Does Experience Make You ‘Tougher’? Evidence from Competition Law

Abstract

This article investigates experience effects for public officials. Using a unique data set of companies investigated under UK competition law, we find very strong experience effects for chairmen of investigation panels, estimated from the increase in experience of individual chairman. Probit and IV probit regressions indicate that replacing an inexperienced chairman with one of average experience increases the probability of a ‘guilty’ outcome by approximately 30% and, after chairing around 30 cases, a chairman is predicted to find almost every case guilty.

Determinants of merger review decisions: an assessment of the Brazilian antitrust authority's capabilities and the influential role of antitrust commissioners

“…Additionally, scholars have neither employed so many arguments nor examined so much data in a single paper. Garside et al (2013), which is the article that is closest to this thesis' scope, analyzes 85 case-level and 388 company-level observations of possible abuse of monopoly power. Regarding the determinants of the United Kingdom Commission's decisions, the authors test only the influence of pre-commission and 'on the bench' experience of the Chairman, panelists' experience on the bench and political variables.…”

“…Parameters such as market shares and other concentration indexes, ease of collusion, barriers to entry, the presence of import competition, remaining vigorous competitors, countervailing buyer power, anticompetitive effects and efficiencies have been tested. Coate et al (1990;, Coate and McChesney (1992); Coate (2002;, Weir (1992;1993), Khemani and Shapiro (1993), Strong et al (2000), Coate and Kleit (2004), Aktas et al (2004;, Coate and Ulrick (2005;, Bergman et al (2005), La , Duso et al (2007;, Avalos and De Hoyos (2008), and Garside et al (2013) 14 , to a greater or lesser extent, examine the traditional antitrust parameters and clearly show that structural factors outweigh efficiencies in merger reviews. Actually, in some cases, contrary to most of the guidelines, an indication of efficiency gains on reports increases the probability of a case being challenged.…”

“…The authors conclude that "[…] a Republican-dominated Commission appears less likely to support a merger order with the effect linked to the party of the individual Commissioners, not the party of the appointing President." More recently, Garside et al (2013) explore concepts such as 'panel's experience', 'age of chairmen', and 'pre-chair experience'. The main purpose of that study is to look for evidence regarding whether the experience of public officials on the United Kingdom Commission affects the probability of a 'guilty' verdict in investigations into suspicions of abuse of monopoly position.…”

“…To illustrate with one more research field interested in the effects of experience on judgments that can be classified into different levels, Garside et al (2013) represent a rare representative of 'economics in public service'. 35 Those authors focus on cases of abuse of monopoly power in the area of United Kingdom antitrust law and reveal that under some circumstances, experience matters.…”

“…Despite the last reported result, concerns about the experience level of antitrust commission panels and the influential role of experience on the level of agency enforcement deserves attention. In addition, it is reasonable to believe that this relationship has a positive direction due to the combination of 'learning by doing' and 'updating' as experience develops, according to Garside et al (2013). 36 The ultimate argument comes from an extended discussion promoted by Prendergast (2007) that comprehends the 'public interest and public choice dilemma' or alternatively, the 'principal-agent problem', to explain why experience matters.…”