Antitrust, Regulation and the Next World Order
Go to the main 2024 conference site
View the individual panel videos of the conference
View the photos of the conference here
Antitrust, Regulation and the Next World Order | Cristina’s Conference Script
These are my notes for running the panels.
8.15 Cristina’s intro
[Welcome] A personal note. I started this conference in this ballroom over 15 years ago. We had the first EC Chief Economist, was all about the “more economic approach”. For 10 years it was titled “Economic Developments in Competition Law” (so boring), with indistinguishable panels on mergers, Art. 102, exegesis of Court decisions (“by object and by effect”), cartels and damages. And then gradually from 2018 I started asking “wait, what are we doing with this more economic approach? Is concentration rising? do we have a problem? what is going on with digital platforms?” – accelerating in 2020 with “Time of Upheaval”, “Disrupted times”, “The Political Economy”… now “the NEXT WORLD ORDER”.
Incomprehension / consternation in the Antitrust Bubble “WHAT IS CRISTINA TALKING ABOUT – we know what we are doing, we apply COMPETITION LAW, we just need some USEFUL TAME ECONOMISTS to do our submissions & tell the regulator it’s all efficient and procompetitive. What we are doing is PURE. It’s technical. We are specialists. We know our stuff. We don’t want to contaminate this PURE THING with POLITICS! We DECIDED antitrust in Europe was an objective science and to be practiced by technocrats, not politicians!”
Every few decades the political economy gets to a point, and then the pendulum swings. It was clear to me by 2018 we were coming to the end of that era. There were voices saying wait, what we are doing is not right – Lina Khan spoke HERE in 2018, Barry Lynn came to Brussels when what he was saying on market power was really thought to be radical and dangerous – “these New Brandeisians are the mad populist fringe, we know what we are doing over here”
The world has kept hurtling through crises at crazy speed – just skirting mass extinction through disease, planet is boiling, WAR and genocide on our doorstep, inflation, ….and masses of inequality, unfairness, exploitation, surveillance. It’s clear the classic neoliberal consensus (consumer welfare, efficiency, no barriers, trickle down economics) has run its course. PEOPLE are restless. They want to be seen as citizens and workers, not just consumers, want attention to people and planet, to justice, to growth that is more equal and fair, democracy. This is a massive shift – no longer a fringe view, we understand that POWER EXISTS in the REAL WORLD. And ANTITRUST matters because it is a critical “check” to capital, that pre-empts concentration and protects economic freedoms for everyone not just for corporates.
This shift has happened in the US where antitrust regulators have revived flagging antitrust along this agenda: more fairness, more equality, stop concentration of power. And it is a shift which is also connected to other shifts in industrial policy and trade: all these regulatory realms – trade, industrial policy, antitrust, privacy – they ALL intersect. The common theme is that EFFICIENCY IS OVER. As the lodestar of what we do, in multiple fields.
So we have a European election in June and one in November in the US, I continue to find it extraordinary that people who work in antitrust think this is nothing to do with them. The question is what should the agenda be for antitrust, and trade, and industrial policy, to reboot economic growth which is flagging in Europe, to reindustrialise, to muscle up the economies in ways that are fairer.
= DO NOT THINK antitrust has nothing to do with this. It has a lot to do with this. But we need to broaden out. So the DMA is not an economic policy alone, it is one piece of it. Taming tech giants is not going to put points on GDP even if getting them to behave more fairly matters.
The US regulators we are going to hear today have been part of an “all of government” approach, and they are connecting the dots. Khan, Tai, Kanter, Chopra, Boushey. What if Trump wins? Much of this is centrist and bipartisan actually. What is the vision for the next 4/5 years?
Antitrust, Regulation and the Next World Order | Brussels | 31 January 24
View the individual panel videos of the conference
Chair Scene Setting (youtube.com)
Rebooting the Next Commission (youtube.com)
“From Price to Power”? Reorienting Antitrust for the New Political Economy (youtube.com)
Are the Courts Likely to Listen (youtube.com)
Market Power Dysfunctions: Seller Inflation, Inequality and AI Acceleration (youtube.com)
Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation (youtube.com)
The European Grand Digital Regulation Project: What is our Theory of Change? (youtube.com)
Antitrust as Agent for Change (youtube.com)
Conversation with Chair Lina Khan (youtube.com)
AI Act DSA and DMA Implementation (youtube.com)
Concluding Fireside (youtube.com)
Commissioner Reynders Address (youtube.com)
Fireside with AAG Jonathan Kanter (youtube.com)
View the photos of the conference
cristinacaffarra.com://vladvdk.pixieset.com/antitrustregulationandthenextworldorder/
Antitrust, Regulation and the Next World Order | Cristina’s Conference Script
These are my notes for running the panels.
8.15 Cristina’s intro
[Welcome] A personal note. I started this conference in this ballroom over 15 years ago. We had the first EC Chief Economist, was all about the “more economic approach”. For 10 years it was titled “Economic Developments in Competition Law” (so boring), with indistinguishable panels on mergers, Art. 102, exegesis of Court decisions (“by object and by effect”), cartels and damages. And then gradually from 2018 I started asking “wait, what are we doing with this more economic approach? Is concentration rising? do we have a problem? what is going on with digital platforms?” – accelerating in 2020 with “Time of Upheaval”, “Disrupted times”, “The Political Economy”… now “the NEXT WORLD ORDER”.
Incomprehension / consternation in the Antitrust Bubble “WHAT IS CRISTINA TALKING ABOUT – we know what we are doing, we apply COMPETITION LAW, we just need some USEFUL TAME ECONOMISTS to do our submissions & tell the regulator it’s all efficient and procompetitive. What we are doing is PURE. It’s technical. We are specialists. We know our stuff. We don’t want to contaminate this PURE THING with POLITICS! We DECIDED antitrust in Europe was an objective science and to be practiced by technocrats, not politicians!”
Every few decades the political economy gets to a point, and then the pendulum swings. It was clear to me by 2018 we were coming to the end of that era. There were voices saying wait, what we are doing is not right – Lina Khan spoke HERE in 2018, Barry Lynn came to Brussels when what he was saying on market power was really thought to be radical and dangerous – “these New Brandeisians are the mad populist fringe, we know what we are doing over here”
The world has kept hurtling through crises at crazy speed – just skirting mass extinction through disease, planet is boiling, WAR and genocide on our doorstep, inflation, ….and masses of inequality, unfairness, exploitation, surveillance. It’s clear the classic neoliberal consensus (consumer welfare, efficiency, no barriers, trickle down economics) has run its course. PEOPLE are restless. They want to be seen as citizens and workers, not just consumers, want attention to people and planet, to justice, to growth that is more equal and fair, democracy. This is a massive shift – no longer a fringe view, we understand that POWER EXISTS in the REAL WORLD. And ANTITRUST matters because it is a critical “check” to capital, that pre-empts concentration and protects economic freedoms for everyone not just for corporates.
This shift has happened in the US where antitrust regulators have revived flagging antitrust along this agenda: more fairness, more equality, stop concentration of power. And it is a shift which is also connected to other shifts in industrial policy and trade: all these regulatory realms – trade, industrial policy, antitrust, privacy – they ALL intersect. The common theme is that EFFICIENCY IS OVER. As the lodestar of what we do, in multiple fields.
So we have a European election in June and one in November in the US, I continue to find it extraordinary that people who work in antitrust think this is nothing to do with them. The question is what should the agenda be for antitrust, and trade, and industrial policy, to reboot economic growth which is flagging in Europe, to reindustrialise, to muscle up the economies in ways that are fairer.
= DO NOT THINK antitrust has nothing to do with this. It has a lot to do with this. But we need to broaden out. So the DMA is not an economic policy alone, it is one piece of it. Taming tech giants is not going to put points on GDP even if getting them to behave more fairly matters.
The US regulators we are going to hear today have been part of an “all of government” approach, and they are connecting the dots. Khan, Tai, Kanter, Chopra, Boushey. What if Trump wins? Much of this is centrist and bipartisan actually. What is the vision for the next 4/5 years?
8.20-8.50 Rebooting the Next Commission – Fireside with Olivier Guersent and Andreas Schwab
Theme of today is what we want for the NEXT Commission. So no retrospective. Just forward looking.
- Let’s start NOT from digital for a change. One big theme in the post-neoliberal pendulum swing is to say we’ve gone too far with efficiency/lowering trade barriers/offshoring which have hollowed European industrial capacity, we need reindustrialisation, creating capacity in Europe, sovereignty, resilience etc. Competition (and state aid rules) have been a sacred cow. “We need to defend against bad national champions, we need to really allow for state investment only if there are market failures and if intervention improves efficiency”. Is this still fit for purpose? The Letta Report anticipated a couple of weeks ago said we need to rethink state aid rules (too much fixation on “efficiency”) in the face of the massive emergencies for Europe. There’s a huge discussion of “new industrial policy”, we will hear later today from White House. Isn’t this of the things we need to rethink: how can competition support this effort in the next 5 years? Or is it business as usual, same tests, same IPCEI examples?
- Amazon/iRobot. Aside from the theory of harm (“protecting competition in robot cleaners”) that seems a bit dumb to me, does it mean more generally we’ve come to the end of the line for Big Tech deals? Is this the message – if it is, I agree with it – but is it what we think it means? Merger control is super powerful to control allocation of assets before it is too late. In a world in which we had to pivot to the DMA to try and do something about power and concentration of Big Tech ex-post, is this saying “look, enough, we learned the lessons and now go invent something but honestly you don’t need to own a robot cleaner”. Hasn’t the error cost assessment (Type 1 vs Type 2) error radically changed in the current world? Is this the message companies should finally take up?
- “DMA 2.0” – we all know it’s being implemented etc, don’t want to talk about that process, but about what comes next. First what’s not covered – the designation covered the low hanging fruit, but then? Cloud, AI, what are we doing about that? Do we need new law or is it a matter of applying the current law?
- What is the agenda for the next Commission?
8.50-9.50 “From Price to Power”? Reorienting Antitrust for the New Political Economy
Andreas Mundt
Luigi Zingales
Tommaso Valletti
Rebecca Slaughter
Gina Cass-Gottlieb
We’ll continue the theme. We are in a world of emergencies. Antitrust can be a little island populated by technocrats who say we have THE LAW, we have our technical rules, we have models and techniques, all these ideas about abandoning the true religion of consumer welfare and orthodoxy mean making antitrust political, we need it to be neutral. First, is it true we are neutral and apolitical in our current posture. Second, how does enforcement adapt and reflect the way the world around us evolved? We have been worrying only about PRICE – as long as prices go down that’s good, but then we have seen power rising massively and now we worry about POWER, the control over markets, inequality, distribution, democracy. Markets are now much more concentrated, industrial capacity has been removed through serial deals in key sectors, we are the target of extractive digital monopolies which keep expanding their ecosystems in all directions, not to mention the polycrises which have exposed massive fragilities and led to inflation flareups etc. What we are seeing are major paradigm shifts in the US, ALSO in antitrust. This is a huge deal.
Luigi: is what we are doing today pure and not political, is efficiency a pure and a-political goal. Should antitrust be a neutral technocratic endeavour? Is there “purity” in antitrust? When we talk about New Brandeis, and the interest for “power, not price”, what has changed?
Tommaso: economists have weighed into antitrust with the “more economic approach” successful campaign, but we ended up as a narrow church preoccupied with what we pretend to be a pure and technocratic endeavour. How do we shake the profession from oblivion, how do we think about “power” vs “price” as the goal. Mention “Economists are a tribal clique” Christine Lagarde
Andreas – How do you think of this, How is the focus and the posture changing with the political economy? can obviously talk about examples from the update of the German Law and your enforcement focus. But also more broadly you are President of ICN. Surely there is appetite e.g. from the Global South for more engagement on the bigger issues.
Rebecca: The FTC has been at the forefront of a major reinvigoration of antitrust in the US. Yes, digging out the “original animating values” but also a very “fierce sense of urgency” things had been allowed to flag in the past and a major shakeup was needed. Using agency powers to do much more.
Gina: You are in the midst of major battles to reform merger law in Australia, with much resistance, claims enforcement will curb growth etc. I understand under your voluntary regime 2/3 of deals are never reported – a huge proportion. Yet it seems you are facing considerable struggle and constraints to drive through a different posture/rules in Australia.
9.50-10.10 Are the Courts Likely to Listen? Conversation with Marc Van Der Woude and Sir Marcus Smith
Marc, in Lisbon you talked about the “new orientation” blowing through antitrust and how are the courts to position themselves there. In the US the courts have been thought of as a major source of resistance – having been indoctrinated at the Manne and Scalia Schools. Yet there are amazing signs some change is appening: judgment in airline cases (JetBlue-AA/Jetblue/Spirit), Illumina/Grail, IQvia in digital advertising. Are the courts in Europe hearing the drums coming from the hills? Inevitably they are somewhat behind, for instance the embrace of AECT in 2022 when we are now questioning it as a pro-defendant test (latest article from Massimo Motta essentially saying it is very problematic) … What is your sense for how the Courts are looking at this whole major evolution.
I know one answer is “The agencies set the direction on policy, we apply the law”. Well yes, but you make precedent. And the interpretation of the law is not immutable right? Surely the Courts and judges do think what they are doing is not immune from the political economy around. You live in the political economy. So how open you might be to arguments on concentration for example is not just a function of thinking GUPPIs is all there is to know…
10.10-11.00 Market Power Dysfunctions: Seller Inflation, Inequality & AI Acceleration
Isabella Weber
Jan Eeckout
Gabriel Zucman
Florian Ederer
Doha Mekki
Much clearer focus on the threat posed by concentration itself, by market power itself, in all its manifestations – discrimination, inequality, exploitation, loss of voice and ultimately threat to democracy. THIS is the message: ladies and gentlemen, forget the quaint European tradition that we worry about “conduct that abuses market power, not about market power” – WRONG! We are VERY worried about market power (and concentration) because it engenders all sort of problems. In turn, there are phenomena in the economy that we do not recognise typically as associated with antitrust, BUT have a lot to do with market power! So what gives. Antitrust needs to be cognisant of these, and enforcement in this environment needs to be also alert to these. “We are not a silo”.
Doha to start by comment on the previous panel and the change in antitrust enforcement posture. Also mention the change in posture is also notching up some recent successes, judges may be “getting it” at last. See Jetblue/Spirit.
Isabella: tonne to say about the inflation debate still raging out there!! We wont have time to go into the full glory of the macroeconomist battles on interest rates, causes and cures for inflation. Focus on your diagnosis that some of the inflationary pressure we have seen has been caused by firms “profit taking” at a time when prices were rising for other reasons. Please do explain what is your theory about the mechanism at play here (is it a form of tacit collusion?). And the empirical validation for your story (I know you have gathered much evidence of execs expressing their intent to do this, spoken to many governments and central banks about this around the world).
Gabriel: your Global Taxation Report has been out recently and I want you to explain the main findings and message: that tax evasion by the top of the multinational companies ($1,000 billion or so in profit shifted to tax havens each year globally) is exacerbating both concentration and inequality – again explain the mechanism to an audience of non-economists and regulators, and what it means for distribution and again why it is related to market power.
Jan: I will link back to your seminal work on markups and concentration, and then ask you to talk about how you are looking at the other big phenomenon of 2023, the massive acceleration of AI, and how it amplifies the concerns you highlighted previously as associated with concentration: how it will affect inequality of income and wealth – directly and by increasing superstar earnings, which are directly linked to market power. Also draw the line between inequality and the political order, via the influence of big corporations on politics, but also via the polarization of the many who feel left out and the mushrooming populism.
Florian: how come all the interesting work in economics now comes from outside IO. This panel is clear evidence. Explain why IO is pretty much dying. Then talk about your work on common ownership which is pervasive in the economy, and the fact that it is (a) super interesting but (b) not recognized enough by the IO church as not “in the orthodoxy”. This insularity and narrowness is not helpful to enforcement either.
Back to Doha: these top economists are making something painfully clear to us in the antitrust world: the “efficiency” framework is extremely narrow and misses a lot of what is threatening our sense of being citizens, of justice, and our democracy. This is not lost on enforcers and why you and Jon Kanter at the Justice department talk about democracy. Talk to us about that.
11.10-12.00 Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation
Nathan Lane
Ufuk Akgicit
Rene Repasi
Heather Boushey
This panel is intended to bring out how antitrust is also challenged by the new thinking around industrial policy. Traditional posture has been industrial policy was simply “unmentionable” in the US. In Europe it has been essentially synonymous with bad national champions, and the role of antitrust limited to state aid assessment: does state support cure a specific market failure, is it the right instrument? We are now in a polycrisis world, in which we have seen values of sovereignty and resilience become critical, in which there are major concerns about European competitiveness. It has become clear that state investment will be critical to directing effort towards goals not otherwise achievable by market forces. In parallel there is new economic thinking around industrial policy.
The purpose of this panel will be to wake up an oblivious antitrust audience to the notion that an effective industrial policy is plainly essential if we are to direct the big investments we need to address the problems of our times – loss of capacity, withered supply chains, de-industrialization, dependencies from rogue states. As Rana Foroohar puts it: the return of industrial policy isn’t the dog, but the tail. It follows a fundamental need, which is for governments to take on what used to be called “negative externalities” of the neoliberal market system — namely, inequality, climate change, financial instability and the resulting political polarization — all of which threatens capitalism and liberal democracy itself. We need industrial policy because markets simply don’t always know best. That’s Joe Stiglitz 101. THEN — you get into the fact that not all industrial policy is created equal. Nearly every major economy with the exception of the US, until quite recently, has had one. So what are best practices? What should we avoid and encourage? And crucially for this conference, how can we avoid falling into the national champions trap, even as we try to build capacity for production as well as consumption in different regions?
Nathan starting off explaining what the New Industrial Policy thinking is, what is the new empirical evidence for what works and does not work, what are the policy prescriptions. AND how does one indeed avoid falling into the national champions trap?
Ufuk to elaborate on key insights (from his book w JVR) on how do we power growth – including not just the Global North but also the Global South. Innovation is the engine for growth, but how do we influence it? How can Europe get itself out of its current predicament of low wage and productivity growth?
Heather would explain the progress made by the Biden WH to actively launch policies to support specific goals, thinking and outcomes: rebuilding capacity for critical industries, etc. “Industrial strategy”. Also what’s the response to the view this is American protectionism?
Rene to comments on whether he thinks EUROPEAN antitrust policy is too much beholden to narrow state aid controls, with their “efficiency” obsession. Note Enrico Letta, former Prime Minister of Italy, just authored a report for the Commission saying inter alia exactly this: We need to upend this narrow state aid, give the perspective of law makers: we need to power up industrial policy, but also move beyond the narrow State Aid framing. Again, though, how do we resist the bad National Champions?
12.00 – 12.45 – Connecting Trade and Competition in the Next World Order Conversation with Trade Ambassador Katherine Tai
Franziska Brantner
James Hodge
Another area where a major rethink is unfolding is trade. We are also here moving away from the neoliberal paradigm of hyperglobalisation, widely open markets and “efficiency” ad the goal, towards a new paradigm in which trade rules are not just designed to protect big corporate interests abroad, with capital and goods being completely mobile and relying on a “trickle down” fantasy to support the masses. The thinking is that trade must complement domestic policy and support the effort to protect against monopolies at home which have increased inequality and threaten democracy. It must work alongside antitrust and industrial policy to help re-industrialise, reduce dependencies and support the middle classes as a defence against Far Right and authoritarianism. This is URGENT in the run up to elections. At the same time, the Global South is raising its voice and needs to be included in shaping the post-neoliberal order.
Katherine:
- This US administration has been reviving its antimonopoly effort, and explicitly rejected efficiency goals in all areas of economic policy. You have been nominated as part of the President’s Competition Council – how do you, as Trade representative, fit into this broader domestic antimonopoly effort – particularly with Big Tech? (need to sync trade and domestic policy, touch also on JSI and why you neutralised the US position at the WTO)
Follow up:
- Expand out of Big Tech into the broader economy – the pandemic brought home the issue of brittle and broken supply chains, and that’s also been a major focus of the administration (rebuilding capacity at home) – again how does Trade fit into this? (opportunity to explain to European audience: what is being done differently from the past, why this is a important for building out the middle classes, why it is centrist and not partisan, why it is not just American protectionism, why it is a place where you see commonalities with the Global South)
Franziska:
- For Europe, following the pandemic the invasion of Ukraine has been a further wake up call that economic dependencies create major vulnerabilities. Europe experienced deindustrialisation which also makes us vulnerable. You have been vocal on the need to move away from efficiency and rebuild domestic industry, and rethink trade as a major part of this. Give us your views on this, including how competition/antitrust should assist this effort in Europe in the next mandate. Need to find common democratic ground against the rise of authoritarianism, and economic coercion. More generally a key soundbite or two about vision for next Commission.
;”>8.20-8.50 Rebooting the Next Commission – Fireside with Olivier Guersent and Andreas Schwab
Theme of today is what we want for the NEXT Commission. So no retrospective. Just forward looking.
- Let’s start NOT from digital for a change. One big theme in the post-neoliberal pendulum swing is to say we’ve gone too far with efficiency/lowering trade barriers/offshoring which have hollowed European industrial capacity, we need reindustrialisation, creating capacity in Europe, sovereignty, resilience etc. Competition (and state aid rules) have been a sacred cow. “We need to defend against bad national champions, we need to really allow for state investment only if there are market failures and if intervention improves efficiency”. Is this still fit for purpose? The Letta Report anticipated a couple of weeks ago said we need to rethink state aid rules (too much fixation on “efficiency”) in the face of the massive emergencies for Europe. There’s a huge discussion of “new industrial policy”, we will hear later today from White House. Isn’t this of the things we need to rethink: how can competition support this effort in the next 5 years? Or is it business as usual, same tests, same IPCEI examples?
- Amazon/iRobot. Aside from the theory of harm (“protecting competition in robot cleaners”) that seems a bit dumb to me, does it mean more generally we’ve come to the end of the line for Big Tech deals? Is this the message – if it is, I agree with it – but is it what we think it means? Merger control is super powerful to control allocation of assets before it is too late. In a world in which we had to pivot to the DMA to try and do something about power and concentration of Big Tech ex-post, is this saying “look, enough, we learned the lessons and now go invent something but honestly you don’t need to own a robot cleaner”. Hasn’t the error cost assessment (Type 1 vs Type 2) error radically changed in the current world? Is this the message companies should finally take up?
- “DMA 2.0” – we all know it’s being implemented etc, don’t want to talk about that process, but about what comes next. First what’s not covered – the designation covered the low hanging fruit, but then? Cloud, AI, what are we doing about that? Do we need new law or is it a matter of applying the current law?
- What is the agenda for the next Commission?
8.50-9.50 “From Price to Power”? Reorienting Antitrust for the New Political Economy
Andreas Mundt
Luigi Zingales
Tommaso Valletti
Rebecca Slaughter
Gina Cass-Gottlieb
We’ll continue the theme. We are in a world of emergencies. Antitrust can be a little island populated by technocrats who say we have THE LAW, we have our technical rules, we have models and techniques, all these ideas about abandoning the true religion of consumer welfare and orthodoxy mean making antitrust political, we need it to be neutral. First, is it true we are neutral and apolitical in our current posture. Second, how does enforcement adapt and reflect the way the world around us evolved? We have been worrying only about PRICE – as long as prices go down that’s good, but then we have seen power rising massively and now we worry about POWER, the control over markets, inequality, distribution, democracy. Markets are now much more concentrated, industrial capacity has been removed through serial deals in key sectors, we are the target of extractive digital monopolies which keep expanding their ecosystems in all directions, not to mention the polycrises which have exposed massive fragilities and led to inflation flareups etc. What we are seeing are major paradigm shifts in the US, ALSO in antitrust. This is a huge deal.
Luigi: is what we are doing today pure and not political, is efficiency a pure and a-political goal. Should antitrust be a neutral technocratic endeavour? Is there “purity” in antitrust? When we talk about New Brandeis, and the interest for “power, not price”, what has changed?
Tommaso: economists have weighed into antitrust with the “more economic approach” successful campaign, but we ended up as a narrow church preoccupied with what we pretend to be a pure and technocratic endeavour. How do we shake the profession from oblivion, how do we think about “power” vs “price” as the goal. Mention “Economists are a tribal clique” Christine Lagarde
Andreas – How do you think of this, How is the focus and the posture changing with the political economy? can obviously talk about examples from the update of the German Law and your enforcement focus. But also more broadly you are President of ICN. Surely there is appetite e.g. from the Global South for more engagement on the bigger issues.
Rebecca: The FTC has been at the forefront of a major reinvigoration of antitrust in the US. Yes, digging out the “original animating values” but also a very “fierce sense of urgency” things had been allowed to flag in the past and a major shakeup was needed. Using agency powers to do much more.
Gina: You are in the midst of major battles to reform merger law in Australia, with much resistance, claims enforcement will curb growth etc. I understand under your voluntary regime 2/3 of deals are never reported – a huge proportion. Yet it seems you are facing considerable struggle and constraints to drive through a different posture/rules in Australia.
9.50-10.10 Are the Courts Likely to Listen? Conversation with Marc Van Der Woude and Sir Marcus Smith
Marc, in Lisbon you talked about the “new orientation” blowing through antitrust and how are the courts to position themselves there. In the US the courts have been thought of as a major source of resistance – having been indoctrinated at the Manne and Scalia Schools. Yet there are amazing signs some change is appening: judgment in airline cases (JetBlue-AA/Jetblue/Spirit), Illumina/Grail, IQvia in digital advertising. Are the courts in Europe hearing the drums coming from the hills? Inevitably they are somewhat behind, for instance the embrace of AECT in 2022 when we are now questioning it as a pro-defendant test (latest article from Massimo Motta essentially saying it is very problematic) … What is your sense for how the Courts are looking at this whole major evolution.
I know one answer is “The agencies set the direction on policy, we apply the law”. Well yes, but you make precedent. And the interpretation of the law is not immutable right? Surely the Courts and judges do think what they are doing is not immune from the political economy around. You live in the political economy. So how open you might be to arguments on concentration for example is not just a function of thinking GUPPIs is all there is to know…
Antitrust, Regulation and the Next World Order | Brussels | 31 January 24
View the individual panel videos of the conference
Chair Scene Setting (youtube.com)
Rebooting the Next Commission (youtube.com)
“From Price to Power”? Reorienting Antitrust for the New Political Economy (youtube.com)
Are the Courts Likely to Listen (youtube.com)
Market Power Dysfunctions: Seller Inflation, Inequality and AI Acceleration (youtube.com)
Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation (youtube.com)
The European Grand Digital Regulation Project: What is our Theory of Change? (youtube.com)
Antitrust as Agent for Change (youtube.com)
Conversation with Chair Lina Khan (youtube.com)
AI Act DSA and DMA Implementation (youtube.com)
Concluding Fireside (youtube.com)
Commissioner Reynders Address (youtube.com)
Fireside with AAG Jonathan Kanter (youtube.com)
View the photos of the conference
cristinacaffarra.com://vladvdk.pixieset.com/antitrustregulationandthenextworldorder/
Antitrust, Regulation and the Next World Order | Cristina’s Conference Script
These are my notes for running the panels.
8.15 Cristina’s intro
[Welcome] A personal note. I started this conference in this ballroom over 15 years ago. We had the first EC Chief Economist, was all about the “more economic approach”. For 10 years it was titled “Economic Developments in Competition Law” (so boring), with indistinguishable panels on mergers, Art. 102, exegesis of Court decisions (“by object and by effect”), cartels and damages. And then gradually from 2018 I started asking “wait, what are we doing with this more economic approach? Is concentration rising? do we have a problem? what is going on with digital platforms?” – accelerating in 2020 with “Time of Upheaval”, “Disrupted times”, “The Political Economy”… now “the NEXT WORLD ORDER”.
Incomprehension / consternation in the Antitrust Bubble “WHAT IS CRISTINA TALKING ABOUT – we know what we are doing, we apply COMPETITION LAW, we just need some USEFUL TAME ECONOMISTS to do our submissions & tell the regulator it’s all efficient and procompetitive. What we are doing is PURE. It’s technical. We are specialists. We know our stuff. We don’t want to contaminate this PURE THING with POLITICS! We DECIDED antitrust in Europe was an objective science and to be practiced by technocrats, not politicians!”
Every few decades the political economy gets to a point, and then the pendulum swings. It was clear to me by 2018 we were coming to the end of that era. There were voices saying wait, what we are doing is not right – Lina Khan spoke HERE in 2018, Barry Lynn came to Brussels when what he was saying on market power was really thought to be radical and dangerous – “these New Brandeisians are the mad populist fringe, we know what we are doing over here”
The world has kept hurtling through crises at crazy speed – just skirting mass extinction through disease, planet is boiling, WAR and genocide on our doorstep, inflation, ….and masses of inequality, unfairness, exploitation, surveillance. It’s clear the classic neoliberal consensus (consumer welfare, efficiency, no barriers, trickle down economics) has run its course. PEOPLE are restless. They want to be seen as citizens and workers, not just consumers, want attention to people and planet, to justice, to growth that is more equal and fair, democracy. This is a massive shift – no longer a fringe view, we understand that POWER EXISTS in the REAL WORLD. And ANTITRUST matters because it is a critical “check” to capital, that pre-empts concentration and protects economic freedoms for everyone not just for corporates.
This shift has happened in the US where antitrust regulators have revived flagging antitrust along this agenda: more fairness, more equality, stop concentration of power. And it is a shift which is also connected to other shifts in industrial policy and trade: all these regulatory realms – trade, industrial policy, antitrust, privacy – they ALL intersect. The common theme is that EFFICIENCY IS OVER. As the lodestar of what we do, in multiple fields.
So we have a European election in June and one in November in the US, I continue to find it extraordinary that people who work in antitrust think this is nothing to do with them. The question is what should the agenda be for antitrust, and trade, and industrial policy, to reboot economic growth which is flagging in Europe, to reindustrialise, to muscle up the economies in ways that are fairer.
= DO NOT THINK antitrust has nothing to do with this. It has a lot to do with this. But we need to broaden out. So the DMA is not an economic policy alone, it is one piece of it. Taming tech giants is not going to put points on GDP even if getting them to behave more fairly matters.
The US regulators we are going to hear today have been part of an “all of government” approach, and they are connecting the dots. Khan, Tai, Kanter, Chopra, Boushey. What if Trump wins? Much of this is centrist and bipartisan actually. What is the vision for the next 4/5 years?
Antitrust, Regulation and the Next World Order | Brussels | 31 January 24
View the individual panel videos of the conference
Chair Scene Setting (youtube.com)
Rebooting the Next Commission (youtube.com)
“From Price to Power”? Reorienting Antitrust for the New Political Economy (youtube.com)
Are the Courts Likely to Listen (youtube.com)
Market Power Dysfunctions: Seller Inflation, Inequality and AI Acceleration (youtube.com)
Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation (youtube.com)
The European Grand Digital Regulation Project: What is our Theory of Change? (youtube.com)
Antitrust as Agent for Change (youtube.com)
Conversation with Chair Lina Khan (youtube.com)
AI Act DSA and DMA Implementation (youtube.com)
Concluding Fireside (youtube.com)
Commissioner Reynders Address (youtube.com)
Fireside with AAG Jonathan Kanter (youtube.com)
View the photos of the conference
cristinacaffarra.com://vladvdk.pixieset.com/antitrustregulationandthenextworldorder/
Antitrust, Regulation and the Next World Order | Cristina’s Conference Script
These are my notes for running the panels.
8.15 Cristina’s intro
[Welcome] A personal note. I started this conference in this ballroom over 15 years ago. We had the first EC Chief Economist, was all about the “more economic approach”. For 10 years it was titled “Economic Developments in Competition Law” (so boring), with indistinguishable panels on mergers, Art. 102, exegesis of Court decisions (“by object and by effect”), cartels and damages. And then gradually from 2018 I started asking “wait, what are we doing with this more economic approach? Is concentration rising? do we have a problem? what is going on with digital platforms?” – accelerating in 2020 with “Time of Upheaval”, “Disrupted times”, “The Political Economy”… now “the NEXT WORLD ORDER”.
Incomprehension / consternation in the Antitrust Bubble “WHAT IS CRISTINA TALKING ABOUT – we know what we are doing, we apply COMPETITION LAW, we just need some USEFUL TAME ECONOMISTS to do our submissions & tell the regulator it’s all efficient and procompetitive. What we are doing is PURE. It’s technical. We are specialists. We know our stuff. We don’t want to contaminate this PURE THING with POLITICS! We DECIDED antitrust in Europe was an objective science and to be practiced by technocrats, not politicians!”
Every few decades the political economy gets to a point, and then the pendulum swings. It was clear to me by 2018 we were coming to the end of that era. There were voices saying wait, what we are doing is not right – Lina Khan spoke HERE in 2018, Barry Lynn came to Brussels when what he was saying on market power was really thought to be radical and dangerous – “these New Brandeisians are the mad populist fringe, we know what we are doing over here”
The world has kept hurtling through crises at crazy speed – just skirting mass extinction through disease, planet is boiling, WAR and genocide on our doorstep, inflation, ….and masses of inequality, unfairness, exploitation, surveillance. It’s clear the classic neoliberal consensus (consumer welfare, efficiency, no barriers, trickle down economics) has run its course. PEOPLE are restless. They want to be seen as citizens and workers, not just consumers, want attention to people and planet, to justice, to growth that is more equal and fair, democracy. This is a massive shift – no longer a fringe view, we understand that POWER EXISTS in the REAL WORLD. And ANTITRUST matters because it is a critical “check” to capital, that pre-empts concentration and protects economic freedoms for everyone not just for corporates.
This shift has happened in the US where antitrust regulators have revived flagging antitrust along this agenda: more fairness, more equality, stop concentration of power. And it is a shift which is also connected to other shifts in industrial policy and trade: all these regulatory realms – trade, industrial policy, antitrust, privacy – they ALL intersect. The common theme is that EFFICIENCY IS OVER. As the lodestar of what we do, in multiple fields.
So we have a European election in June and one in November in the US, I continue to find it extraordinary that people who work in antitrust think this is nothing to do with them. The question is what should the agenda be for antitrust, and trade, and industrial policy, to reboot economic growth which is flagging in Europe, to reindustrialise, to muscle up the economies in ways that are fairer.
= DO NOT THINK antitrust has nothing to do with this. It has a lot to do with this. But we need to broaden out. So the DMA is not an economic policy alone, it is one piece of it. Taming tech giants is not going to put points on GDP even if getting them to behave more fairly matters.
The US regulators we are going to hear today have been part of an “all of government” approach, and they are connecting the dots. Khan, Tai, Kanter, Chopra, Boushey. What if Trump wins? Much of this is centrist and bipartisan actually. What is the vision for the next 4/5 years?
8.20-8.50 Rebooting the Next Commission – Fireside with Olivier Guersent and Andreas Schwab
Theme of today is what we want for the NEXT Commission. So no retrospective. Just forward looking.
- Let’s start NOT from digital for a change. One big theme in the post-neoliberal pendulum swing is to say we’ve gone too far with efficiency/lowering trade barriers/offshoring which have hollowed European industrial capacity, we need reindustrialisation, creating capacity in Europe, sovereignty, resilience etc. Competition (and state aid rules) have been a sacred cow. “We need to defend against bad national champions, we need to really allow for state investment only if there are market failures and if intervention improves efficiency”. Is this still fit for purpose? The Letta Report anticipated a couple of weeks ago said we need to rethink state aid rules (too much fixation on “efficiency”) in the face of the massive emergencies for Europe. There’s a huge discussion of “new industrial policy”, we will hear later today from White House. Isn’t this of the things we need to rethink: how can competition support this effort in the next 5 years? Or is it business as usual, same tests, same IPCEI examples?
- Amazon/iRobot. Aside from the theory of harm (“protecting competition in robot cleaners”) that seems a bit dumb to me, does it mean more generally we’ve come to the end of the line for Big Tech deals? Is this the message – if it is, I agree with it – but is it what we think it means? Merger control is super powerful to control allocation of assets before it is too late. In a world in which we had to pivot to the DMA to try and do something about power and concentration of Big Tech ex-post, is this saying “look, enough, we learned the lessons and now go invent something but honestly you don’t need to own a robot cleaner”. Hasn’t the error cost assessment (Type 1 vs Type 2) error radically changed in the current world? Is this the message companies should finally take up?
- “DMA 2.0” – we all know it’s being implemented etc, don’t want to talk about that process, but about what comes next. First what’s not covered – the designation covered the low hanging fruit, but then? Cloud, AI, what are we doing about that? Do we need new law or is it a matter of applying the current law?
- What is the agenda for the next Commission?
8.50-9.50 “From Price to Power”? Reorienting Antitrust for the New Political Economy
Andreas Mundt
Luigi Zingales
Tommaso Valletti
Rebecca Slaughter
Gina Cass-Gottlieb
We’ll continue the theme. We are in a world of emergencies. Antitrust can be a little island populated by technocrats who say we have THE LAW, we have our technical rules, we have models and techniques, all these ideas about abandoning the true religion of consumer welfare and orthodoxy mean making antitrust political, we need it to be neutral. First, is it true we are neutral and apolitical in our current posture. Second, how does enforcement adapt and reflect the way the world around us evolved? We have been worrying only about PRICE – as long as prices go down that’s good, but then we have seen power rising massively and now we worry about POWER, the control over markets, inequality, distribution, democracy. Markets are now much more concentrated, industrial capacity has been removed through serial deals in key sectors, we are the target of extractive digital monopolies which keep expanding their ecosystems in all directions, not to mention the polycrises which have exposed massive fragilities and led to inflation flareups etc. What we are seeing are major paradigm shifts in the US, ALSO in antitrust. This is a huge deal.
Luigi: is what we are doing today pure and not political, is efficiency a pure and a-political goal. Should antitrust be a neutral technocratic endeavour? Is there “purity” in antitrust? When we talk about New Brandeis, and the interest for “power, not price”, what has changed?
Tommaso: economists have weighed into antitrust with the “more economic approach” successful campaign, but we ended up as a narrow church preoccupied with what we pretend to be a pure and technocratic endeavour. How do we shake the profession from oblivion, how do we think about “power” vs “price” as the goal. Mention “Economists are a tribal clique” Christine Lagarde
Andreas – How do you think of this, How is the focus and the posture changing with the political economy? can obviously talk about examples from the update of the German Law and your enforcement focus. But also more broadly you are President of ICN. Surely there is appetite e.g. from the Global South for more engagement on the bigger issues.
Rebecca: The FTC has been at the forefront of a major reinvigoration of antitrust in the US. Yes, digging out the “original animating values” but also a very “fierce sense of urgency” things had been allowed to flag in the past and a major shakeup was needed. Using agency powers to do much more.
Gina: You are in the midst of major battles to reform merger law in Australia, with much resistance, claims enforcement will curb growth etc. I understand under your voluntary regime 2/3 of deals are never reported – a huge proportion. Yet it seems you are facing considerable struggle and constraints to drive through a different posture/rules in Australia.
9.50-10.10 Are the Courts Likely to Listen? Conversation with Marc Van Der Woude and Sir Marcus Smith
Marc, in Lisbon you talked about the “new orientation” blowing through antitrust and how are the courts to position themselves there. In the US the courts have been thought of as a major source of resistance – having been indoctrinated at the Manne and Scalia Schools. Yet there are amazing signs some change is appening: judgment in airline cases (JetBlue-AA/Jetblue/Spirit), Illumina/Grail, IQvia in digital advertising. Are the courts in Europe hearing the drums coming from the hills? Inevitably they are somewhat behind, for instance the embrace of AECT in 2022 when we are now questioning it as a pro-defendant test (latest article from Massimo Motta essentially saying it is very problematic) … What is your sense for how the Courts are looking at this whole major evolution.
I know one answer is “The agencies set the direction on policy, we apply the law”. Well yes, but you make precedent. And the interpretation of the law is not immutable right? Surely the Courts and judges do think what they are doing is not immune from the political economy around. You live in the political economy. So how open you might be to arguments on concentration for example is not just a function of thinking GUPPIs is all there is to know…
10.10-11.00 Market Power Dysfunctions: Seller Inflation, Inequality & AI Acceleration
Isabella Weber
Jan Eeckout
Gabriel Zucman
Florian Ederer
Doha Mekki
Much clearer focus on the threat posed by concentration itself, by market power itself, in all its manifestations – discrimination, inequality, exploitation, loss of voice and ultimately threat to democracy. THIS is the message: ladies and gentlemen, forget the quaint European tradition that we worry about “conduct that abuses market power, not about market power” – WRONG! We are VERY worried about market power (and concentration) because it engenders all sort of problems. In turn, there are phenomena in the economy that we do not recognise typically as associated with antitrust, BUT have a lot to do with market power! So what gives. Antitrust needs to be cognisant of these, and enforcement in this environment needs to be also alert to these. “We are not a silo”.
Doha to start by comment on the previous panel and the change in antitrust enforcement posture. Also mention the change in posture is also notching up some recent successes, judges may be “getting it” at last. See Jetblue/Spirit.
Isabella: tonne to say about the inflation debate still raging out there!! We wont have time to go into the full glory of the macroeconomist battles on interest rates, causes and cures for inflation. Focus on your diagnosis that some of the inflationary pressure we have seen has been caused by firms “profit taking” at a time when prices were rising for other reasons. Please do explain what is your theory about the mechanism at play here (is it a form of tacit collusion?). And the empirical validation for your story (I know you have gathered much evidence of execs expressing their intent to do this, spoken to many governments and central banks about this around the world).
Gabriel: your Global Taxation Report has been out recently and I want you to explain the main findings and message: that tax evasion by the top of the multinational companies ($1,000 billion or so in profit shifted to tax havens each year globally) is exacerbating both concentration and inequality – again explain the mechanism to an audience of non-economists and regulators, and what it means for distribution and again why it is related to market power.
Jan: I will link back to your seminal work on markups and concentration, and then ask you to talk about how you are looking at the other big phenomenon of 2023, the massive acceleration of AI, and how it amplifies the concerns you highlighted previously as associated with concentration: how it will affect inequality of income and wealth – directly and by increasing superstar earnings, which are directly linked to market power. Also draw the line between inequality and the political order, via the influence of big corporations on politics, but also via the polarization of the many who feel left out and the mushrooming populism.
Florian: how come all the interesting work in economics now comes from outside IO. This panel is clear evidence. Explain why IO is pretty much dying. Then talk about your work on common ownership which is pervasive in the economy, and the fact that it is (a) super interesting but (b) not recognized enough by the IO church as not “in the orthodoxy”. This insularity and narrowness is not helpful to enforcement either.
Back to Doha: these top economists are making something painfully clear to us in the antitrust world: the “efficiency” framework is extremely narrow and misses a lot of what is threatening our sense of being citizens, of justice, and our democracy. This is not lost on enforcers and why you and Jon Kanter at the Justice department talk about democracy. Talk to us about that.
11.10-12.00 Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation
Nathan Lane
Ufuk Akgicit
Rene Repasi
Heather Boushey
This panel is intended to bring out how antitrust is also challenged by the new thinking around industrial policy. Traditional posture has been industrial policy was simply “unmentionable” in the US. In Europe it has been essentially synonymous with bad national champions, and the role of antitrust limited to state aid assessment: does state support cure a specific market failure, is it the right instrument? We are now in a polycrisis world, in which we have seen values of sovereignty and resilience become critical, in which there are major concerns about European competitiveness. It has become clear that state investment will be critical to directing effort towards goals not otherwise achievable by market forces. In parallel there is new economic thinking around industrial policy.
The purpose of this panel will be to wake up an oblivious antitrust audience to the notion that an effective industrial policy is plainly essential if we are to direct the big investments we need to address the problems of our times – loss of capacity, withered supply chains, de-industrialization, dependencies from rogue states. As Rana Foroohar puts it: the return of industrial policy isn’t the dog, but the tail. It follows a fundamental need, which is for governments to take on what used to be called “negative externalities” of the neoliberal market system — namely, inequality, climate change, financial instability and the resulting political polarization — all of which threatens capitalism and liberal democracy itself. We need industrial policy because markets simply don’t always know best. That’s Joe Stiglitz 101. THEN — you get into the fact that not all industrial policy is created equal. Nearly every major economy with the exception of the US, until quite recently, has had one. So what are best practices? What should we avoid and encourage? And crucially for this conference, how can we avoid falling into the national champions trap, even as we try to build capacity for production as well as consumption in different regions?
Nathan starting off explaining what the New Industrial Policy thinking is, what is the new empirical evidence for what works and does not work, what are the policy prescriptions. AND how does one indeed avoid falling into the national champions trap?
Ufuk to elaborate on key insights (from his book w JVR) on how do we power growth – including not just the Global North but also the Global South. Innovation is the engine for growth, but how do we influence it? How can Europe get itself out of its current predicament of low wage and productivity growth?
Heather would explain the progress made by the Biden WH to actively launch policies to support specific goals, thinking and outcomes: rebuilding capacity for critical industries, etc. “Industrial strategy”. Also what’s the response to the view this is American protectionism?
Rene to comments on whether he thinks EUROPEAN antitrust policy is too much beholden to narrow state aid controls, with their “efficiency” obsession. Note Enrico Letta, former Prime Minister of Italy, just authored a report for the Commission saying inter alia exactly this: We need to upend this narrow state aid, give the perspective of law makers: we need to power up industrial policy, but also move beyond the narrow State Aid framing. Again, though, how do we resist the bad National Champions?
12.00 – 12.45 – Connecting Trade and Competition in the Next World Order Conversation with Trade Ambassador Katherine Tai
Franziska Brantner
James Hodge
Another area where a major rethink is unfolding is trade. We are also here moving away from the neoliberal paradigm of hyperglobalisation, widely open markets and “efficiency” ad the goal, towards a new paradigm in which trade rules are not just designed to protect big corporate interests abroad, with capital and goods being completely mobile and relying on a “trickle down” fantasy to support the masses. The thinking is that trade must complement domestic policy and support the effort to protect against monopolies at home which have increased inequality and threaten democracy. It must work alongside antitrust and industrial policy to help re-industrialise, reduce dependencies and support the middle classes as a defence against Far Right and authoritarianism. This is URGENT in the run up to elections. At the same time, the Global South is raising its voice and needs to be included in shaping the post-neoliberal order.
Katherine:
- This US administration has been reviving its antimonopoly effort, and explicitly rejected efficiency goals in all areas of economic policy. You have been nominated as part of the President’s Competition Council – how do you, as Trade representative, fit into this broader domestic antimonopoly effort – particularly with Big Tech? (need to sync trade and domestic policy, touch also on JSI and why you neutralised the US position at the WTO)
Follow up:
- Expand out of Big Tech into the broader economy – the pandemic brought home the issue of brittle and broken supply chains, and that’s also been a major focus of the administration (rebuilding capacity at home) – again how does Trade fit into this? (opportunity to explain to European audience: what is being done differently from the past, why this is a important for building out the middle classes, why it is centrist and not partisan, why it is not just American protectionism, why it is a place where you see commonalities with the Global South)
Franziska:
- For Europe, following the pandemic the invasion of Ukraine has been a further wake up call that economic dependencies create major vulnerabilities. Europe experienced deindustrialisation which also makes us vulnerable. You have been vocal on the need to move away from efficiency and rebuild domestic industry, and rethink trade as a major part of this. Give us your views on this, including how competition/antitrust should assist this effort in Europe in the next mandate. Need to find common democratic ground against the rise of authoritarianism, and economic coercion. More generally a key soundbite or two about vision for next Commission.
;”>8.20-8.50 Rebooting the Next Commission – Fireside with Olivier Guersent and Andreas Schwab
Theme of today is what we want for the NEXT Commission. So no retrospective. Just forward looking.
- Let’s start NOT from digital for a change. One big theme in the post-neoliberal pendulum swing is to say we’ve gone too far with efficiency/lowering trade barriers/offshoring which have hollowed European industrial capacity, we need reindustrialisation, creating capacity in Europe, sovereignty, resilience etc. Competition (and state aid rules) have been a sacred cow. “We need to defend against bad national champions, we need to really allow for state investment only if there are market failures and if intervention improves efficiency”. Is this still fit for purpose? The Letta Report anticipated a couple of weeks ago said we need to rethink state aid rules (too much fixation on “efficiency”) in the face of the massive emergencies for Europe. There’s a huge discussion of “new industrial policy”, we will hear later today from White House. Isn’t this of the things we need to rethink: how can competition support this effort in the next 5 years? Or is it business as usual, same tests, same IPCEI examples?
- Amazon/iRobot. Aside from the theory of harm (“protecting competition in robot cleaners”) that seems a bit dumb to me, does it mean more generally we’ve come to the end of the line for Big Tech deals? Is this the message – if it is, I agree with it – but is it what we think it means? Merger control is super powerful to control allocation of assets before it is too late. In a world in which we had to pivot to the DMA to try and do something about power and concentration of Big Tech ex-post, is this saying “look, enough, we learned the lessons and now go invent something but honestly you don’t need to own a robot cleaner”. Hasn’t the error cost assessment (Type 1 vs Type 2) error radically changed in the current world? Is this the message companies should finally take up?
- “DMA 2.0” – we all know it’s being implemented etc, don’t want to talk about that process, but about what comes next. First what’s not covered – the designation covered the low hanging fruit, but then? Cloud, AI, what are we doing about that? Do we need new law or is it a matter of applying the current law?
- What is the agenda for the next Commission?
8.50-9.50 “From Price to Power”? Reorienting Antitrust for the New Political Economy
Andreas Mundt
Luigi Zingales
Tommaso Valletti
Rebecca Slaughter
Gina Cass-Gottlieb
We’ll continue the theme. We are in a world of emergencies. Antitrust can be a little island populated by technocrats who say we have THE LAW, we have our technical rules, we have models and techniques, all these ideas about abandoning the true religion of consumer welfare and orthodoxy mean making antitrust political, we need it to be neutral. First, is it true we are neutral and apolitical in our current posture. Second, how does enforcement adapt and reflect the way the world around us evolved? We have been worrying only about PRICE – as long as prices go down that’s good, but then we have seen power rising massively and now we worry about POWER, the control over markets, inequality, distribution, democracy. Markets are now much more concentrated, industrial capacity has been removed through serial deals in key sectors, we are the target of extractive digital monopolies which keep expanding their ecosystems in all directions, not to mention the polycrises which have exposed massive fragilities and led to inflation flareups etc. What we are seeing are major paradigm shifts in the US, ALSO in antitrust. This is a huge deal.
Luigi: is what we are doing today pure and not political, is efficiency a pure and a-political goal. Should antitrust be a neutral technocratic endeavour? Is there “purity” in antitrust? When we talk about New Brandeis, and the interest for “power, not price”, what has changed?
Tommaso: economists have weighed into antitrust with the “more economic approach” successful campaign, but we ended up as a narrow church preoccupied with what we pretend to be a pure and technocratic endeavour. How do we shake the profession from oblivion, how do we think about “power” vs “price” as the goal. Mention “Economists are a tribal clique” Christine Lagarde
Andreas – How do you think of this, How is the focus and the posture changing with the political economy? can obviously talk about examples from the update of the German Law and your enforcement focus. But also more broadly you are President of ICN. Surely there is appetite e.g. from the Global South for more engagement on the bigger issues.
Rebecca: The FTC has been at the forefront of a major reinvigoration of antitrust in the US. Yes, digging out the “original animating values” but also a very “fierce sense of urgency” things had been allowed to flag in the past and a major shakeup was needed. Using agency powers to do much more.
Gina: You are in the midst of major battles to reform merger law in Australia, with much resistance, claims enforcement will curb growth etc. I understand under your voluntary regime 2/3 of deals are never reported – a huge proportion. Yet it seems you are facing considerable struggle and constraints to drive through a different posture/rules in Australia.
9.50-10.10 Are the Courts Likely to Listen? Conversation with Marc Van Der Woude and Sir Marcus Smith
Marc, in Lisbon you talked about the “new orientation” blowing through antitrust and how are the courts to position themselves there. In the US the courts have been thought of as a major source of resistance – having been indoctrinated at the Manne and Scalia Schools. Yet there are amazing signs some change is appening: judgment in airline cases (JetBlue-AA/Jetblue/Spirit), Illumina/Grail, IQvia in digital advertising. Are the courts in Europe hearing the drums coming from the hills? Inevitably they are somewhat behind, for instance the embrace of AECT in 2022 when we are now questioning it as a pro-defendant test (latest article from Massimo Motta essentially saying it is very problematic) … What is your sense for how the Courts are looking at this whole major evolution.
I know one answer is “The agencies set the direction on policy, we apply the law”. Well yes, but you make precedent. And the interpretation of the law is not immutable right? Surely the Courts and judges do think what they are doing is not immune from the political economy around. You live in the political economy. So how open you might be to arguments on concentration for example is not just a function of thinking GUPPIs is all there is to know…
Antitrust, Regulation and the Next World Order | Brussels | 31 January 24
View the individual panel videos of the conference
Chair Scene Setting (youtube.com)
Rebooting the Next Commission (youtube.com)
“From Price to Power”? Reorienting Antitrust for the New Political Economy (youtube.com)
Are the Courts Likely to Listen (youtube.com)
Market Power Dysfunctions: Seller Inflation, Inequality and AI Acceleration (youtube.com)
Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation (youtube.com)
The European Grand Digital Regulation Project: What is our Theory of Change? (youtube.com)
Antitrust as Agent for Change (youtube.com)
Conversation with Chair Lina Khan (youtube.com)
AI Act DSA and DMA Implementation (youtube.com)
Concluding Fireside (youtube.com)
Commissioner Reynders Address (youtube.com)
Fireside with AAG Jonathan Kanter (youtube.com)
View the photos of the conference
cristinacaffarra.com://vladvdk.pixieset.com/antitrustregulationandthenextworldorder/
Antitrust, Regulation and the Next World Order | Cristina’s Conference Script
These are my notes for running the panels.
8.15 Cristina’s intro
[Welcome] A personal note. I started this conference in this ballroom over 15 years ago. We had the first EC Chief Economist, was all about the “more economic approach”. For 10 years it was titled “Economic Developments in Competition Law” (so boring), with indistinguishable panels on mergers, Art. 102, exegesis of Court decisions (“by object and by effect”), cartels and damages. And then gradually from 2018 I started asking “wait, what are we doing with this more economic approach? Is concentration rising? do we have a problem? what is going on with digital platforms?” – accelerating in 2020 with “Time of Upheaval”, “Disrupted times”, “The Political Economy”… now “the NEXT WORLD ORDER”.
Incomprehension / consternation in the Antitrust Bubble “WHAT IS CRISTINA TALKING ABOUT – we know what we are doing, we apply COMPETITION LAW, we just need some USEFUL TAME ECONOMISTS to do our submissions & tell the regulator it’s all efficient and procompetitive. What we are doing is PURE. It’s technical. We are specialists. We know our stuff. We don’t want to contaminate this PURE THING with POLITICS! We DECIDED antitrust in Europe was an objective science and to be practiced by technocrats, not politicians!”
Every few decades the political economy gets to a point, and then the pendulum swings. It was clear to me by 2018 we were coming to the end of that era. There were voices saying wait, what we are doing is not right – Lina Khan spoke HERE in 2018, Barry Lynn came to Brussels when what he was saying on market power was really thought to be radical and dangerous – “these New Brandeisians are the mad populist fringe, we know what we are doing over here”
The world has kept hurtling through crises at crazy speed – just skirting mass extinction through disease, planet is boiling, WAR and genocide on our doorstep, inflation, ….and masses of inequality, unfairness, exploitation, surveillance. It’s clear the classic neoliberal consensus (consumer welfare, efficiency, no barriers, trickle down economics) has run its course. PEOPLE are restless. They want to be seen as citizens and workers, not just consumers, want attention to people and planet, to justice, to growth that is more equal and fair, democracy. This is a massive shift – no longer a fringe view, we understand that POWER EXISTS in the REAL WORLD. And ANTITRUST matters because it is a critical “check” to capital, that pre-empts concentration and protects economic freedoms for everyone not just for corporates.
This shift has happened in the US where antitrust regulators have revived flagging antitrust along this agenda: more fairness, more equality, stop concentration of power. And it is a shift which is also connected to other shifts in industrial policy and trade: all these regulatory realms – trade, industrial policy, antitrust, privacy – they ALL intersect. The common theme is that EFFICIENCY IS OVER. As the lodestar of what we do, in multiple fields.
So we have a European election in June and one in November in the US, I continue to find it extraordinary that people who work in antitrust think this is nothing to do with them. The question is what should the agenda be for antitrust, and trade, and industrial policy, to reboot economic growth which is flagging in Europe, to reindustrialise, to muscle up the economies in ways that are fairer.
= DO NOT THINK antitrust has nothing to do with this. It has a lot to do with this. But we need to broaden out. So the DMA is not an economic policy alone, it is one piece of it. Taming tech giants is not going to put points on GDP even if getting them to behave more fairly matters.
The US regulators we are going to hear today have been part of an “all of government” approach, and they are connecting the dots. Khan, Tai, Kanter, Chopra, Boushey. What if Trump wins? Much of this is centrist and bipartisan actually. What is the vision for the next 4/5 years?
8.20-8.50 Rebooting the Next Commission – Fireside with Olivier Guersent and Andreas Schwab
Theme of today is what we want for the NEXT Commission. So no retrospective. Just forward looking.
- Let’s start NOT from digital for a change. One big theme in the post-neoliberal pendulum swing is to say we’ve gone too far with efficiency/lowering trade barriers/offshoring which have hollowed European industrial capacity, we need reindustrialisation, creating capacity in Europe, sovereignty, resilience etc. Competition (and state aid rules) have been a sacred cow. “We need to defend against bad national champions, we need to really allow for state investment only if there are market failures and if intervention improves efficiency”. Is this still fit for purpose? The Letta Report anticipated a couple of weeks ago said we need to rethink state aid rules (too much fixation on “efficiency”) in the face of the massive emergencies for Europe. There’s a huge discussion of “new industrial policy”, we will hear later today from White House. Isn’t this of the things we need to rethink: how can competition support this effort in the next 5 years? Or is it business as usual, same tests, same IPCEI examples?
- Amazon/iRobot. Aside from the theory of harm (“protecting competition in robot cleaners”) that seems a bit dumb to me, does it mean more generally we’ve come to the end of the line for Big Tech deals? Is this the message – if it is, I agree with it – but is it what we think it means? Merger control is super powerful to control allocation of assets before it is too late. In a world in which we had to pivot to the DMA to try and do something about power and concentration of Big Tech ex-post, is this saying “look, enough, we learned the lessons and now go invent something but honestly you don’t need to own a robot cleaner”. Hasn’t the error cost assessment (Type 1 vs Type 2) error radically changed in the current world? Is this the message companies should finally take up?
- “DMA 2.0” – we all know it’s being implemented etc, don’t want to talk about that process, but about what comes next. First what’s not covered – the designation covered the low hanging fruit, but then? Cloud, AI, what are we doing about that? Do we need new law or is it a matter of applying the current law?
- What is the agenda for the next Commission?
8.50-9.50 “From Price to Power”? Reorienting Antitrust for the New Political Economy
Andreas Mundt
Luigi Zingales
Tommaso Valletti
Rebecca Slaughter
Gina Cass-Gottlieb
We’ll continue the theme. We are in a world of emergencies. Antitrust can be a little island populated by technocrats who say we have THE LAW, we have our technical rules, we have models and techniques, all these ideas about abandoning the true religion of consumer welfare and orthodoxy mean making antitrust political, we need it to be neutral. First, is it true we are neutral and apolitical in our current posture. Second, how does enforcement adapt and reflect the way the world around us evolved? We have been worrying only about PRICE – as long as prices go down that’s good, but then we have seen power rising massively and now we worry about POWER, the control over markets, inequality, distribution, democracy. Markets are now much more concentrated, industrial capacity has been removed through serial deals in key sectors, we are the target of extractive digital monopolies which keep expanding their ecosystems in all directions, not to mention the polycrises which have exposed massive fragilities and led to inflation flareups etc. What we are seeing are major paradigm shifts in the US, ALSO in antitrust. This is a huge deal.
Luigi: is what we are doing today pure and not political, is efficiency a pure and a-political goal. Should antitrust be a neutral technocratic endeavour? Is there “purity” in antitrust? When we talk about New Brandeis, and the interest for “power, not price”, what has changed?
Tommaso: economists have weighed into antitrust with the “more economic approach” successful campaign, but we ended up as a narrow church preoccupied with what we pretend to be a pure and technocratic endeavour. How do we shake the profession from oblivion, how do we think about “power” vs “price” as the goal. Mention “Economists are a tribal clique” Christine Lagarde
Andreas – How do you think of this, How is the focus and the posture changing with the political economy? can obviously talk about examples from the update of the German Law and your enforcement focus. But also more broadly you are President of ICN. Surely there is appetite e.g. from the Global South for more engagement on the bigger issues.
Rebecca: The FTC has been at the forefront of a major reinvigoration of antitrust in the US. Yes, digging out the “original animating values” but also a very “fierce sense of urgency” things had been allowed to flag in the past and a major shakeup was needed. Using agency powers to do much more.
Gina: You are in the midst of major battles to reform merger law in Australia, with much resistance, claims enforcement will curb growth etc. I understand under your voluntary regime 2/3 of deals are never reported – a huge proportion. Yet it seems you are facing considerable struggle and constraints to drive through a different posture/rules in Australia.
9.50-10.10 Are the Courts Likely to Listen? Conversation with Marc Van Der Woude and Sir Marcus Smith
Marc, in Lisbon you talked about the “new orientation” blowing through antitrust and how are the courts to position themselves there. In the US the courts have been thought of as a major source of resistance – having been indoctrinated at the Manne and Scalia Schools. Yet there are amazing signs some change is appening: judgment in airline cases (JetBlue-AA/Jetblue/Spirit), Illumina/Grail, IQvia in digital advertising. Are the courts in Europe hearing the drums coming from the hills? Inevitably they are somewhat behind, for instance the embrace of AECT in 2022 when we are now questioning it as a pro-defendant test (latest article from Massimo Motta essentially saying it is very problematic) … What is your sense for how the Courts are looking at this whole major evolution.
I know one answer is “The agencies set the direction on policy, we apply the law”. Well yes, but you make precedent. And the interpretation of the law is not immutable right? Surely the Courts and judges do think what they are doing is not immune from the political economy around. You live in the political economy. So how open you might be to arguments on concentration for example is not just a function of thinking GUPPIs is all there is to know…
10.10-11.00 Market Power Dysfunctions: Seller Inflation, Inequality & AI Acceleration
Isabella Weber
Jan Eeckout
Gabriel Zucman
Florian Ederer
Doha Mekki
Much clearer focus on the threat posed by concentration itself, by market power itself, in all its manifestations – discrimination, inequality, exploitation, loss of voice and ultimately threat to democracy. THIS is the message: ladies and gentlemen, forget the quaint European tradition that we worry about “conduct that abuses market power, not about market power” – WRONG! We are VERY worried about market power (and concentration) because it engenders all sort of problems. In turn, there are phenomena in the economy that we do not recognise typically as associated with antitrust, BUT have a lot to do with market power! So what gives. Antitrust needs to be cognisant of these, and enforcement in this environment needs to be also alert to these. “We are not a silo”.
Doha to start by comment on the previous panel and the change in antitrust enforcement posture. Also mention the change in posture is also notching up some recent successes, judges may be “getting it” at last. See Jetblue/Spirit.
Isabella: tonne to say about the inflation debate still raging out there!! We wont have time to go into the full glory of the macroeconomist battles on interest rates, causes and cures for inflation. Focus on your diagnosis that some of the inflationary pressure we have seen has been caused by firms “profit taking” at a time when prices were rising for other reasons. Please do explain what is your theory about the mechanism at play here (is it a form of tacit collusion?). And the empirical validation for your story (I know you have gathered much evidence of execs expressing their intent to do this, spoken to many governments and central banks about this around the world).
Gabriel: your Global Taxation Report has been out recently and I want you to explain the main findings and message: that tax evasion by the top of the multinational companies ($1,000 billion or so in profit shifted to tax havens each year globally) is exacerbating both concentration and inequality – again explain the mechanism to an audience of non-economists and regulators, and what it means for distribution and again why it is related to market power.
Jan: I will link back to your seminal work on markups and concentration, and then ask you to talk about how you are looking at the other big phenomenon of 2023, the massive acceleration of AI, and how it amplifies the concerns you highlighted previously as associated with concentration: how it will affect inequality of income and wealth – directly and by increasing superstar earnings, which are directly linked to market power. Also draw the line between inequality and the political order, via the influence of big corporations on politics, but also via the polarization of the many who feel left out and the mushrooming populism.
Florian: how come all the interesting work in economics now comes from outside IO. This panel is clear evidence. Explain why IO is pretty much dying. Then talk about your work on common ownership which is pervasive in the economy, and the fact that it is (a) super interesting but (b) not recognized enough by the IO church as not “in the orthodoxy”. This insularity and narrowness is not helpful to enforcement either.
Back to Doha: these top economists are making something painfully clear to us in the antitrust world: the “efficiency” framework is extremely narrow and misses a lot of what is threatening our sense of being citizens, of justice, and our democracy. This is not lost on enforcers and why you and Jon Kanter at the Justice department talk about democracy. Talk to us about that.
11.10-12.00 Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation
Nathan Lane
Ufuk Akgicit
Rene Repasi
Heather Boushey
This panel is intended to bring out how antitrust is also challenged by the new thinking around industrial policy. Traditional posture has been industrial policy was simply “unmentionable” in the US. In Europe it has been essentially synonymous with bad national champions, and the role of antitrust limited to state aid assessment: does state support cure a specific market failure, is it the right instrument? We are now in a polycrisis world, in which we have seen values of sovereignty and resilience become critical, in which there are major concerns about European competitiveness. It has become clear that state investment will be critical to directing effort towards goals not otherwise achievable by market forces. In parallel there is new economic thinking around industrial policy.
The purpose of this panel will be to wake up an oblivious antitrust audience to the notion that an effective industrial policy is plainly essential if we are to direct the big investments we need to address the problems of our times – loss of capacity, withered supply chains, de-industrialization, dependencies from rogue states. As Rana Foroohar puts it: the return of industrial policy isn’t the dog, but the tail. It follows a fundamental need, which is for governments to take on what used to be called “negative externalities” of the neoliberal market system — namely, inequality, climate change, financial instability and the resulting political polarization — all of which threatens capitalism and liberal democracy itself. We need industrial policy because markets simply don’t always know best. That’s Joe Stiglitz 101. THEN — you get into the fact that not all industrial policy is created equal. Nearly every major economy with the exception of the US, until quite recently, has had one. So what are best practices? What should we avoid and encourage? And crucially for this conference, how can we avoid falling into the national champions trap, even as we try to build capacity for production as well as consumption in different regions?
Nathan starting off explaining what the New Industrial Policy thinking is, what is the new empirical evidence for what works and does not work, what are the policy prescriptions. AND how does one indeed avoid falling into the national champions trap?
Ufuk to elaborate on key insights (from his book w JVR) on how do we power growth – including not just the Global North but also the Global South. Innovation is the engine for growth, but how do we influence it? How can Europe get itself out of its current predicament of low wage and productivity growth?
Heather would explain the progress made by the Biden WH to actively launch policies to support specific goals, thinking and outcomes: rebuilding capacity for critical industries, etc. “Industrial strategy”. Also what’s the response to the view this is American protectionism?
Rene to comments on whether he thinks EUROPEAN antitrust policy is too much beholden to narrow state aid controls, with their “efficiency” obsession. Note Enrico Letta, former Prime Minister of Italy, just authored a report for the Commission saying inter alia exactly this: We need to upend this narrow state aid, give the perspective of law makers: we need to power up industrial policy, but also move beyond the narrow State Aid framing. Again, though, how do we resist the bad National Champions?
12.00 – 12.45 – Connecting Trade and Competition in the Next World Order Conversation with Trade Ambassador Katherine Tai
Franziska Brantner
James Hodge
Another area where a major rethink is unfolding is trade. We are also here moving away from the neoliberal paradigm of hyperglobalisation, widely open markets and “efficiency” ad the goal, towards a new paradigm in which trade rules are not just designed to protect big corporate interests abroad, with capital and goods being completely mobile and relying on a “trickle down” fantasy to support the masses. The thinking is that trade must complement domestic policy and support the effort to protect against monopolies at home which have increased inequality and threaten democracy. It must work alongside antitrust and industrial policy to help re-industrialise, reduce dependencies and support the middle classes as a defence against Far Right and authoritarianism. This is URGENT in the run up to elections. At the same time, the Global South is raising its voice and needs to be included in shaping the post-neoliberal order.
Katherine:
- This US administration has been reviving its antimonopoly effort, and explicitly rejected efficiency goals in all areas of economic policy. You have been nominated as part of the President’s Competition Council – how do you, as Trade representative, fit into this broader domestic antimonopoly effort – particularly with Big Tech? (need to sync trade and domestic policy, touch also on JSI and why you neutralised the US position at the WTO)
Follow up:
- Expand out of Big Tech into the broader economy – the pandemic brought home the issue of brittle and broken supply chains, and that’s also been a major focus of the administration (rebuilding capacity at home) – again how does Trade fit into this? (opportunity to explain to European audience: what is being done differently from the past, why this is a important for building out the middle classes, why it is centrist and not partisan, why it is not just American protectionism, why it is a place where you see commonalities with the Global South)
Franziska:
- For Europe, following the pandemic the invasion of Ukraine has been a further wake up call that economic dependencies create major vulnerabilities. Europe experienced deindustrialisation which also makes us vulnerable. You have been vocal on the need to move away from efficiency and rebuild domestic industry, and rethink trade as a major part of this. Give us your views on this, including how competition/antitrust should assist this effort in Europe in the next mandate. Need to find common democratic ground against the rise of authoritarianism, and economic coercion. More generally a key soundbite or two about vision for next Commission.
;”>10.10-11.00 Market Power Dysfunctions: Seller Inflation, Inequality & AI Acceleration
Isabella Weber
Jan Eeckout
Gabriel Zucman
Florian Ederer
Doha Mekki
Much clearer focus on the threat posed by concentration itself, by market power itself, in all its manifestations – discrimination, inequality, exploitation, loss of voice and ultimately threat to democracy. THIS is the message: ladies and gentlemen, forget the quaint European tradition that we worry about “conduct that abuses market power, not about market power” – WRONG! We are VERY worried about market power (and concentration) because it engenders all sort of problems. In turn, there are phenomena in the economy that we do not recognise typically as associated with antitrust, BUT have a lot to do with market power! So what gives. Antitrust needs to be cognisant of these, and enforcement in this environment needs to be also alert to these. “We are not a silo”.
Doha to start by comment on the previous panel and the change in antitrust enforcement posture. Also mention the change in posture is also notching up some recent successes, judges may be “getting it” at last. See Jetblue/Spirit.
Isabella: tonne to say about the inflation debate still raging out there!! We wont have time to go into the full glory of the macroeconomist battles on interest rates, causes and cures for inflation. Focus on your diagnosis that some of the inflationary pressure we have seen has been caused by firms “profit taking” at a time when prices were rising for other reasons. Please do explain what is your theory about the mechanism at play here (is it a form of tacit collusion?). And the empirical validation for your story (I know you have gathered much evidence of execs expressing their intent to do this, spoken to many governments and central banks about this around the world).
Gabriel: your Global Taxation Report has been out recently and I want you to explain the main findings and message: that tax evasion by the top of the multinational companies ($1,000 billion or so in profit shifted to tax havens each year globally) is exacerbating both concentration and inequality – again explain the mechanism to an audience of non-economists and regulators, and what it means for distribution and again why it is related to market power.
Jan: I will link back to your seminal work on markups and concentration, and then ask you to talk about how you are looking at the other big phenomenon of 2023, the massive acceleration of AI, and how it amplifies the concerns you highlighted previously as associated with concentration: how it will affect inequality of income and wealth – directly and by increasing superstar earnings, which are directly linked to market power. Also draw the line between inequality and the political order, via the influence of big corporations on politics, but also via the polarization of the many who feel left out and the mushrooming populism.
Florian: how come all the interesting work in economics now comes from outside IO. This panel is clear evidence. Explain why IO is pretty much dying. Then talk about your work on common ownership which is pervasive in the economy, and the fact that it is (a) super interesting but (b) not recognized enough by the IO church as not “in the orthodoxy”. This insularity and narrowness is not helpful to enforcement either.
Back to Doha: these top economists are making something painfully clear to us in the antitrust world: the “efficiency” framework is extremely narrow and misses a lot of what is threatening our sense of being citizens, of justice, and our democracy. This is not lost on enforcers and why you and Jon Kanter at the Justice department talk about democracy. Talk to us about that.
11.10-12.00 Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation
Nathan Lane
Ufuk Akgicit
Rene Repasi
Heather Boushey
This panel is intended to bring out how antitrust is also challenged by the new thinking around industrial policy. Traditional posture has been industrial policy was simply “unmentionable” in the US. In Europe it has been essentially synonymous with bad national champions, and the role of antitrust limited to state aid assessment: does state support cure a specific market failure, is it the right instrument? We are now in a polycrisis world, in which we have seen values of sovereignty and resilience become critical, in which there are major concerns about European competitiveness. It has become clear that state investment will be critical to directing effort towards goals not otherwise achievable by market forces. In parallel there is new economic thinking around industrial policy.
The purpose of this panel will be to wake up an oblivious antitrust audience to the notion that an effective industrial policy is plainly essential if we are to direct the big investments we need to address the problems of our times – loss of capacity, withered supply chains, de-industrialization, dependencies from rogue states. As Rana Foroohar puts it: the return of industrial policy isn’t the dog, but the tail. It follows a fundamental need, which is for governments to take on what used to be called “negative externalities” of the neoliberal market system — namely, inequality, climate change, financial instability and the resulting political polarization — all of which threatens capitalism and liberal democracy itself. We need industrial policy because markets simply don’t always know best. That’s Joe Stiglitz 101. THEN — you get into the fact that not all industrial policy is created equal. Nearly every major economy with the exception of the US, until quite recently, has had one. So what are best practices? What should we avoid and encourage? And crucially for this conference, how can we avoid falling into the national champions trap, even as we try to build capacity for production as well as consumption in different regions?
Nathan starting off explaining what the New Industrial Policy thinking is, what is the new empirical evidence for what works and does not work, what are the policy prescriptions. AND how does one indeed avoid falling into the national champions trap?
Ufuk to elaborate on key insights (from his book w JVR) on how do we power growth – including not just the Global North but also the Global South. Innovation is the engine for growth, but how do we influence it? How can Europe get itself out of its current predicament of low wage and productivity growth?
Heather would explain the progress made by the Biden WH to actively launch policies to support specific goals, thinking and outcomes: rebuilding capacity for critical industries, etc. “Industrial strategy”. Also what’s the response to the view this is American protectionism?
Rene to comments on whether he thinks EUROPEAN antitrust policy is too much beholden to narrow state aid controls, with their “efficiency” obsession. Note Enrico Letta, former Prime Minister of Italy, just authored a report for the Commission saying inter alia exactly this: We need to upend this narrow state aid, give the perspective of law makers: we need to power up industrial policy, but also move beyond the narrow State Aid framing. Again, though, how do we resist the bad National Champions?
Antitrust, Regulation and the Next World Order | Brussels | 31 January 24
View the individual panel videos of the conference
Chair Scene Setting (youtube.com)
Rebooting the Next Commission (youtube.com)
“From Price to Power”? Reorienting Antitrust for the New Political Economy (youtube.com)
Are the Courts Likely to Listen (youtube.com)
Market Power Dysfunctions: Seller Inflation, Inequality and AI Acceleration (youtube.com)
Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation (youtube.com)
The European Grand Digital Regulation Project: What is our Theory of Change? (youtube.com)
Antitrust as Agent for Change (youtube.com)
Conversation with Chair Lina Khan (youtube.com)
AI Act DSA and DMA Implementation (youtube.com)
Concluding Fireside (youtube.com)
Commissioner Reynders Address (youtube.com)
Fireside with AAG Jonathan Kanter (youtube.com)
View the photos of the conference
cristinacaffarra.com://vladvdk.pixieset.com/antitrustregulationandthenextworldorder/
Antitrust, Regulation and the Next World Order | Cristina’s Conference Script
These are my notes for running the panels.
8.15 Cristina’s intro
[Welcome] A personal note. I started this conference in this ballroom over 15 years ago. We had the first EC Chief Economist, was all about the “more economic approach”. For 10 years it was titled “Economic Developments in Competition Law” (so boring), with indistinguishable panels on mergers, Art. 102, exegesis of Court decisions (“by object and by effect”), cartels and damages. And then gradually from 2018 I started asking “wait, what are we doing with this more economic approach? Is concentration rising? do we have a problem? what is going on with digital platforms?” – accelerating in 2020 with “Time of Upheaval”, “Disrupted times”, “The Political Economy”… now “the NEXT WORLD ORDER”.
Incomprehension / consternation in the Antitrust Bubble “WHAT IS CRISTINA TALKING ABOUT – we know what we are doing, we apply COMPETITION LAW, we just need some USEFUL TAME ECONOMISTS to do our submissions & tell the regulator it’s all efficient and procompetitive. What we are doing is PURE. It’s technical. We are specialists. We know our stuff. We don’t want to contaminate this PURE THING with POLITICS! We DECIDED antitrust in Europe was an objective science and to be practiced by technocrats, not politicians!”
Every few decades the political economy gets to a point, and then the pendulum swings. It was clear to me by 2018 we were coming to the end of that era. There were voices saying wait, what we are doing is not right – Lina Khan spoke HERE in 2018, Barry Lynn came to Brussels when what he was saying on market power was really thought to be radical and dangerous – “these New Brandeisians are the mad populist fringe, we know what we are doing over here”
The world has kept hurtling through crises at crazy speed – just skirting mass extinction through disease, planet is boiling, WAR and genocide on our doorstep, inflation, ….and masses of inequality, unfairness, exploitation, surveillance. It’s clear the classic neoliberal consensus (consumer welfare, efficiency, no barriers, trickle down economics) has run its course. PEOPLE are restless. They want to be seen as citizens and workers, not just consumers, want attention to people and planet, to justice, to growth that is more equal and fair, democracy. This is a massive shift – no longer a fringe view, we understand that POWER EXISTS in the REAL WORLD. And ANTITRUST matters because it is a critical “check” to capital, that pre-empts concentration and protects economic freedoms for everyone not just for corporates.
This shift has happened in the US where antitrust regulators have revived flagging antitrust along this agenda: more fairness, more equality, stop concentration of power. And it is a shift which is also connected to other shifts in industrial policy and trade: all these regulatory realms – trade, industrial policy, antitrust, privacy – they ALL intersect. The common theme is that EFFICIENCY IS OVER. As the lodestar of what we do, in multiple fields.
So we have a European election in June and one in November in the US, I continue to find it extraordinary that people who work in antitrust think this is nothing to do with them. The question is what should the agenda be for antitrust, and trade, and industrial policy, to reboot economic growth which is flagging in Europe, to reindustrialise, to muscle up the economies in ways that are fairer.
= DO NOT THINK antitrust has nothing to do with this. It has a lot to do with this. But we need to broaden out. So the DMA is not an economic policy alone, it is one piece of it. Taming tech giants is not going to put points on GDP even if getting them to behave more fairly matters.
The US regulators we are going to hear today have been part of an “all of government” approach, and they are connecting the dots. Khan, Tai, Kanter, Chopra, Boushey. What if Trump wins? Much of this is centrist and bipartisan actually. What is the vision for the next 4/5 years?
8.20-8.50 Rebooting the Next Commission – Fireside with Olivier Guersent and Andreas Schwab
Theme of today is what we want for the NEXT Commission. So no retrospective. Just forward looking.
- Let’s start NOT from digital for a change. One big theme in the post-neoliberal pendulum swing is to say we’ve gone too far with efficiency/lowering trade barriers/offshoring which have hollowed European industrial capacity, we need reindustrialisation, creating capacity in Europe, sovereignty, resilience etc. Competition (and state aid rules) have been a sacred cow. “We need to defend against bad national champions, we need to really allow for state investment only if there are market failures and if intervention improves efficiency”. Is this still fit for purpose? The Letta Report anticipated a couple of weeks ago said we need to rethink state aid rules (too much fixation on “efficiency”) in the face of the massive emergencies for Europe. There’s a huge discussion of “new industrial policy”, we will hear later today from White House. Isn’t this of the things we need to rethink: how can competition support this effort in the next 5 years? Or is it business as usual, same tests, same IPCEI examples?
- Amazon/iRobot. Aside from the theory of harm (“protecting competition in robot cleaners”) that seems a bit dumb to me, does it mean more generally we’ve come to the end of the line for Big Tech deals? Is this the message – if it is, I agree with it – but is it what we think it means? Merger control is super powerful to control allocation of assets before it is too late. In a world in which we had to pivot to the DMA to try and do something about power and concentration of Big Tech ex-post, is this saying “look, enough, we learned the lessons and now go invent something but honestly you don’t need to own a robot cleaner”. Hasn’t the error cost assessment (Type 1 vs Type 2) error radically changed in the current world? Is this the message companies should finally take up?
- “DMA 2.0” – we all know it’s being implemented etc, don’t want to talk about that process, but about what comes next. First what’s not covered – the designation covered the low hanging fruit, but then? Cloud, AI, what are we doing about that? Do we need new law or is it a matter of applying the current law?
- What is the agenda for the next Commission?
8.50-9.50 “From Price to Power”? Reorienting Antitrust for the New Political Economy
Andreas Mundt
Luigi Zingales
Tommaso Valletti
Rebecca Slaughter
Gina Cass-Gottlieb
We’ll continue the theme. We are in a world of emergencies. Antitrust can be a little island populated by technocrats who say we have THE LAW, we have our technical rules, we have models and techniques, all these ideas about abandoning the true religion of consumer welfare and orthodoxy mean making antitrust political, we need it to be neutral. First, is it true we are neutral and apolitical in our current posture. Second, how does enforcement adapt and reflect the way the world around us evolved? We have been worrying only about PRICE – as long as prices go down that’s good, but then we have seen power rising massively and now we worry about POWER, the control over markets, inequality, distribution, democracy. Markets are now much more concentrated, industrial capacity has been removed through serial deals in key sectors, we are the target of extractive digital monopolies which keep expanding their ecosystems in all directions, not to mention the polycrises which have exposed massive fragilities and led to inflation flareups etc. What we are seeing are major paradigm shifts in the US, ALSO in antitrust. This is a huge deal.
Luigi: is what we are doing today pure and not political, is efficiency a pure and a-political goal. Should antitrust be a neutral technocratic endeavour? Is there “purity” in antitrust? When we talk about New Brandeis, and the interest for “power, not price”, what has changed?
Tommaso: economists have weighed into antitrust with the “more economic approach” successful campaign, but we ended up as a narrow church preoccupied with what we pretend to be a pure and technocratic endeavour. How do we shake the profession from oblivion, how do we think about “power” vs “price” as the goal. Mention “Economists are a tribal clique” Christine Lagarde
Andreas – How do you think of this, How is the focus and the posture changing with the political economy? can obviously talk about examples from the update of the German Law and your enforcement focus. But also more broadly you are President of ICN. Surely there is appetite e.g. from the Global South for more engagement on the bigger issues.
Rebecca: The FTC has been at the forefront of a major reinvigoration of antitrust in the US. Yes, digging out the “original animating values” but also a very “fierce sense of urgency” things had been allowed to flag in the past and a major shakeup was needed. Using agency powers to do much more.
Gina: You are in the midst of major battles to reform merger law in Australia, with much resistance, claims enforcement will curb growth etc. I understand under your voluntary regime 2/3 of deals are never reported – a huge proportion. Yet it seems you are facing considerable struggle and constraints to drive through a different posture/rules in Australia.
9.50-10.10 Are the Courts Likely to Listen? Conversation with Marc Van Der Woude and Sir Marcus Smith
Marc, in Lisbon you talked about the “new orientation” blowing through antitrust and how are the courts to position themselves there. In the US the courts have been thought of as a major source of resistance – having been indoctrinated at the Manne and Scalia Schools. Yet there are amazing signs some change is appening: judgment in airline cases (JetBlue-AA/Jetblue/Spirit), Illumina/Grail, IQvia in digital advertising. Are the courts in Europe hearing the drums coming from the hills? Inevitably they are somewhat behind, for instance the embrace of AECT in 2022 when we are now questioning it as a pro-defendant test (latest article from Massimo Motta essentially saying it is very problematic) … What is your sense for how the Courts are looking at this whole major evolution.
I know one answer is “The agencies set the direction on policy, we apply the law”. Well yes, but you make precedent. And the interpretation of the law is not immutable right? Surely the Courts and judges do think what they are doing is not immune from the political economy around. You live in the political economy. So how open you might be to arguments on concentration for example is not just a function of thinking GUPPIs is all there is to know…
10.10-11.00 Market Power Dysfunctions: Seller Inflation, Inequality & AI Acceleration
Isabella Weber
Jan Eeckout
Gabriel Zucman
Florian Ederer
Doha Mekki
Much clearer focus on the threat posed by concentration itself, by market power itself, in all its manifestations – discrimination, inequality, exploitation, loss of voice and ultimately threat to democracy. THIS is the message: ladies and gentlemen, forget the quaint European tradition that we worry about “conduct that abuses market power, not about market power” – WRONG! We are VERY worried about market power (and concentration) because it engenders all sort of problems. In turn, there are phenomena in the economy that we do not recognise typically as associated with antitrust, BUT have a lot to do with market power! So what gives. Antitrust needs to be cognisant of these, and enforcement in this environment needs to be also alert to these. “We are not a silo”.
Doha to start by comment on the previous panel and the change in antitrust enforcement posture. Also mention the change in posture is also notching up some recent successes, judges may be “getting it” at last. See Jetblue/Spirit.
Isabella: tonne to say about the inflation debate still raging out there!! We wont have time to go into the full glory of the macroeconomist battles on interest rates, causes and cures for inflation. Focus on your diagnosis that some of the inflationary pressure we have seen has been caused by firms “profit taking” at a time when prices were rising for other reasons. Please do explain what is your theory about the mechanism at play here (is it a form of tacit collusion?). And the empirical validation for your story (I know you have gathered much evidence of execs expressing their intent to do this, spoken to many governments and central banks about this around the world).
Gabriel: your Global Taxation Report has been out recently and I want you to explain the main findings and message: that tax evasion by the top of the multinational companies ($1,000 billion or so in profit shifted to tax havens each year globally) is exacerbating both concentration and inequality – again explain the mechanism to an audience of non-economists and regulators, and what it means for distribution and again why it is related to market power.
Jan: I will link back to your seminal work on markups and concentration, and then ask you to talk about how you are looking at the other big phenomenon of 2023, the massive acceleration of AI, and how it amplifies the concerns you highlighted previously as associated with concentration: how it will affect inequality of income and wealth – directly and by increasing superstar earnings, which are directly linked to market power. Also draw the line between inequality and the political order, via the influence of big corporations on politics, but also via the polarization of the many who feel left out and the mushrooming populism.
Florian: how come all the interesting work in economics now comes from outside IO. This panel is clear evidence. Explain why IO is pretty much dying. Then talk about your work on common ownership which is pervasive in the economy, and the fact that it is (a) super interesting but (b) not recognized enough by the IO church as not “in the orthodoxy”. This insularity and narrowness is not helpful to enforcement either.
Back to Doha: these top economists are making something painfully clear to us in the antitrust world: the “efficiency” framework is extremely narrow and misses a lot of what is threatening our sense of being citizens, of justice, and our democracy. This is not lost on enforcers and why you and Jon Kanter at the Justice department talk about democracy. Talk to us about that.
11.10-12.00 Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation
Nathan Lane
Ufuk Akgicit
Rene Repasi
Heather Boushey
This panel is intended to bring out how antitrust is also challenged by the new thinking around industrial policy. Traditional posture has been industrial policy was simply “unmentionable” in the US. In Europe it has been essentially synonymous with bad national champions, and the role of antitrust limited to state aid assessment: does state support cure a specific market failure, is it the right instrument? We are now in a polycrisis world, in which we have seen values of sovereignty and resilience become critical, in which there are major concerns about European competitiveness. It has become clear that state investment will be critical to directing effort towards goals not otherwise achievable by market forces. In parallel there is new economic thinking around industrial policy.
The purpose of this panel will be to wake up an oblivious antitrust audience to the notion that an effective industrial policy is plainly essential if we are to direct the big investments we need to address the problems of our times – loss of capacity, withered supply chains, de-industrialization, dependencies from rogue states. As Rana Foroohar puts it: the return of industrial policy isn’t the dog, but the tail. It follows a fundamental need, which is for governments to take on what used to be called “negative externalities” of the neoliberal market system — namely, inequality, climate change, financial instability and the resulting political polarization — all of which threatens capitalism and liberal democracy itself. We need industrial policy because markets simply don’t always know best. That’s Joe Stiglitz 101. THEN — you get into the fact that not all industrial policy is created equal. Nearly every major economy with the exception of the US, until quite recently, has had one. So what are best practices? What should we avoid and encourage? And crucially for this conference, how can we avoid falling into the national champions trap, even as we try to build capacity for production as well as consumption in different regions?
Nathan starting off explaining what the New Industrial Policy thinking is, what is the new empirical evidence for what works and does not work, what are the policy prescriptions. AND how does one indeed avoid falling into the national champions trap?
Ufuk to elaborate on key insights (from his book w JVR) on how do we power growth – including not just the Global North but also the Global South. Innovation is the engine for growth, but how do we influence it? How can Europe get itself out of its current predicament of low wage and productivity growth?
Heather would explain the progress made by the Biden WH to actively launch policies to support specific goals, thinking and outcomes: rebuilding capacity for critical industries, etc. “Industrial strategy”. Also what’s the response to the view this is American protectionism?
Rene to comments on whether he thinks EUROPEAN antitrust policy is too much beholden to narrow state aid controls, with their “efficiency” obsession. Note Enrico Letta, former Prime Minister of Italy, just authored a report for the Commission saying inter alia exactly this: We need to upend this narrow state aid, give the perspective of law makers: we need to power up industrial policy, but also move beyond the narrow State Aid framing. Again, though, how do we resist the bad National Champions?
12.00 – 12.45 – Connecting Trade and Competition in the Next World Order Conversation with Trade Ambassador Katherine Tai
Franziska Brantner
James Hodge
Another area where a major rethink is unfolding is trade. We are also here moving away from the neoliberal paradigm of hyperglobalisation, widely open markets and “efficiency” ad the goal, towards a new paradigm in which trade rules are not just designed to protect big corporate interests abroad, with capital and goods being completely mobile and relying on a “trickle down” fantasy to support the masses. The thinking is that trade must complement domestic policy and support the effort to protect against monopolies at home which have increased inequality and threaten democracy. It must work alongside antitrust and industrial policy to help re-industrialise, reduce dependencies and support the middle classes as a defence against Far Right and authoritarianism. This is URGENT in the run up to elections. At the same time, the Global South is raising its voice and needs to be included in shaping the post-neoliberal order.
Katherine:
- This US administration has been reviving its antimonopoly effort, and explicitly rejected efficiency goals in all areas of economic policy. You have been nominated as part of the President’s Competition Council – how do you, as Trade representative, fit into this broader domestic antimonopoly effort – particularly with Big Tech? (need to sync trade and domestic policy, touch also on JSI and why you neutralised the US position at the WTO)
Follow up:
- Expand out of Big Tech into the broader economy – the pandemic brought home the issue of brittle and broken supply chains, and that’s also been a major focus of the administration (rebuilding capacity at home) – again how does Trade fit into this? (opportunity to explain to European audience: what is being done differently from the past, why this is a important for building out the middle classes, why it is centrist and not partisan, why it is not just American protectionism, why it is a place where you see commonalities with the Global South)
Franziska:
- For Europe, following the pandemic the invasion of Ukraine has been a further wake up call that economic dependencies create major vulnerabilities. Europe experienced deindustrialisation which also makes us vulnerable. You have been vocal on the need to move away from efficiency and rebuild domestic industry, and rethink trade as a major part of this. Give us your views on this, including how competition/antitrust should assist this effort in Europe in the next mandate. Need to find common democratic ground against the rise of authoritarianism, and economic coercion. More generally a key soundbite or two about vision for next Commission.
;”>12.00 – 12.45 – Connecting Trade and Competition in the Next World Order Conversation with Trade Ambassador Katherine Tai
Franziska Brantner
James Hodge
Another area where a major rethink is unfolding is trade. We are also here moving away from the neoliberal paradigm of hyperglobalisation, widely open markets and “efficiency” ad the goal, towards a new paradigm in which trade rules are not just designed to protect big corporate interests abroad, with capital and goods being completely mobile and relying on a “trickle down” fantasy to support the masses. The thinking is that trade must complement domestic policy and support the effort to protect against monopolies at home which have increased inequality and threaten democracy. It must work alongside antitrust and industrial policy to help re-industrialise, reduce dependencies and support the middle classes as a defence against Far Right and authoritarianism. This is URGENT in the run up to elections. At the same time, the Global South is raising its voice and needs to be included in shaping the post-neoliberal order.
Katherine:
- This US administration has been reviving its antimonopoly effort, and explicitly rejected efficiency goals in all areas of economic policy. You have been nominated as part of the President’s Competition Council – how do you, as Trade representative, fit into this broader domestic antimonopoly effort – particularly with Big Tech? (need to sync trade and domestic policy, touch also on JSI and why you neutralised the US position at the WTO)
Follow up:
- Expand out of Big Tech into the broader economy – the pandemic brought home the issue of brittle and broken supply chains, and that’s also been a major focus of the administration (rebuilding capacity at home) – again how does Trade fit into this? (opportunity to explain to European audience: what is being done differently from the past, why this is a important for building out the middle classes, why it is centrist and not partisan, why it is not just American protectionism, why it is a place where you see commonalities with the Global South)
Franziska:
- For Europe, following the pandemic the invasion of Ukraine has been a further wake up call that economic dependencies create major vulnerabilities. Europe experienced deindustrialisation which also makes us vulnerable. You have been vocal on the need to move away from efficiency and rebuild domestic industry, and rethink trade as a major part of this. Give us your views on this, including how competition/antitrust should assist this effort in Europe in the next mandate. Need to find common democratic ground against the rise of authoritarianism, and economic coercion. More generally a key soundbite or two about vision for next Commission.
;”>10.10-11.00 Market Power Dysfunctions: Seller Inflation, Inequality & AI Acceleration
Isabella Weber
Jan Eeckout
Gabriel Zucman
Florian Ederer
Doha Mekki
Much clearer focus on the threat posed by concentration itself, by market power itself, in all its manifestations – discrimination, inequality, exploitation, loss of voice and ultimately threat to democracy. THIS is the message: ladies and gentlemen, forget the quaint European tradition that we worry about “conduct that abuses market power, not about market power” – WRONG! We are VERY worried about market power (and concentration) because it engenders all sort of problems. In turn, there are phenomena in the economy that we do not recognise typically as associated with antitrust, BUT have a lot to do with market power! So what gives. Antitrust needs to be cognisant of these, and enforcement in this environment needs to be also alert to these. “We are not a silo”.
Doha to start by comment on the previous panel and the change in antitrust enforcement posture. Also mention the change in posture is also notching up some recent successes, judges may be “getting it” at last. See Jetblue/Spirit.
Isabella: tonne to say about the inflation debate still raging out there!! We wont have time to go into the full glory of the macroeconomist battles on interest rates, causes and cures for inflation. Focus on your diagnosis that some of the inflationary pressure we have seen has been caused by firms “profit taking” at a time when prices were rising for other reasons. Please do explain what is your theory about the mechanism at play here (is it a form of tacit collusion?). And the empirical validation for your story (I know you have gathered much evidence of execs expressing their intent to do this, spoken to many governments and central banks about this around the world).
Gabriel: your Global Taxation Report has been out recently and I want you to explain the main findings and message: that tax evasion by the top of the multinational companies ($1,000 billion or so in profit shifted to tax havens each year globally) is exacerbating both concentration and inequality – again explain the mechanism to an audience of non-economists and regulators, and what it means for distribution and again why it is related to market power.
Jan: I will link back to your seminal work on markups and concentration, and then ask you to talk about how you are looking at the other big phenomenon of 2023, the massive acceleration of AI, and how it amplifies the concerns you highlighted previously as associated with concentration: how it will affect inequality of income and wealth – directly and by increasing superstar earnings, which are directly linked to market power. Also draw the line between inequality and the political order, via the influence of big corporations on politics, but also via the polarization of the many who feel left out and the mushrooming populism.
Florian: how come all the interesting work in economics now comes from outside IO. This panel is clear evidence. Explain why IO is pretty much dying. Then talk about your work on common ownership which is pervasive in the economy, and the fact that it is (a) super interesting but (b) not recognized enough by the IO church as not “in the orthodoxy”. This insularity and narrowness is not helpful to enforcement either.
Back to Doha: these top economists are making something painfully clear to us in the antitrust world: the “efficiency” framework is extremely narrow and misses a lot of what is threatening our sense of being citizens, of justice, and our democracy. This is not lost on enforcers and why you and Jon Kanter at the Justice department talk about democracy. Talk to us about that.
11.10-12.00 Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation
Nathan Lane
Ufuk Akgicit
Rene Repasi
Heather Boushey
This panel is intended to bring out how antitrust is also challenged by the new thinking around industrial policy. Traditional posture has been industrial policy was simply “unmentionable” in the US. In Europe it has been essentially synonymous with bad national champions, and the role of antitrust limited to state aid assessment: does state support cure a specific market failure, is it the right instrument? We are now in a polycrisis world, in which we have seen values of sovereignty and resilience become critical, in which there are major concerns about European competitiveness. It has become clear that state investment will be critical to directing effort towards goals not otherwise achievable by market forces. In parallel there is new economic thinking around industrial policy.
The purpose of this panel will be to wake up an oblivious antitrust audience to the notion that an effective industrial policy is plainly essential if we are to direct the big investments we need to address the problems of our times – loss of capacity, withered supply chains, de-industrialization, dependencies from rogue states. As Rana Foroohar puts it: the return of industrial policy isn’t the dog, but the tail. It follows a fundamental need, which is for governments to take on what used to be called “negative externalities” of the neoliberal market system — namely, inequality, climate change, financial instability and the resulting political polarization — all of which threatens capitalism and liberal democracy itself. We need industrial policy because markets simply don’t always know best. That’s Joe Stiglitz 101. THEN — you get into the fact that not all industrial policy is created equal. Nearly every major economy with the exception of the US, until quite recently, has had one. So what are best practices? What should we avoid and encourage? And crucially for this conference, how can we avoid falling into the national champions trap, even as we try to build capacity for production as well as consumption in different regions?
Nathan starting off explaining what the New Industrial Policy thinking is, what is the new empirical evidence for what works and does not work, what are the policy prescriptions. AND how does one indeed avoid falling into the national champions trap?
Ufuk to elaborate on key insights (from his book w JVR) on how do we power growth – including not just the Global North but also the Global South. Innovation is the engine for growth, but how do we influence it? How can Europe get itself out of its current predicament of low wage and productivity growth?
Heather would explain the progress made by the Biden WH to actively launch policies to support specific goals, thinking and outcomes: rebuilding capacity for critical industries, etc. “Industrial strategy”. Also what’s the response to the view this is American protectionism?
Rene to comments on whether he thinks EUROPEAN antitrust policy is too much beholden to narrow state aid controls, with their “efficiency” obsession. Note Enrico Letta, former Prime Minister of Italy, just authored a report for the Commission saying inter alia exactly this: We need to upend this narrow state aid, give the perspective of law makers: we need to power up industrial policy, but also move beyond the narrow State Aid framing. Again, though, how do we resist the bad National Champions?
Antitrust, Regulation and the Next World Order | Brussels | 31 January 24
View the individual panel videos of the conference
Chair Scene Setting (youtube.com)
Rebooting the Next Commission (youtube.com)
“From Price to Power”? Reorienting Antitrust for the New Political Economy (youtube.com)
Are the Courts Likely to Listen (youtube.com)
Market Power Dysfunctions: Seller Inflation, Inequality and AI Acceleration (youtube.com)
Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation (youtube.com)
The European Grand Digital Regulation Project: What is our Theory of Change? (youtube.com)
Antitrust as Agent for Change (youtube.com)
Conversation with Chair Lina Khan (youtube.com)
AI Act DSA and DMA Implementation (youtube.com)
Concluding Fireside (youtube.com)
Commissioner Reynders Address (youtube.com)
Fireside with AAG Jonathan Kanter (youtube.com)
View the photos of the conference
cristinacaffarra.com://vladvdk.pixieset.com/antitrustregulationandthenextworldorder/
Antitrust, Regulation and the Next World Order | Cristina’s Conference Script
These are my notes for running the panels.
8.15 Cristina’s intro
[Welcome] A personal note. I started this conference in this ballroom over 15 years ago. We had the first EC Chief Economist, was all about the “more economic approach”. For 10 years it was titled “Economic Developments in Competition Law” (so boring), with indistinguishable panels on mergers, Art. 102, exegesis of Court decisions (“by object and by effect”), cartels and damages. And then gradually from 2018 I started asking “wait, what are we doing with this more economic approach? Is concentration rising? do we have a problem? what is going on with digital platforms?” – accelerating in 2020 with “Time of Upheaval”, “Disrupted times”, “The Political Economy”… now “the NEXT WORLD ORDER”.
Incomprehension / consternation in the Antitrust Bubble “WHAT IS CRISTINA TALKING ABOUT – we know what we are doing, we apply COMPETITION LAW, we just need some USEFUL TAME ECONOMISTS to do our submissions & tell the regulator it’s all efficient and procompetitive. What we are doing is PURE. It’s technical. We are specialists. We know our stuff. We don’t want to contaminate this PURE THING with POLITICS! We DECIDED antitrust in Europe was an objective science and to be practiced by technocrats, not politicians!”
Every few decades the political economy gets to a point, and then the pendulum swings. It was clear to me by 2018 we were coming to the end of that era. There were voices saying wait, what we are doing is not right – Lina Khan spoke HERE in 2018, Barry Lynn came to Brussels when what he was saying on market power was really thought to be radical and dangerous – “these New Brandeisians are the mad populist fringe, we know what we are doing over here”
The world has kept hurtling through crises at crazy speed – just skirting mass extinction through disease, planet is boiling, WAR and genocide on our doorstep, inflation, ….and masses of inequality, unfairness, exploitation, surveillance. It’s clear the classic neoliberal consensus (consumer welfare, efficiency, no barriers, trickle down economics) has run its course. PEOPLE are restless. They want to be seen as citizens and workers, not just consumers, want attention to people and planet, to justice, to growth that is more equal and fair, democracy. This is a massive shift – no longer a fringe view, we understand that POWER EXISTS in the REAL WORLD. And ANTITRUST matters because it is a critical “check” to capital, that pre-empts concentration and protects economic freedoms for everyone not just for corporates.
This shift has happened in the US where antitrust regulators have revived flagging antitrust along this agenda: more fairness, more equality, stop concentration of power. And it is a shift which is also connected to other shifts in industrial policy and trade: all these regulatory realms – trade, industrial policy, antitrust, privacy – they ALL intersect. The common theme is that EFFICIENCY IS OVER. As the lodestar of what we do, in multiple fields.
So we have a European election in June and one in November in the US, I continue to find it extraordinary that people who work in antitrust think this is nothing to do with them. The question is what should the agenda be for antitrust, and trade, and industrial policy, to reboot economic growth which is flagging in Europe, to reindustrialise, to muscle up the economies in ways that are fairer.
= DO NOT THINK antitrust has nothing to do with this. It has a lot to do with this. But we need to broaden out. So the DMA is not an economic policy alone, it is one piece of it. Taming tech giants is not going to put points on GDP even if getting them to behave more fairly matters.
The US regulators we are going to hear today have been part of an “all of government” approach, and they are connecting the dots. Khan, Tai, Kanter, Chopra, Boushey. What if Trump wins? Much of this is centrist and bipartisan actually. What is the vision for the next 4/5 years?
8.20-8.50 Rebooting the Next Commission – Fireside with Olivier Guersent and Andreas Schwab
Theme of today is what we want for the NEXT Commission. So no retrospective. Just forward looking.
- Let’s start NOT from digital for a change. One big theme in the post-neoliberal pendulum swing is to say we’ve gone too far with efficiency/lowering trade barriers/offshoring which have hollowed European industrial capacity, we need reindustrialisation, creating capacity in Europe, sovereignty, resilience etc. Competition (and state aid rules) have been a sacred cow. “We need to defend against bad national champions, we need to really allow for state investment only if there are market failures and if intervention improves efficiency”. Is this still fit for purpose? The Letta Report anticipated a couple of weeks ago said we need to rethink state aid rules (too much fixation on “efficiency”) in the face of the massive emergencies for Europe. There’s a huge discussion of “new industrial policy”, we will hear later today from White House. Isn’t this of the things we need to rethink: how can competition support this effort in the next 5 years? Or is it business as usual, same tests, same IPCEI examples?
- Amazon/iRobot. Aside from the theory of harm (“protecting competition in robot cleaners”) that seems a bit dumb to me, does it mean more generally we’ve come to the end of the line for Big Tech deals? Is this the message – if it is, I agree with it – but is it what we think it means? Merger control is super powerful to control allocation of assets before it is too late. In a world in which we had to pivot to the DMA to try and do something about power and concentration of Big Tech ex-post, is this saying “look, enough, we learned the lessons and now go invent something but honestly you don’t need to own a robot cleaner”. Hasn’t the error cost assessment (Type 1 vs Type 2) error radically changed in the current world? Is this the message companies should finally take up?
- “DMA 2.0” – we all know it’s being implemented etc, don’t want to talk about that process, but about what comes next. First what’s not covered – the designation covered the low hanging fruit, but then? Cloud, AI, what are we doing about that? Do we need new law or is it a matter of applying the current law?
- What is the agenda for the next Commission?
8.50-9.50 “From Price to Power”? Reorienting Antitrust for the New Political Economy
Andreas Mundt
Luigi Zingales
Tommaso Valletti
Rebecca Slaughter
Gina Cass-Gottlieb
We’ll continue the theme. We are in a world of emergencies. Antitrust can be a little island populated by technocrats who say we have THE LAW, we have our technical rules, we have models and techniques, all these ideas about abandoning the true religion of consumer welfare and orthodoxy mean making antitrust political, we need it to be neutral. First, is it true we are neutral and apolitical in our current posture. Second, how does enforcement adapt and reflect the way the world around us evolved? We have been worrying only about PRICE – as long as prices go down that’s good, but then we have seen power rising massively and now we worry about POWER, the control over markets, inequality, distribution, democracy. Markets are now much more concentrated, industrial capacity has been removed through serial deals in key sectors, we are the target of extractive digital monopolies which keep expanding their ecosystems in all directions, not to mention the polycrises which have exposed massive fragilities and led to inflation flareups etc. What we are seeing are major paradigm shifts in the US, ALSO in antitrust. This is a huge deal.
Luigi: is what we are doing today pure and not political, is efficiency a pure and a-political goal. Should antitrust be a neutral technocratic endeavour? Is there “purity” in antitrust? When we talk about New Brandeis, and the interest for “power, not price”, what has changed?
Tommaso: economists have weighed into antitrust with the “more economic approach” successful campaign, but we ended up as a narrow church preoccupied with what we pretend to be a pure and technocratic endeavour. How do we shake the profession from oblivion, how do we think about “power” vs “price” as the goal. Mention “Economists are a tribal clique” Christine Lagarde
Andreas – How do you think of this, How is the focus and the posture changing with the political economy? can obviously talk about examples from the update of the German Law and your enforcement focus. But also more broadly you are President of ICN. Surely there is appetite e.g. from the Global South for more engagement on the bigger issues.
Rebecca: The FTC has been at the forefront of a major reinvigoration of antitrust in the US. Yes, digging out the “original animating values” but also a very “fierce sense of urgency” things had been allowed to flag in the past and a major shakeup was needed. Using agency powers to do much more.
Gina: You are in the midst of major battles to reform merger law in Australia, with much resistance, claims enforcement will curb growth etc. I understand under your voluntary regime 2/3 of deals are never reported – a huge proportion. Yet it seems you are facing considerable struggle and constraints to drive through a different posture/rules in Australia.
9.50-10.10 Are the Courts Likely to Listen? Conversation with Marc Van Der Woude and Sir Marcus Smith
Marc, in Lisbon you talked about the “new orientation” blowing through antitrust and how are the courts to position themselves there. In the US the courts have been thought of as a major source of resistance – having been indoctrinated at the Manne and Scalia Schools. Yet there are amazing signs some change is appening: judgment in airline cases (JetBlue-AA/Jetblue/Spirit), Illumina/Grail, IQvia in digital advertising. Are the courts in Europe hearing the drums coming from the hills? Inevitably they are somewhat behind, for instance the embrace of AECT in 2022 when we are now questioning it as a pro-defendant test (latest article from Massimo Motta essentially saying it is very problematic) … What is your sense for how the Courts are looking at this whole major evolution.
I know one answer is “The agencies set the direction on policy, we apply the law”. Well yes, but you make precedent. And the interpretation of the law is not immutable right? Surely the Courts and judges do think what they are doing is not immune from the political economy around. You live in the political economy. So how open you might be to arguments on concentration for example is not just a function of thinking GUPPIs is all there is to know…
10.10-11.00 Market Power Dysfunctions: Seller Inflation, Inequality & AI Acceleration
Isabella Weber
Jan Eeckout
Gabriel Zucman
Florian Ederer
Doha Mekki
Much clearer focus on the threat posed by concentration itself, by market power itself, in all its manifestations – discrimination, inequality, exploitation, loss of voice and ultimately threat to democracy. THIS is the message: ladies and gentlemen, forget the quaint European tradition that we worry about “conduct that abuses market power, not about market power” – WRONG! We are VERY worried about market power (and concentration) because it engenders all sort of problems. In turn, there are phenomena in the economy that we do not recognise typically as associated with antitrust, BUT have a lot to do with market power! So what gives. Antitrust needs to be cognisant of these, and enforcement in this environment needs to be also alert to these. “We are not a silo”.
Doha to start by comment on the previous panel and the change in antitrust enforcement posture. Also mention the change in posture is also notching up some recent successes, judges may be “getting it” at last. See Jetblue/Spirit.
Isabella: tonne to say about the inflation debate still raging out there!! We wont have time to go into the full glory of the macroeconomist battles on interest rates, causes and cures for inflation. Focus on your diagnosis that some of the inflationary pressure we have seen has been caused by firms “profit taking” at a time when prices were rising for other reasons. Please do explain what is your theory about the mechanism at play here (is it a form of tacit collusion?). And the empirical validation for your story (I know you have gathered much evidence of execs expressing their intent to do this, spoken to many governments and central banks about this around the world).
Gabriel: your Global Taxation Report has been out recently and I want you to explain the main findings and message: that tax evasion by the top of the multinational companies ($1,000 billion or so in profit shifted to tax havens each year globally) is exacerbating both concentration and inequality – again explain the mechanism to an audience of non-economists and regulators, and what it means for distribution and again why it is related to market power.
Jan: I will link back to your seminal work on markups and concentration, and then ask you to talk about how you are looking at the other big phenomenon of 2023, the massive acceleration of AI, and how it amplifies the concerns you highlighted previously as associated with concentration: how it will affect inequality of income and wealth – directly and by increasing superstar earnings, which are directly linked to market power. Also draw the line between inequality and the political order, via the influence of big corporations on politics, but also via the polarization of the many who feel left out and the mushrooming populism.
Florian: how come all the interesting work in economics now comes from outside IO. This panel is clear evidence. Explain why IO is pretty much dying. Then talk about your work on common ownership which is pervasive in the economy, and the fact that it is (a) super interesting but (b) not recognized enough by the IO church as not “in the orthodoxy”. This insularity and narrowness is not helpful to enforcement either.
Back to Doha: these top economists are making something painfully clear to us in the antitrust world: the “efficiency” framework is extremely narrow and misses a lot of what is threatening our sense of being citizens, of justice, and our democracy. This is not lost on enforcers and why you and Jon Kanter at the Justice department talk about democracy. Talk to us about that.
11.10-12.00 Industrial Policy Revisited: Sovereignty, Resilience, Competitiveness & Innovation
Nathan Lane
Ufuk Akgicit
Rene Repasi
Heather Boushey
This panel is intended to bring out how antitrust is also challenged by the new thinking around industrial policy. Traditional posture has been industrial policy was simply “unmentionable” in the US. In Europe it has been essentially synonymous with bad national champions, and the role of antitrust limited to state aid assessment: does state support cure a specific market failure, is it the right instrument? We are now in a polycrisis world, in which we have seen values of sovereignty and resilience become critical, in which there are major concerns about European competitiveness. It has become clear that state investment will be critical to directing effort towards goals not otherwise achievable by market forces. In parallel there is new economic thinking around industrial policy.
The purpose of this panel will be to wake up an oblivious antitrust audience to the notion that an effective industrial policy is plainly essential if we are to direct the big investments we need to address the problems of our times – loss of capacity, withered supply chains, de-industrialization, dependencies from rogue states. As Rana Foroohar puts it: the return of industrial policy isn’t the dog, but the tail. It follows a fundamental need, which is for governments to take on what used to be called “negative externalities” of the neoliberal market system — namely, inequality, climate change, financial instability and the resulting political polarization — all of which threatens capitalism and liberal democracy itself. We need industrial policy because markets simply don’t always know best. That’s Joe Stiglitz 101. THEN — you get into the fact that not all industrial policy is created equal. Nearly every major economy with the exception of the US, until quite recently, has had one. So what are best practices? What should we avoid and encourage? And crucially for this conference, how can we avoid falling into the national champions trap, even as we try to build capacity for production as well as consumption in different regions?
Nathan starting off explaining what the New Industrial Policy thinking is, what is the new empirical evidence for what works and does not work, what are the policy prescriptions. AND how does one indeed avoid falling into the national champions trap?
Ufuk to elaborate on key insights (from his book w JVR) on how do we power growth – including not just the Global North but also the Global South. Innovation is the engine for growth, but how do we influence it? How can Europe get itself out of its current predicament of low wage and productivity growth?
Heather would explain the progress made by the Biden WH to actively launch policies to support specific goals, thinking and outcomes: rebuilding capacity for critical industries, etc. “Industrial strategy”. Also what’s the response to the view this is American protectionism?
Rene to comments on whether he thinks EUROPEAN antitrust policy is too much beholden to narrow state aid controls, with their “efficiency” obsession. Note Enrico Letta, former Prime Minister of Italy, just authored a report for the Commission saying inter alia exactly this: We need to upend this narrow state aid, give the perspective of law makers: we need to power up industrial policy, but also move beyond the narrow State Aid framing. Again, though, how do we resist the bad National Champions?
12.00 – 12.45 – Connecting Trade and Competition in the Next World Order Conversation with Trade Ambassador Katherine Tai
Franziska Brantner
James Hodge
Another area where a major rethink is unfolding is trade. We are also here moving away from the neoliberal paradigm of hyperglobalisation, widely open markets and “efficiency” ad the goal, towards a new paradigm in which trade rules are not just designed to protect big corporate interests abroad, with capital and goods being completely mobile and relying on a “trickle down” fantasy to support the masses. The thinking is that trade must complement domestic policy and support the effort to protect against monopolies at home which have increased inequality and threaten democracy. It must work alongside antitrust and industrial policy to help re-industrialise, reduce dependencies and support the middle classes as a defence against Far Right and authoritarianism. This is URGENT in the run up to elections. At the same time, the Global South is raising its voice and needs to be included in shaping the post-neoliberal order.
Katherine:
- This US administration has been reviving its antimonopoly effort, and explicitly rejected efficiency goals in all areas of economic policy. You have been nominated as part of the President’s Competition Council – how do you, as Trade representative, fit into this broader domestic antimonopoly effort – particularly with Big Tech? (need to sync trade and domestic policy, touch also on JSI and why you neutralised the US position at the WTO)
Follow up:
- Expand out of Big Tech into the broader economy – the pandemic brought home the issue of brittle and broken supply chains, and that’s also been a major focus of the administration (rebuilding capacity at home) – again how does Trade fit into this? (opportunity to explain to European audience: what is being done differently from the past, why this is a important for building out the middle classes, why it is centrist and not partisan, why it is not just American protectionism, why it is a place where you see commonalities with the Global South)
Franziska:
- For Europe, following the pandemic the invasion of Ukraine has been a further wake up call that economic dependencies create major vulnerabilities. Europe experienced deindustrialisation which also makes us vulnerable. You have been vocal on the need to move away from efficiency and rebuild domestic industry, and rethink trade as a major part of this. Give us your views on this, including how competition/antitrust should assist this effort in Europe in the next mandate. Need to find common democratic ground against the rise of authoritarianism, and economic coercion. More generally a key soundbite or two about vision for next Commission.
;”>12.00 – 12.45 – Connecting Trade and Competition in the Next World Order Conversation with Trade Ambassador Katherine Tai
Franziska Brantner
James Hodge
Another area where a major rethink is unfolding is trade. We are also here moving away from the neoliberal paradigm of hyperglobalisation, widely open markets and “efficiency” ad the goal, towards a new paradigm in which trade rules are not just designed to protect big corporate interests abroad, with capital and goods being completely mobile and relying on a “trickle down” fantasy to support the masses. The thinking is that trade must complement domestic policy and support the effort to protect against monopolies at home which have increased inequality and threaten democracy. It must work alongside antitrust and industrial policy to help re-industrialise, reduce dependencies and support the middle classes as a defence against Far Right and authoritarianism. This is URGENT in the run up to elections. At the same time, the Global South is raising its voice and needs to be included in shaping the post-neoliberal order.
Katherine:
- This US administration has been reviving its antimonopoly effort, and explicitly rejected efficiency goals in all areas of economic policy. You have been nominated as part of the President’s Competition Council – how do you, as Trade representative, fit into this broader domestic antimonopoly effort – particularly with Big Tech? (need to sync trade and domestic policy, touch also on JSI and why you neutralised the US position at the WTO)
Follow up:
- Expand out of Big Tech into the broader economy – the pandemic brought home the issue of brittle and broken supply chains, and that’s also been a major focus of the administration (rebuilding capacity at home) – again how does Trade fit into this? (opportunity to explain to European audience: what is being done differently from the past, why this is a important for building out the middle classes, why it is centrist and not partisan, why it is not just American protectionism, why it is a place where you see commonalities with the Global South)
Franziska:
- For Europe, following the pandemic the invasion of Ukraine has been a further wake up call that economic dependencies create major vulnerabilities. Europe experienced deindustrialisation which also makes us vulnerable. You have been vocal on the need to move away from efficiency and rebuild domestic industry, and rethink trade as a major part of this. Give us your views on this, including how competition/antitrust should assist this effort in Europe in the next mandate. Need to find common democratic ground against the rise of authoritarianism, and economic coercion. More generally a key soundbite or two about vision for next Commission.
The aftermath….
- The hotel meeting that worries the world’s biggest corporations – POLITICO
- The great US-Europe antitrust divide The FT
- Letter: Alas, EU digital markets are Big Tech plaything (ft.com)
- Letter: Europe’s antitrust record is a matter of embarrassment, not pride (ft.com)
- Letter: Brussels and Washington ad idem fighting Big Tech (ft.com)
- Letter: Europe has an unrivalled record on antitrust (ft.com)
- Eurocrats on the Brink – The American Prospect
