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

Abstract

From a traditional rationalist principal-agent framework, the development of the European Community’s competition policy could appear as a straightforward story of agency loss. However, the recent overhaul of competition policy, which the Community presented in terms of decentralisation, appears to have changed the story. We are confronted with the uncommon event of an agent (the European Commission) returning 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 co-operation in networks. These instruments 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 increasing extent to 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 also engage in assessing the facts themselves.