Bulletin n°1 | Monday, July 6, 2015
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ABOUT THIS BULLETIN

From 6-10 July, UNCTAD is hosting the Seventh Review Conference of the founding multilateral agreement on competition policy: the United Nations Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices (UN Set). CUTS is there to update you on the proceedings.
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Opening

Joakim Reiter, Deputy Secretary-General of UNCTAD

In opening the conference, Mr. Joakim Reiter, Deputy Secretary-General of UNCTAD, emphasized the paramount importance of the UN Set on Competition Policy for achieving more efficient markets and governance. He noted that the UN Set represents a strong instrument for enhancing consumers’ choices and growth diversification, and emphasised that it is to date the only truly multilaterally agreed set of rules on competition. Therefore, this conference is virtually the only universal forum in this area.

He recalled that the international community has, for decades, recognized the importance of controlling restrictive business practices. Over the years, significant improvements in regulation and trade openness have already been made, and other organizations and networks have taken up some aspects of competition policy, including the OECD, the World Bank and the International Competition Network. He underscored that international cooperation, trade and competition policies have a fundamental role to play for enhancing innovation, healthy competition and service provision, with the objective of contributing to the accomplishment of a sustainable and inclusive growth for all. In fact, competition policy has to be understood as a key factor in the process of achieving the sustainable development goals that the international community this year will commit committed to achieve.

He concluded by saying that the review of the UN Set that is being undertaken this week is a sizable and impressive venture that is also an example of UNCTAD at its best. The voluntary peer reviews, the meeting of the UNCTAD research partnership platform to be held later during the week, all of these activities exemplify what UNCTAD’s inclusive consensus-building, analytical expertise, and technical cooperation activities can accomplish for its Member States.

High-level Roundtable

The Role of Competition Policy in Promoting Sustainable and Inclusive Growth and Development

This high-Level roundtable addressed key issues of the role of competition policy in promoting sustainable and inclusive growth. In June 2014, the Intergovernmental Group of Experts on Competition Law and Policy (IGE) had requested UNCTAD to prepare a background note on the issue, which was presented today for discussion.

session photoThe presentation by UNCTAD highlighted elements for the development of a sound competition policy able to contribute to sustainable and inclusive development. Key among them was the importance of prioritisation in effective competition law enforcement, whereby competition agencies with limited resources could focus on addressing possible anticompetitive practices in identified priority sectors essential to people welfare. One such sector is typically agriculture, which is often subject to special treatment by competition laws. For instance, small producers may be granted exemptions that allow them to sign cooperation agreements with each other towards strengthening their bargaining power vis-à-vis the larger firms they deal with. It was also noted that standard provisions in competition law fall short of addressing unfair business practices (e.g. abuse of bargaining power), making a case for additional regulation that focuses on fair competition. It was also stressed that competition policy should be seen as complementary to other policies. Finally, competition policies may be designed in a way that promotes inclusive growth and sustainable development, e.g. through provisions on fairness of competition, or public interest objectives including on employment, citizen empowerment, SME market access etc.

The importance of market access for people without power was underscored by Prof. Eleanor Fox of the New York University, who advocated for its inclusion as a sustainable development goal. However, people need to be convinced that markets can work for them and not only for the elite. Competition authorities can play an important role in this regard by effectively protecting people from monopolistic strategies and mergers, appropriately grant exemptions, and tackling the problem of international input cartels.

José María Marín, President of the National Commission of Markets and Competition of Spain showcased empirical evidence of the effects of competition policy on sustainable development, particularly when competition policy objectives specifically include social welfare objectives. The importance of antitrust enforcement and advocacy was also highlighted, as well as the need for competition authorities to be independent from political power and pressure groups.

Theodor Thanner, Director-General of the Austrian Competition Authority Competition reminded that competition policy constitutes only one element which needs to work in synergy with a set of other factors conducive to a competitive environment (e.g. regulatory reform, trade openness, governance etc.). He noted that, looking at the broad picture, there is generally a positive relationship between competition and other policy goals (e.g. social, environmental). However, potential conflicts with other policy areas may arise at the individual level, and competition authorities should therefore maintain communication with other policy stakeholders. He concluded by stressing the paramount importance of international cooperation, espacially case-to-case cooperation.

Pradeep Mehta, Secretary-General of Consumer Unity & Trust Society (CUTS International), identified that competition reforms contributes towards several sustainable development goals both directly and indirectly. A direct linkage can be drawn with goal n°8 which aims at inclusive economic growth and productive employment, as well as with goal n°9 which targets resilient infrastructure, sustainable industrialisation and innovation. In addition, and as evidence from CUTS’ CREW project suggests, indirect linkages exist with several other SDGs. These include: ensuring healthy lives (goal n°3); quality education (goal n°4); women empowerment (goal n°5); management of water and sanitation (goal n°6; and access to energy (goal n°7). He encouraged practitioners and scholars to consider these less obvious links. He also suggested that SDGs should be used as an opportunity to demonstrate how competition reforms can lead to tangible and measurable impacts, citing CUTS’ CREW approach as an example. He concluded by emphasising that the challenge for the competition community is now to specifically identify the relevance of Competition & Regulatory Reforms in meeting the SDGs.

Finally, Alejandro Ildefonso Castañeda, Commissioner at the Federal Economic Competition Commission of Mexico discussed recent empirical evidence of the contribution of competition policy to productivity and growth. In the case of Mexico, there was evidence of the positive short-term impact of trade liberalization as a competitive pressure on increasing investment and reduction of input costs. In addition, competition reform also facilitates the ease of doing business as it introduces certainty on the rule of law and the conditions under which firms will take decisions on investment.

The ensuing discussion from the floor saw a representative from Tanzania pointing out the anti-competitive practices in the tobacco sector in his country, where the firms’ political power is a challenge for the competition authority. The need to revive the dialogue between trade and competition policy at all levels was also mentioned, and should be one of the main recommendations for UNCTAD XIV next year.

Peer Review

Voluntary Peer Review of Competition Law and Policy: Fiji and Papua New Guinea

The Independent Expert appointed for the peer review of Fiji and Papua New Guinea, Ms. Deborah Healey, pointed out several similarities between the two jurisdictions including the small size of their economies and market fragmentation. She provided recommendations relevant to both policies under review, including on price regulation, sound implementation and enforcement, criminalization of cartels, leniency policy, misuse of market power, compulsory notification of mergers etc.

Her recommendations to governments included increased allocation of resources (financial and human) to competition authorities and well as staff training, leveraging firms’ fear from bad publicity in the press, and importantly the need to prioritize effective training including informal exchange of expertise.

The Fiji delegation sought advice from experts from other countries on the following issues: (i) power and procedure for an independent tribunal for competition and consumer protection; (ii) guidance on enforcement and compliance issue; (iii) whether the Austrian delegation be open to signing a MOU to co-operate with Fiji (which was readily accepted); (iv) and carrying out investigation for bid rigging. In a similar exercise, Papua New Guinea sought advice on the following issues: (i) issue of enforcement undertaking; (ii) resolving cases by consent; (iii) mandatory pre-merger notification.

UNCTAD as a part of its technical assistance project proposal for carrying out the implementation proposed to undertake activities geared towards improving legislation, and strengthening enforcement capacities, awareness, coordination between agencies and facilitate international networking. It was proposed to measure the success of implementation through three main ways, i.e. increased number of cases; increased level of awareness; and increased role of competition policy.

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