"More economic approach " in competition policy: EU & Hungarian developments

1. "More economicapproach" incompetition policy:EU & Hungariandevelopments CsorbaGergely HungarianCompetitionAuthority Budapest, 2010-04-23

2. More economicapproach • The role of economic thinking and economists becomes more important in CP analysis • But economics still has a supportive complementary role to competition law • Reasons for the spread of economic analysis • Parties (and sometimes courts) raise more economic points that need to be addressed • Economic theory (industrial organizations) is more developed and unified to answer relevant questions • Empirical methods are more common & suited to help • More data are available to analyze (both quantity & quality + software to handle)

3. Effect-basedapproach • More emphasis put on competitive assessment • Recognised that some behaviors (like vertical restrictions) can be procompetitive or efficiency-increasing • Importance of counterfactual approach: what would have happened on the market without the behavior examined • It is not a definitive black&white choice whether you go effect-based or not • Quite a few cases are (should be) judged on form basis (cartels) • Better be careful not to go more effect-based than case requires • Main advantage of analysing effects: "reality check" • Could be easier to defend • But it also raises the bar: could lead to more rejections as well

4. Forensiceconomics • This is not economics in the academic sense • Usually not enough time • Usually not (good) enough data • Needs to be explained such that lawyers understand • Needs to be recognised that it cannot be a perfect method, but one can decrease errors • The theory (of harm) should be consistent and applicable to the industry in case • "Simple" emprical methods can be also useful if one acknowledges their limitations • The more empirical results lead to the same conclusion, the more robust it is

5. European developments • DG Comp reforms & policy papers • 2004: Horizontal Merger Guidelines & introduction of SLC test • 2007: Non-Horizontal Merger Guidelines • 2005-2009: §82 reform and Guidance Paper • 2010: Guidelines on data & economic analysis • 2010: §81 (§101) reform both on horizontal & vertical agreements • Institutions also move towards more economic approach • Courts expect and use more economic reasoning in cases (from 2000, unfortunately not in a consistent way) • Founding of Chief Economist Team (2003): both for serious economic analysis in high-profile cases + quality control • Strengthening of economic consultant firms

6. EconomicsintheHungarian CA • Chief Economist Team establishedin 2006 • All major casesarenowgiventheoretical and empiricalfoundationsifneeded • Significantimpactin-house • Courtdecisions : fewcasesbutseemstohavesomeeffect (notdefinitvein a caseyet) • Debateswithparties: positivesigns • Policy: newmergerregulationfrom 2009 (SLC) • Most visibleimpactonmergers • Good number of consistentdecisionsin 4 years • Especiallyinhorizonalnon-coordinatedeffects • In 2009, a major casewasremedied, 2 blocked

7. Howdifferent is todoeffect-based CP in a CEE country? • Potentialdifficulties • Less trainedeconomists (smallerstaffs) • Less experience / economicculture • Less demand (courts, consultancy) • Personalview: CAsshouldtake a pro-activerole • May not be easyontheshort-run (neitheronlong-run..) • Settingprecedentscan be quiteusefulinnon-abuse & clearencedecisions • Mergerscan be a strategicarea: partiesare more incentivizedto go economic, givedata and cooperate