Goals of Antitrust and Competition Law Revisited

by
CHRISTIAN KIRCHNER

Abstract
Goals of antitrust in t!e "nited States of Ameri#a !ave been dis#ussed for more t!an a #entury$ T!e dis#ussion on %oals of European #ompetition law !as fo#ussed on t!e relations!ip between t!e #ompetition %oal and t!e inte%ration %oal up to t!e turn of t!e #entury$ Today wit! t!e introdu#tion of t!e &more e#onomi# approa#!' into European #ompetition law a sort of #onver%en#e between %oals of antitrust and %oals of #ompetition law may be observed$ T!e paper en%a%es in a positive analysis of t!e pro#ess of definin% %oals of European #ompeti tion law by studyin% t!e law(ma)in% pro#ess in w!i#! su#! %oals are bein% defined$ *evelop ments in e#onomi# t!eory play a role in t!e law(ma)in% %ame as t!ey #!an%e t!e moves of a#tors of t!at %ame$ T!e paper will brin% forward a !ypot!esis t!at t!e European Commission is usin% t!e &more e#onomi# approa#!' as a devi#e for attainin% two %oals+ ,-. redu#in% fri#tions between "S antitrust and European #ompetition law/ ,0. stren%t!enin% its relative position vis( 1(vis t!e European Courts$ T!e se#ond part of t!at !ypot!esis will predi#t !ow t!e #ourts will a##ept and modify t!e &more e#onomi# approa#!'$

1 1.1 Preliminary Remarks

Introduction

T!e dis#ussion of &%oals of antitrust' !as been of pra#ti#al and intelle#tual relevan#e sin#e t!e first antitrust a#t of t!e "nited States of Ameri#a 2 t!e S!erman A#t 2 !as been passed$- In t!e European Community/ later t!e European "nion/ t!e %oals of #om( petition poli#y and #ompetition law !ave been a matter of dispute sin#e t!e early days of t!e European inte%ration pro#ess$0 T!e #!ara#teristi# feature of Community #ompetition law !as been/ t!at it served two %oals+ t!e #ompetition %oal and t!e inte%ration %oal$ 3!ereas t!e former is fo#ussin% on promotin% and prote#tin% #ompetition/ t!e latter stresses t!e impa#t of #ompetition and #ompetition law on t!e pro#ess of inte%ratin% formerly separated national mar)ets into one Sin%le European 4ar)et$ Today t!e fo#us of t!e European dis#ussion !as s!ifted towards t!e #ompetition %oal 5 and !as t!us been movin% #loser to %oals of "S antitrust law$ T!us a transfer of antitrust #on#epts and %oals to European #ompetition law !as been fa#ilitated$

0 5

Kir#!ner/ C!ristian ,0667./ Goals of Antitrust and Competition Law Revisited/ in+ T!e 4ore E#onomi# Approa#! to European Competition Law/ edited by *ieter S#!midt#!en/ 4a8 Albert/ Stefan 9oi%t/ Tuebin%en/ pp$: 2 0;$ <ones ,066;./ pp$ -7 ( 05= A#t of <uly0/ -7>6/ #!$ ?@:/ 0; Stat$ 06>/ )nown as &S!erman A#t'$ Kir#!ner ,066?a./ pp$ @6> ( @--$ E!lermannALaudati ,->>7.$

T!e perspe#tive of t!is paper will be a European one$ In t!e European "nion #ompeti( tion poli#y means appli#ation and enfor#ement of #ompetition law by t!e European Commission/ t!e European Courts ,and to a #ertain de%ree by national #ompetition aut!orities and national #ourts of 4ember States.$ T!us it ma)es sense to fo#us on %oals of Community #ompetition law rat!er t!an of #ompetition poli#y$ T!e present dis#ussion on revisitin% %oals of European #ompetition law may be seen as part of a world(wide trend into t!e dire#tion of an &e#onomi# approa#!'$@ In Europe t!is trend was first visible in Commission statements in t!e late ->>6s and early in t!e first de#ade of t!e new #entury under t!e name of &more e#onomi# approa#!'$? T!is ap( proa#! !as been first adopted in t!e revised 4er%er Re%ulation of 066@$ ; 4eanw!ile t!e e#onomi# approa#! !as rea#!ed t!e #ompetition law provisions of t!e EC Treaty ,Art$ 7- and 70 EC.$

1.2

Economic and Legal Approaches

To revisit &%oals of #ompetition law' is an e#onomi# topi# and a le%al topi# as well$ In e#onomi# t!eory #ompetition and #ompetition law are subBe#t matters of industrial or( %anisation$: Cut from a le%al perspe#tive %oals of E#onomi# #ompetition law are a sub( Be#t matter of law$7 E#onomi# and le%al approa#!es are stru#turally different$ E#onomi# approa#!es are often usin% formal models w!i#! are to demonstrate welfare effe#ts of different %oals of #ompetition law ,e$%$ ma8imisation of total welfare vs$ ma8imisation of #onsumer wel( fare. Le%al approa#!es may ( from a #onstitutional perspe#tive ( view %oals of #ompeti( tion law as sub(%oals$ T!ey !ave to be defined in a manner t!at t!ey best fit into t!e #onstitutional set of %oals$ To define %oals of #ompetition law be#omes an e8er#ise of law(ma)in% institutions/ su#! as t!e le%islature or law #ourts/ so far as t!ey %o beyond applyin% Community law but en%a%e in law(ma)in% via interpretin% t!e law$ Drom a normative perspe#tive e#onomi# approa#!es and le%al approa#!es differ in so far as ,mainstream. e#onomi# approa#!es stress welfare %oals and ultimately effi#ien#y/> w!ereas le%al approa#!es are fun#tional and fo#us on e#onomi# %oals of t!e European "nion and on &#onstitutional %oals' li)e &t!e rule of law'/ &le%al #ertainty' and &le%itima#y of law(ma)in%'$ Ce!ind t!e two approa#!es/ t!e e#onomi# and t!e le%al one/ stand different le%itimisation #on#epts$ 3!ereas ,main stream. e#onomists use a
@ ? ;

: 7 >

9oi%tAS#!midt ,066?./ pp$ ?5 2 --:$ See 4onti ,066-.= S#!midt#!en ,066;.$ Coun#il Re%ulation ,EC. No$ -5>A066@ of 06 <anuary on t!e #ontrol of #on#entration between underta)in%s/ in+ Effi#ial <ournal L 0@/ 0>A6-A066@/ pp$ - 2 00$ Cis!opA3al)er 0660= Hildebrand 0660$ 4oes#!el ->>-$ See t!e #riti#al evaluation of t!e C!i#a%o S#!ool of Antitrust Analysis by S#!midtARittaler ,->7>.$ 0

utilitarian #on#ept ,en!an#in% welfare./ le%al s#!olars leave t!e le%itimisation to t!e le%islature and #ourts$ 3!ereas t!e le%islature derives its le%itima#y from demo#rati# ele#tions/ law(ma)in% of law(#ourts rests upon a different le%itimisation #on#ept+ t!ey are t!e supposed to be t!e &mout! of t!e le%islature'$ "ltimately t!eir power is based on t!e #onstitution ,i$e$ t!e Treaties establis!in% t!e European Community and t!e European "nion.$ Drom an e#onomi# perspe#tive &revisitin% %oals of #ompetition law' means t!at new developments in e#onomi# t!eory are ta)en to be relevant fa#tors for re(definin% t!e normative %oals of #ompetition law$ Drom a le%al perspe#tive &revisitin% %oals of #om( petition law' means t!at law(ma)in% institutions see %ood reasons to re(define su#! %oals$ Ene fa#tor 2 amon%st ot!ers ( may be new e#onomi# insi%!ts$ T!us/ t!e e#o( nomi# and t!e le%al perspe#tive are #onne#ted$ Cut t!at is not to say/ t!at t!e le%al defi( nition of %oals of #ompetition law is bein% fully determined by e#onomi# reasonin%$ In order to study t!e pro#ess of revisitin% %oals of #ompetition law neit!er a purely e#o( nomi# approa#! nor a purely le%al approa#! would be appropriate$ 3!ereas le%al s#!ol( ars tend to ar%ue normatively and defend su#! %oals w!i#! are purportedly le%al ones/ -6 it mi%!t be !elpful to !ave a loo) into t!e interrelations!ip between t!e e#onomi# and t!e le%al approa#!es and to #on#entrate rat!er on a positive t!an a normative analysis$ Su#! type of analysis #ould add to t!e understandin% of !ow %oals of #ompetition law are bein% revisited and w!at are t!e relevant fa#tors in su#! a pro#ess$

1.3

Methodological Issues Means and Ends!Paradigm and "e# Institutional Eco! nomics

Ce#ause a dis#ussion of #ompetition law %oals #ombines aspe#ts of e#onomi#s wit! t!ose of law/ it is ne#essary to #larify t!e met!odolo%i#al approa#! in a way t!at bot! aspe#ts #an be brou%!t into play in one #ommon met!odolo%i#al framewor)$ T!ere are two possible solutions of t!is problem+ Ene may ta)e re#ourse to t!e means and endsparadigm and treat #ompetition low %oals as an instrument to pursue %oals on a meta( level$ Er one may treat le%al norms as institutions in t!e sense of t!e New Institutional Economics and study t!e pro#ess of definin% #ompetition law %oals by intera#tion be( tween different %roups of a#tors ,positive analysis.$ T!e means and ends(paradi%m-- plays a role in t!e study of e#onomi# poli#y and in Budi#ial law(ma)in%$ It t!us #ould !elp to brid%e t!e %ap between t!e e#onomi# and t!e le%al approa#!$ T!e relations!ip between t!e &%oals of #ompetition law' and %eneral %oals of e#onomi# poli#y in t!e means and ends(paradi%m is t!e followin% one+ Com( petition law is understood as an instrument to pursue %oals of e#onomi#s poli#y$ T!us t!e %oals of #ompetition poli#y !ave to be defined in a manner t!at t!ey serve t!e %en(
-6 --

Immen%a ,066;.$ Kir#!ner ,066;./ p$ 5-$ Streit ,066?./ p$ 0:6= 4ertensAKir#!nerAS#!anFe ,->70./ pp$ @;/ @:= Kir#!ner ,066;./ p$ 0;/ 5-$ 5

eral %oals of #ompetition law best$ T!is paradi%m plays a similar role in t!e t!eory of le%al interpretation/ w!en t!e so(#alled teleolo%i#al met!od of interpretation ,met!od of finality.-0 #omes into play/ w!i#! #an be understood as a devi#e of le%itimisin% law( ma)in% of law #ourts/ w!i#! try to find out !ow an obBe#tive le%islature would !ave solved t!e underlyin% problem of t!e %iven #ase$ T!is met!od pro#eeds in two steps+ ,-. Identify t!e %oals of t!e le%al norms to be interpretedG ,0. Sear#! for a solution w!i#! best fits t!ese %oals bestG T!e sear#! for t!e best fittin% solution is not!in% else t!an an optimisation pro#ess$ T!is is true for t!e appli#ation of t!e means and ends(paradi%m in e#onomi#s and in law$ If t!e means and ends(paradi%m does not meet serious met!odolo%i#al obBe#tions/ it would be possible to derive &%oals of #ompetition law' from a %iven set of meta(%oals$ T!e problem would t!us be moved to a !i%!er level$ It would !ave to be found out w!et!er or not e#onomists and le%al s#!olars #ould a%ree on #ommon meta(%oals in t!e field of e#onomi# poli#y and t!us in e#onomi# law$ T!is mi%!t be doubtful$-5 Cut in #ase serious met!odolo%i#al obBe#tions a%ainst t!e means and ends(paradi%m e8ist/ t!e issue of s!ared meta(%oals between e#onomists and le%al s#!olars #ould be set aside$ A new approa#!/ w!i#! #ould brid%e t!e %ap between t!e e#onomi# and t!e le%al approa#! !ave to found$ T!e means and ends(paradi%m is under !eavy met!odolo%i#al atta#)$-@ T!e determination of t!e proper meta(%oal #annot be derived from t!e means and ends(paradi%m as su#!$ 4eta(%oals may be derived from meta(%oals on !i%!er lev( els$ Cut t!at leads to an infinite re%ress$ In t!e end t!e determination of t!e definite meta(%oal is a8iomati#/ or a met!od !as to be found !ow to le%itimise t!e definite meta( %oal$ Cut even if t!is first problem !as been solved anot!er s!ort#omin% of t!e means and ends(paradi%m poses even bi%%er problems+ If instruments are bein% applied in order to a#!ieve a #ertain %oal/ t!ey may 2 and of do 2 produ#e unintended side(effe#ts$ If su#! side(effe#ts are not ta)en into a##ount t!e result #annot be an optimum$ If t!ey are ta)en into #onsideration t!is leads to ne#essary #!an%es of t!e %iven %oal$ T!us t!e means and ends(paradi%m is #ir#ular in itself$ As a #onseHuen#e it appears reasonable for t!is analysis not ta)e re#ourse to t!e means and ends(paradi%m but rat!er to en%a%e in a positive analysis of t!e pro#ess of definin% #ompetition law %oals$ &Goals of #ompetition law' are le%al rules on a meta(level$ Le%al rules may be viewed as &institutions' in t!e sense of New Institutional E#onomi#s$ -? T!is e#onomi# approa#! is studyin% t!e #reation and #!an%e of institutions/ as well as t!eir impa#t$ Traditional le( %al approa#!es 2 namely on t!e European #ontinent ( are not so mu#! interested in t!e law(ma)in% pro#ess$ T!e e8#eption is Budi#ial law(ma)in%/ w!ere t!e teleolo%i#al met!od of interpretation allows t!e Bud%e to determine !ow t!e obBe#tive le%islature
-0

-5 -@ -?

Cydlins)i ,->>-./ pp$ @5? 2 @?5= Kir#!ner ,066;./ p$ 0;= Ko#!ARuessmann ,->70./ pp$ 000 2 00:= RI!l ,066-./ pp$ ;66 2 ;65= Ruet!ers ,066?./ No$ :-: 2 :56$ Immen%a ,066;.$ Kir#!ner ,066;./ pp$ 5- 2 @7$ Ri#!terADurubotn ,0665./ p$ := 9oi%t ,0660./ pp$ 55 2 @-$ @

would !ave solved t!e problem of t!e %iven #ase$ Cut even if le%al s#!olars are inter( ested in a law(ma)in% pro#ess t!ey do not define t!e assumptions of t!eir analysis pre#isely$ Cut t!at is a ne#essary prereHuisite if a positive analysis is to produ#e testable results/ i$e$ !ypot!eses w!i#! #an be falsified$ T!e new institutional e#onomi#s(ap( proa#! may fill t!e e8istin% %ap t!us enablin% le%al s#!olars to better analyse a law( ma)in% pro#ess$ T!e new institutional e#onomi#s approa#! wor)s wit! a modified set of assumptions/ )nown as t!e e#onomi# paradi%m+ S#ar#ity of resour#es/ self(interested rational be!av( iour ,but bounded rationality./ systemati# in#omplete information/ positive transa#tion #osts and met!odolo%i#al individualism$-; 3!at is important for t!e )ind of analysis at sta)e !ere/ is t!at t!ese assumptions are bein% used for t!e analysis of t!e law(ma)in% pro#ess$ T!e result is a )ind of e#onomi# e8planation of t!at pro#ess$ If t!is is possible/ &%oals of #ompetition law' may be e8plained as a result from su#! pro#ess$ *evelop( ments in e#onomi# t!eory/ i$e$ industrial or%anisation/ are t!en fa#tors w!i#! !ave an impa#t on t!ose a#tors w!o are a#tive in t!e law(ma)in% pro#ess$ Su#! a positive analysis of t!e pro#ess in w!i#! %oals of #ompetition law are bein% de( fined !as to pro#eed in t!ree steps+ Dirst it !as to #larify t!e relations!ip between #om( petition/ #ompetition poli#y and #ompetition law in detail in order to better understand t!e pra#ti#al si%nifi#an#e of &%oals of #ompetition law' for t!e various a#tors$ In a se#( ond step t!e various a#tors w!o intera#t in t!e pro#ess of definin% %oals of #ompetition law !ave to be determined/ in order to analyse t!eir intera#tion$ Here t!e impa#t of de( velopments of industrial or%anisation t!eory #omes into play be#ause it #an be e8pe#ted t!at su#! #!an%es will !ave an impa#t on t!e intera#tion pro#ess$ T!e t!ird step will be t!e formulation of a !ypot!esis on w!et!er and !ow %oals of #ompetition law will be revisited$

1.$

%rganisation o& the paper

T!e paper starts wit! a distin#tion between t!e followin% t!ree levels+ ,-. #ompetition as a %ame/ ,0. #ompetition law as a set of rules of t!e %ame/ and ,5. law(ma)in% in t!e field of #ompetition law as a %ame on t!e level of rule(ma)in%$ Havin% made t!ese dis( tin#tions it !as to be #larified w!o are t!e relevant a#tors on t!e t!ird level+ T!e 4ember States/ t!e Coun#il and t!e Jarliament as le%islature of t!e European Community/ -: t!e European Commission as e8e#utive power and t!e European Courts as Budi#iary of t!e European Community$ Havin% introdu#ed t!ese a#tors t!e &more e#onomi# approa#!' as a relevant fa#tor for #!an%in% t!e %ame is bein% brou%!t into play$ It will be analysed of !ow t!e various a#tors are supposed to t!e introdu#tion of t!e &more e#onomi# approa#!' and w!i#! will be t!e e8pe#ted impa#t on &%oals of #ompetition law'$ In t!e
-; -:

Ri#!terADurubotn ,0665./ pp$ @ 2 ;/ ->5 2 ->@/ ??0= 9oi%t ,0660./ pp$ 0>/ 56$ T!e European Community/ one of t!e pillars of t!e European "nion/ is t!e law(ma)in% entity/ not t!e European "nion$ Its law is &European Community law' or &Community law'$ ?

end a !ypot!esis on e8pe#ted &revisited %oals of #ompetition law' will be formulated to%et!er wit! a plea better to study t!e pro#ess of revisitin% %oals of #ompetition law t!an e8pe#ted out#omes of t!at %ame$

2 'ompetition and 'ompetition La# 2.1 'ompetition

&Competition' may be understood as a #omple8 intera#tion between a#tors/ w!o are a#( tive on mar)ets ,on t!e supply or demand side. in order to en!an#e t!eir individual wel( fare$ Competition is a sort of %ame/ a rivalry between a#tors of one mar)et side$ -7 All players are bound by t!e rules of t!e %ame ,i$e$ t!e institutional framewor)./ w!i#! may be understood as a set of in#entives and #onstraints$ Essential parts of t!e institutional framewor) are for instan#e property ri%!ts/ freedom of #ontra#ts and its limits/ #ivil liability/ ban)rupt#y law/ forei%n trade law$ Rivalry means t!at ea#! player !as to #on( sider moves of ot!er players w!i#! may affe#t !is welfare situation$ All moves are in( #urrin% #osts ,transa#tion #osts.$ In order to be able to parti#ipate in t!e %ame ea#! player !as to ma)e predi#tions of !ow t!e intera#tion between t!e mar)et players wor)s ,positive analysis.$ Su#! predi#tions are falsifiable !ypot!eses in t!e sense of Jopper$ Su#! !ypot!eses depend on #ertain assumptions li)e s#ar#ity of resour#es/ availability and #ost of information/ and be!avioural assumptions li)e ,bounded. rationality and self(interested be!aviour$ As !as been e8plained in -$5 ,met!odolo%i#al issues. in#om( plete information/ bounded rationality and e8isten#e of transa#tion #osts are part of t!e set of assumptions of New Institutional E#onomi#s$ -> If t!ese assumptions are bein% introdu#ed #ompetition !as to be understood as an open learnin% pro#ess$ It is t!e %ame itself w!i#! produ#es t!e information for t!e players for t!eir ne8t moves$ T!is will be relevant w!en it #omes to t!e rules of t!e %ame$

2.2

'ompetition La#

Competition law is one #orner stone of #ompetition poli#y/ w!i#! may be understood as t!at part of e#onomi# poli#y w!i#! aims at promotin% and prote#tin% #ompetition$ Competition law is part of t!e institutional framewor) of #ompetition poli#y$ It is essential to note t!at #ompetition law is only part of t!e institutional framewor)$ T!e main pillars of t!at framewor) are property ri%!ts and freedom of #ontra#t$ Durt!ermore #ompetition poli#y is #ompetin% wit! ot!er poli#ies w!i#! may pursue #onfli#tin% ends/ e$%$ a%ri#ultural poli#y/ industrial poli#y/ environmental poli#y/ waste disposal poli#y$ 06

-7 -> 06

HomannASu#!ane) ,066?./ pp$ 06; 2 0-;$ Ri#!terADurubotn ,0665./ p$ ->5/ ->@= 9oi%t ,0660./ pp$ 0>/ 56$ See Kir#!ner ,066?b./ pp$ 76 2 70$ ;

Competition law is s!apin% t!e institutional framewor) of mar)ets to a #onsiderable de%ree$ It is definin% t!e limits of freedom of #ontra#t in order to )eep t!e intera#tion pro#ess open and to )eep t!e rivalry alive$ Cut 2 as !as been mentioned 2 #ompetition law intera#ts wit! ot!er fields of law$ T!e systemati# imperfe#tion and in#ompleteness of #ompetition poli#y and #ompetition law leads to t!e #on#lusion t!at solutions produ#ed by enfor#in% #ompetition law norms are not optimal solutions but rat!er se#ond best or t!ird best solutions$0-$

3 (he Rele)ant Actors It !as been mentioned t!at le%islature/ e8e#utive power and Budi#iary intera#t in t!e rule( ma)in% %ame w!i#! leads to a definition or re(definition of %oals of European #ompetition law$

3.1

Legislature Member *tates+ 'ouncil and European Parliament

Goals of #ompetition law may be defined on t!e level of primary Community law or on t!e level of secondary Community law$ T!e primary law level in our #ase is t!e Treaty establis!in% t!e European Community ,EC(Treaty.$ En t!e se#ondary level are re%ulations and dire#tives/ e$%$ t!e 4er%er Re%ulation$ 00 T!e distin#tion is ne#essary be#ause primary Community law is publi# international law$ T!e 4ember States 2 as soverei%n nation states 2 #an #!an%e or amend t!e EC( Treaty 2 only 2 by unanimous vote$ If t!ey want to amend Art$ 7- and Art$ 70 EC/ t!e main pillars of European #ompetition law/ t!ey !ave to find #onsensus between 0: 4ember States$ T!is means t!at 4ember States are relevant a#tors as part of t!e le%is( lative pro#ess but t!at t!e rules of t!e %ame in publi# international law are very infle8i( ble$ In t!e end t!is !as t!e #onseHuen#e t!at 4ember States are li)ely to prefer #!an%es on t!e se#ondary level$ C!an%es on t!e level of primary law are t!eoreti#ally possible but not feasible in pra#ti#e$ Le%islative law(ma)in% on t!e level of se#ondary Community law is a rat!er #omple8 matter$ 05 T!e Coun#il of 4inisters !as to intera#t wit! t!e European Jarliament$ T!e Coun#il of 4inisters traditionally is tryin% to re(#on#iliate #ompeten#es of t!e European "nion and t!ose of 4ember States$ Kuite often t!e Coun#il is defendin% #ompeten#es of 4ember States$ Cut in t!e field of European #ompetition law t!ere are no #om( peten#es of 4ember States$ National #ompetition law is only appli#able if a transa#tion
000

05

See S#!midt#!en ,066?./ pp$ -> 2 00/ Coun#il Re%ulation No -5>A066@ of 06 <an$ 066@ on t!e #ontrol of #on#entrations between underta)in%s ,EC 4er%er Re%ulation./ Effi#ial <ournal L 0@/ 0> <an$ 066@/ pp$ - 2 00$ Law(4a)in% in European Community law+ Kilian ,0665./ pp$ ?> 2 ;;$ :

!as no effe#t on t!e trade between 4ember States or in t!e #ase of mer%er #ontrol/ if a mer%er !as no European dimension$ Nevert!eless/ 4ember States are aware t!at revis( itin% %oals of European #ompetition law will automati#ally put pressure on national #ompetition law to move into t!e same dire#tion$ T!us 4ember States s!ould be in( #lined to refle#t t!e indire#t effe#ts of #!an%es in %oals of European #ompetition law$ T!e European Jarliament s!ould !ave a tenden#y to stren%t!en Community #ompe( ten#es vis(1(vis #ompeten#es of 4ember States in order to be#ome more influential$ Cut 2 as !as been mentioned 2 in #ase of European #ompetition law/ t!ere are no national #ompeten#es/ to be ta)en into a##ount$ T!e position of t!e European Jarliament vis(1( vis t!e European Commission is bein% affe#ted by erosion of t!e law(ma)in% power of t!e Jarliament/ w!en t!e Commission en%a%es more and more in t!e produ#tion of so( #alled %uidelines w!i#! do not !ave t!e Huality of law but w!i#! are relevant in de( #isions of European #ourts$ T!us t!e European Jarliament s!ould !ave an interest in su#! #!an%es of se#ondary Community law w!i#! restri#t t!e indire#t law(ma)in% power of t!e European Commission$ 3!en it #omes to potential fri#tions between t!e European "nion and t!e "nited States of Ameri#a/ t!e Jarliament s!ould be interested in redu#in% su#! fri#tions in order to %ive t!e European "nion more wei%!t in t!e inter( national power play$

3.2

E,ecuti)e Po#er European 'ommission

T!e European Commission !as a double(fun#tion+ As e8e#utive power it !as to enfor#e Community law$ In #ase of #ompetition law t!is #onstitutes an important aspe#t of #ompetition poli#y formulated and e8e#uted by t!e Commission$ En t!e ot!er !and t!e Commission is en%a%ed in law(ma)in%/ in so far it produ#es 2 t!e above(mentioned 2 %uidelines$ T!e position of t!e Commission vis(1(vis t!e European Courts at first si%!t is relatively wea) due to t!e ri%!t of Budi#ial review of Commission de#isions by t!e Courts$ T!us t!e Commission s!ould be interested in #!an%in% %oals of #ompetition law into t!e dire#tion of an e#onomi# rat!er t!an a le%al approa#!$ And it s!ould ma)e use of %uidelines/ offerin% orientation to t!e addressees of #ompetition law/ in bindin% t!e Courts to a##ept t!is sort of soft(law$ If t!e Commission su##eeds in definin% an e#onomi# approa#! to #ompetition law/ by #!an%es of se#ondary Community law ,in #o(operation wit! t!e Coun#il and t!e Jarliament. and by %uidelines/ it may redu#e t!e power of t!e Courts to more or less formal review of its de#isions in t!e field of #ompetition law$ In its position vis(1(vis "S antitrust aut!orities t!e Commission is e8pe#ted to stress #onver%en#e of antitrust %oals and #ompetition law %oals to avoid fri#tions of "S law and Community law/ t!us stren%t!enin% its own position vis(1(vis ot!er a#tors on t!e European level$

3.3

-udiciary European 'ourts

T!e European Courts / i$e$ t!e Court of Dirst Instan#e and t!e European Court of <usti#e/ are traditionally in a very stron% position vis(1(vis t!e ot!ers a#tors on t!e European level$ If t!e le%islature is not able to solve a problem/ t!e Courts may step in as Huasi( le%islature$ 3!at t!ey need is a met!od of le%al interpretation w!i#! enables t!em to define w!at an obBe#tive le%islature would !ave done in t!e #ase to be de#ided$ It is t!e teleolo%i#al met!od of interpretation w!i#! fits best into t!is pi#ture ,see -$5.$ T!e European Courts are in a very stron% position vis(1(vis t!e European Commission as a result of t!eir ri%!t of Budi#ial review$ Cut t!at ri%!t #ould be eroded/ if t!e le%al met!od of interpretation would be substituted by an e#onomi# met!od$

$ (he E,pected Impact o& the .actor /More Economic Approach0 on Re)isiting 1oals o& 'ompetition La# $.1 2istorical 3ackground

In t!e years after ->?: Art$ 7? and 7; of t!e Treaty Establis!in% t!e European E#o( nomi# Community0@ 2 now Art$ 7- und 70 of t!e Treaty Establis!in% t!e European Community0? ( !ave served different obBe#tives$ T!ey !ave been understood as a devi#e to serve t!e inte%ration %oal and t!e #ompetition %oal simultaneously$ 0; T!e #ompetition %oal !as been seen in t!e li%!t of t!eories on wor)able #ompetition$ T!e approa#! was t!at of le%al interpretation of %iven #ompetition law provisions$ T!e demo#rati# le%itima#y of t!e #ompetition aut!ority/ i$e$ t!e European Com( mission and namely its *ire#torate General &Competition' ,*G Competition./ was rat!er wea)$ In mer%er #ases t!e supervision by law #ourts ,European Court of <usti#e later on Boined by t!e Court of Dirst Instan#e. was rat!er stron%$ In international #ases 2 espe#ially in international mer%er #ontrol #ases ( a permanent #onfli#t wit! "S antitrust aut!orities over t!e appli#ation of "S antitrust law and European #ompetition law made t!e Commission realise t!e #on#eptual differen#es between "S antitrust law and Com( munity #ompetition law$ T!e 4er%er Re%ulation of ->7> itself was ambi%uous in re%ard of t!e #riteria for mer%er #ontrol$ Art$ 0 ,5. referred as well to t!e dominan#e #on#ept and t!e #on#ept of si%nifi#antly impedin% #ompetition$0: T!ese #on#eptual differen#es in#luded diver%ent %oals of bot! Burisdi#tions$ 3!ereas in "S antitrust law Se#$ : Clayton A#t !as indu#ed t!e Antitrust *ivision of t!e *epart( ment of <usti#e and t!e Dederal Trade Commission ,DTC. to apply e#onomi# do#trines
0@

0?

0; 0:

Treaty Establis!in% t!e European E#onomi# Community/ 0>7 "nited Nations Treaty Series ,"NTS. --/ as of 0?A65A->?:$ Treaty Establis!in% t!e European Community ,#onsolidated version./ E< C 50?/ pp$ 55 2 -7@ of 0@A-0A0660$ Kir#!ner ,->>7./ p$ ?-;$ Krimp!ove ,->>0./ pp$ 0:: 2 077$ >

for t!e solution of mer%er #ontrol #ases07 and develop t!e so(#alled substantially lessen #ompetition(test ,SLC(test./ t!e 4er%er Re%ulation of ->7> 0> was based on t!e #on#ept of &dominant mar)et position'/ w!i#! was open to interpretation of t!e European Court of <usti#e$56 T!e two different #on#epts 2 and indire#tly t!e two different definitions of %oals of mer%er #ontrol 2 turned out to be impediments for t!e !armonious #o(operation between "S(Ameri#an and European #ompetition aut!orities$ A Revision of t!e 4er%er Re%ulation appeared to be suitable way not only to miti%ate t!ese tensions but to ma)e mer%er #ontrol more effe#tive as well$ T!at revision too) pla#e in 066@ and produ#ed a new #on#ept 2 in#ludin% now %oals ( for t!e 4er%er Re%ulation$5- T!e introdu#tion of t!e si%nifi#ant impediment to effe#tive #ompetition( test ,SIEC(test. in Art$ 0 ,5. 4er%er Re%ulation was not only a step into t!e dire#tion of brin%in% European #ompetition poli#y in line wit! "S antitrust but #ould be interpreted as a #!an%e of paradi%m in European #ompetition poli#y from a le%al to an e#onomi# approa#!$ 3!ereas in t!e #ase of t!e 4er%er Re%ulation t!e le%islature brou%!t about t!e #on#ep( tual #!an%e t!is solution was not feasible in re%ard of Art$ 7- and 70 EC$ Joliti#ally it was evident t!at t!e ne#essary unanimity for amendments of t!e #ompetition law provi( sions of t!e EC(Treaty #ould not be or%anised$ 50 In order to introdu#e t!e &more e#o( nomi# approa#!' into t!e field of !oriFontal #o(operations and verti#al a%reements ,Art$ 7- EC. and abuse of dominant positions ,Art$ 70 EC. amendments of se#ondary Com( munity law and t!e promul%ation of le%ally not bindin% Guidelines of t!e European Commission !ad to be #!osen$ T!e maBor do#uments !ave been t!e Guidelines on !ori( Fontal #ooperation a%reements55/ t!e Guidelines on Art$ 7-,5. EC 5@ and Guidelines of !oriFontal mer%ers$5? In 066? t!e European Commission !as started t!e dis#ussion on
07

0> 56

5-

50

55

5@

5?

Se#$ : Clayton A#t reads+ LT!at no #orporation en%a%ed in #ommer#e s!all a#Huire/ dire#tly or indire#tly/ t!e w!ole or any part of t!e sto#) or ot!er s!are #apital of anot!er #orporation en%a%ed also in #ommer#e/ w!ere t!e effe#t of su#! a#Huisition may be to substantially lessen #ompetition between t!e #orporation w!ose sto#) is so a#Huired and t!e #orporation ma)in% t!e a#Huisition/ or to restrain su#! #ommer#e in any se#tion or #ommunity/ or tend to #reate a monopoly of any line of #ommer#e$M Sour#e+ -? "$S$C$ Se#tion -7 ,->77.= on t!at %round t!e Dederal Trade Commission !as issued t!e ->>5 HoriFontal 4er%er Guidelines ,wit! April 7/ ->>:/ Revisions to Se#tion @ on Effi#ien#ies.+ !ttp+AAwww$ft#$%ovAb#Ado#sA!oriFmer$!tm$ E< L 5>?/ p$ - as of 56A-0A->7>= #orri%endum E< L 0?:/ p$ -5 See Hildebrand ,0660./ pp$ @5 2 @7= t!e leadin% #ase is+ Hoffmann(La Ro#!e N Co$ AG v$ Commisson ,9itamins./ Case 7?A:; ,->:>. European Court Re#ords ,ECR./ nos$ 57 2 @- and @7$ Coun#il Re%ulation ,EC. No$ -5>A066@ of 06 <anuary 066@ on t!e #ontrol of #on#entration between underta)in%s/ in+ Effi#ial <ournal L 0@/ 0>A6-A066@/ pp$ - 2 00$ See t!e Conferen#e MEbBe#tives of Competition Joli#yO or%anised by Claus *ieter E!lermann and Laraine L$ Laudate in ->>: in Dloren#e/ w!i#! is do#umented in+ E!lermannALaudati ,->>7.$ Guidelines on t!e appli#ability of Art$ 7- of t!e EC Treaty to !oriFontal #ooperation a%reements/ in+ Effi#ial <ournal of t!e European Communities/ C 5/ 6;A6-A066-/ pp$ 0 2 56$ Communi#ation from t!e Commission$ Noti#e$ Guidelines on t!e appli#ation of Arti#le 7-,5. of t!e Treaty/ in+ Effi#ial <ournal C -6-/ 0:A6@A066@/ pp$ >: ( --7$ Guidelines on t!e assessment of !oriFontal mer%ers under t!e Coun#il Re%ulation on t!e #ontrol of #on#entrations between underta)in%s/ in+ Effi#ial <ournal of t!e European -6

t!e appli#ation of Arti#le 70 of t!e Treaty to e8#lusionary abuses/ 5; w!i#! is presumably leadin% to respe#tive %uidelines in t!is field as well$ T!e revised 4er%er Re%ulation to%et!er wit! t!e e8istin% and t!e e8pe#ted new %uidelines #ontain t!e #on#ept of t!e &new e#onomi# approa#!'5: In order to understand better t!e dis#ussion on %oals of #ompetition poli#y it is ne#es( sary to #learly separate t!is dis#ussion from t!e %eneral debate on a le%al or an e#o( nomi# approa#! of European #ompetition law$ In#reasin% t!e relative wei%!t of e#o( nomi# instruments and met!ods in t!e enfor#ement of European #ompetition law may serve various purposes and may be benefi#ial for a better fun#tionin% of #ompetition poli#y$57 Cut t!is does not automati#ally lead to t!e adoption of a new definition of %oals of #ompetition poli#y$ T!e fa#t t!at a #ertain e#onomi# tool 2 e$%$ t!e SIEC(test 2 may en!an#e %eneral welfare by better distin%uis!in% between !armful and non !armful mer%ers/ does not mean/ t!at #ompetition poli#y s!ould be %overned e8#lusively by #ertain welfare obBe#tives$ T!is distin#tion is important in t!e li%!t of reservations of le%al e8perts w!o are an8ious t!at a &more e#onomi# approa#!' would undermine pri( vate autonomy ,freedom of #ontra#t. and le%al #ertainty$ 5> If a new e#onomi# approa#! #an be used as one step in t!e pro#ess of enfor#in% #ompetition law t!is does not mean t!at aspe#ts of prote#tin% freedom of #ontra#t and le%al #ertainty s!ould be e8#luded be#ause of not bein% part of t!e welfare %oal$

$.2

(he E&&iciency 1oal in the 'onte,t o& the /More Economic Approach0 in the 244$ Merger Regulation

3!et!er or not and !ow t!e &more e#onomi# approa#!' will influen#e t!e %oals of European #ompetition law/ depends on t!e role/ t!e effi#ien#y %oal will play$ 3it! t!e stron% position of European Courts in t!e law(ma)in% %ame/ definin% #ompetition law %oals it will be de#isive/ w!et!er and !ow t!e effi#ien#y %oal will be a##epted and inte( %rated into t!e Burisdi#tion of t!e law #ourts$ It is not the effi#ien#y %oal as su#!$ Cut it will be important/ w!i#! effi#ien#y %oal will #!ara#terise t!e &more e#onomi# ap( proa#!'$ T!e traditional approa#! in European #ompetition poli#y is based on t!e enfor#ement of provisions of #ompetition law/ #ontained in t!e Treaty establis!in% t!e European Com( munity ,EC(Treaty. @6 and in t!e 4er%er Re%ulation$ @- T!ese le%al norms !ave to be
5; 5: 57 5> @6

@-

Communities/ C 5-/ 6?A60A066@/ pp$ ? 2 -7$ European Commission ,066?.$ S#!midt#!en ,066?./ pp$ > 2 -6$ S#!midt#!en ,066?./ pp$ 0; 2 56$ Immen%a ,066;.$ Consolidated 9ersion of t!e Treaty establis!in% t!e European Community+ E< C 50? of 0@A-0A0660$ Jre(066@ 4er%er Re%ulation+ Coun#il Re%ulation ,EEC. No @6;@A7> of 0- *e#ember ->7> on t!e #ontrol of #on#entrations between underta)in%s/ E< L 5>? of @6A-0A0>7>= 066@ 4er%er Re%ulation+ Coun#il Re%ulation ,EC. No$ -5>A066@ of 06 <anuary on t!e #ontrol of --

interpreted as well by t!e #ompetent #ompetition aut!ority ,European Commission and its *ire#torate General Competition. and t!e European law #ourts ,Court of Dirst In( stan#e and European Court of <usti#e.$ As !as been mentioned/ law #ourts !ave t!e final say$ 4a)in% use of t!e teleolo%i#al met!od of interpretation t!ey enBoy a #onsiderable de%ree of dis#retionary power in interpretin% t!e #ompetition provisions of EC(Treaty and t!e 4er%er Re%ulation$ T!e approa#! of enfor#in% le%al norms of #ompetition law interpreted by administrative bodies and law #ourts may be #!ara#terised as a &le%al approa#!' or even a &le%alisti# approa#!'$ T!is approa#! #ontains e#onomi# in%redients insofar as le%al terms of #ompetition law refer to e#onomi# p!enomena and #ompetition law is pursuin% e#o( nomi# %oals$ To w!at e8tent e#onomi# elements and le%al elements of su#! approa#! #ount/ depends on t!e le%islator and t!e law #ourts$ T!ey will ultimately de#ide w!i#! e#onomi# %oals will be internalised wit!in t!e le%al system$ Drom an e#onomi# point of view a le%al approa#! to #ompetition poli#y appears to be sub(optimal$ T!e appli#ation of #ompetition law s!ould not depend on le%al interpretation of le%al terms but on t!e effe#t of different problem solutions$ E#onomi#s s!ould favour an effe#ts(based approa#!/ w!i#! is #onseHuentialist in nature$ 3!ereas a#tors on t!e level of le%islative and Budi#ial law(ma)in% tend to internalise e#onomi# fa#tors into law(ma)in% t!e Commission as e8e#utive power s!ould rat!er favour a pure e#onomi# approa#!/ w!i#! is effe#t(based$ T!is would #ertainly stren%t!en t!e position of t!e Commission vis(1(vis t!e le%islative powers$ Cut one s!ould be #areful not to #onfuse t!is type of &e#onomi# approa#!' and the position of s#!olars of industrial or%anisation$ 3!ereas mainstream e#onomists would a%ree/ t!at a effe#ts(based approa#!/ w!i#! is #onseHuentialist/ would be t!e optimal solution to %uide appli#ation of #ompetition law/ neo(Austrian e#onomists and evolutionary e#onomists would be more #autious and stress t!e #omple8ity of t!e #ompetition pro#( ess in a world of systemati#ally in#omplete information$ @0 It !as not to de#ided w!i#! position is superior$ Cut it is of utmost importan#e w!i#! approa#! is more appealin% for t!e various a#tors w!o en%a%e in t!e law(ma)in% %ame/ definin% %oals of #ompeti( tion law$ T!e !ypot!esis w!i#! states a #lear priority of t!e European Commission for a #onse( Huentialist e#onomi# approa#!/ #an be supported by some fa#ts w!i#! s!ed li%!t on t!e position of t!e Commission$ Drom t!e late ->>6s to t!e present t!e Commission !as

@0

#on#entration between underta)in%s/ in+ Effi#ial <ournal L 0@/ 0>A6-A066@/ pp$ - 2 00$ Kerber ,0665.$ -0

#onstantly pursued t!e &more e#onomi# approa#!' in various %uidelines/ @5 t!e revised 4er%er Re%ulation of 066@ and in a re#ent dis#ussion paper on Art$ 70 EC$@@ It is interestin% to note t!at t!e &more e#onomi# approa#!' presented by t!e European Commission as part t!e endeavours to revise t!e 4er%er Re%ulation !as been under( stood as a devi#e to better defend t!e Commission de#isions a%ainst repeal by European #ourts$ T!e #ore of t!e &more e#onomi# approa#!' in t!e revision of t!e 4er%er Re%u( lation !as been t!e introdu#tion of t!e si%nifi#ant impediment to effe#tive #ompetition( test ,SIEC(test. in Art$ 0 ,5.$ T!us t!e European mer%er #ontrol moved #loser to "S( Ameri#an mer%er #ontrol/ w!i#! is applyin% t!e substantially lessenin% of #ompetition( test ,SLC(test.$ In t!e eyes of t!e Commission t!is eventually may lead to de#reasin% fri#tions between "S antitrust law and European #ompetition law in applyin% two different sets of le%al rules to identi#al mer%er #ases$ @? T!is more or less pra%mati# move w!i#! was meant to better differentiate between detrimental and non(detrimental mer%ers !as !ad a maBor met!odolo%i#al impli#ation$ 3!ereas t!e old approa#! !ad its fo#us on t!e e8isten#e of a dominant mar)et position/ w!i#! is a le%al term/ to be inter( preted by means of le%al interpretation/ t!e SIEC(test introdu#es instruments of e#o( nomi# t!eory into mer%er #ontrol$ T!e #onseHuen#e is/ t!at t!e Huestion on t!e merits of #learin% a mer%er or not !as to be answered in an e#onomi# #onte8t$ Hen#e t!e issue of effi#ien#y #onsiderations #omes into play$ T!us t!e "S(Ameri#an debate on antitrust law as a devi#e to brin% about effi#ien#y ,C!i#a%o approa#!. @; !as arrived in Europe$@: T!is arrival !as far(rea#!in% #onseHuen#es for %oals of #ompetition law$ 3!en it #omes to mer%er #ontrol an effe#ts(based approa#! !as to pro#eed in t!ree steps+ ,-. to determine w!i#! effe#ts are relevant/ ,0. to predi#t su#! relevant effe#ts/ #omparin% #learan#e or pro!ibition of t!e %iven mer%er and ,5. to evaluate t!e merits of t!e mer%er ,or its pro!ibition. in t!e li%!t of t!e %oals of t!e 4er%er Re%ulation$ It is evident t!at all t!ree steps are eHually important$ Do#ussin% Bust on t!e %oals of mer%er #ontrol would oversimplify t!e dis#ussion$ T!e role of determinin% t!e %oals of #ompetition poli#y is Bust one fa#tor$ If t!e relevant effe#ts are not #!osen #orre#tly/ t!e overall result will be defi#ient$ To #larify t!is statement it s!all first be assumed t!at t!e relevant effe#ts are determined in a way t!at only su#! effe#ts are in#luded w!i#! are easy to predi#t/ so t!at lon%(term effe#ts are bein% ne%le#ted/ t!e effi#ien#y test in step t!ree will be misleadin%$ 3!ereas su#! a #on#ept would simplify t!e tas) of t!e Com( mission it is !ard to predi#t w!et!er t!is #on#ept would be a##epted by t!e #ourts$ 4edium( or lon%(term effe#ts may be omitted be#ause of diffi#ulties to predi#t su#!
@5

@@ @? @; @:

Guidelines on t!e appli#ability of Art$ 7- of t!e EC Treaty to !oriFontal #ooperation a%reements/ in+ Effi#ial <ournal of t!e European Communities/ C 5/ 6;A6-A066-/ pp$ 0 2 56= Guidelines on t!e assessment of !oriFontal mer%ers under t!e Coun#il Re%ulation on t!e #ontrol of #on#entrations between underta)in%s/ in+ Effi#ial <ournal of t!e European Communities/ C 5-/ 6?A60A066@/ pp$ ? 2 -7$ European Commission ,066?.$ <ones ,066;.$ See 9oi%tAS#!midt ,066?./ pp$ -7 2 00 NevenARoeller ,066?.$ -5

effe#ts$ T!e approa#! would be stati# in nature$ T!e #ourts #ould ar%ue t!at it does not ta)e into a##ount dynami# fa#tors #orre#tly$ T!e more t!e #ourts insist on ta)in% into #onsideration effe#ts of a mer%er on innovation/ dynami# effe#ts and lon%(term effe#ts t!ey #an ar%ue t!at it is ne#essary to wei%! s!ort(term detrimental effe#ts and lon%(term benefi#ial effe#ts$ To balan#e pros and #ons of a mer%er would be a tas) of t!e #ourt w!i#! !as to apply t!e 4er%er Re%ulation/ w!i#! leaves wide dis#retion to interpreta( tion$ T!us/ even a #lear le%islative move/ to introdu#e a #onseHuentialist e#onomi# approa#! into European #ompetition law/ #ould not prevent #ourts from de#idin% !ow to wei%! t!e various fa#tors$ T!e same is true/ w!en it #omes to definin% t!e %oal of #ompetition law as &effi#ien#y'$ T!ere are various )inds of effi#ien#y/ stati# and dynami# effi#ien#y/ produ#tive and allo#ative effi#ien#y$ @7 Cut even if stati# allo#ative effi#ien#y s!ould be #!osen as t!e measurin% sti#) t!e Huestion !as to be answered w!et!er #onsumer surplus s!ould be ma8imised or total welfare$ T!ere are %ood e#onomi# ar%uments for ma8imisin% total welfare$ Cut law #ourts would not be impressed as lon% as t!e te8t of Art$ 0 ,-. 4er%er Re%ulation #learly adopts t!e #onsumer surplus position w!i#! is evident from t!e te8t$ It does not matter if e#onomists ar%ue/ t!at mar)ets s!ould wor) to t!e benefit of #on( sumers/ so t!at in t!e end it is #onsumer surplus w!i#! #ounts$ T!e de#isive ar%ument for #ourts is t!e lan%ua%e of t!e relevant le%al provision/ not e#onomi# wisdom$ It is true t!at t!e le%islature #ould amend Art$ 0 ,-. 4er%er Re%ulation and rat!er turn to t!e total welfare %oal$ Cut %iven t!e wea) demo#rati# le%itima#y of t!e le%islature in t!e European Community one s!ould rat!er not e8pe#t t!at t!e le%islative bodies will s)ip t!e #onsumer welfare %oal$ T!e potential ar%uments of law #ourts a%ainst t!e &more e#onomi# approa#!' in mer%er #ontrol may be tra#ed ba#) to fundamental met!odolo%i#al problems/ w!i#! %o beyond t!e relatively simple obBe#tion t!at t!e e#onomi# approa#! is not in#ludin% all relevant mer%er effe#ts$ T!e problem is one of !ow to deal wit! t!e fa#t t!at information is sys( temati#ally in#omplete and t!us #ompetition is an open learnin% pro#ess$ @> If t!is is true/ an effe#ts(based approa#! w!i#! does not ta)e into a##ount indire#t effe#ts/ effe#ts on in#entives for innovations and w!i#! is stati# in nature may #ome to misleadin% find( in%s$ T!is line of ar%uments may be used by a law #ourt in order not to reBe#t t!e &more e#onomi# approa#!' per se but rat!er to develop a differentiated strate%y w!i#! pro( #eeds as follows+ As a first step an effe#ts(based e#onomi# approa#!/ w!i#! loo)s into t!e effe#ts of a mer%er 2 #ompared to a situation wit!out mer%er 2 may be used in order to s!ed more li%!t on t!e effe#ts of a mer%er t!an t!e traditional approa#!$ Cut t!ereaf( ter a #ourt mi%!t find it ne#essary to ta)e furt!er #onsiderations into a##ount/ li)e t!e effe#ts of t!e mer%er on in#entives to innovate$ In terms of %oal(oriented dis#ussion one may start wit! a stati# effi#ien#y analysis but !as t!en to pro#eed to a dynami# effi(

@7 @>

Crodley ,->7:.$ Kerber ,0665./ pp$ 5-@ 2 5-;$ -@

#ien#y approa#!$ T!at se#ond step #ould allow to ta)e ot!er welfare aspe#ts into a#( #ount w!i#! are ne%le#ted in a simple SIEC(test$ T!ere is anot!er tri#)y effi#ien#y problem in mer%er #ases for law #ourts+ In mer%er #ontrol one of t!e potential relevant effe#ts of t!e mer%er #ontrol de#ision is !ow pro( du#tive effi#ien#y is ta)en into a##ount$ T!e issue of t!e so(#alled effi#ien#y defen#e !as been a matter of debate in "S antitrust law$ ?6 Given t!e de le%e lata(approa#! t!is issue is not of mu#! relevan#e for European Courts in t!e revised 4er%er Re%ulation$ ?T!ey easily #an put aside t!e effi#ien#y test in t!e li%!t of two fa#tors+ ,-. T!e under( ta)in%s #arry t!e burden of proof/ not t!e Commission$ ,0. T!e proof of improvement of produ#tive effi#ien#y will not #ount unless t!e #onsumers will benefit$

$.3 Art. 51 and 52 E' and the e&&iciency goal $.3.1 Re!interpretation o& Art. 51 637 E' T!e problem of Art$ 7- EC !as been its ambi%uity$ Art$ 7- ,-. seems to #ontain a solid per se(approa#! wit!out a rule of reason/ w!ereas Art$ 7- ,5. opens t!e door for rat!er soft #riteria for e8emption of anti(#ompetitive a%reements$ T!ese #riteria may be inter( preted in t!e li%!t of effi#ien#y %oals of European #ompetition law$ T!e &more e#o( nomi# approa#!' #ontains t!e proposal to interpret t!e #riteria of Art$ 7- ,5. EC in t!e li%!t of effi#ien#y %oals$ T!e Guidelines on !oriFontal a%reements ?0 are movin% into t!at dire#tion$ T!e dis#ussion is different from t!at on t!e 4er%er Re%ulation$ Cut t!ere are some #ommon issues #on#ernin% t!e effe#ts(based approa#! and t!e %oals to be pursued by #ompetition law$ A%ain it is ne#essary to determine ,-. w!i#! effe#ts are relevant/ ,0. to ma)e predi#tions #on#ernin% su#! effe#ts/ and ,5. to evaluate su#! effe#ts in t!e li%!t of t!e %oals of European #ompetition law$ T!e problem of t!e adeHuate welfare standard may be solved le%ally+ Art$ 7- ,5. refers to #onsumer welfare$ T!is is part of t!e bindin% institutional framewor)$ In a de le%e lata(dis#ussion it does not ma)e sense to Huestion t!e potential e#onomi# defi#ien#ies of su#! welfare standard$ A de le%e ferenda(dis#ussion is not a realisti# option/ be#ause it is !i%!ly unli)ely t!at Art$ 7- EC #an be #!an%ed under t!e rule of unanimity for amendin% t!e foundin% #ontra#ts of t!e European Community ,petrifi#ation effe#t.$

$.3.2 Application o& Art. 52 E'

?6 ??0

S#!midt#!en ,066?a./ p$ --= S#!walbe ,066?.= 3illiamson ,->;7.$ Effi#ien#y test in t!e revised 4er%er Re%ulation+ e$%$ S#!walbe .,066?.= C!ristiansen ,066;.$ Sour#e in fn$ @5$ -?

In t!e #ase of Art$ 70 EC t!e Commission is movin% into t!e dire#tion of t!e more e#onomi# approa#! by means of envisa%ed %uidelines as it !as done in t!e #ase of Art$ 7- EC$ It !as started wit! its 066? dis#ussion paper on t!e appli#ation of Arti#le 70 to e8#lusionary pra#ti#es$ ?5 Jarallel to t!e dis#ussion of t!e 4er%er Re%ulation it #an be demonstrated t!at a simple #onseHuentialist e#onomi# approa#!/ w!i#! #on#entrates on s!ort(term effe#t and ne( %le#ts lon%(term and dynami# effe#ts will not easily be a##epted by law #ourts$ T!e dif( ferentiated approa#! proposed in @$5 may solve t!e problems from a perspe#tive of law #ourts$

(he /more economic approach0 and the la#!making game

T!e a#tors w!i#! define t!e %oals of #ompetition law may be interested in revisitin% t!e %oals of #ompetition law in t!e li%!t of t!e &more e#onomi# approa#!'$ T!e &more e#onomi# approa#!' may be #onsidered a step forward in t!e development of e#onomi# t!eory w!i#! allows to better predi#tin% t!e out#omes of a mer%er$ It is possible t!at a#tors may #!an%e t!eir traditional position in t!e law(ma)in% %ame in li%!t of t!is new development$ T!is Huestion will be answered for t!e t!ree %roups of a#tors introdu#ed in #!apter 5$

?$-

4ember States/ Coun#il and European Jarliament

It !as been demonstrated t!at due to t!e unanimity rule t!e 4ember States are to e8pe#t to amend t!e #ompetition provisions in Art$ 7- und 70 EC$ New developments in industrial or%anisation t!eory t!us do not play a role for t!is %roup of a#tors$ T!e Coun#il and t!e European Jarliament !ave been a#tively respondin% to t!e &more e#onomi# approa#!' by amendin% t!e 4er%er Re%ulation in 066@$ T!ey !ave #ontributed to redu#in% t!e fri#tions between "S antitrust law and European #ompetition law wit!out %oin% beyond t!e introdu#tion of t!e SIEC(test$ T!ey did not %ive #lear %uidan#e to t!e European Courts of !ow apply t!is test/ e8#lusively or in a differentiated approa#!$ In t!e li%!t of t!e interest position of t!e Coun#il and t!e Jarliament it #annot be e8pe#ted t!at t!ey will #!an%e t!is position in t!e foreseeable future$

8.2

European 'ommission

?5

European Commission ,066?.$ -;

T!e European Commission !as in t!e past very a#tive in promotin% t!e &more e#onomi# approa#!' and supportin% t!is approa#! by a number of %uidelines$ It !as be#ome evi( dent t!at t!e Commission is pursuin% t!ree %oals simultaneously+ ,-. redu#in% fri#tions wit! t!e "S antitrust aut!orities/ ,0. to better defend its de#isions in mer%er #ases a%ainst repeal by t!e European Courts/ and ,5. to indire#tly bind t!e #ourts by %uide( lines$ It is #learly in t!e interest of t!e Commission to pro#eed in its endeavour to #om( bine t!e &more e#onomi# approa#!' wit! a #lear #onsumer welfare(oriented effi#ien#y %oal$

8.3

European 'ourts

If t!e strate%y of t!e European Commission is su##essful European Courts will be los( ers$ T!eir position will be t!reatened by t!e new indire#t law(ma)in% power of t!e Commission via %uidelines and by an effe#ts(based e#onomi# approa#! w!i#! will limit dis#retionary power of #ourts$ As !as been demonstrated t!e European Courts #an ma)e use of t!eir ri%!t of Budi#ial review of de#isions of t!e Commissions #ombined wit! t!e teleolo%i#al met!od of interpretation$ T!e le%islature !as not #learly defined %oals of European #ompetition law$ Even t!e revised 4er%er Re%ulation !as not done t!is$ T!us t!e #ourts !ave not lost t!eir dis#retionary power to define t!e ultimate %oals of #ompe( tition law$ Cut t!ey are #au%!t in a dilemma situation$ If t!ey defend le%al #ertainty t!ey will !ave to a##ept t!e new Commission %uidelines at least to a #ertain de%ree$ T!us t!ey will not be able openly to reBe#t t!e &more e#onomi# approa#!'$ A more promisin% strate%y will rat!er be to interpret t!at approa#!/ to differentiate t!e approa#!/ to intro( du#e additional effe#ts w!i#! !ave to be ta)en into a##ount$ T!en t!ey are free to wei%! various 2 and may be #ontradi#tory 2 effe#ts$ T!ey even #an introdu#e t!e standard le( %al ar%uments 2 li)e importan#e of &le%al #ertainty' 2 into t!e &more e#onomi# ap( proa#!' in order to modify t!at approa#!$ A de#rease of le%al #ertainty is #ostly$ A#tors ta)in% part in t!e #ompetition %ame !ave to invest into in#reasin% le%al #ertainty indi( vidually or t!ey !ave to #arry t!e #ost of loss of predi#tability$ If t!is is true &le%al #er( tainty' may be brou%!t into play by law #ourts$ T!ey would rat!er prefer a le%al ap( proa#! w!i#! is sub(optimal in terms of a simple effi#ien#y approa#! but w!i#! better produ#es predi#table results$

9 E,pected 1oals o& 'ompetition La# Con#ernin% t!e e8pe#ted %oals of #ompetition law in t!e European "nion t!e followin% !ypot!esis #an be formulated+ Goals of European #ompetition %oals will be revisited in t!e li%!t of t!e &more e#onomi# approa#!'$ T!e way t!is is bein% done is t!e out#ome of an intera#tion between t!e Commission and t!e European Courts$ T!e #ourts !ave t!e final say$ It is e8pe#ted t!at t!ey will be interested in modifyin% t!e effi#ien#y %oals of t!e &more e#onomi# approa#!' in a way w!i#! will minimise t!e redu#tion of t!eir dis(

-:

#retionary power$ T!ey will supposedly brin% into play lon%(term and dynami# effe#ts and &le%al #ertainty'$ T!e !ypot!esis s!ows t!at &%oals of #ompetition law' #an be defined as t!e e8pe#ted out#ome of an intera#tion between various a#tors$ Cut it mi%!t be more interestin% to study t!e intera#tion as su#! and to ma)e predi#tions on t!e ne8t moves of t!e parti#ipants of t!e %ame$ Dor t!e Commission it would ma)e sense to try to #!an%e t!e rules on law(ma)in%$ T!e law(ma)in% power of independent Commissions of t!e "nited States Con%ress 2 li)e t!e Dederal Trade Commission ,DTC. 2 mi%!t be an e8ample t!e European Commission would li)e to #opy$ Cut t!is would #learly undermine t!e power of t!e Coun#il and of t!e Jarliament$ Supposedly bot! a#tors would try to defend t!eir e8istin% position$ T!e intera#tion is very #ompli#ated be#ause t!e a#tors play on different level$ T!ey are en%a%ed simultaneously on t!e level of t!e %ame and of t!at of t!e rules of t!e %ame and t!e %ame of rule(ma)in%$ Jro%ress in e#onomi# t!eories is but one fa#tor w!i#! will influen#e t!e multi(level %ame$

Re&erences Cis!op/ Simon A 3al)er/ 4i)e ,0660./ T!e E#onomi#s of EC Competition Law+ Con#epts/ appli#ation and measurement/ London Crodley ,->7:./ T!e E#onomi# Goals of Antitrust+ Effi#ien#y/ Consumer 3elfare/ and Te#!nolo%i#al Jro%ress/ ;0 N$P$L$Rev$ -60? Cydlins)i/$ DranF ,->>-./ <uristis#!e 4et!odenle!re und Re#!tsbe%riff/ 0nd ed$/ 9ienna/ New Por) C!ristiansen/ Arndt ,066;./ *er Lmore e#onomi# approa#!M in der E"(Dusions)ontrolle 2 eine )ritis#!e 3Qrdi%un%/ dbresear#!/ wor)in% paper series/ resear#! notes 0E!lermann/ Claus *ieter A Laudati/ Laraine L$ ,->>7./ T!e EbBe#tives of Competition Joli#y/ European Competition Law Annual ->>:/ E8ford European Commission ,066?./ *G Competition dis#ussion paper on t!e appli#ation of Arti#le 70 of t!e Treaty to e8#lusionary abuses/ Crussels R!ttp+AAwww$europa$eu$intA#omm$A#ompetitionAantitrustAot!ersAdis#paper066?$pdf S Hildebrandt/ *oris ,0660./ T!e Role of E#onomi# Analysis in t!e EC Competition Rules/ 0nd ed$ T!e Ha%ueALondonANew Por)

-7

Homann/ KarlASu#!ane) Andreas ,066?./ Ee)onomi) 2 Eine Einfue!run%/ 0nd ed$/ Tuebin%en Immen%a/ "lri#! ,066;./ Kommentar+ *er Mmore e#onomi# approa#!O als 3ettbewerbspoliti)/ in+ 3irts#!aft und 3ettbewerb/ 9ol$ ?;/ @;5 <ones/ Clifford A$ ,066;./ Doundations of #ompetition poli#y in t!e E" and "SA+ #onfli#t/ #onver%en#e and beyond/ in+ "llri#!/ Hanns ,ed$./ T!e Evolution of European Competition Law$ 3!ose Re%ulation/ 3!i#! CompetitionT/ C!eltem!am/ "K A Nort!!ampton/ "SA/ pp$ -: 2 5: Kerber/ 3olfan% ,0665./ 3ettbewerbspoliti)/ in+ Cender/ *ieter et al$/ 9a!lens Kompendium der 3irts#!aftst!eorie und 3irts#!aftspoliti)/ 4uen#!en/ pp$ 0>: ( 5;Kilian/ 3olf%an%/ Europaeis#!es 3irts#!aftsre#!t/ 0nd ed$ 4uen#!en Kir#!ner/ C!ristian ,->>7./ Duture Competition Law/ in+ E!lermann/ Claus *ieter A Laudati/ Laraine L$/ T!e EbBe#tives of Competition Joli#y/ European Competition Law Annual ->>:/ E8ford/ pp$ ?-5 2 ?05 Kir#!ner/ C!ristian ,066@./ Competition poli#y vs$ Re%ulation+ administration vs$ <udi#iary/ in+ Neumann/ 4anfred A 3ei%and/ <uer%en ,eds$./ T!e International Handboo) of Competition/ C!elten!am/ "K A Nort!!ampton/ "SA/ pp$ 56; 2 506 Kir#!ner/ C!ristian ,066?a./ Europa als 3irts#!afts%emeins#!aft/ in+ S#!uppert/ Gunnar Dol)eAJerni#e/ In%olf$AHaltern/ "lri#! ,eds$./ Europawissens#!aft/ Caden(Caden/ pp$ 5:? 2 @0: Kir#!ner/ C!ristian ,066?b./ Jrivates 3ettbewerbsre#!t und Gemeinwo!lverwir)li#!un%/ in+ Kir#!!of/ Jaul ,ed$./ Gemeinwo!l und 3ettbewerb/ Heidelber%/ pp$ @? ( 75 Kir#!ner/ C!ristian ,066;./ Europaeis#!e 4et!odenle!re/ Grundla%en/ die oe)onomis#!e T!eorie/ in+ Riesen!uber/ Karl ,ed$./ Europaeis#!e 4et!odenle!re/ Grundfra%en der 4et!oden des Europaeis#!en Jrivatre#!ts/ Cerlin/ pp$ 05 2 @7 Ko#!/ Hans(<oa#!imARuessmann/ Helmut ,->70./ <uristis#!e Ce%ruendun%sle!re/ 4uen#!en Krimp!ove/ *ieter ,->>0./ Europaeis#!e Dusions)ontrolle/ Koeln et al$

->

4ertens/ Hans(<oa#!imAKir#!nerAC!ristianAS#!anFeAEri#! ,->:7. 3irts#!aftsre#!t/ Reinbe) 4oes#!el/ 3ern!ard ,->>-./ T!e Goals of Antitrust Revisited/ -@: <ournal of Institutional and T!eoreti#al E#onomi#s ,<ITE./ pp$ : 2 05 4onti/ 4ario ,066-./ Doreword/ UUUt! Report on Competition Joli#y 0666/ Crussels/ Lu8embour% Neven/ *amien <$ A Roeller/ Lars(Hendri) ,066;./ Consumer Surplus vs$ 3elfare Standard in a Joliti#al E#onomy 4odel of 4er%er Control/ in+ International <ournal of Industrial Er%anisation/ 9ol$ 05/ pp$ 70> ( 7@7 Ri#!ter/ Rudolf A Durubotn/ Eiri) ,0665./ Neue Institutionenoe)onomi)/ 5 rd ed$/ Tuebin%en Riesen!uber/ Karl ,ed$./ Europaeis#!e 4et!odenle!re/ Grundfra%en der 4et!oden des Europaeais#!en Jrivatre#!ts/ Cerlin Roe!l/ Klaus D$ ,066-./ All%emeine Re#!tsle!re 2 Ein Le!rbu#!/ 0nd ed$/ Koeln/ Cerlin/Conn/ 4uen#!en Rueters/ Cernd ,066?./ Re#!tst!eorie $ Ce%riff/ Geltun% und Anwendun% des Re#!ts/ 0nd ed$/ 4uen#!en S#!midt/ In%oARittaler/ <an C$ ,->7>./ A #riti#al evaluation of t!e C!i#a%o S#!ool of Antitrust Analysis/ *ordre#!t/ Coston/ London S#!midt#!en/ *ieter ,066?./ EffiFienF als Leitbild der 3ettbewerbspoliti)+ DQr einen Mmore e#onoi# approa#!O/ in+ Eberender/ Jeter ,ed$./ EffiFienF und 3ettbewerb/ Cerlin/ pp$> 2 @S#!midt#!en/ *ieter ,066;./Omore e#onomi# approa#!O in der 3ettbewerbspoliti)/ in+ 3irts#!aft und 3ettbewerb/ 9ol$ ?;/ pp$ ; 2 -: S#!walbe/ "lri#! ,066?./ *ie Cerue#)si#!ti%un% von EffiFienF%ewinnen in der Dusions)ontrolle 2 Ee)onomis#!e Aspe)te/ in+ Eberender/ Jeter ,ed$./ EffiFienF und 3ettbewerb/ Cerlin/ pp$ ;5 2 >@ Streit/ 4anfred ,066?./ T!eorie der 3irts#!aftspoliti)/ ;t! ed$/ *uesseldorf 9oi%t/ Stefan ,0660./ Institutionenoe)onomi)/ 4uen#!en

06

9oi%t/ Stefan A S#!midt/ AndrV ,066?./ 4a)in% European 4er%er Joli#y 4ore Jredi#table/ *ordre#!t 3illiamson/ Eliver E$ ,->;7./ E#onomi#s as an antitrust defen#e+ T!e welfare trade( offs/ in+ Ameri#an E#onomi# Review/ 9ol$ ?7/ pp$ -7 2 5;

0-