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Competition Policy

Focuses on current challenges for competition policy such as fostering increased transparency for multinational businesses, improving enforcement coordination between national agencies, and reducing bureaucratic and legal hurdles; looks at new challenges and long term opportunities such as the interactions between international trade policy and regional State aid control regimes and the prospect of creating an international framework for shaping competition policy.

Competition Policy and the Trade System

competition policy

Traditionally, competition and international trade policies have followed separate paths. While trade liberalisation addresses obstacles to business transactions across national borders, competition law tackles business conducts affecting the competitive process, including collusion among competitors, monopolisation, and anti-competitive mergers. Notwithstanding these distinct legal traditions, both policies are broadly complementary in that they each aim to foster consumer welfare, growth, development, and even poverty reduction.

Yet, as tariffs, quotas and other formal barriers to trade have been extensively and successfully diminished all over the world; attempts at harmonising competition policy have largely remained regional (and mostly trans-Atlantic) in scope.  Furthermore, the General Council of the WTO dropped competition policy from the Doha agenda in 2004, and has not taken up the issue since.

As a result, anti-competitive practices that restrict or otherwise distort international trade remain unevenly addressed across nations, thus creating the risk that covert, non-border barriers such as export cartels and international market sharing agreements might replace official trade restrictions, and create new challenges to the cross-border flow of goods and services.

At the same time, global mega-mergers have become increasingly frequent, but typically remain subject to the jurisdiction of multitudes of merger control authorities, thus creating potential impediments to cross-border investments. Additionally, concerns have arisen that countries might be using competition policy to favor domestic firms over foreign ones, as evidenced by the recent controversies surrounding the enforcement of China’s Anti-Monopoly Law.

Convergence between policies could facilitate market access by removing non-border barriers to trade, create increased transparency for multinational businesses, and reduce complex bureaucratic and legal hurdles to international trade and investment.  With over one hundred countries having adopted their own competition laws, and new bilateral and mega-regional trade agreements including provisions on competition, there is reason for optimism.  Despite the difficulties of the Doha round, the opportunities for promoting convergence between competition law and trade liberalisation may never have been better.

The advocacy of pro-competitive regulatory frameworks that increase market efficiency promotes productivity and competitiveness of tradable sectors that have become more integrated to the global trading system. This area could explain the success of import competing and exportable sectors that use inputs from normally no tradable regulated sectors as telecoms, energy, transport and financial services.

In light of all the above, the E15 Expert Group on Competition Policy has examined the key challenges at the intersection of competition and trade policy regimes emerging in this context of ever more globalised enterprises and trade flows; assessed opportunities for harnessing greater cooperation/convergence between competition and trade policy disciplines to respond to these new realities; and recommended options for policies and trade rules that could facilitate better interactions between the domains of competition and trade policy.

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