The election of President Trump in the US has been a wake-up call for Europe in many ways – from defence, to energy, to fiscal and trade policy. But it is also putting into question much of the established wisdom about the role of competition policy and economic regulation.
On 24 April, CERRE held a webinar to address this question with experts from both sides of the Atlantic. Moderated by CERRE’s Director of Research, Zach Meyers, panellists comprised Daniel Francis of the NYU School of Law; Barbara Moens of the Financial Times; Member of the European Parliament Aura Salla; Alexandre de Steel, Academic Director at CERRE and Professor of Law at the University of Namur; and Tom Wheeler, of the Brookings Institution and Harvard Kennedy School.
Can the EU remain ‘just’ a regulator?
Under past administrations, the US has often opposed many EU regulations. But years of political deadlock in Washington meant it had no real ability to challenge the Brussels Effect. The US is now threatening to actively retaliate against the EU.
The risk of retaliation is existential for the EU. The EU’s primary power has been its ability to impose and enforce regulatory rules across the continent. It is now too risky for the EU to require foreign companies to abide by European values, while being fully dependent on those companies for Europe’s tech infrastructure.
Driven by a fear that regulation is holding back innovation, the EU has been is scaling back some digital and climate regulation, has decided not to proceed with a number of new laws, and is pursuing a ‘regulatory simplification’ exercise.
MEP Aura Salla argued that poor EU regulation had played a strong role in Europe’s innovative decline – making it harder for smaller EU firms to grow and get access to critical data. While not discounting the positive role regulation can play, MEP Aura Salla voiced scepticism about much of the EU’s current digital laws:
“The problem with tech regulation in the EU is that it hasn’t been smart. It often ignores how companies actually operate, adds unnecessary complexity, and fails to deliver on its core promises — like protecting our children or safeguarding democracy. Instead, it creates legal uncertainty, leads to fragmented implementation, and risks sidelining European companies from high-tech innovation and access to data.” – Aura Salla, MEP
Ms Salla’s intervention highlighted growing doubts on both sides of the Atlantic about whether regulation is doing its job of helping markets work better, and therefore boosting competition and innovation. In defence of EU regulation, Professor Alexandre de Streel argued that the DMA was neither a non-tariff barrier to trade, anti-American, nor anti-innovation. Instead, it created conditions for smaller firms to thrive – regardless of their country of origin.
How should European regulation evolve?
The panel agreed, however, that much depends on the quality of regulation. Even if they are not always realised, the EU has long cherished the ideals of ‘better regulation’ – trying to ensure its laws are non-discriminatory and are enforced impartially. The US is abandoning these ideas, increasing White House supervision over independent bodies such as the Federal Trade Commission, weakening several independent watchdogs, and firing Democratic members of some government agencies. As Tom Wheeler explained:
“The US government is in chaos thanks to Donald Trump and his effort to create the “unitary executive” that centralises power in his office. While these efforts are being challenged in the courts, they are nonetheless being implemented and threaten to remove government decisions from expert agencies and turn them into political/personal transactions.” – Tom Wheeler, Businessman and Author
There was broad agreement among panellists that undermining regulators’ independence was not the right approach for Europe, and that the EU could benefit from offering a more stable, predictable and consistent approach to regulation. Professor de Streel even mooted the possibility of the EU setting up a European digital regulator to protect the independence of enforcement. He argued that the EU could take inspiration from the US Republican Party in this respect:
“FTC Chair Ferguson recently emphasised that the Republican Party is the party of law enforcement. Similarly, the European Commission should position itself as the party of law enforcement in the realm of tech regulation.” – Alexandre de Streel, CERRE Academic Director and University of Namur
Digital competition
One of the clearest areas of regulatory uncertainty is digital competition policy. Until recently, US competition policy was perceived as more conservative and less interventionist than in Europe. Under President Biden, the Federal Trade Commission and the Department of Justice shifted to a more interventionist approach which sought to pursue a wider set of objectives rather than merely protecting consumers from harm. In Europe, there is also growing pressure for competition and regulatory authorities to pursue a range of new objectives, including to support “champion firms”. Daniel Francis argued this was negative development:
“As politics and policy are disrupted and renegotiated around the world, antitrust faces a stark choice. Is our project about protecting consumers and workers from concrete economic harms, or is it a means to broader goals — like the equalisation of power? [We need] a relentless, disciplined, vigorous welfarism that focuses on harm, not power.” – Daniel Francis – Assistant Professor of Law, NYU School of Law
He pointed out that alternatives to focusing on consumer welfare gave competition authorities too much discretionary power, encouraging cronyism and rendering law enforcement vulnerable to corporate lobbying.
Europe’s new digital competition law, the Digital Markets Act, proved a divisive example among panellists. Alexandre de Streel and Tom Wheeler argued that while the instrument was not perfect, it was a positive step forward. Daniel Francis argued it lacked clear objectives, and Aura Salla argued it had delivered very little for European innovation.
Prospects for transatlantic co-operation
The panellists broadly agreed that the EU faced serious difficulties in trying to engage with the US administration. The Trump administration seems unwilling to engage with EU leaders, and the centralisation of decision-making in Washington made it difficult for European politicians to engage meaningfully with many members of the administration. A return of institutions like the EU-US Trade and Technology Council (TTC) seems far-fetched.
One option might be to co-operate in some of areas where EU and US values currently still seem aligned. For example, while the Trump administration bristles at some of Europe’s actions against large US technology companies, US authorities are aligned with the EU in pursuing a number of antitrust cases involving those same companies.
Barbara Moens sounded a note of caution however, observing that concerns about the independence of policy makers and public servants in the US made it difficult for Europe to engage even at an operational level. In her view, the best Europe could do in the short run was to find a balance between continuing to assert its values while not unnecessarily making the transatlantic relationship even more turbulent:
“Geopolitics is increasingly shaping the EU’s regulatory agenda—whether through China’s economic assertiveness or the renewed U.S. pushback against Brussels’ rules on tech, agriculture, and corporate responsibility. The challenge for the EU is to strike a delicate balance between defending its own priorities and navigating a more confrontational global landscape.” – Barbara Moens – EU Correspondent, Financial Times
There was broad agreement that there would be a long path ahead for transatlantic co-operation – and that the EU needed to be creative in finding topics and forums to advance a transatlantic agenda. CERRE continues to believe that constructive dialogue with the US will be essential to boosting competition and innovation in Europe. We are continuing to explore key areas and ways for regulators, regulated companies, and policymakers to continue to engage in dialogue, co-operation and knowledge sharing.
