Transcript of Conference Call on Antimonopoly and Shifts in the Global Antitrust Landscape with Cristina Caffarra

Mar 22, 2024

On March 19, The Capitol Forum’s Teddy Downey spoke with antitrust expert Cristina Caffarra about how the major shift underway in US antitrust is propagating across the globe, and the implications for antitrust, trade and industrial policy across the US, Europe and the Global South. The full transcript, which has been modified slightly for accuracy, can be found below.

TEDDY DOWNEY:  Good afternoon, and welcome to our Conference Call with Cristina Caffarra on “Antimonopoly and Shifts in the Global Antitrust Landscape”. I’m Teddy Downey, Executive Editor here at The Capitol Forum. And Cristrina Caffarra, she really needs no introduction. I’m going to give her one anyway. To me, she is the Queen of antitrust anti-monopoly policy in Europe. And she’s well known as a global thought leader in competition economics, an expert in the application of industrial economics to competition and regulation, with a particular focus on digital industries. Her 25 years of experience in competition economics includes serving as head of European Competition at CRA for 15 years, launching the European Office of Keystone in 2022. She’s directed economic analyses and multiple competition investigations on landmark mergers antitrust matters before the EC, competition agencies in the UK, member states and in the U.S. as well. And Cristrina, thank you so much for doing this today.

CRISTINA CAFFARRA:  Thank you so much. It’s a real pleasure to be here.

TEDDY DOWNEY:  And we had the pleasure two months back of you hosted, we sponsored, an incredible conference on antitrust regulation and the next world order. And I’d like to kind of let’s start things even before that on what was your thinking, what were your goals, what were you trying to achieve with that conference? And what did we learn at the conference? But first, what were you trying to achieve?

CRISTINA CAFFARRA:  So, the conference was a lot of fun. And we’ll talk about its legacy – it did move the dial. My thinking in putting it together was that we are in an election year for multiple countries – of course the U.S., and Europe goes to the polls in the next few weeks. It is an important year in which we need to confront a lot of what we are doing and what we’ve done, but also what we are going to do. What is the agenda for these next four or five years?

So, for me, what was important was to try and convey to a large audience of mainly Europeans (the conference was very large, both in terms of physical presence and we had 3,000 people online from over 30 countries), to establish a few cardinal points that I think are not yet so well-established in Europe.

The first point is really that we’ve gone rogue with anti-trust enforcement. We lost a lot along the way. This is a conversation that in the U.S. you’ve had for the past five years. You had the entire debate about neo-Brandeisians, the end of consumer welfare, the overcoming of consumer welfare and efficiencies as the North Star. In Europe, that discussion has been muted and not very broad.

The notion that antitrust needs to be revitalized in a major way, that the values of antitrust need to be rethought, is not remotely commonplace. It is not remotely mainstream in Europe. Antitrust is still practiced by a select, limited church of specialists, and it has remained so. We are diffident and very concerned about what is happening in antitrust in the U.S. The notion that we are moving from values like efficiency to power, not price, citizens, farmers and workers and small businesses, not just consumers. The idea that we care about notions of fairness and equality and ultimately liberty and ultimately freedom and democracy is still not the main discussion here. Europe had a past in that dimension, but it has been forgotten in the last twenty years. So, I wanted to awaken people to the fact that this big change in the U.S. was super important and certainly affecting.

And the second, and related, point was that in the U.S. there has been this “all of government approach” that your president has established with the July 2021 Executive Order. And what I see this as meaning is that there is a common lifting of all boats, that certain values that have animated antitrust, and animate antitrust now, are also infusing other economic policy tools.

So for instance trade is undergoing a major transformation in thinking in the U.S., which is freaking everybody out. Industrial strategy has become mainstream, and values of antimonopoly are also important there. In Europe, we are still incredibly siloed as between these practices. Not only that, we heard the Director General [of DG Competition] at the conference talking about a “side dish”, competition being “a side dish” relative to these big, important problems of our times.  This is very much what the thinking in Europe has been and remains. Europe has not yet really adopted the position that neoliberalism is over. Our antitrust policies are still pretty neoliberal. Our trade policy is neoliberal. Our industrial policy is neoliberal. We are still close to that world. And so, the conference was very much a way of flying a flag and saying it doesn’t need to be this way.

TEDDY DOWNEY:  You know, one of the things that I have trouble with, because in the U.S. there has been a lot of change. But when we were hosting the conference, there were a lot of things going on that this idea of awakening to how these markets really work. You would think people would see an obvious connection. Obviously, there’s Russia invading Ukraine, causing an energy crisis, which resulted in big shortages and response policy‑wise. You had, when we were in Brussels, farmers protesting in the streets. You have labor unrest. I mean, you have all the same issues that we have here. And yet, there’s no connection intellectually, despite the obviousness of all these things being interrelated. And also, from a practical standpoint, a very quick mobilization to use a lot of authority and cooperate to respond to Russia. I found that I’ve had a hard time understanding why there is no connection or why it’s so much difficulty. And I just wanted to have you reflect on that a little bit more. Like, how are these dots not being connected? How is it able to be siloed this way so effectively?

CRISTINA CAFFARRA:  I’ve pondered this in putting together the narrative arc of the conference. As you recall we started off talking about “power, not price”. And then we went into trade and then went into industrial policy. All the while, you’re right, the farmers were protesting outside in the streets. Europe, is in a difficult position, so it’s even more puzzling that we are so impervious to seeing the connections. Europe is in a big hole. There are report after report coming out commenting on our lack of competitiveness, lack of productivity growth, lack of investment. We have indicator after indicator of serious structural, systemic problems. Some of which have been there for decades. Europe is fragmented. Our Sisyphus rock ends up being market integration, that we don’t seem to be able to achieve.  Energy prices are high. Capital formation is low. Europe is in trouble. And with all of this, we seem to still be impervious to seeing that these things somehow connect to one another.

The response in Europe, when one suggests that there is a common underlying paradigm shift that affects all these tools is, oh, but Cristina, you want antitrust to become political. But antitrust “is” political: we have adopted a political position which was bestowed on us by the Bush administration at the turn of the century, when were told to “read the memo” and start doing things like the Americans do. But it wasn’t a neutral, purely scientific, approach. We’ve forgotten all this. But what we’ve done is to adopt a neoliberal view approach, which is certainly not a-political, pure and scientific.

Similarly, when people say but you can’t solve all of the problems of the world with antitrust: but who says we should? We are not going to solve climate change. We are not going to solve decarbonization. We are not going to solve integration of markets with antitrust tools. That is a dumb objection, no one is suggesting this.

The issue is more these values—which have to do with monopolistic choke points, how we think about power—are important when thinking about the other tools. One inspiring example of this that I’ve seen recently is how U.S. Trade has shifted and pivoted the traditional U.S. position favoring U.S. giants around the world to one that is more thoughtful and says, well, wait a minute. If we are trying to resist the power of certain companies at home because we think that these monopolies are a problem, how can we then be their champions abroad in setting trade rules, supporting the interests of Big Ag, Big Tech, Big Pharma, on the international scene, where ultimately trade rules shape markets?

This has freaked out many in the U.S., particularly the position that Trade Ambassador Tai has taken on digital trade, where she has been saying, well, let’s take a pause and think about this. Think about what we’re doing. Because we need to have a connection between what trade is doing and what antitrust is doing, what anti-monopoly is doing. Well, this is to me a smart way to think things through. It’s “all of government”. It’s how you want things to be. I find that hugely motivating and real. And this is what I think Europe has not yet seen. There is distrust, of course, about what U.S. Trade is doing because European Trade is still very neoliberal, and everyone here is skeptical that the Americans are up to something devious. I really wanted to trigger a number of people thinking about this in the round.

And the legacy of it is interesting, what happened in the immediate aftermath. I mean you were involved in writing about it at the time because it was newsworthy.We had press cycle around it, which was triggered by the comment by the Director General for Competition that “competition really is a side dish when it comes to these big questions of our time”. Rana Foroohar wrote an article on it for the Financial Times, then a response from the Director General, then a response by Matt Stoller… So, there’s been quite a lot of back and forth, and a whole press cycle over that, DG Competition will feel defensive about that. Now we cannot take away from DG Competition that they’ve been early movers in the digital enforcement space. Europe has been a pioneer. Europe was doing cases against Google when everything in the U.S. was under total permafrost – back in 2010, 2011, 2013. I remember doing an event in D.C. in 2018 asking “why is Europe the only one enforcing against Big Tech?” It was during the ABA Spring meetings and everyone got upset with me, it was a provocative thing to say. Europe has been a pioneer, but then somehow these cases haven’t delivered results, so we pivoted to regulation, and it remains to be seen what that will achieve.

So, we need to recognize that Europe played a major role. But I think there is also no question that the U.S.. in terms of posture, vigor and values is now way ahead of where we are. I think there is enormous resistance here still to that view of the world. At the same time there is also enormous appetite for it. Following the conference so many have reached out to me. Somebody said I quit my job because I want to do something more worthwhile. There’s been a lot of young people, students in law and economics and other fields, reaching out and saying that was mind expanding. This is what we really are missing. And we should be thinking about that. Young people in agencies, a huge response, that I think we need. And civil society, which had been focusing in Europe very much on digital rights so far, is pivoting towards anti-monopoly: this is now the common threat that civil society is trying to pursue. So that is interesting.

TEDDY DOWNEY:  I mean, I personally have witnessed an extraordinary reaction, from my perspective, to the conference, as you mentioned, all the public dialog, the EC coming out with a piece in the FT, to your point. The interest in broadening the lens when it comes to competition, seems to be really there.

I want to focus a little bit on something that I continue to be confused about, which is who do the EC staff think of as their constituency. Like, who are they working for? Because I noticed a bit of a disconnect at the conference between Members of the European Parliament, who seemed very enthusiastic about being more strategic on competition, trade and industrial policy, because I think they see it as good for their constituents, their citizens. But that enthusiasm was not apparent from the EC. And there was this great op/ed from the small and medium sized digital businesses in Europe imploring a rejection of the status quo and more aggressive strategic policymaking on their behalf as a constituent, right?

Also to your point, you said USTR has sort of said, look, trade policy is not for big companies, big American companies. It’s for our citizens, our small businesses, our people and the middle class of other countries as well. I mean, this seems like an incredible opportunity if you are looking to boost your own economy to say, well, sure, let’s open some doors for our own small and mid-sized businesses, particularly in the tech space. And we just haven’t seen that. Even though all these rules keep coming out, they seem often to be a little bit more deferential to Big Tech more than I would expect given this opportunity handed to them. And I would love to get your reaction. Because I find it personally a little confusing, from my perspective, how this posture, how EC thinks about their constituencies, how these decisions end up. I don’t want to take away too much because some of these new rules might work a little bit. We’ll see. But we’d love to get your take on all this.

CRISTINA CAFFARRA:  Remember European regulators are not just the EC. There are national regulators, there’s Germany, there’s France, there’s a number of national agencies that are doing God’s work, and we shouldn’t forget them.

But what I am observing is that, although the intentions, are good—no one is disputing the effort or the good intention of the EC – overwhelmingly the intellectual framework remains the things we’ve done over the last 20 years. We’ve done more or less the same for 20 years in merger control. What’s been ultimately the effect? We don’t block any mergers. We let everything through. What matters is not just talking about “animating values” – what matters is outcomes, the out‑turns. And in terms of out‑turns, we block very few mergers. True that in the last year we’ve seen an uptick, we had the first “ecosystem” case being blocked (Booking/e-traveli), we know that Amazon/iRobot was going to be blocked. Something there is moving. But if you look at the past five years, nothing much has shifted. Most mergers go through, like Broadcom/VMware. Everything goes through with remedies.

We are not having the same deep interrogation that the U.S. agencies are putting forward, which is: “concentration is bad. We’ve gone too far. We shouldn’t allow certain sectors to concentrate. The real problem is market power per se”. These are things that you hear freely discussed in the U.S. In Europe, there is great terror to embrace this notion. Because our law says that market power isn’t the problem. It’s the abuse of that power. So, the moment you talk about market power as being the problem, everyone is up in arms: “the law says that market power isn’t the problem . It’s what you do with it!”

So, in conduct cases we are coming out of the last 20 years of this philosophy in which you can be a perfectly good monopolist. You may be a monopolist and not do anything wrong. We’re not going to check what you’re doing with your wages, with your workers, the way in which you’re dealing with your suppliers. As long as you don’t abuse it openly by doing a few select things to your rivals and customers. And by the way, the economists here have got an exculpatory narrative for about anything under the sun. I can tell you that if you do exclusivity, if you do some sort of fidelity discount, if you do other things there are pro-competitive reason for it. And in the end, these cases are few. They are slow. They go nowhere. That’s the problem. So that is a massive frustration. And yes, it is a frustration which I think is hampering the perception of how vigorous and how effective Europe is in this space.

Now in digital, we have pivoted to regulation. The DMA. I’m a supporter of these laws in principle. Because let’s face it, it’s also a moment of great democracy when a continent can express the consensus that will actually allow it to pass laws. This is something that we in Europe do, while the U.S. seems to find it a lot more difficult given the complete dysfunctional nature of your democracy. That said, you can pass a law and then you need to implement it. What will happen remains to be seen. And of course the investment in Brussels on getting something out of the DMA is huge. It is a huge issue of credibility. It needs to work. It needs to be seen to work. Because otherwise, what was all this effort about?

So, we’ll certainly see a lot of effort. At the same time, there is a whole host of other things that are happening in Europe or that are relevant and salient to citizens, not necessarily all in the digital space. We have multiple sectors that are concentrated – though not the same as in the U.S. – we don’t have three meatpackers and two car hire companies. We have fragmentation at national level at the same time, Europe is not integrated. This is the crazy situation we’re in. We have member states fragmented along national lines, so the discussion about anti‑monopoly gets more subtle here – who are the monopolies here? But market power is still pretty persistent and prevalent too.

TEDDY DOWNEY:  And I want to stay on the DMA and the AI act and digital for a minute. I agree with you. It seems like an incredible—it’s like moving mountains to pass these bills. Clearly, there’s an intent to rein in the power of Big Tech with two new pieces of legislation.

Again, the EC’s going to implement these new rules. To the extent that the feedback is this is not enough, you’re not doing enough, is there a realization that this law was passed to rein in Big Tech? And if Big Tech is not reined in, that it would be a failure? Or is the lens more technocratic? They’ve got different goals. And just how do you see that playing out? How do you see that dialog between the people who made the laws and the people implementing the laws and the companies? Again, I focus a lot on these constituencies because I find it a little hard to predict without understanding why people are doing things. But we’d love to get your outlook for the DMA, the AI Act. Is it that the law’s not strong enough? What’s going to be the issue? Where’s the rubber going to meet the road on these?

CRISTINA CAFFARRA:  You know, my view has always been it’s difficult to draft laws that are easy to implement. I mean, this stuff is incredibly hard to do. And then the fundamental, question is what are we seeking to achieve? And as we know, the way in which these laws were drafted was essentially a compendium of all the failed antitrust cases that Europe attempted to do—the cases against Google, against Amazon, against Meta. The theories of harm that were floated in those cases were taken and then turned into “thou shall not do this”. It’s a start. But it’s not surprising that companies that do not want to be regulated will not rush forward, proactively, putting forward solutions that everybody actually likes.

The way in which the law is structured is basically saying don’t do this and don’t do that. And by the way, you have to give us a proactive implementation report, which was due two weeks ago. The companies are to write themselves a report that explains how they will comply with the law. Well, I mean, it’s not surprising that people who are complainants, who are other actors on these platforms, say they’ve not done enough. It’s entirely to be expected. It’s all an experiment because, so far, we are trying to do regulation, but we are not, so far, telling the regulated companies exactly what to do. And so, the regulated companies are saying, well this is how I read the law. This is what I’m going to do and I’m not going to move very much. Sorry, this is how far I go. Tough. I don’t know what to tell you.

In other sectors, e.g. when we regulated telecoms, there was direct engagement on “do this”. “This is the access pricing regime that we are adopting”. The DMA is hands off, the companies have got to come out with proactive solutions, then the EC will evaluate them. And then there is the prospect of noncompliance decision. But inevitably, that will also take time.

And more fundamentally, my concern has always been “What is our theory of change here?” Because if what worries us, and it is a really fundamental existential question, is the power that is essentially associated with a handful of large platforms, then this law is not going to be able to disperse that power, however implemented. You’re going to see some improvement at the margin. You’re going to see some changes which are going to be resisted. But you’re not going to see market structure changing radically.

The philosophy was “fairness and contestability”. I think we’ll see a bit more fairness, perhaps, with some constituency of platform dependents. But contestability that really undoes current real stranglehold on power is not going to eventuate from this.

What’s going to happen? So, I expect it will be DMA 2.0. Inevitably, there will be, as you put it, the Parliament pushing the Commission to ultimately go further. And if outcomes have not been satisfactory, there will be an update to the law with more specific obligations. Because I don’t think the Parliament will sit back and let this unfold. But again, it takes some time. But there could be an expansion and DMA 2.0. I think it’s very likely.

The other more fundamental thing the Europeans need to really confront—and this is again my plea for joining the dots. We are complaining that we are the vassals of four or five big American big tech companies. And we haven’t got anyone here. Why haven’t we got anyone here? Why haven’t we got any kind of digital giant over here? The answer is – again – structural: we are fragmented culturally, linguistically, we don’t have risk capital. We don’t have all sorts of favorable factors that are in the U.S. that spurred innovation and the growth of these big companies.

So how are Europeans going to create some sort of “European stack” that could potentially be an alternative, alongside the large U.S. platforms? This is a question of industrial policy and industrial strategy. Are we investing in this? Are we putting money into this? Well, there are some sovereign funds in Germany who got a bit of money, but we spend tons in Europe in crazy things. We give a hundred million to Sardinian growers harmed by the war in Ukraine. What did they get harmed by exactly? A lot of money in Europe is spent, is disbursed—at the conference, Rene Repasi was saying, yeah, we open the money bag and we throw money right, left and center because we have constituencies. Because we have political clients. But where is our effort to establish alternative infrastructure, which is digital and it is perhaps publicly owned.? For the antitrust community everything is about “taming big tech”. Good luck to us.

TEDDY DOWNEY:  I’m interested to see how this plays out because there’s a lot of movement here. And so, I’m excited to keep following it. We have a lot of questions from the audience. I want to remind people, if you have a question, you can put it in the chat control panel over here, and we’ll try to get to it. We have a lot of questions so far already. I wanted to jump into a few of these that are related to what we’ve already been talking about.

A couple of questions here about how all of this changes with the Trump administration. We have one question. What impact might a new Trump administration have on U.S. antitrust policy enforcement? Another, how can Europe arm itself against a potential second Trump administration and expected pro‑monopoly policy from a second Trump administration? And I would just kind of add to this. We have a third question here about the same thing. Does the prospect of a Trump presidency create at least some more urgency to be more strategic on these specific issues? And we’d love to get your thoughts on that.

CRISTINA CAFFARRA:  The prospect of a Trump administration is terrifying for Europeans, in general. I can’t really speak to how people are preparing for it, but I also think that many of the current concerns about tech are also concerns that were common to the previous administration, and I would expect them to not be completely dissipated. Remember that all of the cases against Google and Meta by Attorneys General were bipartisan cases. So, it’s not as if all will be lost. I think that things would change significantly in the U.S. but how would Europe prepare itself is not clear. But I also think we’ve been fairly impervious so far to some of the progressive changes, so maybe Europe will not be particularly affected by it.

My issue remains that Europe has not moved out of the neoliberal paradigm it has been following for twenty years. As I said at the beginning, there’s enormous resistance here, at the level of agencies themselves, agency senior leadership, to adopting a different set of values. And that is more worrying for me as a European. What is the next Commission going to look like? This is the question. There is an expectation that with the election there will be a shift to the right, that we’ll have here in Europe a more rightwing set of governments and that will colour what commissioners we will have. Remember, the commissioners are not elected. They are nominated by a collection of government. And there’s horse trading around who gets which portfolio in this process. But, of course, they are the expression of what the voters have put forward in terms of governments.

And so, I think before I even worry hugely about the impact of Trump in Europe, I worry about the impact of this election forthcoming in June on Europe, the expected lurch to the right. And what does it do? We haven’t made much progress with a more progressive approach on antitrust. And that could be frozen if you get someone who is not on message there.

TEDDY DOWNEY:  So, it’s very dependent on the EC and who gets put in place. And they could even see a step back in terms of even more laissez faire potentially.

CRISTINA CAFFARRA:  We could. We could. We certainly could. I mean, I think that there is great resistance internally inside the agency now to just embrace this flag. The kind of resistance I described earlier, “but you can’t cure world hunger with all of this. So, you can’t be too political. You can’t be populist”. There is already resistance, and my concern is that with the new election, we could be in a deep freeze. Any progress that might be made in this direction might be actually stopped entirely. And that is scary for me as a European, in terms of what is ahead.

TEDDY DOWNEY:  We’ve got a couple of more questions here. One, we sort of touched on this, but I kind of want to ask about a little bit more specifically, the question is about the competitive landscape for Gen AI and antitrust enforcement. I know you have a lot of views about AI. What do you think needs to happen to have a competitive Gen AI landscape? And what do you think is actually going to happen? And I’m curious if those are at all related. But we’d love to get your take on Gen AI.

CRISTINA CAFFARRA:  You know, with AI, we’ve also been essentially assisting to a gigantic hype cycle. I think one of the most interesting commentators in this area is Meredith Whittaker, who is the President of Signal. And she has got a fantastic way of describing the hype cycle and the way in which the whole thing, the whole narrative, over the last 12 months has been driven by this giant advertising campaign, which is ChatGPT, which essentially has meant we put in the hands of millions of people effectively an advert for something that in practice existed for the last 30 years, but it’s being powered up in a gigantic way by enormous lakes of data and computing power.  I think that kind of narrative is now understood. And I share very much the concern about grandfathering of market power from the current big tech monopolies into AI. Because they control the key assets.

What can one do? Well, the UK CMA has opened a merger inquiry on the acquisition or the investment of Microsoft into OpenAI. A number of agencies that said they were looking into it. They were asking questions. But to open formally a merger inquiry is different and is significant. And it is interesting that the UK CMA, who had lost a little bit, in the last few months, its mantle as being the most progressive agencies, has moved forward on this.

TEDDY DOWNEY:  And we should point out on Microsoft, on the company that they buckled under the political pressure, that they’re willing to do this. I mean, it’s pretty impressive.

CRISTINA CAFFARRA:  It’s pretty significant that they’ve come out and said that this is going to be a merger investigation. Well, you know, kudos. Because ultimately, merger control is one of the few tools that antitrust has preemptively to try and do something about some of these concentrations. The concentration problem is not just that you, of course, have the assets under your control to expand, but you also have the ability to acquire anyone who is a potential future threat. We’ve seen that playbook unfold with tech in the last ten years.

So, what is incredibly concerning is the notion that these same players can do the same in this space, acquiring or putting their claws into someone who could be a future competitor. And when you hear their justification is well, you know, this stuff needs a lot of resources, a lot of compute, a lot of money, we’ve got it so suck it up. That’s not a narrative that anyone finds reassuring.

So it is super important that we look at these partnerships. And we have an AI act which has been approved finally, again a testimony to the ability of Europeans to produce laws. But it is going to be implemented, in any case, not before 2025. And the question is also what does it condition on? Yes, it is conditioning on risk, levels of risk. And that is important because we know that AI is associated to huge levels of risk, inequality and discrimination. But it does not talk about market power. It doesn’t. And. in fact, it leaves Gen AI out of scope. And so incidentally, this is a result that was achieved because the European Gen AI players, as small as they are, like the French Mistral, were lobbying very intensely. We don’t want excessive regulation of the GenAI models, because then we, the challengers, will have great problems in effectively just standing up to Big Tech. Then what happens? Mistral goes into bed with Microsoft, and an investment is being made. This is an area where antitrust in principle has really to be—and I’m not using the word lightly—vigilant. And I think that we should just say “don’t”. We should just say “don’t. Don’t do this acquisition. Don’t do these investments. Sorry. Go and get some funds through IPOs or through other kind of funding rounds”. But to expand the tentacles in this way is problematic.

Now, it is also possible that what we are at the moment is being peak hype and everything is going south from here. Because people are getting fatigued. AI was booed at Austin, at South by Southwest. People are finding that the output of ChatGPT, Copilot are rubbish. So maybe it won’t be quite as pervasive. Much of these hype cycles have got to do with funders wanting to extract a profit from an early funding.

TEDDY DOWNEY:  We have a bit of a related question here. Please comment on the interaction between the FTC and USTR in shaping the digital market platform economy. You’ve already said the UK, the EC. What kind of leadership do you expect from the FTC and USTR on digital markets?

CRISTINA CAFFARRA:  Well, the FTC is doing a ton. The current chair is, of course, very active, and so is the entire Commission. I think it’s remarkable what’s being done in digital, multiple prongs: there are the complaints, the merger challenges. There is attention to conduct in various, multiple ways. And there is early attention to AI. The FTC, like the DOJ, the U.S. agencies are very alert to this. It remains to be seen how they will unfold, but these are very remarkable actions.

Developments at U.S. Trade continue to be hugely interesting to me as an antitrust person. In the U.S., trade has proceeded in its own world and antitrust in its own world, the two were deliberately kept separate in the last 50 years.  Europe is somewhat different. Because European trade and antitrust officials have always had to think about the idea of somehow making the Internal Market happen. So many of the antitrust original rules were formulated in Europe with the purpose of furthering the Internal Market. For example discrimination across borders could be an antitrust violation, because it would be undermining the big overarching objective of achieving the Internal Market. So, Europe has had historically a closer relationship between trade and antitrust. Although, you wouldn’t know it very much today.

Then against this background what U.S. Trade is doing today is remarkable. As I mentioned for example the whole area of digital trade has come very much under the spotlight. Ambassador Tai has been essentially holding back and putting forward the view that we should not favor digital rules that are designed and pursued by Big Tech companies to favor their own data collection, their own free acquisition of data across borders. Because this is contrary to the sentiment that we share about how this whole surveillance economy is harming citizens and people and businesses. So, if we are taking the view that this surveillance economy is toxic in an antitrust context, and we seek to do something about it, then it is super interesting that U.S. Trade is standing up and saying, but wait a minute. I then cannot go and ultimately push the interest of Big Tech in this direction, imposing their will on the Global South and the citizens of other countries. There is a commonality of interests here between the citizens of our country and the citizens of other countries. We are united in this vision that this stuff should not happen. And so, while in the past you had Big Tech effectively ruling U.S. Trade—is my understanding—now you have somebody standing up and saying maybe not. Maybe not. Maybe we should change things.

TEDDY DOWNEY:  I’m curious to get your thoughts on who those counterparts are in Europe when it comes to trade, industrial policy, in particular, bottlenecks. Because we did see, again, as I mentioned, a swift reaction in Europe to bottlenecks created from Russia invading Ukraine. So that muscle can work, despite whatever atrophy has occurred over the years. Who are the people to watch on bottlenecks, industrial policy, trade on the European side? And are they as entrenched in their neoliberal sort of sticking to neoliberalism as the competition policymakers? Or what’s the outlook there?

CRISTINA CAFFARRA:  I think my hope resides in the Parliament. Because, as you said at the beginning, parliamentarians, who actually are elected and they have to respond to their constituents, are sensitive to what is it that we’re doing? And how are we responding to our constituents when they’re asking what are you doing exactly to ensure growth, my job, to keep inflation under control. Why are energy prices so crazy? These are the questions parliamentarians face with their constituencies. And that makes them very rooted.

At the moment, my perception is that trade policy officials in Europe are pretty neoliberal in their own instincts and very suspicious of what Americans are doing. What are these Americans up to? Industrial policy is also interesting. Until now there has been a sense that, oh, this is all about national champions, the state picking winners and losers picking government and all of this. It’s terrible, we shouldn’t be doing it. But we need to do it, and we need to do it fast because we have such enormous structural problems. So let’s see what the new commission is going to do. At the moment, we have a state aid framework, which is still very much, oh, we can only invest if it is correcting a market failure and dealing with it efficiently. I think this framework is pretty outdated, and we need to rethink it. The whole efficiency logic that still pervades European enforcement and policy making is something that I wish will be rethought in a big way in the next commission.

TEDDY DOWNEY:  What about on the national security side? We’ve seen in the U.S.—actually in the U.S. weirdly—the national security apparatus here is really pretty neoliberal and a lot of the people have a lot of, I would say, ties to big tech, and big business, from their consulting days or what have you. Just that community on the national security side has its conflicts. That’s kind of where you’re seeing the Googles of the world go for influence now. But on the flip side in Europe, obviously you have more direct challenge from Russia and China. I think there’s some awareness that there’s competitive issues, that there’s a need to deal with China. But what about the national security folks, also neoliberal? Or are they more open-minded to some of these strategic ideas?

CRISTINA CAFFARRA:  Yes, it’s very real minefield in Europe. Because, of course, national security is very much something which is driven from national capitals. Yes, the EC is seeking to create some sort of consensus. But views are not uniform in Berlin or in Paris. Europe is a collection of 27 states with very different views. And this creates also great potential for lobbying. But we can’t talk about a single security stance at the moment. It’s pretty chaotic.

TEDDY DOWNEY:  I want to ask one more question and wrap things up here. We’ve got a question. I think this is kind of a good way to go out. How would you assess power and provide legal certainty to businesses? Really, the question is how do you assess power if price is not the main proxy? Emphasize on market share only? What’s your view on how to think about power?

CRISTINA CAFFARRA:  So, my take on this is that we need to be less focused on looking at things piecemeal. We look at one merger at a time as if it was suspended into sort of vacuum. And yet, we have seen sectors consolidating serially over time. So, I think that when we are looking at a merger, and we’re considering the question of what market power does this create, the primary question is what market power exists today in this sector? Has this industry consolidated rapidly? Have we reduced over a reasonably limited period of time to a limited number of suppliers? What is this structure? The assessment today is almost oblivious of trends, let’s look at the market shares today. Let’s look at whether they suggest that prices might go up. But we need a holistic view, not a single indicator. For instance we’ve been using these stupid, dumb, indicators like GUPPIs – price pressure indicator. As if looking at margins and diversion ratio really told us something about the effect of a merger going. We should abandon that kind of kiddy stuff. We should abandon vertical arithmetic. Because no one can rely on a stupid cost benefit analysis, static as it is, to tell us something about whether vertical integration is good or bad. What are the other aspects of the structure?

We need to look at an industry overall, not at a single indicator. The problem where things have gone wrong is that we have basically said, well, okay. What it comes to mergers, when you’re talking about the result of mergers, we are looking at things like price pressure indicators. And so, we spend ages calculating diversion ratios and margins, which are all cooked in the kitchen at the back. This stuff is all made up. It’s all snake oil. Vertical arithmetic, total snake oil. This stuff needs to be binned and start again. It isn’t to say that all economics is useless— people have been saying Cristina is trying to expel economics from antitrust. This is complete nonsense. There is good use for economic intuition. That gives us some direction. But we cannot rely on a single indicator and say, well, the GUPPI is this and this is the price effect. It’s dumb.

TEDDY DOWNEY:  Well, I think that’s a good way to conclude. I know from my perspective I always learn an incredible amount talking to you. I find your work rigorous, compelling.

CRISTINA CAFFARRA:  Well, thank you.

TEDDY DOWNEY:  And I think you’re doing invaluable work sort of elevating this conversation and creating an international dialog. I mean, I don’t think there’s another person, who isn’t in the government, creating the types of conversation that you’re creating. So, thank you so much for taking the time.

CRISTINA CAFFARRA:  It’s fun. I love it.

TEDDY DOWNEY:  It was a lot of fun. Thank you so much for letting us sponsor the conference. And thanks to everyone as well for joining the call today.

CRISTINA CAFFARRA:  Goodbye, everyone. Thank you for listening.

TEDDY DOWNEY:  Bye, Cristrina. And this concludes the call. Thank you. Bye‑bye.