Ex Post Economic Evaluation of Competition Policy: The EU Experience, Fabienne ILZKOVITZ and Adriaan DIERX (dir.)

Fabienne Ilzkovitz, Adriaan Dierx (dir.)

This section selects books on themes related to competition laws and economics. This compilation does not attempt to be exhaustive but rather a survey of themes important in the area. The survey usually covers publication over the last three months after publication of the latest issue of Concurrences. Publishers, authors and editors are welcome to send books to catherine.prieto@univ-paris1.fr for review in this section.

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Under the direction of two DG COMP officials, this book was decided and supported by Johannes Laitenberger, former Director General, and was produced by a mixed team of editors, both from within the institution and from external experts. Its high level of analysis makes it suitable for economists, but lawyers cannot ignore it in its purpose, methods and conclusions. The clearly stated objective is to work to ensure the credibility of the Union’s competition policy, reporting on the results obtained in a transparent manner to informed observers or citizens and, if necessary, learning from mistakes if they occur. It responds to an OECD recommendation issued in 2016 to support the raison d’être of any competition policy. In a foreword, Olivier Guersent, current Director General, states that his intention is to continue ex-post studies to learn lessons, i.e. to collect milestones for progress and to identify new objectives for adaptation and improvement.

The book brings together articles already published in journals or internal studies prepared since 2014. It thus condenses five years of expertise. Fabienne Ilzkovitz and Adriaan Dierx, who were the editors, co-author an introductory chapter that presents the key concepts. They offer enlightening tables on the different categories of methods and their respective tools, on their strengths and weaknesses, and on foreign experiences. They point out that the majority of empirical work is focused on concentrations and cartels through price analyses. This explains the role assumed by the authors in terms of abuses, state aid and wider impact on the economy. It is understandable that this means room for improvement, but also a kind of "pioneering" competitive advantage in this area.

The first part deals with merger control decisions. One chapter, led by Professor Kwoka, particularly inspired by his work on evaluations in the United States, provides an overview with very precise descriptions of the samples selected, the results in terms of prices (no price increase in decisions with remedies), the potential for error. Evaluations are then presented on two decisions in the telecommunications sector.

The second part, dedicated to abuses of a dominant position, again covers the telecommunications sector with the Polska case and the electricity sector with the EON case. Additional illustrations could have been expected. The co-directors conclude by suggesting that there is still some distance to go in assessing landmark decisions in the digital sector. There is no doubt that there are more than primers, but they remain in circulation internally.

The third part was eagerly awaited in view of DG COMP’s ambitions in this now major area of its State aid policy. A general introductory chapter on the role of ex post evaluation in this area sets out the main expectations: to provide transparency useful for citizens’ debates, to encourage Member States’ support, and to enable them to achieve greater effectiveness in their intervention policies in the face of market failures. The authors underline the decisive contribution of the modernisation of State aid (SAM), which introduced an ex post evaluation obligation that now makes databases available. The evaluations focus on the effect of the aid to Newquay airport in the UK, the impact of an aid scheme for the installation of broadband in rural areas, and the impact of an aid scheme for firms in difficulty, a subject that is known to be much debated.

Finally, in the fourth part, the two co-directors of the book, together with numerous co-authors, attempt to better understand the wider impact of the application of competition rules. They first consider measuring the direct effects of public action through the savings induced for the consumer. Then, they propose a method to measure the deterrent effects on cartels and another method to measure the deterrent effects on mergers. Finally, in an even bolder way, they address the macroeconomic impact and propose as a conceptual framework a macro-modelling approach and input-output analysis, a method for developing samples and simulation models.

For the future, the co-editors agree that there is a need to make progress in assessing the non-price parameters of competition, namely innovation, quality and diversity. This is particularly important in certain sectors, notably the digital sector. A focus on growth, business dynamism and innovation channels is envisaged. But a solid foundation has now been laid that goes beyond learning. A culture of evaluation has been established with an awareness of the necessary requirements: good quality data, selected and collected at a very early stage for reliable comparisons in time and space from the moment a decision is taken; the setting up of teams different from those involved in decision-making and confrontation with external experts; the combination of methods; the combination of quantitative and qualitative analyses. It is clear that such an ambition represents a cost and the mobilization of high-level staff. However, the stakes are clearly set: beyondadvocacy, the refinement of regulations and soft law for a better competition policy in substance.

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Author

  • University of Paris I Panthéon-Sorbonne

Quotation

Catherine Prieto, Ex Post Economic Evaluation of Competition Policy: The EU Experience, Fabienne ILZKOVITZ and Adriaan DIERX (dir.), February 2021, Concurrences N° 1-2021, Art. N° 98927, pp. 262-263

Publisher Wolters Kluwer

Date 14 May 2020

Number of pages 592

Visites 277

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