The leader of Germany's Social Democrats (SPD) took aim at the Republic and criticised USA technology firms Apple, Facebook and Google on Thursday, saying a strong Europe was needed to make sure they stick to the rules.
He also refused to join a new coalition after Merkel's talks with two smaller parties collapsed last month.
But the party suffered historically poor election results after both Merkel coalitions, with support slumping to a post-war low of 20.5 percent in September.
At a previously scheduled party congress Thursday, Schulz is seeking members' approval for a resolution approving talks on "whether and in what form" the Social Democrats can support a new government.
Schulz is due to speak at noon (1100 GMT) and members are then set to debate motions on what kind of negotiating mandate the party should have for the talks, with many expected to demand a high price in return for supporting Merkel.
Schulz said that if the SPD ends up again governing with Merkel, Berlin's stance on Europe would have to shift away from the austerity approach of Merkel and her former finance minister Wolfgang Schaeuble.
'Those who are against it will simply leave the EU, ' SPD party chief tells party conference.
The leader of Germany's Social Democrats (SPD) called on Thursday for closer integration in the European Union, with the aim of achieving a "United States of Europe" by 2025, while countries who are not on board should leave the bloc.
But SPD vice-president Aydan Ozoguz warned against "repeated skirmishes" over refugee rights, noting that Germany was no longer receiving hundreds of thousands of refugees from the Middle East as it had in 2015.