#### 1. a.3) Damage Control Task

A final task for competition policy authorities is attempting to prevent anticompetitive government action. In the US, this is one of the important roles for the economists working in the competition policy authorities. Consultation with the rest of the government to prevent anticompetitive government action is not easy but it is important. The same holds for consultation when new legislation or new agreements with foreign governments is considered. The motivation for this duty is simple. It is easy for government action in any of a wide number of domains to reduce competition. Seeing the anticompetitive implications of new rules or legislation is something of a specialized task, appropriately given to the competition authority (or even to its economists.) Of course, there are times when the political pressure for anticompetitive policy formation is very strong, so that little can be done.

## 2 ) Principles of Pro-Innovation Competition Policy

There is universal agreement on two guiding principles.

1. Reliance on the Competitive Mechanism

2. Limits on Governmental Activism

The purposes of competition policy are to support, not to supplant, free market competition. Opening up the analysis to make principle 2, Limits on Governmental Activism, into a policy guide rather than a slogan is difficult but important. I would use the following set of analytical principles to move the discussion forward. Italics denote an overly simplistic conclusion.

2.a) No Protectionism

2.b) No Picking Winners / Central Planning

2.c) Competition Policy is Not Regulation

2.d) Don’t Do Anything, Don’t Learn Anything

2.a) Government activism has a degenerate form; in competition policy this leads to protecting competitors from competition rather than supporting the competitive process itself. It is very important to avoid this protectionism, principle 2.a).

That is a substantive, not a procedural, policy principle. It is important to gather information about industries and markets by talking with buyers and sellers. It is also important to be tough minded when buyers and sellers (as they inevitably will) advocate certain policies. White papers from, and meetings with, market participants are typically useful if they are focused on facts and information, typically not useful when they are focused on the participants' policy recommendations.

In the political arena, someone will always shout “protectionism” if the competition policy authority has spoken with a market participant and later acted as the participant has suggested or in their interest. Since all policy interventions, and even the failure to intervene, are in someone’s interest, there is little that can be done about this. The alternative, of policy formation without becoming informed, is a very bad idea.

2.b) Those who work in government often seek to do good and sometimes seek to gain power. In either case, they may be tempted to decide what is the best outcome for the market and push the market in that direction. Sometimes, scholars, pundits, and government analysts get the idea that they know more than the marketplace. This leads to the desire to calculate, with considerable surety (or at least self confidence) the impact of different policies, and then to choose the one with the best numbers. While sometimes