Administrative capacity and firms’ lobbying strategies in EU competition procedures

Regulation plays a central role in modern governance, yet we have limited knowledge of how the subjects of regulation—particularly, private actors—act in the face of potentially adverse regulatory decisions. Here we document and examine a novel lobbying strategy in the context of competition regulation, a strategy that exploits the regulator’s finite administrative capacities. Companies with merger cases under scrutiny by the European Commission’s Directorate General for Competition appear to be employing a strategy of ‘spamming the regulator,’ through the strategic and cumulative submission of economic expert assessments. Based on quantitative and qualitative analyses of an original data set of all complex merger cases in the EU since 2005, we present evidence of this new strategy and a possible learning process among private actors. We further suggest remedies to ensure regulatory effectiveness in the face of this novel strategy. To document and assess this proposed emerging lobbying strategy, we follow the approach of inductive iteration between theory, qualitative, and quantitative data. We begin with a discussion of merger cases as a unique setting for interest articulation, and of DG COMP’s practice in merger cases. This part is based on analyses of documents and insights provided by practitioners. Next, we develop our model of the ‘spamming strategy’ and derive testable hypotheses. These are then tested using a number of analytical steps and an original dataset of all complex merger cases brought before DG COMP since 2005. We test our hypotheses on these data and find strong evidence for a learning process on the side of the merging firms and their consultancies regarding the strategic use of economic submissions. In particular, we report significant increases in the number of submissions by economic consultancies and in the number of economic consultancies hired by merging parties, per merger case over the study period. However, we find no evidence for a strategic timing of these submissions in the course of the individual merger investigation. The quantitative findings, thus, confirm our main expectations but also lead us to partly revise our model of the ‘spamming strategy’. Following a nested analysis approach, we next complement this quantitative strategy with a qualitative analysis of two specific merger cases from our dataset: the StatoilHydro/ConocoPhillips merger in 2008 and the GE/Alstom merger in 2015. These cases are prima facie comparable in terms of complexity and industry; they illustrate the learning process and increased spamming over time. [Joint work with William Pagel (Bank of England), Maria Garcia, Jean Salendres, Will Lowe and Joanna Bryson (all Hertie School).]