Competition Policy in Ireland’s Recession

Paul K. Gorecki

Abstract


Recessions pose something of a dilemma for policymakers with respect to competition policy. Despite compelling evidence that relaxing competition policy during a recession is likely to have quite profound adverse economic consequences in terms of, for example, retarding the subsequent recovery, policymakers may nevertheless relax competition policy to try to prevent job losses and firm insolvency. In Ireland the policy response has been ambivalent. At first, between 2008-2010, competition policy carve out/exemptions were proposed, senior appointments to the Competition Authority were delayed or not made. However, in December 2010 the EU-IMF Programme of Financial Support for Ireland set a strongly pro-competition agenda. But will it last beyond the end of 2013, when the programme expires? There is reason for optimism. If the economy has recovered or is at least growing there will be less pressure for the state to accede to demands for carve outs and other such anti-competitive measures. If the EU-IMF reforms have successfully bedded down in terms of, for example, introducing greater competition in the service sector, turning back the clock may be difficult, since there will be public support for the results of the reforms. The EU-IMF inspired reforms to competition policy and their underlying rationale may be successful in persuading senior decision makers in government, both elected and nonelected, of the merits of competition. Policymakers often claim that they want evidence based policy. The reforms in the EU-IMF Programme are firmly grounded on the literature concerning the impact of relaxing competition policy as well as the Competition Authority’s research into the professions. In contrast, there is little or no evidence to support the 2008-2010 interregnum.

Full Text:

PDF