Industrial Policy by Stealth: Competition Law and Democratic Governance in the European Union

This paper examines the European Union’s growing tendency to pursue de facto industrial policy through the reinterpretation and instrumentalisation of competition policy. In the absence of an explicit, democratically articulated industrial strategy and constrained by fragmented competences at the EU level, policymakers have increasingly relied on competition law—particularly state aid control, merger review and enforcement prioritisation—as substitute tools for strategic economic coordination. Drawing on historical institutionalism, the analysis conceptualises this shift as a case of policy drift and delegation expansion, whereby the European Commission exercises widened discretion under the guise of technically neutral market regulation to achieve industrial objectives that lack clear legislative mandates. The study employs a structured institutional analysis of Commission decisions, court rulings and key policy initiatives—including the COVID-19 State Aid Temporary Framework, Important Projects of Common European Interest (IPCEIs) and high-profile merger assessments such as Siemens–Alstom—to trace how industrial goals are framed and operationalised through competition law. Provisional findings suggest that this emerging model of “industrial policy by stealth” undermines both the internal coherence of competition enforcement and the democratic legitimacy of EU economic governance. Strategic economic choices are increasingly embedded in technocratic regulatory decisions rather than debated through transparent legislative processes. This relocation of industrial coordination from political arenas to enforcement practice complicates accountability, limits public contestation and blurs the normative purpose of competition policy itself. The paper argues that the EU’s reliance on competition policy as a surrogate industrial strategy reflects deeper tensions between geopolitical ambition and constitutional constraint, calling for renewed debate on the democratic foundations of European economic governance.