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Dr Philip Marsden Director and Senior Research Fellow Competition Law Forum

A Deregulated Economy without Competition law Free Market or Free Jungle? Third Business Law Conference of the Nigerian Bar Association 25-28 March, 2008 Abuja, Nigeria. Dr Philip Marsden Director and Senior Research Fellow Competition Law Forum. Why not to have a competition law.

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Dr Philip Marsden Director and Senior Research Fellow Competition Law Forum

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  1. A Deregulated Economy without Competition law Free Market or Free Jungle?Third Business Law Conference of the Nigerian Bar Association25-28 March, 2008 Abuja, Nigeria Dr Philip Marsden Director and Senior Research Fellow Competition Law Forum

  2. Why not to have a competition law The skeptics • Trade liberalisation is enough: foreign entry • Domestic de-regulation is enough: local competition • Higher priorities; opportunity costs • Fears of mis-enforcement • … and the usual self-serving business points

  3. Response to the skeptics • Trade and other liberalisation is not enough (HK, Singapore) • Competition policy bolsters and polices liberalising markets • Higher priorities – once you have a market, you need a referee • Benefits outweigh costs • Mis-enforcement unlikely if law implemented properly

  4. The real benefits • Catalyst for market reforms • Counterweight to entrenched business and regulatory interests • Preserves benefits of privatisation • Prevents private fiefdoms • Better than the alternative: direct regulation

  5. When is a country ripe for a competition law? • Increasing economic development, industrialization and size of an economy • Stronger reliance on market forces; less state-dominated economic activity; less state aid, less subsidies • Increasing openness to trade and dependence on FDI • Support of international organizations • Increased membership in regional trade agreements • Less corruption

  6. Desert v. Jungle • Desert: under-developed economy: few resources, little economic activity…much more important things to worry about • Jungle: Rich in resources, growing economy, increasing development, predators lurking: time to preserve and build on economic gains

  7. Transplant Transplanting a market framework law • Legal landscape is already jungle-like; tangle of laws; over-regulation; private enterprise can’t breathe • Market even more so: predators kill each other off • Competition law - to provide order out of chaos: what order, evolutionary? • To make overlapping laws coherent and efficient • To prevent predation, abuse of dominance, cartels

  8. Transplant • Will the sapling survive? • Support of both government and business to put down roots • Rule of law and legal certainty: to battle winds of change • Enforce in daylight: avoid the fungus of corruption - transparency, publicity • Needs a constant gardener: The Bar The Bench Research organizations

  9. Transplant • Can it adapt to local conditions? • The test: can it achieve its goals? • Proponents: the gardeners • Opposition: the protectionists • Apathy • Communication is crucial

  10. What to focus on? • Market studies; research • Educating media, departments, business • Build collateral institutions • Government restraints – especially barriers to entry by entrepreneurs • Bid rigging and cartels

  11. The law itself • Cautious: first of all, do no harm • Basic law or comprehensive law implemented in stages • Support private actions • Compulsory process powers • Independent staff • Judicial deference to the agency • Regional cooperation

  12. The draft bill • Multiple goals - some conflicting; have a policy to handle conflicts: i.e. small enterprise, but low prices for consumers • Commission will be responsible for competition, consumers and unfair trade: excellent idea, unique • Antidumping provisions - price-raising powers…thus need to use a predation test

  13. The draft bill • Clear threshold for dominance - predictable…may be under- or overinclusive…consider economic analysis • Mix of tests: ULC and SLC…defined? • Can you handle all the complaints?

  14. Building Capacity • Independent agency • Independent officials - one job to do and do it well • Economists • Due process and firm but well-reasoned decisions

  15. Enforcement stance • Government restraints on entry • Ban cartels, esp bid-rigging in government procurement contracts • Build recognition and acceptance via media • Go easy on joint ventures and distribution agreements

  16. A Deregulated Economy without Competition law Free Market or Free Jungle?Third Business Law Conference of the Nigerian Bar Association25-28 March, 2008 Abuja, Nigeria Dr Philip Marsden Director and Senior Research Fellow Competition Law Forum

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