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

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  • Budzinski Oliver

    (Ilmenau University of Technology, Ernst-Abbe-Zentrum, Ehrenbergstraße 29, Postfach 10 05 65, D-98693 Ilmenau)

  • Kuchinke Björn A.

    (Bauhaus-University Weimar, Media Economics, Albrecht-Dürer-Straße 2, D-99425 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.

Suggested Citation

  • Budzinski Oliver & Kuchinke Björn A., 2012. "Deal or No Deal? Consensual Arrangements as an Instrument of European Competition Policy," Review of Economics, De Gruyter, vol. 63(3), pages 265-292, December.
  • Handle: RePEc:lus:reveco:v:63:y:2012:i:3:p:265-292
    DOI: 10.1515/roe-2012-0301
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    References listed on IDEAS

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    1. 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 200614, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Oliver Budzinski, 2009. "Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits," Working Papers 93/09, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    3. 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, vol. 52(3), pages 607-634, August.
    4. Oliver Budzinski & Isabel Ruhmer, 2010. "Merger Simulation In Competition Policy: A Survey," Journal of Competition Law and Economics, Oxford University Press, vol. 6(2), pages 277-319.
    5. Oliver Budzinski, 2010. "An Institutional Analysis of the Enforcement Problems in Merger Control," Working Papers 101/10, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    6. Farrell Joseph & Shapiro Carl, 2010. "Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-41, March.
    7. von Hayek, Friedrich August, 1989. "The Pretence of Knowledge," American Economic Review, American Economic Association, vol. 79(6), pages 3-7, December.
    8. Budzinski, Oliver, 2012. "International antitrust institutions," Ilmenau Economics Discussion Papers 72, Ilmenau University of Technology, Institute of Economics.
    9. Oliver Budzinski, 2006. "An Economic Perspective on the Jurisdictional Reform of the European Merger Control System," Marburg Working Papers on Economics 200608, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    10. Shavell, Steven, 1993. "Suit versus Settlement when Parties Seek Nonmonetary Judgments," The Journal of Legal Studies, University of Chicago Press, vol. 22(1), pages 1-13, January.
    11. Oliver Budzinski, 2008. "Europäische Medienmärkte: Die Rolle der Wettbewerbspolitik," MAGKS Papers on Economics 200806, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    12. Stephen Breyer, 2009. "Economic Reasoning and Judicial Review," Economic Journal, Royal Economic Society, vol. 119(535), pages 123-135, February.
    13. Ascione, Aurora & Motta, Massimo, 2008. "Settlements in cartel cases," MPRA Paper 24416, University Library of Munich, Germany.
    14. Damien Neven & Miguel Mano, 2009. "Economics at DG Competition, 2008–2009," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 35(4), pages 317-347, December.
    15. Philippe Choné & Saïd Souam & Arnold Vialfont, 2012. "Commitments in Antitrust," EconomiX Working Papers 2012-9, University of Paris Nanterre, EconomiX.
    16. Oliver Budzinski, 2009. "An international multilevel competition policy system," International Economics and Economic Policy, Springer, vol. 6(4), pages 367-389, December.
    17. F. Maier-Rigaud & K. Parplies, 2009. "EU Merger Control 5 Years after the Introduction of the SIEC Test: What explains the drop in enforcement activity?," Post-Print hal-00800754, HAL.
    18. Polinsky, A. Mitchell & Rubinfeld, Daniel L., 1988. "The deterrent effects of settlements and trials," International Review of Law and Economics, Elsevier, vol. 8(1), pages 109-116, June.
    19. Oliver Budzinski, 2007. "„Wettbewerbsfreiheit“ und „More Economic Approach“: Wohin steuert die Europäische Wettbewerbspolitik?," Marburg Working Papers on Economics 200713, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    20. 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 401-409, August.
    21. Oliver Budzinski, 2011. "Impact Evaluation of Merger Decisions," Working Papers 112/11, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
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    Cited by:

    1. Budzinski, Oliver & Haji Ali Beigi, Maryam, 2013. "Competition policy agendas for industrializing countries," Ilmenau Economics Discussion Papers 81, Ilmenau University of Technology, Institute of Economics.
    2. Budzinski, Oliver & Haucap, Justus, 2019. "Kartellrecht und Ökonomik: Institutions matter!," DICE Ordnungspolitische Perspektiven 102, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. Dzmitry Bartalevich, 2017. "EU competition policy and U.S. antitrust: a comparative analysis," European Journal of Law and Economics, Springer, vol. 44(1), pages 91-112, August.
    4. Oliver Budzinski & Jürgen-Peter Kretschmer, 2016. "Implications of Unprofitable Horizontal Mergers: A Positive External Effect Does Not Suffice To Clear A Merger!," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 10(1), March.
    5. Budzinski, Oliver & Stöhr, Annika, 2020. "Ministererlaubnis für Kartellfälle: Kooperation im Sinne des Gemeinwohls?," Ilmenau Economics Discussion Papers 143, Ilmenau University of Technology, Institute of Economics.
    6. Budzinski, Oliver, 2014. "The competition economics of financial fair play," Ilmenau Economics Discussion Papers 85, Ilmenau University of Technology, Institute of Economics.
    7. Budzinski, Oliver, 2012. "Würde eine unabhängige europäische Wettbewerbsbehörde eine bessere Wettbewerbspolitik machen?," Ilmenau Economics Discussion Papers 78, Ilmenau University of Technology, Institute of Economics.
    8. Budzinski, Oliver, 2016. "Aktuelle Herausforderungen der Wettbewerbspolitik durch Marktplätze im Internet," Ilmenau Economics Discussion Papers 103, Ilmenau University of Technology, Institute of Economics.

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    More about this item

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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