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Negotiated Remedies in the Modernization Era: The Limits of Effectiveness

 |  February 27, 2014

Posted by Social Science Research Network

Negotiated Remedies in the Modernization Era: The Limits of Effectiveness – Damien M. B. Gerard (University of Louvain – CeDIE)

ABSTRACT: Over the past ten years, the nature, scope and design of remedies have taken a growing importance in the enforcement of competition law in the European Union. That evolution can be viewed as one of the many consequences of the process known as the modernization of EU competition law, understood as a comprehensive attempt to experiment with a utility-maximizing approach to the regulation of economic competition with substantive, procedural and institutional dimensions. In effect, modernization has notably entailed a revamp of enforcement strategies driven by effectiveness considerations. In turn, that effectiveness paradigm has led to a shift toward a “negotiated” form of enforcement by means of tools such as leniency, settlements and commitment proceedings. Commitments, in particular, have developed into the default mechanism to enforce the antitrust provisions of the EU Treaties outside of the field of “cartels,” where the two other instruments are steadily relied upon.

The shift toward negotiated enforcement has moved remedies to the core of antitrust adjudication. However, the effectiveness rationality driving negotiated procedures is as such inapt to ensure the design of efficient remedies, it was submitted, i.e., effectiveness has limits when it comes to define optimal remedies, which in turn affects the legitimacy of those negotiated remedies. In the EU context, these limits are magnified by the relaxation in commitment proceedings of these safeguards that have historically limited the Commission’s remedial discretion, as captured by the concepts of proportionality and due process. While there is a case for relaxing proportionality requirements in commitment cases, doing away with both concepts creates a gap that threatens the legitimacy of competition law itself. In turn, filling that gap requires a review of the sequencing of commitment proceedings and associated procedural rights, as well as the (re-)development of a credible alternative thereto, in order to salvage the voluntary character of commitments as a guarantee of proportionality and to turn commitment proceedings into a collaborative process capable of delivering optimal outcomes both from an effectiveness and an efficiency point of view.