Antitrust has arguably become increasingly political in recent years. Tobias Pukropski provides an overview of the main developments at EU-level and in Germany, and of their practical implications. A tale of hipsters, fairness, sustainability, and Germans in Chinese trains.

Once upon a time…

…antitrust enforcement was untouched by political considerations. All that mattered was the rule of law, applied without regard to political or policy considerations or to external circumstance.

Really? Sounds like a fairy-tale.

Well, that probably is a fairy-tale. Politics have always played a role in antitrust, with enforcers like the DOJ and the FTC in the US and the European Commission being political institutions. Already in 1979, Robert Pitofsky, Commissioner and later Chairman of the FTC, argued in “The Political Content of Antitrust” that antitrust should be more political. Interestingly, he pointed to companies like United States Steel and Xerox (today not quite the feared giants they were perceived as back then) potentially having too much power. 

What Pitofsky’s article shows is: Politization of antitrust is nothing new. However, the level of politization seems to vary over time – politization seems to come in cycles. And this piece will focus on how antitrust has become more political both at EU-level and in Germany over the course of the last years. 

So, what about politization of antitrust in the EU and Germany?

Politization is not always easy to grasp. Yet, even those just observing the antitrust world will have gotten the impression that political goals play an increasing role in defining what antitrust laws should achieve.

It is difficult to outline a clear timeline or triggering event for increasing politization. It seems to have been – and still be – a gradual process. However, there are tangible events and developments one can point to, some more and some less obvious. A book could be written about the topic, so the following will be limited to laying out four of the most important chapters in this tale: hipster antitrust, the stance of the European Commission, sustainability, and the (somewhat torn) German perspective.

Hipsters

As often in Western life, the US frequently sets trends also in antitrust. The term “hipster antitrust” was framed in 2017 on Twitter and describes a movement arguing that consumer welfare should not be the (sole) focus of antitrust law, rather that other goals such as employment and wages should also be taken into account. 

This debate is obviously political. The US trend also gained traction in Europe – the discussion on what antitrust should be and cover is still raging. It has been described as one between “(public interest) discretionalists” and “legalists”. And as this blog’s very own Rupprecht Podszun hinted at already in December 2019, being “pro-enforcement” seems to have become the mainstream position of enforcers and scholars. The counter-revolution (by whom?) is yet to be seen.

Fairness and a dual role

Did the Europeans just follow a US trend? Not at all. If one listened closely, Europe’s most prominent antitrust figure, Margrethe Vestager (no offense to Rupprecht Podszun and Justus Haucap!), brought different considerations into the debate from the start. She became the EU Competition Commissioner in November 2014 and already in nearly all of her first public speeches talked about “fairness” and things having to be “fair”. 

It was not (and might still not be) clear what this actually means in the framework of competition law. Some argued fairness was just shorthand to explain what competition law does anyway. Yet, in hindsight, introducing this term might be seen to have gradually opened the gate for bringing criterions into competition law other than “just” consumer welfare.

Now, the Commission has always been a political institution, where politicians ultimately made the decision. Nonetheless, during (not necessarily because of) Ms Vestager’s time in office, a new cycle seems to have begun, where politics play a greater role. In December 2019, she became Executive Vice President of the Commission, taking responsibility for competition law enforcement and digital industrial policy. That dual role is reported to have led to certain tensions, e.g., on how to balance the application of competition law in patent licensing with supporting Europe’s 5G equipment makers, and with Internal Market Commissioner Breton over if/how to promote EU interests in the tech space.

A number of today’s Commission initiatives have an at least partial political background. It would go too far to describe them all in detail here, but examples like the much debated Digital Markets Act and the proposed regulation on foreign subsidies show that where competition law enforcement is considered to be too limited or slow, there is a political willingness to introduce new rules. And there potentially would not be so many complaints against tech players (e.g., Epic v. Apple, Slack v. Microsoft, Spotify v. Apple) at the Commission level if there was not a political willingness to pursue them.

These days, to convince a regulator to pursue a case (or not to pursue a case), one should be prepared to also show the political or policy benefits. That is of course not to say that regulators will just bow to political pressure: During her first tenure, Commissioner Vestager has not only stayed firm against the huge pressure to clear the Siemens/Alstom merger, but did not shy away from prohibiting three (!) German prestige transactions in one year (Siemens/Alstom, thyssenkrupp/Tata, Wieland/Aurubis). 

Sustainability

The Fridays for Future movement might not even know that it has also left its mark in antitrust: One of the most prominent examples of the intersection between politics and antitrust is sustainability. Regulators across Europe are considering if and how sustainability considerations can be incorporated into antitrust analyses, e.g., during merger control or when assessing cooperations of competitors. Several regulators have published reports (the Netherlands and Greece being at the forefront) and the European Commission has held a conference on this. The topic is still very much in flux. It might, however, ultimately lead to a framework where anti-competitive effects can be outweighed by (the politically driven goal of) benefits for sustainability.

Germany – and China

The politization of the landscape in Germany cannot be separated from China. The “awakening moment” seems to have been the 2015/2016 acquisition of German robotics manufacturer Kuka by Chinese Midea. The German government was reported as considering blocking the transaction, while not having the means to do so – then-minister of justice Brigitte Zypries said in 2017 that a case like Kuka should not happen again.

The initial legislative reaction was to tighten the German foreign investment regime, which by definition is more of a political instrument. But: antitrust caught politics’ attention not long after, when Siemens went public with the intention to merge its rail business with Alstom in 2017. German minister of economic affairs Peter Altmaier, together with his French counterpart Bruno Le Maire, supported the deal and argued it was necessary to create a European champion to compete with Chinese rival CRRC on a global scale. When the European Commission was unimpressed and blocked the transaction in early 2019, both ministers set out to change European merger control rules (results pending). 

CRRC was the focus again in what is the defining case for the Bundeskartellamt’s treatment of acquisitions by state-owned Chinese companies. When CRRC acquired Vossloh’s shunting locomotive business in 2020, the Bundeskartellamt took a very close look and considered factors like subsidies, dumping and industrial policy in its assessment. Although the regulator emphasized this was purely under merger control law, politics were naturally part of the assessment, as subsidies, dumping and industrial policy are quintessentially political. At the same time, the Bundeskartellamt, felt obliged to make the point that some of the “various distortions” of competition observed by market participants related to trade policy or public procurement law and could not be solved by competition law. A similar emphasis was made by the regulator when it announced its clearance of Siltronic/GlobalWafers in February this year.

That the German regulator deems it necessary to remind the public of the clearly defined scope of competition law speaks for itself. With developments going towards politization, the Bundeskartellamt might actually view itself to be a stronghold for keeping things as they were. Just in March, President Andreas Mundt said that there was a high danger of political priorities bending competition enforcement, and that opening the door to public policy objectives could undermine enforcement. Look no further than this statement for evidence on antitrust having become more political.

And will everyone live happily ever after?

Well, that remains to be seen. Princess Antitrust is still weighing whether to let the flirt with Prince Politics turn into a full love affair, or even more. For now, Prince Politics is here, and irrespective of whether or not one likes him, his presence is simply something one has to accept and deal with. Practitioners have to keep this in mind when presenting cases to regulators and when deciding which stakeholders to engage with and how. That is not to say lawyers need to become lobbyists, rather that the political dimension of cases should not be ignored.

Tobias Pukropski is an antitrust lawyer in Duesseldorf, Germany. The views expressed in this piece are purely his personal views.