Dialectical Antitrust: An Alternative Insight into the Methodology of the EC Competition Law Analysis

The main idea behind this article was to perform a theoretical analysis of the purposes and tools of antitrust policy and law. An ancient dialectical method has been applied to separate different components of competition policy with the following deconstruction of the conflicting essence of those elements without inevitable evening-out the distinctions between them. Dialectical approach to antitrust demonstrates why competition deserves to be explored independently from other legitimate economic goals and that the primary purpose of competition law logically is protection (via preventive antitrust, i.e. arts 101-106 TFEU) and promotion (via proactive antitrust, i.e. sector-specific regulation) of competition. Dialectical antitrust does not deny that consumer welfare constitutes a meta-goal of modern competition policy. Indeed in the hierarchy of economic values consumer welfare remains decisive, but methodologically it is neither exhausted nor entirely embraced by competition law, which exists in order to regulate competition. Antitrust theory has striven for a long time to reconcile the apparent dilemma between the aspiration to protect the freedom of undertakings to benefit from their successful competition on one hand, and the freedom of their less successful counterparts to participate in this competition on the other; to provide for firms liberal environment on the one hand and to fine-tune their behaviour in order to establish legal predictability and economic efficiency on the other; to protect competition on the one hand and maximise common benefits for society on the other. Essentially, those three crucial dimensions of the competition dilemma can be solved within the framework of dialectical antitrust, which on the level of methodology proposes to utilitise those conflicts by placing their different components into separate parentheses

Rediscovering the Spirit of Competition: On the Normative Value of the Competitive Process

The paper develops its core argument in 12 sections structured in three parts: I Positive analysis; II Normative proposal; and III Operationalisation. Section B illustrates the traditional justification for the utilitarian perception of competition and analyses its main weaknesses. Section C explores conceptual differences and underlines the fundamental similarities of the two major deontological antitrust schools (Austrian and Ordoliberal). Section D provides some conceptual argumentation for the treatment of competition as a constitutional value. Section E introduces the theoretical framework of value pluralism which reconciles the conflicts between constitutional values. The methodology of value pluralism is applied in order to balance the value of competition with the interests of welfare. Section F opens the second part of the paper. It explores competition as the essence of liberal democracy, claiming that the economic aspects of competition together with its political (elections) and cultural (free speech) elements constitute the core of democratic governance. Accordingly, these values should be protected as a matter of evolutionary choice of society without any utility-based verification. Section G conceptualises the ‘Oroboros dilemma’ of self-destructive freedom and democracy, which is described in the domain of competition by Robert Bork as the ‘antitrust paradox: a policy at war with itself ’. Section H continues the comparative analysis of competition. It explores regulatory practices developed for the protection of free elections (political competition) and free speech (cultural competition) on one hand and economic competition on the other. It reveals the main methodological error of antitrust, which prevents immunisation of some anticompetitive practices from sanctions on non-utilitarian grounds. This section concludes that, unlike its political and cultural counterparts, economic competition is gradually transforming into a purely instrumental consequentialist policy which corresponds neither to the semantics nor even to the syntax of the term ‘competition’. The logic of such transformation is a direct consequence of the above-mentioned methodological inconsistency between economic competition on one hand and the political and cultural aspects of competition on the other. Section I develops the argument that in certain situations anticompetitive agreements are immunised from antitrust sanctions provided that they simultaneously promote competition more than they distort it. This possibility exists in the regulation of the political and cultural aspects of competition, but it is missing in the economic context. The current structure of Article 101(3) of the Treaty on the Functioning of the European Union (TFEU) does not envisage this option. Therefore in practice courts tend to develop indirect ways of granting immunity to undertakings which cannot conform to the rigid utilitarian requirements of Article 101(3) TFEU. While acceptable, this solution is far from optimal. For this reason the section proposes a conceptual amendment of Article 101 TFEU. This proposal is designed as a contribution to the academic debate on the role of the competitive process in antitrust rather than as a direct call for changes in primary European law. Section J clarifies that the proposed deontological benchmark for competition does not diminish the importance of utilitarian values since the proposal merely extends the current regulatory framework without substituting any of its existing parts. The application of the amended Article 101 (3) TFEU would still be based upon the discretion of the decision-maker. The will of the decision-maker (be it the Commission, national authorities or courts) constitutes the central part of this section. It analyses the balancing techniques, developed by the legal and constitutional theories and implements them into the area of antitrust. Section K continues the analysis of the balancing act, dealing specifically with the technique of separation of different values. It proposes a two-step methodology of balancing. The first one is purely value-centric. It artificially isolates each value from all others in order to undertake their independent analysis which helps to understand the internal essence of each value separately. The second consecutive step recontextualises previously isolated values into the main regulatory agenda. This section demonstrates that the present-day regulatory status of competition does not enable it to be in the par-in-parem relationships with other values, because all balancing acts are performed as a one-step analysis: each value is only balanced against the others at the external level, where the one with the higher importance always prevails. This section is designed to provide the operational justification for the normative proposal developed in Section I. The last section summarises the main findings of the paper

Economic Freedom as Political Virtue: An Insight from the Perspective of Value Pluralism

This paper considers the market process as the essence and intrinsic core of liberal democracy. It disentangles market means from welfare ends and recognises the importance, constitutional status and independent stand of the former. Freedom is placed in the same categories as rights. Each constitutional right is protected not because it is efficient, useful or self-executable. On the contrary, rights are protected as a matter of evolutionary choice, as a matter of public principle, as an ethical rather than a practical value.Economic freedom usually leads to success. Its successfulness however sometimes transforms into its biggest enemy. Economic prosperity is a category which can find supporters more rapidly than the notion of economic freedom does. Therefore the latter is often perceived as a means to reach former. The main argument of this paper is that freedom itself loses its internal legitimacy if it is constantly subordinated to the tangible outcomes which it can eventually generate. Freedom can generate welfare, indeed, but welfare maximisation is neither an unconditional nor a quintessential feature of freedom. Freedom must be perceived as a driving force for entrepreneurial discovery, and a prerequisite to democracy, rather than as a mere component of the economic success. Freedom cannot be seen as purely rational, predictable and calculable

Can We Protect Competition without Protecting Consumers?

This paper suggests that an interpretation of competition solely as a means to increase consumer welfare eliminates substantial characteristics from competition as a process, depriving competition from its original meaning. It is misleading to define competition by evaluating its external role on the economy. This role is important only from the perspective of performance. From the ontological view however it is irrelevant. Some forms of competition are good or beneficial others are considered as harmful or undesirable, but in both cases we talk about different features of the same phenomenon. The idea that ‘competition has to bring positive outcomes for economy, otherwise it is not competition’ is logically incorrect. It is impossible to qualify the essence of object only by exploring its external effects. The paper concludes that competition itself deserves its protection even in circumstances when it does not lead to efficiency gains. In this respect competition can be seen as a ‘luxury product’ of market-oriented societies, which is not indispensable for achieving such values as industrial growth, market integration, social coherency, consumer welfare or innovations

Does Competition Matter? An Attempt of Analytical Unbundling of Competition from Consumer Welfare

This paper is an attempt to evaluate the conceptual relationship between two central elements of the theory of antitrust: competition and consumer welfare. These two notions are analysed in their mutual dependency. The main purpose of this paper is to show that both competition and consumer welfare are economic values of fundamental importance with no ex ante hierarchical dominance of consumer welfare over competition. In case of conflict, priority might be given to either of these values depending on the context of the assessment. As can be understood from the very etymology of the term, competition is a notion which encompasses a process, more than a result. The notion of consumer welfare, on the other hand, is result-oriented. If we are interested in the outcomes that can be generated by competition only, then the very process of rivalry between undertakings would be seen as unnecessary or, at least, not indispensable. If, however, we consider that competition (seen as a process) is important for the societal paradigm of economic development, then the outcomes generated by this process are not the only reason for the rivalry between undertakings to exist. Methodologically, the latter approach appears to be more consistent with the idea of liberal democracy

How the Theory of Dialectical Antitrust Perceives the Role of Competition Authorities

Competition policy and law play a pivotal role in the development of the European market process. This role, however, becomes subject to revision in the time of recession. Historically each period of economic downturn is accompanied by severe critique and substantial limitation of the principles of free market with undistorted competition. Crisis cartels and similar otherwise restrictive practices often become not only tolerated but even encouraged by the regulators.This compromise is seen as an inevitable trade-off between competition and other legitimate societal goals, such as industrial growth, social stability, total welfare and sometimes even national security. On the other hand, each regulatory ‘turbulence’, which is caused by the revision of the role of competition within the markets, can be also seen as a fruitful time for introducing new elements to the competition policy itself and testing new theories of competition. Dialectical antitrust is one of these theories.This article explores the role of competition authorities in the period of economic crisis applying methodological apparatus of the theory of dialectical antitrust

Putting the Genie Back in the Bottle - or Adapting to the New Reality? Response to the CMA's 'Online Platforms and Digital Advertising' Market Study Interim Report

Online platforms grow exponentially. Unexpectedly for most, they have reached the top of the world rankings of the companies with highest market capitalisation. Today they keep demonstrating an unprecedented dynamic of further expansion, increasing vertically and horizontally, entering new geographic and product markets, synchronising, synergising and cross-fertilising their data, algorithms and user experiences. Like King Midas, everything they touch, they turn into gold, instantly creating added value for their customers and shareholders. The fuel that keeps the engine on, is big data: collecting –> categorising –> profiling –> synchronising –> predicting ¬–> targeting –> recommending –> satisfying –> and thereby being able to collect more: this is how the perpetual business cycle of Bentham’s digital panopticon and (again Bentham’s) digital ‘happiness machine’ functions. Being by its very nature rather sluggish and inert, the mainstream perception of online platforms was until recently deeply embedded in an outdated narrative of garage-entrepreneurship, egalitarianism, liberal-democratic altruistic evangelism, helping humankind to bid a final farewell to authoritarianism, obscurantism and propaganda by eliminating borders and multiplying possibilities for everyone. It is only the recent turbulence caused by fake news and the post-truth society, epitomised in the CambridgeAnalytica scandal, that has triggered a reconsideration within mainstream societal opinion as to the multifaceted role of online platforms. UK/EU law and policy try to take a lead in these processes of reconceptualisation. They aim inter alia to regulate the uncontrolled growth of online platforms in order (i) to protect competition and consumers, but also implicitly (ii) to mitigate the ever-expanding gap between the UK/EU on one hand and the US and China on the other, catching up the time and momentum that was lost in the decade of digital naivety. As the Interim report explains, both online search- and online display advertising markets are highly oligopolised with Google for the former and Facebook & Google for the latter not only holding significant shares of the markets (referred to in the Interim Report as ‘platforms with ‘Strategic Market Status’ (SMS)) but also demonstrating a continuous, incontestable dynamic of further increase. Such well-known and widely discussed principles of the business of digital advertising as (i) network effects, (ii) the power of big data, (iii) the winner-takes-most and (iv) competition for the market convincingly show that the trend is stable, and the current incumbents will continue strengthening their dominance. The inevitability of such universally observed systemic features of the digital economy as network effects and winner-takes-most also raise a more fundamental question: is it even possible to expect any meaningful and stable form of effective competition from the markets that demonstrate these characteristics as inherent, or would it not perhaps be a more realistic option to design the regulatory framework in a way that would internalise it from ‘bug to feature’, treating platforms with SMS as natural monopolies / de facto standard setters / public utilities / undertakings providing services of general economic interest or as common carriers? Putting it less controversially: would it not make more sense to perceive both approaches as non-conflicting and mutually supportive? Measures taken to protect the competitive process and consumer interests also help to set expectations for higher accountability from platforms with SMS. And vice versa, imposing stricter regulatory requirements on the platforms with SMS would also provide their competitors (and consumers) with a better chance of competing (and consuming) from a specific platform on the merits. The scope of the market study, and the overall legitimacy mandate of the CMA, requires it to focus on the issues related to the interests of consumers and competition. However, this does not mean that the broader spectrum of remedies, related to shaping the regulatory landscape in ways which would create room for newcomers by making the incumbents more fiscally accountable, should be beyond consideration. Both approaches constitute the subject matter of competition policy sensu lato, particularly given that the most plausible outcome of the market study will take the form of a recommendation to the government

(Why) Did EU net neutrality rules overshoot the mark? Internet, disruptive innovation and EU competition law & policy

This article raises a number of theses in support for a more liberalised approach to EU Net Neutrality rules. It offers a graded system of levels of regulatory intervention, arguing that soft Net Neutrality rules are capable of meeting all positive objectives of regulation without causing the problems generated by hard Net Neutrality rules, such as those currently in place in the EU. Hard Net Neutrality rules prevent Internet Service Providers (ISPs) from making disruptive innovations. Meanwhile, they enable some Content and Application Providers (CAPs) to monopolise many markets via (disruptive) innovations, resulting in newly established dominant positions which have, in many instances, been abused. The hypothesis of the essay is that loosening the rules on Net Neutrality would create competition between ISPs and CAPs as well as (which is even more important) between different CAPs for limited premium speed traffic. Such newly established competition could remedy some antitrust conundrums faced by EU competition enforcers and sectorial regulators vis-à-vis disruptive innovators in the area of electronic communications. Resume Cet article soulève un certain nombre de thèses en faveur d’une approche plus libéralisée aux règles de l’UE concernant la neutralité du Net. Il offre un système progressif de niveaux d’intervention réglementaire, affirmant que des règles non contraignantes de la neutralité du Net sont en mesure de répondre à tous les objectifs positifs de la réglementation sans causer les problèmes engendrés par les règles contraignantes, telles que celles actuellement en vigueur dans l’UE. Les règles contraignantes de la neutralité du Net empêchent les fournisseurs de services Internet de développer des innovations perturbatrices. Dans le même temps, ils permettent à certains fournisseurs de contenus et d’applications de monopoliser nombreux marchés via des innovations (perturbatrices), donnant ainsi lieu à des nouvelles positions dominantes, qui ont souvent fait l’objet d’abus. L’hypothèse de l’article est que desserrant les règles sur la neutralité du Net créerait la concurrence entre les fournisseurs de services Internet et les fournisseurs des contenus et d’applications, ainsi que (ce qui est encore plus important) entre les différents fournisseurs des contenus et d’applications pour le trafic de vitesse limitée premium. Cette concurrence nouvellement établie pourrait remédier à certains problèmes de concurrence soulevés par les autorités de la concurrence de l’UE et les régulateurs sectoriels vis-à-vis des innovateurs perturbateurs dans le domaine des communications électroniques

The Dialectics of Competition Law: Sketching the Ordo-Austrian Approach to Antitrust

This paper explores the qualitative (deontological) approaches to the phenomenon of economic competition, synthesizing the Ordoliberal and the Austrian perceptions of antitrust economics, policy and law. It critically addresses the main normative motto of the contemporary antitrust, embedded in the ethos of consumer/total welfare, as well as the methodological reduction of competition policy to the empirical analysis. Not contesting the paramount role of economics in the realm of antitrust, it demonstrates why the phenomenon of competition cannot be narrowed down to its welfare-generating function. By comparing the regulatory mechanisms of the competitive process in the real economy and sports it depicts some potential methodological analogies, between the two realms

On the political nature of competition law : interview with Oles Andriychuk

One of Oles’s latest research is questioning the political nature of competition law – a topic at the same time challenging yet a little provocative in this period of competition law turbulence. However, it goes without saying that there is a real need to address the subject: the link between law and politics is so obvious that we would be blind not to approach it. Law is political, and one speaks well about legislative and jurisprudential policies. However, we often like to believe competition law could have escaped this political aspect, thanks to the rationality of the economic science and the legal formalism on which its enforcement relies. Plus, it is commonly acknowledged that it necessary for competition law to be politically neutral as market regulation crystallizes political cleavages and thus implies, as a body of law, a duty of independence in the judgement process. In his work, Oles provides for a brilliant and critical analysis of the relationship between competition law and politics, questioning the assumption that today competition law is still neutral