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Effective tools of antitrust policy to minimize the negative impact of trade integration processes and the
development of fair competition
Astana Forum24 May ,2014
Hassan QaqayaHead, Competition and Consumer Policies , UNCTAD
Tools for effective regional cooperation on competition policy: an outline
• Complementarily between trade and competition • policies• Trade liberalization, competition and growth• Implications for competition and market structure• A cooperative response
– Competition provisions in TRAs– Substantive areas of cooperation
• Differences and common ground
Complementarily between trade and competition policies
• Free trade promotes benefits of free markets – competition laws secure those benefits
• Pressure by privatization and FDI– investment security anddevelopement objectives
• Trade Agreements contain provisions requiring implementation of competition laws
• Deregulation in industries and foreign competition
Trade liberalization, competition and growth
• New market entrants – foreign competition• Greater competition in national , regional and
international markets• Increased product and service choice for
consumers• Increased innovation• Opportunities for national businesses at home
and abroad (National Champions)
Implications for competition and market structure• Increase in merger and acquisition activity• Foreign acquisitions of leading national firms• Tension between competition and concerns about foreign
investment• Increased trade = increased potential for cross-border
anti-competitive activity• Increased case load = increased pressure on agency
resources• Remedies for anti-competitive activity may require action
in territory of another country
A Cooperative Response
• Competition Authorities have common goals• Increased informal contacts between
competition authorities• Establishment of formal cooperation protocols
between competition authorities including through TRAs for example EURASIA Agreement on competition rules and principles, 2010
A Cooperative Response
Interoperability:
• Case-related information sharing between competition authorities
• Coordination of enforcement activity
• Technical consultations – competition authorities learning from each other
• Application of principles of comity
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Africa
Asia
Latin America and the Caribbean
Agreements with the EU
EURASIA
- CEMAC, UEMOA/WAEMU
- COMESA, EAC
- SACU, SADC
- ASEAN- SAARC - APEC
- MERCOSUR
- Andean Community
- CARICOM
- NAFTA (+ US & Canada)
- Latin American FTAs (US-Peru, US- Colombia, US- Chile)
Which RTAs containing CRPs are we referring to?
- EFTA
-Pre-accession agreements
-Euromed, EU-SA TDCA, EU-Mexico, EU-Chile, EU-Andean Community, EU-Central America (in preparation)
-Economic Partnership Agreements EPAs?
-Belarussia
-Kazakhstan
-RUSSIA
RTAS in effect or under negotiation (as of May 2012)
Notified to WTO
Concluded but not
notified to WTO
Under negotiation DC Total
Share (percent)
Total agreements by DCs 76 34 39 149 100of which: USA is a partner 3 2 4 9 6 Canada is a partner 4 0 3 7 5 EU of EFTA is a partner 24 5 5 34 23 Japan is a partner 1 0 1 2 1 FSU/CIT is a partner 16 0 0 16 11 Intra-DCs 27 26 23 76 51
Total Agreements by Developed and DCs 155 83 46 283
Notes: DCs = Developing Countries; FSU/CIT = Former Soviet Union and other "countries in transition".a) Agreements are counted only once, even if they are notified to the WTO under both GATT Article 24 and GATT Article 5. However, NAFTA is counted twice, as US-NAFTA and Canada-NAFTA.b) Current negotiations on a FTAA are counted twice as US-DC and Canada-DC; similarly the Canada-EFTA FTA is counted under Canada and under EFTA.
Sources: WTO (http://www.wto.org/english/tratop_e/region_e/region_e.htm) and unpublished data sheets from WTO Secretariat.
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A cooperative response
Content of the Agreements:– Main aim: challenge anti-competitive practices and state
aids that would be illegal under EU lawEU-South Africa (SA) TDCA (1999):
– Opportunities for securing market access;– In merger cases in SA, informal cooperation has taken
place, even though not covered by the TDCA. EU-Mexico
– Large number of notification provisions, used predominantly by Mexico (31 as opposed to 1)
Euro-Med:– More harmonization than EU-SA or EU-Mexico. use
countervailing duties if EU State aid rules applied
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EU FTAs
Substance of competition policy Reference to legislation
Technical cooperationMergers &
acquisitionsAbuse of dominant position
Concerted practices
Public (state-
aid)
Mutual recognition
of legislation
Sole reference
to EU legislation
Ban on positive
discrimination for
commercial state
monopolies
Ban on special an exclusive rights for (public)
enterprises
Algeria & Lebanon
MED 1
Israel MED 2
Morocco, Jordan,
Palistinian authority &
Tunisia MED 3
South Africa
Mexico
Chile
Szepesi, S. (2004) «Comparing EU free trade agreements, Competition Policy and State Aid » European Center for Development Policy Managment (ECDPM)
Evolving characteristics of competition provisions in EU agreements
Vertical Restraints
• Enforcement policies differ significantly;• Generally VR are subject to economic evaluation;• Other non traditional criteria:
– Trade related issues;– Market power;– Foreign Direct Investment– Privatisation– Regional integration
Abuse of Dominance
1. Core concept of dominance is similar in most competition laws;
2. Differences in definition of thresholds;3. Differences in thresholds to trigger
investigations;4. Differences in approach to what
constitute legitimate business and abuse of dominance or unlawful monopolisation
Abuse of Dominance:Special criteria in competition laws of the developing partners
• Abuse exploitation of economic dependence is generally prohibited;
• Certain legislation prohibit abuse even where there is no dominant position;
• Significant differences among competition law and enforcement policies relating to joint-ventures;
• Considerations are given to industrial policy, competitiveness, SME and public interest
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Competition Provisions in RTAs:
Follow the logic that trade needs to be freed from enterprise-level distortions
May contain a commitment for both parties to adopt (and enforce) competition legislation
May provide for Special & Differential Treatment (S&D): safeguards interests of less–developed partners, exceptions to key sectors, transitional time periods, technical assistance
For developing countries: non-reciprocal S&D
Exchange of information subject to confidentiality rules
A cooperative response :Substantive areas of cooperation
1. Variety of objectives:2. Blurred criteria;
• Trend towards emphasis on efficiency, consumer protection and competitiveness.
3. Differences in priority attached to competition policy vis-à-vis other policy objectives
4. Different approaches for the control of anti-competitive practices:
« Standards »« Prohibitions » or « abuse »
5. Different techniques used for analyzing markets.
Differences and common grounds
Despite substantial differences among competition laws and enforcement policies, there is now sufficient common ground to form the necessary substantive basis for strengthened cooperation as provided for in the different TRAs agreements.
However, need to clarify scope of such common ground and exchange views on remaining differences
General Criteria and Methods../cont
1. Process of convergence: universal condemnation of collusive practices (with some exemptions);
2. Joint ventures examined case by case;
3. Among VR only RPM is generally a per se prohibition.
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New
Publication of the dissemination phase
Current problems facing developing countries and economies in transition in implementing competition provisions in RTAs
South-South agreements:
Ensure that markets are not subject to abuses of power;
North-South agreements:
Regional competition rules can potentially reinforce the bargaining position of developing economies challenging anti-competition practices at international level
?
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UNCTAD research on Implementing Competition Provisions in RTAs cont’d
• Need for strengthened coordination between trade and competition negotiators
• Sharing experiences in regional and international for a, success/failure stories of different jurisdictions
• Competition chapters and competition principles
• Avoid past experience of signing agreements without tools for implementation
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Need to rationalize commitments relating to competition provisions
Ensure coherence of competition (and other) provisions across agreements
More effective competition law enforcement: key for increased co-operation
However, different legal and administrative systems and capacities: no “one size fits all”
