Nova workboard

a blog from young economists at Nova SBE

Competition Policy “À La Carte”.

As highlighted in a recent article published by Jornal de Negócios, the departing head of the Portuguese Competition Authority (AdC) – Professor Manuel Sebastião – has conveyed his frustration with the judicial system’s inability to treat cases of abuse of dominant position. A free translation of his comment follows:

‘The AdC has lost all of the processes of abuse of dominant position that it had in court. Bad work was not the reason why it lost them. It has lost them because the courts are unable to recognize the evidence that AdC brings in.’ (Jornal de Negócios, 2013 – translated by the author).

Though the words of the head of AdC may be perceived as a simple move to ward off responsibilities, the fact is that they make particularly sense in a southern Mediterranean country such as Portugal, where the light of justice is often prevented from shining to all through the use of unlimited appeals, injunctions and similar judiciary tricks[1].

The apparent inability of a functioning judicial system to ensure the defence of competition emphasizes an important idea presented by Lowe (2009). According to this author, there are two components of competition policy that are strictly dependent on each other and whose adequate alignment is essential for the proper defence of the consumer. These two components are on one hand the definition of proper “rules” and on the other the reliability on the “enforcement mechanisms and agents” that guarantee the application of the defined “rules”. The failure of one of the components endangers the whole process put in place to defend competition.

In the case of Portugal, the words of Professor Sebastião suggest problems with one of these components. The component in apparent failure refers to the “enforcement mechanism and agents”, particularly to the ability of courts of law to recognize relevant evidence. Competition policy is thus jeopardized, as ‘Good rules remain a dead letter if there is no efficiently run organization with the processes to implement them.’ (Lowe, 2009).

Yet, solving this issue by moving to extremes and entrust competition authorities with unlimited power over competition rulings – thus enabling competition authorities to bypass the hurdle of decisions being subject to the ruling of the courts of justice – would definitely be counter-productive. Indeed, such a move would in itself jeopardize the application of competition policy by opening a Pandora’s box and letting out possible biases and conflict of interests that could endanger the public interest in the promotion and defence of competition. Moreover, note that such a move would further aggravate concerns of overpowered trustbusters at the European level, as highlighted by The Economist (2010).

All in all, the proper functioning of a judiciary system is a cornerstone of competition policy, hence choosing “à la carte” to have the ‘rules’ and not the ‘enforcement mechanisms and agents’ is not an option. Accordingly, the proper defence of the consumer can only be made at the expense of choosing the whole menu. Reforming the judiciary system whilst capacitating the courts with competition knowledge – e.g. by clarifying the methods and concepts through which abuse of dominant position is identified, namely the definition of relevant market, market share and barriers to entry (OECD, 1996) – seems to be a clear priority in a country such as Portugal.

Tancredo Duval

References:

Jornal de Negócios (2013) Manuel Sebastião refuta ideia de inoperância da Autoridade da Concorrência accessed on the 14th of April and available at:

http://www.jornaldenegocios.pt/empresas/detalhe/manuel_sebastiao_refuta_ideia_de_inoperancia_da_autoridade_da_concorrencia.html

Lowe P. (2009) The design of competition policy institutions for the twenty-first century: the experience of the European Commission and the directorate-General for Competition in X. Vives, editor, Competition Policy in the EU – Fifty years on from the Treaty of Rome.

OECD (1996) Policy RoundTables: Abuse of Dominance and Monopolisation accessed on the 14th of April and available at:

http://www.oecd.org/competition/abuse/2379408.pdf

The Economist (2010) Enforcement of Competition Law in Europe is Unjust and Must Change accessed on the 14th of April and available at:

http://www.economist.com/node/15545914/print


[1] As an example, a reference could be made here to the decision of the AdC in the case of abuse of dominant position by Portugal Telecom, which was overulled by Court of Commerce of Lisbon. See: http://www.concorrencia.pt/vPT/Praticas_Proibidas/Decisoes_da_AdC/Abuso_de_posicao_dominante/Paginas/PRC200305.aspx

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Author: studentnovasbe

Master student in Nova Sbe

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