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  1. Introduction

The International Competition Network (ICN), a “virtual” organization comprised of most of the world’s competition (antitrust) agencies and expert non-governmental advisors (NGAs), held its Sixteenth Annual Conference in Porto, Portugal from May 10-12. (I attended this Conference as an NGA.) Now that the ICN has turned “sweet sixteen,” a stocktaking is appropriate. The ICN can point to some significant accomplishments, but faces major future challenges. After describing those challenges, I advance four recommendations for U.S.-led initiatives to enhance the future effectiveness of the ICN.

  1. ICN Background and Successes

The ICN, whose key objective is to promote “soft convergence” among competition law regimes, has much to celebrate. It has gone from a small core of competition authorities focused on a limited set of issues to a collection of 135 agencies from 122 far-flung jurisdictions, plus a large cadre of NGA lawyers and economists who provide practical and theoretical advice. The ICN’s nature and initiatives are concisely summarized on its website:

The ICN provides competition authorities with a specialized yet informal venue for maintaining regular contacts and addressing practical competition concerns. This allows for a dynamic dialogue that serves to build consensus and convergence towards sound competition policy principles across the global antitrust community.

The ICN is unique as it is the only international body devoted exclusively to competition law enforcement and its members represent national and multinational competition authorities. Members produce work products through their involvement in flexible project-oriented and results-based working groups. Working group members work together largely by Internet, telephone, teleseminars and webinars.

Annual conferences and workshops provide opportunities to discuss working group projects and their implications for enforcement. The ICN does not exercise any rule-making function. Where the ICN reaches consensus on recommendations, or “best practices”, arising from the projects, individual competition authorities decide whether and how to implement the recommendations, through unilateral, bilateral or multilateral arrangements, as appropriate.

The Porto Conference highlighted the extent of the ICN’s influence. Representatives from key international organizations that focus on economic growth and development (and at one time were viewed as ICN “rivals”), including the OECD, the World Bank, and UNCTAD, participated in the Conference. A feature in recent years, the one-day “Pre-ICN” Forum jointly sponsored by the World Bank, the International Chamber of Commerce, and the International Bar Association, this year shared the spotlight with other “sidebar” events (for example, an antitrust symposium cosponsored by UNCTAD and the Japan Fair Trade Commission, an “African Competition Forum,” and a roundtable of former senior officials and academics sponsored by a journal). The Porto Conference formally adopted an impressive array of documents generated over the past year by the ICN’s various Working Groups (the Advocacy, Agency Effectiveness, Cartel, Merger, and Unilateral Conduct Working Groups) (see here and here). This work product focuses on offering practical advice to agencies, rather than theoretical academic speculation. If recent history is in any indication, a substantial portion of this advice will be incorporated within some national laws, and various agencies guidance documents, and strategic plans.

In sum, the ICN is an increasingly influential organization. More importantly, it has, on balance, been a force for the promotion of sound policies on such issues as pre-merger notifications and cartel enforcement – policies that reduce transaction costs for the private sector and tend to improve the quality of antitrust enforcement. It has produced valuable training materials for agencies. Furthermore, the ICN’s Advocacy Working Group, buoyed by a growing amount of academic research (some of it supported by the World Bank), increasingly has highlighted the costs of anticompetitive government laws and regulations, and provided a template for assessing and critiquing regulatory schemes that undermine the competitive process. Most recently, the revised chapter on the “analytical framework for evaluating unilateral exclusionary conduct” issued at the 2017 Porto Conference did a solid job of describing the nature of harm to the competitive process and the need to consider error costs in evaluating such conduct. Other examples of welfare-enhancing ICN proposals abound.

  1. Grounds for Caution Going Forward

Nevertheless, despite its generally good record, one must be cautious in evaluating the ICN’s long-term prospects, for at least five reasons.

First, as the ICN tackles increasingly contentious issues (such as the assessment of vertical restraints, which are part of the 2017-2018 ICN Work Plan, and “dominant” single firm “platforms,” cited specifically by ICN Chairman Andreas Mundt in Porto), the possibility for controversy and difficulty in crafting recommendations rises.

Second, most ICN members have adopted heavily administrative competition law frameworks that draw upon an inquisitorial civil law model, as opposed to the common law adversarial legal system in which independent courts conduct full legal reviews of agency conclusions. Public choice analysis (not to mention casual empiricism and common sense) indicates that as they become established, administrative agencies will have a strong incentive to “do something” in order to expand their authority. Generally speaking, sound economic analysis (bolstered by large staffs of economists) that stresses consumer welfare has been incorporated into U.S. federal antitrust enforcement decisions and federal antitrust jurisprudence – but that is not the case in large parts of the world. As its newer member agencies grow in size and influence, the ICN may be challenged by those authorities to address “novel” practices that stray beyond well-understood competition law categories. As a result, innovative welfare-enhancing business innovations could be given unwarranted scrutiny and thereby discouraged.

Third, as various informed commentators in Porto noted, many competition laws explicitly permit consideration of non-economic welfare-based goals, such as “industrial policy” (including promotion of “national champion” competitors), “fairness,” and general “public policy.” Such ill-defined statutory goals allow competition agencies (and, of course, politicians who may exercise influence over those agencies) to apply competition statutes in an unpredictable manner that has nothing to do with (indeed, may be antithetical to) promotion of a vigorous competitive process and consumer welfare. With the proliferation of international commerce, the costly uncertainty injected into business decision-making by malleable antitrust statutes becomes increasingly significant. The ICN, which issues non-binding recommendations and advice and relies on voluntary interagency cooperation, may have little practical ability to fend off such welfare-inimical politicization of antitrust.

Fourth, for nearly a decade United States antitrust agencies have expressed concern in international forums about lack of due process in competition enforcement. Commendably, in 2015 the ICN did issue guidance regarding “key investigative principles and practices important to effective and fair investigative process”, but this guidance did not address administrative hearings and enforcement actions, which remain particularly serious concerns. The ICN’s ability to drive a “due process improvements” agenda may be inherently limited, due to differences among ICN members’ legal systems and sensitivities regarding the second-guessing of national enforcement norms associated with the concept of “due process.”

Fifth, there is “the elephant outside the room.” One major jurisdiction, China, still has not joined the ICN. Given China’s size, importance in the global economy, and vigorous enforcement of its completion law, China’s “absence from “the table” is a significant limitation on the ICN’s ability to promote economically meaningful global policy convergence. (Since Hong Kong, a “special administrative region” of China, has joined the ICN, one may hope that China itself will consider opting for ICN membership in the not too distant future.)

  1. What Should the U.S. Antitrust Agencies Do?

Despite the notes of caution regarding the ICN’s future initiatives and effectiveness, the ICN will remain for the foreseeable future a useful forum for “nudging” members toward improvements in their competition law systems, particularly in key areas such as cartel enforcement, merger review, and agency effectiveness (internal improvements in agency management may improve the quality of enforcement and advocacy initiatives). Thus, the U.S. federal antitrust agencies, the Justice Department’s Antitrust Division (DOJ) and the Federal Trade Commission (FTC), should (and undoubtedly will) remain fully engaged with the ICN. DOJ and the FTC not only should remain fully engaged in the ICN’s Working Groups, they should also develop a strategy for minimizing the negative effects of the ICN’s limitations and capitalizing on its strengths. What should such a strategy entail? Four key elements come to mind.

First, the FTC and DOJ should strongly advocate against an ICN focus on expansive theories of liability for unilateral conduct (particularly involving such areas as popular Internet “platforms” (e.g., Google, Facebook, and Amazon, among others) and vertical restraints), not tied to showings of harm to the competitive process. The proliferation of cases based on such theories could chill economically desirable business innovations. In countering such novel and expansive condemnations of unilateral conduct, the U.S. agencies could draw upon the extensive law and economics literature on efficiencies and unilateral conduct in speeches, publications, and presentations to ICN Working Groups. To provide further support for their advocacy, the FTC and DOJ should also consider issuing a new joint statement of unilateral conduct enforcement principles, inspired by the general lines of the 2008 DOJ Report on Single Firm Conduct Under Section 2 of the Sherman Act (regrettably withdrawn by the Obama Administration DOJ in 2009). Relatedly, the FTC and DOJ should advocate the right of intellectual property (IP) holders legitimately to maximize returns on their holdings. The U.S. agencies also should be prepared to argue against novel theories of antitrust liability untethered from traditional concepts of antitrust harm, based on the unilateral exploitation of IP rights (see here, here, here, and here).

Second, the U.S. agencies should promote a special ICN project on decision theory and competition law enforcement (see my Heritage Foundation commentary here), under the aegis of the ICN’s Agency Effectiveness Working Group. A decision-theoretic framework aims to minimize the costs of antitrust administration and enforcement error, in order to promote cost-beneficial enforcement outcomes. ICN guidance on decision theory (which would stress the primacy of empirical analysis and the need for easily administrable rules) hopefully would encourage competition agencies to focus on clearly welfare-inimical practices, and avoid pursuing fanciful new theories of antitrust violations unmoored from robust theories of competitive harm. The FTC and DOJ should also work to inculcate decision theory into the work of the core ICN Cartel and Merger Working Groups (see here).

Third, the U.S. agencies should also encourage the ICN’s Agency Effectiveness Working Group to pursue a comprehensive “due process” initiative, focused on guaranteeing fundamental fairness to parties at all stages of a competition law proceeding.  An emphasis on basic universal notions of fairness would transcend the differences inherent in civil law and common law administrative processes. It would suggest a path forward whereby agencies could agree on the nature of basic rights owed litigants, while still preserving differences among administrative enforcement models. Administrative procedure recommendations developed by the American Bar Association’s Antitrust Section in 2015 (see here) offer a good template for consideration, and 2012 OECD deliberations on fairness and transparency (see here) yield valuable background analysis. Consistent with these materials, the U.S. agencies could stress that due process reforms to protect basic rights would not only improve the quality of competition authority decision-making, it would also enhance economic welfare and encourage firms from around the world to do business in reforming jurisdictions. (As discussed above, due process raises major sensitivities, and thus the push for due process improvements should be viewed as a long-term project that will have to be pursued vigorously and very patiently.)

Fourth, working through the ICN’s Advocacy Working Group, the FTC and DOJ should push to substantially raise the profile of competition advocacy at the ICN. A growing body of economic research reveals the enormous economic gains that could be unlocked within individual countries by the removal of anticompetitive laws and rules, particularly those that create artificial barriers to entry and distort trade (see, for example, here and here). The U.S. agencies should emphasize the negative consequences for poorer consumers, reduced innovation, and foregone national income due to many of these anticompetitive barriers, drawing upon research by World Bank and OECD scholars (see here). (Fortunately, the ICN already works with the World Bank to promote an annual contest that showcases economic “success stories” due to agency advocacy.) The FTC and DOJ should also use the ICN as a forum to recommend that national competition authorities accord competition advocacy aimed at domestic regulatory reform relatively more resources and attention, particularly compared to investigations of vertical restraints and novel unilateral conduct. It should also work within the ICN’s guidance and oversight body, the “Steering Group,” to make far-reaching competition advocacy initiatives a top ICN priority.

  1. Conclusion

The ICN is a worthwhile international organization that stands at a crossroads. Having no permanent bureaucracy (its website is maintained by the Canadian Competition Bureau), and relying in large part on online communications among agency staff and NGAs to carry out its work, the ICN represents a very good investment of scare resources by the U.S. Government. Absent thoughtful guidance, however, there is a danger that it could drift and become less effective at promoting welfare-enhancing competition law improvements around the world. To avert such an outcome, U.S. antitrust enforcement agencies (joined by like-minded ICN members from other jurisdictions) should proactively seek to have the ICN take up new projects that hold out the promise for substantive and process-based improvements in competition policy worldwide, including far-reaching regulatory reform. A positive ICN response to such initiatives would enhance the quality of competition policy. Moreover, it could contribute in no small fashion to increased economic welfare and innovation in those jurisdictions that adopted reforms in response to the ICN’s call. American businesses operating internationally also would benefit from improvements in the global competition climate generated by ICN-incentivized reforms.

 

 

 

I have previously written at this site (see here, here, and here) and elsewhere (see here, here, and here) about the problem of anticompetitive market distortions (ACMDs), government-supported (typically crony capitalist) rules that weaken the competitive process, undermine free trade, slow economic growth, and harm consumers.  On May 17, the Heritage Foundation hosted a presentation by Shanker Singham of the Legatum Institute (a London think tank) and me on recent research and projects aimed at combatting ACMDs.

Singham began his remarks by noting that from the late 1940s to the early 1990s, trade negotiations under the auspices of the General Agreement on Tariffs and Trade (GATT) (succeeded by the World Trade Organization (WTO)), were highly successful in reducing tariffs and certain non-tariff barriers, and in promoting agreements to deal with trade-related aspects of such areas as government procurement, services, investment, and intellectual property, among others.  Regrettably, however, liberalization of trade restraints at the border was not matched by procompetitive regulatory reform inside borders.  Indeed, to the contrary, ACMDs have continued to proliferate, harming competition, consumers, and economic welfare.  As Singham further explained, the problem is particularly acute in developing countries:  “Because of the failure of early [regulatory] reform in the 1990s which empowered oligarchs and created vested interests in the whole of the developing world, national level reform is extremely difficult.”

To highlight the seriousness of the ACMD problem, Singham and several colleagues have developed a proprietary “Productivity Simulator,” that focuses on potential national economic output based on measures of the effectiveness of domestic competition, international competition, and property rights protections within individual nations.  (The stronger the protections, the greater the potential of the free market to create wealth.)   The Productivity Simulator is able to show, with a regressed accuracy of 90%, the potential gains of reducing distortions in a given country.  Every country has its own curve in the Productivity Simulator – it is a curve because the gains are exponential as one moves to the most difficult reforms.  If all distortions in the world were eliminated (aka, the ceiling of human potential), the Simulator predicts global GDP would rise by 1100% (a conservative estimate, because the Simulator could not be applied to certain very regulatorily-distorted economies for which data were unavailable).   By illustrating the huge “dollars and cents” magnitude of economic losses due to anticompetitive distortions, the Simulator could make the ACMD problem more concrete and thereby help invigorate reform efforts.

Singham also has adapted his Simulator technique to demonstrate the potential for economic growth in proposed “Enterprise Cities” (“e-Cities”), free-market oriented zones within a country that avoid ACMDs and provide strong property rights and rule of law protections.  (Existing city states such as Hong Kong, Singapore, and Dubai already possess e-City characteristics.)  Individual e-City laws, regulations, and dispute-resolution mechanisms are negotiated between individual governments and entrepreneurial project teams headed by Singham.  (Already, potential e-cities are under consideration in Morocco, Saudi Arabia, Saudi Arabia, Bosnia & Herzegovina, and Somalia.)  Private investors would be attracted to e-Cities due to their free market regulatory climate and legal protections.  To the extent that e-Cities are launched and thrive, they may serve as “demonstration projects” for the welfare benefits of dismantling ACMDs.

Following Singham’s presentation, I discussed analyses of the ACMD problem carried out in recent years by major international organizations, including the World Bank, the Organization for Economic Cooperation and Development (OECD, an economic think tank funded by developed countries), and the International Competition Network (a network of national competition agencies and experts legal and economic advisers that produces non-binding “best practices” recommendations dealing with competition law and policy).  The OECD’s  “Competition Assessment Toolkit” is a how-to manual for ferreting out ACMDs – it “helps governments to eliminate barriers to competition by providing a method for identifying unnecessary restraints on market activities and developing alternative, less restrictive measures that still achieve government policy objectives.”  The OECD has used the Toolkit to demonstrate the huge economic cost to the Greek economy (5.2 billion euros) of just a very small subset of anticompetitive regulations.  The ICN has drawn on Toolkit principles in developing “Recommended Practices on Competition Assessment” that national competition agencies can apply in opposing ACMDs.  In a related vein, the ICN has also produced a “Competition Culture Project Report” that provides useful survey-based analysis competition agencies could draw upon to generate public support for dismantling ACMDs.  The World Bank has cooperated with ICN advocacy efforts.  It has sponsored annual World Bank forums featuring industry-specific studies of the costs of regulatory restrictions, held in conjunction with ICN annual conferences, and (beginning in 2015).  It also has joined with the ICN in supporting annual “competition advocacy contests” in which national competition agencies are able to highlight economic improvements due to specific regulatory reform successes.  Developed countries also suffer from ACMDs.  For example, occupational licensing restrictions in the United States affect over a quarter of the work force, and, according to a 2015 White House Report, “licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines.”  Moreover, the multibillion dollar cost burden of federal regulations continues to grow rapidly, as documented by the Heritage Foundation’s annual “Red Tape Rising” reports.

I closed my presentation by noting that statutory international trade law reforms operating at the border could complement efforts to reduce regulatory burdens operating inside the border.  In particular, I cited my 2015 Heritage study recommending that United States antidumping law be revised to adopt a procompetitive antitrust-based standard (in contrast to the current approach that serves as an unjustified tax on certain imports).  I also noted the importance of ensuring that trade laws protect against imports that violate intellectual property rights, because such imports undermine competition on the merits.

In sum, the effort to reduce the burdens of ACMDs continue to be pursued and to be highlighted in research, proposed demonstration projects, and efforts to spur regulatory reform.  This is a long-term initiative very much worth pursuing, even though its near-term successes may prove minor at best.

Introduction

In my role as a “non-governmental advisor” (NGA), I was privileged to attend and participate actively in the 15th Annual ICN Conference, held in Singapore from April 26-29.  (I have blogged previously on ICN annual conferences and policy initiatives, see here, here, and here.)  As a virtual network of national competition law agencies (“national competition authorities,” or NCAs, such as the U.S. Federal Trade Commission (FTC) and the U.S. Justice Department’s Antitrust Division (DOJ)) and expert NGAs from around the world, the ICN supports convergence toward consensus-based “best practices” in competition law enforcement and policy:

The ICN is unique as it is the only international body devoted exclusively to competition law enforcement and its members represent national and multinational competition authorities. Members produce work products through their involvement in flexible project-oriented and results-based working groups. Working group members work together largely by Internet, telephone, teleseminars and webinars.

Annual conferences and workshops provide opportunities to discuss working group projects and their implications for enforcement. The ICN does not exercise any rule-making function. Where the ICN reaches consensus on recommendations, or “best practices”, arising from the projects, individual competition authorities decide whether and how to implement the recommendations, through unilateral, bilateral or multilateral arrangements, as appropriate.

Since its founding in 2001, the ICN has evolved from a small club of fifteen agencies and a few NGAs (mainly from North America and Europe) to a robust organization comprising over 130 NCAs and numerous NGAs from around the world (although admittedly the majority of NGAs continue to come from developed countries).  Due to its lack of a centralized bureaucracy and the absence of top-down control by national governments, the ICN has been able to tackle concrete issues in a pragmatic and incremental fashion, drawing upon the insights of leading scholars as well as former and current NCA heads.

Summary Assessment of ICN Achievements

As the ICN turns fifteen, a bit of stock-taking is in order.  Here are some of my observations, based upon my decade-long involvement with the ICN:

  1. The ICN has significantly promoted the reduction of transactions costs involved in merger filings, through its recommended practices for merger notification and review procedures. This tangible benefit has gained importance with the proliferation of merger filing requirements around the world.  Although many regimes have yet to fully adopt the recommended practices, their influence has grown steadily.  Furthermore, the ICN’s Merger Working Group has leveraged this success to promote greater cooperation among NCAs in merger evaluation and a greater acceptance of economics-based merger analysis principles – factors which may also be expected to reduce transactions and error costs.
  1. The ICN’s Cartel Working Group has done an impressive job in promoting cooperation among NCAs in the detection, investigation, and prosecution of international cartels. Hard core cartel agreements involve the one type of business arrangement that unequivocally diminishes economic welfare, and therefore merits condemnation.  ICN work products related to cartel enforcement, including detection, punishment, investigative techniques, and information sharing (supplemented by hands-on workshops), continue to raise the quality of anti-cartel cooperation and new agency involvement in cartel enforcement.  Future challenges for this Working Group include the strengthening of corporate compliance programs worldwide to deter cartel activity, and dealing with private enforcement as a supplement to public anti-cartel efforts (European Union nations and other jurisdictions are beginning to introduce private competition law enforcement).
  1. The ICN has developed taped training modules and related documentary resources, centered on case-specific hypotheticals and economic analysis, that may over time raise the quality of substantive antitrust analyses carried out by NCAs, especially new and inexperienced ones. Although the influence of these materials may only be gradually felt over time, and cannot be quantified, discussion at the Singapore Conference suggests that they are being consulted more frequently.  These materials ideally will help reduce error costs in enforcement by dissuading enforcers from adopting economically irrational approaches to case analysis (although the materials cannot, of course, guarantee against the possible interjection of non-economic policy factors and extraneous political considerations in the assessment of particular matters).
  1. The ICN’s Working Group on Agency Effectiveness holds real promise for enhancement of the quality and efficiency of NCA decision-making. In particular, the Working Group’s recently developed ICN Guidance on Investigative Process provides useful guidance on investigative transparency and due process that, if followed, would help reduce widespread concerns about lack of procedural fairness in competition investigations, particularly those carried out by inexperienced NCAs.  Nevertheless, it must be recognized that calls for increased attention to due process in such investigations, by DOJ, the FTC, and corporate representatives, have met with limited success at best.  This may partly reflect the different view of due process found in civil law systems, which rely on inquisitorial proceedings guided by government officials rather than the common law adversary process.  It may also reflect concerns about having the nature of agency decision-making exposed to too much “sunshine,” particularly in young NCAs that have limited resources and inexperienced staff.  Improvements in procedural fairness thus may be expected to proceed slowly.  Even recognizing this, however, the Agency Effectiveness Group is engaging proactively in such issues as strategic planning and prioritization that could lead to improved substantive NCA outcomes from an economic welfare point of view, quite apart from due process issues.
  1. The ICN’s Advocacy Working Group (AWG) is expanding its efforts to enable NCAs to better assess the anticompetitive potential of government laws and regulations. This AWG has over the years produced excellent and succinct sets of Recommended Practices on Competition Assessment, centered on identifying features of proposed regulations and laws that prevent competitive forces from operating effectively, such as barriers to entry by new businesses.  The Working Group has also done valuable work on inculcating public support for procompetitive government policies (featuring release of a “competition culture” report in 2015).  Recently, the AWG has also worked closely with other multinational organizations involved in promoting international economic cooperation and development, including in particular the World Bank and the Organization for Economic Cooperation and Development (OECD).  The AWG has adapted analysis from the OECD’s Competition Assessment Toolkit (methodologies for identifying anticompetitive government actions) in its recommended practices and has involved OECD Competition Committee experts in its work.  Moreover, for several years now the World Bank has held one-day programs immediately preceding the ICN Annual Conference, which have highlighted how regulations and legislation that undermine competition greatly reduce economic growth potential in developing countries.  Starting in 2015, the World Bank and ICN AWG cooperated in launching annual “competition advocacy contests” in which NCAs compete in presenting case studies on how their successful public advocacy initiatives have enhanced competition and raised economic welfare within their jurisdictions.   The Working Group has also launched a web-based “Benefits Platform,” which “seeks to provide ICN members with knowledge, strategies and arguments for explaining the benefits of competition to support their competition advocacy efforts with government and non-government stakeholders, as well as in the evaluation of competition interventions.”  All told, among all of the ICN’s initiatives, the AWG’s projects hold out the greatest potential for enhancing economic welfare, since government interference in competitive processes tend to be far more serious, distortive, and long-lasting than mere private restraints.  (In a related vein, Shanker Singham and I have authored a Heritage Foundation essay on how procompetitive regulatory reform can advance both economic freedom and prosperity.)  The greatest limitation on the utility of AWG guidance is, of course, political opposition to regulatory reform from private rent seekers and their government allies.
  1. The ICN’s Unilateral Conduct Working Group (UCWG) has done solid and generally sound work on state-created monopolies and predatory pricing, and on the assessment of dominance/substantial market power, and is turning now to a broader policy initiative. In particular, the UCWG merits praise for recommending that competition analysis not treat state-owned enterprises more favorably than their private competitors (although the feasibility of true “neutrality” analysis may be questioned given the array of implicit benefits that state-supported enterprises may enjoy).  The UCWG is now developing a potentially ambitious “workbook” on the general analysis of unilateral conduct, which holds out both promise and risk.  Unilateral conduct analysis is particularly prone to high error costs, because procompetitive and anticompetitive conduct often look the same.  Given that fact, and the importance of aggressive unilateral initiatives to a vibrant competitive process, there is good reason to err on the side of caution in evaluating the competitive ramifications of unilateral conduct.  DOJ’s 2008 Report on Single-Firm Conduct Under Section 2 of the Sherman Act presents an excellent template for unilateral conduct analysis, which could profitably be adopted by the UCWG.  Regrettably, however, there are those who believe that unilateral conduct analysis should rely heavily on sophisticated theoretical models of potential competitive harm.  Such models typically ignore the problem of decision theory and error costs (see here), and threaten to condemn particular instances (if not broad categories) of single firm business initiatives that are welfare-enhancing.  What’s worse, such condemnations have the tendency to chill efficient unilateral actions by other firms, which fear that the efficiencies underlying their actions would be misunderstood or ignored by competition law enforcers.  The members of the UCWG should keep these considerations in mind in drafting the workbook, and rely on decision theory and error cost analysis in deriving their recommendations.

Conclusion

In sum, the ICN has done a commendable job in promoting sensible procedural and substantive principles in competition law analysis around the world.  Although its achievements inevitably have been and will continue to be constrained by the differences among national legal regimes (particularly the civil law and common law divide) and political limitations that individual NCAs face, there is every reason to believe that it has enhanced overall economic welfare through its efforts.  Accordingly, continued support for the ICN by the United States antitrust agencies and American antitrust scholars is clearly warranted.  It is to be hoped that active participants in ICN initiatives will continue to rely on sound economic analysis as their lodestar – and, in particular, that UCWG members will employ appropriate caution and a decision-theoretic template in developing future recommendations.