2 - The Pre–More Economic Approach to Competition’s Role in Crisis Management

Summary

Past practice (in both the EU and UK) took into account non-economic considerations in assessing agreements among competitors and mergers – particularly in times of economic crisis. This included a wide scope for collaboration among competitors and (in the UK) extensive scope for the use of public policy considerations to otherwise override the judgment of merger control authorities. This chapter suggests that although the various regimes previously relaxed competition law in the face of crises, this was a mistake. It examines Depression-era responses (including the US experience) and modern cases (e.g. Synthetic Fibres, the oil crisis and early views on the environment and sustainability) to illustrate the argument. This chapter examines the 1980s and 1990s crisis cartels and other responses to industrial downturn. In the cases of crisis cartels, the competition authorities interpreted the rules to permit industry-wide downsizing plans that alleviated some of the socio-economic consequences of plant closures (e.g. sudden increases in unemployment) notwithstanding that such agreements involved agreed upon output restrictions – a typical manifestation of a cartel.