Sofia Competition Forum

1
Sofia Competition Forum

• 1th SCF Annual Conference, November 2012, Sofia,
• Hilton Hotel,
• Capacity building needs of young competition
  agencies in the Western Balkans
• Hassan Qaqaya
• UNCTAD
• Hassan.qaqaya_at_unctad.org
• www.unctad.org/competition

2
The West Balkan countries Needs and challenges

• Do all WB countries face the same challenges?
• Does capacity building and technical assistance
  need to be calibrated to suit local
  circumstances?
• What should be the form of delivering capacity
  building and TA?
• How to assess the effectiveness of capacity
  building ? Impact ? Sustainability?
• Issues for discussion .

3
Essential conditions for agency effectiveness

• An effective competition agency requires
  certain essential conditions such as (a)
  independence (b) adequate financial resources
  (c) skilled staff to carry out complex
  investigations of competition cases (d)
  leadership (e) the ability to advocate
  compliance with competition law among business
  and government agencies to take competition
  objectives into account and (f) effective
  cooperation with sector regulators.
• Most competition agencies in WB Countries have
  10 to 15 years of existence, and continue to face
  challenges in establishing strong foundations.

4
Essential conditions for agency effectiveness../..

• In addition to these challenges, there are
  conflicting objectives of the competition law
  with other economic policies,.. in some
  situations a lack of good governance,. a lack of
  political will on the part of policymakers and
  .a lack of a competition culture.

5
capacity-building and technical Assistance to
overcome these challenges.

• In this regard, technical assistance and
  capacity-building are of importance to overcome
  these challenges in order to help the recipient
  countries building up effective and efficient
  competition agencies. For more than three
  decades, UNCTAD and other international
  organizations such as OECD, and ICN ,World Bank
  and regional Banks, CUTS, and the more advanced
  competition agencies have been striving to
  improve the capacity of young competition
  agencies around the world.

6
capacity-building and technical Assistance to
overcome these challenges.../..

• An important and sometimes overlooked element of
  technical assistance in competition policy is the
  provision of written materials geared to young
  competition agencies. Among UNCTADs
  contributions in this field are the Model Law on
  Competition, Handbook on competition legislation
  with commentaries, Manual on the formulation and
  enforcement of competition policy, Handbook on
  investigative tools for competition cases, Peer
  reviews and reports prepared for the IGE on
  competition policy. See also OECD and ICN below,
  

7
Review of existing capacity building activities

• Existing capacity-building activities on offer
  includes
• (a) Guidelines and descriptions of the roles,
  functions, powers and responsibilities of
  relevant national competition authorities from
  those countries that have such legislation and
  competition authorities
• (b) Provision of legal assistance and policy
  advice, supported by domestic experts who are
  well-versed in their own national legal system
  and political-administrative structure, with
  respect to
• Identification of the statutory structure and
  substantive elements that should be included in
  the legislation
• Legal concepts relating to competition i.e.
  anti-competitive practices, mergers, hard-core
  cartels, abuse of dominance, consumer protection,
  State monopolies, regulatory objectives, etc.
•  

8
Review of existing capacity building
activities../..

• Administrative, criminal and civil actions and
  penalties, including the allocation and extent of
  criminal and civil responsibility and liability
  for violations of the national competition
  legislation, the applicable rules of procedure
  and the appellate process, etc. and
• (v) Procedures for information exchange and
  cooperation with competition authorities of other
  countries.

9
Designing and assessing effective capcity
building

• Determining how best to design technical
  assistance programmes to interact with nascent
  and financially constrained competition agencies
  is a difficult and complex task. This exercise
  requires information and data that can be
  difficult to collect to conduct this type of
  exercise. Meanwhile, efforts have been undertaken
  by actors in this field and academics to carry
  out ex-post evaluations of programmes implemented
  in the early 1990s.
• Among these actors, UNCTAD,OECD, ICN,WB, the
  United States Federal Trade Commission (FTC) and
  the Department of Justice, EU DG Comp, academia
  have attempted to conduct an assessment of
  experiences in providing technical assistance to
  young competition agencies around the globe..
•  

10
Designing and assessing effective capcity
building published research and findings

• UNCTAD (2011). Foundations of an effective
  competition agency. TD/B/C.I/CLP/8. Geneva.
• OECD (2009). Challenges faced by young
  competition authorities. Note by the secretariat.
  Global Forum on Competition, 19-20 February 2009.
• United States Federal Trade Commission, A
  Conference on Charting the Future Course of
  International Technical Assistance, February 6,
  2008, available at http//www.justice.gov/atr/pub
  lic/reports/250908.pdf.
• ICN (2007). Finding related to technical
  assistance for newer competition agency, May.
•  World Bank, Tomas Serebrisky (2004). What we
  know about competition agencies in emerging and
  transition countries? World Bank Policy Research
  Working paper 3221.
• Kovacic WE (1997), Getting Started Creating New
  Competition Policy Institution In Transition
  Economies, 23 Brooklyn Journal Of international
  Law 403 (1997).
• Simon J. Evenett (2006). The effectiveness of
  technical assistance, socio-- economic
  development, and the absorptive capacity of
  competition authorities. University of St.
  Gallen and CEPR, 31 August.

11
Designing and assessing effective capcity
building research and findings

• Daniel D. Sokol (2009). The future of
  international antitrust and improving antitrust
  agency capacity. Northwestern University Law
  Review. Vol. 103, N2.
• Nicholson MW, Sokol DD and Stiegert KW (2006).
  Technical Assistance for Law and Economics An
  Empirical Analysis in Antitrust/Competition
  Policy. Legal studies research Paper Series,
  Paper N 1024, University of Wisconsin Law
  School, November 2006.
• Sokol DD and Stiegert KW (2008). An Empirical
  Evaluation of Long term Advisors and Short term
  Interventions in Technical Assistance and
  Capacity Building. The Global Competition Law
  Centre Working Papers Series, College of Europe.
  GCLC/02/08.

12
Results of the research

• (a) A good technical assistance programme is one
  that focuses both on what is being provided to
  recipients as well as what can be learned from
  them. Importantly, technical assistance from
  agency providers can serve as a critical first
  step to build an effective, long-term
  relationship in which the provider and recipient
  agencies cooperate on matters and issues of
  common concern after the formal technical
  assistance programme has ended
• (b) Technical assistance is most effective when
  there is long-term engagement between the
  provider and recipient. At least 10 years are
  needed in order for providers to adequately
  acquire knowledge of local conditions, establish
  credibility, and support the formation of strong
  personal relationships
• (c) The provision of technical assistance to more
  mature agencies in WB and supporting institutions
  should not be ignored. Agencies that have been in
  existence for at least several years, but are
  still not at a level comparable to provider
  agencies, can benefit substantially from targeted
  technical assistance

13
Results of the research

• (d) Cooperation between donors, providers, and
  recipients is beneficial, and more and more can
  be done in this regards. Agency providers and
  recipients should work together with
  non-governmental advisors
• (e) Planning and ongoing evaluation of the
  effectiveness of technical assistance programmes
  are essential. Donors, providers and recipients
  should be actively engaged in this process.

14
Results of the research

• In addition to the issues identified above, most
  WB competition agencies have to overcome many
  other challenges in order to create strong
  foundations that would allow them to fulfill
  their legal obligations effectively. Some of
  these challenges are related to the functioning
  of the competition agency. Others are inherent to
  the environment within which the agency operates
  for example
• (i) the limited indigenous expertise on
  competition law and policy, (ii)the lack of
  competition culture,(iii) a deficient judicial
  systems and (iv) a limited access to business
  information.

15
Results of the research

• UNCTAD annual surveys identified
• (a) Conflict with other policy objectives In
  some countries, the governments are reluctant to
  enforce competition law because they, rightly or
  wrongly, believe that these actions unnecessarily
  constrain the ability of the governments to
  exercise their sovereign rights to achieve other
  policy objectives.
• (b) Resistance from vested interests Business
  people are understandably reluctant to see
  profitability eroded by increased competition.
  Thus, it is not unusual for them to petition
  government in order to maintain barriers to entry
  and practices that facilitate collusion.
• (d) Tension with sector-specific regulators
  Despite massive changes in technology, several
  segments of the infrastructure in developing
  countries are natural monopolies, because of the
  limited size of markets and the lack of
  entrepreneurial zeal to make risky investments in
  sectors with high gestation periods.

16
Results of the research

• UNCTAD annual surveys identified
• (e) Resource and capacity constraints Resource
  and capacity constraints are perhaps among the
  most significant problems facing competition
  authorities in developing economies.
• (f) Lack of political will and independence A
  common feature in most young competition
  agencies( not the only ones) is the absence of
  political ownership and support for competition
  policy. This follows both from the power of
  vested interests and from poor governance more
  broadly.
• The absence of political ownership translates to
  political interference in the activities of the
  competition agency, undermining its independence
  as a professional watchdog of competition.
  Several features of the environment in which
  young competition agencies operate have been
  identified. Many relate to the political
  environment and to resistance to the possible
  redistributive effects of effective competition
  policy

17
UNCTAD Capacity building and technical assistance
cycle
18
Review of UNCTAD capacity building activities../..

• At the national level, UNCTAD provides assistance
  related to
• (a) Assistance in the preparation of competition
  and consumer protection laws and related
  legislation
• (b) Consultative meeting to review of draft
  competition laws with representatives of
  governments. These activities represent an
  essential step on the way of competition
  legislation adoption
• (c) Intensive courses on competition laws and
  policies including training courses on
  evidence-gathering in competition cases
• (d) Training courses for judges on issues related
  to competition laws and policies
• (e) Training courses on the implementation of
  competition law for newly appointed
  commissioners and
• (f) Studies and reports on a possible framework
  for cooperation on competition policy, trade and
  related issues for regional integration groupings
  

19
Review of UNCTAD capacity building activities../..

• At the regional level, UNCTAD provides
  assistance related to
• In this regard, UNCTAD worked closely with many
  regional organizations on issues
• related to competition and consumer policies.
  These groupings include ALADI, ASEAN, CARICOM,
  CEMAC, COMESA, ECOWAS, SACU, SADEC , SELA and
  WAEMU.
• COMPAL is a programme on competition and consumer
  protection policies for Latin America, supported
  by the Swiss State Secretariat for Economic
  Affairs (SECO).
• AFRICOMP The new Competition Programme for
  Africa (AFRICOMP) was officially launched in
  Geneva on 22 June 2009.
• Mediterranean Competition Forum project
• Tunis-UNCTAD competition centre

20
Sofia Competition Forum a Cooperative Response

• Competition Authorities in the West Balkans have
  common goals
• Increased informal contacts between competition
  authorities
• Technical consultations competition authorities
  learning from each other
• No one country has all of the answers
• Each competition agency brings unique insight and
  experience based on our own economic development
  experiences
• Competition agencies learn from each other
• Share a common goal competition for the benefit
  of their fellow citizens and business as well as
  regional integration.

21
Issues for discussion

• (a) Are there types or timing of technical
  assistance that are more effective in raising the
  domestic political status of a competition
  agency?
• (b) The optimal duration for a technical
  assistance project in competition law and policy
  to be effective has been estimated at 10 years
  based on the United Sates experience in
  providing this type of assistance. Does the EU
  and its member States and the OECD share the same
  experience?
• (c) Cooperation between donors, providers and
  recipients is beneficial. What can be done to
  make this cooperation winwin for each
  stakeholder? How can coordination and synergy be
  promoted in a context where there seems to be
  competition among providers despite scarcity of
  resources ?

22
Issues for discussion

• (d) Given that the impact of technical assistance
  on recipient authority
• performance appears to vary systematically with
  its absorptive capacity and socioeconomic
  development, how can the absorptive capacity of
  the recipient agency be improved?
• (e) Planning and evaluation of the effectiveness
  of technical assistance
• programmes have been pointed out as essential to
  enhance the enforcement capabilities of a young
  competition agency. What should be evaluated,
  that is, what are the indicators of success or
  failure? When is evaluation most useful, either
  for the recipient or the donor? Does EU DG Comp,
  EU member States and OECD have experience of
  changes made as a result of earlier evaluations?

23
Concluding remarks

• Although there is an agreement about the
  fundamental principles of an effective
  Competition agency
• No one country has all of the answers
• Each competition agency brings unique insight and
  experience based on its own economic development
  experiences
• Competition agencies learn from each other hence
  the need for cooperative intitiatives and
  responses to local and regional needs
• Capacity building should be calibrated to suit
  the circumstances of the beneficiary agency