Kati Cseres

The Impact of Consumer Protection on Competition and Competition Law: The Case of Deregulated Markets

This paper deals with the question what the relationship is between consumer activity and non-competitive market outcomes in deregulated markets. These market failures could be the result of bad regulation, bad competition law enforcement or insufficient consumer activity. The different causes trigger different remedies. The question is whether to tackle a certain market failure on the supplier or on the consumer side. The answer depends on the actual and direct causes of market failures. The choice for appropriate and proportional remedies should be determined on the same basis. This paper argues that opening up markets to competition does not automatically lead to more consumer benefits. When consumers have insufficient information about the choices they can make or they face high search and switching costs they are not able to take the advantages made possible by effective competition and to activate competition. Information failures, therefore, can distort the working of an otherwise competitive market and can lead to sub-optimal effects and inefficiency. The liberalisation of network industries is one example when more competition does not automatically lead to a more competitive outcome because consumers have incomplete information. In many countries liberalisation has led to mixed results. While it improved competition for large users and provided better prices at the same time it raised major difficulties for small consumers to exercise their choice. The questions that are discussed in this paper are the following. When should a specific market failure be tackled on the supplier or consumer side? Which role consumer information problems play in achieving and maintaining competitive markets? How do consumer protection rules addressing information failures effect the enforcement of competition rules?

Accession to the EU's Competition Law Regime: A Law and Governance Approach

Competition law has always formed a core pillar of the European integration process and so it was among the crucial EU requirements set for the candidate countries. Competition law had a significant influence on the way competition laws and institutions were shaped in the candidate countries. In the pre-accession phase this was due to conditionality, however once conditionality terminates and candidate countries become Member States they fall under the EU law and its governance mechanisms, in competition law under Regulation 1/2003. While pre-accession rule transposition is well documented and closely monitored by the EU in its Regular Reports on the candidate countries, the EU’s internal governance mechanisms are less visible and have not been examined in the light of its external model that developed in the course of its eastward enlargement. In EU competition law such internal mechanisms have developed within the framework of Regulation 1/2003. These post-accession compliance mechanisms are critical both with regard to the effectiveness of the EU’s external governance and the internal system of Regulation 1/2003.The aim of this paper is to analyse the interplay between the EU’s external (pre-accession) and internal (post-accession) governance model in the field of competition law and to arrive at a deeper understanding of the EU’s Europeanization strategy at the intersection of the external and internal governance models. Accordingly, the paper maps the EU’s external law and governance model that applies vis-a-vis third countries that wish to join the EU and examines to what extent and how this external model has shaped the EU’s internal governance model vis-a-vis its Member States. It analyses the role of Regulation 1/2003 in creating an effective implementation of EU competition law in the Member States and its governance mechanisms that framed the Europeanization process. In order to evaluate the effectiveness of post-accession compliance in the Member States the paper examines the compound procedural framework composed of EU and national administrative rules that underlies and challenges the enforcement of EU competition law and investigates how administrative capacity of the national competition authorities may effect competition law enforcement. This inquiry includes the detailed assessment of the European Competition Network as the EU’s main mechanism to monitor compliance of Member States with EU law in the post-accession phase.

Empowering consumer-citizens: changing rights or merely discourse?

Where in the past the orientation of the internal market was always on economic growth through removing trade barriers, the 21st century vision seems to be more impact driven, guided by consumers’ and citizens’ needs, not just from an economic perspective but also in terms of satisfaction of citizenship norms and values such as solidarity, inclusion and sustainability. The re-orientation also reflects on the role of the consumer and the citizen: they should be more active through participation in both the design and the enforcement of economic regulation. A parallel reflection of the re-orientation can be found in the EU ‘empowerment’ discourse linked to the consumer and citizenship concepts, as deployed by the Europe 2020 Strategy. The basic question that feeds this paper is what kind of social and economic governance model is behind the new empowerment tools and strategies? The paper is an initial attempt to explore this new consumer citizen centered governance model and its effects on law making and law enforcement. Putting citizens and consumers in the driving seat differs from the traditional way of decision-making through elected representatives and the traditional perception of consumers and citizens as passive receivers of rights and benefits.

Integrate or Separate - Institutional Design for the Enforcement of Competition Law and Consumer Law

Over the past years several EU Member States decided to integrate their competition authorities with their consumer protection agencies. Most recently, the Netherlands Authority for Consumers and Markets (ACM) has merged the Netherlands Competition Authority (NMa) with the Dutch Consumer Authority (CA) and the Netherlands Independent Post and Telecommunications Authority (OPTA) as from 1st April 2013. On the contrary, some other Member States separate the enforcement of competition law and consumer law. The United Kingdom will abolish the Office of Fair Trading (OFT) and merge its competition and national enforcement functions with the also abolished Competition Commission to form a new Competition and Markets Authority (CMA). The OFT’s consumer law enforcement roles are handed to the National Trading Standards Board which will coordinate consumer law enforcement with local and regional government’s trading standards departments. The CMA will retain consumer enforcement powers for some purposes and have responsibility for national oversight of the effective functioning of markets. These institutional changes are the results of political decisions, based mainly on budgetary concerns. National governments justified these institutional mergers by arguing that consolidated agencies can increase the efficiency and effectiveness of competition oversight and market regulation, enhance the importance of consumer and competition affairs in society, ensure corporate responsibility with regard to consumer interests and streamline administration. Similarly, the separation of institutions was justified by the reduction of complexity in the enforcement landscape, strengthening the effectiveness of law enforcement and achieving more cost-efficient delivery of consumer advice, representation and enforcement.These institutional and procedural changes seem to be experimental rather than programmatic and are instituted without investigating their impact on law enforcement. This paper discusses three different institutional models for separating or integrating the public enforcement of competition law and consumer protection and analyses the synergies and the drawbacks emerging from allocating enforcement powers in one or two public agencies. The aim of the paper is to assess how the allocation of enforcement powers affect law enforcement and map those normative criteria that have to be assessed when the allocation of regulatory powers is decided on. The paper analyses the likely consequences of a certain institutional arrangement for procedural norms such as the proportionality of remedies and the time of intervention and for institutional performance norms such as expertise, administrative efficiency, independence, consumer participation and accountability. This analysis is conducted against the backdrop of the regulatory state in EU law and policy and it extends to examine the impact of EU law and policy on the Member States’ institutional design as well as the EU’s constraining effects on institutional path dependence.

Questions of Legitimacy in the Europeanization of Competition Law Procedures of the EU Member States

As less formal institutions such as the European Competition Network or the International Competition Network are becoming generators of soft law that may harden into national, EU or international law, the importance of legitimacy in agenda-setting and in the development of best practices, rules, and standards increases.This paper discusses the legitimacy of the harmonization process which takes place in the European Competition Network(ECN) on the basis of Regulation 1/2003, with regard to the administrative procedures of the Member States the NCAs apply when they enforce EU competition rules. This harmonization process is seemingly the result of voluntary harmonization among the Member States but in fact it is being steered and dominated by the EU Commission. This paper will examine the role of the Commission in initiating harmonization of national administrative procedures and institutional settings of the Member States by analyzing the Report on the functioning of Regulation 1/2003 and the Commission Staff Working Paper accompanying the Report on the functioning of Regulation 1/2003 , as well as through the recent work of the European Competition Network’s Working Group on cooperation issues and due process. The paper will look at the centripetal and centrifugal effects Regulation 1/2003 had on the substantive and procedural rules as well as the institutions of the Member States’ competition law. The paper critically assesses the methods of voluntary convergence that is taking place among the Member States and the way the Commission extends harmonization of the administrative procedural rules as well as certain substantive rules in the EU Member States.