (well yes, the profession is dominated by lawyers, and lawyers will not lead the revolution for sure).

I do think there are useful constructive ways in which competition thinking could contribute to the “Draghi mission”. Several suggestions:

• Integrating macro, trade, finance insights into the agency’s daily work. Create internal competences on this, rather than rely just on a group of IO economists agreeing with each other. The reality of competition enforcement is a bunch of lawyers talking to a bunch of IO economists without any idea of what’s happening in the world at large. Trade imbalances? Manufacturing output? Second China Shock? Tariffs? Digital trade? Competitive advantages? No one inside the agencies has the faintest idea about these broader realities that colour the markets they are supposed to evaluate. The history of sectors and markets and their evolution never gets to matter in a competition assessment focused on formulaic “market definition” and “competitive effects”. It’s painful.

• Relatedly, critically review the usefulness of “the tools” that are deployed in  cookie-cutting fashion in case after case: there’s a box of tired tools from vertical arithmetic to GUPPIs to bidding analyses and more that are broadly discredited as fake science and should not continue to be used. Pension them off.  This is not “science”. Do some serious R&D on tools.

• Actively contribute to the formulation of industrial policy and trade policy, and other tools of growth. This is a major point. Competition policy cannot be purposed alone to engineer growth. But it can and should be very actively involved in the formulation of other policies. This was the spirit of the “all-of-government” approach of the Biden administration, which gathered into a Competition Council all economic functions of the federal government: from transport to agriculture to trade to industrial policy.  Out of fashion now, but innovative.   Closer to home: if we are going to contemplate “buy European” procurement rules (as we should, certainly in digital but more broadly), what can competition agencies contribute concretely to the formulation of these rules, such that they ensure a level playing field in Europe while still protecting us against China? For instance, such that French public procurement does not become “buy French” – but is open to German and Dutch and Polish suppliers? Similar question for national subsidy schemes, e.g. on EVs and green energy – what is a productive way of thinking outside the state aid straightjacket?  There is existing work on procurement rules. Let’s update it and purpose it to this predicament.

• Think away from just “non discrimination”! And join the dots! Related to the above: the mantra of competition policy is traditionally “non discrimination” (and finding contorted explanations for when price discrimination is actually – guess what – “procompetitive”).  But this posture has turned out to lead to self-inflicted harm.  The “non discrimination” rationale, duly weaponised against Europe, is what allowed Big Tech to claim their seat at the table and eat the lunch of every European digital initiative in cloud and elsewhere (see the fate of GaiaX).  China’s policy of blocking foreign apps (total discrimination!) and regulating the internet is anathema to us, but it did lead to an explosion of innovation and diffusion of Chinese apps elsewhere in Asia.[5]

Another point: we need much more joined-up thinking in deciding which rules and regulations to keep and which to burn – as the business community calls for rolling back of all regulation and red tape, and politicians are of course drumming that drum under election pressure. As noted by Sander Tordoir  (https://x.com/SanderTordoir/status/1888349228147294299) rolling back the green transition to improve competitiveness (for instance) may well be dumb as we see evidence that in Germany “structural reforms to speed up permitting for renewables expansion are paying off”, and German solar and wind buildout is taking off.  Is this to do with competition policy? Some will sniff. Well, it’s joined-up economic policy which requires thinking about how to incentivise the right investment in a time of crisis. 

Or closer to home: the vexed issue of telco investment. The proposition that fewer MNOs in any given country tend to be associated with somewhat higher prices for consumers is not in dispute (please don’t tell me again, I have seen more dumb GUPPIs that I can throw a stick at). But as Europe has become a complete digital infrastructure colony, we cannot continue to look at European telcos now as we did in 2010.  Connectivity is a critical asset for Europe and a key part of the European digital infrastructure ecosystem. Telcos sit at the intersection of infrastructure, data and digital services, are in a battle for rents with the US hyperscalers and now in the midst of a major transformation. Who will appropriate these value chains in the next 5 years? How can we continue to talk about market definition in narrow national telco markets only, do markets shares and GUPPIs for voice services, and not acknowledge this bigger picture? Is this competition policy? Well it is the fundamental question of where rents will be created and whether they will be shared by Europeans. This is industrial policy for telecoms, and needs creative competition thinking.^[1]

So I am not saying that we should be relaxing or politicising enforcement or pursuing extraneous goals. I am interested in using competition principles to contribute to equitable growth, and being focused on equitable growth as a goal. Am not even talking about the pervasive power of digital giants and their role in our democracy.  I am making a more modest point about economic performance. 

To be fair, the five Heads of antitrust agencies at the Perfect Storm conference in Brussels a few days ago engaged constructively with the question, and it is a relief we no longer just hear the standard competition enforcers’ response to Draghi: “beware what you are wishing for, it’s competition or national champions, and national champions are very bad”. That is such a poor answer.  But there’s much more to do still, to move from the old safe waters to something real and useful.

The “independence” debate is much about protecting unaccountability

Finally: European antitrust agencies have been given the benefit of the doubt for a long time. Their work was not really visible to citizens and the “real world”, but involved rarified encounters with CEOs, General Counsels and expensive advisors. All behind closed doors, scrutinised only by the Bubble press which is also hugely specialised and read by a tiny number of Bubble members. Broader relevance, zero. Broader visibility, zero – only when touching large corporations like US Big Tech, then there is a frisson of moderate interest from the world at large. But generally no one has known or cared much for their activities. Yes, they had to produce some account of their existence, go face some MPs, but nothing too strenuous. Nothing approaching real, serious relentless accountability of a bureaucracy generally safe in the knowledge it cannot be touched or removed. 

We hear cries of pain that bringing competition enforcement face to face with Draghi’s ugly world risks removing its independence. We hear civil society lamenting the loss of  mythical agency “independence”; we hear even the antitrust bar defending this mythical “independence”.  Truly bizarre.  “Independence” proclamations are difficult to distinguish from an effort to protect a privileged patch where accountability to the public has been extremely rarified.  The political pressure on agencies comes today precisely because their “independence” has been difficult to tell apart in practice from “we know what we are doing, don’t question us, it’s called protecting competition”. And that, today, will no longer wash.

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[1] III. Facts and fiction in the Draghi report – Concurrences, T. Duso and M. Peitz.

[2] Vickers Milan Lecture, ACE Conference Keynote, Bocconi University 16 December 2024

[3] BruxConf 25 – Cristina Caffarra

[4]  C. Caffarra, Trump 2.0 Will Challenge the European “Competition Safe Spaces” – ProMarket Dec 17 2024

[5] Jie Zhou, Firewall for Innovation, February 2025, gfw_jmp.pdf

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Footnote: ^[1] Note I am not working for telcos, I am not lobbying for telcos, this is just an example in a bigger piece this makes a much broader point.