The Dutch economy has become less competitive over the past decade, raising questions about innovation and the country’s economic resilience, competition watchdog ACM warned on Monday.

Several indicators point to a decline in competition between 2011 and 2023, and weaker competition threatens not only prices and quality but also broader public interests, including innovation, the agency said.

Markets with multiple suppliers, the ACM said, are better able to absorb disruption when one player drops out while a reduction in competition makes the economy more vulnerable. At the same time, the watchdog stressed that competition is not an end in itself and must always be weighed against other public interests.

“What matters is effective competition that delivers well-functioning markets for people and businesses, now and in the future,” ACM chairman Martijn Snoep said.

In particular the ACM warned that large companies are increasingly buying up potential challengers to eliminate future competition in innovative sectors such as digital services and pharmaceuticals.

Such “killer acquisitions” risk stifling innovation before it reaches the market, Snoep told the Financieele Dagblad in an interview.

The watchdog is also investigating the veterinary sector, where private equity-backed takeovers created a number of dominate players. The ACM has raised similar concerns about consolidation driven by private equity in areas such as childcare and accountancy for small and medium-sized businesses.

To counter these trends, the ACM suggests a mix of measures. These include making it easier for innovative newcomers to compete with large companies and assessing small acquisitions by major firms when they risk harming competition.

The watchdog also rejected calls to relax merger controls to allow the creation of so-called European champions, warning that looser oversight would ultimately harm productivity and competition.

Instead, it said barriers on the European internal market should be reduced to allow companies to grow without weakening competition.