BOOKS: KOENIG Christian, VON WENDLAND Bernhard and BRAUN Nora Bettina, Edward Elgar Publishing, 2017, 243 p.

The Art of Regulation. Competition in Europe – Wealth and Wariness, Christian KOENIG, Bernhard VON WENDLAND and Nora Bettina BRAUN

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This book is the result of a collaboration between Christian Koenig (Professor at the Center for European Integration Studies, University of Bonn) and Bernhard von Wendland (Directorate General for Competition, European Commission). The authors propose to study the "Art of Regulation" as a function implemented by the European institutions. In an approach combining theory and practice, the book is aimed at researchers, students and practitioners alike. The approach is transversal and multidisciplinary. It deals successively with the foundations of regulation, the conditions for its effectiveness, and the instruments available to the regulator, in their legal, economic, historical and sociological aspects.

In an introductory chapter, the authors adopt a functional definition of regulation, which should be guided by the objective of equity, in the economic sense of the term, and general welfare. Regulation thus refers to any intervention by public authorities in the allocation of resources and aimed at guiding the behaviour of market operators in a way that is in line with the general interest. From this perspective, regulation is not in opposition to competition law. On the contrary, alongside a vertical - or sectoral - form of regulation aimed at correcting market malfunctions, C. Koenig and B. von Wendland consider competition law to be a horizontal form of regulation, in that it provides the administration with the means for exogenous action on the behaviour of operators and thus on the allocation of resources.

Chapter 2 is then devoted to a brief historical review of market regulation in Europe. It describes the various forms of public intervention in the market from medieval times to the present day, ranging from laissez-faire principles to economic dirigisme. The chapter thus traces the evolution of regulation, from the first struggles against the monopolies of the Middle Ages, through mercantilist and Marxist theories, to the principles of ordo-liberalism, with which the European institutions are today largely imbued.

In the third chapter, the various regulatory "instruments" are described. Competition law thus offers various horizontal means of action (i.e. applicable to all sectors) and makes it possible to combat distortions of competition resulting from the behaviour of companies but also of States. In this respect, while State aid can be seen from the point of view of the control of the European regulator, it must also be seen as constituting in itself a privileged regulatory instrument. Where the market alone cannot achieve an efficient allocation of resources, sector-specific regulatory tools are also available to the regulator, enabling it to intervene in particular on the number of operators or on price setting.

Chapter 4 discusses the basis for regulatory intervention by governments, particularly when it takes the form of financial support to companies. While these interventions may be justified from a strictly national perspective, the authors highlight the tension that may exist between these state measures and the supranational objectives of the European Union (EU). The European institutions are thus responsible for defining the principles of a common interest, to be shared by all member states and in the light of which state interventions will be monitored.

Chapter 5 continues the reasoning and demonstrates that State aid control is no longer just a tool for reconciling national and Community interests. It has also become a genuine industrial policy instrument at the disposal of the European Commission. Through its decision-making power, supplemented by the adoption of soft law texts, the Commission would in fact tend to steer the adoption of aid in a direction consistent with the general objective of competitiveness, as defined in the Lisbon Strategy.

The sixth chapter provides an opportunity to further explore the sectoral dimension of market regulation. Many sectors (telecoms, energy, rail transport), characterised by a network industry and formerly structured on the existence of state monopolies, have thus been subject to liberalisation. The regulatory mechanisms will then mainly consist of guaranteeing access to the network for the benefit of new entrants. In this respect, the financial sector must be distinguished from other sectors. Indeed, the regulatory principles governing it do not seek to guarantee access to a network owned by an incumbent operator but to prevent the risk of systemic crisis.

In the seventh chapter, C. Koenig and B. von Wendland look at the difficulties (if not impossibility) of reconciling the State aid control regimes of the World Trade Organisation (WTO) and EU law respectively. According to the authors, this incompatibility results from the absence of any real common interest shared by all WTO members, apart from respect for free trade as such; and this is in contrast to the EU, which pursues the principle of free trade only as a means to a more general end - welfare in the Union - making it possible to justify state aid that is a priori incompatible with the internal market, but which contributes to the achievement of a higher objective.

The eighth chapter finally addresses the question of the legitimacy of the European institutions in their undertaking to regulate markets. From this point of view, the legislative dimension of regulation does not raise any particular difficulty insofar as the adoption of directives and regulations is based on a parliamentary procedure, which, by definition, confers democratic legitimacy on them. Regulation by decision-making and the adoption of soft law texts may appear more problematic, but judicial review of Commission acts is considered satisfactory. Nevertheless, the authors consider the possibility of creating a European regulatory authority more independent of political power, along the lines of certain national regulatory authorities.

All in all, this book is of great didactic interest. It deals with the main aspects of regulation in a precise and concise manner. Its pedagogical dimension is confirmed by the reproduction of case law extracts and fundamental texts, and by the numerous bibliographical references for readers who wish to delve more deeply into certain topics. Finally, the value of the book lies in the ability of its authors to describe regulatory mechanisms faithfully, to identify the issues at stake, but also to make proposals in the face of persistent difficulties.

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  • University of Paris I Panthéon-Sorbonne


Antonin Pitras, The Art of Regulation. Competition in Europe – Wealth and Wariness, Christian KOENIG, Bernhard VON WENDLAND and Nora Bettina BRAUN , November 2017, Concurrences N° 4-2017, Art. N° 85112, pp. 225-226

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