Big mergers are back in fashion. So are “national champions,” industrial-policy wish lists, and solemn warnings that antitrust enforcement may leave the West defenseless against foreign rivals. In Washington, Brussels, and London, competition policy increasingly sounds less like economics and more like geopolitical strategy.
That trend creates a real risk of confusion. Antitrust is not supposed to function as an all-purpose ministry of industrial policy. At the same time, antitrust cannot pretend modern competition is captured by a static snapshot of domestic market shares. In innovation-driven global markets, firms compete through scale, capabilities, investment, and technological change—not just price levels in narrowly defined markets.
Policymakers increasingly invoke this sense of global “competitiveness” in debates over merger control, innovation, resilience, scale, and global rivalry. The term is often frustratingly imprecise. At its worst, it becomes a polite euphemism for protectionism: approve this merger, excuse this restraint, or subsidize this favored firm because it is “ours.” That version of competitiveness has no legitimate place in antitrust analysis. It substitutes national favoritism for competition on the merits.
There is, though, a more coherent—and more defensible—understanding of competitiveness. Properly defined, competitiveness refers to firms’ ability to succeed on the merits by operating efficiently, innovating, and serving customers effectively. Understood that way, competitiveness is not a rival to consumer welfare. It is one of the primary mechanisms through which consumer welfare emerges over time.
That distinction matters. The competitiveness concern worth taking seriously is not whether a domestic firm becomes larger, more politically influential, or better insulated from rivals. The relevant question is whether antitrust analysis accurately accounts for productive efficiencies, dynamic capabilities, innovation incentives, global competitive constraints, and the long-run process through which firms create value for consumers. That distinction should frame the current debate.
The ‘National Champion’ Temptation
There is nothing new about claims that antitrust enforcement may undermine national competitiveness. In the United States, merging parties and public officials have long argued that firms need greater scale to compete against larger domestic or foreign rivals. Courts have given those arguments a mixed reception, but the underlying legal principle has remained relatively stable: a merger that substantially lessens competition in a relevant market is not redeemed merely because it produces a larger or more prominent firm.
The canonical example is United States v. Philadelphia National Bank, where the Supreme Court rejected the argument that a merger was necessary to compete more effectively against larger banks. The decision gave rise to the now-familiar structural presumption, which continues to loom large over merger analysis. Critics have increasingly argued that the presumption encourages undue reliance on concentration metrics and industry structure, rather than evidence of actual competitive effects.
The problem is not that market structure is irrelevant. It is that structure is not destiny. A presumption that may have offered administrative convenience in 1963 fits poorly in industries shaped by rapid innovation, multisided platforms, intellectual property, global supply chains, and dynamic entry.
When “competitiveness” is invoked merely to wave away anticompetitive concentration, antitrust should reject it. But when the term is used to challenge overly mechanical reliance on market shares and to demand a fuller account of rivalry over time, antitrust should pay attention.
The European experience illustrates both the appeal and the danger of competitiveness rhetoric. The European Commission’s 2019 decision blocking the Siemens/Alstom Franco-German rail merger triggered calls for a more permissive policy toward “European champions.” That reaction raised legitimate concerns that competitiveness could become a backdoor around merger law. A large European firm shielded from European rivals may become less—not more—capable of competing globally. Protecting firms at home can dull the very competitive pressures that make them formidable abroad.
At the same time, Europe’s more recent debate has become notably more nuanced. The Draghi Report, the European Commission’s competitiveness agenda, and the Commission’s 2026 draft merger-guidelines process all reflect growing interest in scale, innovation, investment, resilience, and dynamic effects. That marks a meaningful shift, but not necessarily a retreat from competition. The critical question is whether those considerations enter merger analysis through disciplined economic reasoning or through ad hoc political exceptions.
Competition Is More Than Market Share
Competitiveness should mean the ability to win in the marketplace by offering better products, lower costs, higher quality, faster innovation, greater reliability, or more effective commercialization. Properly understood, that definition fits comfortably within a procompetitive consumer-welfare framework. Consumers benefit not only from lower prices today, but also from the new products, improved services, more resilient supply chains, and cost reductions that innovation generates over time.
This is where David Teece’s framework of dynamic competition becomes especially important. Teece argues that antitrust analysis has too often privileged static models centered on price, output, and concentration, while undervaluing innovation, entrepreneurship, and firm capabilities. In a 2025 Antitrust Law Journal article, he emphasizes that firms frequently compete for markets, across future product spaces, and against “unseen” potential rivals—not merely against visible incumbents in narrowly defined present-day markets.
That insight is not a license to abandon antitrust. It is an argument for doing antitrust better. A firm with a large market share is not necessarily insulated from competition if technological change, customer heterogeneity, and entrepreneurial entry constrain its behavior. By the same token, a firm with only a modest current share may possess assets or capabilities that make it a significant future competitive constraint. Antitrust analysis that ignores those dynamics risks condemning conduct that promotes innovation while approving conduct that suppresses it.
Teece’s argument also highlights the limits of merger analysis built primarily around concentration metrics. Dynamic competition depends on capabilities: R&D assets, engineering talent, data, manufacturing expertise, complementary technologies, commercialization capacity, and organizational adaptability. Current market shares do not always capture those realities.
In innovation-driven markets, the key question is often not “how many firms sell similar products today?” but “which firms possess the capabilities, incentives, and opportunities to constrain one another tomorrow?”
That is the competitiveness question antitrust should be asking.
Innovation Cuts Both Ways
The recent enthusiasm for “innovation competition” in merger enforcement has often become strikingly one-sided. Agencies increasingly argue that mergers may reduce innovation incentives, eliminate nascent rivals, or dampen future product development. Sometimes those concerns are well-founded. But an antitrust policy that recognizes only innovation harms while discounting innovation benefits is systematically biased against welfare-enhancing transactions.
In a 2024 Journal of Business & Technology Law article co-authored with Daniel Spulber, I argued that merger policy should not presume mergers either diminish or enhance innovation competition. The relevant inquiry is transaction-specific: how does a particular deal affect innovation incentives, investment, commercialization, and consumer welfare? The article also warns that presumptions of innovation harm may themselves suppress innovation by chilling transactions that provide innovators with capital, complementary assets, or viable exit opportunities.
That concern is not theoretical. Innovation is not magic. It requires financing, appropriability, complementary assets, managerial expertise, and viable routes to market. In some cases, a startup acquisition may eliminate a potential competitor. In others, it may encourage entrepreneurship by making entry more attractive in the first place. An acquisition may allow an invention to be scaled, manufactured, integrated, distributed, or commercialized far more effectively than the startup could achieve on its own.
The same logic applies to both horizontal and vertical mergers. A horizontal merger may reduce rivalry along some dimensions, but it may also combine complementary R&D programs, eliminate duplicative fixed costs, generate scale economies, or support more ambitious innovation investments. A vertical merger may raise foreclosure concerns, but it also may solve coordination problems, reduce double marginalization, protect relationship-specific investments, or improve the commercialization of emerging technologies.
The appropriate policy response is not blanket permissiveness. It is analytical symmetry. If agencies may advance innovation-based theories of harm, merging parties must be permitted to present innovation-based theories of benefit. Those benefits should not be discounted merely because they are dynamic, difficult to quantify, or likely to emerge over a longer horizon than short-run price effects.
Not Every Synergy Slide Is Fiction
A competitiveness-informed antitrust policy must take efficiencies seriously. That does not mean accepting every consultant slide labeled “synergy.” It means recognizing that efficiencies are often the reason firms compete more effectively and consumers benefit.
The current U.S. approach remains too cramped. The 2023 Merger Guidelines from the U.S. Justice Department (DOJ) and Federal Trade Commission (FTC) acknowledge innovation as a dimension of competition, but they place far greater weight on structural presumptions and theories of harm than on efficiencies, innovation benefits, or dynamic competitive gains. That imbalance carries real costs. It risks treating scale, scope, and integration as inherently suspicious simply because they make firms larger.
A better framework would distinguish procompetitive scale from market power. Scale can be harmful when it entrenches dominance, raises entry barriers, or facilitates exclusionary conduct. But scale also can be indispensable in high-fixed-cost, R&D-intensive, capital-intensive, and globally competitive industries. Semiconductor fabrication, next-generation wireless networks, pharmaceuticals, cloud infrastructure, aerospace, and advanced manufacturing all require enormous sunk investments and involve uncertain returns. In those settings, mergers that achieve efficient scale or combine complementary capabilities may strengthen competition rather than weaken it.
The European Commission’s 2026 draft merger-guidelines discussion appears to move in that direction. It treats scale, innovation, investment, and resilience as potentially procompetitive factors, while insisting those claimed benefits be distinguished from mere exercises of market power. That is the correct framework. The challenge is maintaining analytical discipline. Claimed efficiencies should be merger-specific, verifiable, and likely to benefit consumers. At the same time, agencies should not impose evidentiary burdens so demanding that dynamic efficiencies become effectively impossible to prove.
The same principle applies to out-of-market and long-term efficiencies. Traditional merger analysis is understandably reluctant to balance harms in one market against benefits in another. Antitrust should not casually sacrifice one group of consumers to benefit another. But rigid market-by-market analysis can break down in interconnected innovation ecosystems, multisided platforms, global supply chains, and international markets. A merger may generate dynamic benefits that do not map neatly onto the narrowly defined market in which short-run price effects are alleged.
That does not require embracing an unconstrained total-welfare standard. It simply requires recognizing that consumer welfare is forward-looking. Consumers are harmed not only by higher prices today, but also when antitrust blocks transactions that would have produced better products, faster innovation, more resilient supply chains, or lower future costs.
Administrability Is Not Accuracy
A dynamic approach to antitrust must also take error costs seriously. False negatives matter. Anticompetitive mergers and exclusionary conduct can distort markets and harm consumers. But in innovation-driven industries, false positives—condemning or deterring procompetitive conduct—are often even more damaging.
The reason is straightforward. Antitrust intervention can block or chill experimentation, integration, and investment whose benefits are uncertain, but potentially enormous. The costs of an erroneous prohibition are often invisible because the innovation never occurs, the product never launches, the startup never receives funding, or the efficiency is never realized. By contrast, many false negatives can be corrected over time through entry, technological change, follow-on enforcement, private litigation, or ordinary market adjustment. Not always, of course. But often enough that antitrust policy should avoid excessive confidence in static predictions about dynamic markets.
That point matters especially in merger review. Agencies must evaluate transactions quickly, under substantial uncertainty, and before the full effects of a merger can possibly be known. Those institutional realities naturally encourage administrable presumptions. But administrability is not the same thing as accuracy. A framework that systematically discounts efficiencies and dynamic competition will deter transactions at the margin. Firms will abandon deals, restructure investments, or avoid collaborations that could have improved consumer welfare.
A properly framed competitiveness lens should therefore make agencies more humble, not more passive. It should encourage better questions. Is the market genuinely domestic, or do global rivals meaningfully constrain behavior? Do current market shares tell the relevant story, or do capabilities, assets, and innovation pipelines matter more? Are claimed efficiencies speculative, or are they grounded in identifiable business realities? Would the merger expand output, accelerate innovation, or improve commercialization? Are there remedies capable of preserving competition while allowing efficiencies to proceed?
Those are not loopholes. They are what serious antitrust analysis looks like.
Remedies Are Not Theater
A competitiveness-sensitive approach also has implications for remedies. When a transaction threatens competitive harm but also promises meaningful efficiencies, agencies should ask whether a remedy can preserve rivalry without destroying the deal’s procompetitive rationale.
Structural remedies will often remain the cleanest option. But reflexive hostility toward behavioral or enabling remedies can be counterproductive. Access commitments, licensing arrangements, firewalls, interoperability requirements, or investment obligations may sometimes preserve competition while allowing the benefits of scale or integration to proceed. The United Kingdom’s recent merger-remedies reforms reflect this more pragmatic approach. Those reforms show greater openness to behavioral remedies at Phase 1 and distinguish between enabling remedies and more intrusive controlling remedies.
The United Kingdom Competition and Markets Authority’s (CMA) clearance of the Vodafone/Three merger is illustrative. The CMA initially raised concerns about a four-to-three mobile-network merger, but ultimately accepted commitments tied to substantial 5G investment. That does not mean every telecommunications merger deserves approval. It does suggest agencies can sometimes protect consumers more effectively by securing rivalry-enhancing investment than by blocking a transaction outright.
At the same time, remedies cannot become theatrical substitutes for competition. Investment commitments, price caps, and access obligations can prove difficult to monitor and enforce. They also may distort incentives or push antitrust agencies into the role of sector regulators. A remedy that merely papers over an anticompetitive merger solves little. But a remedy that preserves meaningful competitive constraints while allowing merger-specific innovation or scale efficiencies to proceed can remain fully consistent with consumer welfare.
The Qualcomm litigation offers a related lesson. Remedies affecting intellectual property can have profound consequences for innovation incentives, appropriability, and global technological leadership. A remedy compelling broad licensing of valuable technology may appear to expand access in the short run while weakening the incentives that made the technology possible in the first place. The 9th U.S. Circuit Court of Appeals’ rejection of the FTC’s theory in FTC v. Qualcomm avoided a remedy that could have undermined both innovation and competitiveness.
Antitrust Should Not Run on Vibes
The greatest danger in adding “competitiveness” to the antitrust vocabulary is not that agencies will discuss scale, innovation, or resilience. They should. The real danger is that competitiveness becomes a euphemism for unreviewable discretion.
An agency could define markets broadly to obscure competitive harm. It could accept weak efficiency claims because the merging firms are politically favored. It could approve a domestic “champion” while saying little about the resulting consumer tradeoffs. Or it could block a procompetitive transaction based on speculative innovation harms that no one can meaningfully test.
That is why transparency matters. If competitiveness refers to efficiency, innovation, investment, resilience, and dynamic rivalry, agencies should say so explicitly. They should explain how those considerations enter the analysis, identify the evidence necessary to establish them, and distinguish consumer-benefiting competitiveness from simple producer favoritism. And when agencies are making difficult tradeoffs, they should admit it.
A transparent competitiveness framework should rest on six principles:
- Competitiveness must remain tied to competition on the merits. Nationality alone should not qualify as a cognizable antitrust benefit. A firm does not deserve favorable treatment simply because it is domestic.
- Agencies should explicitly account for dynamic competition. In some markets, innovation pipelines, technological capabilities, potential entry, appropriability, and commercialization assets matter more than current market shares.
- Efficiencies should receive symmetrical treatment. If agencies are willing to credit speculative innovation harms, they also should be willing to credit well-supported innovation benefits.
- Evidentiary burdens should remain realistic. Dynamic efficiencies are often harder to quantify than short-run price effects, but that does not make them imaginary.
- Agencies should evaluate remedies pragmatically. The objective is to preserve competition and consumer welfare—not to maximize agency leverage or reflexively punish scale.
- Agencies must remain alert to public-choice risks. Competitiveness rhetoric can easily be captured by incumbents seeking protection from competition rather than competition itself.
Competitiveness, on Antitrust Terms
The best response to competitiveness concerns is not to weaken antitrust. It is to restore antitrust to its proper economic foundation.
A consumer-welfare framework is not limited to short-run price effects. Properly understood, it encompasses quality, innovation, variety, output, resilience, and long-run productivity growth. It asks whether challenged conduct harms the competitive process and thereby harms consumers. It does not condemn size for its own sake. It does not assume concentration is inherently harmful. It does not relegate efficiencies to an afterthought. And it does not mistake competitors’ complaints for harm to competition.
That framework is fully capable of incorporating competitiveness—provided competitiveness is defined correctly. Efficient firms are competitive. Innovative firms are competitive. Firms that use scale to lower costs, improve quality, or develop new products are competitive. Firms that succeed globally because they serve customers better are competitive. Antitrust should not obstruct those outcomes.
By contrast, firms seeking protection from rivalry are not competitive in any meaningful sense. Firms that merge to gain pricing power, suppress innovation, exclude rivals, or divide markets are not advancing competitiveness. They are reducing it.
The policy challenge is distinguishing between the two.
A dynamic, evidence-based antitrust policy would be more skeptical of structural shortcuts, more attentive to innovation and firm capabilities, more receptive to efficiencies, more pragmatic about remedies, and more cautious about false positives. It still would condemn anticompetitive mergers and exclusionary conduct. But it would not allow antitrust to become a barrier to the competitive process it is supposed to protect.
Competitiveness therefore belongs in antitrust analysis—but only on antitrust terms. Properly understood, it is not an industrial-policy escape hatch from consumer welfare. It is a reminder that consumer welfare emerges from firms competing, innovating, investing, and improving over time.
