WTO Public Symposium 2003: Session XXI - Competition and Fair Trading

Organized by CUTS

Panelists and Viewpoints

Philippe Brusick, Head, Competition and Consumer Policy Branch, UNCTAD

Coming soon…

Simon Evenett, Director, World Trade Institute, Switzerland

Mr. Evenett centered his discussion on how cartels hurt developing countries, using this fact as a reason for why competition policy is an important debate. He began by citing the fact that imports of cartelized products have grown significantly over the past few years to more than $12 billion. This increased threat calls for action and enforcement of competition law. He used the vitamin competition case as an example of a successful break-up of a harmful cartel. The case against the vitamin cartel (1) lasted 10 years, as it was broken up between the years of 1989 and 1999. The US fines totaled more than $90 million.

Evenett then focused his remarks on developing countries, explaining that overcharges from cartels are even bigger in these emerging economies because they lack active competition enforcement. Cartel enforcement is good because it can prevent the formation of harmful regimes and prevent overcharging, he explained. Evenett also listed the malicious effects of hardcore cartels. He insisted that not only do they hurt the buyer but they also retard development. Evenett was willing to extend the harmful effects to domestic cartels. In conclusion, he asserted that successful prosecution of hardcore cartels has occurred in developing countries and again stressed the harmful effects of non-enforcement. More information, he noted, is available on the World Trade Institute website.

Allan Asher, Office of Fair Trading, UK

Mr. Asher’s emphatic intervention began with a list of assertions followed by the his own observations. The fiery preamble commenced with the claim that domestic governments do not champion the poor. Instead, according to Asher, governments champion business, vested interests, and the powerful elite. Governments are no longer principals in policy, he explained, but more like agents of these interests. The observations he made were linked to the role of modern civil society. He noted that in most countries, the role is unfulfilled.

As for competition policy, Asher said that in most countries some form of competition law already exists. There are different categories of enforcement that are present in most governments, such as prohibitions against practices that steal from consumers. Laws against cartels, bid rigging, and discounts fall under this category. Merger control is another aspect that is often seen in domestic competition policy. Then there are laws that relate to prevention of letting big companies prevent new entrants.

Asher believes it is the responsibility of consumer groups and civil society to promote competition law. He reminded the audience of old issues, such as privatization of utilities, which are taking new manifestations.

Further Comments by Panelists and Delegates

Development

Many of the comments from the floor addressed the intersection of competition and development. One gentleman wondered whether what looks like a neutral agreement may actually be a ploy to get rid of national competition in order to make room for aggressive foreigner interests. In response, one panelist remarks that “it would defy logic” for a multilateral competition agreement to benefit multinational corporations. A delegate from the European Commission felt similarly, calling competition policy not a luxury but a development tool. He explained that MNCs are fearful of the possibility of a multilateral agreement, and even fear the minimalist form which is currently proposed.

Government Intervention

A delegate from the Kenyan Parliament used experiences from his country to question how a multilateral competition regime would operate. For example, he explained, in Kenya, because markets aren’t very large, players get together quickly and create monopolies. He used the examples of banks setting interest rates. He asked what the role of government intervention is in managing such situations. A panelist responded by explaining that competition policy won’t infringe upon national development efforts, so the Kenyan example he had explained would have been helped by a competition regime.

Awareness and Capacity Building

Consumers International made a comment about the importance of awareness and capacity building to the successful implementation of competition policies. (2) A delegate from the Indian parliament made a comment in the same vein, that there must be a level playing field before the developing world can engage in international competition. He questioned whether the agreement would promote competition of equals or unequals.

(1) In the vitamin cartel case, several of the world' s largest vitamin companies, including Roche, BASF, and Rhone Poulaenc, were prosecuted by the US Department of Justice, the EU Commission, and Australian Government for conspiracy to raise vitamin prices and drive out competition. 

(2) See the summary of Session 10 for a more in- depth discussion of how Consumers International treats the trade and competition issue.