Optimal Enforcement Structures for Competition Policy: The Implications of Judicial Reviews and Internal Error Correction Mechanisms1

In this paper we use the welfare-based framework proposed by Katsoulacos and Ulph (2009) to examine a number of questions related to enforcement structures for competition policy. Does the presence of judicial reviews, offering an independent judgement on Competition Authority decisions and checking procedural correctness, make effects-based decision approaches more attractive than Per Se? Under what conditions will judicial reviews and internal error correction mechanisms improve welfare? What are the implications of internal error correction mechanisms for decision procedures? In the presence of such mechanisms should decisions be reached unanimously or through a majority rule? We demonstrate that judicial reviews do not in general make effects-based decision approaches more attractive than Per Se. However, by reducing false-convictions costs and increasing false-acquittals costs of effects-based procedures they tend to make these more attractive than Per Se when the former effect outweighs the latter. Further, judicial reviews and internal error-correction mechanisms subject to unanimity reduce deterrence. Mor