Panel At WTO Discusses Competition Policy And Why It Matters To Trade

Competition policy has evolved along with globalization and trade in past years. Now there are challenges such as the growth in international trade transactions and rapidly increasing cross-border mergers and antitrust cases. In parallel, the proliferation of competition policies and system has created potential of conflict of jurisdiction. Experts on competition and trade policies came together during the World Trade Organization Public Forum last week to discuss what the WTO can do and how better coordination between the competition policy and trade policy can be achieved to support growth and inclusiveness.

Competition Policy in the WTO

Moderator Rob Anderson, counsellor at the WTO’s Intellectual Property Division and team leader for government procurement and competition policy, provided some background on competition policy within the WTO, pointing out that there used to be an active formal work programme on competition issues. The original working groups still exist, but are have been inactive since 2004.

Whilst this work was formally put on hold, a great deal has happened in the meantime on competition policy and how it relates to international trade. Up from 35 countries in 1995, there are now 130 countries within the WTO which have competition laws and regimes, and much training and capacity building on competition policy has been made.

Why it is Needed and its Relationship to Trade Policy

Eduardo Perez Motta, founding partner of Agon Economics Law and Strategy, began by outlining the basic congruence and complementarity between trade and competition policies.

Anderson said in summary of Perez Motta’s remarks: “The two are not identical, but in the normal case, are broadly supportive of each other as, for example, competition policy can throw light on certain kinds of trade measures which can sometimes be an impediment to trade.”

Perez Motta contended that the world is globalised and it is necessary to open doors to trade, and thereupon competition laws are needed. However, with the proliferation of competition laws, there exists potential for conflict in jurisdictions, and competition law could also be used a tool for discrimination and/or market exclusion, he warned. Unregulated mergers and the abuse of cartels and dominance needs to be prevented, for example.

Perez Motta referred to the International Centre for Trade and Sustainable Development and the World Economic Forum’s E15 initiative, composed of experts on competition and trade policies and systems.

A document was produced by the initiative with proposals to firstly revise competition policy and to enhance coordination and collaboration at the supranational level. Perez Motta argued that competition policy should be involved in treaty decision-making and to use free trade agreements (FTAs) as vehicles to promote greater cooperation on competition enforcement.

Jean-Yves Art, senior director, Strategic Partnerships, Microsoft Switzerland, likewise emphasised the relationship between competition policy and trade law. Art put forward that competition policy does not exist in isolation but is part of a set of broader regulatory instruments and must work towards the economic objectives of a country or of the European Union’s economic integration and cultural welfare for example.

In the event that competition policy can lead to results that are not consistent with fair competition principles, trade law should come into play, such as with non-discrimination principles or due process, suggested Art.

Inclusiveness

Competition policy was also discussed by speakers as an effective force for inclusiveness and to support growth.

Sean Ennis, senior economist in the Competition Division of the Organisation for Economic Co-operation and Development (OECD) said competition policy matters on a day-to-day basis because of prices. For example, he said, “the prices of food matter.”

Small and medium-sized enterprises also need access to goods and services, and competition policy can ensure that prices do not reach excessive levels, he said. According to Ennis, by having companies compete with one another, lower prices would allow more businesses to enter and grow in the markets.

In order to get rid of illegitimate market power, which can raise prices and harm those with lower market power, concrete mechanisms must be sought, he said. Ennis contended that government regulations must be improved, noting also that governments can be the best creators of cartels and monopoly powers themselves. Competition policies need better coordination and merger policy has an important role to play too, he said.

“Mergers have very large volume and very large impacts on the economy” and there is a strong relationship between merger acquisitions, sale activity and good economic performance, “making mergers something important to encourage” said Ennis. Ennis recommended joint working mechanisms, common merger filings and common investigation teams, as numerous countries are setting their own policies.

Pradeep Mehta, secretary general of the Consumer Unity & Trust Society (CUTS), in Switzerland offered his views on comparative laws and institutions, and called for market regulation. For developing countries, the state still has an important role to play in regulation, which cannot be left to the private sector, he said.

Mehta also raised concern about the abuse of intellectual property rights. Mehta pointed to an “inherent contradiction that IPRs have natural monopoly rights.” These are legitimate rights, he said, but competition policy could prevent the misuse of these rights.

Alexandra Nightingale is researcher at Intellectual Property Watch. She completed her Bachelors in Law at the University of Sussex and holds an LLM degree in International Law from the School of Oriental and African Studies in London. During her Masters, she developed a strong interest in Intellectual Property, particularly patents and the aspects relating to global health. Her research interests now also include geographical indications and trademarks.

Image Credits: Alexandra Nightingale