Gralf-Peter Calliess, Jens M. Mertens
Private Law and Competition Policy in the Gobal Economy Privatrecht und Wettbewerbspolitik in der Globalisierung
Volume 74 (2010) / Issue 3, pp. 463-492 (30)
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The fundamental nexus of private law and competition policy is mundane: Economic competition requires a functional market, which in turn requires effective institutions for the enforcement of contracts. The economic constitution in an ordo-liberal sense, therefore, consists not only of a regulatory part, which aims at protecting competition against state restrictions (fundamental freedoms) and private limitations (antitrust law) alike; it also entails a facilitative part, which aims at protecting individuals against opportunistic behavior of their transaction partners (private rights and remedies). In this paper we criticize the so-called »more economic approach« to European competition law for disregarding the importance of a functional system of private law. Based on the availability of market governance as an alternative mode for organizing transactions, this approach presumes that vertical integration is economically efficient. Since the enforcement of cross-border contracts by state-organized systems of private law, however, is insufficient, »make or buy«-decisions in international commerce are prejudiced against »arms' length« transactions on markets. Consequently international transactions are integrated vertically into firm-structures to a higher degree than comparable domestic transactions organized in the shadow of domestic private law. The resulting over-integration of world markets leads to reduced competitive incentives and high bureaucratic costs. Contrary to the fundamental assumptions of the »more economic approach«, vertical integration does, therefore, not per se foster consumer welfare in the global economy. However, as this over-integration is a reasonable reaction to the deficits in state protection of cross-border contracts, it cannot be countered by a strict world antitrust law without suppressing cross-border exchange. Thus, international private law policy establishing legal certainty in the enforcement of cross-border contracts currently seems to be the instrument of choice in promoting competition in the global economy.