Competition Issues with an International Dimension: How to tackle (some of) them? INCSOC Conference 29 January, 2004 Geneva Dr Philip Marsden Director, Competition Law Forum and Senior Research Fellow

Competition issues with an international dimension Cartels – import and export Cartels – import and export Abuse of dominance – exploitative & exclusionary Abuse of dominance – exploitative & exclusionary Mergers Mergers Vertical arrangements Vertical arrangements How do we deal with them? –national competition laws –cooperation agreements –other international mechanisms

Gaps in enforcement coverage Absent or ineffective laws, arrangements for cooperation Absent or ineffective laws, arrangements for cooperation Jurisdictional problems Jurisdictional problems Different substantive approaches Different substantive approaches

How to fill these gaps? Accelerate natural spread of competition laws and arrangements Accelerate natural spread of competition laws and arrangements Converge to principled approach Converge to principled approach Multilateral agreement can help Multilateral agreement can help

Trade and competition at the WTO – now an orphan? Recent past proposals Competition Law Competition Law Cartel Ban Cartel Ban Enforcement cooperation Enforcement cooperation National Treatment National Treatment

Cartel ban Canhelp address cartels, though narrow definition and many exclusions Cannotaddress abuse of dominance, exclusionary practices, mergers Already exists in competition laws so, a stepping stone to more

Enforcement cooperation Canhelp address cartels, mergers and some abusive and exclusionary behaviour Cannothelp if laws and approaches differ Cannotbe made binding …so, a partial answer to some of the problems

National Treatment Canhelp address encouragement of impediments to foreign entry (where BFE>BDE) Cannotaddress all aspects of cartel, merger, abusive or exclusionary behaviour (especially if a barrier is a barrier to all i.e. BFE=BDE) …so, a partial answer to some of the problems

There is no ‘one’ solution …but do need something else Q. Not all competition problems are trade problems but what are? A. Exclusion generallyacross the board The key ‘trade and competition’ link: Exclusion of foreign entrants, by whatever practice

Exclusionary practices Cartels import; collective refusal to deal Abuseindividual refusal to deal/licence predation denial of access Mergersvertical & conglomerate mergers Verticals exclusive purchasing, fidelity rebates

Importance of exclusionary practices For tradethe main trade frictions and disputes relating to business practices (Structural Impediments Initiative; Kodak/Fuji, SABRE/AMADEUS, GE/Honeywell) For policyif we do not forge a multilateral remedy a unilateral one will be imposed a unilateral one will be imposed

So why aren’t we trying to tackle these problems? Controversy about exclusionary practices disputes between the trade and competition communities disputes between the trade and competition communitiesand debate within the competition community debate within the competition community Trade negotiators find it all too difficult Not an easy ‘deliverable’

But all of T&C is ‘too difficult’ Couldn’t in Cancun So, what can we do? Can we bridge the divide? Can we help prevent exclusionary practices that harm trade and competition in all countries?

One suggestion Use the Cancun delay Study the common elements of these practices Combine the work on them by OECD, UNCTAD and the WGTCP Focus on the impact: of exclusion on competition and consumer welfare

Guidelines Compromise outside the ‘T&C’ box is crucial Compromise inside the ‘T&C’ box must never be allowed Do not create a trade remedy that helps only complainant corporations Use both trade and competition policy to protect competition in the market

Recommended focus Trade and Competition Significant Substantially impediment which lessens to foreign entry therebycompetition or expansion inin the relevant a Member’s marketmarket

A focus on both ‘T&C’ Canhelp address the toleration or encouragement of impediments to foreign entry Canaddress all exclusionary aspects of cartels, mergers, abuse and verticals Canprovide a principled analytical anchor for the application of other competition rules at the WTO

Competition Issues with an International Dimension: How to tackle (some of) them? INCSOC Conference 29 January, 2004 Geneva Dr Philip Marsden Director, Competition Law Forum and Senior Research Fellow