Effectiveness of Enforcement Cooperation in Developing Countries: What Role Can Existing Institutions Play?

Abstract

As trade liberalization has progressed, the gap between the rapid internationalization of markets and the fragmentation of the systems of domestic antitrust laws has meant that competition authorities especially in developing countries have experienced considerable difficulties in fighting the transnational anticompetitive practices which originate abroad but have a negative effect on their domestic markets or to adequately intervene against transnational transactions initiated in other countries but affecting their home markets. To try to address this problem, the international competition community has experimented with a number of possible solutions ranging from a failed attempt to promote a multilateral cooperation system in the area of competition to voluntary bilateral cooperation agreements between developed and developing countries, to the creation of an organization meant to facilitate cooperation in the field of antitrust, the International competition network. So far, those solutions have been mostly unsuccessful (in terms of avoiding international restrictions of competition) and frustrating (since cooperation has proved to be much more difficult than expected) especially for developing countries. Regional agreements on cooperation in competition were considered to be more promising largely because it was believed that the cooperating countries may have more of an incentive to cooperate than pairs of developed and developing countries unequal in size and with different stakes and unbalanced trade flows. However the lack of sufficient financial resources and insurmountable jurisdictional problems have so far impeded for the regional agreements in developing countries to achieve tangible results. Developing countries have to be more inventive and find less costly ways to cooperate. Many steps forward are possible, even without creating supra-national authorities. The example of Australia and New Zealand can be of some help.

As for convergence on the procedural and substantive aspects of antitrust law, the OECD, UNCTAD and the ICN all play an important role, with the ICN, specifically designed to meet the challenges facing developing countries. However in order to become more effective in achieving its objectives, the ICN would have to overcome a number of organizational challenges so as to better engage non OECD countries in its activities and ensure that the identification of best practices actually lead to the reduction of transaction costs of firms and to the the creation of a level playing field in terms of procedures and substantive prohibitions.

Keywords: Antitrust issues and Policies, Trade Policy, Economic Integration, International institutional Arrangements

JEL Classification: L5, F13, F15, F55