Thepot, FCS; (2014) The Interaction between Competition Law and Corporate Governance: Opening the 'Black Box'. Doctoral thesis , UCL (University College London).

Abstract

The thesis explores the interaction between competition law - that governs the behaviour of firms in markets, and corporate governance - concerned with relations within the firm. For various purposes, competition law considers the firm - or the undertaking - as a ‘black box’: internal relations or mechanisms, including that of corporate governance, are outside of competition law scrutiny. Also, enforcement instruments barely engage with the internal dimension of firms. For example, penalties are typically imposed on companies, while actors within the firm are rarely liable for competition law violations. In spite of an apparent dichotomy between the firm and the market, in which competition law and corporate governance operate respectively, this research explains that there are meaningful points of interaction between the purposes and mechanisms of these two areas of the law. For example, mechanisms of corporate governance, such as remuneration schemes, may produce incentives to restrict competition in markets. The main contribution of this thesis lies in ‘opening the black box’ of the firm prior to, during and in prevention of a competition law infringement. Building on these developments, it is argued that relations that are internal to companies matter for the effectiveness of competition law enforcement. In addition, mechanisms of corporate governance - whether these are mechanisms of control or sanctions - should be further relied on and integrated into competition policies. Law makers should therefore take greater account of internal incentives and mechanisms in the design and assessment of policies. On similar grounds, competition authorities should steer companies’ incentives to implement effective corporate compliance mechanisms. This thesis also discusses the relevance of the boundary between the firm and the market as established by competition law, in areas such as minority shareholdings and interlocking directorates. The developments are based on the EU, the US and some EU Member States’ jurisdictions when relevant. The normative suggestions mostly concern EU competition law.

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