Is Common Sense Doomed? Choosing Between Rigid Clarity and Flexible Unpredictability

20 Pages Posted: 20 Dec 2012

Date Written: June 7, 2012

Abstract

At first, my thinking was that competition analysis had evidently become too clever for its own good. As items proving the accusation, I could point to economic evidence which is incapable of being understood by people of average intelligence and moderate numeracy, or which is based on plainly wrong hypotheses which would make excellent sense if the facts matched the theory, but which are distractions if they do not match; assuming that the commercial world runs on the lines of block exemptions (a phenomenon which is diminishing but which remains chronic in some quarters); speculative assumptions about how cartels work (assuming malign rationality and intent and corporate cooperative coordination, which are often absent). So my first thought was grumpily to accede to the proposition that the modern law is “too clever by half”. But then my thoughts advanced. I reflected that competition analysis sometimes attributes too much weight to traditional dogma from which modern, fresh theory ought to liberate us. The law on rebates by dominant players cannot be described without an apology; the law on parallel trade is unique on earth; the law on compulsory licensing allows it either anywhere or almost nowhere, depending on one’s reading of the judicial runes; the Guidance paper about dominance gives imperfect guidance, despite the efforts devoted to the drafting process, as the Commission is reluctant to cede, in the forward-looking, economically-sophisticated 21st century, an inch of territory gained in the economically primitive wars of competition law religion in the late 20th century; the method of calculating fines, which involves collecting huge sums from enterprises which are found guilty of economic crimes, huger than for any other kind of breach of a public norm in any democracy, does not punish the gravest offences more severely than lesser offences. In short, some competition law doctrines are not consistent with common sense. Far from being sophisticated, they are rather primitive and deserve a fresh look.

This paper reflects on the fact that at different periods in our legal history, lawyers have confronted the choice between strictness and flexibility. I suggest that we do not need to adopt better principles. We need not more cleverness, but more common sense. Where the results are unsatisfactory or unpersuasive, the explanation may be that the facts were imperfectly analysed. I suggest that we do not need less or more sophisticated analysis; we need more open-minded analysis driven by a willingness to seek truth from facts.

My conclusions may be summarised as follows. In Europe, questions of substance and of process have been regularly entwined together. One can compare the deferential approach of the ECJ in performing its appellate function over Commission action with its robust principle-driven approach to ruling on problems referred by national courts. The tension between rigid predictability and flexible but potentially arbitrary unpredictability has been clear for centuries. We should learn that if the supposedly absolute principle is too rigid, lawyers and judges will find a way round it. The law and the procedure must be adapted to fresh needs and insights, since rigid adherence to unrealistic rules of procedure or substance will ultimately lead to injustice, and creativity will be deployed to get round the absurdity. Guidance from the public authority is highly desirable, but it should be realised that the authority is issuing guidance, not insurance. Fact-finding is utterly crucial, as weak facts make decisions more like propaganda than quasi-judicial determinations. If the law contradicts common sense, and is not being cured, then it needs frank and open-minded examination, followed by reform or convincing explanation. There are several candidates for a frank reappraisal in European competition law.

Suggested Citation

Forrester, Ian S., Is Common Sense Doomed? Choosing Between Rigid Clarity and Flexible Unpredictability (June 7, 2012). 19th St.Gallen International Competition Law Forum ICF - June 7th and 8th 2012. Available at SSRN: https://ssrn.com/abstract=2190919

Ian S. Forrester (Contact Author)

University of Glasgow ( email )

Adam Smith Business School
Glasgow, Scotland G12 8LE
United Kingdom

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