The relationship between Competition and Regulation through two apparently different approaches: US Trinko case and EU Deutsche Telecom19 aprile 2017 -
Di Marco Rosato
“Antitrust analysis must sensitively recognize and reflect the distinctive economic and legal setting of the regulated industry to which it applies. One factor of particular importance is the existence of a regulatory structure designed to deter and remedy anti-competitive harm. Where such a structure exists, the additional benefit to competition provided by antitrust enforcement will tend to be small, and it will be less plausible that the antitrust laws contemplate such additional scrutiny. Where, by contrast, there is nothing built into the regulatory scheme which performs the antitrust function, the benefits of antitrust are worth its sometimes considerable disadvantages.”
Verizon Communications v Law Offices of Curtis V Trinko, LLP, 540 U.S. 398 (2004)
The US Trinko case approach above mentioned has provided – at least for European standards – a (relatively) unusual view about the relationship between competition and regulation, calling into question the long-established supremacy of the former over the latter. In other words, the US Supreme Court held that when the regulatory framework is well-structured and enough targeted to grant a competition protection, the antitrust function can be effectively performed by the regulation system, avoiding a duplication of ex ante and ex post enforcement. In this paper, I will address the issue under EU and US perspective, taking in account two law cases apparently placed at opposite ends, namely Trinko and Deutsche Telecom cases and I will explain why Trinko case finding could be considerate an equilibrate formula to manage the boundaries between regulation and competition. Nevertheless, I will point out also the reasons why this pattern might find some difficulties in its practical application in the EU framework.
The starting point of this work is the US Trinko case. In this decision, indeed, the Supreme Court took a quite firm and resolute stance in reshaping the relationship between competition and regulation, restricting the scope of action of the antitrust law based on a useless duplication of costs due to competition enforcement. In the Court’s opinion, actually, given the detailed and effective regulatory pattern in force as of 1996, the antitrust enforcement would have not resulted in a benefit. In this connection, the Supreme Court held that antitrust breaches are difficult for court to judge because of their technical complexity and continuous occurrence of violations. For these reasons, according to the Supreme Court, the continuing supervision can be better performed by regulatory agencies on daily basis rather than by an antitrust court. Furthermore, the antitrust scrutiny can be highly costly. In this respect, the Court held that a cost-benefit assessment must be performed in order to allow antitrust enforcement to be carried out. Not surprisingly, this approach has drawn several criticisms, especially because the Telecommunications Act of 1996 expressly included an antitrust saving clause, but nevertheless the Supreme Court closed the doors for a simultaneous application of antitrust and regulation scrutiny. The main critical views on Trinko case hinges on: i) the alleged higher cost of ex post enforcement, a statement which is deemed by many scholars not accurate and questionable; ii) the Supreme Court failure to state which are the legal standards that a regulatory programme must meet to block antitrust claims; iii) the lack of any reference in the 1996 Act to the analysis of costs-benefits of antitrust enforcement as a key criterion in order to allow antitrust lawsuit.
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