Experimentalist Enforcement in the European Union: A New Cookbook for Emergent Recipes?

Yane Svetiev’s book, Experimentalist Competition Law and the Regulation of Markets, was launched at an event organized by the University of Amsterdam’s Centre for European Law and Governance (ACELG) and Centre for European Studies (ACES). The book provides an account of the evolution of EU competition law enforcement through the prism of experimentalist governance. Within an experimentalist governance architecture, regulation and enforcement are recursively re-formulated through monitoring and comparing implementation experience from different local contexts. Compared to more traditional legal enforcement that proceeds through identifying and punishing infringements, experimentalist implementation is problem-oriented and collaborative. Moreover, experimentalist governance does not rely on controlled experiments to identify universal causal mechanisms or successful interventions. Rather, as Svetiev explains, it is pragmatic: it relies on “prototyping solutions to specific problems followed by iterative adaptation to refine the prototype” and to then  “possibly scale it up or diffuse it” to other contexts.

Experimentalist governance provides a regulatory architecture to respond to the conditions of radical uncertainty and polyarchy that beset modern regulatory craft, including the enforcement of EU competition law. In contemporary competition law, uncertainty about how to formulate instruments for achieving competition goals is pervasive, as is the concern about how to effectively implement such instruments. Technological changes and novel forms of production and collaboration redefine the very meaning of market rivalry, unsettling our understanding of the potential benefits or harms of business rivalry. This generates a tension between over-enforcement (whereby precaution saps innovation) and allowing market forces to play out (with the risk of entrenching new forms of market power). Moreover, new types of harm bring competition law into closer interaction with other regulatory regimes, for example consumer law, privacy or sustainability. Finally, even if enforcers can decide on an appropriate remedy in a specific case, the difficulties of coercive enforcement imply that a remedy cannot be effectively implemented without collaboration by the targeted undertaking and other market stakeholders. Experimentalism provides a possible way forward through collaborative remedial implementation and follow up peer review of the design and implementation of remedies by other regulators and market actors. This triggers a dynamic process allowing the revision of specific remedies, the rules that guide our understanding of anticompetitive conduct, or the overall goals of competition enforcement. 

Svetiev argues that his book is neither purely conceptual, nor a manifesto. He looks for traces of experimentalism in the current EU enforcement infrastructure,  enforcement practice, and case resolution at EU and national level. Chapter 1 analyses the operation of the European Competition Network and its recent enhancement, following up on Svetiev’s early intuition that the decentralisation of enforcement created scope for experimentalism. Chapter 2 analyses enforcement techniques, such as commitment decisions, that can work as experimentalist tools by combining ongoing monitoring and revision. Chapter 3 details the growing importance of peer review in EU market regulation and shows how experimentalist peer review has been assembled in EU antitrust. Chapter 4 deals with the fraught question of the role of courts in experimentalist governance. As the traditional guardians of the rule of law through the application of rules, courts may be expected to be averse to experimentalism. Svetiev instead shows how courts can calibrate legal interpretation and standards of review to constrain discretion and protect the rule of law, while supporting experimentalist enforcement. He shows that EU Courts use techniques of deference conditioned on monitoring and evaluation of new evidence, and provides examples of how peer review can facilitate judicial review. Svetiev concludes that an experimentalist architecture is already present in EU market regulation and offers guidance on how it can be completed by strengthening the experimentalist features of existing instruments.

At the book launch event, prominent scholars and practitioners, including Paul Lugard, Paul Nihoul, Siún O’Keeffe and Rupprecht Podszun offered their reactions to Svetiev’s book. Three key themes dominated the discussion: (1) the effect of experimentalism on legal certainty, (2) the ability and willingness of enforcers and courts to engage in experimentalism, (3) the implications for our understanding of the goals of antitrust

Does experimentalism undermine legal certainty for  undertakings?

A common concern raised about experimentalist enforcement is that it undermines legal certainty. After all, experimentalism relies on remedial adjustment over time and on differentiated interventions across Member States and even across undertakings. Hence, Podszum, while generally persuaded of the need for experimentation, notes that experimentalism is at odds with the common understanding that EU competition law should be geared to providing certainty and stability. Nihoul pointed out that we cannot ignore what firms need, which is, certainty: “be it bad or good, it’s better to have certainty than uncertainty”. In O’Keeffe’s words “firms would choose for as much certainty as possible, as much convergence as possible”. Lugard similarly stressed a preference for “a predictable, rational, economic framework that tells me and clients whether what they do is right or wrong … competition law must be predictable.” Legal certainty is viewed as essential for undertakings to design business and compliance strategies based on legal rules, which also guard firms’ procedural rights vis a vis enforcers. As Lugard puts it, it is not “fair to expect the business community to be the subject of experimentation again and again and again until the agency gets it right.”

Svetiev does not dismiss these concerns, but is adamant that enforcement scholarship in various disciplines shows that a legal regime which devises a rule for each possible situation in an increasingly complex economic reality would actually lead to greater uncertainty and “leave companies at the mercy of discretion”.  This problem is amplified by a multiplication of specialised regulatory regimes, each applicable to particular conduct, which means that companies also face uncertainty over which regime will prevail. Under such conditions Svetiev argues that companies prefer “a degree of ownership” in adjusting their business strategy to meet regulatory goals (demonstrated by their apparent preference for commitments), rather than being subject to ever-more and possibly conflicting rules. This is in line with Jonathan Zeitlin’s observation that “making explicit how rules are applied differently in different circumstances and local contexts may actually give better guidance to companies.”

 Arguably, Svetiev’s book is not insensitive to concerns about predictability and certainty, but his experimentalist account starts from different premises about the relationship between companies and enforcers. In the traditional enforcement model, which assigns responsibility for infringements, legal certainty is essential to avoid fines. This is less of a concern when competition enforcement is understood as a diagnostic tool to detect possibly harmful business conduct and remedy harms in their incipience, with lesser or no reliance on infringement findings and fines. The concern about legal certainty and predictability is attenuated if we view enforcement authorities, not as watchdogs, but as collaborative participants in shaping market conduct in line with the public interest. Ultimately, Svetiev aims to show, there is no irreducible conflict between business strategy and objectives such as consumer welfare, privacy protection or sustainability promotion.

Can enforcers embrace experimentalism?

 On the one hand, experimentalism gives enforcers greater discretion in crafting and adjusting remedies. On the other, it removes the protective cover of rules and requires acknowledging uncertainty. A concern voiced by some during the event is that competition authorities may be unwilling to use experimentalist enforcement, or be prevented from doing so by legal constraints. As O’Keeffe put it, the confidentiality of information about firm behavior may be a major constraint for experimentalism. There may also be a reluctance to disclose details about the design and on-going effect of remedies, essential for experimentalist peer review. Such a reluctance reflects regulators’ concern about maintaining “their integrity”. Admitting uncertainty and allowing ongoing review of their work may undermine their authority and pose a risk to their autonomy and independence.

Another practical constraint relates to the capability of authorities to implement original or innovative regulatory solutions, subject to resource-intensive monitoring and adjustment. This may be a realistic possibility only for the largest, well-established and funded agencies. Most other enforcers would be – at best – followers. At worst, the guise of experimentation may be used to conceal “backsliding” in settings where the rule of law or respect for human rights are shaky. As Lugard put it, experimentalism could also “go wrong”.

Svetiev acknowledged these concerns, which are discussed in the conclusion of the book. He stressed the importance of the counter-factual to experimentalist enforcement: what are the realistically binding EU and national constraints on the daily work of agencies under the conventional enforcement scenario? In his view, experimentalism adds discipline mechanisms, such as peer review, which support legislative and judicial oversight. As Nihoul also noted, courts may have already embraced formats of dialogic review characteristic of experimentalist practice.  

More generally the discussion suggested that broader embrace of experimentalism may require a change in how we think about the authority of enforcers. While experimentalism is often seen as technocratic, Svetiev is clear that neither well-defined rules nor technocratic knowledge can be sufficient sources of regulatory authority.

What of the goals of antitrust?

This takes us to the perennial debate about the goals of antitrust, which Svetiev described as unproductive and circular. His discussion of how data privacy and sustainability concerns feature in competition law is revealing. He sees competition law as a tool for diagnosing both the limits of competitive markets (market failures) and the shortcomings – or inexistence – of specialised regulation (regulatory failures) when aligning market outcomes with public interest or fundamental rights. Experimentalist competition remedies could absolve concerns about sustainability or privacy in their incipience; they could rely on self-regulation subject to monitoring; or they could lead to formalizing more elaborate targeted regulation.

Notwithstanding this attempt to reframe current debate, Svetiev acknowledges the contestability of his experimentalist account. While I would agree with the discussant in an earlier presentation held under the auspices of ASCOLA that the book provides essential reading for the wider EU legal community, some may be skeptical about departures from traditional legal enforcement, especially in times of threats to the rule of law and fundamental rights. Others, while embracing governance innovation, may prefer other regulatory models. At the very least, Svetiev provides us with a disciplined approach to distinguish and evaluate such models vis-à-vis the experimentalism that he champions. As such, the book also provides a useful tool to analyse whether the incorporation of experimental tools in recent proposals on digital markets and artificial intelligence signals a deliberate shift towards regulatory experimentalism.

Author: Giacomo Tagiuri

Giacomo Tagiuri is an assistant professor in European Law at the University of Amsterdam (UvA) and the Amsterdam Center for European Law and Governance (ACELG). His expertise spans various areas of EU economic law, including the internal market and competition. His research focuses on the interaction of EU and national regulation, and on the social and cultural consequences of EU economic law. Giacomo is part of the University of Amsterdam Sustainable Global Economic Law (SGEL) project.

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