Europe is undermining its own competition rules

Europe is undermining its own competition rules
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Say what you will about AT&T’s merger with Time Warner, but from a regulatory standpoint it displays the U.S. system at its best.

AT&T has the ability to challenge the Department of Justice, and the department has the ability to challenge right back.

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In the process, the arguments are exposed to the light of day, standing or falling on their merits according to the law. As a result the right to binge-watch has yet to be infringed, and those people not staring at a screen can see the rules at work. God bless America.

Having your day in court is one of the mainstays of our democratic and free market systems, and it’s all the more vital when regulators overreach. Happy indeed are the Eurocrats in Brussels, who instead can push a protectionist agenda against American companies (and others) unchallenged. Brussels proclaims its love for rules and transparency, but the EU lacks the independence and oversight to make its system credible.

Europeans like to build big things. From the Airbus A380 to the Eiffel Tower, they have something of an obsession with “European champions”, which is positive spin on huge companies almost as closely aligned to government as China’s state-owned enterprises. The EU’s single market was a great opportunity for these champions to snap up smaller competitors across the continent, ever so subtly aided and abetted by their politicians and bureaucrats back home.

Not every “European champion” triumphs — plenty flounder outside of the EU when faced with competition from markets where governments don’t pick winners — but Europe is still at it.

Today’s case in point is the arranged marriage between Siemens (German) and Alstom (French), which will see Europe’s two biggest railway businesses combine (if pesky antitrust rules can be ignored).

Already German Chancellor Angela Merkel has said “We need global champions. But our European competition law does not help us sufficiently to build them” — a clear shot across the bow of Margrethe Vestager, the European Commission’s top competition cop, who must review the proposed merger.

If ever there was a European commissioner who sticks to the rules through thick and thin, it’s Vestager. Nonetheless, even Vestager might be thinking twice about facing down Germany and France, the two dominant governments in the EU. They have already made up their minds and now the rules will have to bend.

Whatever the cause, it looks like one rule for Europeans and another for the rest of the world.

Europe has a disturbing habit of sidestepping its rules when convenient. Only a few months ago the European Commission waved through another “European champion” merger: Luxottica and Essilor. That deal creates a behemoth in eye care that controls everything from the opticians to the retailers, from the products and the supply chain down to the insurance plans here in the U.S.

Its creation will prove to be detrimental to consumers, particularly in America, who no longer have real choice. Even the Chinese regulators saw the problem, approving the deal but attaching a huge number of controls to prevent their consumers, retailers and opticians from suffering at the hands of Europe’s eye-care merger.

So where does this leave America? Oddly enough, it leaves us looking a lot like a shining city on a hill. Here at least the separation of politics and antitrust remains intact, albeit not perfectly.

The current administration has kept the rules in place rather than sidestep them, as AT&T/Time Warner shows.

It’s time for Europe to get a grip. The world will take it more seriously if antitrust rules aren’t being manipulated in the background.

If Europe continues its recent trend of just applying the rules to American companies (and a few from China), Europeans will soon be left with lots of artificial champions and not much genuine competition, choice and innovation.

David Balto is an antitrust attorney based in Washington, D.C. He previously served as policy director at the Federal Trade Commission and as an attorney in the Justice Department's Antitrust Division. He is an expert in antitrust, consumer protection, financial services, intellectual property and health care competition.