On the Choice of Legal Standards: A Positive Theory for Comparative Analysis

Résumé

The issue of which legal standard Courts and Competition Authorities(CAs) should adopt, when assessing business conduct that can violate Competition Law, with the exception of hard-core collusion and horizontal mergers, has been hotly debated for many years. While economic theory, using a welfare-based approach, has shown the superiority of effects-based standards, in practice different standards are adopted in different countries for the same conduct. What existing theory misses is an explicit examination of (a) the choice of legal standards by Courts, taking into account how this is influenced by the substantive standard adopted;(b) how the choice of legal standards by CAs is affected by Courts’ choices, recognizing that CAs place at least some weight on the implications of their choices for their reputation. Our proposed framework, takes into account these considerations and identifies the fundamental role of the judicial review process in explaining why CAs may favor Per Se type standards(for conduct other than hard-core agreements), with sub-optimal utilization of economic analysis, how this choice is affected by non-welfarist substantive standards set by Courts, why the legal standards for any given conduct may differ between countries and how the choice of standards affects other aspects of enforcement, such as the number of investigations undertaken.