Behavioural Remedies Keep Failing. Regulators Are Finally Saying So.

Daniel Okonkwo — Thu, 13 Aug 2026 00:00:00 GMT

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.

Venture Funding Recovered on Paper. The Median Founder Did Not.

Daniel Okonkwo — Wed, 29 Jul 2026 00:00:00 GMT

Every quarterly funding report this year has led with the same figure: total dollars deployed, up substantially year over year. It is an accurate number and a misleading headline. Strip out the largest deals and the picture reverses. Deal count is roughly flat, the median round has shrunk, and the time between rounds has stretched by about five months.

What happened is not a recovery. It is a concentration.

The arithmetic of a mean that moves without the median

When a small number of very large financings enter the denominator, aggregate dollars rise sharply while the typical experience of raising money gets harder. Both things are true at once, and only one of them makes the summary slide.

The pattern is visible in three places.

Round size distribution. The top decile of deals accounts for a materially larger share of total dollars than it did three years ago. The bottom half accounts for less.
Deal count. Flat to slightly down, depending on whose dataset you use and how they treat extensions and bridges. Nobody credible has it up meaningfully.
Graduation rates. The share of seed-funded companies raising a Series A within 24 months has fallen. This is the number that actually describes founder experience, and it is the one least often reported.

The aggregate number is a fundraising document for the asset class. It is not a description of the market that founders are operating in.

Why bridges are doing the work rounds used to do

The clearest structural change is the normalisation of the inside round. Bridges, extensions, and structured follow-ons from existing investors now make up a much larger share of financings than they did in the last cycle.

This is rational behaviour from funds holding marks they do not want to reset, and it produces two effects worth naming. It keeps companies alive that would otherwise have failed, which delays the mark-down rather than avoiding it. And it shifts negotiating leverage decisively toward existing investors, because the alternative to their terms is often no term sheet at all.

Founders describe the consequence in consistent language: the round happens, the valuation is flat, the preference stack gets heavier, and the option pool gets refreshed out of common. The company survives. The founder’s economics do not.

What the concentration is buying

The large deals are not random. They cluster in capital-intensive infrastructure, where the cheque size is a function of what the business physically requires rather than investor enthusiasm.

That is a meaningful distinction. A very large financing for compute capacity or manufacturing is buying a fixed asset with a depreciation schedule. It looks like exuberance in an aggregate chart and like capital expenditure on a balance sheet. Our reporting on the packaging bottleneck in accelerator supply explains part of why those cheques are as large as they are.

The corollary is that the concentration is not evenly distributed across sectors either. Software businesses with ordinary capital needs are raising smaller rounds against tougher metrics, and the bar has moved from growth rate to demonstrated gross margin. As we found reporting on inference costs, that second requirement is genuinely difficult for a category of products that looked healthy under the old bar.

The number to watch instead

If you want one series that describes the market founders actually face, use the seed-to-Series-A graduation rate on a trailing 24-month basis, split by cohort year. It captures survival, it is not distorted by outliers, and it leads the aggregate figures by about a year.

It is currently below its 2021 peak by a wide margin and has been flat for three quarters. That is the recovery.

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