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Deal or No Deal? Consensual Arrangements as an Instrument of European Competition Policy

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  • Oliver Budzinski

    ()
    (Ilmenau University of Technology, University of Southern Denmark)

  • Björn A. Kuchinke

    ()
    (Bauhaus-University of Weimar)

Abstract

Roughly during the last decade, European Competition Policy has undergone a series of fundamental changes. All four areas – cartel policy, merger policy, abuse control, and state aid control – have been subject to a modernization process, which led to a focus on analysing the effects of individual cases and established a tendency towards deciding each case on its individual merits. These changes can be understood as a move away from rule-based competition policy towards a case-by-case approach. The case-by-case approach especially includes consensual arrangements, so-called ‘deals’ between the competition authority and business companies. Therefore, this paper will discuss the pros and cons of ‘deals’ as an instrument of (European) competition policy. The paper’s central focus lies on the economic analysis of the advantages and disadvantages of using consensual arrangements as a relevant instrument of European competition policy. With respect to European competition policy, we conclude that we need to issue a note of caution. From an economic perspective, an expansion of consensual elements necessarily walks hand in hand with a continual weakening of the protection of competition. Consumer welfare will not benefit from expanding the role and importance of consensual arrangements as a means of European competition policy.

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Bibliographic Info

Article provided by Lucius & Lucius in its journal Review of Economics.

Volume (Year): 63 (2012)
Issue (Month): 3 ()
Pages: 265-292

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Handle: RePEc:lus:reveco:v:63:y:2012:i:3:p:265-292

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  1. Shapiro, Carl & Farrell, Joseph, 2008. "Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt35c5f846, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  2. Perloff, Jeffrey M & Rubinfeld, Daniel L & Ruud, Paul, 1996. "Antitrust Settlements and Trial Outcomes," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 401-09, August.
  3. Oliver Budzinski, 2009. "An international multilevel competition policy system," International Economics and Economic Policy, Springer, Springer, vol. 6(4), pages 367-389, December.
  4. Oliver Budzinski & Isabel Ruhmer, 2008. "Merger Simulation in Competition Policy: A Survey," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 200807, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  5. Oliver Budzinski, 2011. "Impact Evaluation of Merger Decisions," Working Papers, University of Southern Denmark, Department of Environmental and Business Economics 112/11, University of Southern Denmark, Department of Environmental and Business Economics.
  6. Oliver Budzinski & Gisela Aigner & Arndt Christiansen, 2006. "The Analysis of Coordinated Effects in EU Merger Control: Where do we stand after Sony/BMG and Impala?," Marburg Working Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 200614, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  7. Stephen Breyer, 2009. "Economic Reasoning and Judicial Review," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 119(535), pages F123-F135, 02.
  8. Oliver Budzinski, 2010. "An Institutional Analysis of the Enforcement Problems in Merger Control," Working Papers, University of Southern Denmark, Department of Environmental and Business Economics 101/10, University of Southern Denmark, Department of Environmental and Business Economics.
  9. Damien Neven & Miguel Mano, 2009. "Economics at DG Competition, 2008–2009," Review of Industrial Organization, Springer, Springer, vol. 35(4), pages 317-347, December.
  10. Budzinski, Oliver, 2012. "International antitrust institutions," Ilmenau Economics Discussion Papers, Ilmenau University of Technology, Institute of Economics 72, Ilmenau University of Technology, Institute of Economics.
  11. Shavell, Steven, 1993. "Suit versus Settlement when Parties Seek Nonmonetary Judgments," The Journal of Legal Studies, University of Chicago Press, University of Chicago Press, vol. 22(1), pages 1-13, January.
  12. Ascione, Aurora & Motta, Massimo, 2008. "Settlements in cartel cases," MPRA Paper 24416, University Library of Munich, Germany.
  13. Oliver Budzinski, 2009. "Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits," Working Papers, University of Southern Denmark, Department of Environmental and Business Economics 93/09, University of Southern Denmark, Department of Environmental and Business Economics.
  14. Oliver Budzinski, 2008. "Europäische Medienmärkte: Die Rolle der Wettbewerbspolitik," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 200806, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  15. Oliver Budzinski, 2007. "„Wettbewerbsfreiheit“ und „More Economic Approach“: Wohin steuert die Europäische Wettbewerbspolitik?," Marburg Working Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 200713, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  16. Polinsky, A. Mitchell & Rubinfeld, Daniel L., 1988. "The deterrent effects of settlements and trials," International Review of Law and Economics, Elsevier, Elsevier, vol. 8(1), pages 109-116, June.
  17. Jo Seldeslachts & Joseph A. Clougherty & Pedro Pita Barros, 2009. "Settle for Now but Block for Tomorrow: The Deterrence Effects of Merger Policy Tools," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 52(3), pages 607-634, 08.
  18. Oliver Budzinski, 2006. "An Economic Perspective on the Jurisdictional Reform of the European Merger Control System," Marburg Working Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 200608, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  19. Philippe Choné & Saïd Souam & Arnold Vialfont, 2012. "Commitments in Antitrust," EconomiX Working Papers 2012-9, University of Paris West - Nanterre la Défense, EconomiX.
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Cited by:
  1. Budzinski, Oliver, 2014. "The competition economics of financial fair play," Ilmenau Economics Discussion Papers, Ilmenau University of Technology, Institute of Economics 85, Ilmenau University of Technology, Institute of Economics.
  2. Budzinski, Oliver, 2012. "Würde eine unabhängige europäische Wettbewerbsbehörde eine bessere Wettbewerbspolitik machen?," Ilmenau Economics Discussion Papers, Ilmenau University of Technology, Institute of Economics 78, Ilmenau University of Technology, Institute of Economics.
  3. Budzinski, Oliver & Haji Ali Beigi, Maryam, 2013. "Competition policy agendas for industrializing countries," Ilmenau Economics Discussion Papers, Ilmenau University of Technology, Institute of Economics 81, Ilmenau University of Technology, Institute of Economics.

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