Papers – Public Law and Economics

Deepening versus Widening the EU: Where to go?

weaadmin — Wed, 31 May 2017 20:05:18 +0000

In recent years, the fears of European disintegration have risen. After Brexit, different propositions have been made by the European Commission of how to shape the future of the EU. In brief, the EU could proceed as before, or continue with a more differentiated integration. The following paper aims at scrutinizing the latter possibility and potentials for even further enlargement, focusing on purely economic effects. It will draw on theories of fiscal federalism to identify costs and benefits of differentiated integration.

Should competition authorities care about conglomerate mergers?

weaadmin — Wed, 31 May 2017 20:04:27 +0000

Mergers and acquisitions may change competition even when they do not affect market structure, a case known as conglomerate mergers. Competition authorities for a long time have adopted an ambiguous view towards conglomerate mergers, in particular those that are product or market extension mergers (i.e. acquisitions of local firm by a multiunit company that sells the same product in different geographic markets). In this paper, we explore a wave of acquisitions of Higher Education Institutions by educational groups in Brazil, which allow us to disentangle the effects of conglomerate mergers and of horizontal mergers on price, quantity and quality. Our findings show that multiunit organizations are able to increase some quality indicators. As for the effect on price and quantity, results are different. For conglomerate mergers we estimated an increase in the number of freshmen and tuition fees, whereas for acquisitions that leads to horizontal concentration there is no increase in quantity, just in prices. On the whole, our findings are consistent with the hypothesis that multiunit operations increase efficiency, due to scale and scope economies, but that only conglomerate mergers tend to pass on those gains to consumers. We find, though, heterogeneous effects according to the educational group, which still give some leeway for competition authorities to care about conglomerate mergers.

The Efficiency-Growth Dilemma: An Analysis of Regulation’s Impact on Short and Long-Term Development

weaadmin — Wed, 31 May 2017 20:02:52 +0000

In the midst of an ongoing recovery of economies worldwide, a growing concern regarding competitiveness and efficient regulations has arisen. Countries have taken different paths in the hopes of procuring higher growth rates, be it through austerity or expansion of State expenditures. Nonetheless, a common concern pertains to installing appropriate incentives, via regulation, in order to expedite desired results. The term “regulation” is used in a broad sense, insofar as governmental initiatives, under different forms and issued from all three branches, directly impact the main objective of instilling economic growth. To this end –namely the analysis of regulations’ adequacy to reach their assumed goals–, a Law and Economics framework is of great utility. This paper seeks to investigate efficiency under an intertemporal perspective, rather than the traditional static angle. Our premise is that, amongst several functions of norms, is the potentialization of expected returns and impairment of undesired results. In this sense, although several studies involving immediate impacts on efficiency fomented by means of regulation, legislation, or jurisprudential interpretations already exist, a careful analysis considering the dynamic gain in efficiency remains lacking. In some cases norms generate initial reductions of social welfare, widely compensated by future gains. The contrary may also occur, when regulations apparently produce a momentaneous raise in social welfare, followed by long lasting losses. In the present text, using the framework provided by Law and Economics, particularly the Welfare Overtaking Theorem, the efficiency of legal provisions and judicial rulings is analyzed, in a short and long-term perspective. To this end, an initial outline of the referred theorem is exposed, highlighting important matters that can be better addressed through its teachings, such as the offset of initial inefficiencies due to sustainable growth and the correlation between (in)equality and economic development. In sequence, a brief review of important Law and Economics literature is disclosed in the interest of (a) exemplifying the complexities that surround this debate and (b) furthering the current stance of academic reflections. Mainly in pursuance of the latter, various Brazilian case studies are invoked, such as provisions in the bankruptcy act, an emblematic Supreme Court ruling, and welfare programs instituted by government. The conclusions show that in drafting regulations, laws, and rulings, previous considerations of present and future costs and benefits must be acknowledged, including impacts on society’s dynamic efficiency. The findings focus on the Brazilian context, but are undoubtedly replicable in numerous other countries.

Competition Assessment in developing countries: Policy challenges after the global crisis

weaadmin — Wed, 31 May 2017 19:59:36 +0000

After the 2007-2008 global financial crisis, the world has been facing persistently low economic growth, particularly in many developing economies where the low growth environment is putting progress and shared prosperity at risk. In addition to this context, numerous laws, regulations and standards, have turned out to restrict competition in the marketplace further than necessary to achieve their policy objectives. This paper aims to address that developing countries, as those in Africa and Latin America, should adopt competition assessments for their new regulation in order to guarantee that their new rules and/or standards will not affect the competition environment in their countries. The paper concludes that governments and/or antitrust authorities should carefully provide a form of assessment, or a general methodology, for identifying unnecessary restraints and developing alternatives to enhance less restrictive policies that could still achieve government objectives.

Opportunism by Competition Authorities in Ireland, Portugal and Greece in the Wake of Economic Crisis

weaadmin — Wed, 31 May 2017 19:57:19 +0000

Greece, Ireland and Portugal experienced an economic crisis which resulted in bailout programmes negotiated by each Member State with the Troika. This paper offers some observations on how the Programmes sought to reform some aspects of the domestic competition law regime other than those which fell directly within the roots of the crisis (e.g. fiscal policy and the regulation and supervision of financial sector) but were in line with the general reform aspirations of the domestic competition authorities. After describing the programmes in general, this paper examines selected provisions which sought to reform the enforcement of EU (and domestic) competition law by aligning national provisions more closely with the EU model (for example civil fines and settlement mechanism). Next, it highlights how the MoUs sought to enhance the resources and independence of the authorities. Finally, it considers the attention paid to the liberal professions as an example of MoU conditions which were not really linked with the causes of the economic crisis. The title of this paper refers to the opportunism of the competition authorities in three Member States following an economic crisis. Here, however, the term is not intended to connote any moral judgment but to convey how when they found themselves regrettably holding lemons grasped the opportunity to make lemonade.

The Internationalization of Merger Review: Extraterritoriality, Conflicts and Convergence

weaadmin — Wed, 31 May 2017 19:56:04 +0000

Differences in the assessment standards and notification procedures of merger policy across jurisdictions impose substantial transaction costs on international business and commerce. In this paper, the issue of the internationalization of merger policy will be discussed by focusing on the extraterritorial applications, conflicts, and solutions provided by three important antitrust jurisdictions – the US, EU and China. Empirical studies on merger decisions in the US, EU and China shows that such difference may come from the higher, or lower standard in the analysis of merger effects, and the different priorities of competition goals by the antitrust authority. An international convergence in merger policy may face challenges because jurisdictions may easily incorporate non-economic goals, such as protecting domestic enterprises, when making decisions on transnational mergers. Since EU and the US proposed two distinct approaches on the internationalization of competition policy, and after the initiatives on creating a global antitrust legal framework failed, today’s antitrust world relies on bilateral agreements and multilateral cooperation through transnational networks. Technical assistance, experts’ working groups, and the use of “best practice” recommendations provide useful resources for antitrust agencies’ to enhance mutual learning. A global convergence in merger policy, although is difficult from the view of agreeing on one single text of global antitrust law, might be gradually achieved through the efforts by antitrust agencies across jurisdictions that improving their capacity, applying similar analytical tools, and harmonizing assessment procedure rules.

Structural Change and Protection: Non-Tariff Measures in ASEAN

weaadmin — Wed, 31 May 2017 19:54:47 +0000

As part of their regional integration measures, the members of the Association of Southeast Asian Nations (ASEAN) entered a commitment to remove non-tariff barriers and harmonize non-tariff measures by 2015. Despite this, non-tariff measures have steadily increased in the region.

This paper examines the non-tariff measure incidence in ASEAN within the context of the structural changes which occurred in the region during the 1990s. The 1990s was a period of tariff liberalization and outward-oriented policies. These marked the transition of these coun- tries from agricultural to increasingly manufacturing countries. The importance of production network-related trade for ASEAN countries makes the rising incidence of non-tariff measures even more noteworthy. On one hand, non-tariff measures can signal the quality of products of processes, thus stimulating demand. On the other hand, non-tariff measures can act as disguised protectionist measures. Are the ASEAN non-tariff measures motivated by a desire to protect industries which are adversely affected by recent structural changes? Or are these non- tariff measures promoting and enhancing these countries’ participation in production networks?

Using a qualitative approach, this paper examines the trends in the imposition of non- tariff measures vis-a`-vis the characteristics of the ASEAN Members. The trends in this region provide evidence for both scenarios. That the rising incidence of non-tariff measures coincided with increased participation in production networks supports the argument that these measures promote trade by signaling quality. However, the incidence of non-tariff measures in declining industries suggest that protectionist motives may be at play. These results imply that the idea that non-tariff measures need to be harmonized and even eliminated to promote trade needs to be reexamined.

General comments

weaadmin — Wed, 31 May 2017 19:52:08 +0000

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