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On the optimal use of commitment decisions under European competition law

Listed author(s):
  • Choné, Philippe
  • Souam, Saïd
  • Vialfont, Arnold

In Europe, competition authorities have the power to close antitrust cases with “commitment decisions” after the concerned firms have offered agreed remedies. We show that the optimal use of this instrument is governed by a tradeoff between deterrence of potentially anticompetitive practices and early restoration of effective competition. We relate the optimal policy to the distribution of firm profit and consumer harm among cases. We find, however, that the optimal policy is generally not enforceable when the authority cannot credibly announce its policy prior to the firms’ strategic decisions. The lack of authority credibility may translate into insufficient or excessive use of commitment decisions.

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File URL: http://www.sciencedirect.com/science/article/pii/S0144818813000768
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Article provided by Elsevier in its journal International Review of Law and Economics.

Volume (Year): 37 (2014)
Issue (Month): C ()
Pages: 169-179

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Handle: RePEc:eee:irlaec:v:37:y:2014:i:c:p:169-179
DOI: 10.1016/j.irle.2013.10.003
Contact details of provider: Web page: http://www.elsevier.com/locate/irle

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  10. Franzoni, Luigi Alberto, 1999. "Negotiated Enforcement and Credible Deterrence," Economic Journal, Royal Economic Society, vol. 109(458), pages 509-535, October.
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