The Economic Impact of EU Competition Law Enforcement: A Quantitative Assessment of Antitrust Fines and Market Efficacy

Abstract

The paper critically analyzes the quantitative research on the economic impact of the implementation of the European Union competition law by paying particular attention to the antitrust fines and their role in enhancing the efficiency of the marketplace. It combines results about cartel overcharges, the deterring effect of fine changes and the overall microeconomic and aggregate effects of the enforcement choices. Also, it analyzes the methodological tools to test the competitiveness policy effectiveness, such as the research of merger control, and the spread of deterrence. This is further analyzed to determine the real economic utility of interventions by competition authorities and analyzing the distinction between the direct effects and the more substantial deterrent effect, which prevents anti-competitive behavior. It has been pointed out in the review that quantifying these effects is complicated at best, with the direct effects of deterrence on certain markets being easily discernible, whereas in temporal and sector wide spillover effects are very large and multifaceted. As a result, UAE requires complex econometric models to carefully quantify the ripple effects, as it requires that therefore other confounding macroeconomic and sectoral changes cannot be ignored. These assessments can be further narrowed by combining ex-post evaluation frameworks and a better insight into the internal learning processes of competition authorities, which makes it possible to have a more detailed vision of historical mistakes and the factors that caused them.