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An Institutional Analysis of the Enforcement Problems in Merger Control

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  • Oliver Budzinski

    (Department of Environmental and Business Economics, University of Southern Denmark)

Abstract

The literature identifies a significant drop in merger control enforcement activity on both sides of the Atlantic during the last decade. Furthermore, this drop in enforcement activity is convincingly connected to enforcement problems on the sides of the competition agencies. This paper goes beyond the identification of under-enforcement and proceeds to the analysis of causes for the enforcement problems and the discussion of possible solutions. It argues that modern institutional economics suggest that a lack of ‘fit’ between the ‘new’ economic approach to merger control and the ‘old’ institutional environment of the legal enforcement procedures explains the drop of enforcement effectiveness on both sides of the Atlantic by implicitly raising the standard of proof, leading to unattainable standards, virtually eroding merger control enforcement power. As a consequence, the effects-based approach to merger control fails due to its failure to acknowledge its institutional implications. Reconciling industrial and institutional economics – promoting a comprehensive competition economics approach – however offers avenues towards an effective use of sophisticated industrial economic theories and methods. Firstly, incorporating economics into enforceable rules like strong rebuttable presumptions would adjust substantive merger control policy to the procedural institutional environment. Secondly, a reform of the standards of proof provisions would adjust the procedural framework to the characteristics of modern economic evidence and concepts. In summary, the enforcement problems in merger control require even more economic thinking, complementing industrial economic thought with institutional economic thought. I like to thank Arndt Christiansen and Eva Roth as well as the participants of research seminars at the Kiel Institute for the World Economy and at the Düsseldorf Institute for Competition Economics (DICE) for valuable comments on earlier versions of this paper.

Suggested Citation

  • Oliver Budzinski, 2010. "An Institutional Analysis of the Enforcement Problems in Merger Control," Working Papers 101/10, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    • Handle: RePEc:sdk:wpaper:101
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    Citations

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    Cited by:

    1. Patrice Bougette & Oliver Budzinski & Frédéric Marty, 2023. "In the Light of Dynamic Competition: Should We Make Merger Remedies More Flexible?," Working Papers AFED 23-01, Association Francaise d'Economie du Droit (AFED).
    2. Budzinski, Oliver, 2021. "Wettbewerbsordnung und digitale Medienmärkte," Ilmenau Economics Discussion Papers 153, Ilmenau University of Technology, Institute of Economics.
    3. Budzinski, Oliver & Gänßle, Sophia & Stöhr, Annika, 2020. "The draft for the 10th amendment of German competition law: Towards a new concept of "Outstanding relevance across markets"?," Ilmenau Economics Discussion Papers 142, Ilmenau University of Technology, Institute of Economics.
    4. Patrice Bougette & Oliver Budzinski & Frédéric Marty, 2019. "Exploitative Abuse and Abuse of Economic Dependence: What Can We Learn From an Industrial Organization Approach?," Revue d'économie politique, Dalloz, vol. 129(2), pages 261-286.
    5. Budzinski, Oliver & Haji Ali Beigi, Maryam, 2013. "Competition policy agendas for industrializing countries," Ilmenau Economics Discussion Papers 81, Ilmenau University of Technology, Institute of Economics.
    6. Budzinski, Oliver & Stöhr, Annika, 2024. "Perfect competition, market power, and contestability," Ilmenau Economics Discussion Papers 189, Ilmenau University of Technology, Institute of Economics.
    7. Patrice Bougette & Oliver Budzinski & Frédéric Marty, 2024. "Ex-ante versus Ex-post in Competition Law Enforcement: Blurred Boundaries and Economic Rationale," Working Papers AFED 24-07, Association Francaise d'Economie du Droit (AFED), revised Sep 2024.
    8. Budzinski Oliver & Kuchinke Björn A., 2012. "Deal or No Deal? Consensual Arrangements as an Instrument of European Competition Policy," Review of Economics, De Gruyter, vol. 63(3), pages 265-292, December.
    9. Budzinski, Oliver & Haucap, Justus, 2019. "Kartellrecht und Ökonomik: Institutions matter!," DICE Ordnungspolitische Perspektiven 102, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    10. Budzinski, Oliver, 2021. "Europäische Regulierung digitaler Dienste: Eine kritische Würdigung der Entwürfe DMA & DSA aus medienökonomischer Perspektive," Ilmenau Economics Discussion Papers 158, Ilmenau University of Technology, Institute of Economics.
    11. Dzmitry Bartalevich, 2017. "EU competition policy and U.S. antitrust: a comparative analysis," European Journal of Law and Economics, Springer, vol. 44(1), pages 91-112, August.
    12. Budzinski, Oliver, 2012. "Impact evaluation of merger control decisions," Ilmenau Economics Discussion Papers 75, Ilmenau University of Technology, Institute of Economics.
    13. Oliver Budzinski, 2011. "Impact Evaluation of Merger Decisions," Working Papers 112/11, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    14. Budzinski Oliver & Stöhr Annika, 2018. "Die Ministererlaubnis als Element der deutschen Wettbewerbsordnung: eine theoretische und empirische Analyse," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 69(1), pages 216-258, July.
    15. Oliver Budzinski, 2011. "The Institutional Framework for Doing Sports Business: Principles of EU Competition Policy in Sports Markets," Working Papers 108/11, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    16. Budzinski, Oliver & Eckert, Sandra, 2015. "Wettbewerb und Regulierung," Ilmenau Economics Discussion Papers 93, Ilmenau University of Technology, Institute of Economics.
    17. Budzinski, Oliver & Stöhr, Annika, 2020. "Ministererlaubnis für Kartellfälle: Kooperation im Sinne des Gemeinwohls?," Ilmenau Economics Discussion Papers 143, Ilmenau University of Technology, Institute of Economics.
    18. Budzinski, Oliver & Stöhr, Annika, 2019. "Public interest considerations in European merger control regimes," Ilmenau Economics Discussion Papers 130, Ilmenau University of Technology, Institute of Economics.
    19. Budzinski, Oliver, 2012. "Würde eine unabhängige europäische Wettbewerbsbehörde eine bessere Wettbewerbspolitik machen?," Ilmenau Economics Discussion Papers 78, Ilmenau University of Technology, Institute of Economics.
    20. Budzinski, Oliver, 2012. "Empirische Ex-Post Evaluation von wettbewerbspolitischen Entscheidungen: Methodische Anmerkungen," Ilmenau Economics Discussion Papers 69, Ilmenau University of Technology, Institute of Economics.

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    More about this item

    Keywords

    Merger control; European competition policy; antitrust; enforcement problems; in-stitutional economics; more economic approach; standard of proof;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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