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Unilateral Practices, Antitrust Enforcement and Commitments

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  • Rey, Patrick
  • Polo, Michele

Abstract

This paper analyses the impact on antitrust enforcement of commitments, a tool introduced in Europe by the Modernization reform of 2003, and intensively used since then by the European Commission and by National Competition Agencies. We consider a setting where a firm can adopt a costly practice that is either pro- or anti-competitive; the firm knows the nature of the practice and its cost whereas the enforcer has only prior beliefs about them. If the firm adopts the practice, the enforcer then decides whether to open a case. We compare a benchmark regime in which the enforcer can only run a costly investigation that may or may not bring evidence, with policy regimes in which commitments are available. We first analyze a regime reflecting the 2003 regulation, in which the firm can offer a commitment whenever a case is opened. We find that, in most cases, the introduction of com- mitments does not improve enforcement performance. We then study a potential reform of the regulation giving the enforcer the initiative to propose commitments. We show that this regime dominates the benchmark and current regulations whenever enforcement is desirable.

Suggested Citation

  • Rey, Patrick & Polo, Michele, 2022. "Unilateral Practices, Antitrust Enforcement and Commitments," TSE Working Papers 22-1316, Toulouse School of Economics (TSE), revised Oct 2024.
  • Handle: RePEc:tse:wpaper:126713
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    References listed on IDEAS

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    1. Choné, Philippe & Souam, Saïd & Vialfont, Arnold, 2014. "On the optimal use of commitment decisions under European competition law," International Review of Law and Economics, Elsevier, vol. 37(C), pages 169-179.
    2. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
    3. Axel Gautier & Nicolas Petit, 2018. "Optimal enforcement of competition policy: the commitments procedure under uncertainty," European Journal of Law and Economics, Springer, vol. 45(2), pages 195-224, April.
    4. Mario Mariniello, 2014. "Commitments or prohibition? The EU antitrust dilemma," Bruegel Policy Brief 809, Bruegel.
    5. Jennifer F. Reinganum & Louise L. Wilde, 1986. "Settlement, Litigation, and the Allocation of Litigation Costs," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 557-566, Winter.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Antitrust enforcement ; Commitment ; Remedies ; Deterrence;
    All these keywords.

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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