Speech Martijn Snoep, Edinburgh Pre-ICN Conference Dinner 5 May 2025

Lessons from the past: market power and democracy, 5 May 2025, speech held at a dinner on the occasion of the annual conference of the International Competition Network (ICN) in Edinburgh.

CHECK AGAINST DELIVERY

Yesterday, 4 May, was Remembrance Day in the Netherlands. This day commemorates the over 200,000 Dutch citizens who were killed during the Second World War, roughly half of them for being Jewish.

Today, 5 May, is a public holiday, Liberation Day, to mark the end of the war in the Netherlands, now 80 years ago.

When considering the topic of my dinner speech, it was impossible to ignore the memory of 12 years of Nazi reign in Europe, which destroyed so many lives and has shaped the views and beliefs of many generations, including my own.

So this is also an appropriate time to retell stories and reflect on what we as members of the competition community can learn from them. Stories about market power and how market power and political power can become intertwined and lead to a human tragedy.

Let me make two caveats:

First, I’m not a historian, and the story that I’m going to tell is not new or some groundbreaking insight. But it is a story that is worthwhile retelling. It may serve as a reminder of the importance of our work and a confirmation of our conviction and zeal to counter market power.

Second, I’m not suggesting that the story I’m about to tell is evidence of a simple rule of cause and effect. No, history is the product of a near infinite chain of causes, but it’s nevertheless worthwhile studying each of those causes.

So let’s focus on one of the causes of the rise of the Nazi regime in Germany: the role of German industry and how their market power became intertwined with political power, leading to the destruction of democracy and the rule of law.

Since the beginning of the 20th century, the German industry, in particular in machinery, chemicals and steel, had become a world-leading force in an already globalized economy.

It achieved its position through a combination of 1) modern management and production processes, 2) a strong corporatist culture, with high levels of market concentration and restrictions on domestic competition, and 3) protection of this culture by the government through the absence of modern competition laws, high import tariffs, and social laws that favored capital over labor.

Now we go back to the year 1933, when it all began. On January 30, following a petition by a group of major German industrialists, bankers, and landowners, the President of the Weimar Republic appointed Hitler as Chancellor to lead a new minority government. Hitler immediately announced a snap election in five weeks time on 5 March 1933. It would become the third parliamentary election in less than a year and the last free national elections until 1949.

We know from the diary entries of the head of propaganda of the Nazi party, Joseph Goebbels, that party officials were worried about the short time to prepare for the elections. The party had a hard core of devoted followers but the previous election in November 1932 showed that its popularity was slightly diminishing.

And, equally important, the party had a severe lack of funds to run an effective election campaign on short notice. An entry in the diary of Goebbels from 19 February 1933 describes a “depressed mood’ at the Nazi headquarters. But that was about to change.

One day later, on 20 February 1933, a by now well-documented secret meeting took place between Hitler and 25 leaders of the most important businesses. All the heads of the key industries at the time were represented: coal, steel, guns, cars, chemicals, finance, and construction. Market concentration was that high in Germany that only 25 leaders could dominate the entire economy.

During the meeting, Hitler told the audience that he needed complete control of the state to execute his political agenda but that only he would protect the companies’ private property. His main political rival at the time, the communist party had threatened to nationalize businesses. If the communists were to win the election, the companies would lose everything, he warned.

Hitler appealed directly to the participants at the meeting to donate to the Nazi party’s campaign fund so that he could win the upcoming elections, which could be the last elections in a long time, he proclaimed with foresight.

There was no doubt that the participants knew that a Nazi election victory would mean the end of democracy and the rule of law, but they nevertheless donated generously to the Nazi party’s election fund.

The next day, we can read in Goebbels’s diary entries, that the money was well received, the mood at Nazi headquarters had changed overnight, and the propaganda machine went into full force.

After an extremely violent run-up to the elections of 5 March, where opposition parties were oppressed in many ways, the Nazi party won the last free national elections, though still not with the absolute majority they had hoped for. But the rest is, as they say, history.

This story reminds us of a very important lesson related to our work: the need to vigorously counter market power, not only for economic reasons but also to protect our democracies. Businesses should never become so powerful that they can determine the outcome of free elections, let alone abolish democracies.

Nowadays, this lesson is resonating again, in many countries around the world and also with younger generations, as they see the power and influence of companies in politics everywhere.

The good news is that the competition authorities have some pretty powerful tools to fulfil this role. The combination of antitrust and merger-control instruments have stood the test of time, although they continue to need readjustment once in a while to make them fit for purpose. For example:

1. Additional powers are needed in some countries to review below-the-threshold mergers to catch killer acquisitions and anti-competitive serial acquisitions,

2. We need to develop new theories of harm other than restrictions of competition that lead to price increases; think of restrictions of competition that lead to a reduction of labor conditions or media plurality or an increase in environmental pollution.

But there is one additional tool that many authorities generally lack to fill a gap to which we cannot turn a blind eye, if we are serious about fighting market power.

We know from experience and empirical research that some markets self-correct for market power. High prices or low quality will lead to innovation and attract new entrants. But we also see that there are markets where this is not the case.

High fixed costs, significant economies of scale and scope, network effects, and vendor lock-in can make market power durable and markets closed for entry over a longer period of time. And this without any infringement of the competition laws.

The companies with market power are simply taking advantage of the market structure and lack of competition, and, by doing so, are able to consolidate their power.

We see this phenomenon not only in Big Tech, but also in, for example, Big Pharma and Big Payment Networks.

So what to do? Some authorities have already the power to order a break-up of companies but the intervention threshold is high and successes are rare, particularly in cases of horizontal break-ups creating directly competing entities. Vertical or conglomerate break-ups tend to be easier as the fault lines for a break-up are clearer.

So should we give up and succumb to these forms of entrenched market power by hoping for the best and preparing for the worst? No we shouldn’t.

Competition authorities have a political and historical obligation to continue to counter market power, even in cases where there is no infringement. But what to do?

Some countries have given their independent competition authorities the power to impose rules on companies with market power to require, for example, access to their infrastructure, interoperability between systems, data portability, and other remedies to introduce competition.

Not as a punishment or retribution. There is no crime and no liability. But as a way to counter market power by introducing more competition, and ultimately to protect our democracies.

There are roughly speaking three models;

There can be a general power to impose proportionate remedies if an investigation shows that competition is not functioning, like the market investigation tool in the UK or similar New Competition Tools in a few other EU countries, like Germany and Italy.

But there can also be a tool that is more confined to certain sectors or companies, like the European Commission’s Digital Markets Act, that is focused on designated platform companies and their core platform services.

Finally, there are also countries that are reluctant to hand over such quasi-regulatory powers to independent competition authorities. But they do allow their authorities to initiate general market investigations and to propose regulatory remedies. This is the situation that ACM is currently in.

Which of the three models is most effective depends on the political situation and culture. It’s not up to me to recommend any one of the three.

But what I do recommend is that competition authorities take on this responsibility. That they not only prosecute infringements but also structurally police for market power and, at the very least, make recommendations to the legislature on how to correct this.

But it is not enough to have the proper tools, conviction, and zeal to counter market power. The reality is that global companies with entrenched market power are more powerful than most countries.

Let me give you an example. The Netherlands was one of the first countries to challenge the exploitative conditions in Apple’s App Store. ACM did this because we believe that is an abuse of a dominant position. There is no objective justification for this system. Apple simply imposes these obligations because it can. In our opinion, a clear example of exploitation of market power.

We’re still in court so I’m not going to say much about it. But what I can share is that in the run-up to our decision, it crossed my mind several times: what would happen if Apple decided to stop its services in the Netherlands as a form of retaliation?

It is clear that Apple’s revenues in the Netherlands are negligible compared with their global revenue. So they could afford this financially, but the Netherlands, as a country, probably couldn’t. To be fair, Apple never issued this threat and we never anticipated on this threat, but it shows how vulnerable smaller countries are to counter global market power.

Another example is that of Aruba, which is an independent territory within the Kingdom of the Netherlands, and has slightly over 100.000 inhabitants. I have the privilege to sit on the board of AFTA, the competition authority of Aruba. There, you feel even more what it is like to be a small country.

Take for example the dependency of Aruba on the two big global payment networks, Visa and Mastercard, virtually a global oligopoly. Being part of the EU, the Netherlands is protected against exploitation of market power by these companies by regulations. But Aruba cannot profit from this EU umbrella and is left on its own. It could impose similar regulations. But what if the companies withdrew their services from the island? That would be a disaster.

The only way for countries like the Netherlands and Aruba to counter market power of global companies is to be part of an economic alliance, like the EU. I’m convinced that it was the weight of the support of the EU, why Apple ultimately complied with the part of our order that survived the injunction procedure.

So let me recap. We need to continue countering market power, probably more now than in the past few decades. We need to do that, not only in the interest of economic welfare, but also to protect our democracies.

And in order to credibly counter market power, we need an adjustment of our current tools and an extra tool. But that’s not enough. Smaller countries need to be part of an economic alliance to be able to effectively counter the market power of global companies as well as the effects they have on their societies.

And we as competition authorities must continue to show the conviction and zeal to counter market power. We owe this to the public and to our common history, from which we can learn on the basis of retold stories on days like today.

Thank you.