The last two decades have seen most developing economies in the world, including those once committed to central economic planning, taking great efforts in their progression toward the market economy. In this agenda for reform of most these countries, comprehensive development of the legal and regulatory framework has been a focus, with competition law and policy as an integral part, especially now that the need for, and the role of, such a law and policy in the development process is broadly accepted in principle.
From an antitrust-centric point of view, competition law and policy prohibits various restraints of trade and creates public or private rights of actions to enforce such prohibitions. By keeping a check on concentration of economic power, outlawing and penalising rent-seeking behaviours, preventing anti-competitive practices by dominant firms, eliminating artificial restrictions on entry, exit and pricing in industries where they exist; competition law and policy ensures the competitive operation of the market, thereby providing individual entrepreneurs, small and medium sized business with opportunities for participation in the economy, and providing the consumer with reduced prices, better quality and wider choices by firms; all toward the ultimate goal of economic efficiency, growth and equity. A country with an effective competition legislation is also equipped with the legal instrument to either individually or through cooperation with foreign counterparts to challenge firms’ cross-border anti-competitive market behaviour, which is a rising phenomena in the liberalisation and globalisation context.
From an integrated perspective, as regulatory reforms stimulate structural changes, effective enforcement of competition law and policy is needed to prevent private market abuses from reversing the benefits of reforms, especially in developing countries where the low level of policy effectiveness and economic management capacity can easily facilitate economic and political turmoil on the way to market systems. Furthermore, as there is now widespread recognition, one of the most important contributions of a competition policy regime, especially in reform processes, other than antitrust law enforcement, is to serve as a an advocate within the government and the country at large for reliance on market processes and business rivalry to organise economic activity. A competition authority can supply an institutional counterweight within the government to promote liberalisation measures and resist overt or subtle efforts to sabotage market-oriented reforms. Through a variety of advocacy and education activities, the competition agency can provide valuable support for policy measures, ensuring the appropriate role of government intervention in the economy and the correct choice of strategies for promoting growth; for example through participating in developing privatisation programme, advising legislators on drafting economic reform legislations, and participating in regulatory proceedings conducted by other government institutions with authority to determine competition policy in specific economic sectors.
It is well-recognised, nonetheless, that in order to achieve all the aforementioned policy objectives and contribute most to the reform cause, competition laws and policies in developing countries must be well-adapted to their national development circumstances, taking into account all the local economic, social, and cultural dimensions, etc and by no means a copy or derivative of developed-country style laws. They are also to be supported and promoted by efficient institutions, which are well equipped with sufficient capacity and skills. Toward such policies and concomitant institutions, in our view, it is necessary, at the first instance, for developing countries to foster public acceptance as well as widespread participation and contribution of various national stakeholders into the policy-making process; build up the capacities and skills of the [future] competition authority and complementary institutions. In the whole process, it is important for them to learn from their own experiences. Externally, sharing and comparing the learnings with other country’s experience will also help them to overcome the impediments to having an effective competition regime.
Given the above background, the present project (codenamed as the 7-Up MARK II Project) endeavours to accelerate the process toward a formal competition law and policy, which has been absent until now in three developing countries, viz.Cambodia, Lao PDR and Vietnam; and advance the environment in which the law and policy can be enforced for better results; through various research-based advocacy and capacity building activities.
The three Mekong countries viz. Cambodia, Laos and Vietnam, are selected to be beneficiaries of this project. All are pursuing market-oriented reforms, which entail an explicit demand for an effective competition law and policy. Given the local capacity and resource constraints, technical assistance is needed. The need has been underscored by the integration and cooperation process of these countries into regional and multilateral economic systems. Specifically, it is the immediate task of catching up with other country members of ASEAN, the regional cooperation framework of which they have recently acceded to, and the accession process into the WTO. Moreover, given the strong links between these three countries (geographical, cultural, historical, socio-political, economic, etc.), a comparative study and integrated advocacy-cum-capacity-building programme among them will be a practical approach to cross-fertilise and consolidate expertise and resources from the perspectives of developing countries, helping to achieve synergies and contribute to policy and performance developments in the competition area in all the three. Whereas, CUTS, as a developing country-based research-cum-advocacy group with rich experience as regards competition law and policy and a vast network of contacts in the developing world; can stand out as the optimal deliverer of the needed technical assistance to the project countries (More about CUTS at www.cuts-international.org).
In order to accomplish the Mission: “Enabling the regulatory framework through effective competition regimes” and to achieve its goals (as mentioned below) the project, in brief, will:
prepare an economic mapping and inventory of laws in each of the project countries, from the perspective of their market-oriented reform efforts, progresses, problems, etc and the development of an economic regulatory framework and institutions;
conduct a survey of the existing policy framework for competition in each of the three project countries covering competition-specific provisions embodied in various legislations, competition rules in sectoral regulation, organisation and division of responsibilities between law enforcement institutions (including courts, dispute settlement mechanisms, etc); with special attention on the competition aspects of the reform process in these countries, for example in liberalisation, privatisation, regional and international integration, etc;
collect information on the nature of market/competition and the prevailing anti-competitive practices in project countries, as well as the effects of cross-border competition issues on their economies;
assess the effectiveness of the policy regime as well as institutions in place in the project countries in preventing, handling or remedying domestic and cross-border restrictive business practices;
identify problems in the economic regulatory framework of each country and, henceforth the need for and potential role of a competition legislation in the country;
initiate policy debates and promote contributions from the civil society and the private sector to the legislation and hence advocate for its promulgation and enforcement from the bottom;
generate policy recommendations relevant to other LDCs and developing countries paying due regard to national economic, social and cultural differences;
build capacity in understanding competition issues and policies with all stakeholders, especially civil society, as well as promote respect and social responsibility toward the effective implementation of the legislation;
help build domestic constituencies for policies which promote ‘reliance on market processes and business rivalry to organise economic activity’, with competition law as the core regulatory instrument;
carry out training and capacity building for government officials, civil society representatives at national and regional levels through workshops, courses and distribution of reader-friendly materials, etc;
help the project countries, as well as other developing countries with similar contexts, to establish their interests and develop capacity to articulate their positions and views when dealing with issues related to competition in different international fora; and
coordinate with relevant institutions working in the same field to synergise and link the outputs in the form of sound developing country-style competition policy, for optimum utilisation of the resources available for policy formulation.