Germany as a Business Location Under Pressure

The Monopolies Commission points out that the domestic share of value added by large German manufacturing companies has fallen significantly since 2008. Value added has grown much more strongly abroad than domestically. The Commission sees this as a sign that corporate growth is becoming decoupled from Germany as a business location.

The BDI shares this concern. High labor and energy costs, the tax burden, a lack of venture capital, and excessive regulation are undermining investment and innovation. The Monopoly Commission’s call for reducing regulatory burdens and improving framework conditions is correct. However, in light of geopolitical risks, critical dependencies, and the transition to climate neutrality, targeted measures to secure industrial value added and resilience are also necessary.

Industrial Policy: Strengthen Competition, Take Global Distortions into Account

The Monopoly Commission generally gives priority to horizontal measures. A sound regulatory framework and effective competition are generally more appropriate than interventions in favor of individual companies or sectors. It considers vertical measures justified primarily in cases of market or transformation failures. Such measures should be based on transparent criteria and, at the same time, be time-limited and subject to review.

From the BDI’s perspective, competition policy is always also location policy. Government subsidies, market access restrictions, and strategic dependencies alter the competitive conditions for European companies. In addition to key technologies, risks associated with critical raw materials and industrial capacities must be taken into account. It remains a top priority to secure integrated value creation in Germany and Europe. The criterion of market or transition failure therefore falls short. Policies adopted by other countries that run counter to market principles or violate WTO rules can also justify vertical industrial policy measures.

Defense Sector: Combining Market Access and System Responsibility

The Monopolies Commission does not view antitrust law as an obstacle to the expansion of European defense capabilities. Cooperation and mergers may be necessary but must be carefully examined. It warns against dependencies and barriers to market access for smaller providers and advocates for greater interoperability, modular systems, and better access for startups and small and medium-sized enterprises.

The BDI shares the goal of an efficient and innovation-friendly procurement process. For complex defense systems, cooperation and capable system integrators may be necessary to provide capabilities and ensure integration, availability, and security of supply throughout the entire life cycle. At the same time, specialized small and medium-sized enterprises and startups must retain adequate access to intermediate inputs and procurement projects.

The appropriate supplier and procurement structure depends on the specific procurement item and the needs of the armed forces. For technically distinct components, smaller lots can facilitate market access. For highly integrated systems, bundling may be necessary to ensure efficiency and clear system accountability. Accordingly, multi-year contracts may be appropriate for complex large-scale systems, whereas modular contract models may be more suitable for software and other technologies with short development cycles.

Merger Control: Relief and Legal Certainty

The Monopolies Commission takes a critical view of the planned increase in revenue thresholds as part of the 12th Amendment to the Act Against Restraints of Competition (GWB) and generally welcomes the expansion of the transaction value threshold to include anticipated future domestic activity. The BDI takes a different view on both points: Raising the revenue thresholds is the right move, but remains too moderate. Extending the transaction value threshold, on the other hand, increases legal uncertainty and weakens the necessary domestic connection. You can read the BDI’s assessment of the 12th GWB Amendment here: Link to the article https://bdi.eu/de/articles/recht-und-steuern/12-gwb-novelle-zwischen-entlastung-und-wachsender-eingriffstiefe.

Industrial Electricity Prices: Combining Broad and Targeted Relief Measures

The Monopolies Commission sees competitive risks in the existing electricity price relief measures and recommends standardizing the subsidy landscape and structuring levies and charges as horizontally as possible.

The BDI advocates for simple and broadly applicable relief measures. However, these are insufficient for particularly electricity-intensive companies facing international competition. Broad-based and targeted instruments serve different functions: The subsidy for transmission grid fees has a general effect, while the industrial electricity price provides relief specifically to energy- and trade-intensive companies. As long as Germany faces structurally higher electricity costs than key competitive locations, such relief measures are not a privilege but serve to secure investments and value creation.

There is consensus on reducing the bureaucracy surrounding subsidies. Procedures and documentation should be—and are being—simplified and digitized. However, electricity cost relief cannot be replaced by tenders for transformation services, as it primarily serves to safeguard industrial competitiveness.

Artificial Intelligence: Integrating Infrastructure and Regulation

The Monopoly Commission views artificial intelligence as a crucial cross-cutting technology. Among other things, the Monopoly Commission proposes expanding the Digital Markets Act (DMA) to include AI services. It also aims to facilitate industrial data collaborations, identify potential dependencies through control point analyses, and avoid duplicate regulation.

The BDI supports greater legal certainty for industrial data collaborations and the elimination of duplicate regulation. However, the main report does not sufficiently address the importance of AI computing infrastructure. For German industry to realize its potential in the field of Physical AI, the expansion of computing capacities in Germany and Europe must be made a political priority. This requires faster approvals, suitable sites and grid connections, a high-performance energy infrastructure, and competitive electricity prices.

The checkpoint analysis can reveal dependencies, but it is not a standalone basis for intervention. Antitrust measures must continue to be based on specific conduct and proven anticompetitive effects. At the same time, companies are burdened by the cumulative impact of European and national regulations. The BDI therefore calls for the elimination of duplicate regulation and for restraint in ex ante regulation of rapidly evolving technologies.