Competition law and consumer law complement each other in ensuring that markets satisfy consumer preferences. Nonetheless, tensions may result from diverging consumer models in both areas of law. Consumer protection rules that take account of bounded rationality are incompatible with competition rules that are based on the idea of consumer sovereignty. However, as is shown in this contribution, unlike U.S. antitrust law, EU competition law, as interpreted by the European courts and by the Commission, implicitly recognizes rationality deficits on the part of consumers. It thus essentially shares the premises of paternalistic consumer protection.
This is an amended version of a contribution that has previously been published in German under the title ‘Kartellrecht und Verbraucherschutzrecht: Zur Notwendigkeit eines gemeinsamen Verbraucherleitbildes’ in Forschungsinstitut für Wirtschaftsverfassung und Wettbewerb (ed), Herausforderungen für die Wettbewerbspolitik—Kartellrecht zwischen Industriepolitik und Verbraucherschutz, Referate des 46. FIW-Symposions (Cologne, Heymanns, 2013) 73.
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See, e.g. Commission, Report on Competition Policy 2011, COM(2012) 253 final, 13; Report on Competition Policy 2010, COM(2011) 328 final; Report on Competition Policy 2009, 5.
Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, para 125; Case C-95/04 P British Airways v Commission [2007] ECR I-2331, para 106.
See, e.g. J Drexl, ‘Wettbewerbsverfassung’ in A von Bogdandy and J Bast (eds) Europäisches Verfassungsrecht, 2nd ed (Berlin, Springer, 2009) 905, 951; R Zäch and A Künzler, ‘Reining in the “more economic approach”: Some overriding constraints from constitutional law and economics’ in J Drexl et al (eds), Technology and Competition, Contributions in Honour of Hanns Ullrich (Brussels, Larcier, 2009) 541; W Wurmnest, Marktmacht und Verdrängungsmissbrauch, 2nd ed (Tübingen, Mohr Siebeck, 2012) 93; A Fuchs and W Möschel, ‘Art 102 TFEU’ in U Immenga and HJ Mestmäcker (eds), Wettbewerbsrecht. vol I, 5th ed (Munich, CH Beck, 2012) para 131.
N Reich and H-W Micklitz, Europäisches Verbraucherschutzrecht, 4th ed (Baden-Baden, Nomos, 2003) (see in particular chapter 5 by N Reich).
See especially the German Constitutional Court’s decisions: BVerfG, 20/7/1954, 4 Entscheidungen des Bundesverfassungsgerichts 7; BVerfG, 11/6/1958, 7 Entscheidungen des Bundesverfassungsgerichts 377; BVerfG, 17/5/1961, 12 Entscheidungen des Bundesverfassungsgerichts 354; BVerfG, 16/3/1971, 30 Entscheidungen des Bundesverfassungsgerichts 292; BVerfG, 1/3/1979, 50 Entscheidungen des Bundesverfassungsgerichts 290. The idea of economic-political neutrality of the constitution was developed by H Ehmke, Wirtschaft und Verfassung (Karlsruhe, Müller, 1961).
See on the freedom of competition as part of the freedom of occupation under Art 12(1) GG, e.g. O Lepsius, ‘Verfassungsrechtlicher Rahmen der Regulierung’ in M Fehling and M Ruffert (eds), Regulierungsrecht (Tübingen, Mohr Siebeck, 2010) Chap. 4 paras 45 ff.
See for a more detailed discussion of the constitutional guarantee of freedom of contract, M Leistner, Richtiger Vertrag und lauterer Wettbewerb (Tübingen, Mohr Siebeck, 2007) 289 ff.
cf the German Constitutional Court’s leading cases BVerfG, 7/2/1990, 81 Entscheidungen des Bundesverfassungsgerichts 242 (on commercial agents) and BVerfG, 19/10/1993, 89 Entscheidungen des Bundesverfassungsgerichts 214 (on sureties by family members).
The background of this protocol is discussed in more detail by R Barents, ‘Constitutional Horse Trading: Some comments on the protocol on the internal market and competition’ in M Bulterman et al (eds), Views of European Law from the Mountain, Liber amicorum Piet Jan Slot (The Hague, Wolters Kluwer, 2009) 123.
See for a more thorough analysis, L Breuer, Das EU-Kartellrecht im Kraftfeld der Unionsziele (Baden-Baden, Nomos, 2013) 75 ff. and 136 ff.
Pursuant to Art 7(1) of the Consumer Sales Dir 1999/44/EC, the consumer is not free to waive his or her rights resulting from the Directive before the lack of conformity of the contract goods is brought to the seller’s attention.
Pursuant to Art 25 of the Consumer Rights Dir 2011/83/EU, the right of withdrawal granted under Art 9 of the Directive has a mandatory character.
See HR Varian, Intermediate Microeconomics: A Modern Approach, 9th ed (New York, Norton, 2009) 121, describing ‘revealed preferences’ as the following assumption: ‘If a bundle X is chosen over a bundle Y, then X must be preferred to Y’.
This argument is further developed in T Ackermann, Der Schutz des negativen Interesses (Tübingen, Mohr Siebeck, 2007) 114 ff.
See on the inclusion of non-systematic errors in economic models based on the assumption of rationality, P Belleflamme and M Peitz, Industrial Organization: Markets and Strategies (Cambridge, Cambridge University Press, 2010) 21.
This point is further developed in Ackermann, Der Schutz des negativen Interesses.An information asymmetry between buyers and sellers in respect of the product quality may lead to adverse selection (also known as the ‘lemons’ problem), resulting in an inefficient market equilibrium. See the seminal contribution by GA Akerlof, ‘The Market for “Lemons”: Quality Uncertainty and the Market Mechanism’ (1970) 84 Quarterly Journal of Economics 488.
The idea dates back to HA Simon, Models of Man (New York, John Wiley & Sons, 1957).Path-breaking contributions to behavioral economics are D Kahneman and A Tversky, ‘Prospect Theory: An Analysis of Decision under Risk’ (1979) 47 Econometrica 263; D Kahneman and A Tversky, ‘Judgment under Uncertainty: Heuristics and Biases’ in D Kahneman, P Slovik and A Tversky (eds), Judgment under Uncertainty: Heuristics and biases (Cambridge, Cambridge University Press 1982) 3; see for the legal reception C Jolls, C Sunstein and R Thaler, ‘A Behavioral Approach to Law and Economics’ (1998) 50 Stanford Law Review 1471; C Sunstein (ed), Behavioral Law and Economics (Cambridge, Cambridge University Press, 2000).
An instructive introduction to this form of paternalism is given in the widely acclaimed book by C Sunstein and R Thaler, Nudge: Improving Decisions about Health, Wealth and Happiness (New Haven, Yale University Press, 2008), which seeks to justify a libertarian paternalism.
See in support of such an approach, A Aviram and A Tor, ‘Overcoming Impediments to Information Sharing’ (2004) 55 Alabama Law Review 231; M Bennett et al, ‘What Does Behavioral Economics Mean for Competition Policy?’ (2010) 6 Competition Policy International 111; A Fuchs, ‘Introducing more features of real life into the economists’ world of theoretical models—comments on Justus Haucap, Bart Wilson and Christoph Engel’ in J Drexl et al (eds), Competition Policy and the Economic Approach (Cheltenham, Edward Elgar Publishing, 2011) 270; D Ginsburg and D Moore, ‘The Future of Behavioral Economics in Antitrust Jurisprudence’ (2010) 6 Competition Policy lnternational 89; J Haucap, ‘Bounded rationality and competition policy’ in J Drexl et al (eds), Competition Policy and the Economic Approach (Cheltenham, Edward Elgar Publishing, 2011) 217; AP Reeves and ME Stucke, ‘Behavioral Antitrust’ (2011) 86 Indiana Law Journal 1527; ME Stucke, ‘Behavioral Economics at the Gate: Antitrust in the Twenty-First Century’ (2007) 38 Loyola University of Chicago Law Journal 513; A Tor, ‘A Behavioural Approach to Antitrust Law and Economics’ (2004) 14 Consumer Policy Review 18; against such an approach G Werden, L Froeb and M Shor, ‘Behavioral Antitrust and Merger Control’ (2011) 167 Journal of Institutional and Theoretical Economics 126; J Wright, ‘The Antitrust/Consumer Protection Paradox’ (2012) 121 Yale Law Journal 2216.
One example is offered by C Landeo, ‘Exclusionary Vertical Restraints and Antitrust: Experimental Law and Economics Contributions’ in K Zeiler and J Teitelbaum (eds), The Research Handbook on Behavioral Law and Economics (Cheltenham, Edward Elgar Publishing, forthcoming).
See on the implications of bounded rationality of authorities and courts, Haucap, ‘Bounded rationality and competition policy’, 219 ff.
Wright, ‘The Antitrust/Consumer Protection Paradox’. See for an in-depth analysis, ibid, 2242 ff. See e.g., T Ackermann, Art. 85 Abs. 1 EGV und die rule of reason (Cologne, Heymanns, 1997) 97 ff. Case 26/76 Metro v Commission [1977] ECR 1875, para 20.Case C-439/09 Pierre Fabre Dermo-Cosmétique v Président de la Autorité de la concurrence [2011] ECR I-9419, para 46.
See JU Franck, ‘Zum Schutz des Produktimages im selektiven Vertrieb’ (2010) Wirtschaft und Wettbewerb 772, 781 ff.
Art 4(a) of the Vertical Block Exemption Reg (EU) 330/2010.See for a more detailed discussion, M Motta, Competition Policy: Theory and Practice (Cambridge, Cambridge University Press, 2004) 302 ff.
Leegin Creative Leather Products, Inc. v PSKS, Inc., 551 U.S. 877 (2007). A similar argument is made by Fuchs, ‘Introducing more features of real life’, 273.The argument that the margin guaranteed to distributors under a resale price maintenance scheme is an incentive for distributors to mislead customers in order to maximize profits has also been made by WS Grimes, ‘Spiff, Polish, and Consumer Demand Quality: Vertical Price Restraints Revisited’ (1992) 80 California Law Review 815, 834 ff.
Commission, Notice on definition of relevant market for the purposes of Community competition law, [1997] OJ C 372/5 para 56.
See e.g., the dissenting opinion of Justice Scalia in Eastman Kodak Co. v Image Technological Services, Inc., 504 U.S. 451 (1992).
S Bechtold, Die Kontrolle von Sekundärmärkten (Baden-Baden, Nomos, 2007) 15 ff. ibid, 30 ff. As has been observed by Bechtold, ibid, 51.Case T-201/04 Microsoft v Commission [2007] ECR ll-3601 para 1041, citing Commission, COMP/C-3/37.792– Microsoft para 845.
However, in para 846 of its decision, ibid, the Commission referred to a promotion letter by Microsoft stating that the pre-installation was attractive ‘for home users who know little about computers’. But this fact alone does not justify the Commission’s and the Court’s claim that users in general tended to stick to a pre-installed media player.
cf D Kahneman, B Knetsch and R Thaler, ‘Experimental Tests of the Endowment Effect and the Coase Theorem’ in Sunstein (ed), Behavioral Law and Economics, 211.
See e.g., the Consumer Sales Dir and the Consumer Rights Dir. Dir 2005/29/EC concerning unfair business-to-consumer commercial practices, [2005] OJ L 149/22. See Akerlof, ‘The Market for “Lemons”’.See for a further discussion, T Ackermann, ‘Das Informationsmodell im Recht der Dienstleistungen’ (2009) Zeitschrift für Europäisches Privatrecht 230, 240.
See on this point (with reference to the Commission’s proposal of a Common European Sales Law), T Ackermann, ‘Public Supply of Optional Standardized Consumer Contracts: A Rationale for the Common European Sales Law?’ (2013) 50 Common Market Law Review, Special Issue No 1, 11, 16.
Art 6 and 7 UCP Dir. Art. 7(4)(c) UCP Dir. Art. 8 UCP Dir.See for a comprehensive survey, C Alexander, Schadensersatz und Abschöpfung im Lauterkeits- und Kartellrecht (Tübingen, Mohr Siebeck, 2010).
See, however, the rather hesitant approach taken by the Commission in its package of 11/6/2013, http://ec.europa.eu/competition/antitrust/actionsdamages/documents.html.
