EU Antitrust Commission In The Economist

There is an article in this week's Economist about the competition directorate of the European Union. The article talks about how the competition directorate has grown to be the most important institution in its area. The author goes further into how the competition is too strong and does not give a fighting chance to the big companies. it goes far enough to call the directorate whose job it is to protect the consumer, unfair.

The Economist is losing it. It is a terrible magazine when it comes to international politics and most public issues. It defends corporatocracy and destructive institutions such as the Fed. How can they say that the useless antitrust commission in the US is better than its counterpart in Europe that is actually doing something to keep the corporatocracy from growing bigger and gaining more power and possibly becoming Too Big To Fail. For a magazine that pretends to be a defender of free markets and a market economy, how can they possibly defend not being on the side of increased competition. The answer possibly is personal gain on the part of the author or certain higher up people or the magazine being an instrument of certain interest groups. Either way readers should be warned about trusting everything they read in the magazine. The magazine's name is misleading as they have proven many times that they do not fully understand economics.

Below is the article:

"

Competition policy

Prosecutor, judge and jury

Enforcement of competition law in Europe is unjust and must change

Feb 18th 2010 | From The Economist print edition

Illustration by David Simonds

EUROPE’S trustbusters have plenty to boast about. Over several decades the European Commission’s competition directorate has evolved into perhaps the most important regulator of its kind in the world. It has been rigorous in the development of antitrust theory and an energetic enforcer of the law. While antitrust policy across the Atlantic has veered between the activism of the Clinton administration and the relative laissez-faire of the Bush years, it has shown consistency. More than any other body it has upheld the principles of the single market, often incurring the wrath of powerful member states. Yet despite its fine record, there are deep flaws in the way the directorate operates. The priority of the new competition commissioner, Joaquín Almunia, must be to address them.

The problems are not new, but they have been given fresh salience by the fallout from the European Union’s case against Intel (see article). Last May the commission fined the chipmaker a record €1.06 billion ($1.5 billion) under Article 82 (now 102) of the European treaty, which forbids dominant firms from abusing their power. The specific complaint against Intel, brought by its smaller rival, AMD, was that it had bribed PC-makers to buy its own processors.

The sheer size of the fine had an element of grandstanding about it. But a much bigger worry was that the commission’s trustbusters may have ignored evidence that could have weakened their case and made Intel’s conduct look less sinister. The EU’s ombudsman found that in the course of the commission’s investigation, it had failed to keep a record of a meeting with a senior executive from Dell, one of Intel’s biggest customers. Critics, whose concerns have increased with the ferocity of the sanctions imposed, say that by acting simultaneously as investigator, prosecutor, jury and sentencing judge, the commission is denying defendant firms the basic right to be heard by an impartial tribunal. They are right.

The rules under which the competition directorate operates, which date back nearly half a century, are grossly inadequate for the hugely enhanced role it plays today. There are three main objections. The first is the conflicted role of the case teams. These are appointed when the competition directorate decides to investigate a complaint about abusive behaviour from a business rival, an accusation of collusion or a merger with potentially anti-competitive consequences. The case teams investigate, propose a verdict and argue for a particular penalty. From the outset, the process is polluted by a prosecutorial bias. The second objection is that the accused company is denied a fair hearing. Although it gets the chance to put forward its side of the argument, it does so only to the case team, not to a neutral judge or hearing officer. As things stand, the role of the hearing officer is purely procedural. The third objection is that the final decision on culpability is taken on a vote by 27 politically appointed commissioners, only one of whom may have attended the defendant’s hearing.

A fair hearing, please

In no other area of law would it be thought acceptable for the outcome of such important cases to be determined by a bunch of politicians. In America the antitrust division of the Department of Justice has to make its arguments in open court, while even the quasi-judicial commissioners of the Federal Trade Commission appoint a judge to preside over hearings and publish findings. The process is long-winded and expensive but it is an intrinsically fairer way to establish the facts.

Even if Mr Almunia procrastinates, change is coming. Europe’s Charter of Fundamental Rights will finally be ratified next year. It is highly probable that antitrust appeals to the European Court of Human Rights (based on the unfairness of a process that levies huge fines but falls far short of the standards expected of the criminal law) will succeed. Realistically, amending the treaty to remove the commission’s role as the enforcer of competition law is a non-starter. A more modest change would, however, improve things greatly and bring European practice closer to America’s without importing all its excesses. That is to give the hearing officer the power to make a factual and legal determination based on a proper examination of the evidence; the 27 commissioners would then have to accept or reject this. The system would still be far from perfect, but it would be a good deal more just.

"