IMPLICATIONS OF COMPETITIVE NEUTRALITY FOR COMPETITION AGENCIES: A PROCESS PERSPECTIVEOECD, 17 June 2015Prof. Nicolas PETIT

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Outline

1. Conceptual framework2. The State-related firm as defendant3. The State-related firm as complainant4. The State as “third party”5. Debiasing tools6. Advocacy7. Conclusion

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1. Conceptual framework

A State-related firm must not be unduly advantaged in proceedings that take place before the competition agency of its domestic State

Advantages at four possible stages Case-selection Investigation Evaluation Remediation

State-related firm: ownership, control, subsidies, entrustment, regulatory devolution

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2. The State-related firm as defendant

No undue procedural humility vis-à-vis State-related firms that are defendants in competition proceedings

Coordinated conduct Cartels in financial services v public rescue

measures towards banking institutions Unilateral conduct

Utilities: fines v systematic regulatory approach

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3. The State-related firm as complainant

No undue procedural zeal when a State-related firm is complainant

Coordinated conduct Heightened severity for bid rigging in public

procurement? Unilateral conduct

Specific scrutiny for pharmaceutical and medical devices sectors?

By object liability for abuse of originating companies?

Higher fines (French Plavix case)

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4. The State as « Third Party »

Outsider that seeks to influence competition proceedings

Competition agency unwillingly strays from competitive neutrality

Merger control State wants to thwart merger: additional

conditions that create remedial « fatigue » (GE/Alstom)?

State wants to secure merger: plays « white knight » upfront buyer?

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5. Debiasing tools

Institutional approach Expatriation Judiciarization

Substantive approach Stricter normative rules for State-related

companies? EU approach

Procedural approach Competitive neutrality as due process

requirement

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6. Advocacy

CN distortions that cannot be typified as a competition infringement Entry regulation, mandatory standard,

entrustment In advocacy, storytelling matters Link with secondary line injury discrimination

(101(d) and 102(c) TFEU)? CN distortions typified as anticompetitive

conduct, but exonerated State action doctrine, professional services,

SMEs derogations « Spirit » theory ?

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7. Conclusion

Finding n°1: CN distortions more likely to occur through tacit biases and routines in decision-making

Finding n°2: orthodox application of competitive neutrality as constraint on agency discretion

Finding n°3: strict application of competitive neutrality risks divorcing agency from big economic picture

Liege Competition and Innovation Institute (LCII)University of Liege (ULg)

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