An Assessment of US Progress towards its Pledge on Climate Change Mitigation. CEPS ECP Report No. 12, 15 October 2012

In 2009, President Obama pledged that, by 2020, the United States would achieve reductions in greenhouse gas emissions of 17% from 2005 levels. With the failure of Congress to adopt comprehensive climate legislation in 2010, the feasibility of the pledge was put in doubt. However, we find that the United States is near to reaching this goal: the country is currently on course to achieve reductions of 16.3% from 2005 levels in 2020. Three factors contribute to this outcome: greenhouse gas regulations under the Clean Air Act, secular trends including changes in relative fuel prices and energy efficiency and sub-national efforts. Perhaps even more surprising, domestic emissions are probably lower than would have been the case if the Waxman-Markey cap-and-trade proposal had become law in 2010. At this point, however, the United States is expected to fail to meet its financing commitments under the Copenhagen Accord for 2020.

Financial Engineering Instruments and their Assessment Under EU State Aid Rules. Bruges European Economic Policy (BEEP) Briefing 26/2013

Financial engineering instruments such as guarantees, loans and equity are increasingly used in public funding of enterprises. These instruments have three attractive features: they are repayable, they “leverage” private involvement, and they have a multiplier effect because they generate new income. At the same time, however, they are technically complex and they are subject to state aid rules. Their assessment under EU state aid rules creates two additional problems. First, under certain conditions financial instruments may not contain state aid. This is when public authorities act as “private investors”. This means that state aid cannot be presumed to exist in all financial instruments. It must first be established through market analysis. Second, when state aid is found to be present it is not always possible to quantify it. For this reason the state aid rules that apply to financial instruments differ significantly from other rules. This paper reviews how financial instruments have been assessed by the European Commission and under which conditions the state aid they may contain can be considered to be compatible with the internal market. The paper finds that by and large Member States have succeeded to design measures that have all been approved by the Commission.

An Assessment of the Penalties System for Infringements of EU Competition Law: Can Personal Sanctions be the Missing Piece of the Puzzle? IES WORKING PAPER 6/2013

Competition law seeks to protect competition on the market as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources. In order to be successful, therefore, competition authorities should be adequately equipped and have at their disposal all necessary enforcement tools. However, at the EU level the current enforcement system of competition rules allows only for the imposition of administrative fines by the European Commission to liable undertakings. The main objectives, in turn, of an enforcement policy based on financial penalties are two fold: to impose sanctions on infringing undertakings which reflect the seriousness of the violation, and to ensure that the risk of penalties will deter both the infringing undertakings (often referred to as 'specific deterrence') and other undertakings that may be considering anti-competitive activities from engaging in them (often referred to as 'general deterrence'). In all circumstances, it is important to ensure that pecuniary sanctions imposed on infringing undertakings are proportionate and not excessive. Although pecuniary sanctions against infringing undertakings are a crucial part of the arsenal needed to deter competition law violations, they may not be sufficient. One alternative option in that regard is the strategic use of sanctions against the individuals involved in, or responsible for, the infringements. Sanctions against individuals are documented to focus the minds of directors and employees to comply with competition rules as they themselves, in addition to the undertakings in which they are employed, are at risk of infringements. Individual criminal penalties, including custodial sanctions, have been in fact adopted by almost half of the EU Member States. This is a powerful tool but is also limited in scope and hard to implement in practice mostly due to the high standards of proof required and the political consensus that needs first to be built. Administrative sanctions for individuals, on the other hand, promise to deliver up to a certain extent the same beneficial results as criminal sanctions whilst at the same time their adoption is not likely to meet strong opposition and their implementation in practice can be both efficient and effective. Directors’ disqualification, in particular, provides a strong individual incentive for each member, or prospective member, of the Board as well as other senior executives, to take compliance with competition law seriously. It is a flexible and promising tool that if added to the arsenal of the European Commission could bring balance to the current sanctioning system and that, in turn, would in all likelihood make the enforcement of EU competition rules more effective. Therefore, it is submitted that a competition law regime in order to be effective should be able to deliver policy objectives through a variety of tools, not simply by imposing significant pecuniary sanctions to infringing undertakings. It is also clear that individual sanctions, mostly of an administrative nature, are likely to play an increasingly important role as they focus the minds of those in business who might otherwise be inclined to regard infringing the law as a matter of corporate risk rather than of personal risk. At the EU level, in particular, the adoption of directors’ disqualification promises to deliver more effective compliance and greater overall economic impact.