ENHANCED ROLES OF PRIVATE ACTORS IN EU

BUSINESS REGULATION AND THE EROSION OF RHENISH CAPITALISM: THE CASE OF ANTITRUST ENFORCEMENT

Course: Business and European IntegrationBy: Aaron Pulido, Khozama Azzam, Yona Shay

Obtained her PhD titled “Competition for Competitiveness. The Politics of Transformation of the EU competition Regime.” at the University of Vrije.

Her current research focuses on analyzing the global economic crisis and the transnational political economy of the EU.

She is a specialist in competition regulation and financialisation processes from a critical perspective.

Research interests: Capitalist Crisis, critical global political economy approaches, European and global competition regulations.

Angela Wigger:

Obtained his PhD in political sciences at the University of Konstanz.

He worked as senior lecturer at the department of political sciences at the University of Vrije.

Today, he is a professor of international relations and political economy at the Goethe University in Frankfurt.

Research interests: political economy, European integration, International accounting standards, the European financial crisis and financialisation processes .

Andreas Nölke:

The Key Question:

“How can the implications of the pivotal change in the

Competition law enforcement be interpreted?”

Summary of the text: The increasing role of the private actors in business

regulations and the role of the EU as one of the driving forces towards more private enforcement.

The 2004 reform of EU antitrust enforcement as a case study.

Rhenish model Vs. the Anglo-Saxon model.

The Freiburg Ordo-liberal school Vs. Chicago school.

The model shift does not only affect the mode of regulation in the EU, but also the substance of regulations.

Three main actors benefit from the new system: The Commission, The legal profession and The interests shareholders.

The key findings: More importance is now given to short-term consumer

welfare consideration.

The business field has become more risky ( the risk of being sued, damage payments.. etc).

Not all the features of the Anglo-Saxon variety of capitalism are present, and they are not necessarily desirable in Europe, and this hybrid is more problematic because it gives the companies a playing field, thus they have to be aware of the of the markets in which they operate. (The reform is incomplete).

The positive implications are less sure and there are some further doubts on the official efficiency of this system.

The commission is always the driver of a process that is to the benefit of (US-based) professional service firms, US institutional investors and the Anglo-Saxon variety of capitalism.

Selected study case: The 2004 reform of EU antitrust enforcement: This reform was announced as the most radical legal

and cultural ‘modernization’ in the history of European competition policy.

The main burden of antitrust enforcement has now shifted to the private sector.

The reforms aimed at stimulating private enforcement in the form of civil antitrust disputes before the courts.

Companies are not only expected to ‘police’ themselves, but also their competitors, distributors and suppliers by bringing antitrust infringements to the courts.

“The variety of capitalism” approach: the Rheinish model VS the Anglo-Saxon model: Long term efficiency vs. short term efficiency.

Multiple-goal (SME protection and R&D collaboration) VS Single goal (price reduction for consumers).

Administrative control model VS Court model.

Enforcement by public authority VS Enforcement by private litigation.

The major shift in the mode of regulation (from public to private enforcement): The abolishment of the notification regime for

commercial agreements introduces a system of ex post control based on private self-assessment and more litigation opportunities for private plaintiffs.

In combination with the decentralization of the enforcement to the national level, private plaintiffs can start legal proceedings also before the national courts.

Thus, the new regime introduces greater reliance on private ‘market intelligence’ in spotting anticompetitive practices and less market supervision and intervention by public authorities.

The major shift in the substance of regulation (from Ordo-liberalism to Chicago School): In the EU, much more importance is now given to

short-term consumer welfare considerations, which underpin the application of a single measure for anticompetitive conduct.

The move away from the public multi-goal perspective is further reflected in the reformulation of the European test for concentration, the so-called ‘Dominance Test’.

The competition reform entails a shift away from the previous administrative and legalistic approach towards increased use of economic reasoning as a focal point for decision-making.

Main arguments:

Current changes in EU antitrust regulation cannot be ascribed to the efficiency pressures of economic globalization. Rather, they reflect a conscious attempt of the Commission to further harmonize antitrust matters within the Union.

The increasing role of private actors in business regulation is not limited to the issue of competition law enforcement alone.

Critical conclusions:

Even thought the authors gave us in several occasions the thought that they were against the reform, their position was still not clear enough.

The authors also did not gave enough examples of the situation regarding the completion law before the reform.

Class discussion:

Did you that private regulation of competition is the right step to do in this case, and if yes, it was private regulation necessary in other fields such as accounting and banking supervision?

Why the Commission drove this reform even though will “undermine the comparative advantages of the organized market economies within the Union”?

Bibliography:

Wigger, Angela/Nölke, Andreas: Enhanced Roles of Private Actors in EU Business Regulation and the Erosion of Rhenish Capitalism: The Case of Antitrust Enforcement, in: Journal of Common Market Studies 45 (2007) 2, 487-513.