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There is nothing simple and straightforward about competition authorities, their design and operations. Even in the most developed countries, those with a long and uninterrupted tradition of market economy and competition policy enforcement, there are dilemmas about the role, organisation, leverage, accountability, and funding of the competition authorities, among other things. There is no blueprint for the first best design of competition authorities, but rather certain guidelines and best practices—and not all of them consistent over time. It is hardly surprising that in South-East Europe the dilemmas are multiplied, as the region does not have a long tradition of market economy and competition policy enforcement; for most of the countries in the Region competition policy is a novel notion, and rule of law is not exactly a regional hallmark. Clearly, challenges for institution building of competition authorities in South-East Europe are immense.

In recent years, a vast number of countries worldwide have adopted competition laws, including antitrust provisions and merger control. This phenomenon is linked to the belief that competition is beneficial for economic welfare, and that competition law is capable of protecting competition in the marketplace. Literature shows that the effectiveness of competition law in a given country may depend on the economic, institutional and cultural characteristics of the country itself. This paper contributes to this literature by assessing what should be the optimal design of competition law in Western Balkan countries. First, we identify the “policy choice set”, the essential variables that define a competition policy regime. Second, we review the economic, institutional and cultural characteristics that should shape the optimal policy design. Finally, we examine the Western Balkan economies to describe where they stand, in terms of these characteristics, and derive policy implications on how their competition policy should be designed and implemented. Several conclusions emerge from our analysis. The existence of high barriers to entry and poor institutional quality points to the importance of an institutional set-up where the independence and transparency of the competition authorities is maximised within the context of an administrative model; also, no sector or enterprise, including SOEs, should be excluded from competition law enforcement, and competition law provisions should ensure that the voice of the competition authority is heard whenever new legislation that potentially affects competition is introduced. In terms of enforcement, while the role of advocacy emerges as crucial, along with the prosecution of entry-foreclosing abuses, a more lenient approach to merger control can be suggested, in the form of high notification thresholds.

The aim of the paper is to explore whether and what kind of competition policy is desirable for SEE countries using growth rate optimisation as the criterion. The conclusion is that competition is good for the economic growth of the SEE countries. Their growth is based on the increase in the total factor productivity (TPF), mainly on account of the restructuring process and reallocation of resources, but also due to the adoption of modern technology. Competition provides key incentives for this type of economic growth and no disadvantage of competition has been recorded for the TFP based growth. Accordingly, effective competition policy in the SEE countries is essential for avoiding the middle income convergence trap. Taking into account that the business environment in the SEE countries still lags behind the business environment of “Old Europe”, that economic freedom is somewhat curtailed, and that there are still important legal barriers to entry, advocacy should be a priority of the competition policy. Additional efforts are needed for designing a suitable competition advocacy strategy, allocating resources needed for effective advocacy, and changing some of the legislative provisions to grant more power to the national competition authorities (NCAs) to conduct their advocacy activities. Taking into account that restructuring contributes significantly to the economic growth of these countries, and that mergers and acquisitions facilitate that process, merger control should not be an obstacle to this process. For that very reason it is important that merger control in SEE countries be lenient. The best way forward would be to increase the notification thresholds. Such a move would save some NCA resources, which can be allocated to competition advocacy.

All countries in South East Europe introduced a national system of state aid control. The paper first analyses the legal requirements for introducing national state aid rules, stemming from the Stabilization and Association Agreements these countries concluded with the European Union, but also from the Central European Free Trade Agreement and the Energy Community Treaty. The analysis of the institutional design of the national state aid authorities reveals that the SEE countries largely chose to establish an authority with close links to the Government—either as a unit within the ministry of finance or ministry of economy, or as a collegial body formed by the representatives of different ministries, but only formally separated from the Government. Only the FYR Macedonia has chosen to design its state aid authority in a different manner, by entrusting the existing competition authority with the task of state aid control. Both types of institutional design are “inspired” by the models of state aid authorities that existed in the Central and East European countries in the pre-accession period. Regardless of the type of institutional design that a country opted for, the enforcement record of these authorities remains unsatisfactory. The paper concludes with an analysis of the reasons for the inefficiency of state aid control in SEE countries, which do not seem to directly result from the choice of the institutional model of the monitoring authority, since there is no substantive separation of the state aid authority from the Government structures that provide state aid.

The aim of this contribution is to provide a critical view on different challenges in broader competition law and policy, with specific regard to institutional capacities of authorities responsible for competition protection, either through competition law enforcement or through advocacy activities. The paper further elaborates on different challenges regarding the introduction and protection of competition law and policy, as well as different competences of the competition authorities, on one hand, and sector regulators, on the other, bearing in mind the expected common result: a more competitive environment, leading to efficient economy and consumer benefits. The benefits of efficient competition law and policy are sometimes not appropriately recognised and proper understanding of who and what should be protected under competition law and policy remains a specific challenge, and in some cases the system of competition and consumer protection is less efficient than desired and necessary. This paper does not provide specific suggestions on how relevant authorities could be organised. Nevertheless, some specific challenges are highlighted, some of them perhaps in a provocative way, especially regarding the issue of who and what should be protected under competition law and policy, and the functional independence of the authorities concerned.

While Greece’s poor record on product market reforms predates the crisis, the deep recession that followed has made addressing those long-standing structural rigidities and inefficiencies a priority in the context of Greece’s Economic Adjustment Programme and beyond. Against this backdrop, the Hellenic Competition Commission diversified and expanded considerably its advocacy and outreach activities, in order to promote structural reforms notably in the area of professional services and regulatory barriers to competition in market. This contribution describes the advocacy initiatives undertaken by Greece’s competition authority during 2010–2016, which focused on four key areas: (a) liberalization of professional services (liberal professions), (b) ex-post evaluation of laws and regulations in designated sectors of the economy (a series of OECD-managed projects, in partnership with the HCC), (c) addressing targeted regulatory distortions mostly affecting retail and food supply chains and (d) publication of competition compliance and awareness guides, with a view to increasing overall public awareness of the benefits of increased competition. Although it is still difficult to quantify the benefits to growth brought about by such liberalization efforts, several comparative assessment reports suggest that Greece has improved its record in easing regulatory barriers to competition markedly (albeit still lagging compared to EU and OECD average). The Competition Commission’s ambitious advocacy efforts underline, amongst others, the need to implement a coherent regulatory impact strategy at the level of the central administration, so as to promote the ex ante control of draft laws and regulations affecting competition, thereby also safeguarding previously implemented reforms.

This paper provides a short review and analysis of the stipulations of the Law on the Protection of Competition of the Republic of Serbia concerning the competencies of the Commission for Protection of Competition in the field of advocacy, and gives an overview of several examples from the Commission’s practice. The paper examines the definition of competition advocacy and the significance of advocacy in Serbia and other developing and transition countries, as well as certain prerequisites for effective advocacy by a competition authority. Additionally, the article considers the Serbian legal framework for competition advocacy, focusing on the most successful examples and highlighting Serbia’s experience and some realised cases of advocacy initiatives. The article is organised into several parts in order to include a large number of activities that could be classified as forms of competition advocacy (giving opinions, cooperation with other state authorities, i.e. independent sector regulators, the use of market studies, etc.). In conclusion, the final remarks and recommendations for the Serbian Commission and policy makers are included, considering the importance of competition advocacy in developing and transition countries, such as Serbia.

The extent of economic analysis and evidence on which competition authorities and courts rely, in assessing whether specific conducts violate competition law, depends crucially on the legal standard adopted. In this article we examine the factors that influence the choice of legal standards, and hence determine the extent of economic analysis and evidence applied in competition law enforcement, focusing on the recent economic literature. We suggest a number of explanations on why the decisions of competition authorities in relation to the utilization of economic evidence may diverge from the social welfare-maximising decisions, stressing the role of substantive (or liability) standards adopted. Differences in substantive standards may be used to explain the significant divergence in the type of legal standards adopted in the EU and the USA. We also propose a practical methodology that can be used by competition authorities for identifying which legal standards minimise decision errors in the assessment of specific conduct.

The importance of economics to the analysis and enforcement of competition policy and law has increased tremendously in the developed market economies in the past 40 years. In younger and developing market economies, competition law itself has a history of 20–25 years at most—sometimes much less—and economic tools that have proven useful to competition law enforcement in developed market economies in focusing investigations and in assisting decision makers in distinguishing central from secondary issues are inevitably less well understood. This paper presents a non-technical introduction to three economic tools that have become widespread in competition law enforcement in general and in the analysis of proposed mergers in particular: critical loss analysis, upward pricing pressure, and the vertical arithmetic. The first is used primarily in the context of horizontal mergers for both market definition and the analysis of potential competitive effects from the merger, while the second and third are used primarily in the analysis of potential competitive effects, the second in horizontal mergers and the third in vertical mergers.

The definition of the relevant market is one of the most basic underlying concepts of all substantive issues in competition law related to the concentration of enterprises, restrictive agreements and abuse of dominant position. Different methodologies are used for determining the relevant market. What will be applied specifically depends on several factors, the most important including the very nature of a specific product market and data availability. This paper presents the application of methods that are based on the price movement of the products under consideration: correlation, stationarity test (unit root test), cointegration test, and Granger causality test. The aim of the paper is to verify the reliability of these tests in the process of specifying the relevant market. We will demonstrate the practical application of price-based tests on the analysis of monthly time-series data related to the price of three products during the 4-year period.