The Roles of Competition Policies in National Economic Development

In recent years, competition policy has fast become a widely discussed topic with the rapid global expansion of transnational firms and the liberalization of world trade.

However, what competition policy remains varied between economies, international organizations and even between practitioners themselves.

For the purpose of this paper, competition policy may be viewed as a spectrum, at one end, the narrow application of the policy and at the other, the broad application of the policy. In the narrowest view, I refer to the situation where competition policy of an economy is simply carried out with the enactment of a set of competition law and perhaps with the establishment of an enforcement agency to implement and to enforce the law. This arrangement has provided the economy with the basic means to secure and to promote free and fair competition in its economic environment, to ensure economic efficiency, the protection of consumer welfare and other public interests.

Following this framework, the role of competition policy has overtime, expanded further to cooperate with government agencies on other government regulations or policies in the various sectors such as trade, industry, agriculture or intellectual property in matters relating to open markets, unfair trade practices and consumer protection. This cooperative arrangement has created room for the application of competition policy in the deregulation of economies as economies adapt themselves in to the free and open market system.

In recent years, business activities of transnational firms have extended beyond the boundaries and jurisdiction of individual economy. There have been increasing urges by trade authorities from various economies for a mechanism to handle the effects of anti-competitive practices of enterprises in an international setting. Consequently, the role of competition policy will be applied in a even broader sense, with its expansion in to the international dimension. In this dimension, there are calls for greater international cooperation between economies as well as seeking ways and means for greater harmonization and convergence, wherever applicable, of competition laws and/or competition policies.

The types of anti-competitive business activities to be regulated by competition laws may be basically the same. Nevertheless, due to the different stages of economic growth and the differing ways of operation, each economy may adopt its own approach underlying its competition laws to achieve the goal of promoting economic efficiency and national economic growth. Hence, competition laws, the narrowest dimension of competition policy, may play an important role in adjusting a nation's economic development. The standard and approach of competition law may differ for individual economy to regulate the anti-competitive practices mentioned earlier. By adopting an approach suitable for the needs of individual economy, competition law may help develop or adjust the economic environment to an open, competitive, and efficient one.

The enforcement of competition law alone is not enough to achieve the goal of promoting efficiency at the level of national economy as a whole. This is because in addition to anti-competitive practices adopted by private enterprises, government intervention and in those economies with restrictive practices such as state-owned enterprises also play a part in preventing and restricting the economic environment from free and open competition. Government intervention may include government policies (such as environment policy, agriculture policy, and trade and industry policies), which may be implemented by means of their relevant laws, regulations, or administrative orders and measures. And state-owned enterprises, usually with large scale and national resources, may abuse their market power to compete unfairly with their private rivals or make discriminative arrangements.

Thus, in order to foster a competitive and efficient economy, competition policy has to play a more effective and important role than the narrow one, and check and balance the conflicts and harmonies between competition law and the laws for other fields.

The unavoidable trend of Competition policy's emergence onto the international dimension is now apparent. There are two major roles for competition policy in the international dimension: the harmonization and/or convergence of competition laws or policies of individual jurisdictions and international cooperation for competition law enforcement matters.

As the degree and type of economic development differ among individual economies, to come up with a well-established set of competition policy at this point in time to match the needs of each individual economy, in my view, is quite impractical. However, a step-by-step approach may be adopted towards the concept of harmonization and/or convergence of competition policy, to begin with research and consultation to identify regulations on typical international anti-competitive practices that commonly affect individual jurisdictions. Since it is unrealistic to ignore the specific needs of individual economy, a harmony and/or convergence of the policy, setting aside the diversified sectors and focusing on the common ones should be able to establish a better basis for starting a set of commonly recognized and adopted regulations on competition policy in the international market.

The efficient regulation on international anti-competitive practices, in cases like international mergers and acquisitions and abuse of intellectual property, relies largely on the cooperation of other jurisdictions. Hence, international cooperation between or among competition law enforcing authorities of individual jurisdictions should be further expanded as a mechanism to regulate those anti-competitive practices occurring outside the territory of an individual jurisdiction. Only through international cooperation, by sharing experiences and concerns through means such as notification and consultation, exchange of information, and other administrative assistance, can an individual jurisdiction extend its arm beyond the boundary to prevent or eliminate those anti-competitive practices which result in anti-competitive effects on its territory.