Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

The beginning of an enforcement paradigm?

with 4 comments

As noticed yesterday by Nicolas, the Commission´s stance with regards to 102 TFEU cases has certainly evolved under Almunia, in the sense that the Commission is nowadays more cautious in pursuing cases where it may lack sufficiently convincing evidence. Nico referred to this as “the end of an enforcement paradigm”.

However, it seems like this approach could be confined to cases related to alleged abusive conduct.  The reason: rumor has it that the Commission may be thinking about initiating  a “test case”, in which it would attempt to prove a cartel by virtue of economic evidence. The Chief Economist and its team would be playing a major role in the case. Could this be the beginning of an enforcement paradigm?

Such approach is certainly not  unheard of (it was in fact trendy in the 70s given the influence of the Chicago School), but managing to prove a cartel by resorting exclusively to economic analysis is far from being a piece of cake. Discussions on the possibility to follow this path have previously been held, for instance, within the framework of the OECD  (a policy brief is available here). In the course of those discussions, the Commission acknowledged that its “past experience has shown that it is very difficult to base a decision imposing fines on undertakings relying exclusively or in a large  extent on economic evidence” (see here).

If the opening of such case were to be confirmed, it could be a clear indicator of the fact that the Commission´s self-confidence is not at all at its lowest.  Whereas I acknowledge that economics could possibly play a greater role regarding the detection of cartels (an interesting presentation by DG Comp´s staff on this issue is available here), I´m somehow more skeptical in relation to the sufficiency of economic evidence to prove their existence.

It´ll be interesting to see whether this rumour actually turns into a reality or not. And in case it does, would the Court be prepared to undertake a proper review of the Commission´s economic assessment in such a case?

PS. For anyone interested on these matters I recommend a brilliant article by G. Werden: “Economic Evidence on the Existence of Collusion: Reconciling Antitrust Law with Oligopoly Theory”, 71 Antitrust Law Journal 719 (2004).

Written by Alfonso Lamadrid

25 November 2010 at 5:15 pm

4 Responses

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  1. Woodpulp 2?

    nixo

    25 November 2010 at 10:13 pm

  2. The Austrian Competition Authority has shown interest in econometric tests for collusion as well. The issue in your post goes beyond that, but it is an interesting topic altogether. I attended a talk at the Austrian Competition Authority in October by Prof. Abrantes-Metz on “Screening Devices for Detecting Collusion”, in which she laid out various methods and also said that the authorities in The Netherlands, Italy, Turkey and Ireland have started to implement some screenings (though apparently mostly for bid-rigging). Her presentation was followed by those of Prof. Janssen (economics, University of Vienna) and Vienna attorney Dr. Hummer. While the whole session was not more than a basic introduction, I found it very interesting. The slides for all three presentations are available from the Competition Authority’s website: http://www.bwb.gv.at/BWB/Aktuell/variance_screen_18102010.htm (The website is in German, the slides in English.)

    Florian Prischl

    2 December 2010 at 7:37 pm

  3. Thanks a lot, Florian, for the info and for the interesting slides!

    As I said above, I believe that there´s a long way to go in the use of economic tools for the detection of collusion. The implementation of the screenings you mention should be seen as a good step in the right direction. I´m more concerned about the possible use of the same tools not as an indicator but as evidence of the existence of collusion.

    By the looks of the slides I would say that the conference must have been pretty interesting.

    Alfonso Lamadrid

    2 December 2010 at 9:13 pm

  4. […] 10 days ago, we were the ones to announce that the Commission is attempting to cook a cartel case on the exclusive basis of economic evidence. […]


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