The US and EU competition policies: cooperate or compete?
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Transcript of The US and EU competition policies: cooperate or compete?
The US and EU competition policies:
cooperate or compete?
Alix GrassinChristin Fröhlich
Agenda
Reasons for cooperation Scopes Restraints Practical examples Conclusion
Reasons for cooperation
Increase of cross-border trade and
transnational business activities
doctrine of extraterritorial effect Necessity of sharing information Common objectives and similar
anititrust law
Scopes of cooperation
3 agreements concluded (1991, 1998, 2002): voluntary exchange of information,
coordination of antitrust enforcement and regular bilateral meetings
considering the interests of the other party when enforcing its competition rules
each party may ask the other to take enforcement action
review of individual merger cases in close cooperation, with a similar timetable for investigations, exchange of information and joint interviews with the mergers
Scopes of cooperation
Anti-competitive agreements Convergence: Commission followed US
example became more vigorous, setting higher fines
case of heat stabilisers/impact modifiers: prosecution of the cartels involved almost simultaneous surprise visits to companies in the EU and US
Weakening cooperation: risk of discovery ofEU corporate leniency statements and its use by US courts for civil litigation
Scopes of cooperation
Merger control Divergent results because of different
information supplied by merging firms? Possibility of joint meetings between mergers
and authorities Boeing/McDonnell Douglas: competition
authorities played against each other,
US lobbied Commission
Abuse of market power Difficulty of distinguishing between
exclusionary and pro-competitive behaviour Article 82 of EC treaty: firm is abusing its
dominance even if it does not gain more economic power
Market share indicating dominant position EU: 50% or more as clear indicator for
monopoly power; under 25% safe harbour US: two-thirds of a market;
under 40-50% safe harbour Commission more vigorous stance than US?
Scopes of cooperation
Restraints to cooperation
Reasons Sovereignty and national interests:
- benefit first their consumers - protect their industries- protect them from foreign take-overs
Different visions of competition policies: - regulatory vs. market-based economy policies- turning point with Commissioner Monti
Institutional divergences
Practical examples
GE/Honeywell merger with conglomerate effect
Different viewpoints about the merger of two
American firms EU ruling: GE dominant position in the large
jet craft engines market
Honeywell large part of the avionics and non-avionics aerospace component market
Possible effects: bundling, leverage and vertical effects
US ruling: merger efficiency based on lower
prices leads to pro-competitive behaviour
Practical examples
Microsoft Significant divergence of interpreting the
similar antitrust laws US ruling: disclosure of source codes, granting
of non-discriminatory licensing to independent software vendors and allowing the removal of its software
EU ruling: 497 million fine, changes of server operating system to allow competitor’s access and obliged Microsoft to offer a Windows version without the Windows Media Player
Practical examples
Reasons for divergence: Political pressures: at beginning of
investigations the DOJ, under Clinton administration, announced heavy fines and a splitting of the company. Final decision made under the rather business-friendly Bush administration
Different nature of sanctions due to authorities analysing different issues (US: licensing and the removal/altering of programs; EU: emphasis on the bundling itself)
Weak points: Domestic reasons (culture and history,
economic strategy and theory, political behaviour) constitute obstacles
Particularly diverge when defining abuse of market power or assessing effects of mergers, especially when national champions
are involved Not compulsory
Conclusion
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Advantage: Mechanisms established to better understand
each other’s competition policy regimes Strong convergence
Remarkable degree of cooperation in
competition policy,natural tensions exist
Conclusion
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