This short paper argues that the Covid-19 crisis provides an opportunity for improvements in long term growth in the EU by allowing the exit of zombie firms that trap industries into low productivity cycles, limited technology diffusion, and weak economic dynamism. To seize this opportunity, competition policy must abandon its focus on rivalry. And it must embrace a politically costly, yet economically sound non-horizontal approach in State aid and merger control.
Every economic crisis raises the same normative question for competition law. Should decision makers be temporarily more permissive in their application of the law to private and public restraints of competition? Covid-19 is no exception.
While historical evidence from the Great Depression in the US suggests that this is a bad idea, most economic crises since the 1970s led to some softening of competition law. Covid-19, again, is no exception . The European Commission (“EC”) recently signaled that it would let Member States cushion the economic effects of Covid-19 by massive infusions of State aid. In the past month, the EC has cleared all State aid related to Covid-19 in less than 48 hours, undertaking a necessarily summary and tolerant verification of the notified