Economic competitiveness and national security in the context of antitrust and competition policy were issues explored during this year’s Annual Conference on International Antitrust Law and Policy at Fordham Law School. On the sidelines, APCO hosted a luncheon discussion entitled “Competition, Trade, Investment and Security: Looking Ahead to 2025 and Beyond,” which featured regulators, senior in-house counsel, policy advisors and private sector leaders. The event highlighted the intertwinement of competition and security and the implications for business and trade.
Below are three key observations from the discussion:
National Competitiveness = National Security. An Emerging Theme in the Year of Elections
2024 is the year of elections. According to Time, there are at least 64 elections this year in countries representing half the world’s population. While each jurisdiction is facing drastically different political and socio-economic challenges, increasing domestic competitiveness and a more robust approach to industrial policy has emerged as a common theme. It seemed to be the only point that the U.S. presidential candidates shared a similar opinion on at the debate on September 10. In Europe, the recent publication of former European Central Bank President Mario Draghi’s report calls for Europe to become more competitive.
Looking ahead to 2025, “competitiveness and security” will likely be priority policy drivers for many leading liberal-democratic economies. National competitiveness and security will no longer be limited to military and defense; it encompasses novel constructs such as economic security, health security, climate security, data security, supply chain security and border security. In many state-driven economies such as China, economic, supply chain and technology security have always been cornerstones of their industrial policies, although the intensity and velocity of how they are implementing those policies have become much greater over the last few years.
Competitiveness and Security: A Response to Geopolitical Disruptions and Increasing Polarization
The growing emphasis on competitiveness and security globally is seen as a response to significant geopolitical disruption, increasing polarization, growing societal and political pressure and heightened stakeholder scrutiny.
On one hand, the intensity and concentration of conflict along key fault lines—Ukraine, Gaza and potentially Taiwan—raise the threat of global conflict at a scale that many haven’t lived through. The threat of tensions has led to politically scrutinized and volatile supply chains and a new normal of nationalist industrial policies in key markets. On the other hand, rising protectionism and increasing polarization are also contributing to growing distrust in institutions and organizations. Pursuing efficiency-driven “free trade,” once broadly supported across markets and ideologies, has now become a liability for governments and companies.
At the same time, geopolitical tech rivalry is further splitting global markets as governments prioritize national security with the United States and China—and increasingly their allies—trying to build distinct technology ecosystems.
Competition Regulation and Enforcement in A High-Security World
Competition and regulatory enforcement are playing out against an increasingly security-conscious environment. Many companies have already experienced enforcers’ growing focus on national and economic security in competition investigations, investment and merger reviews. In the United States, both presidential candidates are expected to keep in place current tariffs on China.
European policymakers are concerned about Chinese exports but are not fully aligned on how to tackle the issue. For example, the EU’s subsidies investigation against Chinese EVs has resulted in its decision to impose tariffs; however, Spanish Prime Minister Pedro Sanchez, who was recently in China, commented that the country is reconsidering its position on EU tariffs. This shows the difficulty of defining a common European interest and a unified approach to European competitiveness given European interests need to be built through consensus with all of its member states.
Brussels is widely viewed as the “global regulator” with the General Data Protection Regulation (GDPR), the Digital Markets Act (DMA), the Digital Services Act (DSA) and the AI Act. The United States and other like-minded jurisdictions often look to Brussels for inspiration. There are a number of important legislative and regulatory reforms that aim at better equipping regulators to carry out their enforcement agenda or to expand their responsibilities in new regulatory spheres, particularly in emerging technologies. It may further lead to distinctive regulatory approaches on similar issues with their geostrategic competitors, posing challenges for companies to comply with competing regulation across markets.
We have seen an increased number of divergent outcomes in merger reviews across jurisdictions. While coordination is happening amongst regulators in different jurisdictions, and regulators often agree on the analysis, they do not necessarily come to a similar outcome or consider the same remedies.
New Rules, New Playbook
Companies face a challenging environment as competition policy is being increasingly transformed by security and protectionist political agendas. Companies need to build key relationships ahead of time and be prepared for increased political and third-party interventions, elongated timelines and the combined use of competition rules and targeted regulatory initiatives in many jurisdictions. Public affairs campaigns need to account for a broader set of economic and security issues and locally and globally coordinated engagement with stakeholders that matter for a successful business outcome.
