Introduction to Rating Enforcement

Monday, 1 June 2009

Featured In: Rating Enforcement 2009

This year sees some major changes at the top of the Rating Enforcement table. Despite some criticism of the US Department of Justice's antitrust division over the past few years, its performance in 2008 was exemplary, not only in cartel enforcement, but also in merger control - whether or not one agrees with its occasionally controversial decisions. So the DoJ now moves into the elite category, with five stars.

The UK's Office of Fair Trading also performed well last year, according to specialists. When the financial crisis threw the UK economy into turmoil last year, the authority rose to the occasion admirably, despite pressure from all sides, including the UK government's decision to effectively bypass competition law to push through the LloydsTSB/HBOS merger. The OFT's merger control work was excellent, and its cartel enforcement programme made some notable achievements. The OFT moves up to four-and-a-half stars.

The European Commission's Directorate General for Competition, meanwhile, received a fair amount of criticism this year, despite its impressive efforts to wade through the torrent of state aid cases it received in 2008. Although it remains an outstanding institution with a formidable record in cartel busting and other areas of competition enforcement, Brussels' lawyers say the agency must address problems with due process, transparency and evidential burdens, among others. For these reasons, we have downgraded DG Comp from five to four-and-a-half stars.

Ireland's Competition Authority and Brazil's Secretariat of Economic Monitoring both had poor performances in 2008 and each went down by half a star.

Further down the table, younger and less well-resourced agencies continue to improve. The Competition Commissions of both Spain and South Africa made excellent progress last year, and for this reason we have moved them both up the rankings from three to three-and-a-half stars.

The competition authorities in the Czech Republic, Greece, Hungary, Japan, Poland and Russia also improved their performances last year.

Research

Our findings are based upon the opinions of specialists who deal with competition authorities every day - competition lawyers, in-house counsel, economists and academics - together with information supplied to us by authorities. We examine in detail both the quantitative and the qualitative information given to us by each authority, and we also invite the agency leaders to write their own assessment of the past year.

And we draw upon our own experience. Global Competition Review's daily news coverage of competition matters from across the globe provides an unparalleled resource to draw upon when determining the strengths and weaknesses of each agency.

A questionnaire was sent to leading local competition specialists: lawyers, in-house counsel, economists, academics, public affairs specialists and consumer groups. We received some 250 responses. The questionnaire asked each respondent to discuss the competition authority they were most familiar with and to rate each aspect of its enforcement duties, from its merger control and abuse of dominance work to its independence and transparency. The questionnaire then asked respondents to tell us about their experience of a specific case - how efficiently the authority worked, the approachability of staff, the quality of guidance provided, and more.

What's more, we carried out more than 100 interviews by telephone and in person with competition experts across the world.

We also sent each authority a detailed questionnaire covering every aspect of its competition-related duties. The questions cover everything from the number of mergers an authority challenged to how it ensures "institutional memory".

Global Competition Review publishes more than 1,500 competition-focused news stories each year. This year we covered matters ranging from an Indonesian cement cartel to state aid in the European Union. We reviewed these stories to assess each enforcer's progress over the year.

We also carry out monthly surveys of the competition landscapes in different jurisdictions across the world. Together with an in-depth examination of each country's competition regime, our surveys include an interview with the head of the national competition agency. Since the beginning of 2008, we have visited:

• Brazil
• Brussels
• Canada
• Colombia
• Chile
• Estonia
• Finland
• France
• Greece
• Illinois
• India
• Israel
• Japan
• Jersey
• Korea
• London
• Malta
• Mexico
• The Netherlands
• Norway
• Poland
• Russia
• Singapore
• South Africa
• Spain
• Sweden
• Washington, DC

We also attend every major competition conference, including the annual International Competition Network meeting, as well as hosting our own conferences. In short, no other publication comes close to GCR in terms of the breadth and depth of coverage in this area.

How to read the report

Our analysis begins on the next page with a star-rating table showing how each authority compares with its peers. There is no such thing as a perfect authority, and a five-star ranking simply indicates that an authority is at the top of its game. Conversely, a low ranking doesn't mean an authority is dreadful. Indeed, an appearance in Rating Enforcement is itself an achievement.

But comparing authorities on an absolute scale isn't entirely fair. In many instances we are not comparing like with like. A small, young authority in a country emerging from a planned economy is dealing with an entirely different set of issues to a large, well-resourced enforcer like the US Federal Trade Commission. So we also include a performance rating, showing how well authorities have done over the past year, given the resources they work with and the expectations of practitioners. If, according to our research, an authority has made excellent use of its resources and outperformed in 2008, this is indicated with an "up" arrow. Horizontal arrows indicate that an authority performed in line with expectations, while a "down" arrow is used if our research showed the authority had a disappointing year in 2008.

Following that is a brief analysis section looking at trends in areas such as competition budget, number of staff, cartel fines and mergers filings. Again, comparing quantitative data in isolation often skews the true picture. So, where possible, we've tried to include other, influential factors such as the size of the population, or the country's gross national product.

Similarly, we present all monetary statistics in euros, for the sake of comparison. But it's important to note that the drastic fluctuations in exchange rates over the past 18 months, as well as perennial problems such as relative purchasing power, may skew these comparisons to some degree, and should be taken into account when comparing authorities.

The bulk of our report consists of individual country commentaries, where we present an overview of each authority's performance in 2008. This year's country chapters are more extensive than in the past. We have included new sections on how each authority plans each year's enforcement priorities and how it ensures "institutional memory". We also give agency leaders the opportunity to rate themselves.

Where we present staffing statistics, apart from the authority's total headcount, we are referring to non-administrative, competition-focused employees.