The Institutional Design of Competition Authorities: Debates and Trends

See, for example, William E. Kovacic and David A. Hyman “Competition Agency Design: What’s on the menu” GWU Legal Studies Research Paper n°2012-135,

See for example, Philip Lowe “The design of competition policy institutions for the 21st century—the experience of the European Commission and DG Competition” in Competition Policy in the EU Fifty Years on from the Treaty of Rome, edited by Xavier Vives, Oxfrod University Press, 2009 and Eleanor M. Fox and Michael J. Trebilcox: “The Design of Competition Law Institutions and the Global Convergence of Process Norms: The GAL Competition Project”, New York University Law and Economics Working Papers, 8-1-2012.

See OECD Global Forum on Competition 2003, Session I “The objectives of Competition Law and Policy”, available at www.​oecd.​org/​competition/​globalforum/​GlobalForum-February2003.​pdf

See Summary Record of the Roundtable on Changes in Institutional Design, Annex to the Summary Record of the 122th Meeting of the Competition Committee Held on 17–18 December 2014, 23 March 2015, DAF/Comp/M (2014)3/ANN4/Final and the documents submitted at www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

See Note by the Secretariat, The objectives of Competition Law and Policy, OECD Global Forum on Competition 2003, available at www.​oecd.​org/​competition/​globalforum/​GlobalForum-February2003.​pdf

Robert H. Bork “The Antitrust Paradox: A Policy at War with Itself”, New York: Basic Books, 1978.

Herbert J. Hovenkamp, “Distributive Justice and Consumer Welfare in Antitrust”, August 2011, Available at SSRN.

Jack Krirkwood: “The fundamental goal of Antitrust: Protecting Consumers, Not Increasing Efficiency”, Notre Dame Law Review 84 (1), pp 191–243 Seattle University of Law Digital Commons.

International Competition Network: “Competition Enforcement and Consumer Welfare: setting the Agenda”, 10th Annual ICN Conference, The Hague May 17–20, 2011 available at www.​internationalcom​petitionnetwork.​org/​uploads/​library/​doc857.​pdf.

57 competition authorities and 19 non-Governmental advisors to competition authorities responded to the questionnaire sent out by the Netherlands Competition Authority (NMa) in 2010.

See Bundeskartellamt “Guidance on Substantive Merger Control”, 29 March 2012, paragraphs 6 and 7.

OECD Policy Roundtables, Cross-Border merger Control: Challenges for Developing and Emerging Economies, Background note, 2011, available at www.​oecd.​org/​daf/​competition/​mergers/​50114086.​pdf

See OECD Global Forum on Competition 2003, Session I “The objectives of Competition Law and Policy”, p 3, available at www.​oecd.​org/​competition/​globalforum/​GlobalForum-February2003.​pdf

Available at http://​www.​moleg.​go.​kr/​english/​korLawEng?​pstSeq=​54772

South African Competition Act n°89 of 1998.

The Secretariat note on the Optimal Design of a Competition Agency established by the Secretariat for the OECD Global Forum on Competition in 2003 reported on 37 answers received from Member and non Member states and stated: “No other individual task is performed by as many as one third of the Competition Authorities replying to the questionnaire. The most common tasks outside the core competition law and policy area are, in falling order, consumer protection, sectoral regulation, price control, state aid control, and public procurement control. The share of responses indicating those tasks range from 30 % for consumer protection down to 20 % for public procurement control. One response indicates more than 40 % of total resources being devoted to consumer protection. For those other respondents that were able to assess resources spent on consumer protection, this share stays within the interval 5–15 %. Telecommunications is the sector most commonly regulated by Competition Authorities, followed by the energy sector. No Authority has reported that more than 20 % of total resources are spent on sector regulation”.

Note by Allan Fels and Henry Ergas, Institutional design of competition authorities, OECD Competition Committee, 17–18 December 2014, Doc DAF/COMP/WD(2014)85, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

Timothy J. Muris, FTC Chairman, The Interface of Competition and Consumer Protection, Remarks before the Fordham Corporate Law Institute’s Twenty-Ninth Annual Conference on International Antitrust Law and Policy, at 3 (Oct. 31, 2002), available at http://​www.​ftc.​gov/​sites/​default/​files/​documents/​public_​statements/​interfacecompeti​tion-and-consumer-protection/​021031fordham.​pdf

Maureen K. Ohlhausen, “One Agency, Two Missions, Many Benefits: The Case for Housing Competition and Consumer Protection in a Single Agency”, Fordham Competition Law Annual, 2014.

See, for example “Simon Priddis”, “Let Me Not to the Marriage of True Minds Admit Impediments”: Competition and Consumer Law in the UK, 21 Antitrust 89, 89 (Summer 2007): “Notwithstanding the abstract merits of this integrated approach, practical impediments to success remain, not least since competition and consumer protection law arise from sharply contrasting policy perspectives, use different tools to achieve their respective objectives, and historically at least, have measured success in different ways.”. (Quoted by Maureen Ohlhausen).

William E. Kovacic & David A. Hyman, Competition Agencies with Complex Policy Portfolios: Divide or Conquer?, at 38 (GW Law Faculty Publications & Other Works, Paper 631, 2013), available at http://​scholarship.​law.​gwu.​edu/​cgi/​viewcontent.​cgi?​article=​1779&​context=​faculty_​publications

Note by Ireland , Roundtable on Changes in Institutional design of Competition Authorities, OECD, 1 December 2014, DAF/COMP/WD(2014)95, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

Note by Poland, Roundtable on Changes in Institutional design of Competition Authorities, OECD, 10 December 2014, DAF/COMP/WD(2014)135, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

“Break-up bid to put watchdog on leash”, The Australian November 14, 2013.

Note by Finland, Roundtable on Changes in Institutional design of Competition Authorities, OECD, 17 November 2014, DAF/COMP/WD(2014)92, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

It should be noted that the savings to be obtained from having a single body for competition law enforcement and consumer protection are not negligible even if the administrative functions are merged. For example the contribution from Denmark to the OECD Competition committee roundtable on institutional design gave an evaluation of the cost savings associated with the merger of the two functions and stated: “When it comes to economies of scale there have been clear advantages of the merger. Calculations show savings of around DKK 4–4½ million (about 500,000–600,000 €) a year. The savings are mainly caused by saved administrative costs and saved house rent after the two authorities moved from two domiciles to one”.

Note by Iceland, Roundtable on Changes in Institutional design of Competition Authorities, OECD, 18 November 2014, DAF/COMP/WD(2014)94, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

Note by Australia, Roundtable on Changes in Institutional design of Competition Authorities, OECD, 4 December 2014, DAF/COMP/WD(2014)87, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

The regulated sectors are: energy (gas and electricity); water and sewerage services (in England, Wales and Northern Ireland); rail; air traffic control; airport operations; telecoms, broadcasting, spectrum and postal services; healthcare services in England; and, from April 2015, financial services and payment systems.

Note by Portugal, Roundtable on Changes in Institutional design of Competition Authorities, OECD, 10 December 2014, DAF/COMP/WD(2014)102, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

Note by the Netherlands, Roundtable on Changes in Institutional design of Competition Authorities, OECD, 2 December 2014, DAF/COMP/WD(2014)100, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

Note by the Netherlands, Roundtable on Changes in Institutional design of Competition Authorities, OECD, 18 November 2014, DAF/COMP/WD(2014)103, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

Donald Slater, Sébastien Thomas and Denis Waelbroeck: “Competition Law Proceedings before the European Commission and the Right to a Fair Trial: No Need for Reform?”, The Global Competition Law Centre Working Papers Series GCLC Working Paper 04/08.

Judgement ECHR Le Compte, Van Leuven and De Meyere v. Belgium (Application no. 6878/75; 7238/75), 23 June 1981.

Thus, for example, in the Schneider Electric SA judgement, the Court of First Instance held that: “181 Observance of all persons’ right to a hearing before an independent and impartial tribunal is guaranteed by Article 6(1) of the Convention, to which reference is made by Article 6(2) of the Treaty on European Union and which was reaffirmed by the second paragraph of Article 47 of the Charter of Fundamental Rights of the European Union”.

“182 As an integral part of the fundamental rights protected in the Community legal order, compliance with which by the Commission in the conduct of its control procedures relating to concentrations is ensured by the Community judicature, the right to a fair hearing is manifestly a rule intended to confer rights on individuals (Case T-309/03 Camos Grau v Commission [2006] ECR II-1173, paragraphs 102 and 103)”.

“183 However, provided that the right to an impartial tribunal is guaranteed, Article 6(1) of the Convention does not prohibit the prior intervention of administrative bodies that do not satisfy all the requirements that apply to procedure before the courts (see European Court of Human Rights, Le Compte, Van Leuven and De Meyere v. Belgium, judgment of 23 June 1981, Series A No 43, § 51)”.

Note that the second paragraph of art 47 of the Charter of Fundamental Rights of the European Union states : “Everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law. Everyone shall have the possibility of being advised, defended and represented”.

Enhancing competition enforcement by the Member States’ competition authorities: institutional and procedural issues, Commission Staff Working Document Accompanying the document Communication From the Commission to the European Parliament and the Council, Brussels, 9.7.2014, SWD(2014) 231 final, available at http://​eurlex.​europa.​eu/​legalcontent/​EN/​TXT/​PDF/​?​uri=​CELEX:​52014SC0231&​from=​EN

Note by Belgium, Roundtable on Changes in Institutional design of Competition Authorities, OECD, 21 November 2014, DAF/COMP/WD(2014)88, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

Ibid.

The Secretariat note on the Optimal Design of a Competition Agency established by the Secretariat for the OECD Global Forum on Competition in 2003 reports on 37 answers received from Member and non Member states and states: “Out of the around 90 % of Competition Authorities that have competence to take certain kinds of decisions on individual competition law cases, around two thirds have a specific collegiate body for decision-making. In the remaining third the power to take such decisions is assigned to the Head of the Authority. When decisions are taken by bodies external to the Competition Authority, categories mentioned by respondents include courts of general jurisdiction, specialized courts and other collegiate bodies, and ministers”.

Open conflicts among the board members of a competition authority have developed at different time in a number of countries such as Brazil, Mexico, the United states, Portugal, Spain etc…. in some cases the conflicts have been so acute that they have brought down the institution altogether with the result that entirely new boards were brought in or that a completely new institution with different responsibilities or designs replaced the dysfunctional institution.

Commission Staff Working Document Enhancing competition enforcement by the Member States’ competition authorities: institutional and procedural issues Accompanying the document Communication from the Commission to the European Parliament and the Council Ten Years of Antitrust Enforcement under Regulation 1/2003: Achievements and Future Perspectives.

William Kovacic and Marc Wineman “The Federal Trade Commission as an Independent Agency: Autonomy, Legitimacy and Effectiveness”, Iowa Law Review, Vol 100, p 2085.

Thus it appears that from a formal standpoint, in the United States the status of the Antitrust Division of the Justice department of the United States is less protective of its independence than the status of the Federal trade Commission. The head of the Antitrust Division can indeed be dismissed at the will of the president of the United States unlike the head of the FTC even though in practical terms the independence of the head of the Antitrust Division of the US Justice Department seems to be respected.

Note by the European Union, Roundtable on institutional changes, OECD Competition Committee, DAF/COMP/WD(2014)107, 5 December 2014, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

Note by the United Kingdom, Roundtable on institutional changes, OECD Competition Committee, DAF/COMP/WD(2014)105, 18 November 2014, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

Note BIAC, Roundtable on institutional changes, OECD Competition Committee, DAF/COMP/WD(2014)126, 10 December 2014.

The Secretariat note on the Optimal Design of a Competition Agency established by the Secretariat for the OECD Global Forum on Competition in 2003 reports on 37 answers received from Member and non-Member states and states: “The decision on the budget of the Competition Authority often involves several levels of government. 60 % of the replies indicate that the Parliament or other legislative assembly is involved in the procedure. Where Parliament is not involved, the decision is normally either taken by the Government or by a Minister (around 15 % in each category). A few authorities have no separate budget. Less than one fifth of the Competition Authorities have revenues from fines or fees contributing to their funding”.

Malcolm B. Coate, Richard S. Higgins and Fred Mc Chesney, Bureaucracy and Politics in FTC Merger Challenges, The Journal of Law and Economics, Vol 33, N°2 October 1990, pp 463–482.

Pierluigi Sabbatini “Funding the budget of a competition authority with the fines it imposes” SSRN Electronic Journal 10/2009; DOI: 10.​2139/​ssrn.​1492666.

Note by Italy, Roundtable on Changes in Institutional Design of Competition Authorities, OECD, DAF/COMP/WD(2014)96, 17–18 December 2014.

The EU/IMF Economic Adjustment Programme for Portugal provided official sector financing by the European Union, the euro-area Member States and the IMF of some 78 billion €, for Portugal’s possible fiscal financing needs and support to the banking system. One third was to be financed by the European Union under the European Financial Stabilisation Mechanism (EFSM), another third by the European Financial Stability Facility (EFSF), and the remaining third by the IMF under an Extended Fund Facility.

The sectoral regulators contributing to the budget of the Competition Authority are: the Supervisory Authority of Insurance and Pension Funds, the Securities Market Commission, the National Communications Authority, the Transportation and Mobility Authority, the National Civil Aviation Authority, the Public Procurement Markets, Real Estate and Construction, the Regulatory Authority for Water Services and Waste, the Regulatory Authority for Energy Services, and the Regulatory Authority of Health.

In the first survey on the question of filing fees in 2005, The ICN found that of the 73 jurisdictions with pre-merger notification regimes of which the working group was aware, 42 did not charge a filing fee and 31 charged a filing fee for mergers (see “Merger Notification Filing Fees: A Report of the International Competition Network”, April 2005).The developments which follow are largely based on this document.

For example in Canada, the filing fee is C$50,000 irrespective of the size of the transaction. In Austria, the filing fee is 1500 €, regardless of the size of the transaction (or the turnover of the parties to the concentration).

For example, the United States Federal Trade Commission charges a filing fee which is a function of the size of the transactions reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The fee is US$45,000 for transactions valued in excess of $76.3 million but less than $152.5 million, US$125,000 for transactions valued at $152.5 million or greater but less than $762.7 million and $280,000 for transactions valued at $762.7 million or greater. In 2015 the total budget of the US FTC for competition of US$127 while the merger filing fees amounted to US$100 million.

In Zambia, the filing fee payable for a merger application is 0.1 % of the turnover or assets, whichever is the higher, subject to a cap of 16,666,667 fee units. Following the value adjustment to the fee unit in 2015, the cap in filing fees equates to ZMW 5 million (approx. US$631,552).

For example, in Switzerland, there is a fixed fee of Sfr5000 for Phase I proceedings (which includes the pre-notification procedure). If a Phase II proceeding is opened by the Competition Authority , fees will be calculated on the basis of the time spent by the secretariat on the case (Sfr100 to Sfr400 per hour, depending on the seniority of the staff involved and the priority of the case). Fees in Phase II proceedings can reach Sfr100,000 or more.

For example in India, the Combination Regulations provide that filings should ordinarily be made using Form

The CCI’s short form notification template—in particular, where certain criteria are met which would ordinarily suggest an absence of competition concerns. However, the Competition Commission of India has the power to require the parties to notify using the substantially more onerous Form II, and will “stop the clock” for the period in which it takes the parties to provide this additional information. Form I must be accompanied by a filing fee of INR 50,000 (approximately US$1100), while a fee of INR 1 million (approximately US$22,000) applies for Form II and there is no fee for Form III filings.

For example in “Funding the budget of a competition authority with the fines it imposes” (see footnote 50) Pierluigi Sabbatini, talking about the Italian Competition Authority, states: “Fees to be paid on notified mergers are also a common source of finance among antitrust agencies. This type of financing shows some problems too. It is unpredictable, increases transaction costs of mergers and could distort incentives. Sometimes, as happens in Italy, these fees must be related to the effective costs incurred in the merger control by the CA. If the authority is in shortage of funds, it has a clear incentive to show an high degree of severity regarding mergers so as to increase the number of investigations (phase two of merger control). In this way more resources are employed in merger control and an increase in fees could be justified. Criteria for selecting cases are therefore distorted”.

UK Merger Fees: Consultation on possible changes to the system of charging firms for the cost of merger control, Consultation Document (Aug. 2004), www.​dti.​gov.​uk.

New Zealand Ministry of Economic Development, Fees for Clearance and Authorization Applications (Nov. 2004).

The Common Market for Eastern and Southern Africa (Comesa) is a regional organisation whose mission is to promote economic integration through trade and investment in Eastern and Southern Africa (the Common Market). COMESA comprises 19 member states: Burundi, Comoros, the Democratic Republic of Congo (DRC), Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.

Note by Greece, Roundtable on Changes in Institutional Design of Competition Authorities, OECD, DAF/COMP/WD(2014)93, 21 November 2014, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

See the Agency Effectiveness Competition Agency Practice Manual (CHAPTER 1 Strategic Planning and Prioritization), March 2010.

See footnote 64.

Note by The Netherlands, Roundtable on Changes in Institutional Design of Competition Authorities, OECD, DAF/COMP/WD(2014)100, 2 December 2014, available at http://​www.​oecd.​org/​daf/​competition/​changes-in-competition-institutional-design.​htm

The design of competition policy institutions for the 21st century—The experience of the European Commission and DG Competition, Competition Policy Newsletter, Number 3 2008 (a longer version of this article was published in “Competition Policy in the EU: Fifty Years On from The Treaty of Rome”, Xavier Vives Editor, Oxford University Press, 2009.