"Private Enforcement of Competition Law from a Corporate Social Responsibility Perspective; Too much of a good thing?"
(2007)Department of Law
- Abstract
- At the beginning of this century, the EU set itself the ambitious goal of becoming the most competitive, sustainable and dynamic knowledge-based economy in the world. In this context, the concept of corporate social responsibility is gradually presenting itself as the hidden key to success. This means that companies should not just aim at financial gain, but should also take up societal and environmental responsibilities that go beyond their business as usual. Since this is perceived to provide the best guarantee for long-term business success and a sustainable market, the European Commission is determined to use it as a tool to elevate the internal competitiveness of the EU, thereby in turn enhancing its external competitiveness. Within... (More)
- At the beginning of this century, the EU set itself the ambitious goal of becoming the most competitive, sustainable and dynamic knowledge-based economy in the world. In this context, the concept of corporate social responsibility is gradually presenting itself as the hidden key to success. This means that companies should not just aim at financial gain, but should also take up societal and environmental responsibilities that go beyond their business as usual. Since this is perceived to provide the best guarantee for long-term business success and a sustainable market, the European Commission is determined to use it as a tool to elevate the internal competitiveness of the EU, thereby in turn enhancing its external competitiveness. Within this context, competition law plays an essential role in regulating the European economy. The latest intent to stimulate observance of competition law is by promoting private enforcement thereof. The purpose of this thesis is therefore to analyse the current debate around private enforcement of competition law from a corporate social responsibility perspective. Private enforcement is desirable in terms of compensation for those who have suffered from wrongdoings of others. Additionally, it could increase awareness of, and compliance with competition rules. In terms of corporate social responsibility, however, the effects are not per definition as positive. The essential question to be answered is therefore whether private enforcement of competition law can be shaped in a way that fosters rather than frustrates broader policy goals of corporate social responsibility. This thesis establishes different relationships between corporate social responsibility and competition. Most importantly, social responsibility and competition act in a mutually reinforcing way. Healthy competition in a market will create incentives for companies to outperform competitors by means of socially sound innovation and initiatives. Social responsibility, in turn, boosts competitiveness, especially in terms of image. By enhancing compliance with competition law, private enforcement could provide an extra push to these mutually reinforcing powers. This thesis establishes, however, that the opposite result is as likely to happen, especially when private enforcement is made too attractive. Private enforcement policy as proposed so far, could lead to over-enforcement at high social costs. Various side effects will have chilling consequences on competitive and innovative behaviour. For example, competitors might bring suites based on malicious incentives and fear of liability for huge damages compensation will make companies passive. No company will feel called upon to make a viable business case for investing in the changes needed to serve societal or environmental interest if the benefits do not outweigh the risks. Thus, numerous economically and socially desired projects, which in the end might well have been pro-competitive, will not be undertaken. This thesis emphasises these risks, it does not claim that private enforcement should not be possible at all. The conclusion to be drawn is that private enforcement of competition law could foster corporate social responsibility, under the condition that it is shaped very cautiously. When establishing the final policy framework for private enforcement of competition law, close account should be taken of possible detrimental effects on society. That private enforcement should be encouraged does mean that there cannot be too much of a good thing. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/1555164
- author
- Borghart, Marije
- supervisor
- organization
- year
- 2007
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- European Affairs
- language
- English
- id
- 1555164
- date added to LUP
- 2010-03-08 15:23:00
- date last changed
- 2010-03-08 15:23:00
@misc{1555164,
abstract = {{At the beginning of this century, the EU set itself the ambitious goal of becoming the most competitive, sustainable and dynamic knowledge-based economy in the world. In this context, the concept of corporate social responsibility is gradually presenting itself as the hidden key to success. This means that companies should not just aim at financial gain, but should also take up societal and environmental responsibilities that go beyond their business as usual. Since this is perceived to provide the best guarantee for long-term business success and a sustainable market, the European Commission is determined to use it as a tool to elevate the internal competitiveness of the EU, thereby in turn enhancing its external competitiveness. Within this context, competition law plays an essential role in regulating the European economy. The latest intent to stimulate observance of competition law is by promoting private enforcement thereof. The purpose of this thesis is therefore to analyse the current debate around private enforcement of competition law from a corporate social responsibility perspective. Private enforcement is desirable in terms of compensation for those who have suffered from wrongdoings of others. Additionally, it could increase awareness of, and compliance with competition rules. In terms of corporate social responsibility, however, the effects are not per definition as positive. The essential question to be answered is therefore whether private enforcement of competition law can be shaped in a way that fosters rather than frustrates broader policy goals of corporate social responsibility. This thesis establishes different relationships between corporate social responsibility and competition. Most importantly, social responsibility and competition act in a mutually reinforcing way. Healthy competition in a market will create incentives for companies to outperform competitors by means of socially sound innovation and initiatives. Social responsibility, in turn, boosts competitiveness, especially in terms of image. By enhancing compliance with competition law, private enforcement could provide an extra push to these mutually reinforcing powers. This thesis establishes, however, that the opposite result is as likely to happen, especially when private enforcement is made too attractive. Private enforcement policy as proposed so far, could lead to over-enforcement at high social costs. Various side effects will have chilling consequences on competitive and innovative behaviour. For example, competitors might bring suites based on malicious incentives and fear of liability for huge damages compensation will make companies passive. No company will feel called upon to make a viable business case for investing in the changes needed to serve societal or environmental interest if the benefits do not outweigh the risks. Thus, numerous economically and socially desired projects, which in the end might well have been pro-competitive, will not be undertaken. This thesis emphasises these risks, it does not claim that private enforcement should not be possible at all. The conclusion to be drawn is that private enforcement of competition law could foster corporate social responsibility, under the condition that it is shaped very cautiously. When establishing the final policy framework for private enforcement of competition law, close account should be taken of possible detrimental effects on society. That private enforcement should be encouraged does mean that there cannot be too much of a good thing.}},
author = {{Borghart, Marije}},
language = {{eng}},
note = {{Student Paper}},
title = {{"Private Enforcement of Competition Law from a Corporate Social Responsibility Perspective; Too much of a good thing?"}},
year = {{2007}},
}