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Towards Rationalizing Multiple Competition Policy
Enforcement Procedures:
The Role of Lead Jurisdiction Concepts
Prof. Dr....
International Competition Policy Coordination
- International Competition Network (ICN): success story of multilateral
coo...
Lead Jurisdiction Models
General Idea:
uncoordinated multiple procedures are replaced by a common
procedure led by a singl...
Lead Jurisdiction Models
- Voluntary Lead Jurisdiction Model:
lead jurisdiction as a coordinator
compiling and distributin...
A Specific Model
Multilevel Lead Jurisdiction Model:
- International/global level:
selection and appointment of lead juris...
Selection of Lead Jurisdiction
As a potential lead jurisdiction for a given anticompetitive arrangement or
practice qualif...
Other Elements
Supervision, Sanctions, Complaints and Conflict Resolution
- review and monitoring of national provisions a...
Limits I: The Incentive Problem
- lead jurisdiction agency  positive externality
- common interests: reciprocity
- confli...
Limits II: The Divergent Laws Problem
- divergent laws, policies, theories and practices: the same case may be
decided dif...
Limits III: The Lack-of-Eligible-Lead-
Jurisdiction Problem
- Market failure in the “market for lead jurisdictions”?
- onl...
Conclusion
From an economic perspective, the charm of this concept is that it
- replaces the inbound focus of existing com...
Towards Rationalizing Multiple Competition Policy
Enforcement Procedures:
The Role of Lead Jurisdiction Concepts
Prof. Dr....
Readings
- Budzinski, Oliver (2004), The International Competition Network - Prospects and Limits on the
Road towards Inte...
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Towards Rationalizing Multiple Competition Policy Enforcement Procedures: The Role of Lead Jurisdiction Concepts - Oliver Budzinski - June 2014 meeting of the Working Party 3 of the OECD Competition Committee

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This presentation by Prof. Oliver Budzinski was made during a hearing on Enhanced Enforcement Cooperation held at the 119th meeting of the Working Party 3 of the Competition Committee on 17 June 2014. Find out more at http://www.oecd.org/daf/competition/enhanced-enforcement-cooperation.htm

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Transcript of "Towards Rationalizing Multiple Competition Policy Enforcement Procedures: The Role of Lead Jurisdiction Concepts - Oliver Budzinski - June 2014 meeting of the Working Party 3 of the OECD Competition Committee"

  1. 1. Towards Rationalizing Multiple Competition Policy Enforcement Procedures: The Role of Lead Jurisdiction Concepts Prof. Dr. Oliver Budzinski Professor of Economic Theory Institute of Economics (Head) Ehrenbergstraße 29 D-98693 Ilmenau, Germany http://www.tu-ilmenau.de/wth oliver.budzinski@tu-ilmenau.de 17.06.2014 www.tu-ilmenau.deSeite 1
  2. 2. International Competition Policy Coordination - International Competition Network (ICN): success story of multilateral cooperation - BUT: no (explicit) case-related cooperation, no reduction of multiple parallel procedures - limited bilateral case-related cooperation - economic problems of multiple procedures: inefficient transaction costs for companies inefficient taxpayer costs divergent outcomes scope for strategic competition policies  Types of enhanced multilateral cooperation that is case-related.  Lead Jurisdiction Models! 17.06.2014 www.tu-ilmenau.deSeite 2
  3. 3. Lead Jurisdiction Models General Idea: uncoordinated multiple procedures are replaced by a common procedure led by a single competent jurisdiction (its authorities, respectively). 17.06.2014 www.tu-ilmenau.deSeite 3
  4. 4. Lead Jurisdiction Models - Voluntary Lead Jurisdiction Model: lead jurisdiction as a coordinator compiling and distributing evidence non-binding proposal for decision according to mutual comity opt-in and opt-out on an individual and case-by-case level  multiple parallel procedures remain but in a streamlined way - Mandatory Lead Jurisdiction: lead jurisdiction handling the overall case (one-stop-shop) investigation power assisted by other affected jurisdictions binding decision based on total case effects in all affected jurisdictions (= all geographically relevant markets)  among the participants, multiple parallel procedures disappear 17.06.2014 www.tu-ilmenau.deSeite 4
  5. 5. A Specific Model Multilevel Lead Jurisdiction Model: - International/global level: selection and appointment of lead jurisdiction monitoring and supervision of lead jurisdictions complaints against lead jurisdictions - National/supranational/regional level (= existing competition policy regimes): either lead jurisdiction or assisting the lead jurisdiction (if affected) lj: application of own institutions by own authorities … … but embracing all effects in all relevant markets (not minding where) … in a non-discriminatory way nlj: accepting investigation and decision as long as … … international focus and non-discrimination hold, otherwise … … complaint to the international/global level 17.06.2014 www.tu-ilmenau.deSeite 5
  6. 6. Selection of Lead Jurisdiction As a potential lead jurisdiction for a given anticompetitive arrangement or practice qualifies any competition policy regime (a) whose internal markets represent a regional gravity of the market activities (primary effects clause), (b) whose agency enforces a working and nondiscriminatory competition law, (c) whose agency disposes over sufficient capacities and competences for the case in question, and (d) that demonstrates (and has demonstrated) the willingness and experience to investigate, handle and decide the case with a view of protecting all affected consumers and markets, i.e. to safeguard comity to other jurisdictions’ legitimate interests. 17.06.2014 www.tu-ilmenau.deSeite 6
  7. 7. Other Elements Supervision, Sanctions, Complaints and Conflict Resolution - review and monitoring of national provisions and practices regarding non- discrimination - review and monitoring of lead jurisdiction work regarding non-discrimination - hearing of complaints on these issues - sanction: disqualification as potential lead jurisdiction for future cases Case Selection - cases qualify that would lead to multiple procedures - other cases remain national (supranational, regional) competence - requires rules on: threshold for ‚multiple‘ (Xplus rule) sufficient nexus for claiming jurisdiction ( ICN best practices?) specifics of cartels, mergers & acquisitions, dominance cases, … 17.06.2014 www.tu-ilmenau.deSeite 7
  8. 8. Limits I: The Incentive Problem - lead jurisdiction agency  positive externality - common interests: reciprocity - conflicting interests (strategic jurisdictional interests): disciplining forces peer pressure and reputation (strengthening the lead agency against domestic lobbyism) disqualification for future cases (abusing power now vs. maintaining future influence) more independent revision instances (courts)  Model will fail for some cases! (but: is there any model that works with highest-stake cases?)  However: how many cases will be worth risking the (formal and informal) sanctions? 17.06.2014 www.tu-ilmenau.deSeite 8
  9. 9. Limits II: The Divergent Laws Problem - divergent laws, policies, theories and practices: the same case may be decided differently depending on the selected lead jurisdiction - this must be accepted! - problem reduced by cooperation with lead jurisdiction throughout the procedure? - problem reduced by convergence work of the ICN (best practice recommendations)? - on the other hand: advantage of regime diversity! 17.06.2014 www.tu-ilmenau.deSeite 9
  10. 10. Limits III: The Lack-of-Eligible-Lead- Jurisdiction Problem - Market failure in the “market for lead jurisdictions”? - only few jurisdictions may qualify (primary effects, capacities, competences, resources, etc.) - deliberate free-riding by jurisdictions with small-open economies (lack of domestic cases) - alleviating factors: - cooperation of assisting jurisdictions may include offering capacities, resources, and competencies (e.g. for sophisticated economic analysis) - “international regionalization” offers scope for diversity of lead jurisdictions - value of remaining connected with the system 17.06.2014 www.tu-ilmenau.deSeite 10
  11. 11. Conclusion From an economic perspective, the charm of this concept is that it - replaces the inbound focus of existing competition policy regimes by a focus embracing all effects in the relevant geographic (international) market, - provides a one-stop shop for the norm addressees (thus avoiding deficient transaction and administration costs of multiple procedures), - closes many loopholes due to the lead jurisdiction being powerful and also providing protection of competition abroad, and - maintains diversity of competition regimes because each assigned lead jurisdiction handles and decides the case according to this regime’s antitrust rules and procedures, just with the explicit inclusion of cross-border effects. On the downside, it requires an international agreement on procedural rules and willingness to accept - procedural decisions by the international level and - material decisions by the lead jurisdiction as long as all effects are treated impartially irrespective of their jurisdictional location. 17.06.2014 www.tu-ilmenau.deSeite 11
  12. 12. Towards Rationalizing Multiple Competition Policy Enforcement Procedures: The Role of Lead Jurisdiction Concepts Prof. Dr. Oliver Budzinski Professor of Economic Theory Institute of Economics (Head) Ehrenbergstraße 29 D-98693 Ilmenau, Germany http://www.tu-ilmenau.de/wth oliver.budzinski@tu-ilmenau.de 17.06.2014 www.tu-ilmenau.deSeite 12
  13. 13. Readings - Budzinski, Oliver (2004), The International Competition Network - Prospects and Limits on the Road towards International Competition Governance, in: Competition and Change, Vol. 8 (3), pp. 243-266. - Budzinski, Oliver (2008), The Governance of Global Competition: Competence Allocation in an International Multilevel Competition Policy System, Cheltenham: Edward Elgar. - Budzinski, Oliver (2009), An International Multilevel Competition Policy System, in: International Economics and Economic Policy, Vol. 6 (4), pp. 367-389. - Budzinski, Oliver (2014), International Antitrust Institutions, in: R. Blair & D. D. Sokol (eds.), Oxford Handbook of International Antitrust Economics, Oxford: OUP, forthcoming. - Campbell, Neil & Michael J. Trebilcock (1993), International Merger Review – Problems of Multi- Jurisdictional Conflict, in: Erhard Kantzenbach et al. (eds.), Competition Policy in an Interdependent World Economy, Baden-Baden: Nomos, pp. 129-163. - Kerber, Wolfgang & Oliver Budzinski (2004), Competition of Competition Laws: Mission Impossible?, in: Richard. A. Epstein and Michael. S. Greve (eds.), Competition Laws in Conflict - Antitrust Jurisdiction in the Global Economy, Washington, D.C.: AEI Press, pp. 31-65. - Trebilcock, Michael J. & Edward Iacobucci (2004), National Treatment and Extraterritoriality: Defining the Domains of Trade and Antitrust Policy, in: Richard A. Epstein and Michael S. Greve (eds.), Competition Laws in Conflict: Antitrust Jurisdiction in the Global Economy, Washington, D.C.: AEI Press, pp. 152-176. 17.06.2014 www.tu-ilmenau.deSeite 13
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