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Archive for July 28th, 2017

Some thoughts on Cyril Ritter’s ‘Corporate funding for antitrust academics can be a problem’

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As promised, I am back with some thoughts on Cyril Ritter’s recent post on corporate funding of academic research in antitrust. I will point out, to begin with, that the contribution is most welcome. I would like academics to discuss the issue of corporate-funded research as openly and courageously as Wouter Wils discussed the issue of prosecutorial bias in his magisterial 2004 piece on the combination of functions within the Commission.

I do not have major disagreements with Cyril. What is more, he makes some important points with which I agree wholeheartedly. I just have some comments here and there. This is arguably inevitable, as his was a short blog post, not a dissertation.

‘Corporate funding changes the tone of academic discourse’

Cyril argues that corporate-funded research can have the effect of moving the efforts of academics away from basic research and towards the discussion of case-specific issues or concerns.

I agree with Cyril that there is not enough research on fundamental questions and there is certainly too much of an overflow of articles discussing individual cases or discrete sub-sets of cases. And I am ready to concede that corporate funds may exacerbate this trend – whether it is the main cause of the phenomenon is a different question.

I have long seen the trend with concern and will lead by example. If anyone among our readers is considering a PhD: forget about pay-for delay or SEPs. Think about a dissertation on fundamental, horizontal issues that will stand the test of time!

Even if I agree with the above, a reader of Cyril’s post may get the impression that corporate-funded articles are always one-sided advocacy tracts. It would not have hurt to clarify in the post that this is not necessarily the case. Corporate-funded research can be as rigorous in style and substance as research funded via tuition fees and/or the public purse. Again, the example of Toulouse is one that comes to mind.

The ‘subtle’ and ‘insidious’ effects of corporate-funded research

Cyril points out that corporate-funded research may have effects that go beyond the funding of a specific piece. The same effects may be expected of consulting relationships entertained by academics. As a result of these ‘subtle’ and ‘insidious’ effects, academic work may be biased in favour of the interests of the firms funding the research or consulting work.

For the most part, I fully agree. Cyril describes phenomena that have already been identified in the relevant literature, and it is important to engage with them.

As an academic, I am far less persuaded by one of the risks he identifies, however. According to Cyril, academics may be reluctant to change their minds and contradict the viewpoints already expressed in corporate-funded work.

People who are reluctant to change their mind in public belong with druids and preachers, not with academics. The whole point of research as an intellectual exercise is to advance knowledge. Advancing knowledge involves, by definition, refining prior positions and occasionally abandoning them altogether.

I would say more: the harder one thinks about an issue, the more likely a change of mind becomes. A giant like Keynes was famous for the fluidity of his positions. ‘When events change, I change my mind. What do you do?’, Paul Samuelson said, when a journalist pointed to inconsistencies in the successive editions of his legendary textbook about the desirable rate of inflation.

I can also think of some giants in our field. When the latest edition of Whish & Bailey’s textbook came out, I noted in the blog that the position in relation to exclusivity agreements under Article 102 TFEU had evolved. If you read my blog post, you will not be able to find the slightest hint of criticism about this change of mind. On the contrary, I celebrated it as evidence suggesting that ours is a discipline in constant flux.[1]

I understand that the above may not be obvious to non-academics. This fact may explain, for instance, why many in the EU competition law community entertain bizarre ideas about the ordoliberals. Some view ordoliberalism as some sort of cult in which a fixed set of fossilised ideas are worshipped. Nothing could be further from the truth. Ordoliberals disagreed among themselves at discrete points in time, and their views have evolved over the years, as Peter Behrens and Heike Schweitzer have brilliantly explained.[2]

Collective action and corporate funding: what about capture?

Even though Cyril acknowledges that the issue is more complex in practice, a reader may conclude from his piece that corporate-funded research typically, or as a rule, advocates positions opposed to those of competition authorities. Corporations would be in the anti-intervention camp, and public authorities in the pro-intervention camp. As a result, corporate-funded research may create a climate that is hostile to action by competition authorities, thereby harming the public interest.

However (and Cyril points this out at the beginning of his piece), it is not unusual to see corporations siding with public authorities in the pro-intervention camp. By the same token, there is no shortage of corporate funds for research advocating action by competition agencies. Suffice it to think of patent hold-up and the many companies that have funded pieces explaining why it is a real problem requiring some form of intervention.

If one takes this factor into consideration, the issues discussed by Cyril could be developed further. Instead of creating a climate contrary to intervention, corporate-funded research may very well lead to unwarranted action. Why? Companies in the pro-intervention camp may be able to exploit to their advantage the cognitive biases that Wouter Wils masterfully described in the abovementioned piece.

The risk of agency capture by ‘purchasers’ of regulatory intervention is well identified in the literature. It is also known that what is in the interest of companies advocating intervention is not necessarily in the interest of competition and consumers – in fact, it often has the effect of harming both competition and consumers. As Cyril rightly explains, powerful special interests can organise themselves better than larger groups, such as end-users.

There are other factors that may actually enhance the prominence of pro-intervention views. As a reader pointed out in their reaction to Cyril’s post, proactive enforcement is ultimately in the interest of practising competition lawyers. In addition, pro-intervention views may be more popular in academic circles than views advocating restraint and/or arguing that there is nothing new under the sun. I was sharing this impression last month over coffee with a senior academic.

These quibbles aside, Cyril should be congratulated for enriching the debate and taking it to another level. Thanks so much!

[1] One should note, in addition, that Richard worked as a law firm partner for a number of years. This is an example suggesting that the risk identified by Cyril may not materialise in practice, or that the phenomenon may be less pervasive than he appeared to suggest in his post.

[2] I am proud to disclose that Heike was my PhD supervisor in Florence and that I was Peter’s assistant in Bruges.

Written by Pablo Ibanez Colomo

28 July 2017 at 8:50 am

Posted in Uncategorized