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Enforcement of Competition Law—Role of the Courts and Economic Experts

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Competition Law in China

Abstract

Agency public enforcement and private actions before the courts are the two complementing channels to cure market failure. Most antitrust jurisdictions rely on specialized antitrust agencies because it is believed that generalist courts do not have relevant expertise. When agencies are equipped with personnel having knowledge and expertise in economics, they investigate competition cases by applying such knowledge. At the same time, agencies with a top-down organization hierarchy may also suffer from public choice problems, and when the pressure from interest groups prevails, a court system should be built upon to enforce competition law through a more balanced system. Solely relying on the regulatory agencies to investigate competition cases, neglecting the fact that the goals of regulators may not be aligned with the goals of competition. The advantage for a court, but not agency, to enforce the law is that courts are restrained from regulatory capture, as defined in the public choice theory. The main challenge for courts to deal with complex economic antitrust cases is the lack of specific expertise, and such limitation could be remedied with the help of economic experts. This chapter discusses the economic complexity of the competition cases, the problem of specialization for courts versus agencies, and the role of experts. It will positively review the current development of private enforcement of the AML, and the potential role of expert witnesses.

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Notes

  1. 1.

    See for example, Neven and De Coninck (2010).

  2. 2.

    For example, Federal Judicial Center published Reference Manual on Scientific Evidence in 2000. The first two chapters of the Reference Guide in this manual are Reference Guide on Statistics and Reference Guide on Multiple Regression. Baker and Rubinfeld (1999, p. 387).

  3. 3.

    Botteman (2006 p. 71).

  4. 4.

    Friedman (1953, pp 3–4) and see also Weller (1997, pp. 871–935).

  5. 5.

    Neven claimed that the demand for economic consultancy in Europe has dramatically increased since the 1990s, especially after the promulgation of the EC Merger Regulation. Neven (2006, p. 748).

  6. 6.

    Both in the US and EU, the ratio of economists to lawyer at the competition enforcement agencies has increased significantly. In the EU, the Chief Competition Economist at the Directorate-General Competition (DG COMP) was appointed in 2003. Until 2005, among over 700 officials working at (DG COMP), 200 of them have an economics or business background, and about 20 of them hold a Ph.D. degree in economics. In 2005, 10 specialized economists who have a Ph.D. degree in industrial organization were hired by this office either as a permanent EU official, or as a temporary agent. See Roeller (2005, p. 16). Thus, as Neven argued, the number of professionals with an economic background working at the competition agency is comparable with those working in the economic consultancy firms. However, the economic resources that are devoted to case analysis are still unbalanced between private parties and the competition agency. See Neven (2006, p. 752, p. 781). In the US, the enforcement agencies are well-equipped with both professionals of PhD economists, but also antitrust lawyers who have a solid understanding of economic reasoning. See Baker and Bresnahan (2006, p. 28).

  7. 7.

    For example in the EU, Botteman claimed that “There are very few instances where the CFI and the ECJ have been confronted with econometric analyses carried out by the Commission or by experts acting on behalf of the notifying parties or other third parties.” Botteman (2006 p. 73, p. 85).

  8. 8.

    Botteman (2006, p. 86).

  9. 9.

    Back to 1948 Judge Prettyman pointed out that “The tribunal does the best it can to decipher the truth from the resultant welter. Nothing could be sillier.” Prettyman, ‘Needed: New Trial Technique: Suggestions for the Trial of Complicated Cases’, 34 ABA J 766, 770 (1948) cited by Massel (1962, p. 48).

  10. 10.

    Baker and Bresnahan (2006, p. 29).

  11. 11.

    It has been both an academic and a political concern to improve the performance of regulatory agencies by improving the institutional and organizational designs. For example, the study of competition agencies: Wright and Diveley (2012, pp. 1–22).

  12. 12.

    Kovacic (1997, p. 920).

  13. 13.

    This is named by Wright and Diveley “Expertise Hypothesis”, see Wright and Diveley (2012 p. 5). Note that the legislative debate on delegating enforcement power to agencies or courts has lasted for centuries. Back to 1887 when the Interstate Commerce Act was promulgated, one of the most debated issues was whether this Act should be enforced by courts or agencies. See Stephenson (2006, p. 1039). see also Gilligan et al. (1989, pp. 35, 47–49). In the US, the legislative debate on allocating powers on the interpretation of statutes also refers to the Chevron doctrine and its exceptions, which defines when administrative agencies are empowered to interpret the statute. See Stephenson (2006, p. 1041).

  14. 14.

    Dogan and Lamley (2008, p. 15).

  15. 15.

    See for example, Neven and De Coninck.

  16. 16.

    For example, Federal Judicial Center published Reference Manual on Scientific Evidence in 2000. The first two chapters of the ‘reference guide’ in this manual are ‘reference guide on Statistics’ and ‘reference guide on Multiple Regression’. Baker and Rubinfeld (1999, p. 387).

  17. 17.

    As Baye and Wright put it: “The battle of the experts has become a standard, and critical battle in the antitrust litigation wars.” Baye and Wright (2011, p. 5).

  18. 18.

    Farber and McDonnell (2005, p. 620). Discussions of antitrust often focus on economics, leaving many students with the feeling that they have mistakenly wandered into an economics class rather than a law class. .

  19. 19.

    Easterbrook (1984, p. 57).

  20. 20.

    Botteman (2006, p. 71).

  21. 21.

    Crane (2008, p. 1159).

  22. 22.

    Recalling the century-long debate on economic versus non-economic goals of antitrust law. see also Sokol (2015, p. 1247).

  23. 23.

    Neven claimed that the demand for economic consultancy in Europe has dramatically increased since the 1990s, especially after the promulgation of the EC Merger Regulation. Neven (2006, p. 748).

  24. 24.

    Lianos (2009, p. 6).

  25. 25.

    Baye and Wright (2011, p. 5).

  26. 26.

    Faure and Visscher (2011, p. 385).

  27. 27.

    For example, Schreiber (2010).

  28. 28.

    Petroski (2013, p. 108).

  29. 29.

    Baker (1992).

  30. 30.

    Baker (1992, pp. 331–332).

  31. 31.

    Landis (1938), The Administrative Process.

  32. 32.

    Wright and Diveley (2012, p. 5).

  33. 33.

    Lettow (1986, p. 8).

  34. 34.

    Lettow (1986, p. 8).

  35. 35.

    Lettow (1986, p. 8).

  36. 36.

    Lettow (1986, p. 9).

  37. 37.

    Lettow (1986, p. 9).

  38. 38.

    Lettow (1986, p. 9).

  39. 39.

    Macey (1992, p. 103).

  40. 40.

    Macey (1992, p. 103).

  41. 41.

    Note the “epistemic deference” problem: there is an epistemic asymmetry between judges and experts. See Brewer (1998).

  42. 42.

    Baye and Wright (2011, p. 5).

  43. 43.

    Baye and Wright (2011), p. 6.

  44. 44.

    Moore (2001).

  45. 45.

    Chu (2001, pp. 1075–1164).

  46. 46.

    Wagner and Petherbridge (2004 , pp. 1105–1180).

  47. 47.

    Tomlin and Cooper (2006).

  48. 48.

    Posner (2001, p. 277). (“By having technical experts present evidence at trial that the judge and jury is expected somehow to assimilate.”).

  49. 49.

    Wright and Diveley (2012, p. 13).

  50. 50.

    Wright and Diveley (2012, p. 22).

  51. 51.

    Crowley (1987, pp. 266–267) and Humphries and Songer (1999, p. 209).

  52. 52.

    Crowley (1987, pp. 265–83) and Sheehan (1990, pp. 875–85).

  53. 53.

    Petroski (2013, p. 108).

  54. 54.

    Deason(1998, p. 101).

  55. 55.

    Deason (1998, p. 102).

  56. 56.

    Robertson (2010 p. 184).

  57. 57.

    Robertson (2010, p. 185).

  58. 58.

    Robertson (2010, p. 187).

  59. 59.

    Robertson (2010, p. 186).

  60. 60.

    Robertson (2010, p. 188).

  61. 61.

    Van Dusen (1962, pp. 498, 500).

  62. 62.

    Friedman (1953, p. 4).

  63. 63.

    Weller (1997, p. 888).

  64. 64.

    Weller (1997, p. 888).

  65. 65.

    Areeda (1988, p. 1033).

  66. 66.

    Areeda (1988, p. 1033).

  67. 67.

    As Stigler put it: “The apparatus of economics is very flexible: without breaking the rules of the profession—by being illogical or even by denying the validity of the traditional theory—a sufficient clear person can reach any conclusion he wishes on any real problem (in contrast to formal problems).” Stigler (1965, p. 63).

  68. 68.

    Fox (1986, p. 579).

  69. 69.

    Mandel (1999, p. 118).

  70. 70.

    Fox (1986, p. 580).

  71. 71.

    Fox (1986, p. 580).

  72. 72.

    Mandel (1999, p. 119).

  73. 73.

    Mandel (1999, p. 119).

  74. 74.

    Posner (1999, p. 1477) and Posner (1999, p. 91).

  75. 75.

    Areeda (1988, p. 1033) and Harrison (2001, p. 256).

  76. 76.

    One of the major debated issues in implementing the competition policy in Europe is to what extent economic analysis should be used, and what role economists should play in the antitrust decision making. See Roeller (2005, p. 13).

  77. 77.

    Fox (1986, p. 581).

  78. 78.

    Fox (1986, p. 581).

  79. 79.

    Fox (1986, p. 585).

  80. 80.

    Baker and Bresnahan (2006, p. 3).

  81. 81.

    Frye v. United States, 293 F. 1013, 1014 (D.C. Cir. 1923) (“while courts will go a long way in admitting expert testimony deduced from a well-recognized scientific principle or discovery, the thing from which the deduction I made must be sufficiently established to have gained general acceptance in the particular field in which it belongs.”).

  82. 82.

    Daubert v. Merrell Dow Pharms., Inc, 509 U.S. 579 (1993) (“It is the trial judge’s responsibility to ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable.”).

  83. 83.

    The Federal Rules of Evidence—Rule 702: If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify hereto in the form of an opinion or otherwise.

  84. 84.

    Deason (1998, at pp. 84–86).

  85. 85.

    Robertson (2010, p. 200).

  86. 86.

    Lee (1988, p. 480).

  87. 87.

    Deason (1998, p. 76).

  88. 88.

    Harrison (2001, p. 260).

  89. 89.

    Champagne et al. (1992, p. 5).

  90. 90.

    Harrison (2001, p. 260).

  91. 91.

    Posner (1999, p. 1540) and Harrison (2001, p. 267).

  92. 92.

    Harrison (2001, p. 268).

  93. 93.

    Mandel (1999, p. 116).

  94. 94.

    Mandel (1999, p. 116).

  95. 95.

    Harrison (2001, p. 269).

  96. 96.

    Shuman et al. (1994, pp. 193, 200).

  97. 97.

    Harrison (2001, p. 270).

  98. 98.

    Article 50 of the AML: The business operators that carry out the monopolistic conduct and cause damages to others shall bear the civil liability according to law.

  99. 99.

    Zuigao Renmin Fayuan Guanyu Shenli Yin Longduan Xingwei Yinfa De Minshi Jiufen Anjian Yingyong Falyu Ruogan Wenti De Guiding (最高人民法院关于审理因垄断行为引发的民事纠纷案件应用法律若干问题的规定) [Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Dispute Cases Arising from Monopolistic Conduct], Interpretation No. 5 [2012] of the Supreme People’s Court, issued by the Supreme People’s Court on May 3 2012 and effective on June 1 2012.

  100. 100.

    Article 7 of the Provision, id.

  101. 101.

    Article 8 of the Provision, id.

  102. 102.

    Articles 1–2 of the Provision, id.

  103. 103.

    Articles 3, 4 to 5 of the Provision, id.

  104. 104.

    Article 6 of the Provision, id.

  105. 105.

    Hou (2015, p. 1).

  106. 106.

    Zhan and Tan (2015).

  107. 107.

    Zhan et al. (2018).

  108. 108.

    Liu et al. (2020).

  109. 109.

    Zhan and Tan (2015).

  110. 110.

    Hou (2015, p. 8) and Zhan and Tan (2015).

  111. 111.

    China Competition Bulletin, Edition 35, January/February 2015, at p. 7.

  112. 112.

    China Competition Bulletin 2016, Edition 40, January/February, at p. 16.

  113. 113.

    China Competition Bulletin, Edition 44, September/October 2016, at p. 3.

  114. 114.

    China Competition Bulletin, Edition 44, September/ October 2016, at p. 3.

  115. 115.

    China Competition Bulletin, Edition 45, November/December 2016, at p. 8.

  116. 116.

    China Competition Bulletin, Edition 47, June 2017, at p. 7.

  117. 117.

    Hou (2015, p. 7).

  118. 118.

    Zhao and He Jing (2017, p. 1179).

  119. 119.

    Ren (2017, p. 11).

  120. 120.

    Yuangao Nanjing Jiangong Jituan Youxian Gongsi Hunningtu Fengongsi Yu Beigao Jiangsusheng Wujiaju Wujia Xingzheng Chufa Xingwei Yian De Xingzheng Caidingshu (原告南京建工集团有限公司混凝土分公司与被告江苏省物价局物价行政处罚行为一案的行政裁定书) [Administrative Ruling of Plaintiff Nanjing Construction Engineering Group Co., Ltd. Concrete Branch and Defendant Jiangsu Price Bureau] September 24, 2014 available at http://wenshu.court.gov.cn/.

  121. 121.

    陕西:30家机动车检测机构垄断涨价被罚570余万元(Shaanxi: 30 motor vehicle inspection agencies fined 5.7 million yuan for charging monopoly price) Xinhuanews, April 13 2016, available at http://finance.sina.com.cn/roll/2016-04-13/doc-ifxriqqv5567588.shtml (accessed 30.03.2020).

  122. 122.

    临沂25家会计师事务所垄断协议案(Monopoly agreement case of 25 accounting firms in Linyi) Shandong Administration for Market Regulation official website August 20, 2019, available at http://amr.shandong.gov.cn/art/2019/8/20/art_88466_6978770.html (accessed 15.03.2020).

  123. 123.

    Zuigao Renmin Fayuan Guanyu Zai Quanguo Fayuan Tuijin Zhishi Chanquan Minshi Xingzheng He Xingshi Anjian Shenpan Sanheyi Gongzuo de Yijian (最高人民法院关于在全国法院推进知识产权民事、行政和刑事案件审判“三合一”工作的意见) [Opinions of the Supreme People’s Court on Promoting the “Three in One” Trial of Civil, Administrative and Criminal Cases Involving Intellectual Property Rights in Courts Nationwide] issued on July 5, 2016 and effective on July 5, 2016.

  124. 124.

    Zhan, Song and Yang (2018, p. 4).

  125. 125.

    China Competition Bulletin, Edition 38, July/August 2015, at p. 3.

  126. 126.

    China Competition Bulletin, Edition 43, July/August 2016, at p. 4.

  127. 127.

    China Competition Bulletin, Edition 47, June 2017, at p. 6.

  128. 128.

    China Competition Bulletin, Edition 41, March/April 2016, at p. 5.

  129. 129.

    Zhang (2015).

  130. 130.

    US Chamber of Commerce (2014).

  131. 131.

    Zhang (2011).

  132. 132.

    China Competition Bulletin, edition 45, November/December 2016.

  133. 133.

    China Competition Bulletin, edition 47, June 2017.

  134. 134.

    Winston (2005, p. 313).

  135. 135.

    Li (2011, p. 6) and Winston (2005, p. 314).

  136. 136.

    Tay (2007) and Killion (2004, p. 511).

  137. 137.

    Clarke (2003, p. 108).

  138. 138.

    Michelson and Li (2012, p. 4).

  139. 139.

    Ohlhausen (2013).

  140. 140.

    回眸2019:反垄断与公平竞争(Looking Back on 2019: Antitrust and Fair Competition)SAMR Development and Research Center, January 19, 2020, available at https://www.imsilkroad.com/news/p/398809.html?from=singlemessage&isappinstalled=0.

  141. 141.

    Looking Back on 2019: Antitrust and Fair Competition, id.

  142. 142.

    Fei Deng et al (2018, pp. 2, 10, 11).

  143. 143.

    Dogan and Lamley (2008, p. 2).

  144. 144.

    Dogan and Lamley (2008, p. 3).

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Ma, J. (2020). Enforcement of Competition Law—Role of the Courts and Economic Experts. In: Competition Law in China. Springer, Singapore. https://doi.org/10.1007/978-981-15-5105-5_11

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