Competition Policy with Optimally Differentiated Rules Instead of "Per se Rules vs. Rule of Reason"

Abstract: Both in US antitrust and EU competition policy a development to a broader appli-cation of rule of reason instead of per se rules can be observed. In the European discussion the attempt to base competition policy on a "more economic approach" is mainly viewed as im-proving the economic analysis in the assessment of specific cases. In this paper it is shown from a general law and economics perspective that the application of rules instead of focus-sing on case-by-case analyses can have many advantages (less regulation costs, rent seeking and knowledge problems), although an additional differentiation of rules through a deeper assessment can also have advantages in regard to the reduction of decision errors of type I and II. After introducing the notion of a continuum of more or less differentiated rules, we show - based upon law and economics literature upon the optimal complexity of rules - in a simple model that a competition rule is optimally differentiated, if the marginal reduction of the sum of error costs (as the marginal benefit of differentiation) equals the marginal costs of differen-tiation. This model also allows for a more detailed analysis of the most important determi-nants of the optimal degree of rule-differentia¬tion. From this law and economics perspective, competition policy should consist mainly of (more or less differentiated) rules and should only rarely rely on case-by-case analysis. Therefore the main task of a "more economic ap-proach" is to use economics for the formulation of appropriate competition rules.Competition Policy, European Competition Law, Rule of Reason

An Optional European Contract Law Code: Advantages and Disadvantages

Should the EU introduce an Optional European Contract Law Code and what should it look like? By applying economic theories of federalism and regulatory competition (legal federalism), it is shown why an Optional Code would be a very suitable legal instrument within a two-level European System of Contract Laws. By allowing private parties choice of law to a certain extent, it can combine the most important advantages of centralisation and decentralisation of competences for legal rules. Through differentiated analyses of three kinds of contract law rules (mandatory substantive rules, mandatory information rules and facilitative law), important conclusions can be reached: which kinds of contract law rules are most suitable to be applied on an optional basis (e.g. facilitative law) and which might be less so (e.g. information regulations). Furthermore a number of additional general conclusions about the design and scope of an Optional EU Code and some conclusions in regard to sales law are derived.contract law, European Union, legal federalism, regulatory competition

An International Multi-Level System of Competition Laws: Federalism in Antitrust

Since the 1990s, an intensive discussion on the necessity and the potential design of international competition policy has developed. As a preliminary result, some general tendencies can be observed: Many states (including the U.S. and the EU) and most antitrust experts hold the opinion that the traditional system of national competition laws (including their extra-territorial application) is not sufficient for the protection of competition in the new millennium. Therefore, some kind of international arrangement in regard to competition rules seems to be necessary. The introduction of substantive international competition rules with an international competition authority and a corresponding court (in analogy to the supranational European competition law) is not seen as feasible and/or desirable. Thus the solution should not be sought in centralised global competition rules but be based primarily upon national competition laws and authorities. Consequently, the main thrust of the discussion has shifted from the idea of a larger harmonisation and convergence of national competition laws to the problem of better international enforcement of these laws. Although bilateral cooperation between national competition authorities have become an increasingly important issue, bilateral cooperation agreements are considered only a first step to a more preferable multilateral (or plurilateral) solution (e.g. within the WTO). Generally, the path to international competition rules is seen as a pragmatic, step-by-step approach, which can achieve its aim only in the long run. The currently favoured informal network approach, which remains without commitment and emphasizes primarily the gathering, discussion and exchange of information between national competition authorities, is in line with such a pragmatic approach to the incremental evolution of international competition rules. How can we describe the present situation from a global perspective? We have a multitude of national competition laws and enforcement agencies (competition authorities, courts) with more or less different substantive and procedural rules. Different competition laws and enforcement agencies can also exist within a (kind of) federal system, as to some degree within the U.S. and to a larger extent within the EU, where European competition rules and national competition laws coexist on two different levels. Since the competencies of these competition laws and enforcement agencies overlap, many external effects and conflicts can emerge. Up to now we cannot reasonably argue that this complex structure of competition laws forms an integrated system for protecting competition in international markets. The establishment of international competition rules (as well as the less ambitious international network approach), which on one side should help to solve the problems of the current situation, can, on the other side, increase the complexity of the system, because an additional vertical regulatory level in regard to competition rules would be introduced – including new potential conflicts of competencies. But what are the long-term perspectives of this situation? What can an international system for protecting competition look like in the long run? Two basic perspectives can be outlined: One perspective is that such a pragmatic approach, which fosters the discussion between different countries and their competition authorities, eventually will lead to a uniform global competition law or – at least – to a quasi-harmonisation of national competition laws. If the differences between the competition laws disappeared, many of the current problems would vanish. From this perspective, the current situation with many different competition laws on two or three different levels does constitute only an intermediate phase, which in the long run would be replaced by one quasiuniform set of global competition rules. Another perspective proceeds from the more sceptical assumption that it will not be possible for all countries to agree on one uniform set of competition rules, even in the long run. There will always be different objectives of competition laws and different theories about what competition is and what rules are necessary for the protection of competition. Therefore, the coexistence of different competition laws should be seen as a permanent feature of an international system of competition laws, implying that substantial decentralisation and variety will remain a major characteristic of such an international system, also in the long run. This paper will focus on the second perspective, which can be characterised as an evolutionary one: The objectives of competition policy in different countries might change and remain different; competition theories mightevolve through academic progress; the rules for the protection of competition might have to change due to new anticompetitive business practices or new technology (such as the Internet). From this evolutionary perspective, it is crucial that an international system for the protection of competition should also include the long-term capability of adapting quickly to new competition problems, particularly by fostering legal innovations for improving the protection of competition. One important argument for a more decentralised international system of competition laws will be that decentralisation will increase the capability of the system for innovation and learning in regard to the development of effective legal rules for the protection of competition. But what can a workable international system with different competition laws and enforcement agencies on different levels, i.e., a decentralised international system of competition laws, look like? This paper can only present some considerations about this problem. But its goal is to outline an analytical framework, which can be used for designing a workable multi-level system of competition laws. The main idea is that we should apply economic theories about federalism and the advantages and disadvantages of centralisation and decentralisation to develop arguments about the appropriate institutional structure of an international multi-level system of competition laws. The theories that are used in this paper are the economic theory of federalism, the attempts to apply the concept of federalism to legal rules as well (legal federalism), and the theories of interjurisdictional and regulatory competition. The paper is structured as follows. In section II it is shown that the present situation can be interpreted as being already rather close to a kind of threelevel system of competition laws and that many current issues in European and international competition policy can be interpreted as discussions about problems of the horizontal and vertical delimitation of competencies within such a three-level system. In the main section III an analytical framework concerning the potential advantages and disadvantages of centralisation and decentralisation of competition policy will be developed on the basis of economic theories of federalism and regulatory competition. This will include a (still incomplete) set of criteria for regulatory federalism in competition law. Some conclusions for reconstructing international competition policy as a multi-level system of competition laws are presented in section IV.

EU Competition Policy, Vertical Restraints, and Innovation: An Analysis from an Evolutionary Perspective

The EU competition policy in regard to vertical restraints is mainly based upon neoclassical efficiency-oriented reasonings, leading to a neglect of the innovation dimension. This paper analyses to what extent evolutionary theories of competition and innovation economics can be used to derive additional, new criteria for the assessment of vertical restraints. It is shown that Neo- Schumpeterian and Hayekian approaches to competition and innovation economics as well as knowledge-based theories of the firm are capable to provide a basis for a different framework for analysing the impact of vertical agreements. Specific evolutionary arguments, such as subjective and local knowledge, the heterogeneity of knowledge bases of firms, communication and learning problems, and the complementarity of knowledge (systemic innovations) can be used for deriving additional, new assessment criteria for vertical restraints. The analysis is made against the background of the most recent reforms of EU competition rules in regard to vertical restraints. It also shows how evolutionary approaches to competition and innovation might be used for competition policy.European competition policy, vertical restraints, evolutionary economics, innovation economics.

Towards a Differentiated Analysis of Competition of Competition Laws

Can "competition of competition laws" be a feasible concept that should play an important role in an international order for the worldwide protection of competition? We introduce four different types of regulatory competition that allow for a more differentiated analysis of beneficial and deficient effects of competition of competition laws. Our analysis shows that most types of regulatory competition have a rather limited scope for application to competition laws. However, yardstick competition can be very promising and represents a powerful argument against centralisation. An important result of our analysis is that the institutional framework of any competition of competition laws plays a crucial role for its workability.

Internationale Wettbewerbspolitik aus ökonomischer Perspektive

Die Globalisierung der Märkte und des Wettbewerbs sowie die damit einhergehenden Herausforderungen für die nationalstaatliche Wirtschaftspolitik werden seit einer Reihe von Jahren in der Wissenschaft wie in Politik und Gesellschaft intensiv diskutiert. Als Triebkräfte des ökonomischen Internationalisierungsprozesses werden üblicherweise die Erfolge in der Handelsliberalisierung (insbesondere im Kontext von GATT und WTO), die in den letzten Dekaden fortschreitende Deregulierung der Volkswirtschaften (inklusive der nahezu weltweiten Implementation marktwirtschaftlicher Wirtschaftsordnungen) sowie wesentliche Innovationen in der Transport- und Kommunikationstechnologie identifiziert. Es ist dabei zu betonen, dass die Internationalisierung der Märkte und des Wettbewerbs grundsätzlich die Wettbewerbsintensität auf den meisten Märkten erhöht und damit bestehende nationale Wettbewerbsbeschränkungen und Marktverkrustungen neuen Wettbewerbskräften ausgesetzt werden

Optimal Sequential Investigation Rules in Competition Law

Although both in US antitrust and European competition law there is a clear evolution to a much broader application of "rule of reason" (instead of per-se rules), there is also an increasing awareness of the problems of a case-by-case approach. The "error costs approach" (minimizing the sum of welfare costs of decision errors and administrative costs) allows not only to decide between these two extremes, but also to design optimally differentiated rules (with an optimal depth of investigation) as intermediate solutions between simple per-se rules and a fullscale rule of reason. In this paper we present a decision-theoretic model that can be used as an instrument for deriving optimal rules for a sequential investigation process in competition law. Such a sequential investigation can be interpreted as a step-by-step sorting process into ever smaller subclasses of cases that help to discriminate better between pro- and anticompetitive cases. We analyze both the problem of optimal stopping of the investigation and optimal sequencing of the assessment criteria in an investigation. To illustrate, we show how a more differentiated rule on resale price maintenance could be derived after the rejection of its per-se prohibition by the US Supreme Court in the "Leegin" case 2007.Law Enforcement, Decision-Making, Competition Law, Antitrust Law

Study of the atmospheric conditions at Cerro Armazones using astronomical data

Aims: We studied the precipitable water vapour (PWV) content near Cerro Armazones and discuss the potential use of our technique of modelling the telluric absorbtion lines for the investigation of other molecular layers. The site is designated for the European Extremely Large Telescope (E-ELT) and the nearby planned site for the Cherenkov Telescope Array (CTA). Methods: Spectroscopic data from the Bochum Echelle Spectroscopic Observer (BESO) instrument were investigated by using line-by-line radiative transfer model (LBLRTM) radiative transfer models for the Earths atmosphere with the telluric absorption correction tool molecfit. All observations from the archive in the period from December 2008 to the end of 2014 were investigated. The dataset completely covers the El Nino event registered in the period 2009-2010. Models of the 3D Global Data Assimilation System (GDAS) were used for further comparison. Moreover, for those days with coincidence of data from a similar study with VLT/X-shooter and microwave radiometer LHATPRO data at Cerro Paranal, a direct comparison is presented. Results: This analysis shows that the site has systematically lower PWV values, even after accounting for the decrease in PWV expected from the higher altitude of the site with respect to Cerro Paranal, using the average atmosphere found with radiosondes. We found that GDAS data are not a suitable method for predicting of local atmospheric conditions - they usually systematically overestimate the PWV values. Due to the large sample, we were furthermore able to characterize the site with respect to symmetry across the sky and variation with the years and within the seasons. This kind of technique of studying the atmospheric conditions is shown to be a promising step into a possible monitoring equipment for CTA.Comment: Accepted for publication in Astronomy and Astrophysics, 7 pages, 9 figure