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Transatlantic Competition Policy: Domestic and International Sources of EU-US Cooperation

Transatlantic Competition Policy: Domestic and International Sources of EU-US Cooperation. Chad Damro University of Edinburgh United Kingdom. RESEARCH QUESTION. Why did the EU and US create a formal framework for cooperation in competition policy?. THEORY. R. Putnam and H. Milner

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Transatlantic Competition Policy: Domestic and International Sources of EU-US Cooperation

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  1. TransatlanticCompetition Policy:Domestic and International Sources of EU-US Cooperation Chad Damro University of Edinburgh United Kingdom

  2. RESEARCH QUESTION Why did the EU and US create a formal framework for cooperation in competition policy?

  3. THEORY • R. Putnam and H. Milner • Focus on COGs • No role for regulators in negotiation of cooperation • I saw regulators as playing a big role • Domestic politics were clearly important • So, what is to be done? • Explore… • Structural independent variable(s) that explains the cooperation? • Intervening variable(s) that explains variation on that cooperation?

  4. VARIABLES • Dependent Variable: EU-US creation of a formal framework for cooperation in competition policy • Ind. Var.: Econ Internationalisation (EI) • Intervening Variable: Domestic Politics

  5. INDEPENDENT VARIABLE • Economic Internationalization (EI) • Changes in IPE changed behavior of firms • Multiple figures/measures • Firms began merging across borders and becoming subject to multiple separate national competition laws • Could lead to conflicting regulatory decisions on whether to approve a merger

  6. INTERVENING VARIABLE • Domestic politics • Regulators wanted to avoid such conflicting decisions. • Politicians get involved in such decisions… • Regulators want to avoid such interventions • Clearly I had a case of regulator-politician relations! • Explained with Principal-Agent Model (PAM) • Regulators sought international regulatory cooperation—increases in info exchanges—to reduce likelihood of political intervention • Regulators began negotiating info exchanges • Regulators were acting as COGs

  7. CASE STUDY • 1991 EU-US Bilateral Competition Agreement • Regulators negotiated under discretionary authority • France (Spain and Netherlands) intervened and brought case to ECJ • Major case: Without doing so, Commission would have acquired de facto authority to negotiate cooperative agreements in all policy areas!!!! • France won • Renegotiation resulted in EU competition regulators conforming to newly established political control mechanism

  8. CONCLUSIONS I • Theoretical KEYS: • Regulator and politician preferences differ • Regulators remain constrained by domestic institutions • Regulators pursue cooperation via their discretionary authority • Regulators play important role in explaining why int’l cooperative framework is largely discretionary and created by non-treaty int’l agreement.

  9. CONCLUSIONS II • EI is structural cause of EU-US cooperation, the precise effect of which is accounted for by intervening variable (domestic politics), which is simplified w/ PAM • PAM can reveal some dynamics of domestic politics that help to explain IR • We need more studies of cooperation based on non-treaty international agreements

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