Recent contributions from Enrico Letta, Mario Draghi, and Emmanuel Macron are exposing deep concerns that the European project is floundering. Cristina Caffarra writes that Letta, Draghi and Macron are collectively making an urgent call to tackle the reality of a “divided bloc” that has lost ground, rethink industrial policy and public good investments, and reformulate traditional trade-offs. Explicitly acknowledging the end of the neoliberal vision that still occupies many European institutions (from antitrust to trade to industrial policy) will be important to make the trade-offs clear.  

Editor’s note: We would like to foster a debate here in ProMarket about the future of competition policy in Europe in advance of the upcoming EU parliamentary election in June. Readers are invited to contribute to this debate. Pitches may be sent to promarket@chicagobooth.edu.


In the weeks before the European Union’s June parliamentary election, Europe is convulsed with a series of pronouncements on “what it should do” to get itself out of the hole it is in—in terms of geopolitical threats and economic performance. Enrico Letta, the former Italian Prime Minister, just published his report for the European Commission on the Internal Market; former European Central Bank president (and also a former Italian Prime Minister) Mario Draghi has given us a preview of his forthcoming one on competitiveness; and French President Emmanuel Macron delivered an epic speech (“Sorbonne 2”) warning “Europe may die” if we don’t pull ourselves together with a much bolder and assertive vision for the next European Commission mandate for 2024 to 2029. 

While they each talk about major changes that have upended the world order, these reports and speeches do not explicitly acknowledge an intellectual and policy revolution that has been pervasive in the United States for at least the last four years: the end of neoliberalism, a view which broadly relied on the pre-eminence of markets, centring economic policies around ideas of efficiency, low cost and low price, claims of sound economic analysis, identifying citizens just as consumers, pursuing globalization of trade in the belief that capital would follow the path of efficiency—and if this meant offshoring production and impoverishing domestic workers, it would be compensated by the benefits of wealth “trickling down” from the top.  

This view has been comprehensively challenged, and with the end of the “Washington consensus”— ten neoliberal principles written by developed countries for developing countries in crisis— a whole paradigm shift has taken place across economic policy tools: away from efficiency as the north star (produce the most at lowest cost); away from people just as “consumers” to people as workers, farmers, small business owners; recognition that offshoring production relying on “trickle down” has failed and hollowed out local communities; and an emphasis on fairness, opportunity, ultimately individual freedom from the masters of commerce as the foundation for democracy. Original “antimonopoly” values, such as “freedom from all masters”, equality, liberty, democracy, have been re-upped, and since President Joe Biden’s 2021 Executive Order on competition, they have been pursued through reinvigorated antitrust and infused into other areas of policy: trade, industrial strategy, consumer finance, transport, agriculture, and more. 

The expansive national debate about “post-neoliberalism” in the U.S. has found expression in multiple books, essays, articles, debates and conferences (with the Stigler annual conference a major venue). It has gone way beyond a conceptual discussion: antitrust has been revamped and is extending to issues of fairness, non-discrimination, and recognition of workers’ rights. Meanwhile, industrial policy (a neoliberal bane) has become a major tool with antimonopoly underpinnings, and trade policy has been redefined to move beyond World Trade Organization rules (the embodiment of “free trade” ideology to benefit large corporations in the Global North) towards creating democratic opportunities for citizens including those in the Global South (“growing from the bottom up and the middle out,” a favourite expression of U.S. Trade Ambassador Katherine Tai).

This debate has not reached the European policy discussion. Amazingly,  the Pope said  in 2020 that “Neoliberalism simply reproduces itself by resorting to the magic theories of “spillover” or “trickle” – without using the name – as the only solution to societal problems. There is little appreciation of the fact that the alleged “spillover” does not resolve the inequality that gives rise to new forms of violence threatening the fabric of society.” 

But the debate has not been taking place in these terms in Europe. The recent, otherwise lucid, always frank (Letta/Draghi) and at times even apocalyptic and visionary (Macron) pronouncements on the European predicament do not call this out explicitly. One reason is that unlike the U.S., where there has been a surge of intellectual activity around the need for a paradigm shift (from historians, economic historians, legal scholars, activists and civil society, all writing and debating and speaking at events), in Europe most of the policy oxygen has been sucked up in the last four years by the ambitious design of “taming” large digital platforms through regulation (by approving a collection of bills which are just now entering the implementation phase), and a reactive effort to counter U.S. initiatives in the realm of “strategic autonomy” and “decarbonization” (Chips Act, IRA) with equivalent initiatives.  This has all been done in the name of “protecting Europe” from the dominance of (mostly U.S.) digital giants, hopefully boosting European enterprise and investment, and giving consumers some choice.

We have not had an extensive, bottom-to-top questioning of the status quo. Unlike the U.S., there’s been no fundamental rethinking of objectives, principles, goals, “animating values,” which in antitrust has meant a more active approach motivated by “fidelity to the law” and “fidelity to the Constitution.” Current heads of the U.S. antitrust agencies Lina Khan and Jonathan Kanter consistently emphasize their efforts have been to retrieve the original intent of Congress and re-establish the purpose of antitrust as “not serving the kings of commerce,” protecting individual liberties, and not just fighting big corporations and their power but even affirmatively supporting small businesses and workers and farmers. As Columbia professor Richard John recently noted, quoting Arthur Schlesinger’s The Politics of Upheaval, “[Brandeis] wanted government action not only to destroy bigness but affirmatively to protect smallness—even, if necessary, at expense of competition.” Not all agree. There is of course resistance from traditional neoliberals and economists, but this is the state of play and antimonopoly values are being threaded through other policy tools. 

In Europe we are aware of our ordoliberal past (which also puts value on individual freedom, though really is a German legacy); yet we have not had in the last few years a fundamental discussion of “what are we doing.”  The dominant culture at the EU Directorate for Competition is still a version of neoliberal values. Economists, staff, and agency leadership still implicitly operate in a neoliberal “orthodoxy,” and they are surrounded by “clients” (corporate actors and their advisors) who only speak that language. There’s limited interaction with citizens: none of the open meetings and itinerant listening sessions the U.S. agencies are holding. Progress has been about taming Big Tech and pursuing a word salad like “strategic open sovereignty” on top of our existing way of doing things.  But fundamentally, we are still in a European-flavoured version of the neoliberal consensus, shipped to us from the U.S. and embraced in the first decade of this century:when we adopted efficiency as the lodestar in antitrust; when we signed up to the ”more economic approach” which pulped everything into a version of “consumer welfare;” when we preached addressing market failures as the only (aspirational) criterion for permissible industrial policy (at least in theory); when we adopted WTO rules in the drive towards globalization; and when we kept everything siloed away. Meaning that data protection rules had nothing to do with market power and antitrust enforcement; trade was in its own world and nothing to do with competition; industrial policy was mainly state aid, resisting EU member states’ pursuit of bad national champions and distorting competition.      

Antitrust practitioners and agency staff have absorbed the religion that “protecting the competitive process” is the sole mission of antitrust. But the religion is abstract and shallow—there has been no deep interrogation of what it means and what it should contain as the political economy changes. The U.S. discourse on corporate power as the fundamental target, which manifests as inequality, multiple constraints on citizens’ liberties, seeing people as workers not just consumers, the infusion of antimonopoly values in all areas of economic policy—has not touched us as a debate, never mind in terms of policy design. 

Suggestions for this debate are shut down by “the Antitrust Bubble” with the counterargument that “we cannot achieve other goals with antitrust, we have other tools to tackle other objectives”—a position which is just a defense of the status quo. Legal academe has been transfixed by the endless possibilities of writing articles on the new shiny toy of “digital regulation” and has not moved from there, with no real interest for the parallel debates in the U.S. Economists are absorbed in their research and (again unlike the U.S.) historians have been shooed out of antitrust by a view that “we now have science, we are doing things the proper way, we have arrived at wisdom through sound economic analyses.” The entire field is captured by its own self-regard, with practitioners and agency staff speaking their own technical language and proud of their unique shibboleths. Corporate power thrives in this penumbra: if you are in the hands of a caste of brahmins and show up with your own brahmins to the meeting, then you will find an accommodation (in all but more extreme cases). 

This lack of true intellectual search makes it hard to conceive of new trade-offs as the world evolves, and even harder to decide how they should be resolved.  The Letta, Draghi and Macron diagnoses have much in common—the recognition that Europe is fragmented and this renders it “small and weak” in a geopolitical landscape straddled by superpowers. Worse, it is declining. Addressing the structural problems which keep us in this predicament requires framing and resolving serious— and shifting—trade-offs. All three note the “size deficit” of European firms relative to the U.S. equivalent (due to smaller markets, barriers, bureaucracy that prevent scaling up) and say we need firms to grow and acquire scale. We need a true industrial policy, and we need to design the means to finance the massive investments required. This is post-neoliberal in spirit, consistent with the revamp of industrial policy as a field of research and the rethink of its purpose—not just “addressing market failures in an efficiency-enhancing way” (the orthodox framing) but more in the spirit of what China does: “industrial policy [in China] is not justified primarily on the basis of market failure, but on developmental and strategic goals, including for sectors that lack incumbents (like EVs in 2006).” As Macron says in “Sorbonne 2”: 

…[W]e are out of step with a changing world. We regulate too much, we invest too little and we are too open… with the rules we have today in terms of competition policy, trade policy, monetary policy and fiscal policy we will not succeed … and we will lose production… I can see the 30-year gap between Europe and the U.S. … the reallocation of factors of production is happening now… It’s time to stop over-regulation, increase investment, change our rules. That’s the goal. That’s the new model.

 Amen. 

Of course this poses trade-offs: as well as simplifying bureaucracy and removing regulation to put an end to complicated Europe, removinging barriers to reduce fragmentation, and extending the single market to energy, telecommunications, financial services, Macron says “we also need to take responsibility for the evolution of our competition policy, to help European champions to emerge, and to provide substantial support for companies in our strategic sectors, with new common investments.” Accelerating industrial policy already makes the competition community nervous because it has been traditionally associated with creating bad national champions (notwithstanding clear commentary in the U.S. that resurgence of industrial strategy to improve resilience does not mean supporting national champions). But calling for the evolution of competition policy is horrifying to competition agencies. 

“If competition regulators want to play a proactive role, they need to come out and engage, recognize we are in a post-neoliberal world of emergencies for Europe in which “defending competition” is of course a key value but cannot mean just the same as it did 20 years ago.”

Draghi is softer on revising competition rules (at least in his speech), though he also talks about “enabling scale” and mentions the telecoms sector as one where “consolidation” may need to be contemplated. Letta is also less broad and more measured than Macron. He says, “the EU should not use competition policy to engineer a specific market outcome,” but also “scaling up EU companies within the Single Market is essential if we are to maintain and enhance our international role.”He again singles out telecoms as a key sector where pro-entrant regulation and merger control have not delivered:     

 European pro-competitive regulation has brought, over the years, greater benefits to end users in terms of (price of) access to services (compared for example to the U.S.), on the other side, many industry players complain excessive entry of operators into the market, fostered by a liberalisation and regulation approach that that may have generated strong incentives for ‘excessive entry’ by small-scale, territorially focused operators and, consequently, unsustainable market balances harbouring low incentives for innovative investment. Today, in a European market with more than 100 operators, keeping the focus only on proentrant regulation, would be detrimental for a technology switch towards advanced networks that require massive investments…. In the mobile markets, where access is not regulated, an antitrust approach focused on market entry when evaluating mergers led to the same result. 

This is red rag to a bull in competition circles, where in-country consolidation has been resisted on grounds it just raises prices and does not increase investments. Yet, Letta explicitly says, “the scale of investments necessary in new technologies…implies that due consideration should be given to the necessity of some level of consolidation within national markets or strategic alliances between market players including pro-competitive sharing of investments in key network elements.” 

Statements such as this raise immediate reactions from the antitrust community, which will always applaud aphorisms like “competitiveness is born out of free and fair competition, it is not engineered by distorting competition rules” (Vestager Competition Day Keynote, 26 April 2024).  Of course this is true. But are we content with these platitudes now?  Where is the intellectual search, the experimentation, the recognition that as the world changes, and multiple paradigms are shifting, we need to search for answers to different trade-offs?

Note also that while European antitrust regulators like to project they have been tough enforcers, the reality is “not quite.” Yes, the European Commission blocked the O2/Three mobile merger in the United Kingdom in 2016 and resisted Alstom/Siemens in 2019. But other than that, almost every merger got approved, if not outright with a menu of “remedies” which did not “restore competition”. Think about how in the last 20 years of “the more economic approach,” we have presided in Europe over the serial consolidation of the chemical industry; agrochemicals; pharma; telecoms (with a dozen mobile deals since 2013 mostly approved with ineffectual access remedies); airlines (multiple deals approved with slot divestments, and we are at it again with IAG/Air Europa and Lufthansa/ITA right now); and of course virtually everything in digital and content industries. Think of the multiple antitrust conduct cases which have lasted 10 years and not moved the dial on the ground – as a result of poor case selection, excessively elongated timelines and ineffectual remedies. This is the reality.  

My contention is that European institutions remain fundamentally neoliberal (with variance at national level, but especially the European Commission in Brussels), and have not been challenged by a vigorous external debate on goals and purpose. Our regulators are used to deference and softball questions, and while they use the word “democracy” in their addresses every now and then, it rings hollow. We have not experienced an “all of government” rethink of policy tools in an integrated and consistent direction. Everything remains siloed. The attitude is “no need for change in competition policy, we are doing the right thing and competition will deliver.”  Yet, goals (“enhancing efficiency”) and methods are neoliberal.

How does current competition enforcement measure up to societal needs?  How have we developed a pioneering privacy law and yet completely failed to integrate a vision of data protection violations as a manifestation of power abuses into competition enforcement (with the exception of the Facebook case in Germany)?  How do we pivot to more equality and fairness and support citizens to address their pain points?  How do we support industrial policy proactively (not just bring out the IPCEI (Important Projects of Common European Interest) example ad infinitum)? How do we participate in the discourse on reforming trade, recognizing our current rules (WTO) have been made by and for dominant Global North corporations, and need revising in a way that includes the Global South? Where is the engagement of antitrust in these questions? The U.S. has moved towards absorbing an antimonopoly vision in trade, but Macron and Draghi say they are “no longer playing by the established WTO rules.”  Where is the discussion about WTO rules being problematic in the post-neoliberal world? 

What is valuable in Letta/Draghi/Macron is the wake-up call to the need for radical change.  Suggestions are detailed, from powering up common defence capabilities, extending the Single Market to sectors that had been left out because they are “too strategic” (energy, financial services, electronic communications), pursuing capital markets union, massive funding to research and innovation, promoting industrial policy, reducing excess regulation, and much more. Antitrust is not center-stage, but it is the tool that presides over the reallocation of assets between firms, and the policing of firms’ conduct—as such it can be very powerful to control how power is exercised, growth and innovation. Of course, firms would like to consolidate with competitors, efficiencies are elusive, and investment is not boosted by less competition. But we are in exceptionally dire circumstances: our experience is not of markets dominated coast-to-coast by a small number of “monopolies” as in the U.S. (meatpackers, chicken processors, grocery chains, car rentals, confectionery and a lot more): European firms are comparatively small and have no hope of scaling.

Faced with shifting tectonic plates which triggered a major pendulum swing, trade-offs need to be revisited. If competition regulators want to play a proactive role, they need to come out and engage, recognize we are in a post-neoliberal world of emergencies for Europe in which “defending competition” is of course a key value but cannot mean just the same as it did 20 years ago. 

Author’s disclosure: I have received no compensation for writing this piece, and I have not been / am not working on related issues for any client.

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