On Government, Governance and Judicial Review: The Case of European Competition Policy

Abstract

Through the lens of a traditional rationalist principal-agent framework, the development of the European Community's competition policy could be read as a straightforward story of agency loss. However, with the recent overhaul of competition policy, which the Community presented in terms of a decentralisation, the story seems to have changed as we are confronted with the uncommon event in which an agent (the European Commission) returns some of its powers to the principals (the member states). This paper resolves the puzzle by highlighting the role of the Commission and of European courts. It has become part of the Commission's strategy to pursue its objectives through legally non-binding instruments such as notices or guidelines or even through co-operation in networks. For the Commission, these instruments have the advantage that they do not need the approval of the Council of Ministers or the European Parliament. With the Commission's promotion of new modes of governance, the link between sectoral governance (in terms of regulation specific to competition policy) and the governmental shadow of hierarchy shifted, to an ever-larger extent, to the mechanism of judicial review by European courts. Alongside this shift, the character of judicial review has changed in the direction of judicial control, as European courts no longer restrict themselves to review of the legality of Commission actions, but engage in assessing the facts themselves.