Faculty of law blogs / UNIVERSITY OF OXFORD

Normative Goals in Merger Control


Stefan Thomas
Professor of Civil, Commercial and Competition Law at the University of Tübingen, Germany


Time to read

3 Minutes

In my latest paper ‘Normative Goals in Merger Control’, I deal with the recent calls for extending the scope of merger appraisal to normative goals outside the realm of the consumer welfare paradigm. My analysis leads to a sceptical view on those ideas. The normativity approach misinterprets market failures, such as negative externalities, as antitrust problems even though their cause might not be a lack of competition in the first place. Apart from warping the substantive standard, the normativity postulate has the tendency to bring merger enforcement to the brink of a paternalistic control of societal wellbeing. That, in turn, can erode the position of antitrust agencies as independent competition watchdogs. To remain exclusively dedicated to the protection of competition, however, is an invaluable quality for them to promote free markets as a societal goal in itself.   

The Neo-Brandeis school of thought makes the consumer welfare approach responsible for antitrust policy becoming agnostic towards normative implications of market conduct (Lina M Khan (2018)). In my analysis, the term ‘normative’ describes those societal goals that are argued to fall outside of the scope of the consumer welfare standard. Several authors and political stakeholders now posit that antitrust enforcement should embrace broader normative goals, such as the challenge of climate change (Simon Holmes (2019)), employees’ wages (José Azar, Ioana E Marinescu, Marshall Steinbaum (2018)), a general equality of wealth distribution (Lina Khan & Sandeep Vaheesan (2016)), national or EU-industrial policy, or gender equality (Sarah Long (2019)).

The debate has grown out of its academic infancy. Practical cases, especially in merger control, provide examples for the clash of consumer welfare with normative goals. In Bayer/Monsanto, for example, third parties argued against an approval of the transaction citing concerns about food safety, the environment and the climate related to the products of the merged entity (see the European Commission Press Release). In a similar vein, the merger prohibition in Siemens/Alstom was chastised by the German and the French governments for its alleged failure to reflect the wider industrial interests of the bloc (see the government proposals made in response).

The normativity approach appeals to notions that are easy to sympathize with. Protecting the environment or pursuing a national or European industrial strategy, to name just a few, are objectives that many people endorse. However, mere endorsement of goals does not yet make a coherent antitrust concept (on the role of popular rhetoric and sentiments in the current antitrust debate, see Thibault Schrepel (2019)). 

The Neo-Brandeisian criticism of the alleged focus of the consumer welfare paradigm on low prices is unjustified (see also A. Douglas Melamed & Nicolas Petit (2018)). Different from what is often insinuated, consumer welfare is not confined to lower prices. Rather, it can rise if enhanced/new products fulfil consumers’ preferences better. Consumers can have a preference for products to meet higher standards in terms of ethics or sustainability (see on animal welfare as an element of consumer welfare the Dutch competition authority in the so-called ‘Chicken of Tomorrow’ case). The consumer welfare paradigm is therefore able to embrace those seemingly uneconomic societal goals so long as consumers are willing to pay for them. 

If negative externalities result from a merger despite unimpeded competition prevailing, it is neither competition nor the consumer welfare approach that fail. It is the consumer who ‘fails’ to fully embrace what is defined—by certain persons, different from the respective consumers—as the societal optimum. If the state wants to force consumers to align with such a predefined societal optimum, special regulation and enforcement agencies must be bestowed with the task to pursue those societal goals. This can be, for example, the laws on environmental protection and the respective authorities. In essence, this conclusion is an emanation of the ‘Tinbergen principle’: If the government wants to pursue several distinct goals, it needs an equal number of independent instruments [1]. Otherwise, the substantive tests to be applied by the respective authorities become opaque, and the agencies are subjected to perplexing and potentially irreconcilable tasks.

What is more is that the antitrust authorities’ power to consider normative goals outside economic efficiency would attract political stakeholders to exert undue influence on them. Competition, however, is the most effective mechanism to protect the economy from political rent-seeking attacks (see, for example, the famous adage by the German ordo-liberal scholar Franz Böhm, who stated that ‘competition is the most ingenious disempowerment tool in history’ (convenience translation) [2]. 

It is possibly fair to say that it is due to the absence of any political agenda that antitrust authorities have become such powerful agencies worldwide. In not catering to particular societal stakeholders, they are in a position to shape the economic framework in a competitive way proactively, instead of merely implementing a governmental agenda on desired market outcomes. That is the strongest argument against any dilution of their powers by tying them to an undefined set of societal goals besides competition.


Stefan Thomas is a Professor of Civil, Commercial and Competition Law at the University of Tübingen, Germany.


[1] Jan Tinbergen, Economic Policy: Principles and Design (North-Holland 1964) 53.

[2] Franz Böhm, 'Demokratie und unternehmerische Macht' in: Kartelle und Monopole im modernen Recht, erstattet für die Internationale Kartellrechts (Konferenz in Frankfurt am Main Juni 1960, Bd. I, Karlsruhe 1961) 1, 3.


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