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Competition Policy and the Economic Approach

Competition Policy and the Economic Approach

Foundations and Limitations

Edited by Josef Drexl, Wolfgang Kerber and Rupprecht Podszun

This outstanding collection of original essays brings together some of the leading experts in competition economics, policy and law. They examine what lies at the core of the ‘economic approach to competition law’ and deal with its normative and institutional limitations. In recent years the ‘more economic approach’ has led to a modernisation of competition law throughout the world. This book comprehensively examines for the first time, the foundations and limitations of the approach and will be of great interest to scholars of competition policy no matter what discipline.

Chapter 3: Consumer Welfare, Economic Freedom and the Moral Quality of Competition Law – Comments on Gregory Werden and Victor Vanberg

Daniel Zimmer

Subjects: economics and finance, competition policy, law - academic, competition and antitrust law


Daniel Zimmer 1. WHICH CONSUMER’S WELFARE? Gregory Werden presents a broad analysis of the use of the notion ‘consumer welfare’ in economics as well as in legal practice. There is no point in restating it here, but I would like to underline the author’s conclusion that there is no international consensus about the meaning of the term ‘welfare’. Professor Werden points out that in US competition policy consumer welfare is practically the same as total welfare, whereas the competition policy in the EU is more oriented to benefit consumers at the end of the distribution chain. He also makes clear that ‘consumer welfare’ can come into play at different levels of competition policy: as an ultimate goal, but also as a mere test or guidance when applying competition law. He then gives some indications about the use of a ‘consumer welfare’ concept in the different areas of competition policy. According to the author, the goal of merger control laws should be understood to be promotion of social welfare generally. With respect to the implementation of this goal, Werden states: ‘Whatever test for legality is applied, it must be applied using the available analytic tools, and economics provides tools best suited to predicting likely short-term price effects from mergers’. If this is meant to say that merger control should mainly focus on short-term price effects, this raises a serious methodological question: lawyers are used to ask in the first place what the law requires – and then, when applying it, look for...

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