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