Competition Policy

Competition Policy and International Trade Economy

In relation to international trade economy, Christopher Mark (1993) provided the following definition of Competition Policy: A broad category encompassing antitrust and other policies to remedy the imperfectly competitive nature of key industries. Includes what is termed “antitrust policy” in the United States and “antimonopoly policy” in most other countries, as well as regulation of state aids to industry .Competition policy seeks to affect market structure and market conduct, in order to achievemarket performance goals. Trade- related competition policy issues include the impact on international trade of restrictive business practices including intrafirm agreements of multinational corporations (e.g., transfer pricing); strategic partnerships, cartels and private restraints on bilateral trade; distribution monopolies and the procurement practices of private monopolies; and the impact on market structures of mergers and acquisitions across borders.

One approach to competition policy seeks establishment of uniform antitrust rules in all major countries. Short of such an ideal, other advocates argue, competition policy should focus on elements in countries’ economic institutions that impede domestic and international, competition and negotiate for their removal, along with multilateral negotiation of new policy codes for the behavior of governments and firms. See managed trade, strategic trade policy, and restrictive business practices; see also Export Trading Company Act (Sec. IV).

Competition Policy and Law

A legal and regulatory framework that prevents businesses from unreasonably limiting the quality, quantity, and price of goods or services available in the marketplace and seeks to limit anticompetitive government regulation of the marketplace.

The fundamental goal of Competition Law is to foster a culture of competition that ultimately benefits consumers through better quality, service, and pricing for goods and services. Competition Law is of significant relevance to countries that seek to thrive within liberalized markets and better integrate into the world economy. Although Competition Law by itself does not create competition, when effectively applied it can counteract the dangers of anticompetitive behavior and protect consumer welfare.

In many developing nations, Competition Law is not considered a high priority. In certain cases, Western-oriented Competition law may not yet be appropriate, especially if there is rampant corruption and weak institutions. For many transitioning and developing countries, donors should consider the need to engender, nurture, and sustain support for reform prior to embarking on a full-scale initiative. Coalition building is essential in this process; such a coalition should include politicians, executive branch officials, business and civic leaders, judges, professional associations, experts from universities, and others.

In 2003, the United Nations Conference on Trade and Development developed a Model Competition Law that set forth eight components as essential to supporting a developing country’s emergence into the world economy (see box to the right). A critical element to the success and enforcement of these principles is a network of implementing institutions. These institutions may include: a highly competent administering authority, an independent regulator of private or state-owned monopolies, a regulatory and licensing system, a sufficiently trained legal community, and a consumer protection enforcement authority. The participation of supporting institutions such as business associations, consumer groups, lawyers, economists, statisticians, and universities can also serve as an important resource and support for the implementation of a meaningful Competition Law.

The Model Competition Law developed at a United Nations Conference on Trade and Development contains the following components:

Restrictive agreements and arrangements.
Acts or behavior constituting an abuse of a dominant position of market power.
Notification, examination, and prohibition of mergers affecting concentrated markets.
The relationship between the administering authority and regulatory bodies including sectoral regulators.
Possible aspects of consumer protection.
Sanctions and relief.
Appeals.
Actions for damages

Resource Inputs into Competition Policy, by Country

The information below shows the national competition Agency Budget and its staff, by country:

Argentina 200,000 (23)
Armenia 126,740 (22)
Australia 38,000,000 (391)
Belgium 180,000 (20)
Brazil 5,615,000 (167)
Canada 21,300,000 (325)
Chile 1,950,000 (38)
Czech Rep 2,059,715 (120)
Denmark 8,300,000 (65)
Estonia 711,200 (39)
Finland 807,410 (42)
France 79,501,405 (287)
Germany 13,325,240 (150)
Indonesia 2,800,000 (90)
Ireland 4,260,000 (37)
Israel 4,459,267 (82)
Italy 32,000,000 (121)
Jamaica 596,000 (6)
Japan 51,900,000 (607)
Kenya 320,000 (21)
Korea 22,500,000 (416)
Latvia 3,480,000 (25)
Lithuania 796,600 (55)
Mexico 14,000,000 (144)
Netherlands 34,000,000 (158)
New Zealand 10,000,000 (79)
Norway 9,000,000 (80)
Panama 900,000 (17)
Poland 5,303,312 (237)
Romania 1,652,709 (346)
Slovakia 1,115,337 (59)
Slovenia 428,578 (11)
South Africa 9,131,863 (111)
Spain 2,700,000 (95)
Sweden 9,000,000 (94)
United Kingdom 101,682,682 (708)
United States 307,000,000 (1378)
Uzbekistan 500,000 (343)

Source: Global Competition Review (2003).

Competition and Merger Policy and Europe

There is an entry on competition and merger policy in the European legal encyclopedia.

Competition Law and Policy in International Economic Law

In international economic law, competition law and policy includes the following legal areas, with coverage in this world legal encyclopedia:

Impact of Preferential Trade Agreements on Competition Law and Policy
The Role of the OECD in Competition Policy
The Role of UNCTAD in Competition Law and Policy
Anti-trust, Human Rights and Development

Resources

Hierarchical Display of Competition policy

Business And Competition > Competition
Business And Competition > Business organisation > Economic concentration
European Union > European construction > Deepening of the European Union > EU activity > EU policy
Economics > Economic policy > Economic support > State aid
Production, Technology And Research > Research and intellectual property > Intellectual property > Industrial property
Economics > Economic policy > Economic support > Aid to undertakings