Choosing Among American, European, or not Antitrust at All

Abstract:     
We use the theory of law enforcement to analyze why some countries have antitrust policies and others don't; and also, why some countries choose to enforce some antitrust domains using common or civil law as in America, while others resort to the administrative process as in Europe. We conclude that there is not a unique antitrust that fits all countries and policy domains. There is no need of antitrust in countries and policy domains where institutions of law enforcement are too weak. For moderate level of institutional strength, it is better to use ex-ante authorizations such as cartel registrations and competition restrain authorizations. For an intermediate level of institutional strength, it might be better to have an ex-post judiciary regime of common or civil law litigation based on the rule of reason to protect private parties from negligent conducts that end up restraining competition. But, at that level of institutional strength, an ex-post administrative negligence system of the European type dominates when encouraging all firms to comply with a legal standard is not socially desirable. Finally, when institutions are very strong, it is optimal to have an ex-post strict liability regime of litigation able to hold liable firms that engage in what are defined as per se illegal competition restrains as in the cartel cases in the US.

Keywords: Antitrust, Enforcement, Agencies, Judiciary

JEL Classifications: K21, K42

Working Paper Series