Analysis-Europe in no rush to loosen antitrust stance By Reuters

By Mark John and Foo Yun Chee

(Reuters) – Mario Draghi’s call last week for a renewal of tough rules on European pro-competition policy prompted much speculation that the next EU antitrust chief could take a lighter approach to mergers that could bring in industrial “champions” Europeans.

While this may ultimately depend on the political mood in Brussels and Europe’s national capitals as the bloc’s economy lags behind its global rivals, there is little at the moment to suggest a more permissive shift, sources and analysts said.

In any case, the EU consensus remains intact that policies that support competition, keep prices low and ensure a level playing field in the EU’s 27 national markets are one of the few bright spots in the region’s struggling economy.

“If you weaken EU competition rules to build giant companies, create European champions, you will get French, German and Italian companies. Smaller countries will ask, ‘What’s in it for us?'” said a senior eurozone official.

Certain deals – for example one that helped a green technology player against Chinese competition – could be politically viable, the official said, but added: “If it were to be widespread, then it’s a no-go.”

Margrethe Vestager, the EU’s top antitrust chief, who just last week won two major victories against Big Tech on tax fairness and anti-competitive practices, will soon hand over to her successor in a new European Commission lineup.

Who that is will depend on tense negotiations between EU Commission chief Ursula von der Leyen and member states to create a team that reflects the region’s geographic and political balance, as well as gender and other criteria.

But any new arrival will be met by a Competition Directorate-General of nearly 900 bosses, which, longtime antitrust watchers say, is institutionally imbued with a belief in the economic benefits of strong competition policy.

“And a new competition commissioner always depends on their services,” said Umberto Gambini, a partner at business consultancy Forward Global and a former member of the European Parliament specializing in antitrust and state aid issues.

THE GREAT BURDEN OF PROOF

It is far from clear in any case that what Draghi proposed last week would be a radical departure from the current line.

In his much-anticipated 400-page report, the former European Central Bank said “there is a question” whether a vigorous competition policy has prevented European companies from reaching the scale needed to compete with Chinese or American giants.

In particular, he proposed that future antitrust rulings take more into account factors such as whether a merger might give the new entity more investment power to innovate.

But asked if that meant any Commission acting on his proposals today could stamp out the Alstom-Siemens engineering megamerger it blocked in 2019, he said only that “some of the reasons for blocking this merger would not exist”.

“Let me be very clear: we are starting from a common condition… Competition is good. It is good for investment, good for productivity and good for income distribution,” he said.

Indeed, the Draghi report put the onus on the merging parties to justify why any “defences against innovation” should overcome other concerns about their link – with the bar particularly high for companies that are already dominant players in the market .

This reassured supporters of the strong pro-competition policy promoted by Europe and which the Biden administration tried to embrace with Lina Kahn as chair of the US Federal Trade Commission.

“A lot of people in Europe were telling me that (Draghi’s) report was going to say we need less competition enforcement… That’s not what he said,” said Fiona Scott Morton, senior collector of the EU economic think tank Bruegel .

Instead, she outlined her proposals for new tools to boost antitrust enforcement; to force firms to make their networks and products interoperable with others; and how to judge risks, such as future product shortages, in any merger decision.

“There are some nice new ideas as well as doubling down to make sure we have productivity in the economy and not a bunch of lazy monopolists who charge high prices and don’t deliver,” she said.