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Prof. Dr. Francisco Marcos ( fmarcos@profesor.ie ) Professor of Law, IE Business School

Breakout on An Assessment of CP Institutional Machinery: Methods used in Competition Agencies and what Worked for Them Competition Policy Implementation Working Group: Subgroup 2 (Experiences of Younger Agencies). Prof. Dr. Francisco Marcos ( fmarcos@profesor.ie.edu )

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Prof. Dr. Francisco Marcos ( fmarcos@profesor.ie ) Professor of Law, IE Business School

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  1. Breakout on An Assessment of CP Institutional Machinery: Methods used in Competition Agencies and what Worked for ThemCompetition Policy Implementation Working Group: Subgroup 2 (Experiences of Younger Agencies) Prof. Dr. Francisco Marcos (fmarcos@profesor.ie.edu) Professor of Law, IE Business School Director, Competition Service Moscow, 30th may 2007

  2. Agenda Relevance of institutional floor & institutional settings.2. Challenges to CP institutional machinery. Dynamic and continuous reassessment of rules and activities.3. Strategic Planning: Goals/Commitments. Knowledge database construction.4. Enhancement of Administrative infrastructure & procedures.5. Some further reflections.

  3. 1. Relevance of institutional floor & institutional settings (I) “Institutional soil” crucial in rooting CP… (NIE would cover also institutional atmosphere)NARROW VIEW: Organization, Design, Operation & Procedures in charge of implementation and enforcement of CL (+manageable and understandable).Clear understanding of relationship between CP and CL in each system (which indeed may vary) lie at the foundation of the institutional machinery in charge and determine design and operational variations.

  4. 1. Relevance of institutional floor & institutional settings (and II) Greater consciousness of importance of institutional strengths and weaknesses: discussion about substantive topics may lack relevance if the later prevent them to be appliedMajor lesson must be clear from beginning & Subgroup 2 work shows that: no one size fits all!(more than with substantive or material rules and prohibitions)See, for example, Michael J. TREBILCOCK and Edward M. IACOBUCCI, “Designing Competition Law Institutions”, World Competition 25/3(2002) pages 361–394.However, having a look at other institutional experiences may provide valuable learnings, specially for younger authorities….

  5. Agenda Relevance of institutional floor & institutional settings.2. Challenges to CP institutional machinery. Dynamic and continuous reassessment of rules and activities.3. Strategic Planning: Goals/Commitments. Knowledge database construction.4. Enhancement of Administrative infrastructure & procedures. 5. Some further reflections.

  6. 2. Challenges to CP institutional machinery (I). Dynamic and continuous reassessment of rules and activities from the beginning. Comparisons across-time and across-countries.Adapt traditional rules & commands to specific and peculiar national setting (f. e., to make it more effective/efficient) (i) GOALS of CP:consumer welfare, technological progress; enhanced efficiency, international competitiveness; export success; small and medium enterprises, business cycle stabilization; employment concerns;regional development concerns; security of supply….(ii) MATERIAL CONTENTS (& changes): merger policy, public aid, relation with regulation…

  7. 2. Challenges to institutional machinery (and II). (iii) ENFORCEMENT STRUCTURE:judicial/administrative organs, federal states, institutional reshuffling, appointment of members of authority No optimal design exists!!!(iv) ENFORCEMENT POWERS & CAPABILITIES: variable operational features, cruciality of economic analysis (…)leniency, etc. Again, no optimal design: forget searching for Mobby-Dick!!(v) RESOURCES: budget, personnel (how to retain & hire best human capital?)(vi) INTER-INSTITUTIONAL & CROSS-BORDER COOPERATION

  8. Agenda Relevance of institutional floor & institutional settings.2. Challenges to institutional machinery. Dynamic and continuous reassessment of rules and activities.3. Strategic Planning: Goals/Commitments. Knowledge database construction.4. Enhancement of Administrative infrastructure & procedures. 5. Some further reflections.

  9. 3. Strategic Planning. Goals & Committments A. Portfolio of responsibilities. Matching of committments to capabilities & resources, from simple rules to complex rules(f. e., merger policy).B. Priorities and Periodically assessed (annual reviews).C. Policy instruments…. - Not just CL enforcement…. - Advocacy and education (business outreach & awareness campaigns…). Sector studies. - Relationship with complementary & overlapping policies (f. e., trade, public procurement, but specially as a monitoring tool in post-privatization time and transition from planned economy).See f.e., Timothy J. Muris, “Principles For A Successful Competition Agency”, University of Chicago Law Review, Vol. 72, No. 1, Winter 2005, pages 165-187

  10. Agenda Relevance of institutional floor & institutional settings.2. Challenges to institutional machinery. Dynamic and continuous reassessment of rules and activities.3. Strategic Planning: Goals/Commitments. Knowledge database construction.4. Enhancement of Administrative infrastructure & procedures.5. Some further reflections.

  11. 4. Enhancement of Administrative Structure & Procedures The way to better infraestructures and better procedures. WHAT IS BETTER? Several values may be at play (independence, accountability, predictability, flexibility, etc) and their relative relevance in each national setting may change the organizational & procedural outcome.- Transparency (to build confidence).- IT (a proof of adapting institution capabilities to those of potentialantitrust violators).- Economic Analysis….. office for chief economists.- Quality control methods…

  12. Agenda Relevance of institutional floor & institutional settings.2. Challenges to institutional machinery. Dynamic and continuous reassessment of rules and activities.3. Strategic Planning: Goals/Commitments. Knowledge database construction.4. Enhancement of Administrative infrastructure & procedures.5. Some further reflections.

  13. 5. Some further reflections (I) A. Enrich database with data from broader institutional background (other major legal/political/cultural/social traits that affect market functioning, condition CP implementation and, therefore, institutional settings).LEGAL TRADITION. See f.e. Cassey LEE, “Legal Traditions and Competition Policy,” Quarterly Review of Economics and Finance, Vol.45, 2005, pages 236-257; contra Armando E. RODRIGUEZ, “Does Legal Tradition Affect Competition Policy Performance?”, Journal of Business & Economic Studies, vol. 1, nº 1, spring 2007.POLITICAL INTERFERENCE (Agency independence). See f.e. Stephan VOIGT, “The Economic Effects of Competition Policy – Cross- Country Evidence Using Four New Indicators”, WP 2006, available at www.ssrn.com

  14. 5. Some further reflections (II) B. Place it in the context of available relevant work in the area and, if possible, profit from it. Some examples:CP agencies human resources policies (Tomás SEREBRISKY, “What Do We Know about Competition Agencies in Emerging and Transition Countries? Evidence on Workload, Personnel, Priority Sectors, and Training Needs”, World Bank Policy Research WP 3221, Feb. 2004) or Foreign assistance programs and their effectiveness (Michael W. Nicholson, D. Daniel Sokol and Kyle W. Stiegert, “Assessing the efficiency of antitrust/competition policy technical assistance programs” 2006 ICN Cape Town Conference).

  15. 5. Some reflections (III) C. Problem of objetivity of the data (agency survey…., quantitative elements tend to be rather formal and may miss relevant elements of picture). Annual reports cross-checking may decrease subjectivity.D.(Extension) Detailed analysis of major antitrust institutional feature: sanctions (What kind?). Description of antitrust crime dimmension…if exist or if ever used.

  16. 5. Some reflections (and IV) E.(Extension) Do the Real assessment of the institutional machinery!! The “Market for CP institutional settings”?? Analyze impact on economic growth, performance and productivity (more relevant to measure/calculate than in the case of material and substantive rules variations). Some recent attempts: Keith n. HYLTON and Fei DENG, “Antitrust around the world: an empirical analysis of the scope of competition laws and their effects”, Boston University School of Law, L&E WP nº. 06-47, 2006; Michael KRAKOWSKI, “Competition Policy Works: The Effect of Competition Policy on the Intensity of Competition – An International Cross- Country Comparison”, Hamburgisches Welt-Wirtschafts-Archiv (HWWA) Hamburg Institute of International Economics, Discussion Paper 332, 2006; Armando E. RODRÍGUEZ and Lesley DENARDIS, “Examining the Performance of Competition Policy Enforcement Agencies: Country Comparison” Journal of Business & Economic Studies, Vol. 13, No. 1, Spring 2007.

  17. THANK YOU FOR YOUR ATTENTION !!!

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