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Competition Policy

The term competition policy is interpreted in different ways in different countries and different contexts. At its broadest, it can be defined to include all policies that affect competition, or contestability (potential competition) in a market, including trade and regulatory policies as well as competition or antitrust law. More narrowly, it refers to the set of laws and policies adopted by a country to prevent or remedy restrictive business practices by enterprises, whether private or public. Restrictive business practices are those practices that reduce the degree of contestability of a market, such as cartels or other forms of horizontal or vertical market restraints, abuse of dominant market position, monopolization, price discrimination, and the like.

Over the past few years the interest in the interface between trade and competition policy has intensified. The main reasons for this interest is the growing integration of the world economy (both via trade in goods and services as well as through increasing volumes of FDI) which implies that anti-competitive business practices increasingly have trans-border dimensions. Further more, with the expansion of trade and investment, foreign companies are concerned whether national competition laws are adequate to deal with possible anti-competitive practices by such domestic companies. Finally, developing countries, a large number of which do not yet have competition laws in place, are concerned that they be able to address possible abuse of market power by multi-national corporations. 

At present, competition law remains primarily the domain of domestic legislation and there are no internationally enforceable rules and no supranational enforcement body. However, competition policy is dealt with indirectly in each of the main agreements that make up the WTO Agreement (the GATT, the GATS, and the TRIPS Agreement) and provisions for consultation and cooperation on anti-competitive practices are provided for. Consultation and cooperation on matters related to competition policy are also addressed through a number of other multilateral, regional and bilateral instruments and  fora , such as the OECD, which since 1967 has adopted a series of recommendations and guidelines addressing anti-competitive firm behavior, and UNCTAD, which adopted in 1980 a set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices. However, compliance with  many of the above rules and principles is primarily voluntary, on a "best endeavors" basis, rather than rooted in legally enforceable commitments.

The issue whether internationally enforceable multilateral disciplines on private anti-competitive practices should be actively pursued in the next round of trade negotiations is subject to intensive study both by scholars and by multilateral organizations. In December 1996, the WTO itself appointed a working group to examine the issue and report back to the Council.  The most recent report of the Working Group was released on December 8, 1998 and can be obtained at no charge from WTO. The 1997 WTO Annual Report also examines this topic in depth (see below). These reports together with other suggested bibliography provide a thorough examination of the various aspects of the reform of competition policy as it stands today.

 

Further reading and links:

  • Peter lloyd (1998): "Gobalization and Competition Policy", Welwirtschafltiches Archives, vol. 134, number, p. 161-185.

 

Last updated on Nov 18, 2008

Library

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