Live comments from the CCP Summer Conference 2014 – Session 3
June 12, 2014 Leave a comment
Session 3: Legal Framework:
Discussion of the legal framework comprised three very interesting papers covering legal and political science perspectives.
Hussein Kassim (CCP, UEA) presented work co-authored with Hillary Jennings (CCP, UEA, Independent Regulation Consultant) on market studies and the role of the International Competition Network (ICN). Market studies are research projects conducted to gain an in-depth understanding of how sectors, markets or market practices are working. Although there exists no standard model, and newer and more mature competition agencies differ in their use, market studies share the common theme of being a tool to build capacity and regulation. Market studies have two primary functions – competition advocacy and serving as a precursor for enforcement – but also have other objectives, such as investigating suspected market failure and addressing public or political concerns. Although market studies have some limitations (such as the lack of ongoing follow-up), there is evidence of these as a generalised international practice and convergence on usefulness (as opposed to content or format) between competition authorities.
Ariel Ezrachi (Oxford, UK) explored the dimensions of competition in his presentation, “The curious case of competition and quality”. Although quality represents a significant consideration for competition agencies, it is more problematic than price because it is less transparent and comprised of mostly subjective, multidimensional elements. In problem markets, there is a limited or negative correlation between competition and quality because it is expensive to convey quality or consumers have difficulties establishing levels of quality etc. There are additional problems. For example, producers’ incentive to invest in quality is determined by consumers’ ability to evaluate quality. As a result, in markets where there is excessive buyer power (such as supermarkets) and where consumers cannot detect quality (such as healthcare), there can even be quality degradation. As a result, competition may not necessarily drive quality in some markets. It is therefore necessary to take a cautious approach in assuming that quality is always correlated positively with price: it is an elusive concept, so difficult to address with standard policy tools.
Nicolas Petit (University of Liège) spoke about “problem practices” in competition law by reference to specific gaps in lawful anticompetitive conduct and in lawful anti-consumer conduct, otherwise referred to as Gaps 1 and 2. If concepts such as “restriction of competition” broadly, then these could be partially covered by Articles 101 and 102 TFEU. Nicolas considered that Gap 1 was larger in theory and smaller in practice, and Gap 2 considered small in theory and larger in practice. He identified a third gap, which is specifically focused on “frontier” cases, where the EU is undertaking measures in a more informal way.