Optimal enforcement of competition policy : the commitments procedure under uncertainty

GAUTIER, Axel (Université catholique de Louvain, CORE, Belgium) and PETIT, Nicolas (University of Liege) discuss Optimal enforcement of competition policy: the commitments procedure under uncertainty.

ABSTRACT:  Since the introduction of a formal commitments procedure in EU antitrust policy (Article 9 of Council Regulation 1/2003), the European Commission has extensively settled cases of alleged anticompetitive practices. In this paper, we use a formal model of law enforcement (Bebchuk, 1984; Shavell, 1988) to identify the optimal procedure to resolve cases in a context of uncertainty related to the law (L-uncertainty) and to the facts (F-uncertainty). We show that commitments are suboptimal when L-uncertainty is important. Furthermore, the generalized use of commitments creates an additional risk of under-enforcement when F-uncertainty is significant.