Optimal Enforcement of Competition Policy: The Commitments Procedure Under Uncertainty
36 Pages Posted: 14 Oct 2014 Last revised: 29 Apr 2015
Date Written: April 24, 2015
Since the introduction of a formal commitments procedure in EU antitrust policy (Article 9 of Council Regulation 1/2003), the European Commission has extensively settled cases of alleged anticompetitive practices. In this paper, we use a formal model of law enforcement (Bebchuk, 1984; Shavell, 1988) to identify the optimal procedure to resolve cases in a context of uncertainty related to the law (L-uncertainty) and to the facts (F-uncertainty). We show that commitments are suboptimal when there L-uncertainty is important. Furthermore, the generalized use of commitments creates an additional risk of under-enforcement when F-uncertainty is significant.
Keywords: Competition Policy; European Commission; Settlements; Commitments; Law Enforcement.
JEL Classification: K00, K20, K21, K40, K41, K42, L4, L40
Suggested Citation: Suggested Citation