Competition Policy and the Economic Approach
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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.
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Chapter 16: Competition Agencies, Independence, and the Political Process

William E. Kovacic


William E. Kovacic* 1. INTRODUCTION A common assumption in the design of competition policy systems is that public enforcement agencies should be politically ‘independent’.1 A jurisdiction is said to achieve the requisite independence by ensuring that the competition authority can make decisions free from the influence of elected officials (e.g. heads of state or legislators) or appointees subject to their control. In principle, the condition of independence improves policy outcomes by enabling the enforcement agency to exercise its authority according to widely accepted competition policy principles and to resist demands that it serve special interests at the expense of the larger public welfare. At a very general level, there seems to be a rough consensus about what political independence ought to mean in practice. A competition agency should not exercise its power to prosecute – to open files, to issue complaints, to impose sanctions – to satisfy the preferences of legislators, presidents or departmental ministries. At the same time, competition agencies should be accountable for their decisions – accountable to the public and subject to checks and balances (such as judicial review) that press public officials to operate within boundaries of authority set by constitutions and statutes and to exercise their delegated powers wisely. There is an inherent tension between the preservation of an acceptable level of independence and the attainment of necessary levels of accountability. Measures that ensure complete freedom from interference from political forces also can diminish accountability and effectiveness. Beyond these broad prescriptions, discussions about a competition agency’s separation from,...

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