Rules versus discretion in the design of competition law

Anticompetitive agreements and abusive practices can limit the efficiency of market mechanisms. The design of substantive rules and enforcement mechanisms of competition law nevertheless remains an important and unresolved element of the legal framework for the operation of market economies. This dissertation investigates the implications of different design strategies available to lawmakers for the effective enforcement of legal constraints against anticompetitive practices under conditions of asymmetric and costly information.;This dissertation contends that from a theoretical perspective the optimal design of rules and procedures is ambiguous and provides an empirical assessment of possible tradeoffs facing lawmakers. Analyses of the evolution of competition regimes in the Russian Federation, Poland, United States, and the European Union suggest that in the presence of costly and asymmetric information per se prohibitions and decentralized enforcement mechanisms are likely to impose more credible constraints against undesirable conduct than the rule-of-reason approach and purely public enforcement. This dissertation contributes to the literature by highlighting the complementarities between public and private enforcement institutions. Public and private mechanisms are likely to exhibit distinct capacities and incentives to search for and deter illegal practices. This implies that private rights of action can often complement institutions of modern nation states for regulating economic behavior and extend their authority.;Two important observations about contemporary competition regimes in developed and developing countries motivate the analysis. First, anticompetitive practices are perceived to represent a relatively significant constraint on economic growth and development. However, most jurisdictions that introduced a new competition regime in the 1980s and 1990s have implemented a flexible rule-of-reason framework, which requires the balancing of multiple objectives in addition to the protection and/or promotion of competition. Consequently, these regimes are information intensive and prone to uncertainty about the range of permissible market conduct. Most jurisdictions also rely almost exclusively on the information and incentives of public agencies and prosecutors to enforce competition law.