Drafting Competition Law for Developing Jurisdictions: Learning from Experience

Drafting Competition Law for Developing Jurisdictions: Learning from Experience

Description

How should one draft a competition law for a developing country? Is the project an easy job of mark-up, following the lead of mature jurisdictions? Or is it a complicated and thought-enlisting project that requires knowledge of the terrain, technical expertise, and a talent for synthesizing local market context with global rules and standards? This chapter argues for the latter. Approximately half of all developing jurisdictions have a competition law, and more are considering enacting one. Many enforce their laws, at least to some extent. The laws should be seen in the larger context of competition policy. Competition law and policy reduce anticompetitive barriers and prevent exploitations and abuse. They ease the economic plight of people without power—those who are most vulnerable to inflated prices of necessities of life and to blocked market access. They can help to increase a nation’s economic growth and reduce poverty, and can play a role in distributing gains from trade more widely within society. The colorful quote from Paul Godek misses the point entirely when he says: ‘Exporting antitrust . . . is like giving a silk tie to a starving man. It is superfluous; a starving man has much more immediate needs’. Markets that have at least a minimum level of operating markets and an operating legal system, with competition law to protect them, help fill the starving man’s needs—putting bread on his table and opportunity under his belt. Other social policies work in tandem to address immediate human needs. This chapter assumes the importance of competition and competition law, especially in societies that have persistently supported monopolistic structures and blocked the economic opportunities of the mass of people without power or connections. It explores which legal and institutional designs would best promote effectiveness and efficiency of the competition systems of developing countries at different levels of development. We consider which conditions must exist for a competition law to be successful (in the metaphor above: providing basic nutrition), and we focus on how to design a competition law most likely to take root and flourish in developing countries of particular characteristics. The design of competition law for developing countries presents challenges. One of the most important questions is, as we signalled above, whether developing jurisdictions can appropriately take a competition law (the legislation, the guidelines, the case law) ‘off the shelf’, for instance, the shelves of the European Union, the United States or South Africa, or whether developing countries should devise their own laws, drawing from existing models as appropriate. It has become common cause that, despite many shared goals and principles, no one size fits all. We ask: what is the most effective design of the legal and institutional components of competition laws in developing countries? How should their special characteristics come into play? Even within the universe of developing countries, what differences matter? Most developing countries share several basic characteristics that are explored throughout this book, including scarce human and financial resources, malfunctioning markets, poor infrastructure, systemic poverty, cronyism and corruption. We build on these characteristics to propose a general framework for the design of competition laws in developing jurisdictions. We begin the chapter by addressing the question of why or why not adopt an existing model of competition law. We open with a general analysis of the considerations that may counsel for the adoption of an existing, successful model versus a design to fit the nation’s unique characteristics (section 12.2). We then survey characteristics of developing countries that may inform the design of competition laws (section 12.3). We ask: How should these characteristics inform the design? The analysis first focuses on general implications, such as the level of complexity of the law (section 12.4) and the goals to be furthered by it (section 12.5). We then concentrate on specific areas of competition law, investigating how the special characteristics play out in formulations of law (sections 12.6 to 12.8). To illustrate our suggestions we analyze the experience of selected developing jurisdictions and also examine essential characteristics of three main models (US, South African and EU models). This analysis allows us to expose presumptions about how markets operate and how regulators act. Given our conclusion that the established models do not always fit developing countries’ characteristics, we proceed to conceptualize what would be a good competition law, or a sympathetic range of choices for good competition law, for developing countries of certain characteristics with regard to restrictive agreements, abuse of dominance, and mergers. The chapter closes (section 12.9) with an analysis of some of the ways that external forces can be harnessed to overcome some shortfalls of developing jurisdictions’ competition law.

Source Publication

The Economic Characteristics of Developing Jurisdictions: Their Implications for Competition Law

Source Editors/Authors

Michal S. Gal, Mor Bakhoum, Joseph Drexl, Eleanor M. Fox, David J. Gerber

Publication Date

2015

Drafting Competition Law for Developing Jurisdictions: Learning from Experience

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