Jean Monnet Center at NYU School of Law


7. Human Rights Require International Competition Rules Protecting Consumer Welfare and Freedom of Choice of Citizens

Indivisibility of human rights implies that the human right to liberty must protect the right of each individual to self-determination and self-development in all areas of social life through constitutional restraints on power and corresponding liberty rights of citizens provided the equal human rights of all others are respected.112 Equal freedoms of investors, producers, traders and consumers, and their unequal resources, knowledge, capabilities and preferences, inevitably entail competiton as the only decentralized information and coordination meachnism which respects individual freedom of choice and enables individuals to overcome their inevitable ignorance in an extended divison of labor among billions of autonomous producers and consumers. Human rights must not ignore the historical experience and "ordo-liberal insight" that the proper functioning and perceived "justice" of economic markets depends on legal guarantees of "constitutive principles" (e.g. monetary stability, open markets, private property rights, freedom of contract, liability, respect for human rights) and "regulative principles" (e.g. policy coherence, optimal policy instruments, necessity and proportionality of government interventions) without which "market failures" and ,,government failures" risk to distort and discredit competition.113 From a human rights perspective, constitutional protection of human rights in the economy is no less important for the welfare of citizens than protection of human rights and constitutional restraints on powers in the polity.

Human rights also imply that the constitutional task of promoting non-discriminatory conditions of competition and social welfare requires not only "negative freedoms" (e.g. in the sense of absence of illegal force and unnecessary coercion). Constitutional guarantees of "positive freedoms" (in the sense of participatory and re-distributive rights), of individual responsibility (e.g. for savings and investments, injury caused to others or to oneself), undistorted competition and social justice are no less necessary for promoting equal opportunities.114 In order to remain politically and socially acceptable, market economies must offer fair opportunities to all (e.g. for the free development of individual capacities) and must limit, through competition law and social law, the inherent market tendencies towards self-destruction and socially unjust distribution of risks and benefits. The democratic legislation on how to balance and delimit economic freedoms (such as freedom of contract, professional and entrepreneurial freedom), property rights and social rights may legitimately differ from country to country depending on its available resources and prevailing social views. Yet, all constitutional democracies in Europe and North America recognize that neither democracies nor economies can realize their human rights objectives without institutional, procedural and substantive legal restraints on private and public power and corresponding citizen rights desigend to avoid abuses that were not consented to by citizens and reduce social welfare.115

In the pursuit of their constitutional task of defining, delimiting, promoting, protecting and reconciling equal rights and competition across frontiers in an ever more precise and more effective manner, most governments in Europe and North America have also accepted the need for international competition rules which prevent and control - e.g. through competition legislation, independent competition authorities, judicial protection of individual rights and international cooperation among antitrust authorities - "unreasonable restraints of competition" on the basis not only of equal rights, but also of economic criteria (such as prohibitons of price fixing, market-sharing and output restrictions) that offer more precise guidelines for distinguishing welfare-increasing from welfare-reducing restraints of competition. There is broad agreement among competition authorities in Europe and North America today that the direct objective of competition laws and policies should focus on economic efficiency and consumer welfare, even if their indirect long-term objectives also include protection of equal freedoms of market participants and dispersion of private and public power.116 Other policy objectives, like protection of small enterprises and promotion of social justice, can be pursued more effectively through other policy instruments that avoid distortions of trade and competition (e.g. tax benefits and subsidies for small enterprises). The European concept of "social market economy" clearly admits that markets do not guarantee socially just results and need to be complemented by strong social rights. For example, competition, new technologies and changing consumer demand may entail "constructive destruction" (Schumpeter) and adjustment costs that may arise through no fault of producers and require a social "safety net" in order to remain democratically acceptable and protect the human rights of vulnerable groups.

112 On constitutions as "precommitment devices" and the need for a general "constraint theroy" see: J.Elster, Ulysses Unbound, 2000.

113 On ordo-liberal theories on the interrelationships between economic, political and legal order and the need for an "economic constitution" see e.g. Petersmann (note 44), chapter III; Gerber (note 17), chapter VII.

114 On the numerous different concepts of equal freedoms, "basic capability equality" (A.Sen) and distributive justice, and on the problems of knowledge, conflicts of interests, and abuses of power confronting the implementation of concepts of social justice, see S.Darwall (ed.), Equal Freedom, 1995; Barnett (note 14), at 308 et seq; J.Raz, The Morality of Freedom, 1986.

115 On this common dilemma of democracies and market economies see Amato (note 17).

116 See: C.D.Ehlermann/L.L.Laudati (eds), European Competition Law Annual: Objectives of Competition Policy, 1998.




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