Choice. A New Standard for Competition Law Analysis?, Paul NIHOUL, Nicolas CHARBIT and Elisa RAMUNDO

Paul Nihoul, Nicolas Charbit

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 for review in this section.

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Eleven contributions seek to promote consumer choice by presenting it from various angles in order to measure its full potential. Paul Nihoul delivers the first of them under the title "ʻFreedom of choice’: the emergence of a powerful concept in European competition law". He examines the emblematic decisions of the European Commission in which the concept has been put forward (Microsoft, France Télécom, Intel). It then puts them into perspective with landmark judgments such as Hoffmann-La Roche, United Brands, Michelin I. Then, he points out the extent to which freedom of choice is part of a multi-criteria analysis in respect of which prioritisation can only be made on a case-by-case basis. Recalling that competition is a process, Paul Nihoul convincingly concludes that freedom of choice, with the ability to change the operator who matches it, can only be at the heart of this process.

Neil Averitt and Robert Lande take over in a tremendous momentum (from page 43 to 121!) with a title that camps the study in the United States "Using the ʻconsumer choice’ approach to antitrust law". They intend to counteract the idea that consumer choice offers a less scientific approach than the price or efficiency paradigm. In their view, it would be far more appropriate in that it would cover the whole range of situations: those where competition would be driven by price and those equally, if not more, where competition would be driven by quality, diversity, innovation. Their objective is to lay the empirical foundations of this paradigm in a case-by-case analysis through retrospective but also experimental studies in order to meet the legitimate requirements of predictability and "administrability". From an American perspective, such an approach reinforces the FTC’s mission in its articulation between antitrust and consumer protection. Moreover, the authors argue in support of numerous examples that consumer choice is ultimately the implicit basis of many cases and is fully consistent with the consensus that eventually emerged in antitrust policy.

Then comes an article by Peter Behrens to give a strong historical consolidation to consumer choice in the European cradle of competition policy: "The consumer choice paradigm in German ordoliberalism and its impact on EU competition law". He goes back over the misinterpretations that have unfortunately marred ordoliberalism and underlines the systemic approach that underlies the concept of order. He then goes on to recall that Eucken and Böhm saw consumers as the arbiters of the competitive process. Then, explaining the evolution of ordo-liberalism, he notes that the paradigm serves the process of permanent discovery according to Hayek’s vision. He then confronts consumer choice with the concept of "consumer welfare", fortunately taking into account the differences in perception between the Chicago School and the post-Chicago current, marked by a sophistication of analysis. To conclude, consumer freedom of choice is presented as a way of perfecting the post-Chicago current, whose prism seems too narrow.

Robert Lande then comes back to the charge with "Consumer choice, the best way to re-center the mission of competition law", which is an update of an old article. Elisabeth de Ghellinck brings the economic vision of Leuven with "Consumer choice: an economic perspective". The author chooses to focus her study on only one dimension of choice: product variety. While acknowledging the limits of the current efficiency paradigm, she relativizes it, particularly in the practice of the European Commission, which combines quantitative and qualitative evidence. She also adds that the factors of competition without prices are also in ratio studies. Finally, it considers that the consumer choice paradigm is not sufficient to overcome the shortcomings of the current paradigm, especially when competition factors are in conflict or in the assumptions of market failure. The solution it advocates lies in a better appreciation of the three different dimensions of efficiency (allocative, productive and dynamic) for a better elaboration of the "theory of harm" in each particular case.

Joshua Wright and Douglas Ginsburg present "The goals of antitrust: welfare trumps choice". They counterpoint the position defended by Averitt and Lande. The adoption of consumer choice as a paradigm would, in their view, constitute a revolution that would turn against the well-understood interest of consumers. It would be a non-economic approach to antitrust analysis in that it would be totally disconnected from the theory and practice of modern economics. It would reduce "consumer welfare", particularly in the parameters of quality and innovation that its proponents want to defend.

Steven Anderman, as a European, is more circumspect, as the title of his contribution suggests: "Consumer welfare and consumer choice in the reconciliation of the conflicts between competition law and IPRs". It is true that consumer choice has been widely emphasised by the Commission and the European judge in setting the limits to the exercise of intellectual property rights. As a result, European rules have been applied more severely, but with greater predictability, which is a paradox for a concept that has been criticised because of the difficulties in defining it.

Then, for the second time, we find the duo Neil Averitt and Robert Lande under the title "Consumer choice: the practical reason for both antitrust and consumer protection law". They actually develop an idea already defended above. Then Neil Averitt returns solo to explain "How ʻconsumer choice’ can unify the fields of competition and consumer protection law". As a further counterpoint, Thomas Rosch intervenes in his capacity as former FTC commissioner to answer the following question: "Can consumer choice promote trans-Atlantic convergence of competition law and policy? He doubts that convergence is really desirable and, in any case, a common definition seems rather unlikely. Finally, he tries to point out the limits of the concept because of the very fact that the consumer is likely to be manipulated often.

This paves the way for the latest contribution on "behavioral economics" by Maurice Stucke: "When more is better and when less is more: behavioral antitrust and choice". Behavioural economists are known to consider that individuals do not always act in the manner predicted by neoclassical theories. In general, there is reason to believe that consumers will feel a sense of increased well-being in the face of a diversity of choices. This will be particularly the case in the area of media because of the low substitutability of products. However, there are also cases where increased choice can reduce welfare. Market power excels at increasing diversity that is only apparent to the detriment of the consumer and society as a whole. "Choice overload is therefore a real concern for which the economic literature has not yet provided an analytical framework.

In conclusion, we can only note that the question mark in the title of the book is justified. The promotion of the concept is masterfully defended by two American authors through four very substantial contributions. The fact remains that they still seem very far from attracting support in the United States of America itself. On the European side, lawyers are much more inclined to defend the consumer choice paradigm, but economists remain very reserved. The book can only make us even more attentive to the motivations of the Commission and the European judge in their case-by-case promotion of the concept, which remains promising.