Problems of competition enforcement and redress: EU trends and new solutions Professor Dr...
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Problems of competition enforcement and redress: EU trends and new
solutions
Professor Dr Christopher HodgesHead of the CMS Research Programme on Civil Justice
SystemsCentre for Socio-Legal Studies, University of Oxford
Erasmus Professor of the Fundamentals of Private LawErasmus University, Rotterdam
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Issues
1. Damages
2. Enforcement Policy
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The Orthodox ApproachCompetition Enforcement is about
Deterrence, achieved by large finesPenalties on individuals?
The Public Authority imposes FinesDamages can be delegated to private actors
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Design Choices for Enforcement
Actors: public or private?
Law: public or private
Procedures: public or private?
Time of control technique: ex ante or ex post?
Enforcement policy?
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Differing Policies on Enforcement
U.S.A.
Private enforcement of both public norms and
private rights
Deterrence Theory
Damages = Fines
EU
Public enforcement of public law:
sanctions + fines
Deterrence Theory
Private enforcement of private rights: damages
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Choice of enforcement policyDeterrence: competition
Responsive: tit-for-tatPyramid: escalationRisk-based: prioritisationRestorative Justice
Hodges 2 articles 2011
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Removal of Liberty
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EU Public Enforcement Theory:
Fines + DeterrenceA post facto control has to be very large to be
effective.How large is enough?
IneffectiveFines rise to defeat calculations re fine and leniencyDG case investigations have fallenRecidivism?Extent of non-compliance is unknown: important
because used in finingAssumption 10-20% cartels detected
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Problems with Deterrence 11. Deterrence on its own does not deter – unless the
sanction, being ex post, is vast
2. Deterrence does not produce compliant behaviour
3. Should deterrence be a goal of regulatory enforcement?
4. Enforcement on companies is aimed at the wrong targets
5. Fines impose significant damage on the wrong targets (employees, shareholders, innovation)
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Problems with Deterrence 25. Large sanctions are contrary to
constitutional/fundamental rights principles of justice, fairness and proportionality
6. Determination of fines is not transparent, consistent or fair
7. Leniency encourages perverse behaviour (infringe, then own up first, and keep illicit gain)
8. This policy does not rectify a balanced market
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Gain to cartelists
Loss to victims
Gain to cartelists
Loss to victims
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Problems with Deterrence 39. Damages cannot be added on after fines: they
must be integrated to produce fair and proportionate outcomes
10. Culture: Polarisation not solidarity
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A balanced competitive market
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A Model for Enforcement and RestitutionThe priorities are:
Restitution of victimsRestoration of a competitive market
Then consider sanctions based on:Targeting the cause: individuals or company?Action taken against individualsCorporate Best Practice scheme and operationCooperation: Doing the Right Thing
Owning up Paying back Cooperation
Recidivism: past and future likelihoodSeriousness
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Three Pillar Model
RegulationADR Private Litigation
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A Model for Enforcement and Restitution
Credible threats, enlisting self-regulation and the ‘shadow of the law’ to produce swift, cheap solutions
Public Pillar: wide enforcement powers, credible threat, targeted at the source of the problem(company, individual), wide restorative powers, so not often necessary to invoke
Responsible behaviour: company systems, responsible individuals, effective internal regulation and sanctions, supported by ADR
Private law enforcement: make unnecessary, last priority so as to avoid abuse and undermining pillars 1 and 2