European Champions of the 21st century – Free market or “Europe first” policies?

For decades, the European Union’s competition policy seemed untouchable. Over the past 5 years, the EU’s competition czar and liberal Dane, Margrethe Vestager, reigned supreme. She led the enforcement of the EU’s open-market, level-playing field and broad fair competition rules across a broad range of sectors of the Internal Market.

Yet, confronted with the growing challenge of ‘homeless’ global digital companies and shifting economic power to the United States, China and India, the bloc’s longstanding attitude to competition policy is increasingly coming under fire – from within and beyond its EU27 borders.

Faced with growing global competition, in particular in the digital and manufacturing industries, the European Commission lamented the lack of so-called ‘European Champions’ able to challenge the pre-eminence of its global challenges. Traditionally, wary of green-lighting cross-border mergers such as the 2019 failed Siemens-Alstom rail merger that would create pan-European industrial giants, the Commission long favoured EU industrial strategies and providing European companies with a regulatory ecosystem that could encourage their global growth.

To the disappointment of many, this approach has largely failed to create a substantial number of European companies able to compete globally – yet alone lead the market.

Now, faced by fierce competition from other large economies with proactive industrial strategies, member states are losing patience with the competition commissioner’s attitude and the EU’s outdated competition policy.

Calling for a substantial “evolution and modernisation of the current European Commission’s guidelines on the assessment of horizontal mergers and on the definition of the relevant market in order to ensure fair and undistorted competition,” Germany, France, Italy and Poland called on Executive Vice-President Vestager to act swiftly in reforming the EU’s competition rules in an early February letter. In particular, the four industrial heavy weights are calling for extensive reforms to the cross-border merger regime, state aid rules as well as new competition rules to reign in foreign digital actors to ensure a level-playing-field in the digital economy.

President von der Leyen’s new ‘geopolitical’ Commission certainly seeks to exert a stronger global power by protecting and promoting the strategic interests of European businesses abroad. And while both President von der Leyen and Vice-President Vestager have shown themselves open to tweaking the EU’s approach to competition policy, both, the extent and time frame remain open.

Those questions may be answered in the coming weeks, when the Commission is set unveil a new “Strategy for Europe – Fit for the Digital Age”, a new comprehensive “European Industrial Strategy” and set out an Action Plan on Single Market Enforcement.