“The Ordoliberal Concept of ‘Abuse’ of a Dominant Position…”: Comments on Professor Peter Behrens’ Paper.

The history of competition policy can be read as the quest for a working definition of competition as a prerequisite for the definition of restraints of competition which competition laws should prohibit in order to protect competition – Professor Peter Behrens.[1]

Professor Peter Behrens has recently released a paper entitled “The ordoliberal concept of “abuse” of a dominant position and its impact on Article 102 TFEU.”[2]

In this article, Professor Behrens undertakes first to show that the Ordoliberal School was not homogeneous and that, although it stayed faithful to its core tenets, it evolved considerably over time.

He also tries to refute Professor Pinar Akman’s thesis according to which the drafting of Article 102 TFEU––which prohibits the “abuse” of a dominant position––was not influenced by the Ordoliberal School.

Professor Behrens then proceeds to explain and promote “consumer choice” (or “economic freedom”) as the Ordoliberal concept of “abuse.”

I will not comment on the part of the article which deals with historical debates (the content of the Ordoliberal paradigm and the influence of this school over the drafting of article 102 TFEU), because I am not familiar enough with the primary sources.

I will focus instead on discussing the appropriateness of the concept of “consumer choice” as the criterion defining a restraint of competition.

My point will be to show that this concept is too irrational to be considered as a real definition (1.) and that, consequently, Ordoliberalism fails to deliver on its promises (2.).

1. Can the Reduction of “Consumer Choice” Rationally Be Used to Define the Concept of Abuse under Article 102 TFEU?

According to Professor Behrens,

“Abuse” is a rather vague term which lends itself easily to controversies about its meaning. It should therefore not come as a surprise that even within the specific context of EU competition law it has been interpreted from the very beginning in very different ways.[3]

It would be hard to deny this statement. However, the author considers that the Ordoliberal School has elaborated a rational and objective definition of “abuse”: the restriction of “consumer choice.” Thus, Professor Behrens writes that

From an ordoliberal point of view, it is the role of competition law […] to protect competition as a system within which individuals are free to make their choices on the market. In order for consumers to be able to make choices, it is indispensable that there exists a sufficient variety of competing products and producers (suppliers). This brings us to the relevance of the « market structure » which reflects the number of producers (suppliers) and their market shares. […] It follows that a restraint of competition is characterized by a limitation of consumers’ choice which depends on the rivalry among a sufficient number of producers. Hence, from an ordoliberal point of view, a restraint of competition may be found wherever (1) the number of freely competing producers is artificially reduced in ways that do not result from the normal process of competition itself, and (2) where this reduces the scope of alternatives among which consumers may freely chose.[4]

Professor Behrens thinks that this paradigm endorses Adam Smith’s legacy. As he puts it,

By emphasizing individual economic freedom as the source of competition, ordoliberals followed and still continue to follow the liberal tradition which in its classical form was established by Adam Smith.[5]

Indeed, the author affirms that the Ordoliberal paradigm rests on the institution of private property and aims at buttressing the rule of law. He writes

Especially Franz Böhm (the lawyer) emphasized that competition is not merely rooted in individual economic freedom, but in individuals’ use of their property rights guaranteed by a system of private law, rights which are limited, however, by rules which would determine the borderline between (lawful) competitive and (unlawful) anti-competitive market conduct. Ordoliberals therefore insist that competitive markets must be based on the rule of law, more specifically on competition rules which the state must enforce by administrative and adjudicative means.[6]

The author states, however, that the Ordoliberal School departs from the classical school of liberalism on one important point: it does not share this latter’s “optimism” as to the ability of the market to escape self-destruction without the help of the state.

After noting that Ordoliberalism, which grants consumers the right to decide how producers must use their property, differs radically from classical liberalism (1.1.), I will show that the Ordoliberal case for a “consumer choice” paradigm is grounded on a confusion resulting from a polysemy (1.2.), that the move from the choice of products to the choice of producers is not justified (1.3.), and that Professor Behrens actually does not really rely on “consumer choice” to draw the line between legitimate and illegitimate behaviors (1.4.). I will finish this first part by making some miscellaneous comments on “consumer choice” (1.5.).

1.1. The Classical Paradigm: Freedom of Choice regarding the Use of One’s Property, not Someone Else’s.

I would like first to show that “consumer choice,” as Professor Behrens uses it, could hardly be considered to follow Adam Smith’s legacy. On the contrary, it must be analyzed as totally alien to the classical conception of liberalism.

Obviously, I will not deny that “freedom of choice” (which includes “consumer choice”) was highly cherished by classical liberals. Indeed, it was the cornerstone of their legal philosophy. Yet, in the classical paradigm, this concept was understood in a radically different manner than Professor Behrens’.

1.1.1. In the Classical Paradigm, the Range of an Individual’s Choices was Determined along the Lines of Private Property.

According to Adam Smith, his forerunners, and his followers, the “freedom of choice” from which each individual should benefit pertained to his person and property, not to someone else’s.

John was supposed to make his own decisions––his own choices––about how to deal with John’s body and property, but not about James’, and reciprocally.

Indeed, if John had been authorized to decide instead of James what to do with this latter’s body and property, it would have been considered as an infringement of the principle of freedom of choice. “It’s none of your business” is a fundamentally liberal reply.

Armen Alchian aptly formulated this principle:

Often the idea or scope of private property rights is expressed as an assignment of exclusive authority to some individual to choose any use of the goods deemed to be his private property. In other words the “owners,” who are assigned the right to make the choice, have an unrestricted right to the choice of use of specified goods. Notice that we did not add––“so long as the rights of other people are similarly respected.” That clause is redundant in strict logic. Private property owners can use their goods in any way they choose. If some of these chosen uses involve the use […] of other people’s private property, it follows that the private property system is being violated, for this use has denied to other people the control of use over the good classed as private property. To say I have private property rights is to say that no one else has the right to make the choice of use of that good […]. [6bis]

In the classical paradigm, private property made it possible to draw a “private sphere” in which each individual was sovereign and may consequently make “his own choices.” This idea of “private sphere” was paramount.

Only through this notion was it possible to allocate the decisional power among individuals. By determining the range of means that each individual may employ to pursue his own ends, it allowed to decide which choice was John’s and which was James’.

Thus, in order to say meaningfully that “it is the role of competition law […] to protect competition as a system within which individuals are free to make their choices,” one must rely on a pre-existing method of drawing private spheres and allocating the decisional power.

In the classical liberal paradigm, private property embodied this method. But competition law results in conferring to consumers a legal right over the property of the producers. Thus, to say the least, it is misleading to claim that the Ordoliberal way of interpreting competition is grounded on private property.

Moreover, competition law does not just help to protect consumers’ choice; it rather grants them the right to take some decisions which, in the absence of competition law, would have been the producers’ choice.

Competition law decides that the range of options to be offered to sale must be determined by consumers (through the agency of the competition authorities) – not by producers.

1.1.2. On the Market, Consumers’ Choices Rule Economically but not Legally.

Of course, it is not forbidden to say metaphorically that the free-market (i.e., the producers) is governed by “consumer choice” or “consumer sovereignty.”

Indeed, in another paper, Professor Behrens quotes economist Ludwig von Mises saying that

The direction of all economic affairs is in the market society a task of the entrepreneurs. Theirs is the control of production. They are at the helm and steer the ship. A superficial observer would believe that they are supreme. But they are not. They are bound to obey unconditionally the captain’s orders. The captain is the consumer. Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that.[7]

However, it is important to note that this sovereignty of consumers over producers is economic and not legal. Only the sovereignty of each individual over his own property is guaranteed by a legal right.

In an economy characterized by the social division of labor, each individual is to a very large extent economically dependent on the other members of society; but this dependence is not legally compulsory. An individual can always reject it, provided he is ready to accept the economic consequences of his choice.

Consumers have no legal claim on what producers may offer to sale.

Thus, as Mises (also quoted by Professor Behrens, but without emphasizing the bolded part) put it,

Liberty and freedom are the conditions of man within a contractual society. Social cooperation under a system of private ownership of the factors of production means that within the range of the market the individual is not bound to obey and to serve an overlord. As far as he gives and serves other people, he does so of his own accord in order to be rewarded and served by the receivers. He exchanges goods and services, he does not do compulsory labor and does not pay tribute. He is certainly not independent. He depends on the other members of society. But this dependence is mutual. The buyer depends on the seller and the seller on the buyer.[8]

Mises also wrote that

The market does no directly prevent anybody from arbitrarily inflicting harm on his fellow citizens; it only puts a penalty upon such conduct. The shopkeeper is free to be rude to his customers provided he is ready to bear the consequences. The consumers are free to boycott a purveyor provided they are ready to pay the costs. What impels every man to the utmost exertion in the service of his fellow men and curbs innate tendencies toward arbitrariness and malice is, in the market, not compulsion and coercion on the part of gendarmes, hangmen, and penal courts [or competition agencies]; it is self-interest.[9]

Moreover, economist Murray Rothbard, Mises’ pupil, clarified the thought of his master by stating that

[I]n the free market economy people will tend to produce those goods most demanded by the consumers. Some economists have termed this system “consumers’ sovereignty.” Yet there is no compulsion about this. The choice is purely an independent one by the producer; his dependence on the consumer is purely voluntary, the result of his own choice for the “maximization” of utility, and it is a choice that he is free to revoke at any time. […].

Rather than “consumers’ sovereignty,” it would be more accurate to state that in the free market there is sovereignty of the individual: the individual is sovereign over his own person and actions and over his own property. This may be termed individual self-sovereignty. To earn a monetary return, the individual producer must satisfy consumer demand, but the extent to which he obeys this expected monetary return, and the extent to which he pursues other, nonmonetary factors, is entirely a matter of his own free choice.[10]

To speak of the sovereignty of the consumer is only a metaphor. It should never become a legal right.

From an economic and descriptive perspective, it can be useful to distinguish the producer from the consumer and to describe the former as being subjected to the sovereignty of the consumer; but, from a libertarian and prescriptive perspective, one needs to recall that each individual or owner is self-sovereign.

1.1.3. With Competition Law, Consumers’ Choice Becomes Legally Binding for the Producers.

At first, Professor Behrens seems to be faithful to the classical paradigm. He expressly pays tribute to it by recalling that Franz Böhm was insistent on the fact that economic freedom rested on private property.

Moreover, the author, when listing the core tenets of Ordoliberalism, mentions that “Competition results from individual freedom of producers to choose what they want to offer and of consumers to choose what they want to buy.”[11] As one sees, the author seems to respect the reciprocal self-sovereignty of each market participant, be it a producer (over his productive factors and the goods he manufactures) or a consumer (over his wallet).

Yet, this is mere lip-service. Indeed, in the paradigm he promotes (as well in Chicago’s, for that matter), producers can be fined and even jailed if they do not offer a sufficient range of choice. So, it is obviously untrue to say that competition [law] results from [in] “individual freedom of producers to choose what they want to offer.

The whole antitrust enterprise consists in drastically reducing the freedom of producers to make use of the means of production (and their fruits) of which they are the rightful owners. Competition agencies are entitled to punish them if the commercial terms they offer to consumers––for example the range of choice––are not good enough.

Yet, according to Hayek, whom Professor Behrens often quotes,

The power to determine the price or the quality of a product [or the range of choice] at the figure most profitable to the owner of such a rare resource used in its production is a necessary consequence of the recognition of private property in particular things, and cannot be eliminated without abandoning the institution of private property.[12]

One must take some time to measure the gap which separates the modern “consumer choice” concept from the classical one.

Under competition law, “consumer choice” means that consumers have a legal right, generally through the procuration they are supposed to grant to competition agencies, to dictate what the producers’ commercial terms are to be, either financially (Chicago’s School paradigm) or regarding the quality or the range of choice (Chicago’s and Ordoliberal paradigms).

On the contrary, under traditional law, “consumer choice” meant that, if some consumers and producers had reached an agreement, the state was not allowed to step in to prohibit them from implementing the contract.

It did not confer to consumers the power to force the producers, at bayonet point, to offer better commercial terms or a wider range of choice. The only “weapon” available to consumers was to refuse to patronize the producers whose offers they did not like; i.e., to keep their own money.

For instance, under the Prohibition, people could not agree to sell alcohol to each other. If they did, not only was their contract void, but they could be fined and jailed. This was a real encroachment on their freedom of choice. But an innkeeper does not infringe his customers’ freedom of choice if he has only beer and no whisky to offer to them.

After all, as Hayek remarked again,

it would seem […] absurd to allow somebody to use for his private swimming pool a spring of water which would provide unique advantages for a brewery or whisky distillery, and then, once he turns it to such purpose, insist that he must not make a monopoly profit from it [or offer a “too narrow” range of choice].[13]

To conclude this preliminary part, I think that even those who promote the Ordoliberal paradigm should admit that, as far it deals with competition law, it departs from Adam Smith’s legacy and does not rest on the institution of private property.

1.2. A Polysemy: Choice as Preference and Choice as Range of Options.

The word “choice” has several meanings. According to Merriam-Webster, it can be defined in three main ways:

The act of choosing: the act of picking or deciding between two or more possibilities;

2° The opportunity or power to choose between two or more possibilities: the opportunity or power to make a decision;

A range of things that can be chosen.

Neoclassical economics relies on the first definition; the Ordoliberal School, on a mix between the second and the third ones (more weight being put on the third). Yet, curiously, Professor Behrens gives credit to Ordoliberalism for some ethical and practical implications of the first definition and denies them to neoclassicism.

1.2.1. The Neoclassical Concept of Choice: Choice as Preference.

At the heart of the neoclassical paradigm, there is the notion of “revealed preference.” The economic agents, by their purchasing behaviour, demonstrate their preferences.

For instance, if John exchanges his car for three motorbikes, it means that he prefers having the three motorbikes rather than the car. Similarly, if he pays 30.000 € for the car, it means that he prefers having the car rather than 30.000 €. He values more the former than the latter.

By referring to the revealed preferences of consumers, neoclassical economists are able, at least in theory, to dispense themselves from expressing their own value-judgments[14]. Of course, in practice, economists cannot directly observe the spending behavior of consumers. They can only guess or imagine it.

Insofar as they recourse to the revealed preferences of consumers, neoclassical economists can conceptually rightly pretend to respect these latter’s choices. Indeed, in the “wealth-maximization” paradigm, what is “wealth” is determined through consumers’ choices. Thus, neoclassicism would have a far better claim than Ordoliberalism to be called a “consumers’ choice” paradigm.

Moreover, the wealth-maximization criterion does not only deal with money. It incorporates a trade-off between all the parameters that consumers may care about. The result of this trade-off is shown by the revealed preferences of consumers.

Indeed, to a very large extent, most parameters that consumers value––price, quality, and diversity––negatively oppose each other: if one wants lower prices, everything being equal, one must accept a lower quality; if one wishes a higher quality, one must agree for higher prices.

Similarly, the “choice” (in the first meaning) of consumers often leads them to give up some “choice” (in the second and third meanings), that is to get a standardized product at a lower price. Most people wear cheap ready-to-wear clothes rather than expensive made-to-measure garments.

Thus, “the intensity or effectiveness of one form of competition often correlates negatively with the strength of other forms.”[15] It would obviously be absurd to focus on a single given parameter (the range of choice, in the case in hand) at the expense of the others (price, quality…). The diversity of choice must be optimized, not maximized.

1.2.2. The Ordoliberal Paradigm: Choice as a Range of Options.

However, focusing on a single parameter is precisely what, according to Professor Behrens, Ordoliberalism advocates to do. Indeed, it is clear that, when he employs the word “choice,” the author generally means “range of choice.”

For instance, Professor Behrens writes

From an ordoliberal point of view, it is the role of competition law, therefore, to protect competition as a system within which individuals are free to make their choices on the market. In order for consumers to be able to make choices, it is indispensable that there exists a sufficient variety of competing products and producers (suppliers).[16]

Consumers’ freedom to choose between alternative products or services offered on the market is dependent upon the degree of decentralization of production. The higher the degree of concentration, the lower is the number of alternatives available to consumers and the more limited is consumers’ freedom of choice.[17]

Hence, from an ordoliberal point of view, a restraint of competition may be found wherever (1) the number of freely competing producers is artificially reduced in ways that do not result from the normal process of competition itself, and (2) where this reduces the scope of alternatives among which consumers may freely chose.[18]

One sees that no room is left for any trade-off. Firms can be punished for offering a sample of products that a bureaucrat considers insufficient, even if this price/diversity ratio is preferred by consumers. As Joshua Wright and Douglas Ginsburg aptly characterized it,

the central idea of the consumer choice framework [is] that the loss of a “choice” (however defined) is a cognizable antitrust injury even when associated with a reduction in price or an increase in output […].[19]

This approach directly contradicts consumers’ choices. There is no reason to favor it, even less to punish firms which do not achieve it.

Actually, it is hard to conceive how it could be realized. Indeed, one can always imagine a state of affairs with a wider range of choice, so that it is always possible to judge that the scope of options has been “reduced” compared to this arbitrarily chosen reference.

So, it is hard not to agree with Wright and Ginsburg when they state that:

The fatal flaw in the consumer choice standard is that it simply, indeed simplistically, rejects economic analysis of consumer preferences as the fundamental guiding principle of antitrust analysis, including the preferences consumers express in making unavoidable tradeoffs between price and non-price values. The consumer choice standard rejects even the view that the role of antitrust is to protect the competitive process as one that produces desirable outputs (i.e., consumer welfare) in favor of an antitrust regime that analyzes non-price competition as a standalone and inviolable virtue.[20]

Contra Professor Behrens, the “consumer choice” concept, as interpreted by the Ordoliberal school, cannot rightly pretend to promote the “preferences” of consumers. On the contrary, as far as it differs from neoclassical economics, it directly contradicts them.

1.2.3. Professor Behrens Uses the “Choice-as-Range-of-Options” Concept but Takes Credit for the Neoclassical “Choice-as-Preference” Notion.

I generally agree with Professor Behrens’ criticism against the welfare approach to competition law.

Indeed, the author endorses Hayek’s thesis regarding the knowledge problem. Hayek made the case that competition, understood as a process of rivalry, was the only possible means to discover the information that consumers and producers need.

Thus Professor Behrens writes

Due to the influence of Friedrich von Hayek who is also associated with the ordoliberal school, competition is regarded as a dynamic process of discovery which produces all[21] the information necessary to determine consumers’ wants, their demand for specific goods and services and their willingness to pay as well as all the information necessary for producers to determine what to produce at which costs. The theory of « perfect competition » is instead assuming the availability of all the information that competition is supposed to produce in the first place.[22]

This leads him quite naturally to contest the ability of a competition agency to assess the “efficiency” of a given firm or business practice and to advocate instead to rely on the process of competition and the choice of consumers to select the “efficient” practices.

He writes for instance that

If allocative efficiency means satisfaction of consumers’ preferences, then we have to recognize that consumers’ preferences must be revealed by market transactions based on consumers’ choice. There is no way to directly measure allocative efficiency, let alone dynamic efficiency. […] Ordoliberalism simply stands for the protection of a “system of undistorted competition” that is based on individuals using their legally protected rights in order to freely reveal their preferences in a continuous process of choice making […].[23]

I fully agree with this pronouncement. However, I do not see how one might make it compatible with any brand of competition law.

How the Ordoliberal approach of competition law could rely on “consumers’ preferences […] revealed by market transactions based on consumers’ choice” and “allows the determination of allocative and dynamic efficiencies to be deferred to the competitive process” is beyond me.

Indeed, by punishing the firms which produce a range of options that competition agencies deem “reduced,” these latter forcibly prevent consumers from revealing the degree of diversity they prefer. Consumers cannot choose and reveal their preference for an option that producers are not allowed to offer.

Let us take the case of article 101(3). This article provides for the granting of an exemption to those anticompetitive agreements which contribute to economic progress. Professor Behrens explains that it is illusory to hope that competition agencies could ever “measure” allocative and dynamic efficiencies and thus determine directly whether a given practice satisfies to article 101(3).

Thus, he writes that

Ordoliberals have always appreciated and highlighted the positive welfare effects of competition in terms of productive, allocative and dynamic efficiencies. What they refuse, however, is to measure the allocative and dynamic efficiency effects of individual business strategies. The determination and materialization of these effects depends on consumers’ choice in the market. In other words: allocative and dynamic efficiencies can only be the result of effective competition. These results cannot be specified ex ante, because that would require access to the full amount of information which competition is supposed to discover in the first place.[24]

So far, so good. The author also wisely quotes Robert Bork’s wise words that “Economists, like other people, will measure what is susceptible of measurement and will tend to forget what is not, though what is forgotten may be far more important than what is measured.”[25]

But then Professor Behrens seems to consider that the Ordoliberal way of interpreting competition laws solves this problem.

Indeed, he writes that

Competition rules cannot, therefore, pretend to assess dominant firms’ conduct according to their allocative or dynamic efficiencies but merely according to their impact upon competition and consumers’ choice. The efficiency defense that is available according to Article 101(3) TFEU as well as, according to the jurisprudence of the CJEU, within the framework of Article 102 TFEU, is limited to productive efficiencies upon the condition, however, that sufficient residual competition is left. This allows the determination of allocative and dynamic efficiencies to be deferred to the competitive process which allows consumers to make their choices. So, in the end, any business conduct that appears efficient on the micro-level of the individual firm(s) must pass the efficiency test on the macro-level of the system of competition where consumers decide what they want.[26]

I must confess that I cannot comprehend this reasoning. How exactly is competition law supposed to “defer” the “determination of allocative and dynamic efficiencies” to the “competitive process”?

When an enterprise alleges that its practices which have been judged “anticompetitive” under Article 101(1) nevertheless promote economic progress, the competition agency has to assess the merits of this claim.

Professor Behrens affirms that it may directly measure the productive efficiency (which is, in my view, a sheer illusion) but that it must rely on the competitive process to assess allocative and dynamic efficiencies.

Yet, where are consumers supposed to reveal, by “making their choices,” their own appraisal of these efficiencies ? There is no room left for this. And how are their preferences to be communicated back to the competition agency to feed its deliberation?

Let us say that the anticompetitive effects of a given practice amount to -8 and that the competition agency has found out that its effects on productive efficiency equal +5. Thus, if the allocative and dynamic efficiencies are superior to 8-5=3, the practice must be allowed. How is the competition agency to proceed in order to know whether consumers value the allocative and dynamic efficiencies of the practice at more or less than +3? Where is it revealed?

Surely, contrary to what Professor Behrens seems to claim, the competition agency cannot just deduce this from the firm’s “success on the market,” because its role is precisely to determine whether this success was legitimate, and, if not, to “correct” the result which would have been produced in the absence of competition laws.

So it appears that, eventually, competition agencies end up doing in the Ordoliberal paradigm exactly what Professor Behrens reproaches them for doing in the Chicagoan paradigm, namely to “measure what is susceptible of measurement [productive efficiency] and [to] tend to forget what is not [allocative and dynamic efficiencies].”

It is all the more strange to claim to rely on the “competitive process” to assess the allocative and dynamic efficiencies of a given practice as consumers do not appraise them directly. What the competitive process may establish is the global result of the various kinds of efficiencies, not these efficiencies themselves.

Indeed, consumers only care about the best price/quality/choice ratio. They do not wonder, for instance, if a price is “low” because the costs are low or because the spread between the price and the costs is thin. Thus it is illusory to rely on the competitive process to assess or measure “allocative efficiency.”

It is even more unfounded to hope that the preferences that consumers reveal on the market may help a competition authority to appraise “dynamic efficiency,” which, by nature, will only manifest itself in the future.

Except in some very special cases (for instance, when one has to choose between various path-dependent technologies or when the prestige of a firm depends on its technological inventiveness), consumers do not enquire how much a firm will innovate in the future. This is not reflected in their current willingness to pay.

This will only reveal itself at a later stage, when the innovative product is turned out. Meanwhile––i.e., when the competition authority has to deliver its judgment––the behavior of consumers does not reveal anything about dynamic efficiency.

1.3. From the Choice of Products to the Choice of Producers.

In Professor Behrens’ system, “consumers’ choice” supposes that consumers may pick not only between various products, but also between various producers.

Indeed, he writes that

In order for consumers to be able to make choices, it is indispensable that there exists a sufficient variety of competing products and producers (suppliers). This brings us to the relevance of the « market structure » which reflects the number of producers (suppliers) and their market shares. Consumers’ freedom to choose between alternative products or services offered on the market is dependent upon the degree of decentralization of production.[27]

This shift is not supported by any argument in Professor Behrens’ paper.

Now, one can easily conceive that, everything being equal, consumers would generally prefer being offered a wider rather than a narrower range of products––the problem being that, as mentioned above, the “everything being equal” clause can seldom be held.

On the contrary, it is relatively hard to admit that, outside the relatively limited kind of products for which the brand is valued in itself (that is, independently of the product’s quality), the diversity of producers should be considered as an absolute objective for its own sake.

Thus, it looks as if the “consumer choice” paradigm were just a way of recycling the old, discredited “structuralist” paradigm.  As Professor Pinar Akman words it,

In fact, if one looks at the hitherto EU jurisprudence it appears that ‘choice” might simply be another word for ‘competitor’ and the preservation of ‘choice” might simply mean the preservation of rivals on the relevant market.[28]

This is all the more paradoxical as the failure of a firm is a prima facie sign that consumers disapproved of its existence. Indeed, as Mises wrote,

If a businessman does not strictly obey the orders of the public as they are conveyed to him by the structure of market prices, he suffers losses, he goes bankrupt, and is thus removed from his eminent position at the helm. Other men who did better in satisfying the demand of the consumers replace him.[29]

By rendering their enterprises profitable, the consumers shift control of the factors of production into the hands of those businessmen who serve them best. By rendering the enterprises of the bungling entrepreneurs unprofitable, they withdraw control from those entrepreneurs with whose services they disagree.[30]

Hence, I am not convinced by Professor Behrens’ assertion that the Ordoliberal approach “is far from protecting inefficient competitors who would be driven out of the market by legitimate competition on the merits anyway.”[31]

1.4. Professor Behrens Does Not Really Rely on the “Consumer Choice” Principle.

Professor Behrens’ thesis was that “consumer choice” could constitute an objective criterion enabling firms and competition agencies to distinguish between what is and what is not legitimate competition. Eventually, however, it appears that, even in Professor Behrens’ scheme, “consumer choice” does not play at all the function it was supposed to play.

One advantage of this criterion seemed to be that, contrary to consumer welfare, it was relatively straightforward. Indeed, Professor Behrens writes that “What counts are the effects upon competition and consumer choice, however, not on some kind of hardly measurable consumer welfare as mainstream economics wants to have it.”[32] This implies either that consumer choice does not have to be measured, or that this measurement is easy.

Consequently, if a practice carried on by a dominant firm [significantly] reduces choice, it must be forbidden; if it preserves or increases choice, it can be implemented. Thus consumer choice draws the line between correct and incorrect ways of competing.

However, if one looks closely at Professor Behrens’ paper, that is not really what the author advocates. Indeed, this latter writes that

from an ordoliberal point of view, a restraint of competition may be found wherever (1) the number of freely competing producers is artificially reduced in ways that do not result from the normal process of competition itself, and (2) where this reduces the scope of alternatives among which consumers may freely chose.[33]

In order to protect the process of competition as rivalry, unilateral conduct of already dominant firms must be prevented from leading to further concentration in the relevant market by way of merger or by way of exclusionary practices which would drive competitors out of the market by improper (« abusive« ) means at the expense of consumers’ choice […].[34]

Hence, “abuse” in Article 102 TFEU refers to an improper restriction of the residual competition that remains in an already concentrated market where one or some firms hold, individually or collectively, a dominant position.[35]

As one can see, whilst the limitation of “consumer choice” was presented as the criterion drawing the line between “abusive” (or artificial/improper) competitive practices and “legitimate” (or natural/proper) ones, it appears that Professor Behrens inserts an “artificial/improper” component alongside the “consumer choice” criterion.

To say it otherwise, the reduction of “consumer choice” does not define what an abusive/artificial/improper behavior is; instead, only “artificial/improper” reductions of consumer choice constitute abusive behaviors.

Thus, the “consumer choice” criterion actually plays no significant role (at best it is a “necessary but not sufficient component”) and, of course, the author does not even try to explain how to distinguish between an “artificial/improper” reduction of choice and a legitimate one.

1.5. Miscellaneous Comments on “Consumer Choice.”

I could discuss many other objections to the “consumer choice” approach. In order not to extend this article unreasonably, I will only mention them cursorily (of course, I may elaborate on them at a reader’s request):

  • On the free market, consumers always have a choice; the choice to buy or to keep their money.[36] That may seems trivial, but actually it is not. Indeed, as Menger put it, “the general principle of all economic exchanges of goods, according to which both parties must derive an economic advantage from an exchange, maintain[s] its validity unimpaired in the case of monopoly.” Consequently, on a free-market, one might be sure that each consumer will ex ante[37] benefit from the goods he purchases from a monopolist––even if he could have hoped to benefit more by paying a “competitive” price. 
  • The “consumer choice” criterion does not incorporate any way to distinguish between good and bad options: it aims at preserving “options” as such. Yet this distinction is obviously essential. 
  • As shown above, the “consumer choice” paradigm, when put in practice, actually amounts to a “bureaucrat choice” scheme; officials are to decide what “choices” consumers really prefer. 
  • The European Commission undertakes to regulate the properties of every product; so, to be credible, Ordoliberals should vocally oppose most of its regulations. 
  • Dominant firms are often accused of over-diversifying their products; so consistency would require that Ordoliberals criticize this “theory of harm” (I do not know whether they do). 
  • The “consumer choice” paradigm, as interpreted by Professor Behrens, does not seem to incorporate any method to deal with the trade-off between a higher variety of firms and a higher variety of products. 
  • The Ordoliberal reasoning can hardly explain why cartels are forbidden (they just make the prices increase from the “competitive” level to an “anticompetitive” one); so at best they should be deemed detrimental only when they reduce the price variance. 

2. Does Ordoliberalism Deliver on its Attractive Promises?

According to Professor Behrens, Ordoliberalism is characterized by the following features:

  • It is founded on the institution of private property;
  • It conceives competition as resulting from individual freedom of producers to choose what they want to offer and of consumers to choose what they want to buy;
  • It relies on the preferences that consumers reveal by their actual behavior;
  • It analyses competition as a process of rivalry (2.1.);
  • Its brand of competition law sets up rules of the game and does not constitute an “intervention” in the Hayekian meaning of the word (2.2.);
  • It does not require from the competition agencies to assess the efficiency of definite practices (2.3.);
  • It no longer relies on the “as if” approach (2.4.);
  • It does not make dominant enterprises illegal per se and does not prevent them from growing (2.5.);
  • It aims at guaranteeing the “rule of law” (2.6.).

I must say that I find all these promises very attractive. However, I have already demonstrated that the first three prove not to be held by Ordoliberalism.

Moreover, I will show that Ordoliberalism fails to deliver on any of the other promises and, even worse, that it often positively harms these valuable objectives, sometimes even more that the Chicagoan brand of competition law would do.

2.1. Can Competition Be Equated with Rivalry (for the Sake of Competition Law)?

Professor Behrens affirms that there is at the heart of the Ordoliberal brand of competition law

a concept of competition that had already been a centerpiece of Adam Smith’s notion of a « system of natural liberty », i.e. competition as rivalry.[38]

Moreover, he criticizes the neoclassical school for abandoning this model of competition.

Thus, he quotes Ronald Coase saying that, contrary to most modern economists, he “thought of competition … as rivalry, as a process, rather than as a condition defined by a high elasticity of demand, as would be true for most modern economists.[39]

Now, it seems perfectly rational to equate competition with rivalry. The problem is that this conception does not fit at all with any competition law paradigm which does not confine itself to the repeal of exclusive rights.

Indeed, as far as it deals with purely private enterprises, competition law aims at making “competition” a duty, and not merely a liberty. Consequently, if the concept of “competition” is defined as “rivalry” for the needs of competition law, a serious problem arises.

Assuredly, on the free-market, cooperation is as important as its opposite, namely competition (rivalry). Thus, it would make no sense to set up competition as an absolute ideal at the expense of cooperation.

As Robert Bork eloquently put it,

Our society is founded upon the elimination of rivalry, since that is necessary to every integration or coordination of productive economic efforts and to the specialization of effort. No firm, no partnership, no corporation, no economic unit containing more than a single person could exist without the elimination of some kinds or rivalry between persons. Taken seriously, [this policy would be] a prescription for the complete atomization of society. That policy is unthinkable, of course, since it would call not only for general abject poverty but for the death by starvation of millions of people. We may assume the antitrust laws were not designed to place the United States in worse economic condition than Bangladesh. So long, therefore, as we continue to speak of antitrust’s mission as the preservation of competition, we must be on guard against the easy and analytically disastrous identification of competition with rivalry.[40]

Moreover, competition agencies have no means of knowing how to find the correct balance between competition (rivalry) and cooperation. As Frank Easterbrook wrote it,

[T]here is no “right” balance between inside and outside transactions. There is only an ever-shifting equilibrium, differing from firm to firm, product to product, and time to time, as the relative costs of internal and market operations change. If all economic arrangements entail extensive cooperation, how is an antitrust court to proceed? Unless the court knows the “right” balance between competition and cooperation in each market, it does not know in which direction to move […]. Part of the difficulty in antitrust comes from ambiguity in what we mean by competition. Antitrust aims at preserving competition as an instrument for creating economic efficiency. Yet […] competition cannot be defined as the state of maximum rivalry, for that is a formula of disintegration.[41]

In an older paper, Professor Behrens mentioned that “Bork expressly disapproved of the notion that… rivalry should… be the relevant criterion” because he (Bork) felt that “the rivalry paradigm was too broad a standard for antitrust law.”[42] However, Professor Behrens did not offer any argument to rebuke Bork’s criticism.

2.2. Can Competition Law Be Analysed as “Rules of the Game”?

Those who favor competition laws often promote them by saying that competition must not be “the law of the jungle” and consequently must follow some rules.

This is a fallacious argument because, even in the absence of competition laws, competition would be governed by rules, viz. basic rules of private law like property, contracts and tortious liability. So at best one might argue that competition laws improve the institutional framework by creating new, better rules.

Now, even this argument would be incorrect. Indeed, competition rules cannot adequately be described as “rules of the game.” Quite the contrary.

This is perfectly clear for the “effect-based” paradigm, because rules of the game deal with the means employed, not with the results attained. Hayek was right to note that “To judge actions by rules, not by particular results, is the step which has made the Open Society possible.[43]

Moreover, a genuine “rule of the game” does not grant wide discretionary powers to the “arbiter.” Yet, this is precisely what the “effect-based” paradigm does.

As another author said (in another context),

Judges were now increasingly called upon to establish priorities among opposing equities and to assess the effects of private transactions, administrative ordinances, and even laws on the national economy. Their aims were often in conflict. More seriously, they shook traditional conceptions of the generality and autonomy of law.[44]

Now, this is less obvious for the “Ordoliberal” paradigm, which is generally taken to be diametrically opposed to the “effect-based” philosophy, but this is not less true. After scrutiny, this paradigm proves to be very close to the “effect-based” scheme.

Indeed, I have showed above that the “general rules” that Professor Behrens claims to set up are so wide that they could prohibit any commercial practice (one could always conceive of a state of affairs where there would be a wider range of options). So, what happens is that, as Turgot said about usury laws some centuries ago,

The rigorous observation of these laws would mean the destruction of all commerce; consequently, they are not observed rigorously […]. The virtual non-observance of this law has meant that it has become most arbitrary, because there is no certainty as to when it will be invoked.[45]

A general rule which is enforced only selectively is not a genuine rule. Rather, one might say that

Such sentences are not legal rules, for […] they represent a false universality despite the general character of the formulation. […] In other words, these concepts lack an unequivocal content. A legal system that constructs the basic elements of its rules out of these so-called general principles or legal standards of conduct is only a shell covering individual measures.[46]

I said that it was less obvious that the Ordoliberal so-called “rules” were not real “rules of the games,” because Ordoliberalism is generally thought to be diametrically opposed to the “effect-based” approach.

However, Professor Behrens expressly admits that the “It is […] unjustified to blame the dominant interpretation of Article 102 TFEU for not being ‘effects-based’” because “What counts are the effects upon competition and consumer choice.[47] So, even Professor Behrens is led to confirm that, beyond the rhetoric, both approaches have much in common.

2.3. Does Ordoliberalism Dispense Competition Agencies from Assessing the Efficiency of Definite Practices?

Professor Behrens affirms that Ordoliberalism relies on the “revealed preferences” of consumers. (I have shown above that this is not the case.) The reverse side of Professor Behrens’ claim is that Ordoliberal competition agencies would not need to assess the efficiency of definite practices (or firms).

Nevertheless, Professor Behrens sets up an exception to make room for the exemption mechanism provided by article 101(3). Indeed, as mentioned earlier, he thinks that productive efficiency, contrary to allocative and dynamic efficiencies, can be appraised by competition agencies with a reasonable degree of accuracy.

Firstly, I would like to observe that this hope is unfounded. Indeed, Hayek rightly wrote that “though we are in the habit of arguing in theory as if costs were a ‘datum’, that is, given knowledge, the lowest costs at which a thing can be produced are exactly what we want competition to discover.[48]

Curiously, although Professor Behrens makes a wide use of Hayek description of competition as a “discovery process,” and also refers to the book by Buchanan entitled “Cost and Choice” (which develops a “subjectivist” conception of costs), our author does not seem to include the magnitude of costs among the “data” that competition and competition alone may discover[49].

Besides, it appears that Professor Behrens needs to implement case-by-case assessments of efficiency even outside of article 101-3 (whose scope is already extremely large), for instance under article 102. Indeed, he writes that

Fully in line with the ordoliberal concept of competition, Article 102 TFEU is interpreted so as to “ensure that the exercise of market power does not impair competitors’ possibilities to succeed or prevail on the market on the basis of superior business performance.[50]

Now, in order to determine whether a competitor exhibits a “superior business performance,”[51] it seems that there is no way but to assess the efficiency of both the dominant enterprise and its competitor.[52]

This is a pity because, as an author put it, competition “embodies the only means to reward merit without resorting to a standard which would be external and hence arbitrary.”[53] Thus, competition law cannot take credit for one of the main virtues of competition.

2.4. Has Ordoliberalism Really Given Up the “As If” Approach?

Professor Behrens strongly insists that the idea that dominant enterprises should be forced to behave “as if” they were submitted to “perfect/workable” competition, which was propounded by the first generation of Ordoliberals, has been totally discarded nowadays.

For instance, he writes that

As far as the “as if”-standard is concerned – and especially its general application to the conduct (or performance) of dominant undertakings that had originally been advocated by Leonhard Miksch – it should be appreciated that it has been criticized early on and has since long been abandoned by mainstream ordoliberals.[54]

If it were true, it would be good news, because this approach is impracticable and dangerous. Indeed, there is no way of knowing how a dominant firm would behave if it were not so, and there is no reason either to think that it would be proper to force it to do so.

However, throughout his paper, Professor Behrens often seems to endorse the “as if” approach.

For instance, he approvingly reports that according to some Ordoliberals

the development of competition on a dominated market will be distorted by strategies that deviate from normal competition on the merits, that being the case if under conditions of effective competition such strategies would not be rational or appropriate.[55]

He also explains that the bottom line of Mestmäcker’s approach––an author that Professor Behrens undoubtedly sides with––was the principle that a dominant firm

must not engage in conduct that would not be possible under competitive conditions (put differently: conduct that is only possible due to market dominance).[56]

Now, I fail to see any difference between the “as if” approach and the idea that a dominant firm must not engage in conduct “that would not be possible under competitive conditions.”

2.5. Does the Ordoliberal Paradigm Oppose Dominant Enterprises Per Se? Does it Prevent them from Growing?

Professor Behrens also strongly emphasizes that the idea that dominant enterprises should be forbidden per se has been given up by modern Ordoliberals.

For instance, he writes that

Given that market dominance is not anti-competitive per se, the acquisition as well as the expansion of a dominant position by way of legitimate internal growth is not illegal.[57]

However, throughout his paper, Professor Behrens does not hold consistently this policy. More often than not, his recommendations, when scrutinized, boil down to forbidding dominant firms from growing.

Indeed, although he repeatedly upholds the claim that dominant enterprises should not be prohibited from growing per se, he often seems to consider that they should be prohibited  from excluding their rivals per se, which amounts pretty much to the same.

Thus, the criteria he sets forth to distinguish between abusive and legitimate exclusions are either truisms (so that they are always characterized), or are undefined.

For example, immediately after the previous quote he adds, by what could seem a mere explanation but actually turns out to be a contradiction, that

However, the acquisition or expansion of a dominant market position by means other than competition on the merits (i.e. by mergers or exclusionary practices) must be considered an illegitimate increase of market concentration.[58]

So, one sees that, according to Professor Behrens, “exclusionary practices” seem to constitute an illegitimate means of increasing one’s market share. This raises a serious difficulty.

Indeed, it is not easy to understand how a firm could compete and increase its market share without adopting exclusionary practices. Thus, Robert Bork rightly observed that

All business activity excludes. A sale excludes rivals from that piece of business. Any firm that operates excludes rivals from some share of the market. Superior efficiency forecloses. Indeed, exclusion or foreclosure is the mechanism by which competition confers its benefits upon society.[59]

So, one is bound to conclude, as Bork did, that “The problem is to know what exclusion is improper […]. Antitrust, therefore, must be able to distinguish efficiency exclusion from improper exclusion.”[60]

Now, it apparently results from Professor Behrens’ aforementioned words that he considers any “exclusionary practice” to be abusive. In this quote (as in others[61]), the author does not seem to distinguish between “efficiency exclusion” and “improper exclusion.”

Alternatively, he sometime seems to hold that it is indeed necessary to distinguish between normal and abusive exclusions, but that the preservation of “consumer choice” might constitute a proper criterion to carry out this task.

For instance, he holds that

[A] dominant firm should be prevented from eliminating residual competition either by way of merger or by pursuing exclusionary practices which reduce choice.[62]

Hence, in order to determine the exclusionary nature of a specific practice, the Court followed the notion of residual competition which must be protected against strategies that would significantly strengthen the dominant undertaking’s market position at the expense of consumers’ choice.[63]

The problem is that, as already mentioned, Professor Behrens seems to analyze any exclusion as a harm to “consumer choice,” so that any exclusionary practice is considered as abusive. Actually, it is hard to determine whether the limitation of consumer choice is really an additional criterion or merely an “explanatory addition with declaratory effect.”[64]

Sometimes, the author also states than an exclusionary practice is abusive only when it reduces choice by artificial or improper means. Thus, he writes that

Hence, from an ordoliberal point of view, a restraint of competition may be found wherever (1) the number of freely competing producers is artificially reduced in ways that do not result from the normal process of competition itself, and (2) where this reduces the scope of alternatives among which consumers may freely chose.[65]

In order to protect the process of competition as rivalry, unilateral conduct of already dominant firms must be prevented from leading to further concentration in the relevant market by way of merger or by way of exclusionary practices which would drive competitors out of the market by improper (« abusive« ) means at the expense of consumers’ choice […].[66]

This seems to imply the need to make a distinction, among the various forms of exclusionary practices which reduce choice, between those which are legitimate and those which are not. Yet, as indicated earlier, the author does not explain how to distinguish between these two forms of exclusion.

2.6. Does Ordoliberalism Really Aim at Guaranteeing the “Rule of Law”?

As noticed above, Professor Behrens affirms that Ordoliberalism would care about the rule of law; indeed, one of the primary objectives of this paradigm would be to guarantee this value.

Thus, the author writes that,

Ordoliberals […] insist that competitive markets must be based on the rule of law, more specifically on competition rules which the state must enforce by administrative and adjudicative means.[67]

Let us first recall that the “rule of law” means “the absence of arbitrary power on part of the government.” In A.V. Dicey’s words,

[By “rule of law”, we mean], in the first place, that no man is punishable or can be lawfully made to suffer in body or goods except for a distinct breach of law established in the ordinary Courts of the land. In this sense the rule of law is contrasted with every system of government based on the exercise by persons in authority of wide, arbitrary, or discretionary powers of constraint.[68]

Now, I have already shown that competition law, be it the Chicagoan or the Ordoliberal brand, is emphatically about granting wide arbitrary powers to bureaucrats. Thus, competition laws, and consequently Ordoliberalism, not only fails to protect the rule of law, but positively contributes to destroy it.

***

[1]   Peter Behrens, “The ‘Consumer Choice’ Paradigm in German Ordoliberalism and its Impact Upon EU Competition Law,” July 22, 2014, Europa-Kolleg Hamburg, Discussion Paper No. 1/14, p. 7. Available at SSRN: link or link.

[2]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’ of a Dominant Position and its Impact on Article 102 TFEU,” September 9, 2015, Nihoul/Takahashi, Abuse Regulation in Competition Law, Proceedings of the 10th ASCOLA Conference Tokyo 2015, forthcoming. Available at SSRN: link. Quoted here.

[3]     Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 1.

[4]     Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 11.

[5]     Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 9.

[6]     Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, pp. 9-10.

[6bis]    Armen Alchian, Economic Forces at Work, LibertyPress, 1977, pp. 130-131.

[7]    Ludwig von Mises, Human Action – A Treatise on Economics, Fox & Wilkes, San Francisco, 1963, p. 270. Quoted in Peter Behrens, “The ‘Consumer Choice’ Paradigm …,” aforementioned, p. 10. Available at SSRN: link or link. Let us note that, according to Mises, “There is in the operation of a market economy only one instance in which the proprietary class is not completely subject to the supremacy of the consumers. Monopoly prices are an infringement of the sway of the consumers” (Ludwig von Mises, Human Action, aforementioned, pp. 271-272).

[8]     Ludwig von Mises, Human Action, aforementioned, pp. 282-283.

[9]     Ludwig von Mises, Human Action, aforementioned, p. 283.

[10]  Murray Rothbard, Man, Economy, and State, Ludwig von Mises Institute, 2004, pp. 629-630.

[11]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 12.

[12]    Friedrich Hayek, Law, Legislation and Liberty, Routledge Classics, 2013, p. 411.

[13]    Ibid.

[14]    Except insofar (i) they recognize the legitimacy of private property and (ii) they recognize the legitimacy of violating private property through the implementation of the Kaldor-Hicks criterion.

[15]    Harold Demsetz, “How Many Cheers for Antitrust’s 100 years?,” Economic Inquiry, Vol. XXX, April 1992, p. 207.

[16]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 11.

[17]    Ibid.

[18]    Ibid.

[19]  Joshua D. Wright, and Douglas H. Ginsburg, “The Goals of Antitrust: Welfare Trumps Choice,” March 20, 2013, Fordham Law Review, forthcoming; George Mason Law & Economics Research Paper No. 13-22, p. 104. Available at SSRN: link.

[20]    Joshua D. Wright, and Douglas H. Ginsburg, “The Goals of Antitrust: Welfare Trumps Choice,” aforementioned, p. 105.

[21]  I do not think that Hayek would say that competition produces “all” the information necessary. He would rather state that competition is the only rational means to discover the limited pieces of information which can be gathered.

[22]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 12.

[23]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 25.

[24]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 24.

[25]    Robert Bork, The Antitrust Paradox – A Policy at War with ItselfThe Free Press, 1993, p. 127.

[26]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 24.

[27]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 11.

[28]  Pinar Akman, The Concept of Abuse in EU Competition Law – Law and Economic Approaches, Hart Publishing, Oxford and Portland, Oregon, 2015, p. 293.

[29]    Ludwig von Mises, Human Action, aforementioned, p. 270. Quoted by Professor Behrens in “The ‘Consumer Choice’ Paradigm…,” aforementioned, p. 10.

[30]    Ludwig von Mises, The Ultimate Foundation of Economic Science – An Essay on Method, D. Van Nostrand Company, 1962, p. 113.

[31]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 23.

[32]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 28.

[33]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 11.

[34]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, pp. 13-14.

[35]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 16.

[36]    If it were not true, no “allocative efficiency” (deadweight) could ever happen.

[37]   Of course, ex post, it can be different (the consumer can have made a mistake), but it has nothing to do with the monopoly issue.

[38]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 9.

[39]    Ibid.

[40]    Robert Bork, The Antitrust Paradox, aforementioned, pp. 58-59.

[41]    Frank H. Easterbrook, The Limits of Antitrust, Texas Law Review, Volume 63, Number 1, August 1984, pp. 2 and 13.

[42] Peter Behrens, “The ‘Consumer Choice’ Paradigm in German Ordoliberalism…,” aforementioned, p. 30.

[43]    Friedrich Hayek, Law, Legislation and Liberty, aforementioned, p. 204.

[44]    Roberto Unger, Law in Modern Society: Toward a Criticism of Social Theory, The Free Press, 1977, pp. 216-218.

[45]    Turgot, “Paper on Lending at Interest,” in The Turgot Collection, Ludwig von Mises Institute, 2011, pp. 207-208.

[46]    Franz Neumann, Behemot: The Structure and Practice of National-Socialism, 1933-1944, Ivan R. Dee – Chicago, 2006, p. 442.

[47]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 28.

[48]    Friedrich Hayek, Law, Legislation and Liberty, aforementioned, p. 409. According to Hayek “one of the chief sources of error” in industrial economics was “the conception derived from the fictitious assumption that the individual’s ‘cost curves’ are an objectively given fact ascertainable by inspection” (ibid., p. 408).

[49]   Professor Behrens writes that “Due to the influence of Friedrich von Hayek who is also associated with the ordoliberal school, competition is regarded as a dynamic process of discovery which produces all the information necessary to determine consumers’ wants, their demand for specific goods and services and their willingness to pay as well as all the information necessary for producers to determine what to produce at which costs” (Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 12).  As one sees, although it is not very clear, it seems that, according to the author, firms would only have to choose between various processes whose costs have already been objectively defined which best suits the desires of the consumers.

[50]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 23.

[51]    Let us notice that this standard is more demanding (for the competition agencies) than the “as efficient competitor” approach.

[52]   It is all the more surprising as Professor Behrens seems to equate the “as-efficient-competitor” approach with the Chicagoan paradigm. Indeed, he writes that “The Court (as well as the Commission itself!) relied on the exclusionary effect of the scheme (i.e. its negative impact on the market structure!) rather than on the equally efficient competitor-test which forms an essential part of the “more economic approach” as outlined in the Commission’s Guidance regarding Article 102 TFEU (supra n. 1)” (Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 19).

[53]    Gaspar Koenig, Le révolutionnaire, l’expert et le geek – combat pour l’autonomie, Plon, 2015. (My translation.) Let us note that, although he does not refer to it and has perhaps never heard of it, the author of this book is generally very close to the Ordoliberal “consumer choice” paradigm.

[54]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 20.

[55]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 19.

[56]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 17.

[57]  Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 16. Professor Behrens also writes that “First of all, there is consensus among ordoliberals that where market power or even monopoly is the result of success on the market there is no justification to punish it. It is recognized that market power, even where it gives rise to a « dominant position » in the market, cannot be deemed illegal per se, if it is acquired by totally lawful means” (ibid., p. 13).

[58]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 16.

[59]    Robert Bork, The Antitrust Paradox, aforementioned, p. 137.

[60]    Robert Bork, The Antitrust Paradox, aforementioned, p. 137.

[61]   For instance, when he writes that “Anticompetitive conduct of dominant firms cannot be limited to practices which harm consumers, but may as well lead to the maintenance or expansion of their dominant position” (Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 16). However, this sentence is rather hard to interpret.

[62]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 17.

[63]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 18.

[64]  I borrow this expression from the opinion of Advocate General Kokott delivered on 23 February 2006 in the case “British Airways plc v Commission of the European Communities,” C-95/04. 

[65]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 11.

[66]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, pp. 13-14.

[67]    Peter Behrens, “The Ordoliberal Concept of ‘Abuse’…,” aforementioned, p. 10.

[68]   Albert V. Dicey, Introduction to the Study of the Law of the Constitution, LibertyClassics, Indianapolis, p. 110.

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