EU’s Inconsistent and Protectionist Approach to Antitrust in the Digital Age Stifles Innovation and Harms Consumers

The Competitive Enterprise Institute (CEI) released a new paper today examining the European Union’s approach to enforcing antitrust policy against large and innovative technology companies. Authored by CEI adjunct fellow Henrique Schneider, “European Union Antitrust Policy in the Digital Era: A History of Misunderstanding and Arbitrary Enforcement” focuses on a 2019 report by the European Commission intended to update its antitrust policy for the digital age.

The paper presents case studies showing recent European antitrust policy pronouncements and enforcement decisions are based on a series of economic and legal misunderstandings of how markets work, are driven by an activist agenda, and can have protectionist effects that ultimately harm consumers.

One proposal by the European Commission that would create considerable confusion in the marketplace is the suggestion to treat online and offline business models differently. The EU also turns the normal relationship between regulator and regulated entity on its head by shifting the burden of proof to companies expected to demonstrate their innocence, rather than putting the burden on the government to prove wrongdoing.

“It’s disconcerting that the EU’s antitrust policies aimed at large and innovative companies rely on assertions unsupported by the facts and propose treating competing business models differently to the disadvantage of online businesses,” said Schneider. “It is telling that the EU’s largest and highest profile antitrust cases concerning digital and online businesses have been against American companies. The fact is, the EU’s inconsistent and interventionist approach to digital antitrust enforcement ultimately harms European consumers by stifling innovation and limiting access to potentially life-changing products.”

“American policy makers would be wise to learn from Europe’s mistakes and not turn U.S. antitrust law into the EU’s,” said associate director of CEI’s Center for Technology and Innovation Jessica Melugin. “Europe would be wise to move toward a real consumer harm standard like that of the State’s instead of moving further away from it.”

“Europe and the U.S. are already involved in a years-long trade spat. The result so far has been tariffs added to more than $10 billion of goods from both sides,” said CEI senior fellow Ryan Young. “Schneider’s paper shows how antitrust policy can have protectionist effects. Intentionally or not, antitrust enforcement can raise trade barriers without raising tariffs. As both Europe and the U.S. are embarking on a new era of more aggressive antitrust enforcement, officials on both sides should refrain from the temptation to give their own businesses an unfair advantage over foreign companies, or as part of a broader trade policy tool.”

You can read the entire paper here.

For more information on CEI’s work on antitrust issues, please visit cei.org/antitrust.