When Markets are Failing: Part I
Competition Law Insight, Vol. 6, No. 1, p. 6, 2007
4 Pages Posted: 16 Apr 2007
Both the European Commission and the UK authorities have legislative powers to examine a market that they feel isn't working properly in order to investigate if there are any competition and/or other problems that require remedying. Such powers include the ability to initiate and/or undertake market studies, market investigations or sector inquiries. Although the EC and UK investigatory regimes are not identical, noteworthy similarities exist. Both of them, of course, inevitably place a burden on the firms at the centre of the study/investigation/inquiry, as well as on the authorities themselves. Consideration of the relative usefulness or otherwise of these investigatory powers is therefore an extremely important exercise. This is true for the UK and EC authorities as well for the authorities of many more jurisdictions: following Modernisation and enlargement, many other Member States may be interested in introducing these sorts of tools into their own systems. Given this fact the need for a cost-benefit analysis concerning the use of these types of tools is arguably quite pressing. Furthermore, as new Member States attempt to develop such regimes it is imperative that they receive guidance, in the form of 'best practices' for example, on how, and, of course, when, to use those tools to their advantage.
This short article aims to identify: (i) the main benefits (and costs) of market investigations and sector inquiries from an EC and UK perspective; and (ii) any methods or practices that will likely ensure the optimal realisation of the specified benefits. It is published in two parts. This, the first part of the article, describes the main benefits (and costs) of market investigations and sector inquiries from an EC and UK perspective, as well as the legislative frameworks associated with such inquiries under both EC and UK law. The second part will examine: (i) the similarities and differences between the EC and UK approaches to market investigations/sector inquiries; and (ii) 'best practices' that aim to maximise the benefits and minimise the costs of market/sector investigatory tools.
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