The metamorphosis of competition law

I. Expanding the circle

1. When I began my professional career in the early 1980s, competition law was perceived as a little-known, even obscure discipline, the study and practice of which were reserved for a relatively small circle of lawyers. Apart from the European and national officials directly responsible for the application of this law, this circle was limited, in the majority of member states, to academics and practitioners specialized in European law or economic administrative law. In my country, for example, these few lawyers, together with one or two economists, used to meet monthly at the University of Leiden to discuss the decision-making practice of the European Commission and the case law of the Court of Justice, as well as the few cases of Dutch competition law enforcement. This "kartelclub", of which I had the pleasure and honor of acting as secretary for a few years, had no more than a dozen members, curiously enough all men.

2. When the number of cases involving the application of Articles 85 and 86 EEC was not sufficient to fill the agenda, Professor Piet Jan Slot and I tried to identify related cases. These were often free movement cases. In our minds, the competition rules complemented the free movement rules, insofar as the former were intended to combat private barriers that could substitute for the public barriers prohibited by the latter. We were very happy to be able to discuss, for example, the Leclerc cases which, in the field of book prices, illustrated this sometimes complicated interaction between free movement and free competition [1]. At that time, competition law was anchored in European law and served the cause of the creation of the common market. This was not the case in Germany, which had its own competition law, rigorously enforced by the Federal Cartel Office. This law, which had its sources in an ordoliberal economic conception developed by the Freiburg School, contributed to shaping not only the economic policy of the new Federal Republic, but also that of the European Commission and in particular of its Directorate General IV, which was traditionally headed by a German Director General. When I joined this administration as a young civil servant in 1987, this influence was very concrete. Concept notes were still written in German and internal mail was sent by Begleitzettel.

3. This small world of competition law no longer exists. It is now a discipline in its own right, practiced worldwide and bringing together thousands of practitioners who meet regularly in large forums organized on all continents to discuss, most often in English, issues of common interest. These forums are gradually being institutionalized within the International Competition Network. While the European Union and its Member States, whose competition authorities are grouped together in the European Competition Network, make an important contribution to these discussions, they are only one group of actors among others. Although each jurisdiction remains sovereign and decides for itself what it wants to retain, international meetings allow the emergence of consensual opinions that often reflect the need to limit divergent approaches in an increasingly interdependent international economy. The world of competition has become a world of confluences.

4. Another notable difference with the situation in the past is that, while the voice of lawyers was once predominant, it is much less so today. Today, it is the theories and analyses of economists that set the pace. This influence is hardly surprising for a discipline whose vocation is to regulate the economy. More striking is the gradual arrival of new actors, such as philosophers, psychologists and perhaps in a more distant future anthropologists, whose contributions could challenge the notion ofhomo economicus or, even more radically, that of scarcity, on which economics is based.

5. In the course of my professional career, which has often been marked by competition law, I have had the privilege of working with several personalities who have helped this discipline evolve and who have thus participated in its metamorphosis. I will not mention their names, with the exception of Laurence Idot. Her career has also undergone transformations. She began as a French academic with a predominant profile in European economic law, publishing articles in journals such as the Revue trimestrielle de droit européen, which allowed me as a young teacher to become familiar with complex subjects or major topics. His career then followed and influenced the evolution of competition law. Since the Order No. 86-1243 of December 1, 1986 and the alignment of French law with the European model, Laurence Idot has devoted herself, almost exclusively, to this law, both on the national and European scene and at the international level, to become one of its internationally recognized eminent experts.

6. In this contribution in his honor, I would like to dwell, in a first rather descriptive part, on some of the factors that explain the transformation of competition law. The second part concerns the challenge that this transformation raises for the administration of justice by the European courts.

II. The causes of the mutation

7. Although competition law has its particularities, it is a law like any other. It governs human relations according to pre-existing norms, the interpretation and content of which are gradually adapted, albeit with a certain time lag, to the evolution of society. This adaptation can rarely be explained by a single reason. It is rather an interaction of multiple and diverse causes. It is therefore advisable to be cautious in attempting to identify the factors that have contributed to the development of competition law in Europe and elsewhere. I will therefore only give a purely personal and subjective assessment.

8. In my mind, the tipping point in the evolution of European competition law coincides with the period of the completion of the internal market in the early 1990s, as foreseen by the Single Act. The removal of barriers to the free movement of goods, services and, later, people created a large area in which economic forces could operate freely. Gradually, the objective of completing this market, in particular by combating territorial restrictions in distribution agreements, lost importance in relation to an objective more commonly pursued by all competition authorities, namely to ensure the proper functioning of this market, in particular by combating hard-core restrictions, such as concerted supply reduction, market sharing and price collusion. The Commission has thus focused its competition policy more on horizontal restraints, as evidenced by the decreasing number of decisions on vertical restraints. Since many of these horizontal agreements had an international dimension, the Commission was joined in this effort by the competition authorities of other major international economies, such as the United States, Canada, Japan and South Korea, with which it began to conclude bilateral cooperation agreements. This common struggle generated a community of interest, which gradually became organized, first under the auspices of the OECD and then through the creation of the International Competition Network in 2001 by the authorities of fourteen major jurisdictions. Competition law thus became an international issue.

9. Paradoxically, this internationalization has been accompanied by a spontaneous trend towards harmonization, particularly within the European Union, where all member states have gradually adopted antitrust rules comparable to Articles 101 and 102 TFEU. Through the operation of Article 3 of Regulation (EC) No. 1/2003 [2], European and national competition laws have slowly merged. This osmosis, which started with substantive law, has also extended to the institutional level. Not only have the European authorities come together in a network for cooperation, coordination and mutual assistance, the European Competition Network, but they have also aligned themselves with an administrative model for the implementation of these rules, comparable to that of the European Commission. The directive to equip member states’ competition authorities to enforce competition rules more effectively and to ensure the proper functioning of the internal market ("ECN+ directive") will solidify this collective edifice [3]. Competition law is no longer just a Brussels affair.

10. In parallel with its territorial extension, competition law has also expanded ratione materiae. If European industry, united within the European Round Table for Industry and the Union of Industries of the European Community (UNICE, the predecessor of the current BusinessEurope association), actively supported the internal market project carried out by the Delors Commission, it also expressed certain wishes, particularly with regard to competition law. Among other things, it insisted on the establishment of a single merger control system for this new large market. The Delors Commission’s internal market project thus gave rise to Regulation (EEC) No 4064/89 [4], which has since been replaced by Regulation (EC) No 139/2004 [5]. With the erosion of the value of the currency, an increasing number of mergers have reached the European dimension of EUR 5 billion, which this regulation provides as a criterion for jurisdiction, and have therefore had to be notified to the European Commission. Moreover, as with Articles 101 and 102 TFEU, the European control model has been followed by most Member States in assessing, in their jurisdictions, the anti-competitive effects of mergers that do not reach this dimension. All of these merger controls in turn required international cooperation in order to minimize the negative effects of conflicting decisions on the feasibility of large international transactions.

11. While the internal market project was primarily a response to the need to relaunch European integration, particularly in the context of German reunification, it also corresponded to the zeitgeist of neo-liberal thinking and the idea that market forces could move society forward. It is not entirely coincidental that this project was supported by Mrs. Thatcher and that it was embodied in a White Paper by the then British Commissioner, Lord Cockfield. The concept of competition as the driving force of the economy has gradually spread throughout the Union and has contributed greatly to the voluntary harmonization of the competition rules of its member states. This emphasis on competition has influenced not only the macroeconomic policies followed in much of the world, but also the more microeconomic frameworks of analysis used by competition authorities. Under the impetus of the economists and lawyers of the Chicago School, the structuralist approach consisting of analyzing the number of players and the conditions of entry has given way to an approach that is more focused on the process of price formation and consumer welfare, in particular by seeking to protect their surplus when allocating resources. In the absence of negative effects on prices, product quality and/or quantity produced, a concentration or commercial behaviour should not necessarily be censored, even if it affects the number of firms present on the market.

12. This "new" way of thinking has had a strong impact on the small world of competition law, with the arrival of a new category of participants, the economists. If the structuralist approach, as it is still reflected in sections 6 to 8 of the CO form used for merger notification, is relatively easy to follow for most lawyers, the tools advocated by the economists of the Chicago School and by those who succeeded them require more advanced knowledge of economics and econometrics. No competition authority today can do without its team of economists. In the field of competition law, the debate is therefore no longer solely legal.

13. It should also be noted that since the 1990s, this debate has become more intense and professionalized. As competition law has become a discipline in its own right, the academic world has become more interested in it. Since then, specialized chairs have been created in a large number of European universities. Since 2003, an academic association, the Academic Society for Competition Law (ASCOLA), has brought together a large number of researchers and academics interested in competition law and policy around the world. In addition, there are now more specialized journals, such as the journal Concurrenceswhich Professor Idot has brilliantly edited, than there are articles on competition law published in more generalist publications in the past. Beyond the academic world, a daily press dedicated to competition cases has developed, as well as a whole industry of conference organizers, lobbyists and advisors of all kinds.

14. This development, or, if you like, the rise of competition law is not a unique phenomenon, however. As noted above, competition law is not fundamentally different from other laws. However, most legal disciplines have expanded and become more complex over the last thirty years. With the liberalization and internationalization of economic and other exchanges, the erosion or disappearance of traditional forms of social organization and their modes of conflict management, the law has taken on a predominant place in our societies. The modern citizen has become an increasingly demanding litigant. At the same time, more and more long and complex texts try to guarantee him more rights and to protect him against the least risks, at least in the free world. This societal trend is having an impact on the teaching of law. An increasing number of universities are offering courses in new areas, such as energy law, health law, consumer law, data protection law, environmental law and financial markets law, which were once sub-branches of public, private or criminal law, but are now disciplines in their own right. One may wonder about the benefits of this splitting and complexification of our legal systems into as many specialties as there are societal problems.

III. Competition law and the European courts

15. Like European merger control, the European Union Tribunal has its origins in the single market project of the 1980s. The European industry insisted on the need for a more advanced judicial control, with two instances, if the Commission had the ambition to fight and sanction international cartels more. This is why the Single Act inserted a new article 168 A in the EEC Treaty allowing for the creation of a new jurisdiction, which the Council did by adopting decision 88/591 providing for the creation of a court of first instance [6]. Although this court was never specialized in competition law, since it was also responsible for the application of other matters, such as European civil service law, the Court of First Instance made a significant contribution, particularly in the early years of its existence, to the development of competition law. For example, in terms of substantive law, the clarification of the concept of a single and continuous infringement ( Polypropylene case) [7] or that of a collective dominant position ( Irish Sugar, Gencor and Airtours cases) [8], and in terms of procedure, the insistence on the principle of equality of arms between the Commission and the undertakings sued ( ICI and Solvay cases) [9]. While competition cases continue to represent a significant part of the litigation brought before it, the Court of First Instance now has a more general vocation. Indeed, since the Treaty of Nice, it has become the administrative court of first instance for almost all direct actions brought against the institutions of the Union. It bears its name in English and Spanish, respectively General Court and Tribunal General. As the Union’s competences have grown, the Tribunal has to deal with an ever-increasing variety of cases. This is naturally even more true for the Court of Justice, which, through the preliminary ruling procedure, is now called upon to rule on the most diverse societal issues.

16. This generalist tendency at the level of the Union’s jurisdictions contrasts with that of the competition law community, which is experiencing a tendency towards hyperspecialization. It develops its own terminology and notions, just as it has its own modes and trends. Although there are sometimes significant differences of opinion, an international consensus has emerged around consumer welfare as the main objective to be pursued, as well as on the related economic analysis tools. This consensus is based on "mainstream antitrust economics". If this consensus exists within the community of specialists and ensures its internal coherence, it is not necessarily shared outside this circle. It is sometimes surprising when European jurisprudence reminds specialists of the origins of European competition law and its anchoring in the treaties ( GSK case) [10]. The fact that the Court of First Instance and the Court of Justice are not necessarily receptive to requests from the parties to hear their economic advisors or to designate experts may also lead to a feeling of incomprehension or frustration on the part of specialists. These courts would not or no longer understand antitrust law and would therefore have to specialize in order to become more familiar with consensual thinking.

17. Of course, specialization has its merits, especially in complex matters that require considerable initial learning. It allows judges to reuse their knowledge and thus amortize their entry costs by handling several cases, so that they can more easily and quickly grasp the issues at stake in the disputes they are called upon to decide. By becoming part of the specialist community, judges can also better measure the impact of their decisions.

18. However, while specialization may thus improve the quality and acceptability of judicial decisions by specialists, as well as contribute to the internal coherence of their community, it also has disadvantages if it is not accompanied by a broader understanding of the legal system in which it is embedded.

19. Here again, like all other laws, competition law is intended to regulate societal relations, by contributing to the legal security of those subject to its jurisdiction and by providing mechanisms for settling their disputes. It is not there to serve specialists, but society and the people to whom it applies. In particular, the law must also remain predictable and understandable to all those who are subject to it. It is not certain that an "atomization" of the law serves this purpose. Indeed, how could anyone ignore the law if it is composed of an amalgam of specializations, each of which evolves, without overall coherence, according to its own particularities? This risk is not purely hypothetical. Even in the relatively narrow field of European law, there is already a tendency for certain essential concepts to vary from one branch of law to another. For example, the notion of undertaking in the sense of Articles 101 and 102 TFEU does not necessarily correspond to that developed in the context of the application of Article 107 TFEU, even though it concerns the same chapter of the Treaty, nor does it correspond to that used in public procurement law ( Teckal case) [11] or in the field of the preservation of workers’ rights in the event of a transfer of undertaking. While specialization may contribute to the internal coherence of the specialized field, it poses risks for the coherence of the law as a whole and may sometimes lead the specialist to regrettable contradictions.

20. However, this risk can be managed at the jurisdictional level, for example by ensuring that judges rotate between the different specialized fields, so as to guarantee that they can both make the most of their technical knowledge acquired in a specialized field and maintain a sufficiently broad vision to ensure the coherent development of the law as a whole. Striking this balance, however, is not so simple in an international court, such as the Tribunal, whose composition is constantly destabilized by the practice of some member states of appointing judges for only one six-year term. It is not certain that judges are willing or able to specialize in different subjects for such a short period of time, and thus that the desired balance between the specialization of judges and the generalist vocation of the Tribunal can be achieved.

21. If the international competition law community wants the Tribunal to become more specialized in order to be able to respond more adequately to its requirements, it could draw the attention of member states to the need to ensure more stability in the composition of the Tribunal. This would be a service to both competition law and the proper administration of justice.