Privatizing the Economic Constitution: Can the World Market Reproduce its own Institutional Prerequisites?

Abstract

Markets are not a natural phenomenon but depend on a complex set of institutions. Commercial law enables and facilitates at-arm’s-length market exchange. Competition law regulates freedom of contract in order to protect it from self-abolition. On the domestic level, these core pillars of the economic constitution have been safely installed by the modern nation state. However, on the global level the situation is different. Since in contrast to domestic trade, cross-border transactions are not conducted “in the shadow of law” but largely depend on private governance-mechanisms, the crucial question is whether the world market is able to reproduce its own institutional prerequisites. Consequently, we assess the potential effects of this privatization of commercial law on competition policy, namely the potential abuse of market-dominating positions resulting from a rise in the level of vertical integration on the world market as well as the potential of contracting around the ban on cartels by choosing arbitration rather than litigation as a means of commercial dispute resolution.