Legal standards and the role of economics in Competition Law enforcement

Abstract:

The extent of economic analysis on which Competition Authorities (CAs) and Courts rely, in assessing whether specific conducts violate Competition Law (CL), depends crucially on the legal standard adopted.

We examine the factors influencing the choice of legal standards, and hence the extent of economic analysis and evidence applied in CL enforcement, focusing on the recent literature. We suggest explanations about why the decisions of CAs in relation to the utilization of economic evidence may diverge from the social welfare-maximizing decisions. These explanations rely on the realistic assumption that CAs derive utility not only (or primarily) from the social welfare impact of their decisions but also from their reputation or public image. Finally we consider some preliminary empirical evidence providing support for these explanations.

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