On the optimal use of commitment decisions under European competition law

Philippe Choné, Saïd Souam (msouam@parisnanterre.fr) and Arnold Vialfont

International Review of Law and Economics, 2014, vol. 37, issue C, 169-179

Abstract: In Europe, competition authorities have the power to close antitrust cases with “commitment decisions” after the concerned firms have offered agreed remedies. We show that the optimal use of this instrument is governed by a tradeoff between deterrence of potentially anticompetitive practices and early restoration of effective competition. We relate the optimal policy to the distribution of firm profit and consumer harm among cases. We find, however, that the optimal policy is generally not enforceable when the authority cannot credibly announce its policy prior to the firms’ strategic decisions. The lack of authority credibility may translate into insufficient or excessive use of commitment decisions.

Keywords: Commitment decisions; Deterrence; Enforcement of competition law; Credibility (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:37:y:2014:i:c:p:169-179

DOI: 10.1016/j.irle.2013.10.003

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