Tools for effective regional cooperation on competition policy: an outline

1. Effective tools of antitrust policy to minimize the negative impact of trade integration processes and the development of fair competition Astana Forum 24 May ,2014 Hassan Qaqaya Head, Competition and Consumer Policies , UNCTAD Hassan.qaqaya@unctad.org 1

2. Tools for effective regional cooperation on competition policy: an outline Complementarily between trade and competition policies Trade liberalization, competition and growth Implications for competition and market structure A cooperative response Competition provisions in TRAs Substantive areas of cooperation Differences and common ground

3. Complementarily between trade and competition policies Free trade promotes benefits of free markets – competition laws secure those benefits Pressure by privatization and FDI– investment security anddevelopement objectives Trade Agreements contain provisions requiring implementation of competition laws Deregulation in industries and foreign competition

4. Trade liberalization, competition and growth New market entrants – foreign competition Greater competition in national , regional and international markets Increased product and service choice for consumers Increased innovation Opportunities for national businesses at home and abroad (National Champions)

5. Implications for competition and market structure Increase in merger and acquisition activity Foreign acquisitions of leading national firms Tension between competition and concerns about foreign investment Increased trade = increased potential for cross-border anti-competitive activity Increased case load = increased pressure on agency resources Remedies for anti-competitive activity may require action in territory of another country

6. A Cooperative Response Competition Authorities have common goals Increased informal contacts between competition authorities Establishment of formal cooperation protocols between competition authorities including through TRAs for exampleEURASIA Agreement on competition rules and principles, 2010

7. A Cooperative Response Interoperability: Case-related information sharing between competition authorities Coordination of enforcement activity Technical consultations – competition authorities learning from each other Application of principles of comity

8. Africa Asia Latin America and the Caribbean Agreements with the EU EURASIA Which RTAs containing CRPs are we referring to? • - CEMAC, UEMOA/WAEMU • - COMESA, EAC • SACU, SADC • - ASEAN • - SAARC • - APEC • - MERCOSUR • Andean Community • CARICOM • NAFTA (+ US & Canada) • Latin American FTAs (US-Peru, US- Colombia, US- Chile) • - EFTA • -Pre-accession agreements • -Euromed, EU-SA TDCA, EU-Mexico, EU-Chile, EU-Andean Community, EU-Central America (in preparation) • Economic Partnership Agreements EPAs? • Belarussia • Kazakhstan • RUSSIA 8

9. RTAS in effect or under negotiation (as of May 2012)

10. A cooperative response Content of the Agreements: Main aim: challenge anti-competitive practices and state aids that would be illegal under EU law EU-South Africa (SA) TDCA (1999): Opportunities for securing market access; In merger cases in SA, informal cooperation has taken place, even though not covered by the TDCA. EU-Mexico Large number of notification provisions, used predominantly by Mexico (31 as opposed to 1) Euro-Med: More harmonization than EU-SA or EU-Mexico. use countervailing duties if EU State aid rules applied 10

11. Evolving characteristics of competition provisions in EU agreements Szepesi, S. (2004) «Comparing EU free trade agreements, Competition Policy and State Aid » European Center for Development Policy Managment (ECDPM) 11

12. Vertical Restraints Enforcement policies differ significantly; Generally VR are subject to economic evaluation; Other non traditional criteria: Trade related issues; Market power; Foreign Direct Investment Privatisation Regional integration

13. Abuse of Dominance Core concept of dominance is similar in most competition laws; Differences in definition of thresholds; Differences in thresholds to trigger investigations; Differences in approach to what constitute legitimate business and abuse of dominance or unlawful monopolisation

14. Abuse of Dominance:Special criteria in competition laws of the developing partners Abuse exploitation of economic dependence is generally prohibited; Certain legislation prohibit abuse even where there is no dominant position; Significant differences among competition law and enforcement policies relating to joint-ventures; Considerations are given to industrial policy, competitiveness, SME and public interest

15. Competition Provisions in RTAs: Follow the logic that trade needs to be freed from enterprise-level distortions May contain a commitment for both parties to adopt (and enforce) competition legislation May provide for Special & Differential Treatment (S&D): safeguards interests of less–developed partners, exceptions to key sectors, transitional time periods, technical assistance For developing countries: non-reciprocal S&D Exchange of information subject to confidentiality rules 15

16. A cooperative response :Substantive areas of cooperation Variety of objectives: Blurred criteria; Trend towards emphasis on efficiency, consumer protection and competitiveness. Differences in priority attached to competition policy vis-à-vis other policy objectives Different approaches for the control of anti-competitive practices: « Standards » « Prohibitions » or « abuse » Different techniques used for analyzing markets.

17. Differences and common grounds Despite substantial differences among competition laws and enforcement policies, there is now sufficient common ground to form the necessary substantive basis for strengthened cooperation as provided for in the different TRAs agreements. However, need to clarify scope of such common ground and exchange views on remaining differences

18. General Criteria and Methods../cont Process of convergence: universal condemnation of collusive practices (with some exemptions); Joint ventures examined case by case; Among VR only RPM is generally a per se prohibition.

19. New • Publication of the dissemination phase • Current problems facing developing countries and economies in transition in implementing competition provisions in RTAs South-South agreements: • Ensure that markets are not subject to abuses of power; North-South agreements: • Regional competition rules can potentially reinforce the bargaining position of developing economies challenging anti-competition practices at international level ? 19

20. UNCTAD research on Implementing Competition Provisions in RTAs cont’d Need for strengthened coordination between trade and competition negotiators Sharing experiences in regional and international for a, success/failure stories of different jurisdictions Competition chapters and competition principles Avoid past experience of signing agreements without tools for implementation 20

21. Need to rationalize commitments relating to competition provisions • Ensure coherence of competition (and other) provisions across agreements • More effective competition law enforcement: key for increased co-operation • However, different legal and administrative systems and capacities: no “one size fits all” 21

22. Thank you for your kind attention Hassan.qaqaya@unctad.org www.unctad.org/competition 22