Competition law in developing countries: Why put the horse before the cart?
Mohamed Okasha Abdelaal
Commercial Law - School of Law - Alexandria University, Faculty of Law
Abstract
The modern industrial organization establishes that competitive market structures are necessary for economic growth. And, with the demise of the state-planned economy after the breakup of the Soviet Union and the rise of the market economy as the superior system, there has been a great surge in the adoption of competition laws around the world. This surge in competition laws spurred a debate about which competition law and policy is suitable for developing countries? And, whether the transplantation of successful competition law regimes can help developing countries enhance their concentrated market structure and facilitate their transformation to market economies with competitive markets. In other words, can there be a universal competition law regime? On one hand, it is tautological to ask if transplantation takes place or not because it is already ubiquitous. On the other hand, there is growing attention in competition law and policy to the special characteristic of economies, institutions, and cultures in developing countries that are unique and different from that of developed world. Particularly, many developing countries are in the process of transformation from a planned economy with a command and control economic system to market economies and thus a competition culture is lacking. Further, most developing countries have highly concentrated sectors, they lack efficient financial intermediation institutions, appropriate infrastructure, financial and human resources inter alia. This propelled scholars to consider the implications of these characteristics that are different from developed countries on the scope and substance of competition law and enforcement. Most of this later literature confine their discussion and advice to developing countries on how to use economic concepts in ways that fit their economic characteristics, or the appropriateness of having goals other than efficiency, or the best way to construe consumer welfare. Other papers discuss whether the use of standards or rule-based would be better. All these scholarships are enlightening and of great importance to the developing countries' competition law construction and enforcement of competition law. Nonetheless, it underappreciates the political economy's effect on competition, even if it is acknowledged it is usually then brushed away and considered as a given when advising developing countries. Unfortunately, this is the case, though empirical studies show that corporations and investors in developing countries are more concerned about government restraints to competition and the costs it imposes on doing business than the effectiveness of antitrust. A natural consequence of this is that a sound competition policy (including competition law) in developing countries, which its first goal should be generating competition in the first place, must accordingly address the main problems for entrepreneurs. And, as just said a fundamental obstacle to having a competitive market is the government itself. But why political economy and government restraints are absent from mainstream discourse in competition law? One reason is that developed countries competition laws, and particularly the law of the oldest and most influential competition law of the United States does not consider government restraints as a competition problem. Due to this disregard of the US antitrust law to the political economy, the harmonization and transplantation process focused solely on the core antitrust transgressions such as cartels. While the government restraints are rarely discussed in mainstream competition law literature. This paper, thus, aims to shed light on this underrepresented problem of competition law in many developing and transitional economies. The paper analyzes how can competition law and competition agencies play a role in policing state restraints? In answering this question the paper will present a comparative study of the competition law and enforcement application to state restraints In the US and that of the EU in addition to competition law examples of other developing. This work demonstrates the extent of this problem the pervasiveness of government intervention in a number of industries and the costs these barriers impose. Finally, it studies the different approaches that competition agencies can undertake to address government restraints highlighting its limitations and proposing how it can be attuned to help developing countries achieve their goals from the competition.
Keywords
Competition Law, Development, Government restraints, Transplantation
