Despite fundamental changes in the real economy, and strides in the regulation of privacy, data, and digital markets, antitrust practice and discourse in Europe are still conducted in “safe spaces” where the antitrust community resists change and remains attached to neoliberal approaches and efficiency goals. But the Trump Administration will not just signify a wholesale return to pre-NeoBrandeisian times (as many in Europe hope): indeed Europeans hiding in their “safe spaces” may well be surprised, writes Cristina Caffarra.
President-elect Donald Trump’s re-election has upendedthe world. Everything has fundamentally changed. Europeans already sobered by Mario Draghi’s report on the European Union’s competitiveness, a catalogue of all our failures, have been stunned by an election result they dreaded but had not remotely prepared for. Combined with chaos at home (war still raging on the Eastern front, political upheaval in France, “carmageddon” in Germany, annulled elections in Romania, and the rise of far-right parties in multiple countries as well as the European Parliament), no one knows how this will pan out. What we do know is that there is paralysis in Brussels as multiple policy initiatives and decisions about DMA non-compliance, Google ad-tech, and other significant enforcement cases remain stalled in the wings, in suspended animation, until the new American administration takes over in January and shows its true colors and we find out what threats and retribution might be coming our way.
Throughout the turmoil of the last few years, the European “antitrust bubble” has remained a relative oasis of calm and denial about the changing world around it. The system relies on a network of “safe spaces” where time is suspended and values and principles adopted a quarter of a century ago are adhered to without question; where all sides (lawyers, economists, agencies) collude to reassure each other they are on the rightful path; and where resistance to change is a matter of quasi-religious observance. For “safe space dwellers” (otherwise known as “the antitrust bubble”), Trump’s re-election might have encouraged the sentiment that things will finally go back to normal, that they won’t have to tolerate the voices of the rising movement of antitrust progressives/populists. Except we are not going to go back to 2007. Not at all.
Make no mistake: European politicians are restless and stepping in
Growing awareness in the political class that Europe is teetering on the brink (well-documented widening productivity gap with United States and China, low investment, declining economic performance, laggard along multiple dimensions, failed to take advantage of the digital revolution) is unleashing politicians to abandon their prior broad distance from competition enforcement. As antitrust agencies successfully achieved independence from politicians two decades ago, their activities have been broadly protected from public attention and political scrutiny—except when a high-profile case such as GE/Honeywell in 2001 (I was there)or Alstom/Siemens more recently unleashed protests from business and their political clients that regulators were being “too tough.” But so far, these have been occasional events.
Yet resentment has simmered among politicians against European competition agencies, whom they have perceived to be aloof, uncooperative, obstructive and generally unwilling to engage in a debate over how they should support the broader mission of improving growth and economic conditions. These agencies have just not “read the room”: in a world where growth and productivity and investment have become increasingly the obsession of governments, they stuck to the party line that they are just “a side dish” relative to the “important economic issues of our times”, and their battle cry of “competition competition competition” was the one and only mission. “Industrial policy? Not for us. Just don’t push national champions! Trade? Not for us. Don’t ask us to even care.”
Except this time governments are panicking. European Commission President Ursula von der Leyen reshuffled the cards significantly in her assignment of competences across commissioners in the 2024-29 mandate: with competition policy ending up buried in a broad mix with Green Transition and explicit instructions to “modernize” (as comprehensive an indictment of the status quo as can be).
The United Kingdom is even worse: a panicked Labour government is capitulating wholesale to Big Tech and essentially undoing the entire legacy of the Competition and Markets Authority—a once “progressive” agency, now one where chickens have finally come home to roost. In post-Brexit Britain, lack of leverage vis-à-vis corporate power and abnegation to its will is there for all to see, as the government nominates Big Tech executives to run their industrial strategy initiative, and ministers talk about owing “deference” to companies with research budgets larger than a nation state.
But it isn’t as if European competition agencies could not see this coming. It was painfully clear there was a screaming need for rethinking the mission, for proactively engaging with the question of how to support and shape industrial policy and trade vision. None of this happened. Governments are swooping in, not with a worthwhile clear alternative vision but they are. Missed opportunity and major loss of ground for agencies.
What went wrong with antitrust in Europe?
In part, Europe has continued to bask in its own sense of primacy for having first started antitrust action against digital giants (Google since 2010, then Meta, Apple and Amazon) and passed pioneering legislation on data protection, economic regulation and content moderation since at least 2018—all at a time when U.S. enforcement was in “deep sleep.” But then as one after the other enforcement cases failed to deliver and regulation proved to be extremely difficult to get anything concrete out of, European regulators in the last few years have not really heard the “drums beating from the hills,” resisted engagement in a constructive rethinking exercise (with few exceptions, like then-Chief Economist Tommaso Valletti) and remained steadfast to a vision of antitrust which got established with the “more economic approach” push of the late 1990s/early 2000s.
I was there at that time: newly minted economic consultants, all forged in neoclassical industrial organization economics, enthusiastically sold to agencies and lawyers (and ultimately, clients) that we needed to “purify” competition enforcement from any “extraneous” consideration—any form of “public interest” for instance— because fundamentally “as economists we have new tools, we have structure and methods” and “we don’t know how to trade off other goals with efficiency and consumer welfare.” Amen, we thought, so let’s just stick to pure antitrust science! Competition agencies followed in hope, and lawyers saw us as useful support to their advocacy (they certainly didn’t think we possessed great wisdom, we were just convenient peddlers of snake oil). That was unquestionably an extremely effective lobbying exercise, aided and abetted by IO academics who were also keen to establish a “guru” role for the profession in Europe. It culminated with Damien Neven announcing in December 2008 at “my conference” the launch of the Guidance Paper on Exclusionary Abuse—what we all felt at the time was a milestone for enforcement against conduct abuse. That was it: the “more economic approach” was “in,” eventually adopted as major progress that was going to improve the quality of decision making: fewer “type 1” errors, less danger of overenforcement with all its pernicious incentive effects.
What’s gone wrong with antitrust in Europe? Why have outcomes been so poor? A first original sin in my view is that Europe has remained entirely immune from the deep questioning of the neoliberal system of beliefs (and the “Washington consensus”) that had been such a pervasive feature of the policy discourse in the U.S. over the last five years. The challenge to efficiency, to consumer welfare, to free trade and trickle-down economics, passed the European elites (and bureaucracy) entirely by.
While no comprehensive alternative “post-neoliberal” paradigm emerged in the U.S., at least the discussion was being had, and at least in one place—antitrust—an alternative vision emerged. In a deeply transformed political economy (post financial crisis, post Covid, increasing monopolisation of digital spaces) Federal Trade Commission Char Lina Khan and Assistant Attorney General Jonathan Kanter challenged the neoliberal/Chicago and post-Chicago prevailing consensus, seeking to thaw 20 years of competition Agencies’ permafrost, especially vis-à-vis tech giants (supported by a groundswell of activity by state attorneys general), broadened the lens from “pricing” to “power,” and from consumers to workers, small companies, and the public. This fit with an “all of government” approach under the Biden administration, in which antimonopoly was a common thread across multiple related areas of policy: from trade to industrial strategy to consumer finance. A strong group of connected officials pushed along with them in a consistent direction.
While this was happening, European competition enforcement remained moored to its neoliberal conversion, successfully achieved in the first decade of the century. An ocean in between, and the persistence of bureaucracy and leadership (Commissioner for Competition Margrethe Vestager just recently ended her tenure since being first appointed in 2014, way before this deep questioning got underway in the U.S. and before the tide turned finally there in 2019) has meant no real incentive for genuine rethink.
Denial and straw men
The changes in the real world and the political economy that prompted a rethink in the U.S. (increases in concentration, inequality, huge imbalances of power) were not specific to the U.S. An entire system of beliefs premised on the pursuit of efficiency and the welfare of “consumers” is ultimately designed to generate multiple “exculpatory narratives” for almost any form of conduct and almost any concentration of assets.
My skill as an economic consultant (or economic advocate) was the extent to which I could come up with a plausible-sounding narrative to defenda particular conduct which appeared prima facie problematic: finding ways to argue that a merger of direct rivals, or a vertical/ conglomerate deal, will be procompetitive and efficiency-enhancing; that exclusivity contracts are not foreclosing but in fact benefit competition; that discounts are only harmful if they foreclose “as efficient” competitors; that territorial segmentation is efficient price discrimination; that vertical integration is again efficient and procompetitive; that tying/bundling are entirely benign. For the record, they can be, sometimes. But these “standard issue” defenses are not politically neutral. They reflect a political system of values, embedded in the “standard issue” analyses consultants (and academics) routinely do, one in which all that matters is efficiency and we don’t think for instance distribution is at all our issue.
What many of us have been saying is that the system of values underpinning “traditional” antitrust analysis has come under strain because outcomes are so out of line with basic notions of societal benefits. An economic model that tells us a certain practice will not reduce competition is often in conflict with what we know of commercial conduct. In a world profoundly transformed by multiple pathologies and uncertainties (from concentration to inequality to unfairness to deindustrialization to climate crisis), it should be imperative to look up from the narrow technocratic purview of antitrust practice, founded on 1980s principles, and ask: is this still all that matters? Efficiency? What else should I worry about?
The urgency of this quest got even greater in Europe with the Draghi report, which exposed, in all their gravity, the current issues Europe is confronting, and candidly asked that competition enforcement gets with the mission. That is, it joins up with trade and industrial policy to help pursue growth and investment.
Yet, the reaction of the “antitrust bubble” has thus far been hostile to the quest for a rethink. “it works” is the posture, “no need to change anything”. One line of resistance has been that we should beware of progressive enforcers in the US anyway, because they just “hate economics” and are refuting “scientific evidence” in favour of slogans and dogma. In reality what Lina Khan and Jonathan Kanter have done is not to question economics as such, or the value of empirical evidence overall. They both hired outstanding chief economists. What they have questioned is the torrent of submissions put forth at vast expense by defendants—necessitating agencies to respond in kind using taxpayer money—and most of which is inane, inconsistent with the documents, contrary to basic common sense and deliberately obfuscating. Another major line of resistance has been that anyone asking for a reflection on the goals was acting ‘politically’, in oblivion to true science and legal gospel. Yet another related critique has been that the goals of antitrust are clear from the beginning of time, or at least since the beginning of the century, and are codified in the equivalent of Moses’ Tablets and anyone advocating for a broader set of connections (e.g. between competition, trade and industrial policy) is just wrong.
This decoy—the charge that anyone saying anything different is de facto “politicizing” antitrust, and that there can be no ‘conflation’ of goals in a technocratic pure mission—is in fact entirely a straw man. One that has been forestalling any serious re-evaluation in Europe. A whole network of “safe spaces” is the means through which the status quo is jealously preserved and all meaningful debate (other than on minutiae of law or guidelines or cases) is sterilized away.
Progress is held up by the network of “Competition Safe Spaces”
The European antitrust discourse (such as it is) is conducted through a network of ‘safe spaces’ where the ‘community’ – lawyers, consulting economists, academics, agency officials – keep meeting and validating each other. This bubble is narrow, closed and self-referential because its incentives have been deliberately set up in this way, to stifle all dissent and preserve the cash cow.
The bubble moves as a compact group from one conference to the next – there are dozens a year, from ‘professional’ conference organizations to academic events to law firm or consultancy gatherings. What they have in common is a strong “pay to speak” model in which speakers either pay for a speaking slot on a panel (or sponsor an entire panel), or the event is run for explicit purposes of marketing to clients. Regulators are just “bait” in these events (they don’t pay of course, but attract punters). The composition of panels is predictable (in the vast majority, defense lawyers and economists), the topics are narrow (“Has the approach to conglomerate mergers changed with this latest case?”), and quality of the debate is low. No dissenting voices, no civil society asking “wait, is this what you worry about?”
Academic conferences are also often sponsored (to make ends meet, true, but sponsorship by corporates and consultants then translates into speaking slots for them) and tend to be a rarefied narrow church of IO “big beasts” and junior researchers looking for job in consulting or academe, intent on impressing the seniors. Policy speakers tend to be part of the same narrow group, engagement with “the real world” minimal. Gatherings like the annual conference of the Association of Competition Economists across European cities are again safe spaces for consulting economists to celebrate their narrow set of tools and the cases they worked on, with agencies and a few academics who in the main do not question the consensus.
Policy conferences sponsored by the European Commission itself or proxy think-tanks also tend to be narrow, self-referential and stick to the prevailing orthodoxy. There is a whole parterre of academics (lawyers and economists) who are part of some opaque appointed ‘advisory group’ and in a position of mutual validation with the Commission, which affirms that what is being done is ‘just right’ and reassuring everyone they are collectively on the right track. This same group enthusiastically supports digital regulation (e.g. the Digital Market Act) never raising doubts on its effectiveness, but as the pretext for a stream of papers and yet more conference gatherings on the topic for another decade.
I could go on. There are closed-door boondoggles organized with all expenses paid in prestigious locations to celebrate the ‘closeness’ of the organizers with regulators, and reward dear clients. Short of these private events, the appetite for any tidbit leads the press to attend repetitive events where regulators drop their predictable line, economists and advocates do not disclose, and everyone is chewing over the same narrow questions around cases or specific issues. The predictable outcome is there is no pulsion for change – everything is ‘the best of all possible worlds.’
Trump 2.0 will shake the “safe spaces”
In all of this, how will the election of President Trump to a second term play out for Europe? The uninformed view is we will see a return to a traditional Republican/Chamber of Commerce approach to enforcement: i.e. “roll back Lina Khan” and “drill baby drill” (a merger boom with abandonment, no conduct enforcement). I think the reality will be somewhat different.
First, there is no single ‘Republican view’ to drive a single vision of enforcement, but multiple tribes with different incentives and visions alongside the traditional business-friendly one: from techno-libertarians to religious conservatives and many more. How this will translate into policy is of course unclear.
But two things are clear.
First, while the approach towards Big Tech will be transactional and case-by-case, the general drift is anti-Big Tech and pro-“Little Tech”—a nod to Silicon Valley’s venture capital tech billionaires but also an area of convergence with the previous administration. When it comes to Europe, however, I expect push back against all forms of anti-Big Tech regulation (as ‘discrimination against our great American companies’)—consistent with the hard break the EC has applied to these at present: fear and anticipation, until they see the whites of president Trump’s eyes. Consistently, I do not think one should expect much to come out the mild sabre rattling by new European Commissioner of Competition Teresa Ribera that the Google’s breakup is ‘still on the table.’ “On the table” means precisely nothing, and the Commission will not initiate something along these lines unless a U.S. judge does. This is obvious, and the reason everyone shrugs.
Second, there should be no expectation that the new Trump administration will be just a roll back to the past and that the European ‘safe spaces can go back to partying harder than ever. The nomination of Big Tech critic Gail Slater as the Assistant Attorney General for Antitrust at the Department o f Justice, complemented by Mark Meador as new FTC Commissioner, is a very strong signal that the neo-Brandeisian vision is not going to be wholesale erased and history entirely reversed; and that joining the dots with other areas of policy may well also be a posture that persists.
Above all, I expect questioning of the orthodoxy in ways that will surprise Europeans who have been hiding in their safe spaces. One Republican thought leader in antitrust told me a couple of weeks ago that “Lina Khan threw the sword all the way to the end of the field. We are not going to walk it all the way back. We will take it back perhaps half-way up the field. And that will be our new normal.” To this I say, amen.
Author Disclosure: Cristina Caffarra headed for over 15 years 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 is not actively consulting for clients or agencies 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.
