Ciriani, Stephane and Lebourges, Marc, A New European Competition Policy for Growth Driven by Profitable Investments. The European Commission’s Policy In Light of the Modern Economic Growth Theories (April 25, 2014). Available at SSRN: http://ssrn.com/abstract=2441662

1. “Although market dominance is not illegal in the European Union, European Commission’s doctrine regards exercise of market power as economically inefficient. Its economic policy is meant to push markets towards perfect competition, but ignores that investments required for dynamic efficiency are financed by the profits they create.
2. The European competition authorities’ policy is to prevent exercise of market power whereas the purpose of US competition authorities is to maintain undertakings’ incentives to invest in order to gain market power.
3. The European Commission acknowledges investment as a driver of macroeconomic growth undermined by poor profitability but ignores this point concerning the provision of intermediary goods by high technology industries in the internal market.
4. Economic growth results from improved productivity due to investments incorporating technical progress in the production system. Investments decisions by market players are subject to expected profits and cannot be achieved when competition intensity exceeds its optimal threshold. A growth-supportive competition policy should adjust competitive intensities to maximise the contribution investments in each industry to maximise the contribution investments in each industry provide to productivity and growth.”