Optimal Enforcement Structures for Competition Policy: Implications of Judicial Reviews and of Internal Error Correction Mechanisms

We use the welfare-based framework proposed by Katsoulacos and Ulph (2009) to examine a number of questions related to enforcement structures for Competition Policy. Does the presence of judicial reviews, offering an independent judgement on Competition Authority (CA) decisions and checking procedural correctness, make effects-based decision approaches more attractive than Per Se? Under what conditions will judicial reviews and internal error correction mechanisms improve welfare? What are the implications of CAs' internal error correction mechanisms for decision procedures? In the presence of such mechanisms should decisions be reached unanimously or through a majority rule?

We demonstrate that judicial reviews do not in general make effects-based decision approaches more attractive in decision error terms than Per Se. Further, judicial reviews and internal error-correction mechanisms subject to unanimity reduce deterrence. As a result, "confirmatory" procedures involving judicial appeals and internal error-correction mechanisms subject to unanimity are more likely to improve overall welfare when actions are "presumptively legal" than when they are "presumptively illegal". As regards in particular internal reviews we show that, ceteris paribus, final decisions in the CA should be taken unanimously when the action investigated is presumptively legal and through a majority rule when the action is presumptively illegal.