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Economics, uncertainty, rule-making and judicial review lessons from EU will competition law

Explore the economic aspects of EU competition law, the impact on innovation, and the role of judicial review in rule-making. Discuss implications of a narrow focus, hindering innovation, and the debate between rule-based and principle-based approaches.

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Economics, uncertainty, rule-making and judicial review lessons from EU will competition law

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  1. Moscow - April 2015 A.Gerbrandy@uu.nl Economics, uncertainty, rule-making and judicial reviewlessons from EU will competition law

  2. Topics • European competition law is economic law • Implications: • narrow focus • judicial review of economics • hindering innovation • Rule-based versus principle-based? • Final remarks

  3. 1. EU competition law is economic law • legal rules are based on (micro-)economics • legal standards governing behavior of companies • innovation has a place according to standards in these legal provisions • e.g. in merger control • e.g. in cartel cases, exception

  4. 2. Implications: a) foundations and scope • Foundations: which values 'count' in competition law • currently: consumer-welfare paradigm • result: no non-economic values taken into account • therefore • Non-economic innovation is not taken into account, • Such as public-value innovation (or sustainability) • Criticism • on narrow focus of competition law decisions in light of current global problems.

  5. 2. Implications: b) judicial review • Problems of economics in judicial review • difficult, knowledge problem • truth of future facts (prospective analysis, uncertainty) • economists disagree • Solutions • enhance knowledge • reduce uncertainty to minimum • apply procedural tests • give margin of appreciation • Criticism merger-control and innovation: • no rigorous economic analysis, allowed by the courts

  6. 2. Implications: c) law is hindering innovation • Application of competition law hinders innovation: • Ties up resources • New entrants or new technology will resolve a market-power problem • E.g: Microsoft case • Application of regulatory law hinders innovation: • Rules are not technology neutral • Do not take into account innovation • High compliance costs • E.g.: Deutsche Telekom asking for ‘regulatory holiday’

  7. 2. Result of implications • Competition law is rule-based, leading to: • 'technical' debate, not about values • complex, specialist knowledge • still criticized by economists for not being economic enough • non-democratic decision-making of powerful agencies, with danger of lax judicial review • but sometimes great impact on society • Application may hinder innovation

  8. 3. rule-based vs priniciple based? • Is 'extra-informational' decision-making possible? • Principle-based • precautionary principle (ex ante) • innovation principle (ex ante) • [liability principle (ex post)] • Or: • Principles as ‘back-up’ option?

  9. 4. Final remarks • Economics as basis of law is good, more ‘real’ effect based application • But: leads to problems • Difficult to find a way out, but maybe learn from principles from other areas of law

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