The major Western industrialized nations have experienced dramatically slower economic growth in recent decades. This slowdown has been particularly pronounced in the EU, though the United States has suffered, as well. Regulatory, tax, trade, and energy policy reforms that reduce market distortions and provide incentives for investment, production, and innovation could substantially address this problem.
Recalibrating antitrust law (called competition law overseas) in a manner that promotes the competitiveness of the market economy is also part of the solution. Care must be taken, however, to focus on antitrust reforms that spur growth and innovation, not changes that undermine an efficient competitive process.
What Is Competitiveness?
“Competitiveness” refers to a country’s ability to produce and sell goods and services effectively in the global market. It focuses in particular on how well a country’s firms can compete against other countries’ firms in terms of price, quality, and innovation. A highly competitive economy can maintain or increase its global market share in key sectors and drive economic growth.
The World Economic Forum, which has done national-competitiveness rankings since 1979, describes competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country.” Productivity, technology, infrastructure, labor costs, and general regulatory burdens are key factors that contribute to national competitiveness. Government policies, such as minimizing unnecessary regulation and protecting intellectual property (in order to spur innovation) directly affect these factors.
A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade. Companies gain advantage against the world’s best competitors because of pressure and challenge. They benefit from having strong domestic rivals, aggressive home-based suppliers, and demanding local customers.
Competitiveness and Antitrust
In recent years, growing attention has been paid to antitrust policy as an important factor in driving competitiveness. When properly applied, antitrust promotes competition on the merits, fostering strong rivalries and competitive vigor at home. Vigorous competition, in turn, encourages efficient investment in physical plants, equipment, and novel technologies, yielding expanded output and reasonably priced new and improved products and processes.
American antitrust’s goal, according to the U.S. Supreme Court, is to enhance consumer welfare. Pursuing this goal also benefits national competitiveness, as vigorous competition enables a nation’s most productive, efficient, and innovative companies to survive. This tends to enhance the prospects for success of that nation’s firms on the global stage—the essence of competitiveness.
Proper application of antitrust only seeks to prosecute commercial conduct that harms rivals or consumers for no legitimate competitive reason. Such conduct includes hardcore collusion, mergers that reduce competitive vigor, and the maintenance of monopolies through the inefficient exclusion or imposition of costs on competitors.
Appropriate antitrust enforcement avoids artificially picking “winners” and “losers.” It also refuses to impose obligations on successful competitors to prop up less-efficient rivals. Such misapplications of antitrust tend to reduce the competitive vitality of a nation’s firms, rendering them less effective on the global stage, and thereby reducing that nation’s competitiveness.
Recent Antitrust Policy Presents Concerns for Competitiveness
Recent antitrust-law developments in the United States and abroad have tended to undermine, rather than promote, competitiveness. The Biden administration largely abandoned the bipartisan (and pro-competitiveness) American antitrust-enforcement tradition of reliance on the consumer welfare standard. In so doing, it supported protection of individual competitors that were harmed by big business innovations. It also expressed skepticism about mergers in general (despite the pro-innovation economic benefits of many mergers) and placed new emphasis on less well-defined concepts, such as fairness. Taken as a whole, this approach to antitrust was not well-designed to promote U.S. competitiveness.
As part of its pro-competitiveness agenda, the second Trump administration may wish to consider an antitrust-policy reset. The new approach could center on strongly endorsing the consumer-welfare standard and recognizing the importance of innovation and business efficiencies, particularly in mergers.
A pro-competitiveness pivot in American antitrust would be particularly timely. The substantial Chinese threat to the success of innovative U.S. global firms could be magnified by continuing an American antitrust policy that undervalues efficiencies and innovation.
Further supporting a prompt American antitrust pivot are signs that the UK and the EU are finally starting to place greater emphasis on competitiveness in competition-law enforcement. The EU’s administrative arm, the European Commission, has had a long history of taking a highly regulatory approach to business oversight, including in the antitrust field. UK policy was little better.
But a widely-publicized 2024 report by Mario Draghi, the highly respected former European Central Bank President, may be a catalyst for change. The Draghi Report called for major antitrust and regulatory reforms to strengthen weak EU competitiveness.
Acknowledging the Draghi Report, the European Commission’s January 2025 “Competitiveness Compass for the EU” report recommended that Europe “must act now to regain its competitiveness and secure its prosperity,” by reducing EU regulatory barriers to innovation, among other changes. Furthermore, the Compass report specifically pointed to a pro-competitiveness tilt in antitrust enforcement, such as by:
- “simplify[ing], target[ing], and speed[ing] up enforcement”;
- “addressing the need for efficient scale where relevant”;
- “Revis[ing] [Commission] . . . guidelines for assessing mergers, to ensure that innovation, resilience and investment in certain strategic sectors are properly considered”;
- clarifying and simplifying the Commission’s technology-transfer framework “to facilitate technology dissemination, incentivise R&D, and promote innovation”; and
- “[r]igorously enforcing the Commission’s 2023 Foreign Subsidies Regulation (FSR) to combat unfair competition [from other countries].”
Adopting these elements would reduce unwarranted regulatory barriers to market transactions. They are consistent with a consumer-welfare and market-oriented approach to antitrust, more in line with pre-Biden U.S. policy.
What About National Champions?
Properly designed competitiveness policy seeks to encourage the global success of a nation’s firms by reducing artificial government impediments to innovation and market transactions. It should not be confused with a flawed national industrial policy that seeks to promote global “national champions” by picking “winners and losers” through subsidies or special government treatment for favored firms.
As former Obama administration Assistant U.S. Attorney General for Antitrust Bill Baer recently explained:
Creating a national champion is tempting, yes. However, the U.S experience shows that promoting them comes with risks. Protecting companies from competition can lead to inefficiencies, complacency, and stagnancy. Ultimately, these firms may struggle to remain competitive in the global marketplace.
All in all, the case is strong that the best antitrust policy to advance U.S. competitiveness should aspire to promote consumer welfare and minimize barriers to private-sector innovation.
