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THE ISSUE

The growth of privatization and international trade and investment, and the spread of bilateral and multilateral trade agreements have increased economic integration, affecting almost all nations of the world. This new reliance on private enterprise has brought about many changes in the economic structure and production capacity of developing countries. However, it has also made developing countries more vulnerable to new and harmful types of anticompetitive business practices.

Putting effective policies in place to ensure that businesses compete is a complex and difficult task. This book and its accompanying website demonstrate the importance of true and fair competition to sustainable development and an effective marketplace, touching on issues of globalization, consumer welfare, cartels and monopolies, and trade liberalization.

THE RESEARCH

Much can be learned from the problems faced in developing countries and the steps that have been taken to overcome those problems.

Costa Rica: Consumer choice at the corner store
Benefits of competition policy are not always clear to the average consumer. But people in Costa Rica noticed when a competition authority ruling put a stop to a Coca Cola bottler’s anticompetitive practices. The highly visible case is helping to build political will to tighten the legislation.

South Africa: Equal opportunity to compete
Competition law in South Africa acknowledges that ensuring open, free, and competitive markets today requires addressing the injustices of the past. The law is exerting a subtle influence over the way in which South Africans do business.

Uzbekistan: Competition research improves services
Like migrant workers all over the world, Uzbek workers abroad send much of their earnings home to support their families and communities ― and until recently paid fees as high as 10% to transfer the funds. Those fees are coming down thanks to competition and recommended innovations are leading to more choices for consumers.

Egypt: Privatization alone is not enough
The privatization of state-owned companies attracted new players to Egypt's cement industry and generated export growth. But at the time, the market wasn't regulated to ensure fair play among businesses. New legislation is now helping to rid it of anticompetitive behaviour.

For more case studies and further details on the four noted above, visit www.idrc.ca/in_focus_competition.

THE LESSONS

The introduction and implementation of a competition law is fraught with problems. Political will is necessary every step of the way. Competition law will not be broadly accepted or fully enforced unless key leaders in government have adopted market principles as the underpinning of economic development. The following recommendations suggest practical strategies for introducing and enforcing a competition law.

1. Enact legislation that is strong and supported — Sound legal drafting is vital. The law must be designed to prevent opponents from undermining its aims.

2. Appoint and encourage strong leadership — Leading a competition authority — especially in its early years — requires determination, independence, and a tireless facility for public engagement.

3. Recruit expert staff and renumerate them well — New authorities need to hire lawyers with experience in competition, courtroom, and administrative law and procedure. Economists must be trained in industrial organization.

4. Ensure that judges receive specialized training in competition law — A few judges, strategically assigned to deal with competition cases, should be trained in the minutiae of law and economics.

5. Recognize that not everyone will be your friend — A coherent mapping exercise should be carried out to identify organizations that currently engage with the authority, and each should be surveyed to identify the degree to which it is friend or opponent of the authority.

6. Build alliances with the beneficiaries of competition law — Coalitions must be built between the competition authority and those who will benefit from predictable and lasting implementation of competition rules.

7. Activate popular interest in competition questions — Competition authorities should regularly brief media of all kinds, from mass-market newspapers and broadcasters to sector-specific journals and NGO newsletters.

8. Build alliances with other government departments — The competition authority should search out and foster coalitions with like-minded departments and agencies of government.

9. Institute both leniency programs and tough fines — Competition legislation should provide the authority with the power to be both lenient toward defectors from cartels and to punish the rest.

10. Develop interagency cooperation and entrench competition provisions in trade agreements — Intergovernmental cooperation against anticompetitive abuses across borders is imperative.

11. Monitor liberalized markets closely — The entry of large foreign-owned companies into a developing-country market can significatnly benefit the domestic economy. But the cost of these benefits may be losing local competitors and unfairly squeezing local suppliers who now confront a buyer with considerable market power.

Document(s) 1 of 9