Political economy constraints in implementing competition law regimes in developing countries Maher...

Political economy constraints in Political economy constraints in implementing competition law regimes implementing competition law regimes

in developing countriesin developing countries

Maher M. DabbahMaher M. Dabbah

DirectorDirectorInterdisciplinary Centre for Competition Law and Policy (ICC) Interdisciplinary Centre for Competition Law and Policy (ICC)

Queen Mary, University of LondonQueen Mary, University of London

7Up4 Project7Up4 ProjectCUTS International CUTS International

The GambiaThe Gambia

30 July 200930 July 2009

1.1. Introduction Introduction

The unique circumstances of developing The unique circumstances of developing countries: political, economic, social and countries: political, economic, social and culturalcultural

The constraints:The constraints: Political constraintsPolitical constraints Influence of foreign countries and firmsInfluence of foreign countries and firms The role of the government in the economyThe role of the government in the economy Institutional parameters within the regimeInstitutional parameters within the regime Scope of the lawScope of the law Lack of awareness of the concept of competition Lack of awareness of the concept of competition

and its importanceand its importance

2.2. Political constraintsPolitical constraints

Governments which are made of Governments which are made of coalitionscoalitions

Ideological disagreements are likely Ideological disagreements are likely to ariseto arise

Achieving political compromises and Achieving political compromises and consensusconsensus

The problem of short-lived The problem of short-lived governments and short tours of governments and short tours of politicians in ministerial positions politicians in ministerial positions

3.3. Influence of foreign Influence of foreign countries and firmscountries and firms

A developing country may not necessarily A developing country may not necessarily be 100% in control of its own political and be 100% in control of its own political and more relevantly its economic affairsmore relevantly its economic affairs

Dilemmas are very likely over the extent Dilemmas are very likely over the extent and effectiveness of competition and effectiveness of competition enforcement when foreign firms are enforcement when foreign firms are involvedinvolved

Bargaining power of foreign firms may be Bargaining power of foreign firms may be particularly strong and they may enjoy the particularly strong and they may enjoy the backing of their own governments.backing of their own governments.

And of course there is the serious And of course there is the serious phenomenon of lobbying, especially by phenomenon of lobbying, especially by special interests special interests

4.4. Role of the government in Role of the government in the economythe economy

The need for government control is The need for government control is the subject of heated debatethe subject of heated debate

Governments: protecting the greater Governments: protecting the greater good of citizens and upholding the good of citizens and upholding the principle of social responsibility are principle of social responsibility are supreme because people prefer and supreme because people prefer and feel safe with public controlfeel safe with public control

Non-government voices: no real Non-government voices: no real evidence of this!evidence of this!

Role of the government in the Role of the government in the economy . . Cont./economy . . Cont./

Heavy government involvement is Heavy government involvement is problematicproblematic Local private firms may be Local private firms may be excludedexcluded: :

one example is the construction sector one example is the construction sector and the need to secure loansand the need to secure loans

The government may operate a market The government may operate a market sharing, price-fixing agreement in sharing, price-fixing agreement in partially privatised marketspartially privatised markets

5.5. Fixing institutional Fixing institutional parametersparameters

The QuestionsThe Questions Who should have responsibility for enforcing the Who should have responsibility for enforcing the

law? law? Should the relevant competition body in question Should the relevant competition body in question

be independent or part of the executive branch? be independent or part of the executive branch? Should courts have a role to play in the Should courts have a role to play in the

enforcement of the law and if yes, what should enforcement of the law and if yes, what should that be? that be?

What resources (including human and financial What resources (including human and financial resources as well as expertise) are needed and resources as well as expertise) are needed and how can these be secured? how can these be secured?

In case where more than one actor is involved in In case where more than one actor is involved in the operation of the regime how can one ensure the operation of the regime how can one ensure that bureaucracy of the regime would not derail that bureaucracy of the regime would not derail enforcement actions? enforcement actions?

Fixing institutional parameters Fixing institutional parameters . . Cont./. . Cont./

Two specific issues of particular Two specific issues of particular importance and deserve attention:importance and deserve attention: FIRSTFIRST: Structure, composition and powers of : Structure, composition and powers of

the relevant competition authoritythe relevant competition authority Lack of independenceLack of independence Political intervention and pressure: statutory and Political intervention and pressure: statutory and

non-statutory basednon-statutory based ‘‘Doubling’ of officialsDoubling’ of officials

SECONDLYSECONDLY: Lack of expertise: Lack of expertise Difficulty in attracting talent and expertise to new Difficulty in attracting talent and expertise to new

competition authoritiescompetition authorities

6.6. Scope of the lawScope of the law

Narrowing down the meaning of key Narrowing down the meaning of key terms such as ‘entities’, terms such as ‘entities’, ‘undertakings’, ‘persons’, ‘companies’ ‘undertakings’, ‘persons’, ‘companies’ etc. to EXCLUDE public bodiesetc. to EXCLUDE public bodies

Limiting the definition of terms such Limiting the definition of terms such as ‘collusion’ to ‘written’ contracts as ‘collusion’ to ‘written’ contracts and agreements and not mentioning and agreements and not mentioning ‘conspiracies’, ‘concerted practices’ ‘conspiracies’, ‘concerted practices’ etc.etc.

Use of exemptions and exclusionsUse of exemptions and exclusions

Scope of the law . . Cont./Scope of the law . . Cont./

Role of non-competition Role of non-competition considerations:considerations: Employment; general economic Employment; general economic

development etc.development etc. Existence of political pressureExistence of political pressure

Bundling competition and non-Bundling competition and non-competition elements in the Law:competition elements in the Law: Trade policy; unfair competition; anti-Trade policy; unfair competition; anti-

dumping; and price control dumping; and price control

7.7. Lack of sufficient Lack of sufficient awareness of the concept of awareness of the concept of

competitioncompetition This is very evident This is very evident The mentality of ‘defeating’ The mentality of ‘defeating’

competitors through dishonest and competitors through dishonest and fraudulent practicesfraudulent practices

Undermining private forces Undermining private forces deliberately by public forces to deliberately by public forces to ensure superiority of public sectorensure superiority of public sector

8.8. Role of international Role of international organisationsorganisations

Important contribution made by different Important contribution made by different international organisations international organisations mustmust be be acknowledged especially in relation to:acknowledged especially in relation to: Enacting competition legislationEnacting competition legislation Capacity building and technical assistanceCapacity building and technical assistance Reviewing competition regimes for Reviewing competition regimes for

improvement etc. improvement etc. Concerns of developing countries:Concerns of developing countries:

Need to avoid a top-down approach at all Need to avoid a top-down approach at all costcost

Need to have a dialogue Need to have a dialogue

Thank you!Thank you!

Maher M. DabbahMaher M. Dabbah

Email: [email protected] Email: [email protected]

Political economy constraints in implementing competition law regimes in developing countries Maher...

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