Way Forward for the CCI: External Activities – making an impact OECD Seminar New Delhi 23 November 2009 Hilary Jennings Head of Competition Outreach

Enforcing the law Primary function of competition authority Key for credibility Key for establishing a competition culture Taking cases – imposing penalties – reputation Learning by doing

Enforcement: targeted and selective Choosing best + highest impact cases –Maximises impact –Effective and timely deterrence –Demonstrates scope of application of competition law At outset: identify sensitive sectors Cartels: priority Give messages through high impact cases: –Business: deterrence –Consumers: watchdog for competition –Government: importance of competition – resourcing

Focussing and Prioritising Agency Resources Choose what to do and which tools to use Importance for overall effectiveness of regime: –Taking forward “right” cases –Ensuring markets are competitive –Ensuring consumers benefit Importance for competition agency: –Sound and transparent decision-making vis a vis stakeholders

Prioritisation How do you decide what work to do? Possible criteria: –Impact on economy and consumer welfare –Law –Specific sectors – especially those with market failures –Deterrent effect –Strategic significance –Risks – the likelihood of successful outcome, risks of not taking action –Resource implications

Deterrence No deterrence without enforcement Deterrent effect of enforcement is significant: (From UK OFT commissioned study 2007) –Cartels – 5:1 (external lawyers); 16:1 (UK businesses) –Other agreements – 7:1 (external lawyers) 29:1 (UK businesses) –Abuse of dominance – 4:1 (external lawyers) 10:1 (UK businesses) –Mergers: 5 proposed mergers abandoned/modified on competition grounds before OFT aware of them, for each merger blocked/modified by UK competition agencies.

Securing compliance Embed a culture of competition in business Different mechanisms: –Targeted outreach to specific sectors –Host a Competition Forum for representatives of private sector and academia –Educate Trade/Business Associations – spread the message of compliance through their membership As cases start to come through: increase in deterrence and compliance ENFORCEMENT IS KEY!

Advocacy Complements Enforcement Advocacy opens more markets to competition, with greater need for enforcement (goal scoring) Greater enforcement leads to lobbying for reduced competition scrutiny (goal-keeping)

Advocacy: Role for Competition Authorities Law enforcement: most significant role But also an agent of challenge and change: –(i) influence government policy –(ii) influence business behaviour

Advocacy: Influencing Government Policy At the design, implementation and review stages: –(i) Scrutinise potential impact on competition of new regulation or policy (e.g. OECD Competition Toolkit) –(ii) Market studies: identify and address problems in markets not working well –(iii) Promote market-based alternatives to traditional regulation –(iv) Provide guidance to public sector during privatisation or liberalisation or when private sector introduced to public services Use of softer tools to engage with government particularly useful when public sector restrictions not susceptible to enforcement actions

Advocacy Tools: OECD Competition Assessment Toolkit Designed to help evaluate whether a law or regulation unduly restricts competition. The goal is to identify ways to achieve the objectives of laws and regulations with the least harm to competition. Can be used in a process to streamline large numbers of existing laws and regulations, review proposed new ones. Can be used at national, regional and local levels

OECD Competition Assessment Toolkit (2) Competition checklist to filter policy proposals, laws and regulations Three questions: –Are there restrictions on entry by new businesses? –Do the regulations affect the ability of businesses to compete? –Do the regulations reduce the incentive of businesses to compete vigorously? Revise the policies that unduly restrict competition

Advocacy Tools: OECD Guidelines for Fighting Bid Rigging Best practices in OECD countries Source Help procurement officials design public tenders to reduce bid rigging (Design Checklist ) Better tender design Help procurement officials detect bid rigging when it occurs (Detection Checklist) Tougher law enforcement 13