Alberto Mingardi  

Competition, technocrat-style

School Networking Bleg... The problem with "shocks"...

In an op-ed for the Financial Times, former EU Competition Commissioner Mario Monti took the opportunity of the antitrust probe into Google to characterize antitrust as "a policy made in Brussels that works."

Putting aside any consideration of the Google case (see this excellent analysis by my colleague Massimiliano Trovato), the article is worth reading, because--as always with Monti--it epitomises the way in which the European elites think, starting with the astonishing statement that the European Commission is "one of the world's most formidable defenders of free markets." I would like to make three points:

(1) Monti claims that EU antitrust policy "works". But in what sense? He refers explicitly to the record fine that he himself imposed upon Microsoft in 2004. To show it to be a precedent of the ongoing Google case (in which the search engine company is accused of prioritising its own product comparison appliance over competitors'), he mentions one of the problems with Microsoft was bundling: bundling of Windows Media Player into its own operating system. For the antitrust decision to have "worked," it means it should have created a level playing field for more competition to emerge. Arguably, however, in that very field, a market alternative (iPod/iTunes) developed prior to the Monti ruling, and challenged Microsoft in the marketplace. There is another possible interpretation of the "workings" of Antitrust policy. It may well be that the Microsoft decision was good enough to produce a more lively, de-monopolised market in digital services at large, all over Europe. This seems to me to be even harder to argue.

(2) To make the case for the legitimacy of Antitrust policy, Monti mentions the fact that big decisions, such as Microsoft and the stop to the GE/Honeywell merger (another effort he deems to have "worked"), were in fact upheld by the European Court of Justice. Fair enough, but perhaps he should also mention that during Mr. Monti's tenure as DG Competition (1999-2004) the Commission decided against eight mergers. Of the four cases that appealed against the Commission's decisions, the ECJ nullified three (Airtours-FirstChoice, Schneider-Legrand, TetraLaval-Sidel) , only upholding the ruling against GE/Honeywell.

(3) Many claim that the European Commission dresses up an industrial policy as competition policy, and specifically that it tends to target big US businesses. Mr Monti considers this claim to have been "silenced" by facts. But then his ultimate justification for competition policy is one of power play: "bites," it is "felt beyond European shores," it disallows Microsoft or Google to "play 28 national decision makers against each others." EU competition policy successes shines in comparison "with the conflicting attitudes EU states takes vis-à-vis Russia" or with their "disarray" in dealing with the "migration crisis". But this means, at best, that there is some sort of agreement among European states on what competition policy should look like, whereas there is no agreement on what foreign policy should look like. Is the mere fact of this agreement "a formidable defense of free markets"?

(4) Monti blames the EU's ineffectiveness in facing Russia's aggression in Eastern Europe, the Greek debt crisis, or the migration emergency on the conflict of disparate national visions on these issues, whereas antitrust "decisions are taken by the commission, a supranational body, under the judicial control of the ECJ. It is the EU's institutions that are in control, rather than its member governments." But what about accountability? Voters seem to prefer national democracy, with all its flaws, to supernational government, which seems to be evern more opaque. Everything, in Monti's vision, should be serenely decided by far-away, all-knowing wise men (and a few women) in Olympian autonomy.

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COMMENTS (2 to date)
Don Boudreaux writes:

Bravo, Alberto!

Mark V Anderson writes:

I know very little about the European Commission, so I am not astonished by the claim on how free market oriented they are. Could you explain that further?

Or is it just the anti-trust things in this article that you refer to? I think anti-trust could be reasonably described as free market, since the intent is to force markets to be more competitive. It is certainly true that anti-trust could also be described as anti-free-market. It is not clear to me which answer is correct.

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