Tihamér Tóth (ed.), The Cambridge Handbook of Competition Law Sanctions

• 1. Introduction

  Tihamér Tóth, the editor of the reviewed book is a full-time professor and former vice dean at Pázmány Péter Catholic University, Budapest. Tóth is also a practicing competition lawyer, and currently serves as a judge of the General Court of the EU. As editor of the book and author of the first article, Tóth sets the scene for the works of the brilliant ‘international roster of competition law scholars’ that make up the authors of The Cambridge Handbook of Competition Law Sanctions.
  The book is divided into two main parts that are titled “General chapters” and “Country reports”. This thoughtful division mirrors both the expertise behind the concept of the book, and the very nature of competition law, in the sense that theoretical outlines and general goals are shared across jurisdictions, but there is a wealth of scholarly value that is to be extracted upon assessment of specific jurisdictions. General chapters regard state-of-the-art theory, carefully assorted to enshrine all key aspects of how law enforcement through different types of sanctions (and quasi regulatory measures)¹x Surd Kováts, ‘Effectiveness of Commitment Decisions: A Review of Selected Practice by the European Commission’, in Tihamér Tóth (ed.), The Cambridge Handbook of Competition Law Sanctions, Cambridge University Press, Cambridge, 2022, p. 168. play a role in adhering to the goals of substantive competition law. Country reports offer exactly what the section got its name from: the extensive theoretical value of how competition law functions in the practical frame of a jurisdiction. From another perspective, country reports offer great help in broadening the vision of scholars and practitioners from all over the world by including reports from Africa, Asia, South America, North America, and Europe.

• 2. The Complex Mission of Safeguarding Competition

  While stating that the main goal of competition law is to regulate markets just to the extent that they would function efficiently may be regarded as begging the question, it is still an important thought and a convenient starting point. If we imagined a top-down model of how the aforementioned goal is to be met through the law, the first step would be to adequately formulate the law, and the second would be to properly enforce it. This, however, is not purely a sequential process, as substantiating matters of law through regulation and adjudication has to consider the lessons learned from enforcement. The evolution of law is, therefore, a cyclic process, in which indicators of past enforcement outcomes are of great importance. For this reason, how sanctions work is a salient parameter in forming future substantive law. Indeed, considering that the law inherently involves coercion,²x Frederick F. Schauer, The Force of Law, Harvard University Press, Cambridge, Massachusetts, 2015, pp. 124-140. sanctions play a multifaceted and prominent role in determining what the law is and whether its objectives are achieved.³x Frederick F. Schauer, ‘Was Austin Right After All? On the Role of Sanctions in a Theory of Law’, Ratio Juris, Vol. 23, Issue 1, 2010, p. 18. The importance of sanctions is hard to overestimate, and for a legal field that employs a primarily ex-post enforcement structure,⁴x For accounts on how competition law is shifting toward a regulatory venture see e.g. Kováts 2022, pp. 164-180; András Tóth, ‘The Role of Fines in the Toolkit of Competition Agencies’, in Tóth (ed.) 2022, pp. 24-36. sanctions are the tools for guaranteeing successful law enforcement.
  Efficiency is a standard of competition law matters, and therefore competition law sanctions must also be efficient in their enforcement.⁵x Tihamér Tóth, ‘The Quest to Create An Effective Set of Competition Law Sanctions: Converging Goals with Divergent Tools’, in Tóth (ed.) 2022, p. 3. While this may be true, it is not possible to fully implement a sanctioning system solely through the use of econometrics. Legal expertise is necessary for specific matters, e.g. for the interaction between traditional disciplinary content of criminal law and competition law infringements.⁶x Ádám Békés, ‘Criminalization of Anticompetitive Conducts: A Real Deterrent or a ‘Paper Tiger’ in Practice?’, in Tóth (ed.) 2022, pp. 118-120. Legal expertise and logical thinking are also crucial when it comes to navigating in the much chaotic, theoretical, and sometimes moral question as to what types of conduct call for a regulatory,⁷x András Tóth 2022, pp. 27-29. a structural-remedial (that is dependent on wrongfully assumed quasi-regulatory powers)⁸x Kováts 2022, p. 168. a consequentialist⁹x Peter Whelan, ‘Antitrust Criminalization as a Legitimate Deterrent’, in Tóth (ed.) 2022, p. 103. Consequentialist criminal sanctions sometimes act as a deterrent by their sole theoretical possibility, even if they are rarely prosecuted. See Shiraishi Tadashi, ‘Competition Law Sanctions in Japan’, in Tóth (ed.) 2022, p. 507. or a compensatory¹⁰x Csongor István Nagy, ‘What Role for Private Enforcement in EU Competition Law’, in Tóth (ed.) 2022, pp. 219, and 228. state intervention in the form of a competition law sanction. Competition law regulates markets for efficiency; thus, econometrics and economics also play a primary role in forming an efficient sanctioning system, that is optimal for deterrence.¹¹x Ákos Szalai, ‘Sanctions on Legal Persons: An Economic Analysis’, in Tóth (ed.) 2022, pp. 37-53; Cento Veljanovski, ‘The Effectiveness of European Antitrust Fines’, in Tóth (ed.) 2022, pp. 61-65. The interdisciplinary nature of competition law is also reflected in the field of competition sanctions. This very nature is what makes this book a fine addition to the scholarly debate in this field, as its concept is to bring interdisciplinary answers to these complex questions.

• 3. An Exemplar of Dilemmas of Competition Law Enforcement

  Several important and sometimes competing goals exist in the theory of competition law sanctions. These call for delicate balancing acts. For one, the prevention of future infringements is of the utmost importance, and it is primarily achieved through deterrence.¹²x Tóth 2022, p. 7; Whelan 2022; Békés 2022; Kováts 2022; Nagy 2022. Prevention is sometimes achieved through large fines, for monetary setbacks as consequences of non-compliance incentivize market players to play by the rules. But only going for astronomical fines may not be the best approach. The size parameter of sanctions affects corporations with risk-seeking and risk-averse managers differently.¹³x Szalai 2022, pp. 43-44. Large fines may be fit for reigning in large players, who could arguably do the most harm, but what makes a ‘large’ or sufficient fine? Should fines commensurate with the harm the infringement leads to, or based on the size of the rogue corporation at hand (revenue-based)?¹⁴x Veljanovski 2022, p. 62.
  On another note, the size of fines is a question that is involved in the power dimension of public law, since substantive monetary setbacks may call for guarantees that safeguard the fundamental rights of individuals.¹⁵x Pál Szilágyi, ‘Human Rights Jurisprudence and the Effectiveness of Competition Law Sanction’, in Tóth (ed.) 2022, p. 247. One of these guarantees is legal certainty, but if the size of the fines are predictable, it is possible to calculate how large a fine may be imposed for their infringement. This may render competition law fines akin to taxes, effectively leading to higher cartel overcharges and undermined enforceability.
  Large fines, on their own, often fail to motivate company directors to avoid repeat offenses, as the monetary setbacks primarily impact shareholders and the value of their portfolios. However, if competition authorities’ action only results in the removal of directors from their positions or in directors being fined personally,¹⁶x For an empirical account on what the Hungarian private competition law community thinks of sanctions such as individual monetary sanctions, see András Pünkösty, ‘Competition Law Sanctions in Hungary’, in Tóth (ed.) 2022, pp. 419-422. the targeting issue remains unresolved as the shareholders remain prone to recidivism with just part of their portfolio merely scraped by an under-deterrent fine. Corporate governance structures are diverse, while shareholders may not be in a position to decide if the company was to infringe competition law, they can exert significant influence on directors. Conflicts of interest in the corporate governance dimension of competition law must be accounted for in the theory and calculation of sanctions,¹⁷x Dávid Sobor & Péter Virág, ‘Corporate Governance and Competition Law Sanctions’, in Tóth (ed.) 2022, pp. 86-100. just as well as they should be incorporated in compliance programs that inject competition law compliance considerations into corporate culture.¹⁸x Péter Sükösd, ‘Compliance Policies and Sanctions: The US, EU and UK Perspectives’, in Tóth (ed.) 2022, pp. 181-192.
  The secretive nature of cartels arguably has to play a role in calculating fines in the face of a deterrence multiplier,¹⁹x Veljanovski 2022, p. 65. for the reason that the probability of detection likely plays a role in the minds of directors who engage in anticompetitive agreements, and simply because cartels more often than not remain undiscovered for years. This period has to be accounted for in the substance of the consequential punishment. Even this last argument can bear controversial value as by bringing it, we might be justifying astronomical fines (that are hard if not impossible to pay out by companies with low assets to sales ratios) by the institutional constraints²⁰x William E. Kovacic, ‘The Chicago Obsession in the Interpretation of US Antitrust History’, The University of Chicago Law Review, Vol. 87, Issue 2, 2020, p. 491. of competition agencies to enforce the law i.e., to discover cartels.²¹x Veljanovski 2022, p. 66.
  Leniency programs address the essence of cartels, operating in secrecy. Leniency leverages the prisoner’s dilemma of a cartelist in granting an exemption for a whistleblower in follow-up public enforcement. Leniency is to bring investigatory enforcement costs of agencies down and foster deterrence. While leniency employs a simple modus operandi, the tradeoffs embedded in whistleblowing are complex. In the presence of possible subsequent private action for treble damages, or sensitive corporate data that is to be disclosed in a successful application for leniency, whistleblowing may become of little popularity.²²x Sobor & Virág 2022, p. 97. Other concerns are that generous leniency programs may invoke a corporate strategy that sees law infringement as a profitable interim option as leniency offers a possible way out. This strategy can be labeled as ‘collude and report’.²³x Veljanovski 2022, p. 71.

• 4. Conclusion – the Uncertainty Problem

  In the preceding chapter, I aimed to bring an exemplative account on how complex the enforcement side of competition law truly is. This complexity amounts to a condition of uncertainty. In the theory of public policymaking, the condition of uncertainty refers to a scenario in which state actors are unable to identify their interests, and therefore find themselves unable to formulate policy.²⁴x Peter M. Haas, ‘Introduction: Epistemic Communities and International Policy Coordination’, International Organization, Vol. 46, Issue 1, 1991, p. 1. In the presence of uncertainty, policy goals are both interlinked and concurrent, leading to complex problems, such as the delicate balancing act of erecting an efficient sanctioning system for competition law infringements. In these types of scenarios such a deeply insightful handbook is an essential companion.
  What this excellent book offers help in is understanding the uncertainty problem in competition law sanctioning in such a depth that enables well-informed decision-making in finding new paths for research, producing policy, or most of all: developing the theory of the dynamic and interdisciplinary field of science that is competition law.

Noten

• 1 Surd Kováts, ‘Effectiveness of Commitment Decisions: A Review of Selected Practice by the European Commission’, in Tihamér Tóth (ed.), The Cambridge Handbook of Competition Law Sanctions, Cambridge University Press, Cambridge, 2022, p. 168.

• 2 Frederick F. Schauer, The Force of Law, Harvard University Press, Cambridge, Massachusetts, 2015, pp. 124-140.

• 3 Frederick F. Schauer, ‘Was Austin Right After All? On the Role of Sanctions in a Theory of Law’, Ratio Juris, Vol. 23, Issue 1, 2010, p. 18.

• 4 For accounts on how competition law is shifting toward a regulatory venture see e.g. Kováts 2022, pp. 164-180; András Tóth, ‘The Role of Fines in the Toolkit of Competition Agencies’, in Tóth (ed.) 2022, pp. 24-36.

• 5 Tihamér Tóth, ‘The Quest to Create An Effective Set of Competition Law Sanctions: Converging Goals with Divergent Tools’, in Tóth (ed.) 2022, p. 3.

• 6 Ádám Békés, ‘Criminalization of Anticompetitive Conducts: A Real Deterrent or a ‘Paper Tiger’ in Practice?’, in Tóth (ed.) 2022, pp. 118-120.

• 7 András Tóth 2022, pp. 27-29.

• 8 Kováts 2022, p. 168.

• 9 Peter Whelan, ‘Antitrust Criminalization as a Legitimate Deterrent’, in Tóth (ed.) 2022, p. 103. Consequentialist criminal sanctions sometimes act as a deterrent by their sole theoretical possibility, even if they are rarely prosecuted. See Shiraishi Tadashi, ‘Competition Law Sanctions in Japan’, in Tóth (ed.) 2022, p. 507.

• 10 Csongor István Nagy, ‘What Role for Private Enforcement in EU Competition Law’, in Tóth (ed.) 2022, pp. 219, and 228.

• 11 Ákos Szalai, ‘Sanctions on Legal Persons: An Economic Analysis’, in Tóth (ed.) 2022, pp. 37-53; Cento Veljanovski, ‘The Effectiveness of European Antitrust Fines’, in Tóth (ed.) 2022, pp. 61-65.

• 12 Tóth 2022, p. 7; Whelan 2022; Békés 2022; Kováts 2022; Nagy 2022.

• 13 Szalai 2022, pp. 43-44.

• 14 Veljanovski 2022, p. 62.

• 15 Pál Szilágyi, ‘Human Rights Jurisprudence and the Effectiveness of Competition Law Sanction’, in Tóth (ed.) 2022, p. 247.

• 16 For an empirical account on what the Hungarian private competition law community thinks of sanctions such as individual monetary sanctions, see András Pünkösty, ‘Competition Law Sanctions in Hungary’, in Tóth (ed.) 2022, pp. 419-422.

• 17 Dávid Sobor & Péter Virág, ‘Corporate Governance and Competition Law Sanctions’, in Tóth (ed.) 2022, pp. 86-100.

• 18 Péter Sükösd, ‘Compliance Policies and Sanctions: The US, EU and UK Perspectives’, in Tóth (ed.) 2022, pp. 181-192.

• 19 Veljanovski 2022, p. 65.

• 20 William E. Kovacic, ‘The Chicago Obsession in the Interpretation of US Antitrust History’, The University of Chicago Law Review, Vol. 87, Issue 2, 2020, p. 491.

• 21 Veljanovski 2022, p. 66.

• 22 Sobor & Virág 2022, p. 97.

• 23 Veljanovski 2022, p. 71.

• 24 Peter M. Haas, ‘Introduction: Epistemic Communities and International Policy Coordination’, International Organization, Vol. 46, Issue 1, 1991, p. 1.