Want to influence the authorities? Spam them!

Regulation plays a major role in modern governance, but what happens when companies bombard EU regulators with expert opinions to get favourable decisions on their merger cases? A new study co-authored by Joanna Bryson, Professor of Ethics and Technology at the Hertie School’s Centre for Digital Governance, discusses this new practice and calls on the EU to take measures to combat it. The article, titled “Spamming the regulator: Exploring a new lobbying strategy in EU competition procedures”, appeared recently in the Journal of Antitrust Enforcement. 

Bryson’s co-authors include recent Hertie School PhD and master’s degree recipients Marlene Jugl (currently at Bocconi University), Maria Camilla Garcia Jimenez and Jean Pierre Salendres; Hertie School Data Science Lab adjunct Senior Research Scientist Will Lowe; William A. M. Pagel of Oxford University; and Hertie School Fellow Helena Malikova, who is a member of the Chief Economist Team of the European Commission’s Directorate General for Competition.

How companies spam the EU regulator

Filling a research gap on private actors’ behaviour in the context of corporate merger cases, Bryson and her co-authors analysed all complex merger cases under scrutiny by the European Commission’s Directorate General for Competition (DG COMP) between 2005 and 2020. They found that private companies hoping for a positive decision on their case often use a strategy like “spamming”. “Companies submit several highly specialised economic reports to increase the burden on the regulator, who has considerable, but not infinite, administrative capacity. This interrupts or at least slows down the enforcement of European competition rules,” Bryson explains. 

Strategy is not illegal, but it does hamper regulatory effectiveness

According to the authors, strategically burdening DG COMP with submissions and economic arguments is a worrying trend. “It’s similar to using spam in email and other Internet domains to disrupt the communication of information,” says Bryson. The authors comment that although this spamming strategy does not violate the law per se, it does go against its original intent. “The report-submission system was designed to encourage merit and informed collaboration. By sending an excessive number of economic reports, corporations try to bypass rules with procedural tactics,” Bryson explains. “As we write in the article, our concern is that DG COMP might decide not to rule against firms and their merger if they are afraid of being challenged in court on procedural grounds. This could potentially limit the regulator’s capacity to defend its decisions, and ultimately curb its effectiveness.”

Recommendations to rein in regulatory spamming

The authors stress that their findings point to the need for new regulatory rules to filter the documentation sent to DG COMP and ensure regulatory effectiveness. “Emphasis should lie on the quality and utility of submissions, not their quantity or length,” according to Bryson.

To rein in corporate spamming in merger cases, the researchers suggest requiring that documents do not overlap where multiple consultancies and academic experts intervene on the behalf of private companies. This way, the authorities are not forced to look through the same information twice. The authors also recommend that economic consultancies intervening directly in merger case review should be subject to a professional code and monitoring system, as is the case for the legal profession.

The researchers note that some might think it unjustified to limit the resources that corporations can expend on making their cases. Yet the researchers argue that it makes sense to limit the resources that corporations demand a regulator deploy to examine their cases. For the sake of fair corporate practices, and to lessen the financial burden ultimately shouldered by taxpayers, Bryson says that “the costs of ‘spam filtering’, or clarifying what information sent by a corporation is relevant to a given case, should be on the side of the regulated parties.”

Read the full report in Journal of Antitrust Enforcement.

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