Competition policies in a changing political environment

Future trends in competition law and enforcement have  to take account of the current shift in the focus of economic activity, and the law enforcement which accompanies it, away from the longstanding dominance of the US and Europe towards a more multipolar environment with a growing influence of emerging countries, and in particular of Asian economies and jurisdictions. 


Below we share with you extracts of an address given by Sir Philip Lowe at the MLex and Baker McKenzie Competition Law conference in Hong Kong, 1 December 2017 exploring these issues.[1]

Germany, France, the UK and Italy all still feature in the list of the world’s largest economies. But Europe now represents less than 5% of the world’s population and, looked at over a five to ten year period, the economies of European countries are growing significantly less fast than those of many emerging countries, including major powers such as China, India, and Nigeria.  We have to take account of the current shift in the focus of economic activity, and the law enforcement which accompanies it, away from the longstanding dominance of the US and Europe towards a more multipolar environment with a growing influence of emerging countries, and in particular of Asian economies and jurisdictions.

On the inauguration of the International Competition Network in 2002, US and EU voices advocated strongly for jurisdictions in developing and emerging countries to abandon national competition laws which included tests such as industrial policy in India, positive discrimination provisions in South Africa, security or protectionist policies elsewhere. To avoid political interference, it was essential that the law should contain exclusively competition- and efficiency-based tests.

Nowadays government on both sides of the Atlantic has recognized that application of so-called non-competition criteria can sometimes be necessary, whether or not it is for a competition authority or another arm of government to apply them. (A recent study showed that more than 80% of competition authorities in the world have non-competition criteria written into their competition law, even if only a minority applies them). It is certainly true that economic efficiency, with clear benefits for the consumer, remains the leitmotiv of national competition policies. On the other hand, there is a growing consciousness in Western countries as well as elsewhere, that liberal trade and antitrust policies tend to benefit people or countries unevenly and in a way which is sometimes perceived as ‘unfair’.  Moreover, in a world that has recently emerged from one of the worst financial crises in history, people are more conscious of growing economic inequalities, previously in developing and emerging countries but now in sharp focus in developed countries.


Initially, globalisation was generally seen as a positive force. Together with the delocalisation of many industries to emerging economies, such as India and China, globalisation arguably brought millions of people out of poverty.  From a public policy point of view, this result chimed well with the Millennium Goals adopted by UN bodies at the beginning of the 21st Century. However, there is no evidence that inequalities between developed countries on the one hand, and emerging and developing countries, on the other have actually reduced over the last three to four decades. At the same time, there has been a growing realisation that many people who previously worked in industrial communities in developed countries have actually lost out, as their jobs have been exported. If it were as simple for them, as one of Margaret Thatcher’s ministers once exclaimed, for them to just ‘get on their bike’ and find another job, then there would be no problem. But in a world of slower economic growth and globalized markets, it is not obvious that the jobs will be ‘there’ for the taking.

What are the political implications of these trends and what impact are they having on competition policies?

In the first place, those who have been ‘left behind’ by globalisation will either seek redress from politicians or politicians who claim they have answers to their problems will seek their votes and populism win the day, even if it has no effective answers. Promises to protect jobs, to stop unfair trade practices of foreign firms abound. And as large multinational corporations, alongside financial speculators, are regarded as the major beneficiaries of globalisation, there are calls for them to take the blame for the harm it has caused.

In this toxic atmosphere, it is not surprising that competition authorities are striving to retain political and public support for their policies and programmes. The task of maintaining and promoting competition is for the long-term and in most cases involves ensuring that there is a dynamic of competition in the market which will ultimately be good for the consumer in terms of lower prices, more choice, better quality and more innovation. But there is no guarantee that antitrust decisions on specific cases will result in an immediate fall in prices or other benefits to consumers.  Politicians will also look at determining market outcomes through other means, such as price regulation. Sectoral regulators become the preferred port of call for politicians as they usually have the power to intervene rapidly in the market to fix prices or change company practices, without the need to follow the due process of a competition law case.


Competition authorities continue to have a key role in vetting international mergers. Recent proposed and promulgated transactions in already highly concentrated sectors such as chemicals, agribusiness, metals, air and rail transport, and telecoms call for close scrutiny of their impact on competition and on consumers. From a business point of view, these transactions reflect not just a desire to gain economies of scale and scope through the merger. They are also a result of a concern on the part of a number of corporations on the one hand to ring-fence their involvement in activities that are heavy in immovable fixed assets and on the other hand to concentrate more on the provision of services to the consumer and not just the product.

These transactions normally require in-depth antitrust investigations and significant structural remedies, in many jurisdictions. The solutions to the competition problems they raise mean that several competition authorities will be involved and that these authorities will inevitably have to take account of each other’s decisions, if not actively cooperate in negotiation of appropriate remedies with the parties. It is now a reality of multijurisdictional deals that one would be ill-advised to move forward without some idea of how antitrust authorities in the US, Europe and China will react.

Against this background, there has been a call in several countries for stricter control of foreign investments in the domestic economy to ensure they lead to benefits for local people instead of exporting assets or profits out of the country.  These concerns certainly go beyond the more confined security-linked mandate of the US CFIUS Committee. A number of countries are concerned that critical infrastructures, such as import terminals, energy or telecoms networks, do not fall into the hands of companies who are often state-owned in a foreign country and who could potentially use their acquisitions for strategic purposes in order to favour their own domestic companies.

It is surely legitimate for example to ask whether a merger would result in the reduction or closure, for example, of R+D facilities, which, beyond a potential loss of jobs, could have a negative impact on the competitive advantage of a national economy. The same goes for acquisitions of critical infrastructure. These issues are not simply populist but real and need to be addressed.   The European Commission has already proposed to supplement the controls in the EU Merger Regulation with an information-sharing mechanism between the Commission and member states, which is designed to pick up cases where further scrutiny by individual member states may be necessary.


There is a growing mistrust of large multinational corporations who appear to benefit unduly from globalization and from the digitalization of the world economy. There is increasing interest among European authorities as to the extent of competition between platforms as well as the scope that may exist for some companies to exploit their possession of large amounts of data on consumer transactions; a reassessment of established antitrust concepts is underway.

Generally speaking, competition authorities on both sides of the Atlantic have taken the view that the efficiencies gained in a vertical merger outweigh any danger of foreclosure of competition.  We see that the DoJ is opposing a vertical merger between AT&T/Time Warner merger on the ground that the combined firm would have both content and distribution of sufficient size to foreclose competitors. This is but one example of where theories of anticompetitive harm are being redefined and retested to ensure that competition authorities neither intervene too early or too late in fast-moving consumer-centred markets.

Emerging trends in the political environment surrounding competition policy and law enforcement will have an impact on competition authorities around the world.  They will have to be prepared to advocate and argue with government or regulators when the latter try to ‘fix’ a competition problem in the short term rather than looking for a more permanent, robust solution. Continued close cooperation between competition authorities worldwide will obviously strengthen an authority’s position when it is subject to excessive political pressure. Recognising too when a problem can, in fact, be best tackled by a regulator or by regulation should also free up resources for more important cases.

[1] Sir Philip Lowe is the former Director General for Competition (2002-2010) and for Energy at the European Commission (2010-2014). He is a Senior Adviser at FTI Consulting, Chair of the Annual Competition Workshop of the Florence University Institute, and Executive Chair of the World Energy Council’s Energy Trilemma Initiative.
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