A Context: Populism, Democracy, Markets, and Competition Law

In January 2020 wildfires were ravaging Australia, an established democracy with a robust free market economy and a very high gross domestic product (GDP) per capita. The authorities did not manage to control the situation and thousands of people had to flee their homes. The environmental damage was unprecedented. The smell of smoke was everywhere, and the sun was hardly visible. Tourists had to change their routes and ended up in places they’d never thought of visiting. The common experience connected them to the locals, and tourists and locals began exchanging views, asking themselves why these things were happening and what should be done. During one such exchange, the author of this book, a national of a Central European democracy, asked a local Australian, a well-dressed man in his fifties, what should be changed in Australia. My interlocutor answered in a way that echoed the voices I heard increasingly often in Europe. He stated that Australia ‘needs to be shaken’, and expressed strong doubts about whether this was possible in the Australian democratic system. He said he would prefer a strongman who would destroy the ‘ivory tower’ which rules Australia today. He argued eloquently that politicians in Australia are reelected because of the support they receive from big Australian businesses, which in turn influences the way in which these politicians govern the country. The result is that Australia is driven by the self-interest of the rich class and is not capable of facing the then current economic, environmental, and societal challenges. He hoped that the strongman, if left unconstrained, could change this course of events.

This conversation aptly encompasses the concerns underlying this book. Today’s world faces a number of challenges, which are the subject of intense public debate. They include climate change, digitalization of the economy, the growing inequalities of wealth, migrations, and the crisis of values in modern societies. These challenges inform, at least to some extent, the rise of populist politicians, who build their programs on the opposition between elites and the ordinary people who feel both disoriented and endangered by the aforementioned challenges. These populist politicians often argue that the concentration of political power is necessary for them to deliver on the promises they make to the ordinary people. In last ten years, populist parties, headed by charismatic and divisive leaders, have won democratic elections, formed governments, and often stayed in power for more than one term. They emerged in Europe (Greece, Hungary, Poland, and the Czech Republic) and in Asia (India). In other countries populist politicians have won presidential elections (Brazil, the United States) and reshaped the political and economic scene in their countries. In several other countries, such as Austria, France, Germany, Italy, and the UK, populist politicians and populist parties have gained strength, and although they have not attained full power, they have become important players on the political scene. Since the challenges mentioned above are not likely to disappear, populism can be seen as a phenomenon which is likely to remain present for many years to come.Footnote ¹ Thus it makes sense to discuss the already-existing examples of the rule by populists (rule of populists’ governments), and by doing so to build a better understanding of what the future may bring.

Populism is a phenomenon that can be studied from the point of view of the impact it has on democracy. Indeed, the number of such studies has been growing in recent years. At the same time, populism is a phenomenon which is related to the economy. There are economic reasons underlying the success of populist politicians. The study of populism through the lens of competition law fits well within the studies of populism focused on both democracy and the economy. This is because competition law is an element of a certain type of economic order: one in which the free market plays a fundamental role. Competition law is aimed at ensuring that, competition – which is a central mechanism underlying the functioning of a free market – is protected. In particular, the actions of private actors may undermine competition and in doing so harm consumers and societies at large. Competition law aims to ensure that such actions are eliminated. At the same time, ever since the first competition act was adopted in the USA in the late nineteenth century, competition laws have been considered as an important element of a democratic order.Footnote ² This is because both US and European history has shown that a concentration of excessive economic power is related to a concentration of excessive political power, and that both of them – seen jointly – endanger democracy.Footnote ³ Thus, since competition law, by prohibiting the exclusion of rivals using anticompetitive means and by screening potentially anticompetitive mergers, imposes limits on the concentration and the use of economic power, it is conducive not only to the adequate functioning of markets but also to democracy.Footnote ⁴

Such a perception has traditionally been present in both the USA and Europe, where it has been promoted in the latter instance by, among others, German ordoliberals.Footnote ⁵ They considered economic freedom as a necessary element for the exercise of political rights by individuals in a democracy, and considered competition law as a rule of law for markets – one which aims to protect this economic freedom and hence promotes a free society.Footnote ⁶ Therefore the preservation of a free society is considered an ultimate goal of ordoliberal competition policy.Footnote ⁷ While the influence of ordoliberal thought has been limited in recent years due to a focus on the neoliberal economic efficiency paradigm,Footnote ⁸ today it still inspires the study of competition law as an element of the broader political-economic system. Indeed, such reflections are on the rise. For example, Eleanor Fox argues that liberal markets ‘produce the tight and virtuous fit between safeguarding civil liberties and economic liberties’, and thus serve democracy.Footnote ⁹ On the other hand, democracy includes ‘a major negative goal likewise symbiotic with markets: it is against autocratic power and privilege and control by the few for the few’.Footnote ¹⁰ Applying Fox’s approach, we can argue that in a democratic country competition law serves both markets and democracy: it helps markets to play their utilitarian role of meeting people’s needs, and at the same time helps markets reinforce the civil and economic rights which are inherent in free democratic societies.Footnote ¹¹ In this context, it is not coincidental that the EU legal order, which was founded to integrate markets and by doing so to foster peace in Europe, has ever since its inception contained competition law in its rule book. Similarly, the transformation of the post-Soviet Central European countries in the 1990s involved not only the embracement of democracy as a political system but also the adoption of competition laws as an element of promoting a new, free market-oriented economic order.

As this book will further explore, the rise of populism, and in particular the actual rule by populist politicians, may be seen as a process that influences both liberal democracy and the free market economy. If the rule by populists also has an impact on the competition law system, its functional role for markets and democracy is affected. This is exactly what this book is about: the impact of populists’ rule on competition law systems in the context of the broader political (liberal democracy) and economic (liberal markets) aspects. It explores the links between populism, competition law, democracy, and markets.

B Existing Debates and the Topic of the Book

The research presented in this book thus speaks to the broader debates which have been present in the public law and competition law literature for some time, as well as those which have been on the rise more recently.

Starting with the general topics, the book is of relevance for the debate on how to understand modern populism, particularly insofar as its actual consequences for democracy and the economy are concerned.Footnote ¹² Populism is certainly a contested term, but increasing numbers of scholars have observed that populism translates into changes for both democracy and the economy. This links the topic of populism with the debates concerning the rise of illiberalism and the slide toward authoritarianism in countries which were once considered democracies, i.e. the process of so-called democratic backsliding. This book contributes to this debate by offering – in the context of the competition law system – evidence regarding the influence of the rule of populists on the democratic and economic order. In other words, while this research is primarily focused on the competition law system, it is of significant relevance to the broader debates concerning democracy and the economy. In particular, the book can be helpful in bridging the gap between political and economic studies on populism. This is necessary because political scientists and constitutionalists generally tend to focus on right-wing populism and the possible threats it poses for liberal democracy, while they show limited interest in the economic aspects of populism. Economists, on the other hand, often focus on left-wing populism due to its easily observable anti-market discourse. While I believe that distinguishing between right-wing and left-wing populism is not very useful in the contemporary world,Footnote ¹³ the study offered in this book can be helpful in building an understanding that whatever the version (right wing or left wing), populism can still affect both the constitutional legal order (liberal democracy) and legal-economic order (liberal economy). The extent to which it affects these two orders is arguably related to the variables which are described in Chapter 3 rather than to the label (right wing or left wing) attached to a given populists’ government.

This book also offers insights into the debate on the rule of law crisis, which is especially visible in the context of EU law. In recent years EU law scholars have attached a growing importance to the principle of the rule of law declared in Article 2 of the Treaty on European Union (TEU),Footnote ¹⁴ and have closely followed the European Commission’s and European Parliament’s initiatives criticizing certain EU member states for their alleged violations of the basic principles of the rule of law and separation of powers.Footnote ¹⁵ In the rulings of the Court of Justice of the European Union effective judicial protection (Art. 19 TEU) and the independence of a member state’s judiciary have been subjected to close scrutiny.Footnote ¹⁶ This book will complement this debate by discussing in detail how the threats to the rule of law posed by populists’ governments affect concrete areas of EU economic law, focusing on the crucial area of competition rules.

This book is also of relevance to the debate in administrative law about the regulatory state and the crucial role played today by regulatory agencies. While administrative law scholars have opened a debate on how populism affects the administrative state, the works on this topicFootnote ¹⁷ do not discuss in detail the possible ramifications for competition agencies and the courts reviewing their decisions. This book aims to fill this gap. Of particular importance is the book’s analysis concerning the independence of competition agencies and the judicial review of their actions. This analysis is helpful for understanding how resilient the administrative state is in younger democracies.

This research concerns institutions which are sometimes called ‘chapter IX institutions’ by constitutionalists (after the South African Constitution), or ‘State Institutions Supporting Constitutional Democracy’. They support democracy by playing an oversight role within the democratic state. Their role is complementary to functions usually associated with separation of powers in a democratic legal order.Footnote ¹⁸ In other words, such institutions can be considered to make up part of a broadly conceived system of checks and balances within the state. Their independence from the executive and legislative branches and their constitutional status reinforce such a role. Indeed, such institutions are sometimes dubbed as the ‘fourth branch of government’ since they discharge some of the executive, legislative, and judicial responsibilities associated with the traditional three branches of government.Footnote ¹⁹ While competition agencies are not a classic example of chapter IX institutions, they can be considered to be such. Very often they enjoy an independent status and operate within the sphere of competences which are laid out in national constitutions. One of their roles is to provide a check on state activities so as to limit anticompetitive acts of state (which covers not only anticompetitive legislative measures but also the activity of states in the private sphere, e.g. by means of state-owned enterprises or SOEs). In addition, the activities of chapter IX institutions which are focused on the protection of market competition can be conducive to democracy. While the literature on chapter IX institutions is vast, the research in this book can be helpful in understanding how they operate in a country ruled by populists. Thus the focus on competition agencies may also enrich the literature on chapter IX institutions, which is usually focused on other institutions, such as electoral commissions.

Finally, as already indicated, the book speaks to the literature concerning the relationship between democracy, markets, and competition law systems. It needs to be emphasized that most of the competition law scholarship in the last two decades has been focused on the economic aspects of competition law. Both in the USA, where the efficiency-focused paradigm in antitrust law has prevailed, and in the EU, where the so-called more economic approach in competition law has become more prominent, the focus has often been on how to make enforcement more flexible so that the actually measured anticompetitive effects and procompetitive efficiencies resulting from firms’ actions are taken into account. While the relevance of these dynamics remains valid today, and are indeed issues the enforcers may struggle with when dealing with digital platforms, it seems imperative to remind ourselves about the political face of competition law and the role it plays in enhancing democracy and markets. This book engages in an extensive analysis of this aspect. In particular, the study on the condition of competition law systems in increasingly illiberal political and economic surroundings is of relevance in this regard.

Moving our attention now to competition law issues per se, it should be stressed that the topic of populism is underdeveloped in the competition law literature. In particular, no monograph has been written addressing the influence of populism on competition law and policy. It is true that populism has been the subject of debate in US antitrust law, but in a way understood differently from that which is presented in this book – i.e. in a way associated with a fear of large corporations and their vast market power and sympathy for small businesses.Footnote ²⁰ In particular, populism has not been analyzed in the competition law literature in the institutional context, i.e. as a process which may affect the institutional characteristics and the practices of competition agencies and courts. Against this backdrop, this book is of importance for the debates about the institutional structure of competition agencies. It should be noted that two monographs have searched for an optimal institutional model of competition law enforcement.Footnote ²¹ However, both books are based on the experience of competition law enforcement in liberal democracies based on rule of law, and they indirectly presume that this is the surrounding environment in which competition laws function. The study presented in this book provides insights into how those factors which are fundamental to building an adequate institutional structure – in particular an agency’s independence, expertise, and resources – are actually implemented in practice in populist surroundings, which may be hostile to independent, merit-based competition agencies. For example, one of the key issues concerns the actual independence of agencies as opposed to their formal independence. Such an approach is in line with the suggestions pointing out that the institutional structure of an agency, i.e. its internal organization and the context in which it functions (institutional embeddedness), condition the substantive outcome of a competition agency’s actions.Footnote ²² The study presented in the book also sheds light on the debate about the adequate allocation of competences to competition agencies, and in particular the question whether the mandate of competition agencies should be narrow (limited to the protection of competition) or broad (covering other areas such as consumer protection, public procurement surveillance, and unfair trading practices).Footnote ²³

The research presented also speaks to the vast antitrust literature on developments of competition law regimes, which discusses, inter alia, the factors which inform the successes of some competition law regimes and the upheavals faced by others.Footnote ²⁴ As regards the discussion in this book, it is also of relevance that antitrust scholars have offered insightful reflections on how to safeguard the system of antitrust law to ensure that it is democratic in its nature.Footnote ²⁵ However, the existing literature does not analyze in detail how the overall state of liberal democracy and its institutions affect competition law systems. This is not to say that this relationship has never been addressed in the antitrust literature at all. In fact, it has been subjected to analysis in the context of the establishment of new competition law regimes in developing countries.Footnote ²⁶ However, the existing literature does not discuss the situation of countries with more experienced and advanced competition law regimes (with at least fifteen years of experience) when faced with the appearance of populists’ governments. It could logically be presumed that with the passage of time the functioning of competition law will in most cases improve, not deteriorate.Footnote ²⁷ But the appearance of populists’ governments may interrupt such a continuing improvement.Footnote ²⁸ It is worth exploring the competition law system from this perspective.

The discussion offered in this book aims to fill another gap in the competition law literature, which normally takes the independence of courts reviewing the decisions of competition authorities for grantedFootnote ²⁹ and focuses on the institutional and procedural organization of competition agencies. Since in this predominant model competition agencies are administrative authorities (rather than courts), it is necessary to provide effective judicial review of their actions by independent courts. However, the academic attention is usually limited to questions concerning the scope and the intensity of the judicial review of competition authorities’ decisions. In cases of populists’ rule, one has to take a broader view and also address the question of whether the national courts responsible for competition law are indeed independent.

Leaving aside the institutional aspects of the competition law system, we need to underscore the importance of antitrust literature discussing the relationship between the state and competition, including, among other issues, the application of competition laws to SOEs.Footnote ³⁰ Today this is one of the key issues for competition law, particularly if we take into account the rise of Asian economies (such as China) where the state and SOEs play a vital role and where the border between the activity of firms in the private business sphere and acts of state is blurred.Footnote ³¹ This issue can be framed within the issues of protectionism and competitive neutrality.Footnote ³² For example, one of the issues – whether merger control can be used as a protectionist tool aimed at preventing acquisitions by foreign firms – has been analyzed in the literature.Footnote ³³ The insights offered by this book will be helpful, however, in understanding how the centralization of power within the state, which can be considered characteristic of populists’ governments,Footnote ³⁴ as well as the growing role of SOEs in the economy,Footnote ³⁵ change the dynamics of enforcement by competition agencies. One of the challenges is whether they continue to apply competition law with no bias (e.g. without providing more favorable treatment to SOEs) in line with a competitive neutrality principle.

The book is also of relevance vis-à-vis the debate over how competition law and competition agencies should respond to the challenges posed by digital markets, in particular the rise of digital platforms such as Amazon, Facebook, or Google. A disagreement in this respect clearly exists in the literature. While some continue to believe in the hands-off approach to firms which built their success on innovation, and thus favor limited enforcement against the dominant digital platforms, others see their market power as very problematic and call for more vigorous antitrust enforcement under a broader set of competition law goals.Footnote ³⁶ This book may provide insights into this debate. At the outset, one has to bear in mind that the rise of populists’ governments could have been facilitated by social network platforms such as Facebook or Twitter, which make it possible to segment society, to deliver an appropriate targeted message to potential voters, and overall to benefit from growing social polarization.Footnote ³⁷ What’s more, the rise of populists is arguably linked also to labor insecurity, which the rise of digital platforms may create (or at least give such an impression). Finally, populism is associated in the antitrust literature with intense enforcement, in particular against the digital platforms. The analysis provided in this book verifies whether the enforcement in countries ruled by populists is indeed intense. In a similar vein, the study of enforcement of competition law in countries ruled by populists is helpful in understanding whether the experiences of these countries offer examples of the intense enforcement of competition law focused on the interests of the ordinary people the populists claim to represent. The analysis in this respect will be helpful for the discussion on the role of competition law in combating inequalities.Footnote ³⁸

Finally, this book is of relevance to the debate concerning the EU competition law system. There are several topics which nurture this debate today. They include the functioning of the European Competition Network; the institutional challenges the national competition authorities (NCAs) face; the application of Articles 101–102 of the Treaty on the Functioning of the European Union (the TFEU)Footnote ³⁹ by NCAs; the convergence – substantive, institutional, and procedural – of EU and national competition laws; and the role of the European Commission in the system of enforcement of EU competition law. This book will be helpful in understanding how broader political and economic changes within the EU member states affect the functioning of the EU competition law system. The analysis will also fit squarely into the debate about the reforms of the EU competition law system and the role the European Commission (and in particular the Commission’s autonomous Directorate General (DG) Competition) is to play vis-à-vis member states promoting the interests of selected enterprises or national champions.

C Approach

Principal Questions

This book analyses the interrelationships between populism and competition law in a broader political and economic context. Specifically, the research questions addressed are:

1. 1. What characteristics of populism are relevant in analysis of the influence of populism on a competition law system?

2. 2. In what ways does the rule of populists’ governments affect the institutional structure and the enforcement of competition law?

3. 3. How relevant are the challenges related to the rule of populists’ governments to the regional system of competition law, and what should the regional reaction to these challenges look like?

As shown in the Figure 1.1, the answers to the first two questions will make it possible to assess whether the processes prompted by populism reinforce the idea that liberal democracy and the competition law system are interrelated; namely whether the impact of populists’ rule on the liberal democratic order influences the institutional structure and enforcement of competition law. Moreover, the answers to these questions will make it possible to assess whether the populists’ impact on a liberal market economy influences the institutional structure and enforcement of competition law. Finally, in the event the impact of populists’ rule on the competition law system is confirmed, the answers to these questions will be of relevance in the debate over how the application of competition law during a time of populism may affect free markets and democracy, and so possibly further reinforce populists’ rule. In other words, the answers to these questions will be helpful in better understanding the relationship between populism, liberal democracy, liberal markets, and competition law. The analysis related to the third question above will complement this reflection by examining how a regional system of competition law, which is built on the premise that its members adhere to certain set of common values – including among others the rule of law – interacts with the populist dynamics materializing on a national level.

Figure 1.1. Relation between populism, democracy, competition law, and markets

In order to answer the first question (1), the analysis offered in the Chapter 2 identifies the principal characteristics of populism, particularly in light of the actual experiences of countries ruled by populists such as Hungary and Poland. The impact of populists’ rule on both liberal democracy and the liberal economy is taken into account. Next, in light of the Chapter 2 findings, Chapter 3 proposes variables by means of which various scenarios of populists’ impact on competition law systems can be identified.

In order to answer the second question (2), Chapters 4 and 5 examine the manifestations of populists’ impact on the competition law system with respect to its institutional structure and the enforcement of competition law. The experiences of Hungary and Poland are specifically studied in this respect. Insofar as the institutional structure of competition law is concerned, these manifestations are examined with respect to the independence of the competition authorities, their operating capabilities, their mandate, and judicial review of their actions. As regards the enforcement of competition law, these manifestations are examined with respect to the character and the intensity of the enforcement and application of competition law to SOEs, the application of exemptions and other limitations on competition law, as well as the agencies’ advocacy activity. This identification of the manifestations of populists’ impact on competition law elaborates on and gives concrete meaning to the scenarios put forward in Chapter 3. By doing so, the existing examples of populists’ influence on competition law systems are used to build an understanding of the ways in which populism may affect the competition law system of a liberal democratic country that is subject to populists’ rule.

In order to answer the third question (3), Chapter 6 discusses how the challenges related to populists’ rule identified at the national level interact within a regional system of competition law, in this work being that of the EU. In this respect the relevant EU legislative initiatives, as well as the reactions of the EU central institution responsible for competition law (i.e. the European Commission) to the developments in member states, are critically assessed. In addition, the challenges related to mutual trust and respect for the rule of law are analyzed. The chapter also looks at the populist-related dynamics concerning the functioning of the central level of the regional (EU) competition law system.

D Background Information on Hungary and Poland

Since the research set out in this book is based primarily on the experiences of Hungary and Poland, it may be useful to offer to the reader a short summary of the political economies of these two countries, as well as offer a background for further analysis, which is focused on the developments after 2010 and 2015, respectively.

Hungary and Poland are important economies of Central-Eastern Europe. Their joint GDP is 743,545 million USD.Footnote ⁵⁴ They have forty-eight million inhabitants. What these countries share is not just a close geographical location but also a common modern history. After the Second World War, from 1945 until 1990 they made up part of the Soviet bloc of satellite states. Their economies were designed, in line with the Soviet model, as centrally planned economies with little space for private economic initiative. The central role of the state was a defining characteristic. In particular, in most of the sectors the state was responsible for the production, distribution, and sale of goods. State enterprises, grouped within specific industries, played a crucial role. Within such a model there was almost no space for market competition, hence unsurprisingly there were also no meaningful legal rules aimed at the protection of competition. The first experiments with competition laws began in the 1980s – Hungary adopted its first competition law in 1984, and Poland in 1987. They were part of the economic reforms that aimed to address the shortcomings of centrally planned economies. Among other things, they aimed to address the economic harm caused by state enterprises. The ultimate change in the economic model came about in 1989 with the end of communism, and Hungary and Poland embarked on political and economic reforms. A system of liberal democracy and a free market economy were introduced in each country. Among other actions, new competition law acts were adopted in 1990 in Hungary and Poland and NCAs were established. Part of the post-1989 economic reforms included the process of demonopolization of the economy. For example, the Polish competition agency was empowered to divide or dissolve state enterprises. In addition, the Hungarian and Polish competition agencies enforced prohibitions of anticompetitive agreements and anticompetitive unilateral conduct against the incumbents: SOEs and the legal successors of state enterprises. The other process that characterized the 1990s in Hungary and Poland was privatization, which continued with various degrees of intensity until the 2000s. Many SOEs were privatized and often ended up in the hands of foreign investors.

From the early 1990s onward, both Hungary and Poland opted for economic integration with the EU, and both countries signed Association Agreements with the European Communities. These agreements required, inter alia, the building of an effective free market economy and the approximation of laws to the EU legal framework. Thus, among other things, changes in Hungarian and Polish competition laws were introduced.Footnote ⁵⁵ The EU accession process was finalized in 2004, when both Hungary and Poland joined the EU and thus became integral parts of the EU internal market, making Hungarian and Polish competition agencies competent to apply EU competition rules (Arts. 101–102 TFEU).

After 2004 both countries continued to function as free market economies, and their respective GDPs were growing significantly.Footnote ⁵⁶ At the same time, however, the increases in average wages were far less impressive.Footnote ⁵⁷ Moreover, both countries had high unemployment rates,Footnote ⁵⁸ and the level of development differed widely between different regions. Indeed, some of the regions, including the industrial ones, were hit hard by the transformation process. As a result, the entrance to the EU led to widescale emigration of young people to the ‘old’ EU member states, in particular (though not only) to the UK and Ireland. On the political side, throughout the 1990s and 2000s there was generally a political consensus in both countries that liberal democracy was the right political model.Footnote ⁵⁹ The checks and balances inherent for liberal democracies were respected. In particular, the need for and role of an independent judiciary was not fundamentally questioned. Moreover, both countries had powerful constitutional tribunals which often invalidated the laws passed by their respective parliaments due to their unconstitutionality. Media freedom, freedom of assembly, and freedom of association were also generally safeguarded. At the same time, the level of public trust in public authorities was low, and courts were known for lengthiness of proceedings and excessive formalism.

The reorientation of the political and economic model started at the end of first decade of the 2000s and in the first instance concerned Hungary, where a populists’ government was formed in 2010, and then Poland, where a similar process took place in 2015.Footnote ⁶⁰ The parliamentary elections brought to power parties headed by strong leaders who in their public statements questioned the safeguards of the liberal democratic order. The judiciary was particularly singled out for criticism. In addition, in Hungary media freedom came under growing pressure. The changes were complemented with new widespread and generous social distribution programs, as well as nation-centered patriotic rhetoric and anti-immigration attitudes.

E Terminology

In this book several terms are used, the meanings of which can be subject to different interpretations. Thus it seems useful at the outset to explain how these terms are understood in this book.

First, populism is associated with the practice of rule by populists’ governments and is seen as a driver of an illiberal shift insofar as democracy and the economy are concerned.Footnote ⁶¹ This practice is justified by the ruling populists’ claim that the will of ordinary people needs to be implemented without constraints. Central to populism is a rejection of pluralism and a willingness to consolidate power. It should be noted that such an understanding of populism is different from the one present in the US antitrust literature, where populism is often associated with a fear of large corporations and sympathy for small businesses.

Second, illiberalism is associated with actions which undermine liberal democracy and economic liberalism, in particular the rule of law and checks and balances, as well as the commitment to market competition and the limited role of the state in the economy.Footnote ⁶²

Third, checks and balances refer to safeguards protecting against the encroachment of one branch of power upon the competences of others, as well as the control of one branch of power over the functioning of another one.Footnote ⁶³ In this book the term ‘checks and balances’ refers not only to the three traditional branches of power (i.e. legislative, executive, and judiciary) but also to independent regulatory agencies.

Fourth, rule of law is understood as an opposition to and a safeguard against the arbitrary exercise of power, and is linked to a certain set of requirements that: (1) laws be prospective rather than retroactive; (2) compliance with such laws be possible; (3) laws be promulgated in advance; (4) the meaning of laws be clear; (5) laws be consistent with one another; (6) laws be sufficiently stable; (7) laws be general; and (8) officials adjudicating legal matters do so within the meaning of the laws and the laws governing their activities.Footnote ⁶⁴ In addition, rule of law is also about the availability of legal remedies and procedures which guarantee that the rule of law is ensured. In particular, effective judicial protection is a concrete expression of the rule of law. In turn, effective judicial protection requires that the courts are independent.

Fifth, competition law system is associated with competition law statutes (the law on the books), institutions responsible for the application of competition law (competition agencies and courts), and the application of competition laws by these institutions (competition law in practice).

Sixth, the term enforcement of competition law is understood broadly and covers different situations in which competition agencies and courts apply competition law in practice. This includes, in particular, the application of the prohibition of collusion between firms (prohibition of anticompetitive agreements), the prohibition of anticompetitive unilateral actions (prohibition of abuse of dominant position), merger review by competition agencies (control of concentrations), as well as a competition agency’s public activity against anticompetitive legislation by parliament or other state institutions (its advocacy role).