Competition policy in the European Union is moving toward a new phase. Max von Thun parses ideas from two recent documents outlining the future of competition in the EU—a report from former Italian Prime Minister Mario Draghi and a “Mission Letter” from European Commission President Ursula von der Leyen—to understand what questions competition chief Margrethe Vestager’s appointed replacement, Teresa Ribera, must address as she lays out her own vision for the future of competition policy in the EU.
Competition policy in the European Union is at a crossroads. After a decade, the Commissioner in charge of the EU’s Directorate-General for Competition (DG COMP), Margrethe Vestager, is riding off into the sunset. Her chosen replacement—Spain’s Deputy Prime Minister and environmental minister Teresa Ribera—is expected to take office before the end of the year, subject to approval by the European Parliament. What should we expect from Ribera, and what will be sitting in her inbox when she takes office?
Little is known about how Ribera views her new competition responsibilities, given her career to date has focused on environmental policy, which will continue to form part of her exceptionally broad EU portfolio, Ribera’s imminent hearing in the European Parliament will give her an important opportunity to lay out her broader perspective and immediate priorities for the role. But she will need time to develop a sophisticated vision and detailed proposals for change.
In the meantime, two important documents published in recent months offer the best guide as to what the new European Commission—and DG COMP specifically—could achieve in competition policy under Ribera over the next five years. The first is the report by former Italian Prime Minister Mario Draghi on Europe’s competitiveness, published in September. The second is the “Mission Letter” issued by Commission President Ursula von der Leyen to Ribera, also in September, setting out the latter’s priorities for the coming term.
Two steps forward, one step back?
There is a great deal of alignment between the Draghi report and von der Leyen’s Mission Letter. This is unsurprising given that von der Leyen commissioned Draghi to write his report with the aim of informing the next Commission’s policy agenda.
At a high level, Draghi and von der Leyen agree on the need for a “new approach” to EU competition policy which promotes Europe’s global competitiveness, although they are vague and at times contradictory on what this means in practice. Encouragingly, both recognize that enforcement must move beyond consumer welfare and short-term price effects—with a particular emphasis on innovation and resilience—and call for competition to be more aligned with other EU policy areas. Both Draghi and von der Leyen see merger control as a priority for applying this new approach, with a focus on European companies competing in global markets.
Yet there are also many areas where the Draghi report and Mission Letter diverge. While the brevity of the Mission Letter is one reason for this, another is that von der Leyen appears to have rejected or at least neglected some of the proposals put forward by Draghi. This includes some of his best suggestions, from introducing a new market investigation tool at the European level and tying public subsidies to open access and interoperability requirements, to using competition policy to address practices that unfairly limit labor mobility such as no-poach agreements.
On the other hand, the Mission Letter also leaves out some of Draghi’s most problematic ideas, including his call for a new “innovation defence” that companies could use to lobby in favour of mergers, and his misguided emphasis on the supposed need for consolidation in telecoms and defence. The Mission Letter also sets out ideas not mentioned in Draghi’s report, including tightening the merger control regime to address “killer acquisitions” and accelerating approval of state aid and mergers in undefined “strategic fields.”
In general, there are many encouraging ideas in this flurry of proposals. Most importantly, Draghi and von der Leyen are right in seeking to disrupt DG COMP’s blinkered approach to competition policy and enforcement, where consumer welfare remains king and meaningful collaboration with other parts of the Commission rarely happens. In practice this has prevented the EU from grasping and tackling the many overlapping threats—to resilience, innovation and democracy—posed by the significant rise in corporate concentration in Europe over several decades.
As Draghi notes, “strengthening competition goes well beyond traditional competition policy” while von der Leyen’s Mission Letter urges Ribera to “work closely with other Commissioners…to tackle anti-competitive practices.” This bodes well for a more joined-up approach to competition under the new Commission, bringing together antitrust, industrial policy, trade, and digital regulation in a holistic manner. The combination of environmental and competition policy in Ribera’s brief also offers an opportunity to develop novel thinking on how robust competition enforcement can further climate objectives.
But there are also reasons to be worried. While both Draghi and von der Leyen acknowledge the benefits of robust competition for European businesses and consumers, they fixate on corporate scale as the silver bullet for Europe’s global competitiveness without seriously considering the risks. For example, Draghi questions “whether vigorous competition policy conflicts with European companies’ need for sufficient scale to compete with Chinese and American superstar companies” while von der Leyen calls for policy “supportive of companies scaling up in global markets.”
It is doubtful whether European champions—built through mergers rather than organic growth in competitive markets—are the answer to Europe’s economic challenges. It’s also far from clear that the potential harms from this scale—higher prices, lower wages, weaker resilience—are worth the purported benefits from such champions. A case in point is the telecoms sector, where Draghi argues that consolidation is urgently needed to strengthen the industry’s competitiveness while glossing over the reams of evidence linking concentration in telecoms markets to higher prices and reduced investment.
Setting out a vision
In her hearing before the European Parliament on Tuesday, November 12, Ribera has the chance to resolve many of these tensions by setting out an independent vision that draws on Draghi and von der Leyen’s prescriptions without being subservient to them.
Ribera should seek to answer the following key questions:
What is the overarching purpose of EU competition policy? While Draghi and von der Leyen have indicated the need to move beyond price to account for impacts on resilience and innovation, there are many other non-consumer harms associated with excessive market concentration—such as lower wages and weaker media plurality—that competition policy could help address. Ribera should name the problems that she wants competition policy to solve.
What are DG COMP’s priorities? Like all regulators, competition authorities have limited resources and must prioritize. Without clear priorities, enforcement will be spread thin and fail to meaningfully contribute to the EU’s broader policy objectives. Ribera should identify several immediate priorities, be it preventing Big Tech from controlling Europe’s artificial intelligence market or tackling rising concentration in Europe’s agricultural sector.
How can Europe compete on the global stage without sacrificing competition at home? There is an unresolved tension—evident in both the Draghi report and the Mission Letter—between the need to promote robust competition at home and the desire to ensure Europe remains globally competitive. Ribera should explain how she will promote competitiveness without sacrificing competition and fuelling monopolisation.
How can the competition policy “silo” be broken? Draghi and von der Leyen have called for competition policy to work in tandem with other parts of the Commission. Ribera should explain how she will put this “cross-government” approach into effect—for example by establishing a new task force bringing together officials from different directorate-generals—and identify the most urgent areas for collaboration.
How can the EU’s existing competition powers be used more effectively? Von der Leyen’s Mission Letter asks Ribera to “strengthen and speed up enforcement of competition rules.” Ribera should use her hearing to set out areas where existing rules could be enforced more effectively, for example by increasing the resources dedicated to enforcement, making greater use of structural measures to address competition concerns, or more frequently applying interim measures to address urgent harms.
How should the EU’s competition powers be expanded or strengthened? While a more effective use of existing tools will go a long way, in some cases new or strengthened powers will also be necessary. Ribera should set out her initial thinking on potential upgrades, including a new market investigation tool, reform of the EU Merger Regulation, and a potential expansion of the Digital Markets Act.
Some might interpret Ribera’s portfolio brief as a “demotion” of competition in the Commission’s priorities. That would be wrongheaded. Competition policy is one of the most powerful tools the EU has at its disposal to achieve its policy objectives, including not just promoting competitiveness but, more importantly, ensuring Europe’s economy serves the interests of its citizens.
Author Disclosure: The author works for the Open Markets Institute, which receives funding from foundations such as the Lumpkin Family Foundation, William and Flora Hewlett Foundation, Wallace Global Fund, Omidyar Network, Open Society Foundations, and Schöpflin Stiftung.
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