Competition enforcement is harder than it seems


No matter where you go, competition agencies are sharpening their claws.

Call yourself the “21st Century”Trust destroyer“On Friday, US President Joe Biden announced a wide-ranging crackdown on everything from ticket pricing to non-compete clauses in employment contracts. The next day, Chinese competition regulators blocked Domestic M&A This is the first deal proposed by Tencent to create a dominant video game streaming media operator. On Tuesday, France imposed a record 500 million euro fine on Google for using news content.

After years of growing unease about business mergers and the dominance of large companies, the government is taking swift action. In most cases, this should have been achieved long ago, but when they take unprecedented actions, there may be some difficult trade-offs, as shown in the two recent examples.

Last week, the EU proposed its The first ever cartel case focused on technical cooperation Technology, not the usual pricing. It fined BMW and Volkswagen a total of 875 million euros and exempted Daimler from the 727 million euro fine because it reminded the committee of collusion. The fact is worthy of punishment. Several German automakers came together to set a uniform fuel tank size for pollution control components and standardize other measures, eventually conspiring to delay the introduction of better technologies.

But the crackdown made companies trying to cooperate in the field of electric vehicles and green energy shudder.BMW’s punishment was originally due to Discussion does not affect product decision, Especially some executives said they no longer know what kind of cooperation is acceptable.

This is very important. If done well, unified standards will accelerate commercialization and adoption. Imagine if we have a GM car battery. You can drive to the gas station for a new one without waiting for the car to charge. Not doing well, they rejected new players and slowed down the progress: what if the shared battery is inefficient and bulky, but no one is trying to improve it?

At the same time, another groundbreaking competition case equates future innovation with rapid adoption, this time in the medical field. The US Federal Trade Commission is the second lawsuit against vertical mergers in 40 years and is trying to prevent the acquisition of Grail by the biotech company Illumina, which produces cancer screening tests.The European Union has changed decades of merger policy survey $8 billion in transactions.

Illumina is the market leader in genome sequencing; Grail uses its machines. This integration can improve efficiency. If a company that provides critical infrastructure—just like Google does in search—competes with its customers, it will also stifle competition. FTC called Illumina May hinder the company Hope to compete with Grail’s screening test by charging them more or denying them the use of Illumina technology.

Illumina CEO Francis deSouza countered that his larger company would save lives by bringing Grail’s novel tests to the global market faster and accelerating its acceptance by insurance companies. In turn, this will make it easier for other groups to follow suit. He said that when Illumina began prenatal testing, its competitors were not deterred.

In order to ease the FTC, Illumina will promise to reduce prices over time and charge external customers the fees paid by Grail. But critics say that regulators have failed to enforce remedies for such behavior. The EU is weighing a more detailed investigation, and the US case will hold a hearing next month.

Authorities need to seriously consider whether faster release of life-saving cancer tests or electric vehicles should outweigh concerns about future integration. The evidence from the pandemic is mixed: it turns out that government-approved cooperation is essential in developing and manufacturing the Covid-19 vaccine, but competition helps ensure that there are multiple candidates.

Philip Agion, author The power of creative destruction, I think the best option might be to let the company experiment and then take punitive measures if necessary. “After the fact rather than before. Have you reduced the competition?” he said.

However, law enforcement cases often make a list of “not to do” when the industry really needs some “not to do”. To solve the problem of excessive concentration of enterprises, while promoting the rapid development of medical care and green energy, smart contact is required. Margrethe Vestager, head of EU competition policy It was admitted last year that companies need more guidance when trying to combat climate change. The watchdog must strengthen and provide it.

brooke.masters@ft.com

Follow Master Brook My FT And in Twitter





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