Delegation in EU merger control: The determinants of referrals to national competition authorities (2004–2012)

AuthorMarco Mainenti
Published date01 July 2019
Date01 July 2019
Subject MatterArticles
untitled Article
Public Policy and Administration
2019, Vol. 34(3) 329–348
Delegation in EU
! The Author(s) 2018
Article reuse guidelines:
merger control: The
DOI: 10.1177/0952076717753278
determinants of referrals
to national competition
authorities (2004–2012)
Marco Mainenti
Department of Social and Political Sciences, Universita` degli Studi
di Milano, Italy
The present analysis investigates the rationale for delegation to domestic institutions in
the EU. This issue is prominent in merger control, where the Commission can refer the
assessment of concentrations between undertakings to national competition authori-
ties. We argue that the purpose of referrals is to reduce the decision-making costs.
Employing data from 2004 to 2012, we show that the recourse to national authorities is
associated with taking advantage of agency expertise and shifting the blame for policy
failures. Conversely, referrals are not grounded on the need to reduce the number of
pending cases. These results hold when controlling for confounding factors such as the
involvement of non-EU countries, the different commissioners for competition, and
sensitive economic sectors.
Commission, competition policy, delegation, European Union, merger control
The European Commission carries out various responsibilities with regard to
common policies, such as proposing legislation, negotiating trade agreements,
issuing regulations, and enforcing EU law. Since the establishment of the
European Economic Community member states have transferred their authority
on these tasks by Treaty or executive delegation (Franchino, 2004, 2007;
Majone, 1996: 69–72; Pollack, 2003). Such centralization has particularly
af‌fected competition policy, the cornerstone of European internal market and
Corresponding author:
Marco Mainenti, Universita` degli Studi di Milano, Via Conservatorio 7, Milano 20122, Italy.

Public Policy and Administration 34(3)
also the f‌irst supranational policy (McGowan and Wilks, 1995; Seidel, 2009). As
stated in the Treaty of Rome, the Commission was empowered to control state
aid and enforce antitrust rules. More recently, it extended its competences
over merger policy (Aydin and Thomas, 2012; McGowan and Cini, 1999;
Warlouzet, 2016).
However, the transfer of authority from national to supranational institutions is
only one of the delegation processes at stake in the EU multi-level system.
Competition policy well ref‌lects the multiple types of relations between domestic
and EU actors. In merger control, in particular, the Commission can refer its
powers back to member states. It is actually given competence over the assessment
of large-scale concentrations between undertakings in order to prohibit the creation
of dominant players in the common market. None the less, on certain circum-
stances it entrusts national authorities with the assessment of mergers. This referral
mechanism became more f‌lexible once merger regulation was amended in January
2004 (Cini and McGowan, 2008: 141–142). Hence, the involvement of national
authorities clearly increased: as detailed below, between 2004 and 2012 member
states administered more than double the number of mergers with a Community
dimension compared to 1990–2003 period.
The growing use of referrals can have a twofold ef‌fect on the whole regula-
tion. Of course, they let the Commission rely on the institutions best placed to
deal with a particular case. Nevertheless, they may have serious consequences on
merger policy. Since national authorities decide in agreement with domestic
laws, as a matter of fact, the referral entails no enforcement mechanism accord-
ing to supranational provisions. Given the repercussions on merger control at
EU level, this work examines what determines the recourse to domestic
We argue that the referral is based on distinct functional reasons that are asso-
ciated with the reduction of the decision-making costs (see Tallberg, 2002).
Employing data from 2004 to 2012, f‌indings show that the involvement of national
authorities is grounded on two rationales: taking advantage of agency expertise
and shifting the blame for policy failures. Conversely, the recourse to member
states is not af‌fected by an increasing backlog of pending cases. These results
hold controlling for the involvement of non-EU countries, the dif‌ferent commis-
sioners for competition, and sensitive economic sectors.
The analysis contributes to explaining the functioning of EU institutions
and the vertical allocation of competences between national and supranational
actors (Benz and Zimmer, 2010). In particular, it highlights how the relations
between EU and domestic institutions are not solely inf‌luenced by hard rules
and formal procedures. The next sections examine the logics of delegation in
the EU and the referral mechanism in merger control. Then, we focus on the
contrasting implications of the growing recourse to referrals and the role of
policy expertise. Finally, after describing data and variables, we discuss the
main results.

The logics of delegation in the European Union
Scholars have examined extensively the diverse factors favouring delegation to
EU institutions. The extant literature mostly follows the insights of the new
institutional economics, the principal-agent framework in particular (i.e.
Ballmann et al., 2002; Damro, 2007; Dehousse, 2008; Doleys, 2000; Franchino,
2004, 2007; Pollack, 1997, 2003; Tallberg, 2002). This rational institutionalist
approach contributed to explaining the institutional design of delegation in the
US (Epstein and O’Halloran, 1999) and several parliamentary systems (Huber
and Shipan, 2002). Likewise, it has the merit of clarifying the functional logic of
delegation in the EU.
Delegation to EU institutions is expected to provide member states with desired
benef‌its. Empowering the former with specif‌ic regulatory tasks allows the latter to
enhance the credibility of policy commitments and reduce the decision-making
costs. These benef‌its refer to the main logics of delegation to the Commission
(Majone, 2001). Credibility-based delegation is related to the need for national
governments to entrust non-majoritarian institutions with enforcement powers in
order to solve the commitment problem of elective legislators. Instead, where
member states want to reduce the decision-making costs, the rationale
behind delegation is to take advantage of agency expertise, reduce the legislative
workload, or shift the blame for policy failures (Franchino, 2002: 678–679;
Tallberg, 2002: 26–27).
Delegation will occur if its benef‌its outweigh the estimated costs. The costs for
delegating parties are associated with the control mechanisms to prevent agents
from bureaucratic drift. In order to avoid outcomes other than preferred policies,
agents are monitored through ex-ante and ongoing controls. The former category
regards the procedural constraints that principals insert when they design the stat-
utes. The latter refers to mechanisms of police patrol and f‌ire alarm, including
judicial oversight (Lupia and McCubbins, 1994).
The logic of delegation may condition the control mechanism employed. With
regard to the EU, Majone (2001) asserts that member states minimize any form of
direct control where the purpose of delegation is to enhance the credibility of policy
commitment. The areas related to single market integration, where the Commission
has been entrusted with exclusive competences, are a case in point. However, since
delegation of executive powers is usually motivated both by credibility and ef‌f‌i-
ciency, statutory controls are consistently adopted by member states (Franchino,
The cost–benef‌it analysis of delegation accounted in particular for the shift of
powers from national governments to supranational institutions and agencies.
None the less, this is just one of the processes of delegation that involve domestic
institutions and the EU. For instance, the Commission sometimes refers its powers
back to member states. Although this type of delegation does not constitute a core
issue in every policy f‌ield, it is prominent in two key components of EU

Public Policy and Administration 34(3)
competition policy such as antitrust and merger control (Kassim and Wright, 2009;
Wilks, 2005).
We focus on the particular characteristics of merger regulation, where the
Commission can refer the assessment of acquisitions and concentrations to the
national authorities concerned. Rationalist arguments can shed light on the logic
behind this type of delegation too. First of all, they help to identify the functional
problems associated with the allocation of competences. Specif‌ically, the delegation
to national authorities may rely on the need for the Commission to employ relevant
expertise, improve decision-making ef‌f‌iciency, or shift blame for unpopular deci-
sions. These benef‌its of delegation are supposed to outweigh the detrimental impli-
cations on the enforcement of supranational provisions.
Furthermore, cost–benef‌its arguments allow us to investigate the rational foun-
dations of the next step of delegation chain, that is, which follows the transfer of
authority from member states to EU institutions. Actually, this step, from the
Commission to national authorities, is conditioned by those mechanisms that
national governments designed to reach an agreement over the competences allo-
cated to supranational institutions. What we are...

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