Better out than in: why barriers to exit matter for competition law and policy. Issue 1 (April 2020)

• Record Type: Journal Article
• Authors: Johnson, Matthew
• Is Part Of: Competition law journal. Volume 19:Issue 1(2020)
• Page Start: 42
• Page End: 46
• Publication Date: 2020-04
• Subjects: barriers to exit -- competition policy -- mergers -- antitrust -- State aid
• DOI: 10.4337/clj.2020.01.05
• Languages: English
• ISSNs: 2516-5771

Abstract

Abstract : The issue of barriers to exit has been neglected by competition authorities and by competition policy research. This is somewhat surprising as it is a topic which goes to the heart of why competition policy exists; if barriers to exit prevent or delay inefficient firms from leaving the market, then the normal competitive process of driving up market efficiency is hampered. This in turn reduces the benefits to other, more efficient firms, and to customers in terms of lower prices, better quality, etc. This article explores the reasons why, despite the importance of barriers to exit in the economic framework that underpins competition policy, very few competition authority decisions discuss the issue. It considers the approach to barriers to exit in different types of competition investigation, such as merger assessment, Article 101 and 102 TFEU cases, and State aid. The article also considers the scope for cross-disciplinary research and collaboration, such as in the design of insolvency or bankruptcy laws.