Title: Proposals for a Multilateral Framework on Competition Policy MFC
1Proposals for a Multilateral Framework on
Competition Policy (MFC)
- Simon J. Evenett
- World Trade Institute
- University of Bern, Switzerland
2Objectives of this presentation
- To summarise the nature of the discussions on
competition policy in the WTO since the Singapore
Ministerial. - Taking each issue in turn, to characterise and
then analyse proposals for a MFC. - Identify outstanding questions and role that Arab
nations can play in this debate.
3Accompanying document
- I will refer extensively to the following
document, which has been circulated at this
meeting. - J. Clarke and S. Evenett, A Multilateral
Framework for Competition Policy? This can be
downloaded from www.wti.org.
4Competition law and policy
- There is a distinction between competition law
and policy the latter is broader than the
former. - Although competition policy has been discussed at
the WTO, as we will see almost all proposals
relate to competition law.
5From Singapore to Cancun
- Singapore Ministerial
- Doha Development Declaration
- Paragraph 23
- Paragraph 24
- Paragraph 25
- What is supposed to be decided in Cancun?
6The changing nature of the debate at the WTO
- Market Access ?Minimum Standards.
- Pre-1999 Competition policy matters were seen
primarily in terms of their effects on market
access. - 1999 Main proponent of MFC (the EC) shifts
position to advocate minimum standards of
competition law and practice.
7Proposals for a MFC
- Who are the proponents?
- What do they want?
8Open proponents of a MFC
- EC
- Canada
- Australia
- Japan
- Korea
- Switzerland
- Note These countries need not agree on the
components of a MFC
9Opponents and skeptics of a MFC
- Malaysia (consistent opponent)
- India (although its position appears to changing)
- Hong Kong, China (consistent opponent)
- United States (expected to become more vocal in
opposition) - Like Minded Group
10What do the proponents want?
- A ban on hard core cartels that is enforced
- A commitment to adhere to core principles in
national competition law and practice - Provisions to foster voluntary cooperation
- Progressive reinforcement of competition law and
institutions in developing countries
11Big issues that proponents are not asking for
- Explicit commitments on market access.
- Multilateral commitments to enact and enforce any
competition law other than cartel law. - The creation of a supranational competition
enforcement agency.
12Description of the proposals
- These are not my proposals they are the
proposals of WTO members. - Here I summarise the submissions made to the WTO
by proponents. - See the appendix of the circulated paper for a
detailed account of each proposal.
13Hard core cartels
- See pages 34-36
- See submissions by, in particular,
- Korea (contains a useful overview of the issues)
- EC
- Thailand
14EC proposals on hard core cartels
- Wants a clear statement that hard core cartels
are prohibited. - Notes that definition of a hard core cartel will
need to be negotiated as would exceptions etc. - Wants a commitment by WTO members to have
sufficiently strong deterrents to cartelisation. - Wants framework for voluntary cooperation.
15Thai proposals on hard core cartels
- Wants mutual assistance in fighting cross-border
cartels. - Wants notification requirements on enforcement
agencies. - Wants mandatory consultation on investigations.
- Wants mandatory assistance to be given.
- Wants financial compensation for developing
countries when they assist industrial countries.
16Differences in EC and Thai approaches
- Thai approach focuses on cross-border cartels EC
proposals apply to domestic cartels too. - EC wants voluntary cooperation and assistance
Thais have taken a mandatory approach. - Thais want asymmetric obligations on developing
and industrialised countries (as do others, such
as India).
17My commentary on the proposals on hard core
cartels
- 1990s have shown that both domestic and
international cartels are a problem so Thai
focus on the latter is misplaced. - Mandatory sharing of information on cartel
investigations is both unnecessary and
counterproductive. - The debate over asymmetric obligations is
overdone.
18Core principles
- See pages 28-34.
- Main proponent is the EC.
- EC proposals call for
- Transparency in the enforcement and operation of
competition law. - Procedural fairness in the application of
competition law. - Non-discrimination in statement of competition
law. - Application of these principles to all
competition laws a nation has on the statute
books not just cartel law.
19Proposals on transparency
- Proposals for transparency
- in application of national law.
- of national laws vis-à-vis other WTO members.
- Flexibility in implementation.
- EC claims any well functioning competition
enforcement body probably already meets this
standard.
20Doubts and concerns on provisions on transparency
- No WTO member appears to challenge the notion
that transparency is an undisputed virtue. - But two concerns have been raised
- Can developing countries adhere to transparency
standards in industrial countries? - Can WTO notions of transparency that
traditionally apply to laws also apply to
individual enforcement decisions? - My evaluation of these concerns.
21Procedural fairness
- EC, Canada, Korea, and Australia have all put
forward different proposals that recognise the
large differences in national legal traditions. - Essentially, each advocates codifying the
following four guarantees for private parties - Rights of access to legal or enforcement process.
- Right to express their views in a fair manner.
- Right to be notified of a reasoned final
decision. - Right to appeal administrative decisions.
22Non-discrimination
- EC proposal
- calls for national treatment and most favoured
nation (MFN) treatment in the statement of
competition law. - would not apply to the application of competition
law and therefore to specific enforcement
decisions. - EC argues that a non-discrimination requirement
does not mean non-differentiation in the design
of competition law. - EC notes that exceptions could be negotiated.
- National champions.
23Non-discrimination
- Thais argue that a nations competition law
should not discriminate between export and
non-export firms, eg. Export cartel exemptions. - Yet, Thailand argues that developing countries
should be able to exempt national and
international export cartels! - India has argued that positive discrimination in
favour of domestic firms should still be allowed
so the impact of non-discrimination provisions
would fall on rich nations.
24Some questions on non-discrimination
- What is the economic case for arguing that
developing country export cartels are OK but
industrialised country export cartels are not? - What real goal does a country want to attain
through discrimination and is there a more
effective way to accomplish it than through the
discriminatory application of competition law? - Where is the economic evidence that
discrimination in favour of domestic firms in the
application of competition law has actually
enhanced development?
25Assessment on non-discrimination
- Even though there is little economic case for
discrimination, governments still do it. - Non-discrimination provisions have implications
for policies towards national cartels, national
champions, and bilateral cooperation agreements. - The ECs proposal has far less bite than is
commonly thought. Exemptions for sensitive
sectors have been envisaged.
26Voluntary cooperation
- See pages 36-37.
- Traditional tools for voluntary cooperation
- Notification
- Exchange of allowed information
- Notions of comity (traditional/negative,
positive) - Supporters include EC, Canada, Australia
- Canada has also called for the creation of a
Competition Policy Committee at the WTO
27Developing country views on voluntary cooperation
- Thailand sees cooperation as a way to stop firms
in industrialised countries from targeting
developing countries with anticompetitive
practices. - Calls for mandatory cooperation (as discussed
earlier). - Hong Kong, China is concerned about the potential
burdens on developing countries of cooperation
provisions.
28Assessment on voluntary cooperation (VC)
- Enforcement officials repeatedly say that VC is
- valuable to them (see page 60)
- that it is more likely to occur when a legal
framework is in place - There are a small number of bilateral VC
agreements in place (see page 21) - Voluntary nature of cooperation ensures that
nations decide only to incur costs if benefits
are larger.
29Capacity building
- All agree that capacity building would be a
central feature of a MFC - All agree that capacity building needs to respect
national characteristics and traditions. - Outstanding questions
- Can commitments here be made binding?
- Which organisations will conduct the capacity
building?
30Special and Differential Treatment (S and D)
- Many developing countries have called for S and D
in a future MFC. - Yet, no developing country has put forward a
comprehensive proposal on S and D. - S and D could include
- Fewer commitments by developing countries
- Longer implementation periods
- Implementation of commitments only required when
national capacities are sufficiently developed
31Summary of proposals for a MFC
- A ban on private hard core cartels that is
enforced - A commitment to adhere to core principles in
statement of national competition law and
practice - Provisions to foster voluntary cooperation
- Progressive reinforcement of competition law and
institutions in developing countries - Even these proposals leave much to be negotiated.
32What is not in a MFC?
- Ban on state-run cartels, like OPEC.
- Requirement to create a new enforcement agency.
- Requirement to enact any competition law other
than a cartel law. - Requirement to abandon pro-development objectives
of competition law. - Requirement to abandon existing exemptions,
exclusions, etc from national law. - Prevent the creation of national champions.
33Preparing for Cancun Some questions for
policymakers
- Does your countrys competition law already
comply with the proposals of the proponents of a
MFC? (Question helps to identify the
actualrather than fearedeffect of a MFC.) - If not, what exemptions etc would you have to
negotiate? - If your country does not have a competition law,
what is the minimum that would be required to
comply with a MFC? And, how much would it cost?
(Question helps identify what assistance is
needed.)
34Preparing for Cancun Some questions for
policymakers
- How long would it take for your country to comply
with the obligations for a MFC? - Putting together a proposal for a non-reciprocal
MFC is easy to do (and easy to ignore!) the real
challenge is formulating a proposal for a MFC
that involves obligations on all. - Can Arab nations, individually or collectively,
make such a proposal about a MFC or elements of a
MFC? - What about an Arab proposal on S and D?
- What are your fall back positions in Cancun if
the leading opponents of a MFC fall silent?