In the Monopolies Commission’s view, the relative shift of value added in the manufacturing sector abroad is a response to local conditions and is therefore driven not only by cyclical factors but also by structural ones. Growth abroad, particularly within the European single market, is, however, primarily an expression of free entrepreneurial decision-making and does not in itself constitute a competition problem. In the Monopolies Commission’s view, the shift only becomes relevant where avoidable, home-grown locational disadvantages distort such decisions. This gives rise to three recommendations:

• A competition-oriented industrial policy should examine the extent to which the weakness of the manufacturing sector stems from avoidable regulatory burdens and should remove such distortions without hindering market-driven adjustment processes.
• Where the state intervenes, it should prioritise the general framework conditions and take a horizontal approach, rather than protecting individual sectors or locations. This includes reducing regulatory components of energy prices, bureaucratic burdens and barriers to investment and adjustment.
• Sector- or company-specific support should only be provided where it addresses a clearly identified market or transformation failure and is designed in a way that is open to competition. 

Competitive location conditions determine whether industrial capacity in the manufacturing sector can be productively renewed or whether it comes under sustained cost pressure. At the same time, location conditions influence how international trade linkages play out. Imports can cushion cost rises, but they can also displace domestic intermediate goods production if domestic production conditions remain uncompetitive in the long term. From the Monopolies Commission’s perspective, this gives rise to two recommendations:

1. Policy-makers should take a long-term view and improve general business conditions. Market-driven structural changes should not be held back by the permanent protection of existing structures. 

2. Labour market policy should facilitate occupational mobility and effective competition for skilled workers. Barriers to mobility and recruitment should be removed. This also includes examining the extent to which employment protection rules and non-wage labour costs hinder mobility and recruitment. Digital and AI-related skills, along with an innovation-oriented mindset, should be fostered at an early stage. 

Against this background, the enforcement of claims for damages arising from antitrust infringements should be further improved. The Monopolies Commission recommends:

1. The courts should permit the use of existing instruments for the consolidated enforcement of claims for scattered damages in the interests of effective enforcement of the law. Class action recovery – which has been available with legal certainty since the Federal Court of Justice’s ruling – can help ensure that even smaller claims for damages arising from antitrust infringements can be pursued and that victims do not remain structurally at a disadvantage compared to the infringing parties.
2. When estimating damages, the courts should, depending on the individual case, draw on econometric regressions or more flexible estimates based on a sound factual foundation. Regression analyses may be appropriate in suitable cases, but must not effectively become a prerequisite for claiming antitrust damages if the available data or the principles of procedural economy argue against it.
3. The procedural framework should be further developed to make antitrust damages proceedings more efficient, faster and more manageable. In particular, this can be achieved by grouping similar cases more closely together, further concentrating jurisdiction and providing the courts with effective tools for dealing with voluminous case files.
    

Against this background, competition in the defence sector should be specifically strengthened and competitive risks should continue to be closely monitored:

1. Cooperation and mergers in the defence sector should be carefully assessed under competition law. This applies in particular to joint ventures between established manufacturers and diversified defence conglomerates, which can raise barriers to market entry and increase dependencies.
2. A more far-reaching sector-specific exemption for the defence sector under competition law should not be introduced. The current law does not, in principle, preclude necessary cooperation, whilst blanket relaxations could entrench inefficient structures and weaken incentives for innovation.
3. Defence procurement should become more competition-oriented and innovation-friendly. Joint procurement, greater interoperability, greater involvement of start-ups and SMEs, and simpler and faster procedures can better harness competitive potential.

Against this background, the Monopolies Commission recommends, above all, addressing the structural competition problems in the wholesale markets and at the refinery level:

1. The Federal Cartel Office should vigorously pursue the proceedings it has initiated under Section 32f of the Act against Restraints of Competition (GWB), using the instruments and data at its disposal. In this regard, the new data collection in accordance with Section 47k(7) of the draft 12th Amendment to the Act against Restraints of Competition (GWB-E), as proposed in the draft bill, can improve the data basis. In principle, however, the necessary data should be collected in the respective proceedings.
2. Sustainable structural solutions are preferable to sector-specific market interventions and price controls that are questionable from a regulatory perspective. It is doubtful whether the proceedings under the newly introduced Section 29a of the GWB are significantly faster and more effective than structural measures.
3. Interventions in free price formation, such as the ‘petrol discount’, should be avoided in future because they are costly, provide asymmetric relief and, above all, dampen price signals caused by scarcity. The fuel discount was not passed on in full to consumers. Regional differences in the extent to which it was passed on point to competition issues. The ‘12 o’clock rule’ should be evaluated and, if necessary, further developed.
    

Against this background, ex-post evaluations should be utilised more extensively as a tool for an adaptive and evidence-based competition policy:

1. Ex-post evaluations should be used systematically to draw lessons from past decisions for future proceedings and to further develop merger control on an evidence-based basis. They make it possible to test prognostic assumptions retrospectively against actual market developments, thereby promoting institutional learning.
2. Ex-post evaluations should be based on a transparent and robust empirical methodology. In particular, a comprehensible counterfactual design is required, one that discloses comparison groups, time periods and control variables, thereby enabling robust conclusions to be drawn about the effects of a merger.
3. The results of ex-post evaluations should be systematically incorporated into future merger control proceedings, assessment tools and remedial measures. The case study provided as an example demonstrates that ex-post evaluations can yield additional insights into the competition mechanisms that are actually effective.
    

The Monopolies Commission regards competition as an indispensable part of a successful industrial policy. This gives rise to three policy priorities:

1. Industrial policy measures should focus on clearly justified cases of market or transition failure and be primarily geared towards future-oriented and strategically important key technologies. 
2. Measures to complete the European single market should take precedence, as it is precisely there that better framework conditions for innovation, scaling up and competition can be created for all businesses.
3. Where support is provided to individual sectors or technologies, the instruments should be open to competition, transparent, coordinated at European level and, where possible, time-limited.
    

With a view to improving the competitive conditions for German industry with regard to the cost of electricity, the Monopolies Commission has identified the following policy priorities: 

1. Where relief from electricity prices is sought, priority should be given to horizontal, straightforward measures that do not undermine competition. These include, above all, broad-based relief on non-market-determined components of electricity prices.
2. Sector-specific or company-specific relief measures – such as electricity price compensation, an industrial electricity tariff or subsidies towards grid charges – should only be used in a targeted and strictly limited manner. They should be clearly justified on objective grounds, designed as simply as possible and structured in such a way that they do not distort competition.
3. The electricity market design should be reformed so that electricity can be supplied in a structurally cheaper and more reliable manner. As high prices also result from systemic weaknesses such as grid bottlenecks, inadequate price signals and high redispatch and grid costs, state aid is no substitute for reforming the system. In particular, grid tariffs should be reformed, incentives for grid-friendly behaviour strengthened and the grids further digitised.
    

The AI transformation requires a competition-oriented economic policy that makes targeted use of government intervention without undermining competition. To this end, three pillars should be consistently aligned: competition policy, regulation and industrial policy.

1. Competition policy: The Digital Markets Act (DMA) should be adapted to address new competition risks across the AI stack and enforced resolutely. This involves, in particular, focusing on AI services and further developing behavioural obligations in such a way as to ensure open and contestable markets, whilst limiting tendencies towards market foreclosure through vertical integration, self-preferencing and exclusive access to key AI resources. In areas where the DMA does not apply, Section 19a of the German Act against Restraints of Competition (GWB) provides the Federal Cartel Office with the flexibility and scope to intervene.
2. Regulation: The EU AI Act is, in principle, the right approach and an important step as a uniform European legal framework. However, it should be implemented and further developed in such a way as to avoid unnecessary burdens on innovation and diffusion. In general, a paradigm shift in government regulation should be initiated – moving away from attempts at early and comprehensive regulation of new technologies towards regulation that only comes into effect once experience has been gained in the markets. Particularly for small and medium-sized enterprises, disproportionate compliance burdens, double regulation and uncertainties regarding risk classification should be mitigated, so that the AI Act creates legal certainty without hindering the widespread use of AI.
3. Industrial policy: Industrial policy should not promote individual national or European ‘champions’, but rather enhance the widespread use of AI. Where high risks, dependencies or coordination problems exist, the state should act in a targeted manner as an anchor customer for European and German AI solutions, thereby supporting demand, testing and scaling. To ensure the widespread adoption of AI, IP transfer processes from research institutions should be accelerated and AI-related skills development strengthened.