When Law & Economics Violates the Rule of Law: Three Illustrations

Law &amp; Economics scholarship movement continues to be an important methodological approach to the positive and normative analysis of law since its inception in the second half of the 20th century. However, Law &amp; Economics has been criticized on various grounds, from its over-reliance on consequentialist arguments against deontological arguments to its indifference towards the fundamental concepts of law such as the Rule of Law. This latter argument is scrutinized and further illustrated in this article. Here, we demonstrate that despite the common theoretical underpinnings between Law &amp; Economics and the Rule of Law (I), it is argued that Law &amp; Economics conflicts with the Rule of Law principles on three major instances, namely the Coase theorem, the theory of efficient breach of contracts and the influential rule of reason in the field of competition law and policies (II). We therefore conclude that there cannot be a practical convergence between Law &amp; Economics and the Rule of Law at the universal level unless Law &amp; Economics revisits some of its normative conclusions that conflict with the Rule of Law as exemplified in this article.

2. Liberty in the law: this is historically the most ancient element of the Rule of Law as illustrated in England, for instance, by the Magna Carta of 1215, followed by the Habeas Corpus of 1679, the Petition Rights of 1628 and the Bill of Rights of 1689. The Rule of Law ensures liberty in the law by granting fundamental personal rights (freedom from unfair trial and illegal detention, etc.) and fundamental economic rights (property rights, contractual rights, liability rules, etc.). 3. Certainty of the law: this is guaranteed by the Rule of Law with respect to the protection of vested interests and rights of individuals and with respect to quality requirements of the law. Law must be of sufficient certainty and quality in order to protect both the wellfunctioning legal order and individuals' rights to know and rely on the law. The legal certainty derived from the Rule of Law requires the law to be intelligible, of sufficient clarity, and of necessary predictability. Individuals must also put legitimate expectations onto the law for the law to be aligned with the Rule of Law principle.
These three characteristics of the Rule of Law correspond not only to ethical imperatives 7 , but also to economic objectives 8 . Indeed, the Rule of Law is engrained with economic reasoning since it has been one of the prerequisites for the development of modern economies. As Zywicki argues, 'the rule of law should not be understood as a mere means to a social order predicated on limited government, freedom, and prosperity. Instead, the rule of law is an inherent part of a free, peaceful, and prosperous society' 9 . More specifically, the Rule of Law encompasses the following features essential for a legal system to be conducive to prosperity: The Rule of Law as rules of interdiction: the State is not permitted to be outside the ambit of an equal

I. INTRODUCTION
In this section, we will provide some definitions of the Rule of Law (a), as well as envisage and define Law & Economics as a scholarship movement.

A. Definitional aspects of the Rule of Law
As 'existing constitutional principle' 1 , the Rule of Law is one of these expressions that are used in the law with a precise meaning but without a clear definition. Indeed, Lord Bingham admits that while an appealing concept, the 'Rule of Law' has admittedly no specific definition of its own. Historically, the Rule of Law has emerged as a substitute to the rule of might, to the rule of the Crown, to the rule of arbitrary powers -in a nutshell, to the rule of injustice 2 .
On the one hand, the Rule of Law refers to the well-functioning of the legal order from a vertical relationship, whereby the rulers are also bound by the rules enacted. This is the Rule of Law as obedience to the law, that is, the procedural justice of the Rule of Law. On the other hand, the Rule of Law refers to the fact the law rules -lex suprema est 3 . The Rule of Law in that facet refers to the rule of justice since there are peaceful, voluntary and horizontal commitments by individuals to individuals where abidance to the law is essential 4 . Rule of Law is here approached as meaning protection of individual rights, i.e. the substantive justice of the Rule of Law. The dual etymological origin of the Rule of Law 5 has produced what can be identified as the three main legal characteristic of the Rule of Law: 1. Equality before the law: this requires the law to be indistinctly applicable to the rulers and individuals. The Rule of Law therefore entails the lack of discrimination not only between the rulers and the individuals but also among individuals. The law rules equally to persons in similar situations 6 .
law and economics deal with the study of the behaviours of individuals in a world of scarcity of resources 13 : because resources are scarce, human actions are to be constrained by legal determinants and/or by economic necessities 14 . The interactions between law and economics are therefore apparent with respect to the impact of legal interventions onto market exchanges and to the necessary scientific study of humanly designed legal norms.
The law refers to the social ordering of individuals restricted in their means of actions by sanctionable and enforceable norms 15 .
The law puts a price on human actions that impairs the natural ordering of market exchanges in favour of a generally accepted social ordering of things 16 . Economics refers to the scientific study of the human actions by the individuals. If economics is focused on the maximization of wealth (or of utility), the efficiency rationale of economics can be compatible with the justice rationale of the law (or juridical sciences) because if a legal rule is not necessarily efficient, an inefficient rule can hardly be a legal rule. Indeed, an inefficient situation, at its cornerstone, yields more costs than benefits and therefore infringes upon more rights than it protects or creates existing rights 17 .
The two disciplines -law and economics -have been comprehensively analysed under the Law & Economics scholarship, which has been a major trend of legal and economic literature from the second half of the 20th century 18 . The lessons of the Law & Economics movement have participated in increasing the efficiency of the legal rules and institutions. While Law & Economics scholarship has been very rich in the diversity of approaches it generated -from Austrian economics 19 to utilitarian economics through public choice school 20 and behavioural economics 21 -and implementation of the law across individuals 10 , to illegally detain individuals, to prosecute them without charge, to judge twice the same facts, to seize and/or trespass property without a legal basis and so on. The Rule of Law as rules of direction: strong protection of property rights, the lay down of liability of rules for deterring those having involuntarily entered in inefficient exchanges, the lay down of contractual rules for securing voluntary and efficient exchanges, the lay down of a competitive order protecting the contractual freedom of economic actors and so on 11 . The Rule of Law as rules of procedure: the judiciary and the constitutional system guarantee the separation of powers whereby the government is submitted to both parliamentarian sovereignty and independence of the judiciary; courts' procedures are designed transparently and applied equally, trials are fair, and intrinsic qualities 12 are attached to the law such as the clarity and the predictability of the law.
These three qualities of the Rule of Law are cumulative qualities because a legal system grossly lacking one or two of these three qualities will not be considered as respecting the ideals of the Rule of Law.

B. Definitional aspects of Law & Economics
Economics studies the prices put on human actions and compares the costs and benefits derived from the social ordering of things with a fictional -'natural' or alternative -ordering of things. Both 22 See, e.g., Richard Posner, Economic Analysis of Law (1st ed. 1973); Richard Posner, Utilitarianism, Economics and Legal Theory, 8 J. Leg. Stud. 103 (1979)

B. Universalist convergence: Law & Development, Law & Finance
Law & Economics movement has even generated a sub-trend of research wherein Law & Economics approach is applied to the developing world -the so-called 'Law & Development' and 'Law & Finance' approaches 24 . The Rule of Law, from its inception, had a universalist ambition. The guarantee of procedural and substantive rights from one country, i.e. England, had quickly been the source of inspirations for popular claims requesting similar rights. Thus, the French Declaration of Human Rights of 1789 has an explicitly universal ambition, inasmuch as the American Bill of Rights of 1791 and other international and constitutional texts 25 . Interestingly enough, the Rule of Law principles and Law & Economics have so far remained quite isolated from one another. The Rule of Law has been a crucial constituent of the law and development practice in the late 20th century 26 . '[I]t is the efficiency logic of law and economics that is the real novelty act here with the rediscovering of the Rule of Law', argues Newton 27 .
For the United Nations, the Rule of Law are principles of governance in which all 'persons, institutions and entities, public and private, including the state itself, are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated and that are consistent with international human rights norms and standards'. The UN posits that application of the Rule of Law requires 'measures to ensure adherence to the principles of supremacy of law, equality before the law, accountability to the law, fairness in the application of the law, separation of powers, participation in decision-making, legal certainty, avoidance of arbitrariness and procedural and legal transparency' 28 .
Also, The World Justice Program (WJP) uses a working definition of the rule of law based on the following four universal principles: i) the government and its officials and agents are accountable before the law; ii) laws are clear, publicized, stable and fair, and protect fundamental rights, including the security of persons and property; iii) the process by which the laws are enacted, administered and enforced is accessible, fair and efficient; and iv) justice is delivered by competent, ethical and independent representatives and neutrals who are of sufficient number, have adequate resources and reflect the makeup of the communities they serve 29 .
The export of the Rule of Law principles 30 , historically a Western heritage of legal culture, has dramatically increased with the fall of communism in the late 1980s and the early 1990s 31 . Indeed, the prevailing model of capitalism, combined with the Rule of Law principles, has gained the sufficient political and legal legitimacies for a legal transplant of the fundamental principles commanded by the Rule of Law 32 . Historically 33 , the modern development theories started in the second half of the 20th century with what Newton calls the 'Inaugural Moment' of the 'Developmentalist Démarche' of while some make the distinction between Law & Economics and economic analysis of law, we will refer to Law & Economics scholarship as the traditional (and influential) Posnerian Law & Economics 22 . On the basis of rational self-interestedness and welfare maximization criterion, Posnerian Law & Economics claims that common law rules tend to be economically efficient (positive claim) and that legal rules ought to be economically efficient (normative claim). The notion of economic efficiency itself has been the subject of much controversy 23 . However, in general, Law & Economics scholarship 'survived' and economic efficiency remains the prime normative criterion for Law & Economics.
In that regard, Law & Economics has allegedly identified efficiency-enhancing rules in modern economies, and relied classically on neoclassical liberal theory and utilitarianism.
After having introduced the Rule of Law and Law & Economics scholarship, we now turn to the common theoretical convergence between the Law & Economics movement and the Rule of Law requirements. More specifically, the rationale of the law and economics are reconciled, balanced and analysed into a common methodological approach under the Law & Economics scholarship movement.

A. Philosophical convergence: Law & Economics and the rule of law
Law & Economics have been argued against the political (if not populist) use of the law in favour of economically motivated legal rules. In that respect, the Rule of Law can be seen as echoing Law & Economics to the extent that Rule of Law principles aim at rationalizing the legal rules by stating the principles of law which are independent from any political volatilities or from any populist agenda.
Therefore, a philosophical convergence exists between the Law & Economics methodological approach and the Rule of Law principles only to the extent that Law & Economics is compatible with these principles whenever they bear an economic rationale such as the protection of property rights, the protection of the freedom of contract, the protection of the competitive order and the absence of unjustified discrimination. These values strongly enshrined into Rule of Law principles have been defined by Law & Economics scholars as being efficiency-enhancing. While the Law & Economics scholarship justifies these rules with arguments pertaining to consequentialist ethics, the Rule of Law principles are justified on the basis of arguments pertaining to deontological ethics. Consequently, while Law & Economics scholarship uses consequentialist arguments to justify liberally minded rules such as property rights protection and individual freedom in a market economy, the Rule of Law has recourse to deontological arguments to also justify market economy principles. 34  Advisors should therefore focus on the narrow understanding of the Rule of Law in order to implement such principles of law for the improvement of both the legal and economic orders of a particular society. The narrow version of the Rule of Law, focusing only on the legal and institutional improvements, can claim universality more easily 45 . The protection of the Rule of Law principles in developing countries is 'measured' through data sets such as the one proposed by the World Justice Programme Rule of Law Index, which takes the four previously mentioned WJP principles as its basis and disaggregates these into 48 sub-factors to inform the following nine dimensions of the rule of law: limited government powers, absence of corruption, order and security, fundamental rights, open government, regulatory enforcement, access to civil justice, effective criminal justice and informal justice 46 .
The export of Rule of Law through the current 'Revivalist Moment' of Law and Development has also been reinforced by another trend of Law & Economics scholarship called 'Law & Finance' 47 . The theoretical ramifications of Law & Economics with the Rule of Law are most exemplified in this 'Law & Finance' research agenda where it has been evidenced that countries that most protect the Rule of Law principles are those having the most efficient rules and most prosperous economies. While being debated and contested, the 'Law & Finance' trend of researches has been influential in fostering the justification of Rule of Law principles in developing countries.
Indeed, Law & Finance has participated in the Law & Development's Revivalist Moment, where legal theory came to the conclusions that rather than detailing precise legal rules, the promotion of the principles derived from the Rule of Law would most be conducive to the prosperity of developing economies. Indeed, most human rights enshrined in Rule of Law principles are efficiency-enhancing 48 . Institutional rules and legal rules are conducive to economic efficiency whenever Rule of Law principles, 1960Law principles, -1974 . This approach is characterized by 'decolonization', and the 'statist principles and prescriptions of first-generation development economics are routinely and ubiquitously deployed'. In the early 1970s, the 'Political Economy' approach of the 'Critical Moment' from 1974 to 1985 prevailed: 'the oil shocks, international economic slowdown, collapse of international monetary regulation (floating currency exchange rates), and the advent of the Third World debt crisis, [t]hese form the backdrop of the rise of the family of antidevelopmentalist theories' 35 . The need for a more political economy approach was derived from these macroeconomics shocks, therefore leaving only an incidental role for the law in development theory.
Also, the Critical Moment has been internationalized with national economic policies substituted to a more encompassing approach of global economic development via the growing role of  52 , wherein Ronald Coase demonstrated that nuisance disputes will always be efficiently resolved regardless of the legal rule chosen, provided that the parties in the dispute can negotiate with zero transaction costs.
We will now discuss the essence of what has subsequently (and curiously) been called the 'Coase theorem'. Ronald Coase has demonstrated that in a hypothetical world of zero transaction cost, parties with a conflict would bargain and achieve efficient allocation of resources, independently of the legal rules allocating rights between them. Property rules are normally protected by injunctive reliefs, namely rules that stop trespassers to encroach on individuals' properties. Liability rules are normally governed by damages -financial compensation, whereby the victim is compensated for the harm caused. Ronald Coase demonstrates that legal rules ascribing property rights are irrelevant with respect to efficiency if parties can costlessly bargain over their rights in a hypothetical world of costless transactions.
Ronald Coase takes a simple example to illustrate his argument, that is, a cattle-raiser and a farmer operating on neighbouring properties. It is inevitable that the cattle would stray onto the farmer's property and destroy crops. An increase in the quantity of meat produced corresponding to an increase in the size of the cattle herd increases the crop loss to the farmer so that the case may be summarized as follows: notably property rights protection 49 , are upheld 50 . Convincingly and empirically evidenced, the study conducted by Kaufmann et al. demonstrates that 1-point increase on the 6-point of their Rule of Law scale is correlated with a 2.5-to 4-fold improvement in per capita incomes of developing countries 51 .
As a result, one would wonder what are the remaining differences between the Rule of Law principles and Law & Economics scholarship in general. Despite the common underpinnings between the Rule of Law principles and Law & Economics both theoretically and apprehended in their universalist dimensions, the following section argues that Law & Economics scholarship still conflicts with the Rule of Law principles, as evidenced by three instances of legal issues.

III. PRACTICAL DIVERGENCE: THREE ILLUSTRATIONS
The Rule of Law shares common grounds with the Law & Economics movement. This hypothesis theoretically developed in the previous section will now be tested in practice. We will demonstrate the fundamental conflicts between the Rule of Law principles and Law & Economics teachings using three illustrations chosen from three different legal issues, which are presented below.

A. The Coase Theorem in property rights protection
The so-called 'Coase theorem' refers to Nobel Prize Laureate Ronald Coase's seminal article 'The Problem of Social Cost' In terms of property rights, entitlements are either for granting the farmer a right to have undamaged crops or for granting the cattle-raiser a right to raise cattle, including a right to damage the farmer's crops. If the farmer holds the entitlement and if he is protected by injunction, then he can stop the cattle-raiser from allowing his cattle to damage the crops. If the cattle-raiser holds the entitlement, then the farmer has to buy him off to be free from damage.
The more efficient solution with respect to the opportunity cost of not maximizing outputs would be to negotiate damages rather than injunctive reliefs. The cattle-raiser will have to pay damages for the harm caused by his cattle. Conversely, if the cattle-raiser holds the entitlement, protecting him with damages as remedy would mean that the farmer will have to compensate the cattle-raiser for his 'damages' (lost profits) in order to restrict his cattle raising.
In the current situation, the efficient solution from the example above would be to produce only 1 ton as it maximizes overall net profits with £9.000. However, if transactions are costless, information is full and damages of liability rules are being preferred over injunctions for property rights issues, then as Coase argues, it becomes possible to reach a completely different outcome than the one delivered by the current state of law. Indeed, in the example given above, the cattle-raiser stands to gain a £10.000 profit from producing 1 ton of meat while the farmer only loses £1.000 worth of crops. Thus, it would be efficient to reach an agreement under which the cattle-raiser would pay the farmer a sum between £1.000 and £10.000 in return for a right to produce 1 ton of meat. Production will remain at the optimum level of 1 ton. To produce 2 tons, the cattle-raiser would have to buy the farmer off with at least £15.000, whereas he

Additional Profits Total Profits (P)
Additional Damage, in £ Consequently, the enforcement of fundamental rights and the claim of one's property rights can be seen, in Coase's eyes, as uncooperative behaviours creating extra transaction costs. This 'inefficient' behaviour is nothing less but the enforcement of constitutional rights that every individual is entitled to claim. Therefore, the whole theory of rights and wrongs, of principles and torts, is being weakened for the attempted attainment of an efficiency goal wherein the 'social cost' is minimized. The individual constitutional property rights protected by injunctive reliefs are curbed in favour of a collective objective derived from utilitarianism of 'economic efficiency'.
The theory of rights, according to which 'rights matter', is where Rule of Law principles are given full effects. Rule of Law principles do not scrutinize onto the respective costs and benefits of negotiating trespass between the tortfeasor and the victim. Rule of Law principles are limited to the fundamental first stage of analysis, namely whether or not the human action breaches an individual his/her fundamental property rights. Because the answer to this question in the Coase theorem would be positive, injunctive reliefs would be issued so that the Rule of Law empowers the victim to have his/her private property rights freed from any intrusion irrespectively of the costs and benefits of each involved party or of the society.
The fundamental premise upon which Law & Economics movement has flourished -the consequentialism of the Coase theorem's contribution to property rights -therefore contradicts the fundamental premise upon which the Rule of Law has emerged -the deontological protection of private property rights. The Coase theorem contradicts the Rule of Law because the Rule of Law principles cannot be superseded by the economic principle of efficiency with respect to its ethical superiority. After property rights protection, it seems that Law & Economics scholarship may contradict the Rule of Law principles when it comes to its idea of an 'efficient breach' of contract law.

B. The 'efficient breach' in contract law
'Central to law and economics of contract law' 56 , the notion of 'efficient breach' contradicts the principles underpinning the Rule of Law. The notion of 'efficient breach' of contracts flows from the belief that breaches of contracts should be deterred, via specific performance or compensatory damages, only when such breaches are inefficient.
Breaches of contracts are said to be inefficient whenever the value generated by the respect of the contractual promises is lower than the associated costs. However, the assessment of both the 'value' and the 'costs' of a specific contract is subject to controversy as the conclusion may dramatically differ whether or not one takes only the breaching party's perspective, two contracting parties' perspective or the whole social costs into account. Consequently, the mathematical computation of the realisticness of the 'efficient breach' pares down to an impossible calculus.
Indeed, according to law and economics thinking, 'if the breaching party has to pay the other parties' loss then the breach can be subject to a comparison of gains and losses. If the gains from breach plus expectation damages are small or negative, then stands to gain only £4.000. Similarly, it would not be sensible to produce the third ton.
The resulting production level would be the same if a damage remedy were chosen instead. It would be beneficial to both parties for the cattle-raiser to pay the farmer 1.000 £ in damages to produce 1 ton of meat. Again, there would be no incentive to bargain for a higher level of production. The efficient amount of meat would still be produced if the cattle-raiser held the entitlement instead. The cattle-raiser would have the right to produce meat at maximum capacity (i.e. 3 tons) without having to compensate the farmer for the damage to his crops. Because of zero transaction costs, the farmer would negotiate with the cattleraiser to reduce the output of meat. The farmer would buy off the cattle-raiser with some amount between £6.000 and £35.000. The cattle-raiser would reduce output from 3 tons to 1 ton and thereby reduce damage to the farmer by £35.000. It would not be beneficial to negotiate for a further reduction in the production of meat since the farmer would have to pay the cattle-raiser £10.000 to reduce damage of only £1.000. The efficient amount of production would be reached, as argued by Coase.
The Coase theorem, by emphasizing the disturbing role of transaction costs in reaching efficient solution, has seminally pointed out the problem of the social costs generated by transactions. From a normative perspective, the Coase theorem, applied in a positive cost world, justified institutions' roles, not only paved the way for the New Institutionalism personified by economists such as Nobel Prize Laureate Williamson, but also has been foundational to the Law & Economics scholarship 53 .
With respect to the Law & Economics teachings examined from the Rule of Law principles' perspective, one can ask the following question: to what extent the solution provided by the so-called 'Coase theorem', aimed at reaching an efficient solution, contradicts the Rule of Law? Let us ignore the economic feasibility of the assumptions under which the Coase theorem can realistically take place 54 , there are a number of reasons for seeing the Coase theorem, albeit fundamental to the Law & Economics scholarship, as encroaching upon the fundamental principles commanded by the Rule of Law.
First, property rights are not, under Coase theorem, protected by injunction reliefs but by simple damages: trespassers are not estopped from violating individuals' properties. They are only asked to compensate the victims for such trespasses. The moral imperative of prohibition of trespasses, given the violation of the fundamental property rights, is disregarded. The ethical requirement of adherence to the law is jeopardized for the sake of efficiency and consequentialist-loaded arguments. The justice of the Coase theorem solution is highly questionable. Second, the economic rationale of the Coase theorem can be questioned on the very economic side: the dynamic approach of the benefits of property rights is denied in favour of a static approach to social production. Indeed, what if the property owner, here the farmer, planned to invest in his property and have long-term projects that require free disposal of his own property? The social cost, à la Coase, is considered only from a static perspective without the long-term perspective of negative impact on property investments 55 . Interestingly, because some scholars considered that economic structuralism was catching not too little but too many behaviours of market actors, scholarship moved away from a strict economic structuralism approach to competition in favour of a more behavioural approach. Under the economic behaviourism of competition law, it no longer matters whether the market shares are detained by each market actor in order to conclude whether each of them was willing to be under the scrutiny of competition law. However, it has become the anti-competitive behaviour of market actors as such, which has become the interest of competition authorities. Irrespective of the market shares of market actors, some behaviours can infringe or not onto the level of competition in a specific market. Therefore, some market actors with high market shares have started being excused and justified under economic behaviourism, whereas economic structuralism would have fined them. The outcome has been increased uncertainty as the competition authorities' investigations were possibly targeting any market actors. Behaviours of market actors have become increasingly suspicious as the lines between the legality and illegality of behaviours under competition law are blurred. The principles of law being weakened, the practice of law more importantly relies on a casuistic approach. The intrinsic qualities of the Rule of Law are lacking, the equality before the law is jeopardized, the liberty in the law for market actors is constrained under constant fears of administrative investigations and legal certainty is no longer achieved.
Economic behaviourism has tentatively tried to legitimize itself with the so-called 'rule of reason', which was preferred over the 'per se rule'. According to the rule of reason, competition authorities are fining market actors according to the criterion of reasonableness. The main and historical proponent of the rule of reason -the US Supreme Court -has gradually departed from the per se rule in favour of a rule of reason. Indeed, in the United States, according to Section 1 of the Sherman Act, 'every contract (...) in restraint of trade or commerce (...) is declared to be illegal (...)' and there is no legal exception to this prohibition. Certain agreements which are considered very likely to be anti-competitive are automatically found to be illegal, and for other types of agreements, the anti-competitive and pro-competitive aspects of the agreement are weighed before an agreement is condemned as illegal 58 . The first time a rule of reason has explicitly been applied in the United States is when Justice White in Trans-Missouri Freight Association 59 argued that there needs to be a criterion of 'reasonableness' in the interpretation and application of Section 1 on the basis of the fact that 'it is not the existence of the restriction of competition, but the reasonableness of that restriction'.
Unlike in the United States, the European Union has adopted a more formalistic approach with Article 101 of the Treaty on the Functioning of the European Union (TFEU), which involves both prohibition and exemption provisions for agreements in restriction of competition, with Article 101(1) and Article 101(3), respectively. Article 101(3) can be applied to all types of agreements, whether they have the restriction of competition as their object or effect.
There is no such possibility in the US antitrust law, since an equivalent of Article 101(3) does not exist. Article 101(3) provides for a sort of European rule of reason where pro-and anti-the breach will not occur, and should not occur from an economic viewpoint. However, if there are gains, then it would be efficient to release the resources to alternative uses' 57 .
According to law and economics, there can be situations when efficient breach can be called for. For instance, in light of the change in price between the time of the signing of the contract and the time of the performance of the contract, the seller could breach the contract whenever the higher price is less than the original buyer's valuation price. The instability, unpredictability, increased insurance costs and increased deterrence in contracting such concept of efficient breach would structurally far outweigh any conjectural and relative gain from the seller's viewpoint. Irrespectively of the economic rationale of such measure, the 'efficient breach' concept drastically undermines the premises of the Rule of Law, according to which obedience to the law, in general, and obedience to the law of any contracting parties (i.e. the contracts), in particular, are both an ethical and legal imperative.

C. The rule of reason in competition law
Competition law is a fundamental area of law and policy allowing for the emergence and reinforcement of a competitive order through regulatory interventions of the economic freedoms of market actors. The reduction of the economic freedoms of the market actors is such a sensitive issue that strong legal and economic argumentations must be ex ante developed in order to justify subsequent regulatory restrictions upon the market actors' economic freedoms.
Historically, competition law (or 'antitrust law' in North America) had had recourse to 'economic structuralism' in order to identify which business practices were susceptible to distort competition in the market and hence be made illegal. Economic structuralism refers to the need for identifying the key fundamental market structures for achieving a high level of competition. Outside these market structures, the actions of the market actors would become dubious with respect to their willingness of not distorting competition in the market.
Economic structuralism had numerous advantages and limitations with respect to the application of competition law. Economic structuralism allowed for competition authorities not to be warned when business practices were not outside the structural criterion. For instance, if the abuse of dominant practice can only occur when a firm has 50% of the market shares of its relevant market, a firm with 45% of the market shares, regardless of its presumably abusive practices, would not be scrutinized by competition authorities. Certainty and predictability in the law helped market actors to understand competition law, which therefore remained clear, accessible and predictable. These are the intrinsic qualities of the Rule of Law. Indeed, economic structuralism resembled a principled approach to the law, where competition law was focused on potential infringements by markets actors only when principles of law and of the competitive order were to be breached. Economic structuralism has generated the 'per se rule', whereby some specific behaviours under certain specific circumstances (market structure) were deemed to be anticompetitive. Outside such circumstances, no minor charges against market actors could be found, therefore providing for greater legal certainty and hence greater economic freedoms. supposed pro-competitive effects of contested behaviours) has developed into an essential element of justification in competition cases. In contrast to the original intent of scholars vouching for a departure of economic structuralism in favour of economic behaviourism with the rule of reason in order to exempt some market behaviours from competition authorities, this evolution has tended to increase the number of competition investigations, the extent of market behaviours caught under competition law and the legal uncertainty in relying upon competition law. The Rule of Law is here undermined. The efficiency defence therefore has worked as an engine of disintegration of the Rule of Law in competition law. The Law & Economics teachings in competition law, which naturally favours the efficiency defence of the rule of reason as part of the economic behaviourism this movement has actively promoted, are contrary to the principle-based approach of the Rule of Law to competition law.
However, competition law is one of the main areas of law where Law & Economics applications have largely been uncontested. Therefore, even in one of its core elements, Law & Economics favours ideas and concepts that contradict the clarity and predictability required by the Rule of Law principles. In light of the pitfalls generated by the luring rule of reason, some attempts have been made to vouch for a more 'structured rule of reason', which would be something in-between the rule of reason and the per se rule, and their respective economic approaches, namely economic behaviourism and economic structuralism. It is nothing else but an increased level of justification, which yields no particular benefit in terms of legal certainty, but increased costs in terms of discovery and argumentative discourses 68 . Indeed, M. Strucke (2009) rightly wonders: 'so how does the rule of reason (…) standard for evaluating conduct under the Sherman Act fare under these rule-of-law principles? Poorly' 69 . The Rule of Law principles require the predictability and the clarity that the rule of reason fails to address and hence give up these qualities of the law for supposedly efficiency gains. The conceding of the Rule of Law principles for elusive efficiency gains is contrary to the very essence of Rule of Law principles. Consequently, Rule of Law principles can only accept per se rules of competition law, rules continuously criticized by Law & Economics scholars.
These three illustrations have evidenced the claim according to which the lessons derived from the Law & Economics scholarship are not always compatible with the Rule of Law principles. This claim is even more telling since the above illustrations have been chosen among the fundamental lessons of Law & Economics movement in three fundamental areas of law, namely property rights (Coase theorem), efficient breach (contract law) and rule of reason competitive effects of practices are weighed out with an economic approach that increases legal uncertainty and confusions. However, the major shifts in the EU institutions' practices towards a more 'economic' approach, which is favourable to a rule of reason, can be witnessed with the 'White Paper on the Modernisation of the Rules Implementing Articles 85 and 86 of the EC Treaty' 60 and with the Merger Regulation 1/2003 61 . The rise of the rule of reason in the EU has started with judgements taking into consideration the 'legal and economic context' of the firms' practices of the economic analysis of the pro-competitive effects of the defendants' arguments 62 .
For instance, in Wouters 63 , the ECJ balanced anti-competitive effects with other public policy considerations -notably, the restrictive effect of bar admissions for lawyers with the objective of ensuring useful effects of professional regulations. The ECJ concluded that public policy considerations outweighed harm to competition: the rule of reason is broadened to other public policy considerations. The ECJ can be said to have favoured a 'partial rule of reason' 64 , where a balancing test between pro-and anticompetitive effects is carried out, but with some aspects of a per se rule with respect to the restrictive object of agreements.
With the rule of reason, the question becomes as follows: can one provide a reasonable justification for the behaviours of the market actor under scrutiny? If the answer is yes and/or if the justification with respect to the economic efficiency of the contested behaviours is provided, the investigations will cease. If the answer is no and/or if the justification with respect to the economic efficiency of the contested behaviours are considered by competition authorities as being not sufficiently convincing, the investigations will ban these behaviours. If the line is thin, the consequences are dramatically opposite. It is sufficient for competition authorities to be convinced regarding the supposed economic benefits of the behaviours and such behaviours will be deemed pro-competitive. If not, the behaviours will be deemed anti-competitive.
The principled-based approach to competition law under economic structuralism has therefore been substituted to a behavioural approach to competition law where the rule of reason has outplayed the Rule of Law 65 . The rule of reason 'embraces antitrust's most vague and open-ended principles, making prospective compliance with its requirements exceedingly difficult' 66 . The flexibility, and hence unprincipled approach of the rule of reason, has sometimes been acclaimed 67 . However, the rule of reason is not an ancillary rule in competition law. It is a fundamental bedrock to current competition practice inasmuch as the 'efficiency defence' (or the economic justification based on the