Competition Policy, Liberalism and Globalization: A European Perspective

6 Colum. J. Eur. L. 289 (2000)

Barry J. Rodger. Senior Lecturer, University of Strathclyde, Glasgow.

There are a number of reasons why a contemporary analysis of competition policy in a global economy is necessary and instructive. First, the Thatcher/Reagan era attack on the welfare regulatory state has been questioned in the late 1990s and this has profound implications for the role of competition policy. The newer approach to markets and state regulation can perhaps be best indicated by the much-vaunted “third way” promoted by UK Prime Minister Tony Blair’s Labour Government. More particularly there has been a sustained critique of the certainty and predictability of both UK and Community law during the last fifteen years. In particular, the UK has recently adopted a new Competition Act harmonizing its rules with those of Articles 81 and 82 of the EC Treaty, with the principal aim of providing greater certainty in the law. The debate on subsidiarity in Community law, in addition to important constitutional changes in Community law introduced by the Maastricht Treaty and the recent Amsterdam Treaty, will further impinge upon Community competition policy. On a broader level, the globalization of trade and the creation of the global economy has called into question both the function of competition law and the appropriate level of competition law competencies for dealing with international antitrust issues. This is particularly the case with the growing incidence of mergers on a global scale. The European Union has been prominent in the debate on the potential for globalized competition law and has also been proactive in instituting bilateral cooperation agreements in the field of international competition law enforcement.

This article will look at the implications of globalization for competition policy. First, I will relate the significance of liberal ideology to the competition law and policy debate. Liberalism is also an important yardstick against which the development of competition law can be assessed, and is particularly relevant to the debate on the scope for political intervention in markets within competition law. Globalization is greatly associated with free markets and the increasing liberalization of world trade.

Liberalism is, of course, significant for the writer’s background, not only because this article’s themes have a contemporary significance for Scotland but also because throughout the eighteenth and nineteenth centuries, Scotland was the hotbed of liberal ideas. Classical liberal ideology can perhaps be best witnessed in the work of the Scottish philosopher David Hume. In addition, the “invisible hand” free market principles of Adam Smith, a Scottish liberal economist, constitute an important benchmark for competition law and policy.

After outlining the relevance of globalization, the article will discuss liberal ideas and their relation to competition law and policy development. Specific liberal models such as Ordoliberalism and the work of Hayek will be considered as having a particular bearing on competition law and policy. An earlier study on the relationship between US antitrust law and the tenets of liberalism will be considered. The following section will consider the liberal rule of law and the Weberian legal paradigms of legal formalism and the rematerialization of law in the evolution of legal systems. The relevance of these legal paradigms will be assessed for competition law and its regulatory role. The experience of European Community and UK competition law will act as a focus for assessing the two paradigms and this will have important implications for the analysis of the liberal rule of law in competition law and policy.

Recent work in legal theory has considered the potential for a third legal paradigm, alternatively known as proceduralism or reflexive law. These theories have been developed due to concern with the appropriateness and utility of regulation and the process of juridification. These ideas will be outlined briefly, as will their relevance to, and limitations for, their application to competition law and policy development.

Recent UK legislation will be considered to assess the relevance of the legal theory debate on the forms and content of competition policy. There has been an apparent shift in UK competition law towards a more rule-oriented set of competition laws based on Community competition rules. However, this does not necessarily mean that Community competition law neatly fits into the formalistic law/politics distinction which would equate most clearly with a liberal rule of law ideal.

In Europe, a key development is the decentralization of competition law enforcement. This development is associated with a variety of significances. First among these is the move towards court-enforced competition laws, a new tradition in Europe, as compared to the history of private antitrust enforcement in the US. Second, and related, is the consideration of rule-oriented laws, with less political content, as more suitable for court-based enforcement. Third, the discussion of intra-Europe competencies may be interesting for the development of a world-wide system of market competencies. Subsidiarity in Community law has paved the way for a debate on competencies within Europe which may also have important implications for the form and content of, and relationship between, competition regimes. A particular issue in the European debate concerns the supremacy of Community law and the possibility of conflicting national norms. One aspect of this relationship has been termed “diagonal conflicts.” It concerns the scope of “competition law” and the extent to which Community and national policies and politics relating to the market are overlapping or in conflict and how this can be resolved. The conflict between Community competition norms and national formal private law and, more broadly, the possible inclusion of extra-competition policies within the ambit of “competition law,” constitute two aspects of this paradigm.

Perhaps the most pressing issue is the question of whether a global competition law system would constitute the appropriate response to the globalization of markets. The problem of a global democratic deficit and difficulties in reaching agreement on its key aspects would suggest that any global competition law system is most likely to be a minimalistic and formalized rule-based system. It is suggested that this is likely to amount to little more than a cartel-type prohibition, loosely reflecting the tenets of liberalism and laissez-faire in the world order. It has also been suggested recently that globalization will require and result in both an upward-global response to market regulation and also a downward-regional one that would be more culture-specific. This latter issue has been reflected in a number of Community competition law issues in recent years which inevitably question the validity of a liberal world order unless there is scope for wider competencies at the local level. Nonetheless, the European Union has clearly been at the forefront of the development of international cooperation agreements and is a strong advocate for the institution of a set of globalized competition law norms.

To sum up, this article looks at globalizing markets and the globalization of competition policies and ideas. It is concerned with the impact of a liberal agenda on competition law and policy. It will assess the relevance of the liberal rule of law for competition policy in the context of the wake of the post-1980s attack on interventionism. It shall address in outline some aspects of the “progress” towards a global competition law regime in which the European Union has played an important role. It is important in this context to be aware of the continuing debate on competencies both in the Community and beyond and how these are related to the more fundamental questions of globalization, the objectives and style of competition law and their relation to the underlying philosophical and economic bases.

This article reflects, from a competition law perspective, many of the dilemmas facing us in the globalizing era as outlined recently by Axtmann.