The Studies of Organization and Authorities of Agencies Governing Competition Policy and Law in Various Countries　

Abstract:

1. With the conclusion of the Uruguay Round of trade talks, trade barriers arising from border protection were greatly reduced, and the focus of negotiations shifted toward entry into domestic markets and internal barriers to trade. The importance of competition policy also became more obvious. The natural characteristics and the socio-economic development of different countries have led to variations in the formulation of competition law and implementation of competition policy. To respond to the new issues and consultations arising out of the WTO, APEC, and OECD forums, there is thus a need for greater understanding of competition policy and the powers and responsibilities of the enforcement agencies in various countries.

In addition, though the Fair Trade Law (competition law) in Chinese Taipei has been the subject of much attention since its initial implementation in 1992, there has never been a comprehensive and systematic overview of the implementation of competition law in other countries. This study undertakes to analyze data from advanced countries such as Germany, the United Kingdom, Sweden, the United States, France, Japan and Italy in order to gain a greater understanding of the similarities and differences in their competition policies, the responsibilities of their enforcement agencies, and their respective advantages and disadvantages as a benchmark for Chinese Taipei’s efforts in implementing the Fair Trade Law. Following the introductory first chapter, the second chapter categorizes competition law enforcement agencies as “semi-independent administrative agencies” or “independent administrative agencies” and examines their differences in terms of whether enforcement of competition laws and consumer protection laws are undertaken by different agencies or the same agency. Chapter three examines the structure and operations of independent and semi-independent administrative enforcement agencies and the differences between them. Chapter four examines the organizational characteristics and operation of Chinese Taipei’s Fair Trade Commission, comparing it with the enforcement agencies in other countries and reviewing its changing responsibilities. Chapter five offers conclusions and suggestions.

2. Methodology

The nature of different types of competition authorities is examined, along with their organization and operations. These are compared with Chinese Taipei’s Fair Trade Commission to shed light on the issues the Commission now faces, and as a reference with regard to future changes in its role and the possible means of combining the Fair Trade Commission with the Consumer Protection Commission.

3. Main findings, conclusions and suggestions

(1) Competition policies and the structure and operation of enforcement agencies

There is significant variation among the bodies governing competition issues in various countries, and their establishment and enforcement methods reflect the differences in constitutional law, administrative customs and concepts central to competition policy. They may be independent or semi-independent administrative agencies, and they may combine oversight of consumer protection as well as competition matters, or those responsibilities may be given to separate agencies. Independent agencies for the enforcement of competition laws usually have a central commission not subordinate to any other department, which is able to formulate relevant policy in an expeditious manner. Agencies in the United States, France, Japan, and Italy are all of this type; the Chinese Taipei authority over competition policy/law (fair trade policy/law), the Fair Trade Commission, also belongs to this category. Semi-independent agencies usually belong to the economic, trade and industry or commerce ministries of a government, and their tasks are usually a relatively narrow or partial implementation of competition policy, with broader implementation and powers of oversight assigned to the higher agency. Agencies of this type include the Federal German Cartel Office of Ministry of Economics, the Office of Fair Trading of the British Department of Trade and Industry, and the Competition Authority of the Swedish Ministry of Industry and Trade. While the question of whether competition authorities should also deal with consumer protection matters is handled somewhat differently in different countries, the advent of the WTO Working Group on the Interaction between Trade and Competition Policy in 1997, with protection of consumer interests coming under its purview, means that the trend will be toward combining competition laws and those protecting consumers.

(2) Organization and operation of Chinese Taipei’s Fair Trade Commission

a. Organizational characteristics

Comparison of Chinese Taipei’s Fair Trade Commission and the competition authorities in other countries shows it to have the following characteristics:

i. A collegiate system was adopted for the Commission, in accordance with worldwide trends in competition law matters.

ii. The Commission is politically neutral and has guaranteed independence in policy-making.

iii. The Commission is an independently established body within the administrative structure and belongs to the Cabinet.

iv. The commission is active in the formulation and realization of broad competition policy in addition to its enforcement role.

v. In accordance with article 9 of the Fair Trade Law, those matters that concern the authority of other ministries and commissions are to be handled by the Fair Trade Commission in consultation with such other ministries and commissions, giving it an expanded role in coordinating enforcement.

b. Difficulties and limitations in the Commission’s fulfillment of responsibilities

In carrying out its responsibilities, the Commission faces the following difficulties and limitations:

i. Given the current system of administrative policy formulation, the Commission’s hierarchical ranking creates difficulties in coordinating with other bodies in order to effectively implement competition policy. For example, the Commission took the initiative to put forward the “Plan for Deregulation and Promotion of Market Competition,” but its proposals were not binding on other related government bodies.

ii. While the Fair Trade Commission is in principle a body with “independent powers,” and can cooperate with other agencies in the handling of enforcement-related issues, it is limited in actual practice to a coordinating role, steering or facilitating the implementation of competition policy.

iii. The Commission virtually always handles cases referred to it, regardless of their size or importance, so that manpower resources can quickly become strained to the limit. Few resources are left for other missions which bear on overall national development, such as industry surveys, overseeing the formation of sound regulations, empirical research, coordination activities and active formulation of competition policy.

iv. It has been proposed that the Fair Trade Commission be combined with the Consumer Protection Commission as a part of the program for government restructuring. However, resulting problems in the enforcement area and alterations in organizational structure cannot be overlooked.

c. Suggestions for changes in the current duties of the Fair Trade Commission

i. In accordance with the shift from a focus on “practices” in competition law matters to a focus on “structure,” or a shift from concern with narrow aspects of competition policy toward broader promotion of policy, the Commission should become more involved with active formulation of broad competition policy in addition to its usual enforcement concerns. On issues such as competition and market liberalization or removal of entry barriers and return to unrestrained pricing mechanisms, it should participate in the early stages of planning and put forward concrete proposals and suggestions.

ii. The proposals submitted by the Commission to other departments on competition law or policy matters are approved by the Cabinet or implemented in cooperation with those other departments. Thus its actual tasks are not limited to mere “coordination,” and its proposals should be made more binding on those other departments, or at the least it should have the capacity to speed the pace of implementation by those departments in order to enhance market opening and liberalization, thus helping to reach the goal of upgrading overall competitiveness.

iii. In view of its creative role in helping guide overall national development and in view of its personnel deficiencies, the staffing and personnel expansions of competition authorities in Japan, the United States and other nations should be referred to, and adequate support and expansion of personnel resources should be undertaken with respect to Chinese Taipei’s competition law enforcement authorities. This will help prevent the Commission from being stuck in the narrow role of policing the market order, which weakens its ability to actively participate in policy formulation.

(3) The merger of the Fair Trade Commission and the Consumer Protection Commission

This study arrived at the following views on the merger of the Fair Trade Commission and the Consumer Protection Commission

a. There is little doubt that many provisions of the Fair Trade Law are protective of consumer interests. In recent years, the Commission has been more effective than other agencies in control of commercial advertising, and in accordance with article 24 of the Fair Trade Law, has developed some corrective measures to protect consumers. Therefore, administration of relevant provisions of the Fair Trade Law could allow the Commission to become the chief consumer protection body.

b. While internationally, there are a number of agencies overseeing competition which also directly handle consumer protection issues, there are also a large number for which handling of such issues are subsidiary. Most often seen in this regard is implementation of controls over advertising. With regard to the current structure and functions of the Fair Trade Commission and the Consumer Protection Commission, the latter was established under the authority of the Consumer Protection Law with the goal of “formulating basic consumer protection policies and overseeing their implementation,” and is a legally constituted body within the Cabinet. The Consumer Protection Commission in principle does not handle individual consumer cases, though it does retain the option of installing consumer protection officers to intervene in such cases if it were to see fit. The principal task of the Fair Trade Commission is investigation of businesses engaging in improper competitive behavior, and secondarily, consumer protection. The trend around the world is the combination of these two types of agencies. Further, bodies that oversee competition laws can be given the function of deciding consumer protection policies, since establishment of a sound competitive order is of benefit to consumers. In carrying out its enforcement duties, the Commission has always been obligated to give due consideration to consumers’ legal rights and benefits.

c. Basic issues for consideration in combining the Fair Trade Commission and the Consumer Protection Commission

i. In coordinating its activities with those of other relevant bodies, the Commission obviously is not able to assume a “guiding” role as other Cabinet commissions are, which reduces its effectiveness.

ii. After merging the two commissions, care should be taken to avoid having even more people take the new commission as an official version of the Consumer Foundation. Specifying case-handling principles and methods for cases unrelated to the Fair Trade Law or for consumer disputes with little bearing on the public interest can reduce administrative costs.

iii. An appropriate expansion of the current structure and manpower of the Commission is necessary, along with integration of the resources and personnel of the Consumer Protection Commission, in order to achieve a complementary rather than a conflicting result after merger of the commissions.

d. Suggestions regarding merger of the Fair Trade Commission and the Consumer Protection Commission

i. The advantages of the collegiate system should be further enhanced, and “neutrality with respect to political parties” and “guarantees of independence in policy formulation” should be maintained in order to give full play to that system. In the administrative area, case-handling methods should be further examined and administrative units given sufficient authority to allow for reducing costs and increasing efficiency.

ii. Further research should be done on areas where the Consumer Protection Law and the Fair Trade Law may overlap, and distinctions made between those laws which have to do with fairness in consumer transactions, and those having to do with protection of consumer safety and consumer interests. The structure and functions of the Australian ACCC provide a useful standard, in which the “coordinating” and “guiding” functions falling under “consumer protection” would be left to the Cabinet, with the new agency responsible for enforcement and review of the Fair Trade and Consumer Protection laws.

iii. The new body formed by merger should be mindful not to take every problem reported as an appeal under public law, in order to avoid being inundated with consumer cases of little public relevance. The new commission’s effectiveness in enforcement could be enhanced by reserving sufficient administrative resources to handle cases having to do with restraint of competition, which are of greater relevance to the public interest and to Chinese Taipei’s overall economic interests. In addition, the original Consumer Protection Commission does not have the power to handle consumer disputes, and after merger with the Fair Trade Commission, it would be even less appropriate to expand its role in this area, unless new personnel are added to the organization to allow it to handle such disputes.

iv. In terms of the structure of the new commission, additional hiring of specialists in consumer affairs as commissioners should be clearly stipulated in order to strengthen the representative nature of the body and create a commission with powers in the areas of both enforcement and policy formulation. Even more important, the commission’s formal structure should include a policy research unit for continuous data-gathering and analysis in order to support the implementation of competition laws and for the research necessary in drafting new provisions in the areas of competition and consumer protection.

v. For the sake of conformity between legislative and enforcement efforts, package or comprehensive legislation should be undertaken to enact overall modifications in the Fair Trade Law, the Organizational Statute of Chinese Taipei Fair Trade Commission, and the Consumer Protection Law, thus avoiding conflicts that might otherwise occur between individual amendments or because of disparities in the dates on which they would take effect.

　

Written by

Liu Chien-hsun, Hu Tsu-shun, Wang Jung-ching,

Liu Shao-chen, Hsu Tsung-yo (Planning Department)