Berlin/Bonn, 9 July 2026 – The German Monopolies Commission recommends the Federal Government to align its economic policy more closely with competition.
The problems facing German industry cannot be solved by a constant stream of new, isolated measures. Many state interventions are costly and often ineffective. What is needed instead is vigorous competition and framework conditions that enable innovation.
Competition should serve as the guiding principle for economic policy – for example, in energy policy, in the promotion of artificial intelligence, and in shaping the broader business environment. The Monopolies Commission today presented its 26th Main Report, “Competition 2026: Towards a Competition-Oriented Economic Policy”, to the Federal Ministry for Economic Affairs.
Germany as a business location is losing ground: industrial policy must take a broader approach
Germany’s largest industrial companies are growing, but increasingly rarely within Germany itself. The manufacturing sector is particularly affected. According to the Monopolies Commission’s analysis, the domestic share of value added by the 100 largest companies in this sector fell from 57 per cent in 2008 to 40 per cent in 2024.
The fact that large industrial companies increasingly generate their value added abroad, while productivity in Germany is falling, is a warning sign. Germany must become a more attractive business location once again.
The decline in productivity is not uniform across all sectors. High-tech companies are faring considerably better than traditional sectors. In the Monopolies Commission’s view, economic policy should therefore prioritise promoting innovation and new technologies rather than relying on outdated sectors.
The Monopolies Commission recommends policy measures with a broad impact, including reducing state-induced energy costs, fostering basic research and transfer as well as significantly cutting red tape. In contrast, subsidies for individual sectors or companies can distort competition and should therefore be employed only when essential investments would not occur otherwise or where the transformation to a more sustainable and digital economy would otherwise not succeed.
Electricity prices: Broad relief instead of a labyrinth of special rules
Over the years, Germany has built up a labyrinth of sector-specific electricity support schemes, including electricity price compensation, industrial electricity price subsidies, reductions in electricity tax, and grants towards grid charges. Each measure comes with its own eligibility criteria, application procedures, and thresholds. The result is a system that has become almost impossible to navigate and which, above all, favours large firms, while smaller businesses often either receive little support or are excluded altogether.
The Monopolies Commission therefore advocates a different approach. Priority should be given to broad-based relief measures, such as reducing state-determined components of electricity prices. By contrast, support targeted at individual sectors should be limited to narrowly defined and well-justified exceptional cases. Admittedly, the importance of electricity costs differs markedly between sectors: while they account for an average of 2.29 per cent of intermediate inputs, the share exceeds 15 per cent in a small number of energy-intensive sectors. However, it is precisely sector-specific support that creates boundary-drawing problems, additional bureaucracy, and distortions of competition along the entire value chain.
A simulation by the Monopolies Commission also shows:
Subsidies for individual sectors offer no greater benefit to the economy as a whole than a general reduction in costs.
The Monopolies Commission has long advocated a structural reform of the electricity market, with particular emphasis on redesigning network charges.
AI transformation: opening up competition, streamlining regulation, accelerating the pace
The Monopolies Commission also identifies significant shortcomings in the industrial adoption of AI. The diffusion of AI technology is not advancing at the necessary speed and scale. The reasons for this failure to transform are manifold – ranging from organisational inertia within firms and legal uncertainties to a regulatory framework that places considerable burden on businesses, particularly smaller firms and start-ups. At the same time, German industry has great potential for the development and application of AI. “Companies’ deep sector-specific knowledge and expertise as well as the wealth of data offer huge opportunities for industrial AI solutions,” said Duso. Yet a major challenge remains: the AI ecosystem remains heavily dependent on a small number of large US technology companies.
Whether companies innovate and invest with a long-term perspective is not primarily a matter for the state; ultimately it is businesses themselves that must make these decisions. What economic policy can do, however, is create an environment that encourages innovation and investment.
The Monopolies Commission therefore puts forward three key recommendations. First, competition law and the European Digital Markets Act should be enforced consistently to ensure contestable markets. Second, AI regulation should be simplified and regulatory overlap avoided. Third, the state should make better strategic use of its purchasing power. Targeted demand can help high-performing European solutions achieve scale.
