The document outlines questions posed about defining market power, assessing evidence of market power incidence, and implications for competition policy. It then provides definitions of market power and discusses how various empirical studies have found increasing industry concentration, rising markups, declining labor share, and dispersion of productivity. However, the evidence does not clearly establish the causes and the policy implications are uncertain given multiple possible explanations. Competition policy challenges that could be further examined include treatment of mergers, small mergers, interaction with globalization, and exemptions. The author advocates a cautious policy response while continuing to evaluate frameworks.

1. “Review of the evidence on market power, contestability
and antitrust”
John Asker
Professor of Economics, UCLA
June 20, 2019
OECD GFP
Asker Market Power, Contestability, Antitrust June 2019 1 / 25

2. Outline
Questions posed:
What is market power? How is it inferred?
What is the evidence on the aggregate incidence of market power?
What are the policy implications of the available evidence
Specifically, what are the implications for competition policy?
Take aways:
Keeping basic economic definitions firmly in mind is crucial to interpreting
evidence
Evidence tends to suggest concentration and markups have risen in developing
economies, but little clarity as to why.
The state of the evidence is such as to suggest a very cautious policy
response. Policies should be selected based on what will perform well given
considerable uncertainty as to economic fundamental driving observed trends.
Despite this, examining existing competition policy enforcement frameworks
can has potential to be productive.
My thoughts on this continue to evolve – doubly so given the evolving state
of this literature. Please consume with that caveat.
Asker Market Power, Contestability, Antitrust June 2019 2 / 25

3. Definitions
Market Power: The textbook definition of market power ... is that the firm has
the ability to influence the price at which it sells its product(s). In other words, if a
firm does not face a perfectly elastic residual demand curve, it has market power.
Implications:
Market power =⇒ Markups > 0
and without further assumptions on conduct and other primitives:
Markups > 0 =⇒ Market power
Few firms =⇒ Market power
Sources: [24]
Asker Market Power, Contestability, Antitrust June 2019 3 / 25

4. Markups > 0 =⇒ Market power
Perfectly competitive market with
atomistic firms
Average markup is 1.39.
(Price ÷ marginal cost)
P
Q
1
1
Supply
Demand
0.5
Asker Market Power, Contestability, Antitrust June 2019 4 / 25

5. Few firms =⇒ Market power
Consider the classic homogenous Bertrand model with two firms that have
the same constant marginal costs.
P = MC and both firms have a 50% market share.
In a related sense, useful to recall Shaked and Sutton (1987): when firms’
fixed cost investment shape competition, the competitive process itself can
lead to consolidation
More information about the underlying primitives is required to make
conclusions about competition.
Sources: [24] [16] [23]
Asker Market Power, Contestability, Antitrust June 2019 5 / 25

6. Empirical implications of definitions and basic theory
Have to be cognizant of the logical steps in finding market power
Consumption of evidence requires judgement, it is not mechanical.
Absent assumptions about conduct and primitives (i.e. a model), evidence is
not dispositive
Quality of inference depends on the applicability of a (usually implicit) model
Recurrent danger in much of this of repeating errors imbedded the
Structure-Conduct-Performace (SCP) paradigm abandoned by IO in the early
1980s.
All that said, we should know what the world looks like. And any evidence is
valuable.
Sources: [22] on SCP and the issues therein, c.f. conclusions in [15] for value of this work in potentially re-shaping thinking re aggregate economy.
Asker Market Power, Contestability, Antitrust June 2019 6 / 25

7. Evidence, via a few selected pictures
Figure 1: Average Change in Market Share of 4-Largest Firms over 5-year intervals
−1
0
1
2
3
4
ChangeinConcentration
(4−FirmMarketShare/PercentagePoints)
1972−77 1977−82 1982−87 1987−92 1992−97 1997−02 2002−07 2007−12
Manufacturing Industries
Non−Manufacturing Industries
Notes: Results from a regression of change in 4-firm concentration shares by time period. From 1972-
1992, average of 4-digit SIC codes for manufacturing industries and lowest levels of aggregation for
non-manufacturing industries (A mixture of 3 and 4 digit SIC codes). From 1997 onwards, average
of 6-digit NAICS codes for all industries. Data for non-manufacturing firms in 1972 is incomplete.
Data from 1992 and 1997 are from non-comparable industrial classification systems.
Table 1: Market Concentration and Productivity RegressionsSource: [13] see also [6]
Asker Market Power, Contestability, Antitrust June 2019 7 / 25

8. Evidence, via a few selected pictures
Figure 3: Correlation of Economic Outcomes to Market Concentration
−.3
−.2
−.1
0
.1
.2
lnOutputChange
−1 −.5 0 .5 1
ln 4−firm Share Change
Real Output
−.3
−.2
−.1
0
.1
.2
lnPriceChange
−1 −.5 0 .5 1
ln 4−firm Share Change
Prices
−.3
−.2
−.1
0
.1
.2
lnLaborProductivityChange
−1 −.5 0 .5 1
ln 4−firm Share Change
Real Labor Productivity
−.3
−.2
−.1
0
.1
.2
lnMeanWageChange
−1 −.5 0 .5 1
ln 4−firm Share Change
Mean Wage
−.3
−.2
−.1
0
.1
.2
lnEmployeesChange
−1 −.5 0 .5 1
ln 4−firm Share Change
Employees
−.3
−.2
−.1
0
.1
.2
lnLaborShareChange
−1 −.5 0 .5 1
ln 4−firm Share Change
Labor Share
Notes: Results from a non-parametric regression of 5-year changes change in the combined market
share of the four largest firms by time period using standardized residuals after demeaning for year-
Source: [13] see also [6]
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9. Evidence, via a few selected pictures
Figure 8: Cost-Weighted vs. Sales-Weighted Average Markups, Compustat
Solid blue line shows the sales-weighted average of firm-level markups in Compustat data, as in De Loecker and Eeckhout (2017).
Dashed red line shows the cost-weighted average of firm-level markups. The former has increased by a larger amount, but the
latter is the relevant measure of the aggregate distortion to first-order conditions that results in welfare losses.
Alternative ‘low M’ and ‘high M’ calibrations. Our benchmark calibration targets anSource: [12], see also [10] [11]
Asker Market Power, Contestability, Antitrust June 2019 9 / 25

10. Evidence, via a few selected pictures
there has been a steady rise from a markup of around 1.1 to a markup of 1.6 in 2016. Observe
the steady rise in the first two decades (1980s and 1990s), and the virtually flat evolution in
2000s. In the last few years, there has again been a sharp increase.
0
.5
1
1.5
2
1 2 3
2016
1980
(a) Distribution of Markups: 1980, 2016
.7511.251.51.752
Markup2016
.75 1 1.25 1.5 1.75 2
Markup 1980
0.011
0.010
0.009
0.008
0.007
0.005
0.004
0.003
0.002
0.001
0.000
(b) Contour Plot of Markups: 1980, 2016.
Figure 2: The Change of the Global Distribution of Markups
Because we have the markup for each of the firms, we can investigate the change in the
distribution. From Figure 2a, it is evident that the the increase in the average markup is due
to an increase in both the variance as well as the mode of the distribution. Most importantly,
we observe the fattening of the upper tail. And while the values of the higher percentiles have
increased substantially, there is little change at or below the median. Even in 2016, most firms
have markups that are relatively low. But in contrast, substantially more firms now have rel-
atively high markups.5 Figure 2b shows yet another way to analyze this distributional shift,
Source: [10] see also [11] [12]
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11. Summary of emergent stylized facts arising from these
papers:
Country-level industry concentration has increased, at least on average in
many countries, although measured magnitudes vary
Markups have increased, at least on average, although measured magnitudes
vary
Prices index changes seem unrelated to concentration
Profit share of GDP has increased
The labor share has declined
Industry concentration and labor share are negatively correlated.
Labor productivity dispersion has increased
Firm entry rate appears to have declined, although measurement is tricky
Employment share of young firms has declined.
Sources: [6] [2] [10] [11] [12] [9] [13] [14] [20] [4] [7] [31]
Asker Market Power, Contestability, Antitrust June 2019 11 / 25

12. Implications of evidence: Welfare impacts of market power
or markups
Figure 1: Production misallocation (resulting from market power)
MC1
MCf
P
q1 Q = q1+q2 QSP
D
Notes: q1 indicates total production from the cartel, while qf indicates production from the competitive fringe. The
producer with market power has marginal costs of MC1, while the fringe has the marginal cost schedule of MCf .
QSP
is the social planner’s quantity.
at a higher resource cost than is socially optimal: Indeed, the low-cost producer should do all
the production. The welfare cost of this production misallocation is the shaded area. It is this
welfare cost, the rectangle, that we take as our measure of the full extent of misallocation. This
Source: [3], see also [12]
Asker Market Power, Contestability, Antitrust June 2019 12 / 25

13. Implications of evidence: Impacts unrelated to market
failure
Perfectly competitive market with
atomistic firms
Average markup is 1.39.
(Price ÷ marginal cost)
P
Q
1
1
Supply
Demand
0.5
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14. Implications of evidence: Impacts unrelated to market
failure
Perfectly competitive market with
atomistic firms
More efficient firms become even
better
Prices unchanges
Labor share down
Average markup increases from 1.39
to 1.57.
(Price ÷ marginal cost)
P
Q
1
1
Supply
Demand
0.5
0.5
Asker Market Power, Contestability, Antitrust June 2019 14 / 25

15. Implications of evidence: Impacts unrelated to market
failure
Country-level industry concentration
has increased, although measured
magnitudes vary
Markups have increased, although
measured magnitudes vary
Prices index changes unrelated to
concentration
Profit share of GDP has increased
The labor share has declined
Industry concentration and labor share
are negatively correlated.
Labor productivity dispersion has
increased
P
Q
1
1
Supply
Demand
0.5
0.5
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16. Implications of evidence: Impacts unrelated to market
failure
Perfectly competitive market with
atomistic firms
Demand increases
Average markup increases from 1.39
to 1.64.
(Price ÷ marginal cost)
P
Q
1
1
Supply
Demand 2
0.5
Demand 1
1.5
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17. Implications of evidence: Summary
Patterns likely reflect some combination of the following channels (and maybe
others):
Market power increases, possibly relating to lax antitrust enforcement
Changes in production technologies (rising fixed and sunk costs)
Changes in the nature of produced goods
Globalization
Causal links between the observed patterns and any of these channels has yet to
be clearly established in the data.
Sources: variously [21] [4] [14] [2].
Asker Market Power, Contestability, Antitrust June 2019 17 / 25

18. Implications of evidence: Competition policy failure?
In the aggregate, no dispositive evidence that competition policy has lead to
these trends.
However, certainly a productive challenge to any view that competition policy
is perfect
Emergent lines of research, prompted in part by the aggregate numbers,
suggesting various potential competition policy challenges:
Mergers: treatment of passive investors
Mergers: treatment small mergers
Interaction with globalization and rising mercantilism
Mergers: coordinated effects
Platform/Network effects (FAANGs and related business models)
Exemptions and related ‘regulatory capture’ (e.g. State aid, Noerr-Pennington
and related doctrine/practices)
Sources: [5] on passive investors, [25] [26] on small mergers, [1] [28] [30] on globalization, [18] [8] on coordinated effects, [17] [27] on platforms, [19] on
‘exemptions’
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19. Competition policy challenges: Common ownership and
treatment of passive investors
Figure 1: Common Ownership Profit Weights Over Time
Notes: This figure depicts the mean implied profit weight across all pairs of firms in the S&P 500 index by year, excluding own
profit weights, which are normalized to 1. See Section 2 for an explicit formula for common ownership weights and derivation.
We compute the implied common ownership profit weights for the full set of S&P 500 Index
constituents, pairwise, from 1980 through the end of 2017. Revisiting the math of common
Source: [5]
Asker Market Power, Contestability, Antitrust June 2019 19 / 25

20. Competition policy challenges: Small mergers
010002000
Count
1995 2000 2005 2010
Year
Mergers Notifications
Panel A: Notifications of never-exempt mergers
0100020003000
Count
1995 2000 2005 2010
Year
Mergers Notifications
Panel B: Notifications of newly-exempt mergers
150200250300350
500100015002000
Count
1995 2000 2005 2010
Year
Mergers Investigations
Panel C: Investigations into never-exempt mergers
050100150200250
0100020003000
Count
1995 2000 2005 2010
Year
Mergers HSR-only invest. Investigations
Panel D: Investigations into newly-exempt mergers
Figure II: Nearly all of the decline in notifications and investigations occurs among newly-exempt mergers.
The top panels plot notifications and mergers over time. The bottom panels plot investigations and mergers over time, with the primary and secondary y-axes counting the former
and latter, respectively. Panels A and C are based on never-exempt mergers, while Panels B and D are based on newly-exempt mergers. In each, a vertical line marks 2001, the
year the Act was amended to raise the size-of-transactions threshold. Note that the distance between the dashed lines in Panel D represents non-HSR-related investigations (of
which there are few).
19
Source: [25], see also [26]
Asker Market Power, Contestability, Antitrust June 2019 20 / 25

21. Competition policy challenges: Interaction with
globalization and rising mercantilism
Paris, le 19 février 2019
N°1043
A Franco-German Manifesto for a European industrial policy fit for the
21st
Century
At a time of increasingly fast changes globally, Europe must pool its strengths and be more united t
han ever.
Europe’s economic strength in the coming decades will be hugely dependent on our ability to remai
n a global manufacturing and industrial power. The industrial sector of the 20th
century is changing b
efore our eyes due to digitalization. Brand new industrial sectors are appearing such as those linke
d to artificial intelligence, others are changing at great speed such as the car or railways sectors, an
d other traditional sectors will continue to be essential such as steel or aluminium.
If Europe still wants to be a manufacturing powerhouse in 2030, we need a genuine European indu
strial policy. The investments required to enable Europe to compete on the global stage and the de
velopment of long-term industrial strategies aiming inter alia at a carbon-neutral economy are so im
...2. Adapt our regulatory framework:
We will only succeed if European companies are capable of competing on the global stage.
Competition rules are essential but existing rules need to be revised to be able to adequately take i
nto account industrial policy considerations in order to enable European companies to successfully
compete on the world stage. Today, amongst the top 40 biggest companies in the world, only 5 are
European.
Despite our best efforts, which we must pursue, there is no regulatory global level playing field. And
there won’t be one any time soon. This puts European companies at a massive disadvantage. Whe
n some countries heavily subsidize their own companies, how can companies operating mainly in E
urope compete fairly? Of course, we must continue to argue for a fairer and more effective global le
Source: [1], see also [28]
Asker Market Power, Contestability, Antitrust June 2019 21 / 25

22. (Very) Selected Bibliography
[1] A Franco-German Manifesto for a European industrial policy fit for the 21st Century, 19 February 2019, at
https://www.gouvernement.fr/en/a-franco-german-manifesto-for-a-european-industrial-policy-fit-for-the-21st-century, accessed 15 June 2019.
[2] Akcigit, Ufuk and Sina Ates (2019), Ten Facts on Declining Business Dynamism and Lessons from Endogenous Growth Theory, NBER Working Paper
25755.
[3] Asker, John, Allan Collard Wexler and Jan De Loecker (2019), (Mis)Allocation, Market Power and Global Oil Extraction, American Economic Review,
109(4), 1568-1615, 2019.
[4] Autor, David, David Dorn, Lawrence F. Katz, Christina Patterson, and John Van Reenen (2017) The Fall of the Labor Share and the Rise of Superstar
Firms, NBER Working Paper 23396.
[5] Backus, Matthew, Christopher Conlon, Michael Sinkinson (2019), Common Ownership in America: 1980-2017, NBER Working Paper 25454.
[6] Bajgar, Matej, Giuseppe Berlingieri, Sara Calligaris, Chiara Criscuolo and Jonathan Tmmis (2019), Industry Concentration In Europe and North
America, OECD Productivity Working Papers, No. 18.
[7] Barkai, Simcha 2017, Declining Labor and Capital Shares, Working Paper.
[8] Byrne, David and Nicolas de Roos (2019), Learning to Coordinate: A Study in Retail Gasoline, American Economic Review, 109(2), 591-619.
[9] Chen, Wenjie, Federico Dez, Romain Duval, Callum Jones, and Carolina Villegas-Snchez (2019) The rise of Corporate Market Power and its
Macroeconomic Implications, Ch2 in World Economic Outlook, April 2019: Growth Slowdown, Precarious Recovery, IMF.
[10] De Loecker, Jan and Jan Eeckhout (2018), Global Market Power, NBER Working Paper 24768.
[11] De Loecker, Jan and Jan Eeckhout (2017), The Rise of Market Power and the Macroeconomic Implications, NBER Working Paper 23687.
[12] Edmond, Chris, Virgiliu Midrigan and Daniel Yi Xu (2019), How costly are markups?, NBER Working paper 24800.
[13] Ganapati, Sharat (2019), Growing Oligopolies, Prices, Output, and Productivity, mimeo.
[14] Gutirrez, German and Thomas Philippon (2017), Declining Competition and Investment in the U.S, NBER Working Paper 23583.
[15] Harberger, Arnold (1954), Monopoly and Resource Allocation, American Economic Review Papers and Proceedings, 44(2), 77-87.
[16] Hubbard Tom and Michael Mazzeo (2018), When Demand Increases Cause Shakeouts, AEJ Micro, forthcoming.
[17] Khan, Lina (2017), Amazon’s Antitrust Paradox, Yale Law Journal, 126(3), 564-907.
[18] Miller, Nathan and Matthew Weinberg (2017), Understanding the Price Effects of the Miller/Coors Joint Venture, Econometrica, 85(6), 1763-1791.
Asker Market Power, Contestability, Antitrust June 2019 22 / 25

23. (Very) Selected Bibliography, continued
[19] Minda, Gary (1990), Interest Groups, Political Freedom, and Antitrust: A Modern Reassessment of the Noerr-Pennington Doctrine, Hastings Law
Journal, 41(4), 905-1028.
[20] Rossi-Hansberg, Esteban, Pierre-Daniel Sarte, and Nicholas Trachter (2018), Diverging Trends in National and Local Concentration, Working Paper.
[21] Sam Peltzman (2019), Industrial Concentration under the Rule of Reason, Journal of Law & Economics 57(S3): The Contributions of Robert Bork to
Antitrust Economics (August 2014), pp. S101-S120.
[22] Schmalensee, Richard (2012) ‘On a Level with Dentists?’ Reflections on the Evolution of Industrial Organization, Review of Industrial Organization,
41, 157-179.
[23] Shaked, Avner and John Sutton (1987), Product Differentiation and Industrial Structure, The Journal of Industrial Economics, 36(2) , 131-146.
[24] Syverson, Chad (2019), Macroeconomics and Market Power: Facts, Potential Explanations and Open Questions, Economic Studies at Brookings.
[25] Wollmann, Thomas (2018), Stealth Consolidation: Evidence from an Amendment to the Hart-Scott-Rodino Act, American Economic Review:
Insights, forthcoming.
[26] Wollmann, Thomas (2019), How to Get Away With Merger: Stealth Consolidation and its Real Effects on US Healthcare, in process
[27] Special issue on Antitrust and the Platform Economy, Review of Industrial Organization, 54(4), 2019.
[28] Open letter on European champions with signatures: More, not less, competition is needed in Europe, at
https://www.competitionpolicyinternational.com/wp-content/uploads/2019/02/Open-letter-on-European-champions-with-signatures.pdf, accessed 15
June 2019.
[30] Horn, Henrik and James Levinsohn (1997), Merger Policies and Trade Liberalization, NBER Working Paper 6077.
[31] Kehrig, Matthias and Nicolas Vincent (2018), The Micro-Level Anatomy of the Labor Share Decline NBER Working Paper No. 25275.
Asker Market Power, Contestability, Antitrust June 2019 23 / 25

24. Appendix: More evidence, average markups by country
the pattern that emerges in the aggregate, both globally and for the regions, is the amalgama-
tion of each of the constituent countries, there is considerable variation across countries. Most
European economies have seen steep increases, particularly Denmark, Switzerland and Italy.
Except for Portugal, which had a modest decline in markups, the other European countries all
show an increase in markups that is in line with the overall trend.
Markup
2016 change?
Global Average 1.59 +0.52
Europe 1.64 +0.66
1 Denmark 2.84 +1.95
2 Switzerland 2.72 +1.63
3 Italy 2.46 +1.46
4 Belgium 2.06 +1.03
5 Greece 1.80 +0.85
6 United Kingdom 1.68 +0.74
7 Norway 1.60 +0.74
8 Ireland 1.82 +0.66
9 France 1.50 +0.53
10 Sweden 1.31 +0.50
11 Netherlands 1.52 +0.47
12 Finland 1.36 +0.44
13 Austria 1.33 +0.41
14 Spain 1.34 +0.33
17 Germany 1.35 +0.29
16 Portugal 1.19 –0.06
North America 1.76 +0.63
1 United States 1.78 +0.63
2 Canada 1.53 +0.61
3 Mexico 1.55 +0.17
Africa 1.38 +0.32
1 South Africa 1.34 +0.07
Markup
2016 change?
Asia 1.45 +0.43
1 South Korea 1.48 +0.72
2 Hong Kong 1.65 +0.41
3 India 1.32 +0.34
4 Japan 1.33 +0.30
5 Indonesia 1.50 +0.22
6 Thailand 1.44 +0.21
7 Malaysia 1.33 +0.03
8 Pakistan 1.17 –0.01
9 Taiwan 1.24 –0.15
10 Turkey 1.16 –0.32
11 China 1.41 –0.45
12 Philippines 1.50 –0.77
Oceania 1.55 +0.56
1 Australia 1.57 +0.57
2 New Zealand 1.35 +0.37
South America 1.59 +0.01
1 Argentina 1.45 +0.64
2 Colombia 1.56 +0.41
3 Brazil 1.61 –0.01
4 Peru 1.64 –0.04
5 Venezuela 1.47 –0.46
6 Chile 1.37 –2.25
Table 1: Sample of Individual Countries (40 countries out of 134). Countries in each region are ranked
by their change in markup. The Region and Global averages are for all countries in that geographical
area, not just those reported in the table.
?
Difference between markup in 2016 and 1980. If the first observation (1980) is missing, we extrapolate
linearly.
The pattern of the NAFTA countries Canada and United States, is very much aligned,
though the US started 20 points above Canada. Instead, Mexico has experienced a much more
modest increase, though it has had a high markup from the start.
Source: [10]
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25. Appendix: Competition policy challenges: Interaction with
globalization and rising mercantilism
5/8/2019 19 EU countries call for new antitrust rules to create ‘European champions’ – EURACTIV.com
19 EU countries call for new
antitrust rules to create ‘European
champions’
Commissioner of Competition Margrethe Vestager is wary about having cross-border mergers given that
they could limit competition in the internal market. [European Commission]
A total of 19 EU governments have proposed updating the EU’s antitrust rules in order to facilitate the
5/8/2019 19 EU countries call for new antitrust rules to create ‘European champions’ – EURACTIV.com
After a ministerial meeting in Paris on Tuesday (18 December), the group of 19 countries called for “new
political impetus” to ensure European industry remains competitive on a global level.
As part of a new assertive strategy, the 19 EU governments said they will make proposals to the next
European Commission that will be nominated after the EU elections in May 2019.
One of their main ideas is “the identi cation of possible evolutions of the antitrust rules to better take
into account international markets and competition in merger analysis,” the nal statement reads.
France and Germany have defended cross-border mergers between big national rms over the past
months in order to forge European “champions”. However, the Commission is traditionally wary of such
operations, fearing they could squeeze competition in the single market.
The EU’s antitrust chief, Margrethe Vestager, expressed concerns on Tuesday over plans to merge
Germany’s Siemens and France’s Alstom to create a European rail champion.
Asked about the merger during a press conference, she said: “It is right to say that we have concerns on
very high-speed trains because it is very important for Europe to develop also when it comes to high-
speed trains.”
But some national governments disagree. “If we want to be able to face competition with Chinese giants,
we have to bring European forces together,” said French nance minister Bruno Le Maire, in comments to
the Financial Times aimed at defending the merger.
Vestager is expected to meet with Le Maire in Brussels later today (19 December).
The French minister will meet as well with Commission vice-president for the euro, Valdis Dombrovskis,
and commissioner for Economic A airs, Pierre Moscovici.
Le Maire will explain how France intends to meet the EU’ budget de cit targets despite new spending
plans announced after the ‘yellow vests’ protests.
‘Act quickly’
Paris, le 19 février 2019
N°1043
A Franco-German Manifesto for a European industrial policy fit for the
21st
Century
At a time of increasingly fast changes globally, Europe must pool its strengths and be more united t
han ever.
Europe’s economic strength in the coming decades will be hugely dependent on our ability to remai
n a global manufacturing and industrial power. The industrial sector of the 20th
century is changing b
efore our eyes due to digitalization. Brand new industrial sectors are appearing such as those linke
d to artificial intelligence, others are changing at great speed such as the car or railways sectors, an
d other traditional sectors will continue to be essential such as steel or aluminium.
If Europe still wants to be a manufacturing powerhouse in 2030, we need a genuine European indu
strial policy. The investments required to enable Europe to compete on the global stage and the de
velopment of long-term industrial strategies aiming inter alia at a carbon-neutral economy are so im
portant that we can only succeed if we pool our funding, our skills, and our expertise.
The choice is simple when it comes to industrial policy: unite our forces or allow our industrial base
and capacity to gradually disappear. A strong industry is at the heart of sustainable and inclusive gr
owth. And above all, it’s what will give Europe its economic sovereignty and independence.
To succeed, we need much more strategic thinking than in the past. That is why France and Germa
ny call for a more ambitious European industrial strategy with clear objectives for 2030. This should
also be a top priority for the next European Commission. The social market economy has been and
will continue to be a successful model for the EU and worldwide. We should continue to strengthen
and improve it. The European industrial strategy is a strategic aim in this respect.
Building on our discussions with other countries, and as reflected in the recent Friends of the Indus
try statement of December 2018, we consider the future European industrial strategy should be buil
...2. Adapt our regulatory framework:
We will only succeed if European companies are capable of competing on the global stage.
Competition rules are essential but existing rules need to be revised to be able to adequately take i
nto account industrial policy considerations in order to enable European companies to successfully
compete on the world stage. Today, amongst the top 40 biggest companies in the world, only 5 are
European.
Despite our best efforts, which we must pursue, there is no regulatory global level playing field. And
there won’t be one any time soon. This puts European companies at a massive disadvantage. Whe
n some countries heavily subsidize their own companies, how can companies operating mainly in E
urope compete fairly? Of course, we must continue to argue for a fairer and more effective global le
vel playing field, but in the meantime, we need to ensure our companies can actually grow and com
pete.
This entail changes to existing European competition rules. France and Germany suggest examinin
g different options:
Taking into greater consideration the state-control of and subsidies for undertakings
within the framework of merger control.
Updating current merger guidelines to take greater account of competition at the global
level, potential future competition and the time frame when it comes to looking ahead to theAsker Market Power, Contestability, Antitrust June 2019 25 / 25