Relaxing whilst doing Competition Law is not an Oxymoron

Archive for July 23rd, 2013

Sexy Cases

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Journalist, practitioners and scholars often accuse agencies of putting resources on “sexy” cases.

This would be particularly true in matters where agencies can prioritize cases and select enforcement targets: e.g., in unilateral conduct cases and to a lesser extent in merger cases (the argument has less traction in cartel and State aid cases).

True, untrue?

A sexy case can be defined as one which brings large public exposure.

Sexy cases often involve popular consumer goods/services:  search engines, smartphones, LCD screens, etc. They may also concern “evil“, John Grishamesque industries:  oil, tobacco, pharmaceuticals or finance. Or they may feature non EU firms which threaten domestic operators (Gazprom, Boeing, etc.).

With this background, there’s a good proxy to determine whether agencies focus on sexy cases: brands rankings.

And this recent ranking seems to confirm agencies interest for sexy cases: the top 5 brands are Apple, Google, Amazon, Microsoft and Samsung. All those companies are currently wrestling with DG COMP.

So much for the facts.

Public choice theory has an appealing explainer for public authorities’ focus on sexy cases: like standard businessmen, agency officials are profit maximisers. Yet, given that they cannot maximize revenue, they strive to make good on other variables, such as press recognition, reputation, etc.

In the week-end, I had some time to think on whether it is good for agencies to focus on sexy cases.

The answer to this is unclear. On the one hand, sexy cases are likely to improve the taxpayer’s knowledge of competition policy, and disseminate the “culture of competition” accross society. In brief, sexy cases are good in terms of competition advocacy.

On the other hand, sexy cases nurture disinterest for competition policy. Let me explain. Sexy cases generate the perception that competition policy is public policy for the rich and wealthy. On complainants’ side, if you don’t have a complaint against a Google or a Microsoft, you feel you are unlikely ever to attract agency interest.  This, in turn, has a cost for society. Cases which are potentially serious, yet unsexy, will not be reported to the agency (a type II error). Similarly, on infringers’ side,  firms with little public exposure know that there are quasi-immune from prosecution if the enforcement system is focused on sexy cases. Thus, they have little incentives to comply with competition law (another type II error).

With this background, I still fail to figure out which of those two effects – knowledge v disinterest – dominates the other.

Yet, I intuitively believe it is good administrative policy for an agency like DG COMP to also run ‘small‘ abuse cases like Tomra or the recent ARA case.

I conclude with a thought, which just sprung to mind whilst writing this post: may agencies be sometimes tempted to hide sexy cases? I mean look: the CDS and Libor investigations or the Gazprom case make remarkably little noise in the news, despite their considerable interest for society at large.

Written by Nicolas Petit

23 July 2013 at 10:12 am

Posted in Uncategorized