Competition Law and Development Policy: Subordination, Self-Sufficiency or Integration?

Svetiev, Yane

doi:10.1007/978-3-642-33917-2_9

Yane Svetiev⁷

Part of the book series: European Yearbook of International Economic Law ((volume 4))

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Abstract

International competition lawyers often refer (with some pride) to the exponential growth of the number of jurisdictions in the world that have adopted antitrust enforcement regimes since the early 1990s. Namely, over 100 national jurisdictions now have some competition law mechanism and in addition, quite a few regional integration regimes contain competition provisions. Since industrialised countries have been covered by the more established and long-standing antitrust regimes in the US and the EU, much of that growth is due to the adoption of competition laws by transition and developing economies. Some of those jurisdictions have adopted or strengthened their competition enforcement regimes of their own initiative. However, more often, such a regime is implemented at the instigation or encouragement of international donors and development bodies, such as the World Bank, the IMF, as well as the EU.

The author acknowledges the support of the ERC Project on European Regulatory Private Law hosted at the EUI. The argument presented in this paper has benefited from discussions in research meetings with other members of the project team.

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Notes

1.
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2.
The former socialist nations of Eastern Europe, for example, established competition enforcement regimes as part of their efforts at transition to a market economy.
3.
In an interview an Egyptian Competition Authority official explained that the IMF had pressed for the adoption of a competition law, but that Egypt could delay its adoption since it “wasn’t one of the [top] priorities [for the IMF],” Interview with Egyptian Competition Authority official, 2 June 2009.
4.
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5.
It has been argued that the effects of antitrust enforcement in the developed world are also not well understood. For two divergent conclusions on this issue, see Crandall/Winston, Does Antitrust Policy Improve Consumer Welfare? Assessing the Evidence, Journal of Economic Perspectives 17 (2003) 4, p. 3 (23-24), and Baker, The Case for Antitrust Enforcement, Journal of Economic Perspectives 17 (2003) 4, p. 27 (42).
6.
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7.
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8.
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9.
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10.
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11.
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12.
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13.
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14.
In fact, there is also evidence that the disciplining effect of domestic competitors is much more potent than that of imports. See Evenett, What is the relationship between competition law and policy and economic development, in: Brooks/Evenett (eds.), Competition Policy and Development in Asia, 2005, p. 1 (20).
15.
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16.
Singh, Competition and Competition Policy in Emerging Markets: International and Developmental Dimensions, Research papers for the Intergovernmental Group of Twenty-Four on International Monetary Affairs, No. 18, 2002, p. 18; Singh, Multilateral Competition Policy and Economic Development—A Developing Country Perspective on the European Community Proposals, Paper presented at the Fifth session of the Intergovernmental Group of Experts on Competition Law and Policy at Geneva, 2003, pp. 13–14, available at: http://www.networkideas.org/feathm/aug2003/MCP.pdf.
17.
Singh, Multilateral Competition Policy and Economic Development—A Developing Country Perspective on the European Community Proposals, Paper presented at the Fifth session of the Intergovernmental Group of Experts on Competition Law and Policy at Geneva, 2003, p. 16.
18.
Singh, Multilateral Competition Policy and Economic Development—A Developing Country Perspective on the European Community Proposals, Paper presented at the Fifth session of the Intergovernmental Group of Experts on Competition Law and Policy at Geneva, 2003, p.15.
19.
Singh, Multilateral Competition Policy and Economic Development—A Developing Country Perspective on the European Community Proposals, Paper presented at the Fifth session of the Intergovernmental Group of Experts on Competition Law and Policy at Geneva, 2003, p. 20.
20.
Singh, Multilateral Competition Policy and Economic Development—A Developing Country Perspective on the European Community Proposals, Paper presented at the Fifth session of the Intergovernmental Group of Experts on Competition Law and Policy at Geneva, 2003, pp. 24–25.
21.
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22.
US Supreme Court, National Society of Professional Engineers vs. United States, 435 US 679 (1978), at p. 695 (“Even assuming occasional exceptions to the presumed consequences of competition, the statutory policy precludes inquiry into the question whether competition is good or bad.”).
23.
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24.
Svetiev, Antitrust Governance: The New Wave of Antitrust, Loyola University of Chicago Law Journal 38 (2007) 3, p. 593.
25.
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26.
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27.
One example of this is the issue of consumer privacy in conduct and transactions over the Internet. Before there was widespread awareness of this issue among consumers, in analysing the proposed merger between Google, Inc. and DoubleClick, Inc. on antitrust principles, the FTC recognised that the “acquisition raised concerns about consumer privacy in the online advertising marketplace that were not unique to the proposed merger.” Rather than prohibiting the merger on this basis, the FTC subsequently developed and released a “set of behavioural marketing principles that could be used by businesses” to protect online privacy. See Federal Trade Commission, The FTC in 2008: A Force for Consumers and Competition, 2008, p. 4. Note that recently, consumer privacy issues on the Internet have taken on a far greater significance as an aspect of competition. The change in Google’s privacy policy at the beginning of 2012 triggered a vocal debate with one of its rivals Microsoft, about which company offered more robust privacy protection on the Internet, triggering a response from Google in which it compared the privacy policies of the principal Internet platforms. See “Microsoft slams Google user data policy in new ads,” Sydney Morning Herald, 1 February 2012, available at: http://news.smh.com.au/breaking-news-technology/microsoft-slams-google-user-data-policy-in-new-ads-20120202-1qu3b.html (reporting on Microsoft’s “Putting People First” advertising campaign).
28.
Jorde/Teece, Innovation, Cooperation, and Antitrust, in: Jorde/Teece (eds.), Antitrust, Innovation and Competitiveness, 1992, p. 47 (49); Mathews, Strategizing, Disequilibrium and Profit, 2006, p. 21.
29.
Alchian/Demsetz, Production, Information Costs, and Economic Organization, American Economic Review 62 (1972) 5, p. 777.
30.
Svetiev, Antitrust Governance: The New Wave of Antitrust, Loyola University of Chicago Law Journal 38 (2007) 3, p. 593 (620, 634).
31.
Brusick/Evenett, Should Developing Countries Worry About Abuse of Dominant Power?, Wisconsin Law Review, (2008) 2, p. 269 (280).
32.
McMahon, Developing countries and international competition law and policy, in: Faundez/Tan (eds.), International Economic Law, Globalization and Developing Countries, 2010, p. 252.
33.
Fox, Economic Development, Poverty and Antitrust: The Other Path, Southwestern Journal of Law and Trade in the Americas 13 (2007), p. 211 (213).
34.
Yu, Development Challenges of Competition Policy in the Economic Partnership Agreements, 2007, available at: http://www.acp-eu-trade.org/library/files/Yu_EN_190607_South-Centre_Developmet-challenges-of-Competition-policy-in-the-EPAs.pdf.
35.
http://cuts-international.org/Capability-December2009.pdf.
36.
http://www.cuts-ccier.org/index.htm.
37.
http://www.cuts-ccier.org/Competition_Policy_and_Law.htm.
38.
Interview with Official of the Consumer Unity and Trust Society, 3 June 2009.
39.
Interview with Official of the Consumer Unity and Trust Society, 3 June 2009.
40.
Interview with Official of the Consumer Unity and Trust Society, 3 June 2009.
41.
Rodrik, Institutions for High-Quality Growth: What They Are and How to Acquire Them, Studies in Comparative International Development 35 (2000) 3, p. 3 (8).
42.
Krugman, The Fall and Rise of Development Economics, in: Rodwin/Schön (eds.), Rethinking the Development Experience: Essays Provoked by the Work of Albert Hirschman, 1994, p. 39, available at: http://web.mit.edu/krugman/www/dishpan.html.
43.
Sabel, Learning by Monitoring: The Institutions of Economic Development, in: Smelser/Swedberg (eds.), The Handbook of Economic Sociology, 1994, p. 137.
44.
Krugman, The Fall and Rise of Development Economics, in: Rodwin/Schön (eds.), Rethinking the Development Experience: Essays Provoked by the Work of Albert Hirschman, 1994, p. 39.
45.
Krugman, The Fall and Rise of Development Economics, in: Rodwin/Schön (eds.), Rethinking the Development Experience: Essays Provoked by the Work of Albert Hirschman, 1994, p. 39.
46.
Rodrik, Institutions for High-Quality Growth: What They Are and How to Acquire Them, Studies in Comparative International Development 35 (2000) 3, p. 3 (4).
47.
Rodrik, Institutions for High-Quality Growth: What They Are and How to Acquire Them, Studies in Comparative International Development 35 (2000) 3, p. 3 (4).
48.
On the idea of self-sufficient regulatory regimes, see Micklitz, The Visible Hand of European Regulatory Private Law, Yearbook of European Law 28(2009), p. 3 (55–58), also Micklitz/Patterson, From the Nation State to the Market: The Evolution of EU Private Law, unpublished manuscript, 2012.
49.
Rodrik, Institutions for High-Quality Growth: What They Are and How to Acquire Them, Studies in Comparative International Development 35 (2000) 3, p. 3 (4).
50.
Sabel, Learning by Monitoring: The Institutions of Economic Development, in: Smelser/Swedberg (eds.), The Handbook of Economic Sociology, 1994, p. 137.
51.
Krugman, The Fall and Rise of Development Economics, in: Rodwin/Schön (eds.), Rethinking the Development Experience: Essays Provoked by the Work of Albert Hirschman, 1994, p. 39.
52.
Sabel, Learning by Monitoring: The Institutions of Economic Development, in: Smelser/Swedberg (eds.), The Handbook of Economic Sociology, 1994, p. 137 (140).
53.
Krugman, The Fall and Rise of Development Economics, in: Rodwin/Schön (eds.), Rethinking the Development Experience: Essays Provoked by the Work of Albert Hirschman, 1994, p. 39.
54.
Singh, Multilateral Competition Policy and Economic Development—A Developing Country Perspective on the European Community Proposals, Paper presented at the Fifth session of the Intergovernmental Group of Experts on Competition Law and Policy at Geneva, 2003, p. 16.
55.
Singh, Multilateral Competition Policy and Economic Development—A Developing Country Perspective on the European Community Proposals, Paper presented at the Fifth session of the Intergovernmental Group of Experts on Competition Law and Policy at Geneva, 2003, p. 16.
56.
Sabel points to evidence to suggest that even in Japan the state did not (ex ante) have privileged access to prescient information that would allow it to play the principal or dominant steering role in the process of industrialisation and development and that the strategies initially sponsored by state institutions were not necessarily the ones that bore fruit in Japan’s path to industrialisation, see Sabel, Learning by Monitoring: The Institutions of Economic Development, in: Smelser/Swedberg (eds.), The Handbook of Economic Sociology, 1994, p. 137 (150).
57.
Singh also highlights the importance of maintaining strategic oligopolistic rivalry in the Japanese context, together with “investment races” and “contest based competition,” see Singh, Multilateral Competition Policy and Economic Development—A Developing Country Perspective on the European Community Proposals, Paper presented at the Fifth session of the Intergovernmental Group of Experts on Competition Law and Policy at Geneva, 2003, pp. 20–21, though one should be careful not to jump to the conclusion that even a very “competent” state would be capable of divining an optimal market structure for achieving developmental objectives.
58.
Sabel, Learning by Monitoring: The Institutions of Economic Development, in: Smelser/Swedberg (eds.), The Handbook of Economic Sociology, 1994, p. 137 (151–152).
59.
A point also conceded by Singh, Multilateral Competition Policy and Economic Development—A Developing Country Perspective on the European Community Proposals, Paper presented at the Fifth session of the Intergovernmental Group of Experts on Competition Law and Policy at Geneva, 2003, pp. 23–24, who notes that “the focus of MITI’s work, its relationship with the competition agency and its instruments for persuading firms and industries to accept its proposals, have all changed with times and with the liberalisation, globalisation and other developments in the world economy.”
60.
Breznitz, Innovation and the State: Political Choice and Strategies for Growth in Israel, Taiwan and Ireland, 2007, pp. 11–12.
61.
Breznitz, Innovation and the State: Political Choice and Strategies for Growth in Israel, Taiwan and Ireland, 2007, pp. 14–15.
62.
Breznitz, Innovation and the State: Political Choice and Strategies for Growth in Israel, Taiwan and Ireland, 2007, p. 15.
63.
Breznitz, Innovation and the State: Political Choice and Strategies for Growth in Israel, Taiwan and Ireland, 2007, p. 29.
64.
Breznitz, Innovation and the State: Political Choice and Strategies for Growth in Israel, Taiwan and Ireland, 2007, p. 29.
65.
Breznitz, Innovation and the State: Political Choice and Strategies for Growth in Israel, Taiwan and Ireland, 2007, p. 32.
66.
Monti, Unilateral Conduct: The Search for Global Standards, in: Ezrachi (ed.), International Research Handbook on Competition Law, 2012.
67.
Note that in another concrete example of the integration of policy objectives, more recently a similar result with respect to a cancer drug was obtained in India through the patenting regime and the grant of a compulsory license under the Indian Patents Act. Compulsory License Application No. 1/2011 (Controller of Patents Mumbai), Natco Pharma Limited vs. Bayer Corporation, available at: http://www.ipindia.nic.in/ipoNew/compulsory_License_12032012.pdf.
68.
De Schutter, Addressing Concentration in Food Supply Chains: The Role of Competition Law in Tackling the Abuse of Buyer Power, Briefing Note No. 3, 2010.
69.
This problem is not limited to the developing world. Ganesh points out that similar issues have been investigated both in the UK and in the US. See Ganesh, Right to Food and Buyer Power, German Law Journal 11 (2010) 11, p. 1190, available at: http://www.germanlawjournal.com/pdfs/Vol11-No11/PDF_Vol_11_No_11_1190-1244_Articles_Ganesh.pdf. More recently the issue has received prominence in Australia, see Battersby, “Dob in your supermarket, ACCC tells suppliers,” Sydney Morning Herald, 21 February 2012, available at: http://www.smh.com.au/business/dob-in-your-supermarket-accc-tells-suppliers-20120221-1tkaw.html.
70.
De Schutter, Addressing Concentration in Food Supply Chains: The Role of Competition Law in Tackling the Abuse of Buyer Power, Briefing Note No. 3, 2010, p. 2.
71.
De Schutter, Addressing Concentration in Food Supply Chains: The Role of Competition Law in Tackling the Abuse of Buyer Power, Briefing Note No. 3, 2010, p. 3.
72.
Ganesh, Right to Food and Buyer Power, German Law Journal 11 (2010) 11, p. 1190.
73.
Ganesh, Right to Food and Buyer Power, German Law Journal 11 (2010) 11, p. 1190 (1196).
74.
De Schutter, Addressing Concentration in Food Supply Chains: The Role of Competition Law in Tackling the Abuse of Buyer Power, Briefing Note No. 3, 2010, p. 1.
75.
Cf. Ganesh, Right to Food and Buyer Power, German Law Journal 11 (2010) 11, p. 1190 (1196), noting that costs of compliance with such standards led to the exclusion of small farmers in Kenya and a tendency towards larger farms owned by exporters.
76.
Whitford/Zeitlin, Governing Decentralized Production: Institutions, Public Policy, and the Prospects for Inter-Firm Collaboration in the US, Industry & Innovation 11 (2004) 1/2, p. 11.
77.
Breznitz, Innovation and the State: Political Choice and Strategies for Growth in Israel, Taiwan and Ireland, 2007, p. 29, 32. Such a view of bureaucracy obviously presents a serious challenge to traditional public law visions of rigid procedures and formal hierarchies as the form of control of administrative action. However, this simply presents a challenge to be overcome to the extent that we are not forced to choose between the bureaucracy’s efficacy and its accountability.
78.
It would be difficult for a single farmer to guarantee the safety of agricultural commodities from pests or diseases without the cooperation of neighbouring farmers.
79.
Sabel points to evidence that Japanese subcontractors typically sought to avoid being dependent on a single buyer, by spreading their activities across different industries and groups, while at the same time avoiding dependence on a single bank as a source of credit. Sabel, Learning by Monitoring: The Institutions of Economic Development, in: Smelser/Swedberg (eds.), The Handbook of Economic Sociology, 1994, p. 137 (146).
80.
Ruggie, Protect, Respect and Remedy: a Framework for Business and Human Rights, Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, A/HRC/8/5, 2008, p. 8, available at: http://www.reports-and-materials.org/Ruggie-report-7-Apr-2008.pdf.
81.
On this point, see also Ganesh, Right to Food and Buyer Power, German Law Journal 11 (2010) 11, p. 1190 (1227–1228).
82.
James, Reconciling Divergent Enforcement Policies: Where Do We Go From Here?, in: Hawk (ed.), International Antitrust Law & Policy 2001 Fordham Corporate Law Institute, 2002, p. 1 (5).
83.
Monti, Unilateral Conduct: The Search for Global Standards, in: Ezrachi (ed.), International Research Handbook on Competition Law, 2012.
84.
Svetiev, The Limits of Informal International Law: Enforcement, Norm-generation and Learning in the ICN, in: Pauwelyn/Wessel/Wouters (eds.), Informal International Lawmaking, 2012, p. 271 (290).
85.
Monti, Unilateral Conduct: The Search for Global Standards, in: Ezrachi (ed.), International Research Handbook on Competition Law, 2012.
86.
In an interview with an official of the Consumer Unity and Trust Society, an NGO that has been operating to promote competition and consumer protection regulation in the developing world, he observed that UNCTAD has a “developing country focus.” Rather than their output, the official emphasised that the UNCTAD annual conference on competition is “smaller” than the ICN meeting and “dominated by developing country authorities,” which meant that “the exchange of experiences and thoughts are much better.” Interview with an official of the Consumer Unity and Trust Society, 3 June 2009.
87.
UNCTAD, Abuse of Dominance, TD/B/COM.2/CLP/66, 2008, p. 12.
88.
Brusick/Evenett, Should Developing Countries Worry About Abuse of Dominant Power?, Wisconsin Law Review (2008) 2, p. 269 (271).
89.
Svetiev, Antitrust Governance: The New Wave of Antitrust, Loyola University of Chicago Law Journal 38 (2007) 3, p. 593 (597–599). In the context of the discussion of this paper, particularly notable is the apparently emerging consensus to assign cartel offenses criminal liability.
90.
Tools of static analysis provide a framework for the step-wise breaking down of an antitrust problem and an apparently systematic method of analysing it, but as Coyle has observed they are not particularly useful or relevant in settings where unpredictable dynamics are important, see Coyle, Discussion on “Competition Economics and Antitrust in Europe,” Economic Policy 21 (2006) 48, p. 786.

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Research Fellow, Law Department, European University Institute, Via delle Fontanelle 10, I-50014, San Domenico, Italy
Yane Svetiev

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European Law, European and, University of Passau Chair for Constitutional and Administrat, Passau, Germany
Christoph Herrmann
Chair for Public Law, University of Erlangen-Nürnberg, Erlangen, Germany
Markus Krajewski
Chair for Public Law, European and, Leuphana University Lüneburg, Lüneburg, Germany
Jörg Philipp Terhechte

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Svetiev, Y. (2013). Competition Law and Development Policy: Subordination, Self-Sufficiency or Integration?. In: Herrmann, C., Krajewski, M., Terhechte, J. (eds) European Yearbook of International Economic Law 2013. European Yearbook of International Economic Law, vol 4. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-33917-2_9

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