Synthesis documents

Competition and Development, IDRC, 2008

    Description
    This book, which can be downloaded free of charge from the IDRC website via the link above, provides an introduction to competition and the laws and policies affecting competition in developing countries. Its focus is on the practical problems these countries face and the steps they have taken and can take to overcome them. The book conveys three central messages: the importance of competition in the development process; the fact that individual countries can tailor and enforce competition law to suit their particular situation; and the importance of international cooperation in entrenching fair business practices and standards. While the book strongly advocates the benefits of robust competition, it nonetheless implies that competition is at best a means to an end, and not an end in itself.

    Part 1 provides a brief primer on trade and competition. Part 2 describes IDRC's involvement in supporting developing-country research in the area of competition law and policy. Part 3 outlines developing countries' experience to date with implementing competition policy, and outlines a number of specific positive outcomes (e.g. increased productivity and reduced bid rigging), as well as challenges that have arisen. Finally, Part 4 offers recommendations regarding the introduction and enforcement of a competition law.

    Summary of results
    The book gives the following recommendations for introducing and enforcing a competition law:

    1. Enact legislation that is strong and supported - Sound legal drafting is vital. The law must be designed to prevent opponents from undermining its aims.

    2. Appoint and encourage strong leadership - Leading a competition authority, especially in its early years, requires determination, independence, and a tireless facility for public engagement.

    3. Recruit expert staff and remunerate them well - New authorities need to hire lawyers with experience in competition, courtroom, and administrative law and procedure. Economists must be trained in industrial organization.

    4. Ensure that judges receive specialized training in competition law - A few judges, strategically assigned to deal with competition cases, should be trained in the minutiae of law and economics.

    5. Recognize that not everyone will be your friend - A coherent mapping exercise should be carried out to identify organizations that currently engage with the authority, and each should be surveyed to identify the degree to which it is friend or opponent of the authority.

    6. Build alliances with the beneficiaries of competition law - Coalitions must be built between the competition authority and those who will benefit from predictable and lasting implementation of competition rules.

    7. Activate popular interest in competition questions - Competition authorities should regularly brief media of all kinds, from mass-market newspapers and broadcasters to sector-specific journals and NGO newsletters.

    8. Build alliances with other government departments - The competition authority should search out and foster coalitions with like-minded departments and agencies of government.

    9. Institute both leniency programs and tough fines - Competition legislation should provide the authority with the power to be both lenient toward defectors from cartels and to punish the rest.

    10. Develop interagency cooperation and entrench competition provisions in trade agreements - Intergovernmental cooperation against anticompetitive activities across borders is imperative.

    11. Monitor liberalized markets closely - The entry of large foreign-owned companies into a developing-country market can significantly benefit the domestic economy. But the cost of these benefits may be losing local competitors and unfairly squeezing local suppliers who now confront a buyer with considerable market power.