Competition Remedies: What Should They Seek to Achieve?

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• Competition Remedies What Should They Seek to
  Achieve?
• Dr. Mark Williams
• ACF/GTZ Conference
• Jakarta
• 23 May 2007

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What is the function of competition remedies?

• Competition remedies are the means by which a
  competitive economy is achieved.
• Such remedies presuppose a national desire to
  create a more competitive domestic and
  internationally traded economy.
• Attaining the political consensus as to the
  necessity of a pro-competition policy is
  difficult to achieve in many countries.
• Without such consensus deciding what should be
  the objectives of a competition policy is
  impossible.
• If objectives are not clear, the remedies needed
  to deal with anti-competitive behavior and
  uncompetitive industrial structures will not be
  adopted and so a more competitive economy will
  not be achieved.

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Nature of competition Remedies

• Legal remedies form only part of an overall
  pro-competition strategy.
• Basic pro-competition policy choices include
• Low external tariffs on imports, so providing
  competitive pressure on domestic producers.
• Acceptance of foreign direct investment, so as to
  provide alternatives local production of goods
  and services in addition to existing domestic
  producers.
• Dismantling public or private sector monopoly
  producers including a privatization policy so as
  to create or enhance market structures.
• All these policy choices are inherently
  politically controversial

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National Champions

• Often industrial policy to promote national
  champions conflicts with a pro-competition
  policy.
• France is a good example of dirigisme.
• OECD research suggests that such policies do not
  necessarily improve overall economic performance.
• Australias deregulation and pro-competition
  policies over the last 20 years have improved
  long term economic growth.
• Thus, an overall pro-competition policy choice
  involves more than just competition law remedies.

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Specific Antitrust Remedies

• Legal remedies must be carefully tailored to
  address the specific competition harm in
  question.
• Often the root of many anti-competitive practices
  lies in government action.
• The competition agency must have power to
  scrutinize and recommend pro-competition
  legislative and regulatory measures.

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Interim and final injunctions

• The competition law must contain powers for the
  agency to order the cessation of conduct prior to
  the completion of a full investigation in urgent
  cases where irreparable harm may be done to
  competition in a given market if the conduct
  continues.
• Final cease and desist powers are also
  necessary.
• Powers to order a particular course of conduct
  may also be necessary obligation to allow
  access to essential facilities or to supply
  inputs to a downstream producer.
• Courts or a tribunal must have similar powers in
  private litigation actions.

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Confiscation of unlawful profits

• As a minimum, the wrong doer must not benefit
  from his wrong or else he will repeat the
  conduct.
• Ascertaining the precise amount of unlawful gain
  is very difficult definition of affected market
  and accounting standards are complex and open to
  dispute.

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Deterrence

• In addition to removal of unlawful profit, the
  wrongdoer must be punished sufficiently to act
  as a deterrent to further law breaking himself
  and to discourage others.
• Risk of being caught must be high enough to
  encourage lawful behavior leniency programs.
• How big a fine to impose? seriousness of
  breach, longevity, effect on the market all
  factors to be considered.
• But if fine is too high it may bankrupt the firm
  and further weaken competition dilemma for the
  agency!
• Personal responsibility seen as very important to
  encourage good behavior by executives.
• Criminal penalties? Possible problematic proof,
  criminal process.
• Disqualification as a director? Easier to impose
  and may be effective especially in Asia.

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Private Actions

• Important in America because of special
  characteristics of the US tort system jury
  trials, contingency fees, punitive and treble
  damages.
• Much more limited impact elsewhere.
• However, they can be a very important supplement
  to official action and help to provide a remedy
  if the agency cannot or will not act.

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Misleading and deceptive conduct

• Necessary to ensure accurate market information
  so as to allow consumers to make appropriate
  choices.
• But does this power need to be in a competition
  statute?

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Structural Powers

• Investigation of existing markets with low or
  muted competition.
• Small markets dominated by conglomerates with
  many subsidiaries might crowd out new market
  entrants.
• Prevention of attainment of market power via MA
  problematic as a prospective assessment of
  future harm must be undertaken.

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Conclusion

• Competition remedies are part of an overall
  pro-competition policy.
• Legal remedies must be carefully selected to deal
  with the particular harm discovered.
• A wide range of remedial tools are needed to
  ensure that the competition law can achieve its
  agreed objectives.

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Thank you!

• Dr. Mark Williams
• afmarkw_at_polyu.edu.hk