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2019 | OriginalPaper | Buchkapitel

2. Competition Law in Developing Countries

verfasst von : Julia Molestina

Erschienen in: Regional Competition Law Enforcement in Developing Countries

Verlag: Springer Berlin Heidelberg

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Abstract

The question of whether competition law implementation and enforcement constitutes a relevant concern for developing countries is certainly legitimate. In fact, it was a common view that the implementation of competition laws in developing countries in the first place was not a sovereign decision of these countries, but one that was obtruded by the pressure of foreign international institutions. In the absence of liberalized markets in developing countries, there was little incentive to support the introduction and development of competition laws. Rather, the enactment of competition laws was in some instances made a precondition by the developed world for economic cooperation and trade with developing countries. This perceived imposition, occurring in the context of local markets marked by strong state intervention, constituted and still constitutes a hurdle to effective competition law enforcement in developing countries.

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Vorheriges Kapitel Overview of the WAEMU, the AndeanC and the CARICOM

Nächstes Kapitel Terms and Premises of Regional Competition Law Enforcement

The particular competition law enforcement difficulties of developing countries will be dealt with below in Sect. 2.2.

Marcos also raises this question, see Marcos. Do developing countries need Competition Laws and Policy?, 21–23 September 2006, Madrid, pp. 4ff.

Stewart/Clarke/Joekes. Competition Law in Action, 2007, p. 1. With regard to the competition law experiences in Africa, see Gerber. Global Competition, 2010, p. 250.

With regard to Latin America and Sub-Saharan Africa, see Gerber. Global Competition, 2010, pp. 240ff., 252ff.

Dabbah, 33/3 W. Comp. 457, 459f. (2010); Gerber. Global Competition, 2010, p. 250.

Godek. One U.S. Export Eastern Europe Does Not Need, 15 Regulation 20, 21 (1992) <http://object.cato.org/sites/cato.org/files/serials/files/regulation/1992/1/v15n1-2.pdf#page=11> accessed 11 November 2018. In this context Godek states: “Worrying about antitrust issues shows an unhealthy anxiety about the imagined ills of capitalism. Exporting antitrust to Eastern Europe is like giving a silk tie to a starving man. It is superfluous; a starving man has much more immediate needs. And if the tie is knotted too tightly; he will not be able to eat what little there is available to him.”, Godek: Ibid.. p. 21.

UNCTAD, The relationship between competition, competitiveness and development, 2002, p. 1.

Fox. in: Drexl/Bakhoum/Fox/Gal/Gerber. Competition Policy and Regional Integration in Developing Countries, 2012, pp. 273, 274.

Alvarez/Evenett/Wilse-Samson. in: Alvarez/Wilse-Samson. Implementing Competition-Related Provisions in Regional Trade Agreements, 2007, pp. 59, 61.

Stewart/Clarke/Joekes. Competition Law in Action, 2007, p. 13.

Mateus, Competition and Development: What Competition Law Regime?, 2010, p. 276 <http://ssrn.com/abstract=1699643> accessed 11 November 2018.

Brusick/Evenett, Should Developing Countries Worry about Abuse of Dominant Power?, 2 Wis. L. Rev. 269, 292ff. (2008); Jenny. Cartels and Collusion in Developing Countries, 29/1 W. Comp. 109, 133 (2006).

Jenny. Cartels and Collusion in Developing Countries, 29/1 W. Comp. 109, 134 (2006).

Lachmann. The Development Dimension of Competition Law and Policy, 1999, p. 5 <http://unctad.org/en/Docs/poitcdclpm9.en.pdf> accessed 11 November 2018.

Waked. Competition Law in the developing world, GAR 69, 73 (2008).

On the problematic issue of measuring efficiency of competition law enforcement, see below Sect. 3.3. Mateus, Competition and Development: What Competition Law Regime?, 2010, pp. 276f.

Dutz/Hayri. Does More Intense Competition Lead to Higher Growth?, 2000, pp. 1–25 <http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2320> accessed 11 November 2018. For an overview of the research on the positive effect of competition policy on economic growth, see Mateus, Competition and Development: What Competition Law Regime?, 2010, p. 279 <http://ssrn.com/abstract=1699643> accessed 11 November 2018.

Alvarez/Evenett/Wilse-Samson. in: Alvarez/Wilse-Samson. Implementing Competition-Related Provisions in Regional Trade Agreements, 2007, pp. 59–95; Fox. in: Drexl/Bakhoum/Fox/Gal/Gerber. Competition Policy and Regional Integration in Developing Countries, 2012, pp. 273, 274.

Kovacic, Institutional Foundations for Economic Legal Reform in Transition Economies, 77 Chi.-Kent L. Rev. 265, 296 (2001).

In the same vein, Waked. Competition Law in the developing world, GAR 69, 75 (2008).

Gal, The effects of market size on optimal competition policy, 74 S. Cal. L. Rev. 1437, 1438 (2001).

Gal. Institutional Solutions when Antitrust Enforcement Resources are Scarce, 41 Loy. U. Chi. L.J. 417, 417 (2010); Trebilcock/Iacobucci, Designing Competition Law Institutions, 41 Loy. U. Chi. L.J. 455, 455 (2010).

Kovacic. Creating New Competition Policy Institutions in Transition Economies, 23 Brook. J. Int’l. Law 403, 404 (1997).

For more information on the range and types of developing countries, see Tybout, Manufacturing Firms in Developing Countries, 38 J. Econ. Lit. 11, 13 (2000).

Enforcement difficulties related to deficits in the drafting of a law are deliberately left out. Although the drafting of substantive competition law provisions of developing countries is a problematic issue, it would exceed the scope of this study. For more information on the substantive law of competition law in developing countries, see UNCTAD. Model Law on Competition, 2004; Bakhoum. A Dual Language in Modern Competition Law?, 34/3 W. Comp. 495–520 (2011).

Generally on the interaction between competition law enforcement and the attainment of the Millennium Development Goals, see Alvarez/Evenett/Wilse-Samson. in: Alvarez/Wilse-Samson. Implementing Competition-Related Provisions in Regional Trade Agreements, 2007, pp. 59, 59ff.

Gal, Competition Policy for Small Market Economies, 2003, p. 1; Gal, The effects of market size on optimal competition policy, 74 S. Cal. L. Rev. 1437, 1439 (2001).

Gal, Competition Policy for Small Market Economies, 2003, p. 1.

Gal, The effects of market size on optimal competition policy, 74 S. Cal. L. Rev. 1437, 1439 (2001).

For example India: Although considered a developing country, it is not a small market economy. Israel on the other hand, considered part of the developed world, only constitutes a small market economy. All the examined Member States of the three Regional Trade Agreements can be classified as small market economies.

Gal, Competition Policy for Small Market Economies, 2003, p. 15.

A situation in which the market can only support one efficiently sized firm. Gal, The effects of market size on optimal competition policy, 74 S. Cal. L. Rev. 1437, 1446 (2001); Brusick/Evenett, Should Developing Countries Worry about Abuse of Dominant Power?, 2 Wis. L. Rev. 269, 274ff. (2008).

Cernat. in: Brusick/Alvarez/Cernat. Competition Provisions in Regional Trade Agreements, 2005, pp. 1, 6; Stewart/Clarke/Joekes. Competition Law in Action, 2007, p. 15.

Gal, The effects of market size on optimal competition policy, 74 S. Cal. L. Rev. 1437, 1441 (2001); OECD. Small Economies and Competition Policy: A Background Paper, 2003, pp. 4ff. <http://vi.unctad.org/windiesst09/docs/presentations/wednesday13/oecdsmalleconomybackground.pdf> accessed 11 November 2018.

Brusick/Evenett, Should Developing Countries Worry about Abuse of Dominant Power?, 2 Wis. L. Rev. 269, 276 (2008).

Gal, Competition Policy for Small Market Economies, 2003, p. 22; Gal, The effects of market size on optimal competition policy, 74 S. Cal. L. Rev. 1437, 1447 (2001).

Gal, The effects of market size on optimal competition policy, 74 S. Cal. L. Rev. 1437, 1447f. (2001).

Boza, Tailor-Made Competition Policy in a Standardizing World, 2005, pp. 48ff.

Ibid; Stewart/Clarke/Joekes. Competition Law in Action, 2007, p. 19.

Boza, Tailor-Made Competition Policy in a Standardizing World, 2005, p. 49.

Stewart, An Empirical Examination of Competition Issues in Selected Caricom Countries, 2004, pp. 149f.; Stewart/Clarke/Joekes. Competition Law in Action, 2007, p. 20.

Gal, Competition Policy for Small Market Economies, 2003, p. 36.

Krakowski, Competition Policy Works, 2005, p. 1 <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=854908> accessed 11 November 2018.

UNCTAD, The relationship between competition, competitiveness and development, 2002, p. 13.

Ibid.: In general, the evidence indicates that in countries that are technologically weak, the extent of technology transfer by transnational corporations is correspondingly weak.

In the CARICOM, the tourism sector, the leading economic sector in the Caribbean, is largely owned by foreign-based firms; Stewart, An Empirical Examination of Competition Issues in Selected Caricom Countries, 2004, p. 114f.

Boza, Tailor-Made Competition Policy in a Standardizing World, 2005, p. 10.

Ibid.

UNCTAD, The relationship between competition, competitiveness and development, 2002, p. 14.

Stewart/Clarke/Joekes. Competition Law in Action, 2007, p. 22; UNCTAD, The relationship between competition, competitiveness and development, 2002, p. 7.

Specifically regarding the impact on Latin America, see Connor. in: Fox/Sokol, Competition Law and Policy in Latin America, 2009, pp. 291, 291ff.

Levenstein/Suslow, Contemporary International Cartels and Developing Countries, 71 Antitrust L.J. 801, 804 (2004); UNCTAD, The relationship between competition, competitiveness and development, 2002, pp. 7ff. The vulnerability of developing countries towards international anticompetitive practices prevails irrespective the finding that the duration of international cartels has declined, see Connor. in: Fox/Sokol, Competition Law and Policy in Latin America, 2009, pp. 291, 310.

Unlike the formal economy, the informal sector refers to a part of an economy, which is not taxed, not supervised by the government and not included in the evaluation of the GDP of a country. Due to its nature the informal sector is difficult to measure in statistical numbers.

Tchapga. La politique de la concurrence dans la CEMAC et l’UEMOA, 1 Conc. 237, 239 (2013); Bakhoum. in: Zimmer. The Goals of Competition Law, 2012, pp. 408, 426.

Tokman. Informality in Latin America, 2008, p. 2 <http://wiego.org/sites/wiego.org/files/publications/files/Tokman-Informality_in_Latin_America_2008.pdf> accessed 11 November 2018.

Stewart, An Empirical Examination of Competition Issues in Selected Caricom Countries, 2004, p. 152.

Stewart, An Empirical Examination of Competition Issues in Selected Caricom Countries, 2004, pp. 150ff.

Bakhoum. in: Zimmer. The Goals of Competition Law, 2012, pp. 408, 434.

Stewart, An Empirical Examination of Competition Issues in Selected Caricom Countries, 2004, p. 150. Stewart even describes the informal sector as “safety net” for the disadvantaged parts of society.

Tybout, Manufacturing Firms in Developing Countries, 38 J. Econ. Lit. 11, 13ff. (2000): The conclusions on the scale effectiveness of small firms vary, “(…) some finding that small enterprises are at least as efficient as others, and others finding their efficiency relatively low” (p. 18).

Baetge, Globalisierung des Wettbewerbsrechts, 2009, pp. 44ff.; Bakhoum. A Dual Language in Modern Competition Law?, 34/3 W. Comp. 495, 509 (2011); UNCTAD, The relationship between competition, competitiveness and development, 2002, p. 5; Alvarez/Horna, Implementing competition law and policy in Latin America: The role of Technical Assistance, 83 Chi.-Kent L. Rev. 91, 107 (2008).

Mehta/Agarwal/Singh, Politics Trumps Economics, 2007, p. 16.

Ibid.

In this regard see Smith-Hillman: “Incomplete privatization enables the State to maintain a dominant position in several industries, potentially laying the basis for the abuse of a dominant position funded through access to public funds.”, Smith-Hillman. The Prospect of a Caribbean Competition Policy, 40 J. W. Trade 405, 416 (2006).

This argument is also applied in the developed world, for example in the context of a preferential treatment of the telecommunication or electronic sector.

Trebilcock/Iacobucci, Designing Competition Law Institutions, 41 Loy. U. Chi. L.J. 455, 467 (2010); Gal. Institutional Solutions when Antitrust Enforcement Resources are Scarce, 41 Loy. U. Chi. L.J. 417, 468 (2010); Dabbah, Competition Law and Policy in Developing Countries, 33/3 W. Comp. 457, 468 (2010).

Even in relatively developed competition law regimes such as Jamaica (since 1994), there are only few competition law experts, see Stewart, An Empirical Examination of Competition Issues in Selected Caricom Countries, 2004, p. 18.

Dabbah, Competition Law and Policy in Developing Countries, 33/3 W. Comp. 457, 468 (2010).

Kovacic. Creating New Competition Policy Institutions in Transition Economies, 23 Brook. J. Int’l. Law 403, 437 (1997).

Stewart/Clarke/Joekes. Competition Law in Action, 2007, p. 29.

Kovacic, Institutional Foundations for Economic Legal Reform in Transition Economies, 77 Chi.-Kent L. Rev. 265, 308 (2001); Bakhoum. A Dual Language in Modern Competition Law?, 34/3 W. Comp. 495, 509 (2011).

Dabbah, Competition Law and Policy in Developing Countries, 33/3 W. Comp. 457, 469 (2010).

Gal. The Unique Enforcement Challenges Faced by Small Economies, 33 Fordham Int’l. L.J. 1, 20 (2009).

Gal. The Unique Enforcement Challenges Faced by Small Economies, 33 Fordham Int’l. L.J. 1, 23 (2009).

For developing countries it is in particular difficult to enter into cooperation agreements with developed jurisdictions. For more details on this problematic issue see below in Sect. 2.2.4.

Salah, M. M. notes that codes of investments have more and more become canvassers: “On note ainsi que les codes des investissements se font de plus en plus racoleurs!”. See Salah M.M. La Mise en Concurrence des Systèmes juridiques nationaux, XV R.I.D.E. 251, 281 (2001).

On the interdependencies of economic development, poverty and competition law and policy, see Fox. Economic Development, Poverty, and Antitrust: The Other Path, 13 Sw. J.L. Trade Americas 101 (2007); Fox. in: Drexl/Bakhoum/Fox/Gal/Gerber. Competition Policy and Regional Integration in Developing Countries, 2012, p. 273 Gerber. in: Drexl/Bakhoum/Fox/Gal/Gerber. Competition Policy and Regional Integration in Developing Countries, 2012, p. 253.

On different forms of antitrust enforcement, see Borrell, Choosing among American, European, or no antitrust at all, 2005 <http://ssrn.com/abstract=669282> accessed 11 November 2018.

This research relies on a broad definition of the term “political”. “Political” thus refers to any action of an individual or institution that is based on the creation, exercise or maintenance of political authority.

Gerber. in: Drexl/Bakhoum/Fox/Gal/Gerber. Competition Policy and Regional Integration in Developing Countries, 2012, pp. 253, 253.

Public-choice-theory-related considerations are deliberately left out, because they are not a distinct feature of developing countries’ institutions, but may also apply to institutions of developed jurisdictions. See Dabbah, Competition Law and Policy in Developing Countries, 33/3 W. Comp. 457, 466 (2010).

Clark. Competition Advocacy: Challenges for Developing Countries, 6/4 OECD J. Comp. L. Policy 69, 70 (2005).

OECD. Small Economies and Competition Policy: A Background Paper, 2003, p. 8 <http://vi.unctad.org/windiesst09/docs/presentations/wednesday13/oecdsmalleconomybackground.pdf> accessed 11 November 2018.

Stewart describes the Caribbean societies as “extremely stratified, with a strong correlation between race, class, unequal distribution of wealth and income that creates a ‘caste’ system and generates social tension and instability.” See Stewart. in: Drexl/Bakhoum/Fox/Gal/Gerber. Competition Policy and Regional Integration in Developing Countries, 2012, pp. 161, 163f.

Regarding “The phenomenon of short-lived governments”, see Dabbah, Competition Law and Policy in Developing Countries, 33/3 W. Comp. 457, 465 (2010).

This was the case in Venezuela, in which the private sector has been expropriated in the context of creating a socialist market system. In October 2013, the High Authority for the People’s Defence Economy, the highest supervisory body for private production, was created. For more information see Curiel Leidenz. in: Drexl/Bagnoli. State-Initiated Restraints of Competition, 2015, pp. 213–238.

Gerber. in: Drexl/Bakhoum/Fox/Gal/Gerber. Competition Policy and Regional Integration in Developing Countries, 2012, pp. 253, 260. For more information see below in Sect. 2.2.3.2.

Alvarez/Horna, Implementing competition law and policy in Latin America: The role of Technical Assistance, 83 Chi.-Kent L. Rev. 91, 104 (2008).

Baetge, Globalisierung des Wettbewerbsrechts, 2009, pp. 48ff.

Alvarez/Horna, Implementing competition law and policy in Latin America: The role of Technical Assistance, 83 Chi.-Kent L. Rev. 91, 95 (2008).

On the general role of competition advocacy, see Evenett, Competition Advocacy, 26 Nw. J. Int’l. L. Bus. 495, 495ff. (2006).

Fox. Economic Development, Poverty, and Antitrust, 13 Sw. J.L. Trade Americas 101, 105ff. (2007).

Jenny inter alia highlights concentrations in trade or price-fixing as prominent anticompetitive practices in developing countries. From empirical evidence he sees that the following sectors are mostly affected by anticompetitive practices: bread, chicken, beer, retail distribution, cement, aluminium, steel, telecommunications, railways, bus services, freight, professional services. See Jenny. Cartels and Collusion in Developing Countries, 29/1 W. Comp. 109, 113ff., 132ff. (2006).

Mehta/Agarwal/Singh, Politics Trumps Economics, 2007, p. 23.

Krakowski, Competition Policy Works, 2005, p. 14 <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=854908> accessed 11 November 2018.

In this vein, in the WAEMU, national governments are often called upon by consumers to provide for prices and quality products, for example via price-fixing; see Bakhoum. A Developing-Country Perspective on “Global Competition”, 28 October 2011, Chicago, p. 14.

Apart from the discussion on the necessity to provide special rules for minorities, there is also a general ongoing debate on the appropriate goals of competition law in developing countries, see this regard Bakhoum. in: Zimmer. The Goals of Competition Law, 2012, pp. 408–440.

100

This is particularly the case in the Caribbean. Stewart states in this regard: “The role of colour is still very much a factor in social mobility. The race factor impinges natively on access to finances and other support systems, and stifles entrepreneurship.”, see Stewart. in: Drexl/Bakhoum/Fox/Gal/Gerber. Competition Policy and Regional Integration in Developing Countries, 2012, pp. 161, 164.

101

In this context, the case of the Peruvian competition authority, INDECOPI, on a case of alleged racial discrimination in 1998 offers interesting insights on the Peruvian society. A Peruvian newspaper published a letter of the editor Lenkiza Valcárcel, in which she complained of an alleged racial discrimination against her darker skinned friend by an upscale club bouncer in Lima. Despite the lack of an unambiguous competence provision of the INDECOPI, the latter decided to proceed based on economic and market considerations, instead of strictly human rights issues. For more information on the case see Boza, Tailor-Made Competition Policy in a Standardizing World, 2005, pp. 62ff.

102

This is the case in the Caribbean. According to Stewart “(…) the majority of the black population [is left] in poverty and [is] engaging in informal economic activities to survive.”, see Stewart. in: Drexl/Bakhoum/Fox/Gal/Gerber. Competition Policy and Regional Integration in Developing Countries, 2012, pp. 161, 170.

103

Stewart/Clarke/Joekes. Competition Law in Action, 2007, p. 23. South Africa is a very prominent example for this. Its competition law includes special public policy considerations that aim at the alleviation of (often historically created) economic inequalities. For more information on the new South African competition law, see Lewis. Enforcing Competition Rules in South Africa, 2013, pp. 5ff.

104

Stewart/Clarke/Joekes. Competition Law in Action, 2007, p. 23.

105

Stewart. in: Drexl/Bakhoum/Fox/Gal/Gerber. Competition Policy and Regional Integration in Developing Countries, 2012, pp. 161, 164; Stewart, An Empirical Examination of Competition Issues in Selected Caricom Countries, 2004, p. 121; Stewart/Clarke/Joekes. Competition Law in Action, 2007, p. 23.

106

<http://www.internationalcompetitionnetwork.org/> accessed 11 November 2018.

107

UNCTAD, The relationship between competition, competitiveness and development, 2002, p. 8.

Titel: Competition Law in Developing Countries
verfasst von: Julia Molestina
Verlag: Springer Berlin Heidelberg
Buch: Regional Competition Law Enforcement in Developing Countries
Print ISBN: 978-3-662-58524-5

Electronic ISBN: 978-3-662-58525-2

Copyright-Jahr: 2019
DOI: https://doi.org/10.1007/978-3-662-58525-2_2