The European Union Signals New Age of Antitrust

Last November, the European Union confirmed Spain’s Teresa Ribera as Executive Vice President and Commissioner for Competition to replace the outgoing Margarette Vestager. The move will likely bring about a notable shift in antitrust doctrine. Vestager’s time in office saw the aggressive use of competition enforcement against American as well as European firms, often to the frustration of domestic leaders. However, alongside Vestager’s iconic use of aggressive antitrust enforcement came calls from European leaders to support the continental economy and produce homegrown companies that could compete with the Americans and Chinese. In particular, the end of her administration saw the emergence of the Digital Markets Act (DMA), a law targeting individual U.S. and Chinese tech firms with discriminatory obligations. Given these realities, combined with public statements from Ribera about the need to support European firms, her nomination suggests that the E.U. intends to openly use antitrust as a tool for industrial policy. 

Vestager’s Term 

To better understand the potential signal Ribera’s appointment is sending, one should first recount Vestager’s storied term. The outgoing antitrust chief received stiff accusations from the U.S. of biased enforcement against American firms due to her aggressive lawsuits against tech platforms such as Apple, Google, and Microsoft. Apple CEO Tim Cook accused her of bringing politicized lawsuits against his company for alleged abuse of subsidies and President Trump charged her with “hating the U.S.” after bringing three cases against Google. However, even if she was targeting American firms, she also balanced her portfolio with scrutiny of European companies such as her cartel investigations into the German automotive industry and strict enforcement of mergers. 

In her own words, Vestager, a self-identified Danish liberal, would call her style “doing things by the book” with “neutrality, impartiality, and rigor.” Under her watch, European antitrust laws were aggressively enforced, with the intention of counterbalancing corporate power with state intervention. Although Vestager’s vision would initially gain her stardom, her universalist approach to antitrust would put her in contention with growing calls for protectionism and industrial policy. 

Among the many voices for a new European strategy, one particularly outspoken voice is French President Emmanuel Macron, who recently remarked “[w]e are over-regulating and underinvesting. If we continue with our usual agenda over the next 2 to 3 years, we will be out of the market. I have no doubt!” On the matter of subsidies, which Vestager opposes as a threat to the E.U. common market, she finds herself at odds with even the president of the Commission. Like an increasing number of E.U. officials, President von der Leyen sees subsidies as a necessary deviation from the principles of competition to support domestic firms in the face of economic downturn and the dominance of American and Chinese firms. Furthermore, Vestager has been outspoken against calls to reform the merger process to be less strict on European firms staying resolute in her belief in aggressive, universalist antitrust doctrine.

Finally, perhaps the greatest landmark in the transition from Vestager’s vigorous law enforcement model and growing political, industrial policy trends was the enactment of the DMA. Although the DMA certainly gave the competition commissioner powerful new tools, which Vestager supported, it also inserted a heavy dose of politics into E.U. antitrust enforcement, downgrading the importance of independent law enforcement. The DMA’s creation of specific rules to be followed only by seven of the largest tech platforms, six of which are American, serves to hamstring U.S. firms while removing discretion from the courts and law enforcement. 

The Rise of Ribera 

Although what Commissioner Ribera will do remains to be seen, her ascension to Brussels suggests that the E.U. will lean much more heavily into using antitrust as an industrial policy tool rather than as a law enforcement mechanism. For one, the two women come from different backgrounds. Vestager is a liberal with a background in economics and a resume that includes pushing for balanced budgets and financial reform. Ribera is a member of the Spanish Socialist Workers Party, trained in law, and currently the Minister for the Ecological Transition of Spain. The transition from a person like Vestager to one like Ribera suggests that there is an appetite amongst E.U. leaders to see the office play a more cooperative role in transforming the European economy rather than being a neutral law enforcer. 

Ribera’s statements also suggest she is ready to play that role. In particular, in her written statements to the European Parliament she outlined two major policy goals: merger reform and rigorous enforcement of the DMA. She made explicitly clear that her “aim is to ensure that merger control gives the right weight to the E.U. economy’s needs and reflects overall policy objectives and market realities.” A reasonable interpretation suggests that she intends to grant greater deference to European mergers over others, especially if the merger forwards a particular industrial goal set out by leadership. In fact, her statement paraphrases a line from the Draghi Report, a document outlining a set of reforms to revamp the European economy, namely through industrial policy.

Alongside more vigorous enforcement of the DMA, which singles out six American tech platforms along with one Chinese, Ribera has also moved closer to the E.U.’s stance on penalizing Chinese companies over state subsidies. Although initially cautious of the idea of starting a trade war with China over allegations of unfair state aid, Ribera has since stated “[w]e need to ensure that the E.U. remains a place for battery electric vehicle (BEV) production and that we preserve the E.U.’s manufacturing capabilities.”

It remains to be seen where exactly Ribera will take the Commission’s antitrust doctrine. However, there are significant forces pushing in the direction of using competition law as a tool to mold the European economy. This trend would comport with the transition from Vestager’s initial regime of vigorous enforcement and aggressive action to a more regulatory approach that seeks to restrain some companies and support others. The emerging willingness to indulge in state subsidies domestically while bringing probes and slapping tariffs on foreign state-backed firms is but one sign of what may be to come. Faced with frustration with overregulation on the one hand and a desire to produce European commercial champions on the other, Ribera’s Competition Commission will likely become a partner to the political-economic ambitions of European leadership. Whereas Vestager perhaps attempted to give overtures to political demands while remaining dedicated to her vision of rigorous competition enforcement, Ribera will likely embrace contemporary demands for antitrust to support a new European industrial policy.