Fairness and Competition Law: A Fairness Paradox
Dolmans, Lin, "How to Avoid a Fairness Paradox in EU Competition Law", in D. Gerard et al. (eds), Fairness in EU Competition Policy: Significance and implications, GCLC Annual Conference Series, pp.27-76
50 Pages Posted: 21 Sep 2017 Last revised: 10 Sep 2021
Date Written: September 20, 2017
“Fairness” is increasingly invoked in public debate as a goal or standard for the application of EU competition law. It is understandable that politicians use this concept in public discourse to summarize the goals and criteria of competition policy, to re-establish trust in the regulatory system. “Fairness”, however, is an imprecise and subjective moral concept. It means different things at different times and in different countries to different people, depending on their political, philosophical, religious, social or cultural backgrounds. It could be used to justify a multitude of different and inconsistent outcomes, and even raises the spectre of antitrust populism (such as criticism of large firms on the ground that “big is bad”). It is also too vague a criterion for firms to determine their commercial conduct, and thus undermines legal certainty (which in turn could deter desirable competitive conduct and investments). It is not a workable benchmark for regulators to determine infringements (with some exceptions, such as FRAND licensing), and creates a risk that political goals and populist appeal skew an objective assessment. There is, therefore, a fairness paradox: on one hand, competition law should reflect principles of fairness; on the other hand, if fairness were actually used as goals and criteria, that would lead to unequal and inefficient results. This paradox is resolved by using objective and rigorous analysis rooted in core concepts of law and economic: (a) “consumer welfare” and efficient allocation of resources as key goals of competition law, (b) “competition on the merits” and “effect on competition” as the core criteria for a finding of infringement, (c) proportionality and “useful effect” as a benchmark for remedies, and (d) due process and the rule of law as the hallmarks of the proper procedure for the application of competition law. This article is a plea to stick to these more objective and precise concepts. These are relatively well defined in case law, and less susceptible to the cognitive biases that colour the perception of fairness. There is a risk that relying on fairness as a criterion could ironically lead to unfair and inefficient outcomes. There are other concerns, too: Connotations that are implicit in the moral concept of fairness (such as equal treatment, special protection of weaker parties, or mutual assistance) may influence or even prejudge the outcome of proceedings and lead to inefficient results that are inconsistent with the law as it stands, and reduce rather than foster consumer welfare and efficient allocation of resources. Social values inherent in some concepts of fairness (such as loyalty, cooperation and reciprocity, information sharing, and transparency) may even lead to violations of the law. And focusing on fairness of outcomes (for instance, applying the law to protect competitors who have been unable to keep up) may lead to interference with the normal process of competition, or intervention in cases where firms lost the competitive race for reasons other than a rival’s violation of competition law. While fairness may have some independent relevance in exploitative abuse cases (albeit protecting consumers rather than competitors), it is too fuzzy and unworkable a concept to have independent role as a benchmark in exclusionary abuse cases, Article 101 TFEU, or merger control.
Keywords: competition, antitrust, fairness, consumer welfare, competition on the merits, due process, proportionality, rule of law, antitrust populism,
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