Abstract:
The time since the end of the twentieth century has been a new era of knowledge and innovation. Faced with the rapid development of technology and economic globalization, Chinese Taipei has inevitably accepted the “knowledge economy” as the target of future development. The development of a knowledge economy requires the juxtaposition of many factors, including investment in education, a technological base, and appropriate social values. In addition, the creation of an environment promoting fair competition is indispensable. However, whether fair competition can be established depends on whether the competition policies of a country are capable of coping with new challenges. Therefore, among the important issues connected with national competition policies in the knowledge economy era are the definition of the country’s existing basis and positioning, the location of possible obstacles, and the formulation of solutions.
With regard to this issue, this paper first clarifies the differences between the knowledge economy and the traditional economy, and then further discusses some of the major issues connected with competition policies that have been brought up. First of all, since the production of knowledge is paramount in the knowledge economy era, countries bestow intellectual property rights upon innovators in order to protect and encourage innovation. However, the monopolistic status thereby created is apparently in conflict with the spirit of competition laws. The question here is thus how to balance intellectual property rights laws and competition laws. Furthermore, the production of knowledge requires a high level of investment in research and development. However, since Chinese Taipei’s economy is dominated by small and medium-sized enterprises, few companies are able to sustain their own independent research and development without cooperating with other companies. In spite of this, concerted action among enterprises is mostly deemed negative in competition laws. How to appropriately evaluate joint research and development is therefore a crucial issue. Additionally, the competition authority must be able to adjust its organizational structure in response to the knowledge economy’s orientation as the socioeconomic environment changes. And as the government reorganizes itself, whether the organizational restructuring of the Fair Trade Commission can fully deliver the desired functions will determine whether the reform will be successful. This paper thus seeks to probe the possible difficulties facing national competition policies as the country faces the challenges of the knowledge economy, and to examine corresponding solutions in connection with intellectual property rights, joint research and development, and the organizational reform of the authority in charge of competition laws.
An examination of relevant literature and domestic and foreign practical experience shows that the knowledge economy has several specific characteristics, namely, high innovation costs, rapidly changing industries, an emphasis on intellectual property rights, and highly important networking effects. Since it is desirable to create an environment promoting fair competition in the knowledge economy era, the following possible obstacles must be addressed:
1.Intellectual Property Rights and the Abuse of Market Power:
Both intellectual property rights and competition policies serve to further the long-term goal of promoting innovation. However, the short-term monopolistic position that intellectual property rights laws bestow on innovators tends to cause tension with competition laws and may result in the problem of restraints on competition via refused authorization, conditional authorization, and tied-in sales. Intellectual property rights are only one of the origins of monopolistic positions, however. Since competition laws only prohibit actions that abuse market power, instead of dealing with the structure of a monopolistic position, the simple protection of intellectual property rights is not criticized in competition laws. To determine whether an intellectual property rights holder has abused his/her rights, the authority in charge of relevant laws must define its complementary relationship with the authority in charge of intellectual property rights. It must also, when implementing competition policies, respect the nation’s prior commitment to innovators and exercise self-restraint so as to protect the incentive for innovation.
2.Joint Research and Development and Concerted Actions
From the perspective of competition laws, a horizontal concerted action among enterprises decreases social welfare and is usually deemed an illegal action. However, in the knowledge economy era, joint research and development among enterprises does not decrease efficiency, but rather increases it. It is therefore important to re-evaluate the performance of joint research and development. After examining the competition laws of different countries, it has been found that regulations are relatively relaxed when it comes to joint research and development, and there are often regulations designating safe areas or the collective exemption of enterprises under a certain size. The present laws in Chinese Taipei do not designate specific thresholds for exemption. In the real world, however, enterprises usually fail to file applications for joint R&D, and they do not think they have affected market function, which leads to a situation where laws and regulations are inconsistent with reality. At the “Working Conference on Easing Laws and Regulations Governing the Development of Emerging High-Tech Industries,” which was held by the Science and Technology Advisory Group, Executive Yuan, near the end of 2002, the chairman’s conclusions contained short-, mid-, and long-term solutions. In the long term, the Fair Trade Commission was to consider joint research and development when addressing issues connected with the amendment of laws. Furthermore, to eliminate unreasonable restraints to joint R&D, the Commission was to also add direct exemption for joint research and development that is obviously beneficial and has only a minor impact.
3.Organizational Reform of the Competition Authority
With regard to the organizational reform, the Fair Trade Commission, the Consumer Protection Commission of the Executive Yuan, and the International Trade Commission of the Ministry of Economic Affairs (MOEAITC) are probably to be integrated to become an independent agency named the “Fair Trade and Consumer Protection Commission.” Observation of the anti-dumping system and actions taken by the MOEAITC suggests that the anti-dumping system leans towards protectionism, the protection of domestic monopolistic enterprises, and opposition to overproduction by industries with economies of scale, which is contrary to the spirit of competition laws. From the standpoint of this paper, it would be more appropriate if anti-dumping actions were governed and administered by the competent authority in charge of trade policy. With respect to the integration of the competition law competent authority with the consumer protection authority, since the Fair Trade Commission is already involved in consumer protection tasks, and the integration of these two types of agencies has become a global trend, this paper lends such integration its full support. Additionally, since organizational integration in Chinese Taipei is hampered by departmentalism, which leads to many unsolved problems, it is suggested that the government heed the advice given by impartial third parties, and not allow the concerned agencies to discuss the details of integration by themselves. Reforms implemented in Australia suggest that this will ensure that reform will proceed more smoothly and effectively.