Corporate Disclosure In A Competitive Environment The Ecjs Axel Springer Case And The Quest For A European Framework For Mandatory Disclosure

Download or read book Corporate Disclosure in a Competitive Environment - the Ecj's Axel Springer Case and the Quest for a European Framework for Mandatory Disclosure written by Wolfgang Schoen and published by . This book was released on 2011 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: European Company Law requires both closely-held and listed companies to disclose their financial situation (annual accounts) to the general public. The European Court of Justice has recently decided that also competitors of a company are in the position to enforce this obligation. This gives rise to the question how the effects of disclosure in the capital market (towards investors and creditors) and the effects of disclosure in the product market can be aligned. In order to give a full account of the framework, both the legal rules on disclosure under EC law and the basic economic concepts on the interaction of product and capital markets are laid out. A decisive role is played by quot;competitive costsquot;, i.e. the costs resulting from a disadvantage in the product market. The harmful effect of these competitive costs has also a major impact on the financial market because it prevents companies from deliberately disclosing sensitive data to existing and potential investors and creditors. Taking a closer look one finds out that there exist three basic situations where the efficiency aims in the product market and in the financial market clash: The access of competitors, suppliers or customers to quot;innovativequot; data, the abuse of a dominant market position in the course of quot;predatory pricingquot; and the mutual exchange of sensitive data in an oligopolistic setting.An economic analysis of the interaction between product and financial markets leads several policy proposals: a first insight would be not to extend mandatory disclosure to non-incorporated market participants; a second step should be to dismantle full mandatory disclosure for closely-held companies, and a third step should be to provide specific rules for the above mentioned cases of quot;innovativequot; data, quot;predatory pricingquot; and quot;mutual informationquot.