The European Commission is under pressure to tweak competition laws to promote European innovation. These efforts risk delivering all the downsides of America’s traditional approach to competition policy – such as higher prices – without any commensurate benefits.
In recent months, two major reports on the EU by former Italian prime ministers, Enrico Letta and Mario Draghi, have painted a dire picture of the bloc’s economic prospects. It is hard to argue with their diagnosis: Europe has doggedly low productivity growth, meaning it is struggling to become more efficient and produce more value for each hour worked. One reason is that established European firms are not using new technologies or innovating much themselves, while small and innovative firms are often unable to grow. Letta and Draghi conclude that one way to partly solve the problem would be for the European Commission to think more about innovation and growth in enforcing competition policy – a position that British prime minister Keir Starmer recently echoed in criticising the UK’s competition authority.
But competition policy is not the main cause of Europe’s innovation woes. If she is confirmed as the next Commission’s competition czar, Teresa Ribera should avoid sharp changes to the bloc’s antitrust policies until the EU tackles more important reforms. Adjusting competition policy now risks making Europe’s poor record on innovation even worse.
About the author:
Zach Meyers is assistant director of the Centre for European Reform.