Behavioural Remedies Keep Failing. Regulators Are Finally Saying So.

The remedy has always been the weak link in competition enforcement. Establishing that a firm holds market power and abused it is hard but tractable. Fixing it has, for twenty years, mostly meant asking the firm to behave differently and appointing someone to check. The record of that approach is now long enough to evaluate, and enforcers in three jurisdictions have started saying out loud what the evidence supports: it does not work.

The shift is from conduct remedies to structural ones. That is a much larger change than the language suggests.

What a behavioural remedy actually asks

A conduct remedy tells a dominant firm to stop doing a specific thing: no self-preferencing in this ranking surface, no bundling this product with that one, offer these terms on a non-discriminatory basis. A monitor reports on compliance. The firm’s incentives are unchanged.

Three failure modes recur so reliably that they are effectively predictable.

• Substitution. The prohibited mechanism is discontinued and a functionally equivalent one appears. The undertaking was written against an implementation, not an incentive.
• Definitional drift. Terms like “equivalent treatment” and “comparable access” get litigated for years. The firm’s interpretation governs during the argument.
• Monitor asymmetry. The monitor has a handful of staff and depends on the firm for data about the firm’s own conduct.

We spent six years supervising an undertaking that the market had routed around in eighteen months. That is not enforcement. It is an expensive form of documentation.

That assessment came from a former case officer at a European competition authority, who asked not to be named because the matter remains partially under review.

What changed the calculus

Two things. The first is simply elapsed time. There are now enough completed conduct remedies to compare intended outcomes against measured market structure, and the comparisons are unflattering. Market shares in several supervised markets are more concentrated at the end of the undertaking than at the start.

The second is a change in how enforcers frame the counterfactual. The traditional objection to structural relief is that it is disproportionate and risks destroying efficiencies. That argument carries less weight once the alternative has a documented failure rate, because the comparison is no longer divestiture against a working conduct remedy. It is divestiture against a remedy that predictably does not bind.

What structural relief looks like in practice

It is not always a break-up, and treating it as synonymous with one obscures the more likely outcomes.

The most common form is divestiture of a specific asset that creates the conflict: an ad exchange separated from the demand side that trades on it, a marketplace separated from the private-label operation competing on it, a payment rail separated from the platform mandating its use. The test is whether the conflicting incentive is removed rather than supervised.

A second form is mandated interoperability with a technical standard set outside the firm. This is structural in effect even though no asset moves, because compliance becomes observable by third parties rather than by a monitor reading the firm’s own reports.

The third, least developed, is data separation: prohibiting the transfer of data between units rather than prohibiting a use of it. Enforcers are cautious here because the monitoring problem returns unless the separation is architectural.

The cost, and who bears it

Structural remedies are slower, more expensive to litigate, and more vulnerable on appeal. They also produce irreversible outcomes, which is a genuine risk when the theory of harm turns out to be wrong.

Those objections are real and are not going away. What has changed is that they are now weighed against a measured failure rate rather than against a hypothetical. The firms facing this shift understand the stakes precisely, which is why the fight over the next several years will be about remedy design rather than liability.

For the market-structure context in which these cases arise, see our reporting on where venture capital is concentrating.