Fabienne Ilzkovitz
Professor, Solvay Brussels School of Economics and Management, ULB
External economic advisor to the European Commission
OECD WP2 Roundtable on Assessing the Impact of Competition Authorities‘s Activities
Paris, 16 June 2025
Objective: Explore three areas where competition authorities could expand their assessment of the impact of competition policy enforcement:
Innovation and quality effects
Deterrent effects
Macroeconomic impact.
Scope: For each of these areas:
Why expand the assessment in this area?
How to implement the assessment?
Illustrations.
OECD (2023) “The Role of Innovation in Competition Enforcement”: competition authorities increasingly analyse how changes in innovation affect competition.
⇒ Relevant to assess the contribution of competition policy enforcement to this objective.
Draghi report: Europe faces an innovation challenge.
⇒ Important to have a better picture of the competition enforcement activity incorporating innovation analysis.
Provide a simple descriptive analysis of interventions driven by innovation and quality concerns:
‒ Based on data used to calculate customer savings, identify cases in which an innovation or quality theory of harm was present.
‒ For example, calculate the proportion of interventions driven by innovation or quality concerns.
In a first step, do not attempt to quantify the benefits for consumers as done for the direct customer savings.
Not too much resource intensive.
On average over the period 2012-2024, 25% of the number of EC merger interventions include innovation or quality concerns and this share is relatively stable.
Merger control interventions with innovation or quality concerns (2012-2024)
The turnover of merger interventions with innovation and quality concerns can represent up to 77% of the total turnover of merger interventions.
On average over the period 2012-2024, 30% of the number of EC antitrust interventions include innovation or quality concerns and the trend is increasing.
Antitrust interventions with innovation or quality concerns (2012-2024)
The turnover of antitrust interventions with innovation and quality concerns can represent up to 90% of the total turnover of merger interventions.
Over the period 2012-2024, innovation concerns were present in only a single cartel intervention, the Car Emissions case of 2021.
The interventions of competition authorities have two main effects:
Direct effects = To stop and punish anti-competitive behaviour.
Deterrent effects = To discourage future anti-competitive behaviour.
Deterrent effects are important because:
Leverage effect.
Change companies' behaviour in the longer term. According to the literature, the deterrent effects of competition authorities' interventions outweigh to a large extent the direct effects.
Measuring the deterrent effects of their interventions would give CA a clearer picture of the total (direct + deterrent) effects of their interventions:
⇒ To better illustrate the benefits of competition policy (advocacy).
⇒ To better target interventions.
Deterrent effects are difficult to measure :
Needs to make inferences about changes in future behaviour by market players resulting from interventions by competition authorities.
Duration of the deterrent effects may differ from that of the direct effects.
Two main methods have been used:
Survey approach:
Surveys asking companies and their legal advisors to estimate the number of cartels/abuse/anticompetitive mergers deterred for every cartel/abuse/anticompetitive merger detected (multiplier approach).
Existing surveys are outdated and cover only UK and NL.
New study by the EC.
Theoretical or statistical models to describe the deterrent effects
Allow to test the sensitivity of the deterrent effects to different parameters.
Measuring the deterrent effects is resource intensive but very useful. 9
New EC study to estimate the scale and determinants of the deterrent effects of EU competition policy enforcement (study made by a consortium comprising Lear and Verian).
Scale of deterrence estimated through the multiplier approach.
Final results expected by the Summer 2025.
2 surveys covering the period 2019-2023 to estimate the scale of the deterrent effects:
ca. 300 senior competition lawyers covering EU27.
ca. 300 business executives or in-house counsels covering 10 EU countries.
+ an analysis of the determinants of deterrence based on another survey of ca. 300 business executives and 50 interviews.
Some first preliminary results of the EC study:
Scale of deterrence estimated through the multiplier approach is significant and seems to be in line with previous survey results.
A non negligible portion of anti-competitive behaviour in the areas of cartels and abuses is undetected ⇒ potential for anti-competitive conduct to be deterred is high in these two areas.
Influential decisions for cartels are recent decisions and decisions concerning the same sector than that in which the company operates.
Influential decisions are high fine decisions for cartels and abuses and prohibition decisions for mergers.
Business chilling (pro-competitive conduct refrained due to fear of potential legal challenge) may be a relevant concern in abuses and mergers. But risk of overestimation.
Determinants of deterrence include fines and probability of detection but also private damage actions, procedural costs of being involved in an EC investigation and reputational costs.
See Dierx et al. (2023), “ Modelling the diffusion of the deterrent effects of competition policy”, Journal of Competition Law.
Deterrence modelled as a diffusion of information about CP interventions:
Competition authorities send an external signal to market players depending on the economic importance of the detected competition law infringements.
Interactions in the market , in particular via legal counsels and law firms, stimulate the propagation of the deterrent effects of the signal.
The diffusion of the signal is described by a model similar to models used to describe the propagation of a virus and calibrated to ensure that deterrence multipliers are consistent with survey results.
Deterrent effects are primarily felt in the sector directly affected by the intervention.
The mere existence of a competition authority can have deterrent effects on the behaviour of market players.
Work in progress:
Consider that some influential decisions can have an impact on companies not belonging to the sector in which the company operates.
Introduce a time dimension in the process of diffusion.
Caveat: To be distinguished from the macroeconomic impact of competition
Useful for advocacy reasons: allow to illustrate the direct and deterrent effects of competition policy enforcement. In the present economic and policy context, competition rules sometimes criticised as being an obstacle to competitiveness and growth ⇒ important to show that competition policy contributes to improve productivity and growth.
Use data collected for the calculation of customer savings to calibrate mark-up shocks applied to a DSGE model
Competition Policy Laws and Institutions
Enforcement: Merger, Antitrust and Cartel Decisions
1. Direct Effects
2. Deterrence Effects
Prices
Mark-ups
Macroeconomic Effects: (GDP, employment...)
Strength of Competition Policy
Microeconomic Effects of Competition Policy on Competition
Illustration:
Latest simulation results made by the EC with the QUEST III model to assess the impact of EU competition policy enforcement over the period 2012-2022
Main macroeconomic results
Expanding the assessment of the impact of competition authorities ‘s work beyond the direct customer savings is:
Useful, particularly for advocacy reasons.
Complex.
Resource intensive.
This work should be not be integrated in the customer savings calculations:
To not undermine the simplicity and credibility of these calculations.
Not possible to quantify the benefits of innovation for consumers based on a similar approach.
Complexity of the modelling of the deterrent effects and variation in the scale of deterrence multipliers estimated on the basis of surveys.
Descriptive analysis of innovation incorporation in enforcement activity.
Guidance on this issue can be relatively easily provided.
Contribution of DG Competition for the OECD Roundtable on “Assessing the Impact of Competition Authorities’ Enforcement (Paris, 16 June 2025)
Dierx A., Ilzkovitz F., Pataracchia B. and Pericoli F. (2023), “Modelling the diffusion of the deterrent effects”, Journal of Competition Law and Economics, https://doi.org/10.1093/joclec/nhad004
Lear and Verian (2025), « Survey of practioners on the deterrence effects of EU competition enforcement », Study prepared for the Directorate General of Competition of the European Commission. European Commission, Directorate-General for Competition, Directorate-General for Economic and Financial Affairs, Joint Research Centre, Dierx, A., Fedotenkov, I., Ilzkovitz, F. et al. (2024). Modelling the macroeconomic impact of competition policy – 2023 update and further development. Publications Office of the European Union https://competition-policy.ec.europa.eu/document/download/05570b1d-271e-46f4b061443ed9f4ea25_en?filename=kdaq24001enn_macroeconomic_impact_of_competitio n_policy_2023.pdf