Seminar 8: Regulatory Antitrust (20 November)

The aim of this session is to assess the claim/criticism that antitrust law at times manifests regulatory tendencies. As discussed earlier in the course, to a certain extent antitrust is part of the regulatory space which exists in the EU and US. But the specific accusation of ‘regulatory antitrust’ is that there are tasks that go beyond its remit, and there is a problem with antitrust agencies or courts that swing too far away from the core antitrust mission.  I have picked three papers. the first two can be read against each other (Ibanez Colomo and Devlin).  The third is a different type of piece that uses a very different method to make inquiries that go along similar lines.

Reading

Ibanez Colomo ‘On the Application of Competition Law as Regulation: Elements for a Theory’ (2010) Yearbook of European Law 261

Devlin ‘Antitrust as Regulation’ 49 San Diego Law Review 823 (2012) (also on ssrn)

Thatcher ‘European Commission merger control: Combining competition and the creation of larger European firms’ (2014) 53(3) European Journal of Political research 443

19 comments on “Seminar 8: Regulatory Antitrust (20 November)

  1. giorgiomonti says:

    If you’ve looked a Devlin’s paper you will note he considers Google Book. Note the legal issues dominating the settlement discussions pertain to copyright law. There is an allusion to the antitrust concerns in the 2011 judgment, which is available here:
    http://www.nysd.uscourts.gov/cases/show.php?db=special&id=115
    This is the judgment discussed by Devlin.

    There are none however in the 2013 judgment (an appeal is pending, as far as I know)
    http://www.arl.org/storage/documents/publications/google_summary_judgment_final_Nov_14_2013.pdf

  2. Jotte says:

    The readings appear to demonstrate that to say that antitrust law at times manifests regulatory tendencies can mean very different things.

    Ibanez Colomo asserts that to say this means that antitrust law at times manifests itself as being proactive and prescriptive.

    Devlin asserts that to say this means that antitrust law at times manifests itself as aspiring to maximising consumer welfare.

    Thatcher (could) assert that to say this means that antitrust law at times manifests as a pursuit of political goals.

    Probably all three touch on a facet of the ‘competition as regulation’ debate that is relevant.

    The proactive/prescriptive perspective of Ibanez Colomo link to the Telefonica/Deutsche Telekom types of debate that question the role of antitrust as distinguished from sector regulation that puts in place ex ante regulatory mechanisms, allowing competition to develop, but only on the basis of market forecasts whilst antitrust acts ex post, using historical data.

    The maximising consumer welfare critique of Devlin applies mostly to the U.S. context and his concern is related to a specific adjudicative technique that implements a strict proportionality test in the assessment of potential restrictions on competition. It is questionable whether his critique is also valid for EU adjudication in antitrust. EU adjudication in abuse of dominance cases appears to be solely focussed on the nature of the conduct in question rather than on the actual choices that were available to the undertaking(s) concerned. In that sense perhaps, since EU courts have not adopted the effects based approach to adjudicate cases, it seems that Devlin’s critique is of most relevance in the U.S. adjudicative context. Perhaps the European Commission, however, can be seen to adopt a ‘less-restrictive alternatives’ approach when it assesses unilateral conduct and can be accused of using regulatory welfare maximising rationales in this approach.

    Within this debate the Thatcher piece can be seen as emphasizing the political interests in the application of antitrust law whereas it can be argued that antitrust should function completely separate from such interests. It could be argued that regulatory schemes leave, intentionally, space for national variation and intervention because they regulate interests over which Member States want to retain some political control (such as utilities regulation). Competition law, in contrast, is free from political preferences and controls market behavior in a ‘neutral way’. It is clear, however, that 101 has been applied to achieve political goals (Gazprom).

    The readings, therefore, all suggest in their own way, how the regulation vs competition dichotomy is an interesting perspective to adopt when thinking about the role, scope and mechanisms of antitrust law. Perhaps most importantly, to argue in favour or against antitrust law as having proactive/prescriptive role, maximising, bettering consumer welfare or creating European champions, requires a clearer articulation of what defines antitrust law, which remains eventually a political decision. These debates, however, unveil what such a choice would entail.

    • giorgiomonti says:

      I don’t agree that Devlin’s paper is inapplicable to the EU on the point you note:
      1) in the context of article 101(3) exemptions it must be shown that the restriction of competiiton is proportionate
      2) in the context of art 102 the invocation of an objective justification defence likewise has a proportionality standard.

  3. Christopher Johnson says:

    Thatcher argues that the Commission pursues an “integrationalist” mergers policy, “whereby it accepts the development of larger European firms through mergers in order to enhance economic integration.” Thatcher develops his argument based on a statistical analysis of mergers decisions, focussing particularly on decisions in three sectors where mergers may be considered more likely to be anticompetitive. In my opinion (regardless of the correctness of the conclusions), the methodology that Thatcher selects is insufficiently analytical to enable him to reach the conclusions he does.

    Thatcher finds that the vast majority of mergers are accepted at phase 1 without conditions. He further finds that the vast majority of phase 2 investigations also result in mergers being permitted. He finds that these trends are repeated to a greater or lesser extent in the three sectors on which he has chosen to focus. Thatcher uses these findings to support his conclusion the Commission is pursuing an “integrationalist” mergers policy. In my opinion, this is a significant logical leap.

    Under the Mergers Regulation, all concentrations with a Community dimension must be notified to the Commission for assessment. As there is no filter on notifications (for example, risk of incompatibility), it is unsurprising that the large majority of mergers are regarded as unproblematic. On the basis of Thatcher’s statistics, it would be just as easy to conclude that the large majority of notified mergers pose no real problems to competition. Thatcher would have done better to place far more emphasis on the second part of his paper where he looks at specific cases, as it is, I would argue that his analysis in this second part is also too cursory to support his stated conclusion.

    • giorgiomonti says:

      I agree with the critique of the first part.
      It would help to substantiate your criticisms of the second part. The way I would argue it is this: even in the phase 2 cases the Commission manages, applying bog standard competition analysis, to clear the mergers. There isn’t anywhere a lowering of the competition standards to accommodate an integrationist policy. (There may be a raising of the standards, ie manufacturing odd theories of harm to secure a remedy desirable for market integration reasons).

  4. Fabrizio says:

    I disagree with Devlin’s critique of consumer welfare maximization. What he proposes instead is Pareto superiority.
    His argument that “consumers should be already thankful because their situation improves” is circular because it is just a different way of saying that Pareto superiority should be the test.
    The LRA functions basically as a private enforcement pro-competitive mechanism. In a way, it reduces barriers to entry: in order to have a more competitive market, anyone with an idea of how the market should be, rather than entering the market, sues and gets paid. Afterwards, the market structure changes in a more competitive one (or the firm will be sued by other consumers). Also the test under 101(3) TFEU requires that no least restrictive conduct was available.
    From an incentive perspective, Devlin does not consider enought how the proscriptive approach of antitrust (Ibanez Colomo) provides incentives to firms. Say you are a firm in situation S1. You can choose to stay there or move to S2 or S3. For you S3>S2>S1, but for the consumers S2>S3>S1. He seems to suggest that the LRA gives you incentive to stay in S1. But staying in S1 is irrational for you as a self-interested agent. You will move in any case.
    The difference is that under Devlin’s standard, you will go for S3 with no risk. Under the LRA, if a consumer shows in court that for consumers S2>S3, then you are liable.
    Finally, from an institutional perspective, I see a fallacy in the critique based on judicial error. This is a quite common argument: courts do a poor job, so the policy backfires. Assume for the sake of the argument that this is correct. Then the problem is in the enforcement system; reflect on how to improve it. If you focus on how to weaken the substantial standard, the choice arguably reveals two potential implicit preferences (maybe concurring). A conservative preference regarding the judicial system; and/or a pro-enterprise preference in the market conflict between enterprise and customer.

    • giorgiomonti says:

      super comments on institutional perspectives and incentives (last 2 paras).
      I am not sure about the first bundle of points. Art 101(3) perhaps looks for Kaldor-Hicks efficiency ( in that the gains must outweigh the losses); but the LRA question is going beyond that efficiency standard.
      I’m also not sure that Devlin woudl agree his standard is about Pareto superior outcomes.

  5. Marita says:

    In his article Devlin is critical of antitrust law as regulation. However, I think it is undeniable that antitrust shares at least some characteristics of regulation. This is especially so if one sees ex ante application as a defining feature of regulation. Competition authorities act proactively (as opposed to being simply reactive) not just in the area of merger policy, but also in devising guidelines and other forms of soft law. To my mind, the real problem emanating from both Devlin’s and Colomo’s articles is that competition policy is overstepping its proper bounds and trying to be a “repair it all service”. By embracing objectives that are outside its limits, it might be actually doing more harm than good – an issue identified by Devlin. Overly prescriptive behaviour on the part of the competition authorities, as illustrated by requiring welfare maximisation or some of the structural remedies, might well be misplaced. The issue here is not just that the courts/competition authorities are ill-suited to such unworkable task, it is also about a possible perverse effect of replacing competition with regulation through competition policy.

    One particular thing that caught my attention when comparing Devlin’s and Colomo’s approaches is their stance on the innovation angle of competition policy. Uncertainty associated with innovation is used by Devlin as an argument against welfare maximisation standard, whereas it leads Colomo to an outright rejection of the dynamic aspects as factors that should be considered in the competition field. Indeed, he is not isolated in claiming that there is no space for innovation perspective in competition policy, his view is shared inter alia by Bork. However, given the importance of innovation to economic growth (as highlighted by Colomo) I find this approach troubling. True, it might be difficult to foresee the evolution of the markets in the long term and certainly the indeterminacy of economic theories on the relationship between competition and innovation does not make things easy. Yet, there is nothing “in the very nature” of competition law that confines it to static considerations or that makes dynamic efficiency a “foreign standard”. Indeed, there is a consensus on innovation being key to consumer welfare. There is also no necessary correlation between taking into account the innovation perspective and the form of remedies applied by the competition authorities. While Colomo takes the example of Microsoft as illustration of the Commission possibly overstepping its proper role because of embracing the innovation policy, in fact the dynamic efficiency factor could equally have been a reason for inaction in this case (breakthrough vs follow-on innovation debate).

    • giorgiomonti says:

      Nice on innovation.
      On your first point I wonder if ex ante is really the vtal distinguishing feature of regulation. In telecoms for example, you regulate a sector, and you do so at regular intervals, determined by the statutory text. In competition law you regulate conduct haphazardly: you don’t necesarily regulate everyone and you do so only if there is an act that raises concerns.

  6. stavros says:

    Devlin criticizes a specific version of the Rule of Reason (RR) because it asks from the courts to engage in a demanding counterfactual test similar to an exercise of discovering a practice’s opportunity cost. In particular, the basic form of the RR states that if a practice enhances an appropriate measure of consumer welfare then the practice is lawful. The modified version requires from this practice to be the less restrictive practice for competition (LRA). In other words, if there is another equally efficient yet less restrictive substitute, then the said practice should be condemned. By doing so the courts set a high standard asking from the firms to behave not merely in a welfare enhancing manner but in a welfare-maximizing manner. For Devlin such a legal standard is not workable because (i) it requires a demanding counterfactual (p. 6) and (ii) courts err and judicial process is costly (p. 8-9). Consequently, Devlin proposes a much simpler counterfactual: compare the state of affairs incurred by a firm’s conduct to a state of affairs without it. If a firm’s practice leaves consumer better off than if the firm had not acted at all, then the practice at stake is welfare-enhancing and shall not be condemned.

    However, this argument is not persuasive: the LRA does not demand such a sophisticated counterfactual; it merely enables the plaintiff to argue that there was an equally efficient, yet less restrictive alternative for the defendant. Should the plaintiff (not the Court) manage to prove that there is one single alternative then the Court would reasonably condemn the practice at stake as anti-competitive. The LRA is beneficial for two reasons. First, it permits the defendant to argue that her practice brings efficiency gains, while it provides the plaintiff with the possibility to rebut defeendant’s justification by claiming that there was a less-restrictive practice. Such a shift of the burden of proof achieves a fair allocation of the burden, and, thus, takes the rights of the parties seriously. Secondly, LRA allows antitrust private enforcement become a tool towards welfare maximization, since consumers will receive not only the benefits of the practice, but also the gains of greater competition. In addition, such outcome does not require an extensive and open-ended economic analysis on the part of the court such as a determining-the-opportunity-cost exercise.

    Be that as it may, it is important to highlight that Devlin’s critique on this specific adjudication method is not only relevant for the US antitrust. It offers a specific and coherent response to much broader questions, namely: (i) what is the relationship between antitrust and regulation, (ii) how should antitrust intervene in the market order. Devlin’s response appears to be neutral, but in fact it involves a comprehensive approach towards antitrust. Specifically, Devlin argues that antitrust’s objective is consumer welfare (but under two qualifications, pp 13-17) and that such goal is to be achieved in a passive way. By this he means that antitrust does not and should not be applied in a regulatory fashion (main thesis). From my perspective, the descriptive limb of this main thesis is highly contestable as shown by Colomo’s article (pp 263-276). In relation to the normative limb, it is adequately to highlight at this point a methodological error: it seems that he grounds the implicit normative claim on the descriptive claim, yet the latter is not proven. As long as he conceals his normative account in the description of the facts he avoids arguing on the normative level, while he suggests that his comprehensive, normative account is merely a description. In this respect, Colomo’s conclusion that antitrust is regulatory in nature sufficiently rebuts Devlin’s main thesis. No normative argumentation (i.e. asking whether should antitrust intervene in a regulatory manner) is necessary at this point.

    Lastly, I would like to bring forward a conceptual argument against Devlin’s strict distinction between antitrust and regulation. The said distinction may have a pedagogic value, yet it oversimplifies the complex nature of antitrust intervention and the relationship between competition law and regulation. In particular, Devlin contends that antitrust does not “instruct companies to act in a particular way ex ante; it merely imposes narrow limits defined ex post”. Nevertheless, competition rules as all legal norms inform and guide subject’s behavior (Hart, the Concept of Law). In addition, antitrust presupposes and builds on certain legal ground rules: freedom of trade is a permissive ground rule and antitrust prohibitions presuppose and circumscribe such freedom. For Devlin this constituent legal background remains invisible; it is presupposed as a certain kind of natural order. That is why Devlin does not see the instructive or regulatory character of antitrust. However, the only reason for the invisibility of antitrust’s regulatory character lies on the following observation: often we don’t think of ground rules of permission as ground rules at all (Hohfeld, Fundamental Legal Conceptions as Applied in Judicial Reasoning). Nevertheless, permissions play an enormously important role in economic life and antitrust’s prohibitions give a specific form to these fundamental permissions. In this sense antitrust is regulatory in nature, regardless of its application (i.e. even when it is applied ex post and proscriptively). Consequently, the scope and the limits of antitrust’s intervention cannot be defined by crossing a red line between antitrust and regulation. From this perspective Colomo’s approach could be proven much more fruitful: he attempts to develop a theoretical framework for a applying antitrust on different occasions, namely in cases when it is more (ex ante and prescriptive) or less (ex post and proscriptive) intrusive (regulatory) in the economy (pp 301-306).

    • giorgiomonti says:

      Isn’t the point at pp.301 to 306 thatthere are some ‘bad’ uses of antitrust and here they are?
      so that for Colomo the difference is rather between good and bad antitrust?

      Turn your points upside down: Colomo empirically shows you many examples where antitrust is used in a regulatory manner. he says it’s antitrust law, but Devlin would see these as instances of regulation. so what’s absent in Colomo in the first few segments is a normative account of the scope of antitrust. Later on it seems to boil down to: you should not intervene in cases where you can’t solve the issue or where the standards are too low. But this is not an antritrust/regulation divide but a divide between desirable and undesirable intervention.

      • stavros says:

        Yes, indeed. But Colomo frames the question in a much better way: It is better to ask what are the proper conditions for antitrust intervention and how do we distinguish good from bad antitrust intervention. By simply claiming that a specific antitrust intervention is unacceptable because it is regulatory we do not achieve much.

        Sure, Colomo is quite hesitant in advancing a complete normative theory but he attempts to do so especially in the last part of the article. For instance, he seems to propose that the purpose of intervention is to protect the existing market structure or that asymmetries between rivals are of essence for competition, or that creating a level playing field should be promoted as long as the ability and the incentives to compete are not jeopardised to an extent that causes consumer harm. It is not a complete theory but there are elements of a theory and this is a better way to approach the issue in comparison to Devlin.

  7. Theodosia says:

    In my opinion the reading material of this week reveals one of the most important challenges antitrust law faces, the fact that there is no consensus on what are its main goals. Although this issue is core, it still remains unsolved. However, if it is not clear what are the main goals of competition law then the Commission can apply competition law with wide discretion. As a result, it can alter the way it applies merger regulation or article 101 TFEU depending on the sector of the economy each time aims to protect or promote and the political sensitiveness of each case. In addition, the ambiguity underlying the Commission’s decision making process derives not only from the fact that its goals are unclear but also from the fact that there is no clear consensus on how these goals can be achieved. For example, dynamic efficiency is one of the main goals of antitrust. However, there is no actual agreement on the main determinants of the relationship between innovation and the application of competition law. Should competition law apply so that innovation is promoted? Are there cases where less competition may lead to more innovation? I consider that all these issues are crucial since to the extent they remain unresolved they strengthen the Commission’s discretion to inject undefined political concerns in its competition analysis, promote its own political agenda and exploit its enforcement power in order to substitute regulators.

  8. Leticia says:

    I am in between minds regarding some of the issues tackled in the readings, namely the division of labour between competition law and regulation when correcting market failures. In principle I find the first half of Devlin’s article quite compelling: competition should be less ambitious than regulation when tackling, for instance, natural monopolies, where a potential issue would not be the fact that the company is the only one giving the service but that the prices it charges for it are still higher than what would be optimal. This could be better corrected by means of regulation (price control and/or higher taxation), as competition law might not have a better answer or any answer at all. Perhaps the UEFA decision described in Ibáñez’s article is another illustration of how ‘pure’ regulation could have (better) served the general interest by means of, say, setting maximum prices that the UEFA could charge for its football broadcasting rights (Ibañez suggests, among other arguments, that the Commission’s decision to compel selling those rights in packages had the effect of just increasing the rents of football operators for basically the same service they were giving before).

    However, getting into the Google Books discussion got me a bit puzzled about Devlin’s categorical distinction between welfare enhancing (which competition law should pursue) and welfare maximising (which competition law should abstain from).

    – First there is the issue of whether the Court should have invalidated an agreement that enhanced consumers’ welfare by making orphan books available to them for the first (and only) time. Devlin’s depiction sounds intuitively telling but, as Theodosia has mentioned, it might get a bit blurry as we go deep into analysing what sort of competition law do we want. The abuse of a dominant position by fixing prices that competitors cannot replicate would be a similar issue where a ruling against would result in decreased consumer welfare (in the end, consumers would have lower prices if this conduct was not anti-competitive). And yet it is just illegal. We might imagine that the company lowers its prices with the sole objective of excluding competitors and, once this has happened, it could rise the prices again, and consumers would end up extremely unhappy. Could also Google Books do a similar move of initial exclusion and subsequent exploitation of his market exclusiveness?

    – Then there is Devlin’s suggestion (p. 50) that the court’s ruling discourages the 100 million dollars that Google invested in digitalising books. I don’t see that argument compelling in the light of the core of the issue, which is what happens with orphan books. It is not obvious to me that orphan books made a difference in Google’s decision to take the copyright infringement risk, as these books were a marginal asset considering the already enormous fixed costs of digitalising the libraries of Harvard, Oxford, Stanford et al.

    – Lastly, I might also disagree with the Google Book judicial decision but for reasons different to those of Devlin. I see how the sentence of ‘Competitors that attempted to do the same [copy and disclose orphan books] would face statutory damages’ can be problematic for competition. Why didn’t the Court just impose on Google the duty to allow competitors to publish these orphan books in exchange of the proportional cost of scanning them (omitting the fixed costs of scanning, dividing the variable scanning costs between the number of books, and then taking only part of this cost proportional to the ‘use’ of the scanned book, not to its actual purchase). Perhaps in doing so we would enter into the sort of behavioural prescriptions that Ibáñez assimilates to regulation, but which are nonetheless suitable for ensuring competition.

  9. Elias says:

    The Article by Colomo is interesting since it proposes a theoretical framework which analyses the overlap between competition law and regulation. This framework tries to overcome the traditional categories which differentiate between regulation and competition based on criteria such as ex-ante and ex-post intervention as well as their prescriptive or proscriptive character. However, his concerns concerning the ‘instrumentalisation ‘of competition law hinge upon the assumption that, whereas the role of sector-specific regulation consists in shaping markets and neutralising competitive advantages based on market power, the role of competition law is limited to the preservation of a given market structure. This assumption, however, does not reflect the aim of EU competition law which should according to the former Article 3 (1) (g) EC and since 2009 according to Treaty Protocol N°27 protect a system ensuring that competition is not distorted. This aim does not preclude pro-active creation of a certain market structure through the application of competition law when it serves the protection or the reestablishment of competition in a given market. Moreover, the recurrent reference to the special responsibility of dominant firms and the principle of equal opportunities between competitors by the Union Courts do not support such a restrictive vision of the role of competition law which denies its role in creating a level playing field. This is also reflected by some of Colomo’s examples. In this regard, the analysis of the EU Merger control by Thatcher demonstrates how the Commission shapes by applying competition law the structure of the EU Internal Market and pursuits policy goals such as market integration.

  10. I agree with Devlin that the rule of reason/welfare improvement reasoning can sometimes lead to outcomes that nobody really likes and it definitely makes sense to talk about how the results in those instances can be improved. However, I would argue that a strict welfare argument or even consumer welfare test as he proposes it, is flawed as well. This could for example result in cases, where as long as prices are not raised directly, or ‘the consumers’ don’t have issues, you would allow certain types of monopoly because they create(d) a certain environment that the consumer appreciates. From the view of the overall society and the economy, this might however be a very undesirable outcome.
    As others above me have stated already, the papers under discussion for today’s seminar all show different aspects of competition regulation.
    The paper by Thatcher furthermore shows, how the application of competition law (in the EU) today is far beyond just safeguarding competiton. (as everybody also can understand this differently) To this end, not only Thatcher’s integrationist theses are important but f.e. many commissioners have in the past alluded to using competition law for consumer protection, environmnental protection or even industrial policy. (see the discussion in my ll.b thesis about the objectives/goals of competition law)

  11. Maria C says:

    I have found very interesting the ways in which the readings explore the relationship between antitrust and regulation, especially the contrasting opinions of Devlin and Colomo. Devlin argues that there should be a clear-cut separation between competition and regulation. In his view, competition law plays a neutral, passive role aimed at the protection of well-functioning markets, expressed in the concept of consumers’ welfare. He then draws the difference between ‘welfare enhancing’ and ‘welfare maximizing’, arguing that antitrust law must be solely concerned with the former, or else the limits between competition and regulation would become dimmer and dimmer. Colomo, on the contrary, defends there is a regulatory dimension to competition law.
    From this last perspective, I agree that competition law cannot be defined in total neutral terms, as if it were a device working in the vacuum. As Theodosia has pointed out, this debate is very much connected to the goals and objectives we assign to competition law, to the extent that they become part of its definition. Competition law is presented as an instrument, a tool in the hands of certain authorities, but tools are defined by the purpose they serve. Answering that the ultimate goal of competition law is preserving competitive markets, efficiency and protecting consumers’ interests may be an important step towards consensus, but it would be too easy to think that these general concepts can only be read in one single neutral way. If the definitions and objectives of competition law remain open, it is easier for enforcers to fill them with the conceptions of welfare they happen to hold at a particular time, depending on the political and social sensitivity of the moment.

  12. Noguier Alice says:

    These three articles claim that there is a recent tendency for competition authorities to apply competition law in order to shape the conditions of competition in markets. Competition authorities tend to intervene more and more on the basis of presumptions and forecasts about the evolution of markets. Prospect about the evolution of innovation and investment in a given market are not part of the static considerations to which competition law analysis is typically confined. However in some cases, competition authorities do not hesitate to alter the competitive process in a market in an attempt to revert its tendency toward monopoly. Traditionally, this is the role of regulation and competition law should only seeks to preserve the existing market structure from being further deteriorated. Because competition authorities behave like regulators and try to reach policy goals that are usually foreign to competition policy, it is said that competition law is instrumentalised.
    Against this background, the question that arises is whether this instrumentalisation is a misuse of competition law?
    The three authors provide us with very different answers.

    According to Ibanez Colomo, application of competition law as regulation is problematic as it may alter the expected standard of intervention by competition authorities. When competition law is instrumentalised, a behaviour that would not in principle be a source of concerns on the light of the expected standards of intervention may in fact be found to violate competition rules. Intervention may be based on a finding of infringement that does not find support in the relevant precedents; or the remedies imposed in a given case may exceed what would be necessary to bring an end to an infringement identified by the authority. Ibanez Colomo sees this failure to abide by the principle of proportionality as a misuse of competition law principles. However the author claims that there may be good reasons why standard of intervention are lower under sector-specific regulation. In industry recently open to competition, promoting entry in formerly monopolised markets by means of generous access obligation and strict non-discrimination principles can be easily justified and put in context.

    Devlin also contends that the use of competition law in a regulatory manner is a misuse. He argues that in the US, judges have transformed the rule of reason to require the best outcome available rather than a mere improvement. They have adopted a welfare-maximisation principle, i.e. judges employ antitrust as a tool of public policy, instead of using it as a barrier against social welfare reducing activities. According to him, the courts’ use of the less restrictive alternative test leads to findings of antitrust violations in cases where courts cannot reliably identify the relevant counterfactual. The difficulty of cases raises the probability of errors and the social cost involved in courts’ mistakes. The author stresses that “by seeking to facilitate more open competition in the future by restricting practices that are undeniably efficient today, antitrust enforcers may paradoxically provide consumers with less.”

    In the contrary, Tatcher argues that the European Commission can pursue an integrationist policy through the application of competition law. According to him the Commission can combine competition policy with achieving the ‘industrial policy’ aim of aiding the development of larger European firms without misusing competition law principles.

    These divergent views may be in part explained by the fact that the authors do not consider the same anticompetitive practices, Ibanez Colomo and Devlin mainly consider 102 TFEU and Section 2 of the Sherman Act cases and Tatcher focuses on mergers control.

  13. Jonathan says:

    Delvin discusses the current misuse of anti-trust regulation within the United States. He concludes that the judiciary has rewritten the rule of reason to require the best outcome available, rather than mere improvement. The courts construction of the Sherman Act requiring more than a progression in welfare improperly conflates antitrust with regulation. I agree with Delvin that adopting principles of welfare maximization in monopolization cases is problematic. Delvin does not believe anti-trust law should regulate.

    On the contrary, Ibanez Colomo discusses the similarities and differences between competition law and regulation in order to justify the practice of regulation through competition. In this process, he looks at concerns of when competition law replicates sector-specific regimes in order to examine to what extent these concerns are justified. He states that the concerns surrounding the application of competition law as regulation have more to do with the proportionality of the intervention. He further explains how in certain situation, competition law does apply ex ante, not just ex post. He then explains how in certain circumstances, competition law may impose prescriptive, not just proscriptive; For example, when markets display a tendency towards monopoly. This challenge to the legitimacy of competition as regulation is very interesting and I believe that Colomo develops very valid points.

    Thatcher examines merger control within competition policy and explains how the Commission can combine policy with achieving the industrial policy aim of aiding the development of larger European firms. He attempts to establish that the Commission pursues an integrationist policy where it accepts the development of larger European firms through mergers in order to enhance economic integration. He finds that surprisingly there have been only two prohibitions in three major sectors in the last 20 years.

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