Law and Economics EU/EC Competition Law Professional Career Programme (PCP) Yoshiharu, ICHIKAWA 2012/01/14

What we learned at the last session Informant! Commission fines ADM, Ajinomoto, others in lysine cartel The Commission has today fined Archer Daniels Midland, Ajinomoto and three other companies a total of almost 110 million Euro for operating a global price-fixing cartel for lysine. The decision highlights the Commission's determination to fight cartels, the most damaging of all anti-competitive practices. - Matio Monti ! - You can access the FBI’s real secret video through youtube. (search ‘lysine cartel’)

Enforcement who enforces competition law? and how? - process is also an important factor Regulation 1/2003 – called ‘Modernisation’ before this regulation…ex ante (notification and exemption) - heavy task, no priority ⇒ ex post ⇒ de-centralisation

Enforcement Regulation 1/2003 – ‘Modernisation’ ex post …by Commission - greater autonomy to set priorities - erosion of national sovereignty - turn to US-style model; based on deterrence - leniency policy de-centralisation - coherent interpretation needed - empower NCAs and national courts

Enforcement Private actions …another side of enforcement 1) Injunctive - ending anticompetitive behaviour 2) restorative / compensatory - remedying the financial losses 3) penal - punishing and deterring the firms - Public enforcement cannot achieve 2).

Review of this class Question: What is the difference between EU competition law and other competition laws?

Review of this class Question: What is different from EU competition law? Sharman Act (US) Section 1: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Section 2: Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine…

Review of this class Question: What is the original purpose of EU competition law?

Review of this class Question: What is economic freedom theory? What is different from economic efficiency?

Review of this class Question: What is cartel? Why should this conduct be punished?

Review of this class Question: What is abuse of a dominant position?

Abuse of a dominant position Introduction – Article 82/102 Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

Prohibition of anticompetitive agreement Introduction – Article 81/ The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. 2…. 3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:…

EU Competition Law: Law and Economics Foundation Legal Enforcement Ordoliberal Market Integration Refined, Coherent Advanced Economics US Market matured

EU Competition Law: Law and Economics Foundation Legal Enforcement Ordoliberal Market Integration Refined, Coherent Advanced Economics US Market matured Economics: Economic Freedom (Germany) ‘right’ ‘special responsibility’…Pluralism Law: → abuse of a dominant position (Article 82/102)

EU Competition Law: Law and Economics Foundation Legal Enforcement Ordoliberal Market Integration Refined, Coherent Advanced Economics US Market matured Market Integration itself is one of the objective: but, market was matured. Market access has become non-political matter

EU Competition Law: Law and Economics Foundation Legal Enforcement Ordoliberal Market Integration Refined, Coherent Advanced Economics US Market matured ‘rights-based approach’ is difficult to apply on the ground… → need to develop quantitative measures…consumer welfare

Wider Perspectives: EU competition is often regarded as a ‘unique system’ West African Economic and Monetary Union (Mali, Niger…) …introduce the same framework of EU competition law China …prohibit ‘abuse of a dominant position’ Japan …originally influenced by the German competition law

Final Question: ‘What is competition?’ ‘What does competition law do for society?’

Course web site: My webpage: You can download the presentation I used in the session. Contact address: or from my Facebook page