ELEMENTS OF AN EFFECTIVE COMPETITION LAW
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Presentation to the APEC Conference on
Competition Policy and Deregulation 1997
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May 19, 1997
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Quebec City, Quebec.
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By Marcie Girouard
Competition Bureau, Industry Canada
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���. INTRODUCTION
- Importance of competition laws
- Possible approach to competition law development
- develop core substantive laws and the institutions to enforce them;
- increase public awareness and acceptance of the benefits of
competition law for consumers and the economy.
- refine the expertise and the tools to perform the enforcement tasks
well.
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�. OBJECTIVES OF COMPETITION LEGISLATION
- Maintenance of free competition
- Prevention of abuses of market power;
- Foster economic efficiency
- Promotion of international competitiveness
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�. CORE ELEMENTS OF AN EFFECTIVE COMPETITION LAW
- Legal standard and approaches may vary (e.g. civil versus criminal
provisions, per se prohibitions versus rule of reason approach).
- Different models effective and appropriate depending upon economic
circumstances, legal and constitutional frameworks.
- At minimum, legislation should include:
- prohibitions against collusive practices such as price-fixing,
bid-rigging and market allocation agreements (so-called �ard core cartels��).
- measures to address situations involving monopolization of markets or
the abuse of market power by dominant firms.
- measures to deal with mergers that are or are likely to have a
negative impact on competition.
- compulsory merger prenotification helpful to provide an early warning
system and ensure that effective remedial action can be taken.
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�. SCOPE AND COVERAGE
- Competition rules should apply equally to domestic and foreign firms.
- Different national competition laws contain different exemptions and
defenses for specific sectors, market structures and activities.
- These vary due to factors often unrelated to competition policy
considerations.
- Some sectors (e.g. natural monopolies) may require regulation to
promote efficiency. However, competitive principles should be applied to the greatest
possible extent.
- Canadian experience with legislated competition policy advocacy role
has been positive in promoting liberalization of sector specific regulation.
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�. ENFORCEMENT INSTITUTIONS
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- Dedicated competition law enforcement agency important to develop and
consolidate expertise, provide resources and incentives to enforcement.
- Agency may combine investigative and adjudicative functions.
Alternatively, some competition law regimes (such as Canada) provide for institutional
separation of investigative and adjudicative functions.
- Key institutional features:
- independence and objectivity of enforcement agency
- transparency in enforcement policies and decision-making
- fairness and impartiality in adjudication process. Can be achieved
through judicial independence, public distribution of reasons for decisions, public
proceedings.
- Agency structure, personnel and financial resources play a role in
the ability of the agency to effectively enforce the law.
- Enforcement strategies and approaches also play a role in determining
the effectiveness of the agency.
- Given trend to globalization of business, important for agencies to
be cognizant of potential international dimension to anti-competitive practices and to
cooperate with other agencies to extent possible.
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�. INVESTIGATORY POWERS AND SANCTIONS
- Adequate formal powers necessary to ensure information critical to
investigation can be obtained in a timely fashion, coupled with sanctions for
non-compliance with compulsory processes.
- Adequate confidentiality safeguards important to:
- ensure integrity of the investigative process
- protect commercially sensitive information
- ensure fairness to those accused of allegations.
- Meaningful sanctions required to ensure compliance. Some
anti-competitive practices may be better addressed through remedial measures (structural
and behavioural remedies) rather than sanctions after the fact.
- Variety of additional tools can facilitate effective enforcement ��
injunctions or interim remedial orders, power to sanction violations of remedial orders,
legislated compliance tools.
- Enforcement can be enhanced through explicit mechanisms to encourage
voluntary compliance and promote pro-active avoidance of potential violations (e.g.
advance rulings, public education activities.)
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�. CONCLUSION
- Competition rules and institutions may take variety of forms,
although some key elements can be identified.
- Process is evolutionary and will go hand in hand with growth in
public awareness of benefits of competition law enforcement.
- Canadian experience has demonstrated importance of effective
competition laws to facilitate structural adjustment.