It was a pleasure to join Matthew Hall and James Hunsberger on the latest episode of Our Curious Amalgam, the podcast from the American Bar Association’s Antitrust Law Section. We discussed recent developments in EU and UK competition policy and you can listen to the conversation here.
One issue we touched on was whether the new draft EC merger guidelines will lead to more politicised decision-making. Here I think we need to distinguish between discretion and politicisation as the two don’t necessarily come together.
When an agency is asked to balance a wide range of factors but is not told how to go about ranking them, that agency is being given substantial discretion. This is because as long as it follows a reasonable and proper process, there are multiple case outcomes that it should be able to defend in court.
The draft guidelines do not hide this. There are eight references to the ‘margin of discretion’ that the Commission enjoys in weighing up the evidence. This leads to the question of who will influence how this discretion is exercised. Will it be officials in DG COMP or others, for example in the cabinet of President von der Leyen or amongst member state governments?
There are good grounds for thinking DG COMP will continue to hold the most influence. It has expert staff who work full-time on the issues and they control the process, whereas those who may seek to exercise political influence generally have less technical knowledge, they have many other things on their plate and they are trying to affect the process from the outside. In any bureaucracy, experts in control of the process wield a lot of power.
But there are two risks.
The first is of self-restraint. Any agency will pay attention to the authorising environment around it, and DG COMP cannot fail to have noticed the signalling when the merger guidelines were discussed by the College of Commissioners on 18th March. The minutes show that almost every single comment in the discussion implied a softening of merger control, and in her summing up President von der Leyen left no room for doubt: “The message must be clear: the world had changed, markets were now global and European businesses needed predictability.”
The second risk stems from DG COMP’s success in the drafting. Many have argued that the text itself is mainstream in its economics; it codifies the EC’s recent decisional practice rather than imposing a radical shift in policy; and it seeks to put discretion in the hands of experts at DG COMP. That may be true.
But this is not an economics textbook, it’s guidance for a public authority. By mentioning lots of policy objectives, it gives legitimacy to a wide range of actors across the EU institutions and member states who may want a say in merger control. And by not saying how these policy objectives should be ranked when they come into conflict, the guidelines will not have resolved the policy debate. This will end up being done in individual cases, and that is where political intervention is generally more damaging.
