Europe is acutely aware it has fallen behind competitively, but it is struggling to find a way to recover lost ground. Cristina Caffarra writes that Europe did not find any inspiration in the American anti-monopoly movement, which underpinned the whole-of-government approach of the Biden administration. It is also faltering in developing a response to the vigorous array of tools deployed by the Trump administration to assert power at home and on the world stage. It does not need to be this way, as Europe has tremendous assets and capabilities. But it needs investment and leadership, boldness and experimentation in vision and policy design. Policymakers are beginning to see the urgency, but there is still too much narrow defensive posturing by regulators sticking to their patch.
This article is part of a symposium exploring the role of big business in a globalized economy. In an era of intensifying global competition, can states pursue policies and regulations to disperse market power and prevent consolidation at home without forfeiting international competitiveness? How can the U.S. government regulate Big Tech and other big businesses at home without hamstringing their ability to compete on the global stage? How can the EU build its own Big Tech giants without undermining its pioneering digital protections for users and society and permitting the harms that can come from market concentration? You can read the contributions from Xavier Vives, Eleanor Fox and Harry First (writing together), Cristina Caffarra, Laura Phillips Sawyer, and Beatriz Kira as they are published here.
At my competition conference nearly two years ago, we imagined the possibility of a “New World Order” : a progressive “post-neoliberal” vision radiating outwards from the United States, where “anti-monopoly” had been rediscovered as a golden tool with profound historical roots, and which would spread out to be adopted around the world. The strong anti–monopoly revival of the Brandeisian movement regarded concentrated corporate power as the source of many societal harms which therefore needed to be dispersed. That aspiration became the lens through which the Biden administration looked at all areas of U.S. economic policy (from trade and industrial policy to finance, transport, and agriculture), as part of a progressive agenda centered around “citizens” (e.g. workers, small businesses, farmers) instead of just “consumers.”
In that view, anti-monopoly had a major proactive role in preventing the further concentration of markets (and where possible, de-centralizing them) through antitrust enforcement and rulemaking. In line with this ethos, the revival of industrial policy would avoid creating national champions; trade policies would not carry water for monopolists abroad; and finance, banking, agriculture and transportation policies would likewise address the problems of concentration.
Notwithstanding multiple recent attempts to interpret the anti-monopoly, or Neo-Brandeisian, movement as inimical to big business, the ultimate target of the movement was not “bigness per se.” Rather, it was containing the extraction of rents resulting from market power or privilege, and addressing the indignities that outsized economic power inflicts upon dependents. That requires a systematic, sustained effort to prevent further concentration and exploitation of monopoly power.
Europe never cared for this broader vision (the United Kingdom’s competition authority perhaps indulged it for a brief period) and remained steadfast in its pursuit of “traditional” antitrust (though with some “ordoliberal” sensitivities thrown in). Perhaps because we don’t have the same “wall-to-wall” monopoly problem the U.S. has in multiple sectors, European antitrust regulators never felt comfortable uttering the word “democracy” among their goals. The previous European Competition Commissioner, Margrethe Vestager, only did so at the very end of her mandate in 2024. The current commissioner, Teresa Ribera, occasionally sprinkles it in her speeches though it feels more like a personal note than a vision shared by “the House.” This is not to imply that the future of Europe ever depended on antitrust enforcement – but it is symptomatic of the lack of a coherent political economy vision linking areas of policymaking in Europe, with the result that our historic burdens (fragmentation, lack of a single market) just persist and drag us backwards.
Enter the new geoeconomics of hard power
The world has now brusquely entered a new geoeconomics era: a profoundly transformed military and economic order where the U.S. no longer wants to bear the burden of being the world’s enforcer. Europe’s economic model is faltering while being brutally squashed between a U.S. administration which sees us as a contemptible mess and total free loaders and an unstoppable China which is fighting a trade war with the U.S, and regurgitating its unabsorbed, prodigious excess production through exports to other markets (including Europe).
Europe is at this point confronting major economic trouble. Former European Central Bank President Mario Draghi continues to issue exasperated warnings that we are woefully behind in strategic sectors—from defence to tech—and not doing enough to move us forward. Russia’s aggression is resurgent and, with China’s support, throwing darts into Europe. NATO is itself acknowledging that it has struggled to respond. All the while, European top trade officials candidly admit that “everything needed to be done” during tariff negotiations last July to preserve U.S. President Donald Trump’s support for Ukraine. Thus Europe experienced its “summer of humiliation,” in which we dropped all tariffs on U.S. exports and promised billions of dollars in investments in the U.S. economy and billions of dollars in the purchase of U.S energy, as well as capitulated de facto on digital regulation, in exchange for somewhat lower tariffs on our on goods: all in the hopes the U.S. would not walk away.
Europe’s existential problems are so pressing that nothing short of a major industrial policy and capital allocation revolution across multiple strategic sectors will get us through. We are a rich continent with great talents faced with an enormous task and huge questions on everything from political leadership, vision, funding, industrial capacity, ability to design a roadmap and, above all, to execute it and reverse the shallowing of our capital and industrial base.
Competition policy and regulation also need to rethink the mission from the ground up. As the newly minted Nobel Prize in Economics Philippe Aghion said with earlier recipient Jean Tirole, “Absent any change in its economic doctrine—under which regulation largely prevails over investment — Europe runs the risk of suffering an irremediable decline” [emphasis mine]. Voila.But instead of muscling in to support and lead the effort, European antitrust is holding to its narrow patch, looking the other way not to upset the U.S. administration with digital enforcement, and spending months toying with “bargaining models” to probe silly mergers which are then unconditionally cleared (e.g. the Mars / Kellanova deal in the snack and candy industry).
The US administration is wielding a “big bag” of power tools
As expected, the Trump administration has thrown out anti-monopoly and shown incredible aptitude to aggressively wield an extraordinary array of tools to assert hard power. The federal antitrust agencies have narrowed the mission: cases against Google continue, but the HPE/Juniper saga may well have put a damper on merger challenges. There has been a major return to merger settlements with remedies and an expressed appetite to settle long-running digital cases, roll back flagship initiatives like bans on non-competes, and fight culture wars by pushing back on diversity, equity, and inclusion (DEI) policies. There are stated intentions to focus more on algorithmic rent fixing and healthcare, pharmaceutical and food prices, all consistent with the administration’s “populist” agenda and putting ordinary Americans “first.” At the same time, a much broader set of power tools are being proactively wielded to assimilate, subjugate, and weaponize—rather than fight—corporate power.
While the Trump administration has narrowed the focus of antitrust regulation in some ways, it has expanded it immensely in others to assert America’s primacy in the world and his own power at home. Take most obviously trade: under Biden, trade policy had evolved towards a post-neoliberal goal of “benefiting the middle class and the Global South” (this was U.S. Trade Representative Katherine Tai’s expressed aspiration). The Trump administration pursues a very different path in which the purpose and role of tariffs are as tools to restructure the global trading system, reduce the U.S. trade deficit, reshore manufacturing, create American jobs, and get allies and foes to comply by threatening real economic pain.
Take traditional media: clear warnings have been delivered to Wall Street, traditional cable networks, and Hollywood studios that “you exist at our own pleasure, we can allow you to go forth with plans that will make you unspeakably rich, but we can also turn you off indefinitely.” See, for example, the Paramount/Skydance deal that the Trump administration cleared based on behavioral concessions on speech rules, Disney-owned ABC briefly removing from its schedule late-night show host Jimmy Kimmel in response to warning from the chair of the Federal Communications Commission, or the potential merger between Warner Bros Discovery and Paramount which shapes up to call for a political settlement. Take the ongoing battle to end the independence of the Federal Reserve. And of course the multiple executive orders to push U.S. technology and standards on the world – most especially in artificial intelligence.
Meanwhile, national champions no longer seem such a plague to be avoided: the administration is taking a stake in Intel, a “golden share” in Nippon Steel, and cooking the upcoming TikTok deal. And of course, there is the transactional relationship with tech giants and oligarchs: defending them abroad from “abusive” regulations, while keeping them on a leash at home in exchange for being allowed to print money. “We are supportive but can still come after you” seems to be the message.
Multiple tools are being wielded all at once to assert hard power in an increasingly fractious geoeconomic landscape. Anti-monopoly, the North Star under the Biden administration, has entirely receded. In early October, former Assistant Attorney General Jonathan Kanter said, “the path is jagged” and he hoped anti-monopoly will come back, because a world in which power is concentrated is worse than one where we are doing something about it. In principle, yes. Though what we now know is also that antitrust cases are always rather “small ball”: they progress piecemeal and very slowly, so progress requires a systematic, persistent effort to move things along. This is all is in suspended animation for now.
Is Europe updating?
How is Europe shaping up in this new harder geoeconomic environment? The Draghi warnings and the ensuing “competitiveness angst” are combining with faltering economic performance (Germany’s cars, which are a major economic engine for Europe), political chaos (France), and general fear of the multiple ways in which the U.S. administration can hurt us to create more paralysis than deliberate action, more intentions than execution from our institutions.
Europe has incredible talent, assets and capabilities, and European industry is resilient with a broad base and multiple sectors of excellence (ASML is an indispensable supplier to the world’s chip industry, Project Beethoven, investment in Mistral, green tech)—although we remain a digital colony at every level of the stack. Our public strategies for emancipation and resilience in AI are somewhat perplexing (AI GigaFactories, Apply AI), but there is a broad sentiment in industry that we need to rise and meet the challenge. There is grassroot impatience and frustration with politicians and institutions, but we are still on “this side” of the “hair on fire” moment, so no one is yet climbing barricades.
2025 Nobel Prize winner Philippe Aghion is explicit (together with Jean Tirole and Mathias Dewatripont) that Europe will suffer a “death spiral” unless it changes its “economic doctrine” whereby “regulation prevails over investment” (among other things). He has been vocal in pushing an “ARPA-style” approach to investment in innovation, with deep collaboration between government, industry and research, in contrast with the current mindset where (as Draghi put it) we have “blind faith” that if we somehow regulate tech giants, “uncoordinated national efforts” and “market forces” will “build new sectors.”
Alas I see very limited evidence of intellectual effort and true engagement in this direction on the part of the European antitrust and regulatory bubble. Just as it kept to its narrow traditional garden and never subscribed to a more expansive “anti-monopoly” view, European antitrust is not doing major policy research and development. We had our “pioneering” efforts with antitrust cases against digital platforms in the 2010s—they were important, but already too late and too timid to deliver anything. And yes, we found the political consensus to adopt digital regulation (the Digital Markets Act, Digital Services Act), but we know it is not going to deliver enough change.
The key point is—again, as Aghion says—we maxed out regulation as our North Star. Not remotely enough. Competition thinkingshould be leading the way in designing proactive industrial policies. It should not stick to its narrow lane. The future of Europe—given our predicament—does not depend at all on the outcome of the Google ad tech case. Yes, there is the view among civil society, think tanks, and the left that the power of the platforms is an existential threat to democracy. I agree concentrated power is problematic, but Europe’s more pressing, existential problems are elsewhere today. We have devoted too much energy to this “lane,” failing to “build” instead. A greater focus on “building” would have delivered more autonomy and resilience and placed us in a better position to grow in critical sectors. We are scrambling to stay afloat.
Consolidation and the perennial “conversation of the deaf”
For all the agreement that we desperately need to grow, we are also having a true “conversation of the deaf” in Europe on how our undersized companies and startups can grow and compete globally. This has gone on forever but is getting increasingly frustrating. Everyone by now knows our true issue is the lack of a single internal market where companies can seamlessly roll across 27 states and sell to 450 million citizens, the lack of a capital union, and the lack of risk capital.
Yet periodically we have the “charge of the CEOs” writing open letters to their prime ministers (most recently the latest Evian letter of October 10) asking for merger control rules to be relaxed to allow European industry to pursue consolidation to gain “scale.” And this draws the inevitable dissenting response from the heads of antitrust agencies reacting indignantly: “no it’s not us, if you are not big enough it’s not because we prohibit mergers, we will not relax the competition rules for you big boys, all you want is market power.” This dance goes on in 2025 as it did in 2017 at the time of the blocked Alstom/Siemens rail industry consolidation. We go around in circles.
The frustration of companies is in part misdirected. They blame merger control when it is really the lack of internal market, of “buy European” incentives, of a capital union and risk capital that pre-empts them from exploiting our biggest asset: European demand. But it is also more complicated than this, and it involves rightful frustration at lack of reforms, at the proliferation of regulations, at the lack of business nous and, yes, also at antitrust rules perceived to be weird and arcane, stubbornly refusing to acknowledge markets are dynamic and the trade world is big and scary. “The markets are not global!” say our regulators. “What are you smoking,” say businesses, “we need scale and you don’t let us get it.” On it goes.
Mario Draghi (again) said last September in his plea to the European Parliament that competition policy must recognize that in key strategic sectors (e.g. “defence and space—and the dual-use technologies that underpin them,” i.e. tech and digital) “consolidation is not necessarily a threat” to consumers. Furthermore, “competitors in the US and Asia benefit […] also from consolidation in these sectors.” To this end, “industry cannot wait until 2027” for a review of the Merger Guidelines […]. Rather, Draghi says, “[r]esilience and innovation must be built into competition policy now.” Amen.
Antitrust regulators tend to react to these invitations with eyerolls. What do all these people know about antitrust? About market definition? About theories of harm? It’s all complicated. And they push back: steady on, no rushing, we will take our time. And what will the update do anyway? Add a section on dynamic competition summarizing the theoretical industrial organization literature by 2027? Unless posture fundamentally changes, European antitrust will remain narrow and churchy, and recede into insignificance of its own making. It is regarded by industry as dogmatic and insensitive to their perceived predicament. It never adopted the heroic post-neoliberal populist anti-monopoly stance of the U.S. progressives, and it has not proactively stretched to new thinking: data protection: no; industrial policy: not really; labor: no; trade: no. We will have more industrial organization theory models instead. Competition is still seen as a value per se. What can you contribute to create growth and favor asset formation and investment? “Competition.” Will regulation of digital platforms create us a digital industry? “Not our problem, not something we can be responsible for. If we address barriers to entry, then the market will do its thing. No need to get involved proactively in industrial policy either, other than we hate national champions, so none of that.”
Growth needs serious policy design and execution across critical strategic sectors, and while that is not directly the job of competition policy, there is an intellectual job to do to lead policy design there. We need to implement “Buy European” mandates for public procurement without the competition agencies standing in the way with some “discrimination” nonsense. We need to design major private/public investment programs for chips, defence, connectivity, and indeed the entire digital tech stack (see the EuroStack initiative). Again, this is not directly the job of competition agencies, but it is the priority for Europe. It’s part of the same phenomenon: from a “broad arc of history” perspective, it is a pity that European antitrust remained so reluctant to participate in a broader vision for its mission during the days of the U.S. “progressives.” True to form, it is similarly reluctant today to roll up sleeves and lead on an existential mission for Europe. More important than ever in the new geoeconomics.
The prophecy might just be fulfilled that relative to the big issues of our times, European antitrust is indeed just “a side dish” of its own making. Sticking to traditional tools because “that’s what we do” is not a strength, it is a weakness in a transformed world. Competition policy requires deep rethink—not stubborness— to be useful in policy design. Yet the rest of European policymakers should not hold their breath waiting for a proactive contribution. Let’s hope that industry and capital can move ahead and heed the call of Aghion on receiving news from the Nobel Committee: “European countries need to realise that we must no longer allow the United States and China to become the technological leaders and lose out to them.” It’s a massive challenge. As economic historian Adam Tooze writes in his blog: “Over any reasonable time horizon, Europe’s weight in the world economy will likely continue to decline.” I find it hard to concede. Europe has tremendous capabilities and assets but needs to muscle up and welcome size and investment, not pious attachment to “competition as a goal.” It’s on us.
Author Disclosure: Cristina Caffarra was for 15 years the Head of the European Competition Practice of CRA, an economic consultancy assisting clients and lawyers in cases before the agencies and the courts. In that role, between 2006 and 2022, she advised on multiple mergers, conduct cases and litigated matters for parties including Apple, Amazon, Microsoft, Newscorp, Uber, and many more. She also advised agencies and regulators on several matters, including adverse to Google and Meta. She has not been actively consulting for clients or agencies since 2023 and is not being paid by any parties for advice on the issues discussed in this column. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
Subscribe here for ProMarket’s weekly newsletter, Special Interest, to stay up to date on ProMarket’s coverage of the political economy and other content from the Stigler Center.
