European Cross-Sectoral Collective Bargaining as Post-Crisis Social Policy

This article proposes a policy project, centered around coordinated collective bargaining at the European Union level, to redistribute income towards low-wage workers in post-crisis Europe. It suggests we allow labor unions in sectors employing low-wage workers to present common wage demands across sectors and EU Member States. It shows that this would make union wage increases less harmful to workers and consumers than under uncoordinated sectoral bargaining, while coming more directly at the expense of managers and investors. The article then describes existing EU legal institutions that-although they do not quite amount to the policy proposed here-constitute useful precedents for it. These institutions are European social dialogue, European Works Councils, and European Framework Agreements bargained for by multinational firms and worker representatives. The article also discusses doctrines of EU competition and internal market law that could potentially be held to prohibit European cross-sectoral collective bargaining coordination. The article lays out arguments in favor of finding such coordination lawful, so that it may form part of the EU's policy arsenal to address wrenching economic inequalities worsened by the ongoing economic and health crises.

COVID-19 Impact and Policy Response: A General Equilibrium Approach for Egypt

The economic impacts of COVID-19 were negative across nations but with different degrees depending on the timing, degree of containment measures and the extent of dependency on the world economy. Moreover, the policy response has been heterogeneous across different countries, but mainly addressing urgent and short-term problems without addressing the structural problems that led to the vulnerability of these countries in crisis times. Thus, the objective of this paper is threefold. First, it distinguishes between the supply and demand effects of COVID-19. Second, we examine the key differences between the short and long terms effects of the policies that were adopted. Finally, we modify the model to include the informal labor that was highly affected by the pandemic, and we relax the assumption of perfect competition and replicate the simulations under an imperfect competitive framework in order to see how reforms pertaining to competition policies can alter the adopted policies. To do so, we use a dynamic CGE model calibrated on the Egyptian Social Accounting Matrix of 2014/2015. Our findings show how the Egyptian economy has been relatively vulnerable to external shocks that affect its sources of foreign currency. Yet, most of the effects are temporary and vanish in the long run. Imperfect competition in commodity markets would increase the adverse effects of the pandemic and undermine the effectiveness of public policies.

The EU Trade Agenda—Rules on State Intervention in the Market

This Article critically analyzes the main legal and policy issues that are likely to determine the development of the EU's trade policy concerning rules on State intervention in the market, specifically on subsidies and SOEs. The article assesses the aforementioned issue especially within the context of the new trade strategy entitled "An Open, Sustainable and Assertive Trade Policy” set out by the European Commission in February 2021, at the core of which stands the concept of strategic autonomy. The focus of our analysis is on key elements of the current EU competition and trade policies and normative initiatives, namely: the relaxation of the usual State aid regime under Articles 107 and 108 TFEU to give Member States more flexibility in supporting their economies and strengthen EU industrial policy;the likelihood of EU proposals resulting in any substantial change to international trade law on subsidies and SOEs at the multilateral (WTO) level;a systemic horizontal investigation into the relevant trade rules promoted by the EU in its most recent practice of PTAs;and, finally, the EU pursuing stronger protection of its companies with its recently announced new regulation on foreign subsidies, on the basis of which the European Commission can investigate foreign subsidies and impose remedies. Even though, at first sight, it may seem that the current evolution of the EU trade policy on these issues seems inconsistent, the Article argues that the unilateral, bilateral, and multilateral approaches are indeed strictly intertwined, and they reveal a significant shift in the most recent EU trade policy objective in relation to the role of State in the market.

Economic Interventionism and International Trade Law in the Covid Era

Economic interventionism in the form of subsidization and operation of state-owned enterprises (SOEs) is today among the main frontlines of international trade conflicts. Along with trade restrictions and new legislation designed to impact cross-border investment, mergers, and acquisitions, the use of subsidies and countervailing measures by governments and trade-distorting effects of SOEs have lately caused harsh controversies within and outside the World Trade Organization (WTO) between its members. Going forward, there are reasons to expect these tensions to intensify rather than diminish in number and importance. This Special Issue aims at examining the development of international trade rules regulating state interventionism against the background of the Covid-19 global pandemic and present shifts in global geopolitics and the economy. This introduction, in presenting the state of the art on the questions tackled by this Special Issue and highlighting its contribution to existing literature on the topic, offers different considerations aimed at bringing together various trends emerging from the Articles contained in this Special Issue. It also explores avenues for further research and reflection.

Editorial

Pharmaceutical producers got the (non-binding and conditional) assurance that their cooperation aimed at avoiding shortages of vital medicines did not raise competition concerns.2 Information exchanges in matchmaking meetings in which undertakings operating at different levels of the value chain sought partners to ramp up the production and supply of vaccines, were also considered non-problematic.3 The Temporary Framework has now been withdrawn in favour of the all-purpose revised Informal Guidance Notice. [...]subsequently, this runs the risk that we will see informal guidance only in areas where the Commission and national competition authorities are already developing a rich body of decision-making practice. Because it is precisely in non-priority areas where questions unanswered by existing forms of guidance – on, for instance, the application of Article 101(3) TFEU - are most likely to persist. In this final issue of CoRe in 2022, Paul Gorecki discusses price signalling as a form of information exchange, a longstanding concern under EU competition law but one that has attracted only a limited number of infringement decisions.

Antitrust Decisions as a Sledgehammer?: A Descriptive Study on the Impact of Cartel Investigations on Stock Prices

Companies under investigation for anticompetitive behaviour in breach of the competition rules face heavy fines, high legal costs, loss of future profits and reputational damage. In addition, listed companies also seem to (temporarily) experience negative shocks in their stock market value. This article provides a descriptive analysis of the impact of the European Commission’s press release, announcing an antitrust investigation, on the stock market performance of the companies involved. Furthermore, we discuss the influence of the press release covering the Commission’s decision and accompanying fine. Reviewing four cases for each of these two moments, we conclude that an antitrust investigation or fine can be linked to a substantial negative shock to the stock market value of the companies concerned. While the drop is sizeable and thus clearly visible for almost all companies, the effect also seems to be relatively short-lived. Interestingly, the effects mostly seem more pronounced for the announcement of the investigation than for the fine, with some cases barely showing an effect of the latter. This could indicate that the stock market already accounts for the full effects around the time of the initial announcement. Keywords: antitrust;cartel investigation;impact assessment;stock market performance

Merger Control in Hungary

The present study presents the findings of the most comprehensive research that has ever been conducted in relation to the 30-year-old Hungarian merger authorisation process that has been in place since the political transition in Hungary. The aim of the research is, in particular, to present to the wider professional public the development of the authorisation process for mergers (or concentrations) in Hungary, which started in the last decade, and the resulting public value returns that have been achieved. The most important results to emerge from the research are that – compared to 2010 data – the average procedure time for full-scale merger proceedings in 2020 was reduced by 62%, and the administrative time limit for simplified cases decreased by 82.5%. Furthermore, the research revealed that today one-third of the Hungarian Competition Authority’s market interventions in connection with mergers take a verbal/informal form. This study was conducted using the methodology of data processing and analysing that are at the disposal of the Hungarian Competition Authority.

The EU scheme for the state aid rules in the air transport sector during the Covid-19 crisis

Paper provides for a systematic overview of the EU scheme for the State aid rules applicable to the air transport sector during Covid-19 crisis. The COVID-19 outbreak is having a major impact on European air transport sector. In order to help air transport undertakings in Europe to overcome the financial troubles, to preserve jobs, to secure supply of essential food, medicals or other items, etc., the EU Commission adopted set of legislative measures enabling the EU Commission and Member States to authorise hundreds of State aid measures, not only to air transport sector, but also to other economic sectors, which were mostly affected by the pandemic. Since in normal circumstances member states State aid to national undertakings are subject to extremely stringent EU competition law regime, the intention of this paper is, firstly, to analyse to what extent and under what conditions that has changed during pandemic. Secondly, the intention of the paper is to explore to what extent and for what purposes different Member States granted State aid to their airline industries with special respect to the French, Austrian, Swedish and Croatian State aid policy. Lastly, the authors will raise question whether massive capital injection to air transport companies being made only by certain, wealthier, member states are going, in long term, to cause negative impacts on the competition in the air transport sector in the internal market3.

New Publications

Climate Change and Maritime Boundaries: Legal Consequences of Sea Level Rise Published by Cambridge University Press, 2021 304 pp., €100 (Hardback). “Is carbon dioxide removal ‘mitigation of climate change’?” 30 Review of European, Comparative & International Environmental Law (3/2021), pp. 327-335. “International Cooperation on Climate Change Mitigation: The Role of Climate Clubs”, 30 European Energy and Environmental Law Review (5/2021), pp. 195-218. Foreign investor protections, stabilization clauses and fossil-fuelled power generation in developing countries”, 30 Review of European, Comparative & International Environmental Law (3/2021), pp.313-326.

Recent Developments at DG Competition: 2020/2021.

The Directorate General for Competition at the European Commission enforces competition law in the areas of antitrust, merger control, and State aid. After providing a general presentation of the role of the Chief Competition Economist's team, this article surveys some of the main developments at the Directorate General for Competition over 2020/2021. In particular, the article discusses the Commission proposal on the Digital Markets Act, the developments on the State aid response related to the COVID pandemic as well as the Danfoss/Eaton merger.

EU Competition Law: An Unaffordable Luxury in Times of Crisis?

The paper rejects arguments advanced in some quarters for a relaxation of EU competition policy to promote economic recovery. Economic theory and historical experience indicate that competition is likely to assist rather than impede recovery. While the Covid-19 induced recession necessitated increased State Aid, there is a serious risk that such aid will seriously distort competition within the internal market, given differences in the financial capacity of Member States to support businesses. The paper argues that policies designed to promote national champions and greater self-sufficiency are not justified and that action to secure reciprocal market access for EU exports is preferable to protectionist measures. An important lesson from the financial crisis is that actions based on immediate needs are a poor substitute for policy intervention based on sound economic analysis.

Recent Developments at DG Competition: 2019/2020.

The Directorate General for Competition at the European Commission enforces competition law in the areas of antitrust, merger control, and State aid. After providing a general presentation of the role of the Chief Competition Economist's team, this article surveys some of the main developments at the Directorate General for Competition over 2019/2020. In particular, the article reviews the economic analysis in the Qualcomm predation case, recent developments in the assessment of vertical mergers, as well as the new "Temporary Framework" that has been developed in the wake of the COVID pandemic.

Recent Developments at the CMA: 2019-2020.

We discuss three important cases that the Competition and Markets Authority (CMA) has completed over the past year: First, the coronavirus pandemic has had implications for a wide range of the CMA's work; we describe the work on price gouging conducted by the CMA's Covid-19 taskforce and respond to the argument that competition authorities should not be concerned about such behaviour. Second, a number of high-profile studies have considered the appropriate application of competition policy in digital industries. The second two cases-the Online Platforms and Digital Advertising market study, and the Google/Looker merger-show the work the CMA has continued to do in this area.

South African competition policy on excessive pricing and its relation to price gouging during the COVID-19 disaster period.

The declaration of a state of national disaster in South Africa, due to the COVID-19 pandemic, was followed by excessive-pricing regulations pertaining to certain consumer and medical products and services. The regulations and their application suggest an intertemporal benchmark to judge excessive pricing, deviating from previous practice. Intertemporal comparisons assume a structural shift during COVID-19 that changes competitive conditions, related to changes in consumer behaviour. Such comparisons must also account for demand and cost changes. While the COVID-19 regulations allow for cost-based price increases, demand-based increases are not explicitly accounted for, suggesting that the regulations are framed more generally as price-gouging regulations. The differences between price-gouging and excessive-pricing benchmarks depends on the type of disaster-period demand shock. They are similar following a transitory demand spike, provided sufficient time is allowed for dynamic price behaviour, but differ markedly when demand is elevated for the duration of the disaster period. Applying simple cost-based comparisons in recently concluded cases against smaller retailers are consistent with excessive pricing, given the presence of a demand spike. To the extent that these involve persistently higher demand, cases against wholesalers and larger retailers will be more complicated, as such demand must be reflected in competitive prices.