How can enforcers strike a balance between innovation and strict competition policy?
This is the debate that Roger Alford and Andreas Mundt, along with moderator Cristina Caffarra, engaged in at a recent panel hosted by FGS Global and The Capitol Forum.
According to Mundt, one cannot be achieved without the other; strict enforcement directly drives growth and competitiveness, and by extension innovation. Further, he explained that competition is impossible if one dominant company sets the rules for competitors. Alford agreed, adding that the best response to new innovative industries is vigorous and effective competition rather than the creation of government-chosen national champions.
It seems, then, that the US and EU are on the same page philosophically – and this was further highlighted in the panel’s discussion of mergers. Alford signaled a greater willingness amongst the new administration to find remedies for mergers and accept early termination for nonproblematic deals. He stressed that suing on every case creates bottlenecks and removes the possibility of an exit through M&A, which therefore disincentivizes startup innovation.
Practically, however, Alford argued that there are many countries in Europe where high startup costs create a less competitive environment, and this along with overly stringent regulations like GDPR make it difficult for smaller companies to compete with large incumbents in the region. Mundt, on the other hand, argued that European agencies have done a good job of creating a level playing field. Instead, he sees the problem with tech competition in Europe as more related to energy prices, regulations and bureaucracy.
Still, he posed that enforcers are not political bodies, but rather arbiters of the law. The goal for competition agencies should be to help, support and facilitate positive economic change by creating the space for investment and innovation.
To watch the full video of the session, please fill out the form below.