Competition policies need to address globalisation

Globalisation and competition policy came under scrutiny at a recent conference in Cape Town as regulators, economists, lawyers and academics wrestled with how to achieve growing and inclusive economies through effective competition enforcement.

The discussion exposes divergences in approaches to competition policy across jurisdictions. In 1947, the UN Conference on Trade and Employment attempted and failed to adopt the Havana Charter that encompassed aspects of international trade and competition policy.

In 1996, the World Trade Organisation (WTO) developed a working group on the interaction between trade and competition policy to clarify core principles including transparency, nondiscrimination, procedural fairness, provisions on hardcore cartels, modalities for voluntary cooperation and, in addition, support for the reinforcement of competition institutions in developing countries.

This working group has been inactive since 2001, but the International Competition Network was established that year, linking competition authorities across the world.

International trade and the concomitant prevalence of cross-border anticompetitive conduct has grown tremendously since those early initiatives to build consensus on a competition framework and cooperation among authorities.

This affects the work of SA’s Competition Commission that in the past three years, has assessed about 36 mergers also notified in other international jurisdictions, as well as cartel conduct which permeates borders — including investigations into markets relating to foreign exchange, deep-sea transportation and automotive components.

There is a gap in the global approach to dealing with crossborder anticompetitive transgressions — in the parameters of divergence across countries in their approaches. This raises the question of what is, or should be, the approach to international competition policy and how to define the terms and the scope of principles such as convergence, harmonisation and co-operation. The work undertaken by global organisations such as the African Competition Forum, International Competition Network, UN Conference of Trade and Development, World Bank and Organisation for Economic co-operation and Development is critical in developing a voluntary and concerted approach to competition enforcement through guidelines, peer review and capacity building.

RAPID CHANGES

view on the mergers between Wal-Mart Stores and Massmart Holdings and recently between Anheuser-Busch InBev and South African Breweries.

The effect of such increased cross-border economic activity within SA is a concern not only for trade policy, but also competition policy and the Competition Commission’s approach to competition law enforcement.

SA’s competition policy encompasses equal access to markets, efficiency, consumer welfare and socioeconomic goals such as employment and the greater spread of economic ownership. Although not unique to SA, this approach differs from what has been adopted by most competition authorities in the developed world.

In the developed world, the focus is exclusively on competition issues and other issues are dealt with through other policy instruments.

Another difficulty is the divergence in the capacity and capabilities of competition law institutions, with Western Europe and the US having more mature competition authorities than elsewhere in the world.

However, all is not lost, because there is a great amount of harmonisation and an equal amount of co-operation at multilateral and bilateral levels.

This is seen not only in the development and strengthening of competition enforcement within most regional trade blocs, but also through bilateral cooperation between competition authorities.

The Competition Commission is an active participant in the work of the African Competition Forum, International Competition Network, the UN Confer-

THERE IS A GAP IN THE GLOBAL APPROACH TO DEALING WITH CROSS-BORDER TRANSGRESSIONS

ence on Trade and Development, World Bank and the Organisation for Economic co-operation and Development and has concluded and adopted memoranda of understanding with several jurisdictions including the European Commission, Namibia, Brics and the Southern African Development Community.

This month, the commission concluded and signed memoranda of understanding with the competition authorities of the Russian Federation and Kenya.

This level of co-operation is invaluable as it builds a systematic approach to competition enforcement that mitigates against inconsistencies across jurisdictions in which companies engage in the same or similar anticompetitive conduct.

It is also beneficial for business as it reduces uncertainties and the cost of doing business across jurisdictions.

The global economy is becoming more concentrated, as illustrated by recent merger activities in the chemicals and agro-processing industries. Business conduct is also becoming more complex with the use of digitalisation and big data.

It will become imperative to revisit the work the WTO started and to continue advocacy work in other global organisations to develop an international framework on co-operation leading to global convergence.