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AUTHOR:
Wolfgang Kerber
TITLE:
An International Multi-Level System of Competition Laws: Federalism in Antitrust
SUGGESTED CITATION:
Wolfgang Kerber
(2003)
"An International Multi-Level System of Competition Laws: Federalism in Antitrust",
German Working Papers in Law and Economics:
Vol. 2003:
Article 13.
http://www.bepress.com/gwp/default/vol2003/iss1/art13
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ABSTRACT:
Since the 1990s, an intensive discussion on the necessity and the potential
design of international competition policy has developed. As a preliminary
result, some general tendencies can be observed:
Many states (including the U.S. and the EU) and most antitrust
experts hold the opinion that the traditional system of national
competition laws (including their extra-territorial application) is not
sufficient for the protection of competition in the new millennium.
Therefore, some kind of international arrangement in regard to
competition rules seems to be necessary.
The introduction of substantive international competition rules with
an international competition authority and a corresponding court (in
analogy to the supranational European competition law) is not seen
as feasible and/or desirable. Thus the solution should not be sought in
centralised global competition rules but be based primarily upon
national competition laws and authorities.
Consequently, the main thrust of the discussion has shifted from the
idea of a larger harmonisation and convergence of national
competition laws to the problem of better international enforcement
of these laws. Although bilateral cooperation between national
competition authorities have become an increasingly important issue,
bilateral cooperation agreements are considered only a first step to a
more preferable multilateral (or plurilateral) solution (e.g. within the
WTO).
Generally, the path to international competition rules is seen as a
pragmatic, step-by-step approach, which can achieve its aim only in
the long run. The currently favoured informal network approach,
which remains without commitment and emphasizes primarily the
gathering, discussion and exchange of information between national
competition authorities, is in line with such a pragmatic approach to
the incremental evolution of international competition rules.
How can we describe the present situation from a global perspective? We
have a multitude of national competition laws and enforcement agencies
(competition authorities, courts) with more or less different substantive and
procedural rules. Different competition laws and enforcement agencies can
also exist within a (kind of) federal system, as to some degree within the U.S.
and to a larger extent within the EU, where European competition rules and
national competition laws coexist on two different levels. Since the
competencies of these competition laws and enforcement agencies overlap,
many external effects and conflicts can emerge. Up to now we cannot
reasonably argue that this complex structure of competition laws forms an
integrated system for protecting competition in international markets. The
establishment of international competition rules (as well as the less ambitious
international network approach), which on one side should help to solve the
problems of the current situation, can, on the other side, increase the
complexity of the system, because an additional vertical regulatory level in
regard to competition rules would be introduced – including new potential
conflicts of competencies.
But what are the long-term perspectives of this situation? What can an
international system for protecting competition look like in the long run? Two
basic perspectives can be outlined:
One perspective is that such a pragmatic approach, which fosters the
discussion between different countries and their competition authorities,
eventually will lead to a uniform global competition law or – at least – to a
quasi-harmonisation of national competition laws. If the differences between
the competition laws disappeared, many of the current problems would
vanish. From this perspective, the current situation with many different
competition laws on two or three different levels does constitute only an
intermediate phase, which in the long run would be replaced by one quasiuniform
set of global competition rules.
Another perspective proceeds from the more sceptical assumption that it will
not be possible for all countries to agree on one uniform set of competition
rules, even in the long run. There will always be different objectives of
competition laws and different theories about what competition is and what
rules are necessary for the protection of competition. Therefore, the
coexistence of different competition laws should be seen as a permanent
feature of an international system of competition laws, implying that
substantial decentralisation and variety will remain a major characteristic of
such an international system, also in the long run.
This paper will focus on the second perspective, which can be characterised
as an evolutionary one: The objectives of competition policy in different
countries might change and remain different; competition theories mightevolve through academic progress; the rules for the protection of competition
might have to change due to new anticompetitive business practices or new
technology (such as the Internet). From this evolutionary perspective, it is
crucial that an international system for the protection of competition should
also include the long-term capability of adapting quickly to new competition
problems, particularly by fostering legal innovations for improving the
protection of competition. One important argument for a more decentralised
international system of competition laws will be that decentralisation will
increase the capability of the system for innovation and learning in regard to
the development of effective legal rules for the protection of competition.
But what can a workable international system with different competition laws
and enforcement agencies on different levels, i.e., a decentralised
international system of competition laws, look like? This paper can only
present some considerations about this problem. But its goal is to outline an
analytical framework, which can be used for designing a workable multi-level
system of competition laws. The main idea is that we should apply economic
theories about federalism and the advantages and disadvantages of
centralisation and decentralisation to develop arguments about the appropriate
institutional structure of an international multi-level system of competition
laws. The theories that are used in this paper are the economic theory of
federalism, the attempts to apply the concept of federalism to legal rules as
well (legal federalism), and the theories of interjurisdictional and regulatory
competition.
The paper is structured as follows. In section II it is shown that the present
situation can be interpreted as being already rather close to a kind of threelevel system of competition laws and that many current issues in European
and international competition policy can be interpreted as discussions about
problems of the horizontal and vertical delimitation of competencies within
such a three-level system. In the main section III an analytical framework
concerning the potential advantages and disadvantages of centralisation and
decentralisation of competition policy will be developed on the basis of
economic theories of federalism and regulatory competition. This will include
a (still incomplete) set of criteria for regulatory federalism in competition
law. Some conclusions for reconstructing international competition policy as
a multi-level system of competition laws are presented in section IV.
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