Nations around the world are reassessing antitrust policy (generally called “competition policy” overseas). Governments, regulators, and industry leaders are increasingly asking whether traditional antitrust enforcement is holding back the “competitiveness” of domestic firms. The term now shows up in speeches by European commissioners, in UK government directives, in U.S. merger battles, and in Canadian legislative reforms. Everyone seems to agree that competitiveness matters.
What Do ‘Competitiveness’ and ‘Competition’ Mean?
“Competitiveness” has no unique mutually agreed-upon definition. Nevertheless, it has been widely understood in recent years as referring to firms’ ability to win on their merits: to innovate, to operate efficiently, to be effective. At its worst, it becomes a political slogan used to justify protecting national favorites or rubber-stamping mergers that weaken competition at home in the hope of building corporate champions abroad.
Modern, economically based competition policy centers on promoting consumer welfare. The notion that “the consumer should be king in the marketplace” goes back to Adam Smith, who wrote in “The Wealth of Nations” that “the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.”
In the United States, enforcers have focused on challenging conduct that is not “competition on the merits.” That term covers business actions that inefficiently exclude or impose harm on existing or potential competitors. It also applies specifically to cartels, where competing firms secretly agree to fix prices or divide markets, and to mergers that reduce competition in a market. These sorts of actions tend to harm consumers, reduce economic efficiency, and undermine innovation and economic growth.
As policymakers around the world deal with slowing growth, rising geopolitical tensions, and rapid technological change, the temptation is to blur the lines between “competitiveness” and “competition policy.” But if we don’t define competitiveness carefully and transparently, we risk undermining the very competitive markets that make innovation and growth possible.
Historical Tensions: Competition vs Competitiveness
This isn’t the first time that notions of “competitiveness” have clashed with traditional antitrust goals. In the United States, companies have long argued that consolidation is needed to compete internationally. In the 1960s, banks said they needed to merge to fend off out-of-state rivals. In the 1980s, officials from the Pentagon and U.S. Commerce Department office claimed the U.S. Justice Department (DOJ) should back off its antitrust case against AT&T to help America compete with Japan. Those officials also unsuccessfully supported largely exempting the domestic steel industry from antitrust. More recently, T-Mobile and Sprint insisted that only by merging could they lead the world in 5G innovation.
Courts and enforcers have usually resisted these arguments, because competitiveness is too often invoked to justify anticompetitive behavior. To be sure, there are cases when “pro-competitiveness” consolidations assist large American companies in ways that are also procompetitive and pro-consumer—e.g., through cost reductions and innovation that generate better products and services. But too often, “competitiveness concerns” are advanced to support well-connected domestic firms and are at odds with the interests of domestic consumers, economic efficiency, and innovation.
Europe has faced similar tensions. When the European Commission blocked the Siemens/Alstom merger in 2019, France and Germany erupted in frustration, accusing Brussels of standing in the way of “European champions.” Competition Commissioner Margrethe Vestager pushed back, warning that weakening antitrust enforcement would leave Europe less innovative, less dynamic, and ultimately less competitive. Europe could either protect competition or protect incumbents, but it could not do both.
Yet the political pressure didn’t disappear. Reports commissioned by the European Commission now call for modernizing competition tools to better evaluate innovation, scale, and strategic industries, an attempt to thread the needle between competition and competitiveness.
The post-Brexit United Kingdom has leaned more openly into the idea. Its government has directed the Competition and Markets Authority (CMA) to help make the UK more attractive to global investment, and has criticized the agency for being slow, rigid, and indifferent to economic growth. When the CMA approved the Vodafone/Three merger after securing billions in 5G investment commitments, it signaled a shift: competitiveness would not replace competition, but it would shape enforcement choices.
Canada tried embedding competitiveness directly into law through an “efficiencies defense” that allowed some anticompetitive mergers if they boosted productive efficiency. After decades of controversy, that defense was repealed last year, evidence of the difficulty of balancing domestic harms with theoretical global gains.
Competitiveness in Competition-Law Analysis
If governments formally consider competitiveness in antitrust cases, four areas could change:
- Market Definition: Regulators could start analyzing markets globally or regionally, rather than domestically, especially in technology, manufacturing, and digital platforms. This raises questions about the harm to domestic consumers in the short run and efficiency advantages in the larger market in the long run.
- Treatment of Efficiencies and Innovation: Today, efficiencies matter only if they benefit consumers in the relevant market within a short time frame. A competitiveness lens would place far more weight on scale for long-term innovation and investment, which are often speculative and difficult to verify.
- New Defenses: Policymakers in Europe have floated an “innovation defense,” allowing mergers if combining resources is essential to compete globally. This defense would not apply if dominant firms were to use it to increase or entrench their power. Firms using the defense must commit to investments that can be audited. Allowing innovation benefits to serve as a limited defense underscores the importance of promoting competition through innovation.
- Remedies: Authorities may become more willing to accept behavioral commitments, such as investment pledges or price caps, instead of blocking mergers outright.
Costs
Policymakers are right to worry about global competition. China’s industrial policy, America’s technological push, and Europe’s stagnation all loom large. But competitiveness won’t make anticompetitive mergers harmless. If anything, the rush to incorporate competitiveness without clear standards creates three dangers:
- We may accept speculative promises of innovation over concrete harms to consumers.
- Political pressure may override objective, transparent enforcement.
- Domestic markets may become less competitive, undermining the very innovation we claim to protect.
The biggest risk is not that antitrust will consider competitiveness; it’s that it will do so quietly, without admitting it. An invisible “competitiveness thumb” on the scale would weaken public trust and move antitrust decisions from evidence to politics.
If regulators want to factor competitiveness into merger analysis, they should say so openly. They should explain when competitiveness matters, how it will be measured, and why it does not justify sacrificing competition itself. Evidence should drive decisions.
Final Thoughts
Competitiveness, appropriately cabined, need not be the enemy of competition. But unless we draw clear lines, the two can blur in ways that weaken both. The global economy needs innovative and efficient firms. This requires principled antitrust enforcement : transparent, pro-efficiency, pro-innovation, and pro-consumer.
