Post on 17-Jan-2018
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UNCTAD
CompetitionCompetition Law and PolicyLaw and Policyfor Practitionersfor Practitioners
The Rationale For Introducing The Rationale For Introducing Competition Law and PolicyCompetition Law and Policy
ByBy
Michael Adam, Competition law and Consumer Policies Michael Adam, Competition law and Consumer Policies Branch, Branch, Division on International Trade in Goods, Division on International Trade in Goods,
Services and Commodities,Services and Commodities, UNCTAD UNCTAD
TRAINFORTRADE : Competition Law and Policy
UNCTAD
WELCOMEWELCOMETO THETO THE
UNCTAD TRAINING COURSEUNCTAD TRAINING COURSEONON
COMPETITION LAW AND POLICY COMPETITION LAW AND POLICY FOR PRACTIONERSFOR PRACTIONERS
TRAINFORTRADE : Competition Law and Policy
UNCTAD
AIM OF THE COURSEAIM OF THE COURSETo enable participantes to understand To enable participantes to understand
the issues arising as to:the issues arising as to:
• Coherently designing,Coherently designing,• Effectively implementing, andEffectively implementing, and• Justly enforcingJustly enforcing
COMPETITION LAW AND POLICYCOMPETITION LAW AND POLICY
TRAINFORTRADE : Competition Law and Policy
UNCTAD
Objectives of Module 1: The Rationale for Objectives of Module 1: The Rationale for Introducing Competition Law and PolicyIntroducing Competition Law and Policy
Upon concluding this module, Upon concluding this module, participants should be able to:participants should be able to:
• Define the term Define the term “competition policy”“competition policy”• Explain the recent evolution of Explain the recent evolution of
competition law in developed and competition law in developed and developing countriesdeveloping countries
• Specify the objectives and benefits of Specify the objectives and benefits of competition lawcompetition law
TRAINFORTRADE : Competition Law and Policy
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What does Competition Policy Cover?What does Competition Policy Cover?
• Broad definition covering:Broad definition covering:The full array of government policy The full array of government policy measures that influence competition in measures that influence competition in domestic markets (e.g. tariff domestic markets (e.g. tariff protection)protection)
• Narrow definition limited to:Narrow definition limited to:The design, effective implementation The design, effective implementation and enforcement of competition lawand enforcement of competition law
TRAINFORTRADE : Competition Law and Policy
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The Intention of Competition LawThe Intention of Competition Law
To eleminate or curtail restrictive To eleminate or curtail restrictive business practices which hinder business practices which hinder or prevent firms from competing or prevent firms from competing freely with one another in the freely with one another in the marketmarket
TRAINFORTRADE : Competition Law and Policy
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The Three Main Categories ofThe Three Main Categories ofPROHIBITED RESTRICTIVE PRACTICESPROHIBITED RESTRICTIVE PRACTICES
•Collusive arrangements, Collusive arrangements, agreements or understandingsagreements or understandings
•Abuse of dominant market powerAbuse of dominant market power•Mergers, acquisitions or Mergers, acquisitions or
takeoverstakeovers
TRAINFORTRADE : Competition Law and Policy
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Two Approaches toTwo Approaches toRESTRICTIVE PRACTICESRESTRICTIVE PRACTICES
• Per se offencesPer se offencesNo defence once provedNo defence once proved
• Rule of reasonRule of reasonAdverse effects of restriction on Adverse effects of restriction on competition weighed against possible competition weighed against possible public benefitspublic benefits
TRAINFORTRADE : Competition Law and Policy
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Economic reform >>> greater reliance Economic reform >>> greater reliance on marketson markets
• Lowering of tariff barriers,Lowering of tariff barriers,• Removal of most quantitative import Removal of most quantitative import
restrictions,restrictions,• Reduction of subsidies to domestic Reduction of subsidies to domestic
producers,producers,• Privatisation of government businesses,Privatisation of government businesses,• Encouragement of foreign direct Encouragement of foreign direct
investment.investment.
TRAINFORTRADE : Competition Law and Policy
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Some benefits of competitionSome benefits of competition
1)1) Pressure to produce and distribute Pressure to produce and distribute products/services at lowest possible products/services at lowest possible cost,cost,
2)2) Ensures prices are kept down or Ensures prices are kept down or reduced in step with cost reductions,reduced in step with cost reductions,
3)3) Facilitates the introduction of new Facilitates the introduction of new products/processes and entry to new products/processes and entry to new marketsmarkets
TRAINFORTRADE : Competition Law and Policy
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Principal Objectives of Principal Objectives of Competition Law and PolicyCompetition Law and Policy
•To improve economic efficiencyTo improve economic efficiency
•To contribute to economic To contribute to economic developmentdevelopment
TRAINFORTRADE : Competition Law and Policy
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Secondary Objectives of Secondary Objectives of Competition Law and PolicyCompetition Law and Policy
• Limit further increases in the Limit further increases in the concentration of economic power,concentration of economic power,
• Protect small and medium-sized Protect small and medium-sized companies,companies,
• Provision of state assistance on a Provision of state assistance on a non-discriminatory basis.non-discriminatory basis.
TRAINFORTRADE : Competition Law and Policy
UNCTAD
Some Limitations of Competition LawSome Limitations of Competition Law
1)1) Doesn’t seek to change the structure of Doesn’t seek to change the structure of the market,the market,
2)2) Monopolies may continue to earn Monopolies may continue to earn monopoly profits,monopoly profits,
3)3) Applies to domestic markets only, not to Applies to domestic markets only, not to overseas markets,overseas markets,
4)4) Must not contradict other economic Must not contradict other economic policies affecting competition.policies affecting competition.