Antitrust Alert: EU Appoints New Chief Competition Economist
The European Commission antitrust authority, DG Competition, has designated a new Chief Economist. Professor Kai-Uwe Kühn will take office in January 2011, succeeding Professor Damien Neven.
Established only seven years ago, the role of Chief Economist has rapidly come to serve as an integral check and balance on the quality of DG Competition decisions. The Chief Economist gives economic guidance and methodological assistance to case handlers, and his team joins case teams where needed. The Chief Economist can also provide independent economic advice to the Commissioner on any matter.
While the Chief Economist's opinions are never made public, his influence on the process is important. Economic analysis is increasingly part of enforcement of the antitrust and merger rules, as well as judicial review of Commission decisions. Professor Kai-Uwe Kühn has significant academic and consulting experience and has worked on both sides of the Atlantic. This may facilitate greater convergence of EU and U.S. policy and practice, as well as bring to the EC an increased awareness of the hard realities of today’s business climate. Nevertheless, this appointment is unlikely to bring radical changes in the enforcement of EU competition law.
Role of the Chief Economist
The Chief Economist provides a variety of support and advice functions to the case teams and policy makers of DG Competition. A case team may request the Chief Economist to examine a case or a specific economic issue, or he may follow a case on his own initiative with the agreement of the Director General. He may also give assistance to the defence of any cases before the EU Court of Justice. He also coordinates the Economic Advisory Group on Competition Policy (EAGCP), an advisory group composed of academics who contribute to policy making (the group recently advised on EU policy regarding vertical restraints and horizontal cooperation agreements).
The Chief Economist reports directly to the EU Commissioner for Competition, rather than through the hierarchy. He and his team of just over twenty economists and therefore work with some autonomy within DG Competition. This relative independence was established as an additional check and balance on the work of the case teams. However, the Chief Economist’s opinions are deemed to be part of the European Commission’s internal decision-making. The opinions are therefore not made available to parties under investigation or to any other third parties, unlike the reports of the other offices involved in the decisionmaking process (such as the Hearing Officer reports on the Commission’s compliance with due process obligations and the Advisory Committee reports on the views of representatives of the EU Member States).
The Chief Economist is relatively new to the EU competition field. The specific need for enhanced economic analysis in EU competition law was made apparent in the trilogy of merger decisions overturned by the EU General Court in 2002. At that time, the Director General for Competition commented that the judgments "raised important issues concerning the functioning of the EU merger review process. In particular, it is clear that the CFI is now holding the Commission to a high standard of proof, which has important implications for the way in which the Commission conducts its investigations." The then European Commissioner for Competition Policy also realized that "We are increasingly confronted with the need to investigate complex cases, which require in-depth fact-finding and rigorous economic and/or econometric analysis. The CFI Judgments confirm this need. We are therefore discussing measures aimed at further strengthening the economic expertise capabilities of the Competition DG".
Creating the post of Chief Economist was just one among a series of measures taken at that time to improve the quality of decisionmaking. A wide reorganisation of DG Competition occurred in 2003, resulting in sector specific units covering the range of competition issues within those sectors. The Merger Task Force was substantially disbanded and replaced by merger teams within each sectoral unit. Specific measures were also introduced to enhance the rigour of the Commission’s decisions, such as a devil’s advocate panel to add a 'fresh pair of eyes' into the process, increased transparency in merger cases by allowing earlier access to the Commission's file, as well as earlier confrontation of opposing views as to a merger’s likely impact.
Influence of outgoing Chief Economist, Professor Neven
The first Chief Economist, Lars-Hendrik Roeller, was appointed in 2003. He was succeeded by Professor Damien Neven in 2006. Although the Chief Economist is appointed for a non-renewable term of three years, Professor Neven remained in office until now to ensure consistency and continuity during the economic crisis.
The extent of the Chief Economist’s influence is difficult to measure, as he is not involved in all cases. However, Professor Neven himself recently highlighted the role of the Chief Economist in providing economic analysis in key merger cases Oracle/Sun Microsystems, ABF/GBI and Ryanair/Aer Lingus, as well as in antitrust cases against Intel, Rambus, and Qualcomm. Professor Neven also was instrumental in preparing the 2008 EU Guidance Paper on exclusionary conduct under Article 102 and the Best Practices for the Submission of Economic Evidence and Data Collection.
The newly designated Chief Economist, Professor Kai-Uwe Kühn, is a German native with broad-ranging background and experience. He studied at the University of Bonn and the London School of Economics, as well as earning a doctorate from Oxford University. He currently combines both an academic post at the University of Michigan and a consultancy role with Charles River Associates.
Professor Kühn has advised on a large number of merger cases and competition inquiries, typically against the European Commission and national competition authorities, including the Microsoft cases (for Sun Microsystems and other interested parties), the GE/Honeywell merger, the Norske-Skog/UPM/Haindl merger, and the Totalfina/Elf merger. Thus Professor Kühn is also welcomed for his U.S.-based experience and activities in private practice.
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