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Antitrust
Why competition and industrial policies should co-exist
Competition policy and industrial policy are often portrayed as competing approaches to economic policymaking. Yet in an era of geopolitical uncertainty, supply chain disruptions and rapid technological change, both are essential. This policy paper examines how policymakers can align these frameworks to strengthen competitiveness, encourage investment and innovation, and support sustainable economic growth.
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For much of the past decades, competition policy and industrial policy have been viewed as opposite ends of the economic spectrum. One seeks to keep markets open and competitive, the other justifies government interventions to steer economic outcomes.
But as governments respond to geopolitical tensions, supply chain vulnerabilities, the green transition and technological competition, the challenge is not choosing between competition and industrial policy, but rather to ensure the two approaches can work together.
This ICC policy paper examines the relationship between these two policy areas and provides recommendations to ensure they work together effectively while preserving competitive markets. Greater coherence can improve legal certainty and support innovation and investment, while preserving competitiveness and sustainable economic growth.
Recommendations to ensure a productive co-existence of competition and industrial policy
- Competition authorities must be independent.
- Competition authorities must be transparent and open to engagement.
- Competition authorities should be able to issue non-binding opinions to government about the impact of new industrial policy projects.
- Governments or parliaments must be able to adapt some features of the competition policy.
- The instruments of industrial policies should obey rules fixed by parliaments but be controlled by independent authorities.
- The international imbalances created by industrial policy should ideally be kept in check by the above recommendations.
- Transparency and accountability in subsidy regimes should be enhanced.
Best practices to advance the debate:
- Craft pro-competitive green and digital industrial strategies.
- Enhance competition policy globally.
- Reconcile national champion narratives with robust merger control.
- Structure post-crisis support to preserve long-term competitiveness.
