Diminishing Enforcement: Negative Effects for Deterrence of Mistaken Settlements and Misguided Competition Promotion and Advocacy
IE Law School
March 4, 2009
Competition policy is conceived to preserve and promote free market competition. It can be fleshed out through a mix of tools that are used to further consumer and social welfare through preserving and promoting the efficient functioning of markets. In different countries, courts, administrative authorities and governments themselves play different roles in the execution of competition policy and in the fulfilment of its goals.
On the one hand, competition policy uses prohibitions of anticompetitive actions and merger control as a legal instrument to fight or prevent market restraints by private agents. Public and private competition law enforcement leading to sanctions and/or actions for damages (i.e. the 'regular' enforcement of competition law) is the main manifestation of competition policy.
However, relatively recent developments have increased the number of tools in the shed of competition law enforcement. It has gone past 'regular' enforcement and currently also foresees settlements as a tool to introduce flexibility in the prosecution of competition violations. Settlements are conceived as procedural devices in public antitrust enforcement that provide a shortcut to allow for the speedy conclusion of inquiries and administrative proceedings in those cases that would be costly and inefficient to pursue. If properly used, recourse to settlements may allow competition authorities to save costs and resources in pursuing risky proceedings with an uncertain outcome. From that perspective, the effects of antitrust settlements may seem socially valuable. However, an often overlooked effect is that settlements may also dilute the deterrent effect of 'regular' enforcement. A similar reasoning or discussion underlies the objectives and operation of leniency programs (another of the relatively recent tools for competition enforcement, at least in most EU member States), although several striking differences exist between leniency and competition settlements.
On the other hand, softer new tools have also been developed. Under the headings of competition promotion and competition advocacy a variable set of instruments are created for competition authorities to create and spread the culture of free market competition in areas that have traditionally been exempted from market forces or competition. Advocacy is mainly targeted towards anticompetitive governmental regulations, whilst promotion is aimed at easing and favouring the rooting of competition policy in sectors that for whatever reason have suffered entry barriers and anticompetitive restrictions in the past.
This article criticizes certain uses, mistaken or misguided, of settlements, advocacy and promotion. These are two very different settings in which the deterrent feature of competition authorities' enforcement actions may suffer a deathly blow. Paradoxically, if wrongly used, both may endanger the deterrent principle upon which competition law and policy are built. The basic point of departure is that the new tools might be diminishing the effectiveness of 'regular' competition law enforcement-which shall not be left in the shed to rust.
Number of Pages in PDF File: 21
Keywords: Public enforcement, deterrence, settlement, antitrust, consent decrees, commitment decisions, competition policy, competition law, competition advocacy, sanctions, fines, compliance
JEL Classification: K21, K40, L13, L40
Date posted: March 18, 2009
© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo2 in 0.297 seconds