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Competition Policy Issues in the ASEAN Context

Competition Policy Issues in the ASEAN Context. Erlinda M. Medalla PIDS Research Fellow 7up 2 Final Meeting June 27-28, 2006 Bangkok. Brief Survey of Competition Law in ASEAN. Brunei Darussalam. Monopolies Act (1932) but no comprehensive legislation pertaining to all aspects of competition

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Competition Policy Issues in the ASEAN Context

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  1. Competition Policy Issues in the ASEAN Context Erlinda M. Medalla PIDS Research Fellow 7up 2 Final Meeting June 27-28, 2006 Bangkok

  2. Brief Survey of Competition Law in ASEAN

  3. Brunei Darussalam • Monopolies Act (1932) but no comprehensive legislation pertaining to all aspects of competition • Currently developing its competition law • Comprehensive single regulatory body or sectoral regulations? • How properly to implement the competition rules from grassroots up

  4. Cambodia • Various legislations covering aspects of competition and consumer protection but no comprehensive competition law • Passing a new competition law appears to have low priority • Priority: to create functioning private markets before being overly concerned about their domination and abuse

  5. Indonesia • New competition law (1999): Prohibition of Monopolistic Practices and Unfair Business Competition, effective since March 2000 • Created the Commission for the Supervision of Business Competition (KPPU) • Tasks: Both law enforcement and policy recommendation • Increasing application/enforcement

  6. Indonesia • Challenges • New culture: lack of understanding and internalization of competition law and policy by the government and legal institutions and business sector • Different perceptions between KPPU, government institutions and other legal institutions • Lack of human resources and competencies • Lack of operational instrument of competition law • Need to develop guidelines and cooperation with police

  7. Lao PDR • Decree on Trade Competition, PMO No. 15 (2004) • Regulates monopolization and unfair competition in trade of all forms, to promote fair trade competition, protect the rights and legal interests of consumers and to encourage business activities • Competition Authority • Trade Competition Commission under Ministry of Commerce

  8. Malaysia • Sectoral approach: no national competition law • There is an array of statute which regulate trading and business activities as well as protect the consumer interests • New competition law being considered • Since 1991; recognized in 8th Malaysian Development Plan; cautious approach

  9. Myanmar • No competition policy or law • Does not appear to be on the immediate horizon of policy makers • Lack of competition culture • Transition economy; takes time to change mindset • inward-looking policy and closed-door form of socialism • high levels of government intervention • public monopolies which restricts entry into several sectors of the economy • under-developed private sector

  10. Philippines • Various legislations covering aspects of competition and consumer protection but no comprehensive competition law • Has an anti-trust law that has never been used • Various bills being proposed • Sector reforms incorporating competition objectives

  11. Singapore • Competition Act in October 2004 • Prohibited activities • anti-competitive agreements • abuse of dominant position • anti-competitive mergers & acquisitions • Scope of Application • applies to all undertakings but there are exemptions • Enforcement • Appeal Process

  12. Singapore • Competition Authority • Competition Commission of Singapore (CCS) • to implement and enforce the competition law • statutory body under Ministry of Trade and Industry, Singapore • Powers of the CCS • investigate any infringement • make decisions • impose sanction

  13. Thailand • Enacted Competition Act B.E. 2542 in 1999 • Competition Authority • Trade Competition Commission (TCC) under Department of Internal Trade (DIT) • consists of 16 members from public and private sectors • have specialized sub-committee, inquiry sub-committee and appellate committee

  14. Vietnam • Law 27-2004-QH11 on Competition • approved in November 2004 session and came into force on 1 July 2005 • Establishes a Competition Commission and Competition Council • Competition authorities have been established but are not yet operational Budget and human resource problem

  15. Vietnam • Competition authorities • Vietnam Competition Administration Department (VCAD) • established under the Ministry of Trade (MOT) in early 2004 • delegated statutory powers effective 5 February 2006 (more than 6 months after law effectivity) • Vietnam Competition Council (VCC) • will comprise 11-15 members appointed by the Prime Minister on the proposal of the MOT • will be responsible for hearing and resolving cases concerning practices in restraint of competition

  16. Major Issues • Question on the need for a new Competition Law; Create a central competition authority? • Serious concerns about capability and competency • Competition culture not fully developed • Inadequate Information and advocacy • Interface with other government policies • E. g. industrial policy, agricultural development, environment protection

  17. Main Apprehension • Difficult task to implement properly • Apprehensions about the types of business practices will be considered anti-competitive or restrictive • Pessimistic that, at the very least, it would become just another regulatory layer • Risks of regulatory capture • So many things could go wrong…

  18. Central Competition Authority? • How can this become a credible, respected Authority? • Goes back to the issue of capability and competency • Should have good legislative foundation • Relationship between regulatory bodies and Competition authority

  19. Enforcement issues • Costs of creating enforcement body and needed capability building, • Cost of enforcement itself • Risks from government failure • These could weigh heavily against acknowledged potential benefits • Sectoral approach more cost-effective?

  20. Interface with Other Government Policies • Various national objectives other than competition-- including safety and standard regulations, equity and access, sector development. • Concern about how competition policy could restrict policy space for other national objectives

  21. Interface with Other Government Policies • Conflicts could arise. Priorities should be made clear at the outset. And sometimes this is not easy. • The institutional design, and the division of powers and responsibilities between sector specific agencies and the general competition authority should be carefully crafted.

  22. Nonetheless… • There is increasing recognition of benefits from having a working competition law and policy • Especially within the context of the global regime, need for some form of regional cooperative approach.

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