The problem of concentrated economic power and the debate surrounding it is not new. There have been various waves of monopolization and strong counter-movements to stop or reverse it. As a result of this changing history, there are now laws and institutions in Western countries that are intended to prevent excessive concentration of economic power and, above all, the abuse of this power. There are different terms for this: Antitrust (USA), competition law (D) or competition policy (EU/ D). It is worth familiarizing yourself with these instruments.
In Europe, there are two levels: at national level, the competition authorities of the individual member states, such as the German Federal Cartel Office, and at European level, the EU Commission. One part of the EU Commission, the Directorate-General for Competition, has taken on the role of the European competition authority.
The competition authorities have the following options for action:
- They can prevent mergers between companies: Mergers above a certain size must be notified and are examined by the antitrust authorities. They can decide to approve the merger, impose conditions or prohibit the merger altogether. However, the latter has rarely happened over the decades. Many problematic mergers have been approved, such as the takeover of WhatsApp by Facebook or Bayer-Monsanto.
- They can stop abusive business practices: The antitrust authorities investigate whether companies are abusing their market power. If this is the case, they can impose penalties and impose requirements on companies. For example, the Federal Cartel Office prohibited Amazon from forcing sellers on its platform to sell at the same price on other platforms.
- They can (partially) break up companies: If companies abuse their market power, the EU Commission can also demand the sale of parts of the company. In the UK and more recently also in Germany, break-ups are possible regardless of abuse, i.e. a break-up in highly concentrated markets without proof of a specific abuse.
- They can prevent prohibited, anti-competitive agreements (cartels): These can be price agreements between companies, for example. The EU Commission also deemed it a cartel that German car manufacturers agreed to limit the size of the Adblue tanks for exhaust gas purification in diesel cars (an important aspect of the diesel scandal).
As a rule, competition proceedings against individual companies or a group of companies are a prerequisite for the use of these instruments. The competition law is supplemented by sector-specific regulations such as the Digital Markets Act. This prohibits particularly powerful digital platforms from engaging in certain business practices from the outset (“ex ante”) that further strengthen their power and harm consumers and other companies.
These instruments represent very powerful levers. The so-called impact principle applies: competition authorities can also take measures against companies based in other countries if these have an impact on the national or European market. This means that the European Commission can conduct proceedings against American companies or prohibit the merger of two foreign companies if this affects the European market.
At the same time, the toolbox has some special features and weak points:
- The implementation of competition law relies heavily on individual proceedings and the legal interpretation of the basic laws. In many cases, companies take legal action against the decisions of the antitrust authorities, with the result that the courts, in particular the European Court of Justice, ultimately decide. As a result, the proceedings take a very long time.
- The (legal) hurdles for proving problematic market power and its abuse are high. In addition, the analysis of market power is generally very narrowly defined.
- More far-reaching structural measures such as break-ups of companies or the sale of parts of companies are rarely ordered. Priority is given to so-called behavioural measures, i.e. requirements for the behavior of companies. However, these are often difficult to control, especially in the case of tech empires with their intertwined business areas and opaque algorithms. High penalties such as the 4 billion euro fine for Google for abusing its dominant market position with Android2 may seem spectacular, but they are not necessarily effective. Monopoly-like positions of power are not broken up in this way.
So the picture remains mixed: competition law is actually intended to prevent the formation of cartels, curb the concentration and concentration of markets and curb the abuse of market power. It offers far-reaching instruments for this – at least in theory. In practice, however, there are weaknesses. Too many mergers have been waved through, the fight against abuse of power is sluggish and more far-reaching, stringent instruments are rusting away because they are rarely used. In fact, these instruments have been weakened over the last 40 years by a neoliberal and economistic turn. But the wind is beginning to turn again. In recent years, the power of the big tech companies has sparked a new debate, even among experts.
At the same time, a social movement is growing that wants to strengthen antitrust instruments again and utilize their potential in a new way. Within just a few years, this movement has achieved a remarkable turnaround in the USA. Several antitrust proceedings are currently underway in the USA, which are aimed at splitting up Facebook and Google, among others. The debate is also growing in Europe and Germany. The “Limit corporate power” initiative was founded here in January 2018. The reason for this was the Bayer-Monsanto merger. Supporters include NGOs from various sectors such as Digitalcourage, Goliathwatch, the Forum Fairer Handel, the Forum Umwelt und Entwicklung, LobbyControl, Oxfam and WEED. An anti-monopoly network has existed at European level since 2022.
We are once again in a transition: from a low phase to a revival of anti-monopoly approaches and the rediscovery of their potential. Rebalance Now aims to strengthen this movement and make it successful.
