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CIRC Conference: Building "Friends of Competition" in India

Creating Competition Culture: Creating Competition Culture: Australian ExperienceAustralian Experience

ByProfessor Allan Fels, AO

Dean, Australia and New Zealand School of Government (former Chairman of the Australian Competition and Consumer

Commission)

24th November 2011

New Delhi, India

REFORM DOES HAPPENREFORM DOES HAPPEN

• Most countries have competition law. Fewer have competition policy

• In the era of the market, competition is critical

• Competition gets some good results• There is some business support for

competition law• Competition institutions get some

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THE FOUR Cs FOR ECONOMIC REFORMTHE FOUR Cs FOR ECONOMIC REFORM

1. Crises

2. Communication

3. Coalitions

4. Commitment

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THE FIRST C: CRISESTHE FIRST C: CRISES

• Can promote support for microeconomic reform

• Will this happen now in Europe? Note Mr Monti as Prime Minister of Italy. Does he have legitimacy?

• Crises, however, can generate anticompetitive outcomes

• This highlights the importance of how crises are framed

• What if there is not a crisis?

• Competition reforms are sometimes part of wider economic reforms

• With or without a crisis, competition reforms may get caught up as part of broader pro-market reforms

Such reforms create momentum for competition policy

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COMPETITION LAW AS PART OF COMPETITION LAW AS PART OF BROADER PRO-MARKET REFORMSBROADER PRO-MARKET REFORMS

• Independent monetary authority• Opening up of economy• Deregulation• Reform of public utilities• Competitive public procurement• Competitive neutrality and state aids

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THE SECOND C: COMMUNICATIONTHE SECOND C: COMMUNICATION

• The important need to communicate the case for competition law and policy initially and at all later stages

• The role of stories• The need for educated leaders• Competition institutions as sources of

communication

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COMMUNICATION REGARDING APPLICATION COMMUNICATION REGARDING APPLICATION OF COMPETITION LAW CREATES SUPPORT OF COMPETITION LAW CREATES SUPPORT

FOR COMEPTITION LAW AND POLICYFOR COMEPTITION LAW AND POLICY• Competition cases have an educative effect

• Competition cases attract publicity– Create understanding of law– The media reports confrontation and conflict – in this case of regulator and

big business– Harms to the community from anticompetitive conduct can be demonstrated– Findings of guilt are of public interest– Business takes notice of individual cases– Importance of strategic view of cases

• Properly enforced competition law builds support for competition law and creates pressure for national comprehensive competition policy

• Enforcement demonstrates commitment of competition law agency to competition policy

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THE ROLE OF MEDIATHE ROLE OF MEDIA

• A potentially valuable ally for reform but note some complications– Self interest of media proprietors– On some issues, media prone to criticise

competition regulator– Claimed job losses due to competition law– “big brother” role of state, especially re

small business– Mergers are often poorly understood– Role of merchant bankers in mergers

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THE THIRD C: COALITIONSTHE THIRD C: COALITIONS

• Big business?• Small business• Consumers• Farmers• Unions• Bureaucrats• Courts• Politicians• Academics • International support

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THE FOURTH C: COMMITMENTTHE FOURTH C: COMMITMENT

• Principles• Machinery• Resources• Independence• Court system• Committed institutions• New interest groups?• Education• Financial rewards?

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CONTRADICTORY ATTITUDES TO CONTRADICTORY ATTITUDES TO COMPETITIONCOMPETITION

• Most people and businesses want to buy from competitive markets and sell into competitive markets

• Most people do not want competition in relation to themselves

• In most cases, overall benefits to individuals of competition policy exceed its costs

• Often people want an exemption for themselves whilst supporting general competition policy

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IDEOLOGICAL ISSUESIDEOLOGICAL ISSUES

• Competition law involves:

a) Seeking competition outcomes

b) Substantial intervention in markets

• Some people support (a) and (b)

• Some support (a) but oppose (b)

• Some support (b) but not (a) – anti big business lobby

• Much support for competition law is really support for anti big business intervention, not for competition

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TRYING TO MAXIMISE NUMBERS IN TOP LEFT HAND CORNER

COMPETITION CULTURE VARIESCOMPETITION CULTURE VARIES

• From one country to another

• From one era to another

• From one part of government to another

• From one level of government to another

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