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Sofia Competition Forum

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Title: Sofia Competition Forum


1
Sofia Competition Forum
  • 1th SCF Annual Conference, November 2012, Sofia,
  • Hilton Hotel,
  • Capacity building needs of young competition
    agencies in the Western Balkans
  • Hassan Qaqaya
  • UNCTAD
  • Hassan.qaqaya_at_unctad.org
  • www.unctad.org/competition

2
The West Balkan countries Needs and challenges
  • Do all WB countries face the same challenges?
  • Does capacity building and technical assistance
    need to be calibrated to suit local
    circumstances?
  • What should be the form of delivering capacity
    building and TA?
  • How to assess the effectiveness of capacity
    building ? Impact ? Sustainability?
  • Issues for discussion .

3
Essential conditions for agency effectiveness
  • An effective competition agency requires
    certain essential conditions such as (a)
    independence (b) adequate financial resources
    (c) skilled staff to carry out complex
    investigations of competition cases (d)
    leadership (e) the ability to advocate
    compliance with competition law among business
    and government agencies to take competition
    objectives into account and (f) effective
    cooperation with sector regulators.
  • Most competition agencies in WB Countries have
    10 to 15 years of existence, and continue to face
    challenges in establishing strong foundations.

4
Essential conditions for agency effectiveness../..
  • In addition to these challenges, there are
    conflicting objectives of the competition law
    with other economic policies,.. in some
    situations a lack of good governance,. a lack of
    political will on the part of policymakers and
    .a lack of a competition culture.

5
capacity-building and technical Assistance to
overcome these challenges.
  • In this regard, technical assistance and
    capacity-building are of importance to overcome
    these challenges in order to help the recipient
    countries building up effective and efficient
    competition agencies. For more than three
    decades, UNCTAD and other international
    organizations such as OECD, and ICN ,World Bank
    and regional Banks, CUTS, and the more advanced
    competition agencies have been striving to
    improve the capacity of young competition
    agencies around the world.

6
capacity-building and technical Assistance to
overcome these challenges.../..
  • An important and sometimes overlooked element of
    technical assistance in competition policy is the
    provision of written materials geared to young
    competition agencies. Among UNCTADs
    contributions in this field are the Model Law on
    Competition, Handbook on competition legislation
    with commentaries, Manual on the formulation and
    enforcement of competition policy, Handbook on
    investigative tools for competition cases, Peer
    reviews and reports prepared for the IGE on
    competition policy. See also OECD and ICN below,

7
Review of existing capacity building activities
  • Existing capacity-building activities on offer
    includes
  • (a) Guidelines and descriptions of the roles,
    functions, powers and responsibilities of
    relevant national competition authorities from
    those countries that have such legislation and
    competition authorities
  • (b) Provision of legal assistance and policy
    advice, supported by domestic experts who are
    well-versed in their own national legal system
    and political-administrative structure, with
    respect to
  • Identification of the statutory structure and
    substantive elements that should be included in
    the legislation
  • Legal concepts relating to competition i.e.
    anti-competitive practices, mergers, hard-core
    cartels, abuse of dominance, consumer protection,
    State monopolies, regulatory objectives, etc.
  •  

8
Review of existing capacity building
activities../..
  • Administrative, criminal and civil actions and
    penalties, including the allocation and extent of
    criminal and civil responsibility and liability
    for violations of the national competition
    legislation, the applicable rules of procedure
    and the appellate process, etc. and
  • (v) Procedures for information exchange and
    cooperation with competition authorities of other
    countries.

9
Designing and assessing effective capcity
building
  • Determining how best to design technical
    assistance programmes to interact with nascent
    and financially constrained competition agencies
    is a difficult and complex task. This exercise
    requires information and data that can be
    difficult to collect to conduct this type of
    exercise. Meanwhile, efforts have been undertaken
    by actors in this field and academics to carry
    out ex-post evaluations of programmes implemented
    in the early 1990s.
  • Among these actors, UNCTAD,OECD, ICN,WB, the
    United States Federal Trade Commission (FTC) and
    the Department of Justice, EU DG Comp, academia
    have attempted to conduct an assessment of
    experiences in providing technical assistance to
    young competition agencies around the globe..
  •  

10
Designing and assessing effective capcity
building published research and findings
  • UNCTAD (2011). Foundations of an effective
    competition agency. TD/B/C.I/CLP/8. Geneva.
  • OECD (2009). Challenges faced by young
    competition authorities. Note by the secretariat.
    Global Forum on Competition, 19-20 February 2009.
  • United States Federal Trade Commission, A
    Conference on Charting the Future Course of
    International Technical Assistance, February 6,
    2008, available at http//www.justice.gov/atr/pub
    lic/reports/250908.pdf.
  • ICN (2007). Finding related to technical
    assistance for newer competition agency, May.
  •  World Bank, Tomas Serebrisky (2004). What we
    know about competition agencies in emerging and
    transition countries? World Bank Policy Research
    Working paper 3221.
  • Kovacic WE (1997), Getting Started Creating New
    Competition Policy Institution In Transition
    Economies, 23 Brooklyn Journal Of international
    Law 403 (1997).
  • Simon J. Evenett (2006). The effectiveness of
    technical assistance, socio-- economic
    development, and the absorptive capacity of
    competition authorities. University of St.
    Gallen and CEPR, 31 August.

11
Designing and assessing effective capcity
building research and findings
  • Daniel D. Sokol (2009). The future of
    international antitrust and improving antitrust
    agency capacity. Northwestern University Law
    Review. Vol. 103, N2.
  • Nicholson MW, Sokol DD and Stiegert KW (2006).
    Technical Assistance for Law and Economics An
    Empirical Analysis in Antitrust/Competition
    Policy. Legal studies research Paper Series,
    Paper N 1024, University of Wisconsin Law
    School, November 2006.
  • Sokol DD and Stiegert KW (2008). An Empirical
    Evaluation of Long term Advisors and Short term
    Interventions in Technical Assistance and
    Capacity Building. The Global Competition Law
    Centre Working Papers Series, College of Europe.
    GCLC/02/08.

12
Results of the research
  • (a) A good technical assistance programme is one
    that focuses both on what is being provided to
    recipients as well as what can be learned from
    them. Importantly, technical assistance from
    agency providers can serve as a critical first
    step to build an effective, long-term
    relationship in which the provider and recipient
    agencies cooperate on matters and issues of
    common concern after the formal technical
    assistance programme has ended
  • (b) Technical assistance is most effective when
    there is long-term engagement between the
    provider and recipient. At least 10 years are
    needed in order for providers to adequately
    acquire knowledge of local conditions, establish
    credibility, and support the formation of strong
    personal relationships
  • (c) The provision of technical assistance to more
    mature agencies in WB and supporting institutions
    should not be ignored. Agencies that have been in
    existence for at least several years, but are
    still not at a level comparable to provider
    agencies, can benefit substantially from targeted
    technical assistance

13
Results of the research
  • (d) Cooperation between donors, providers, and
    recipients is beneficial, and more and more can
    be done in this regards. Agency providers and
    recipients should work together with
    non-governmental advisors
  • (e) Planning and ongoing evaluation of the
    effectiveness of technical assistance programmes
    are essential. Donors, providers and recipients
    should be actively engaged in this process.

14
Results of the research
  • In addition to the issues identified above, most
    WB competition agencies have to overcome many
    other challenges in order to create strong
    foundations that would allow them to fulfill
    their legal obligations effectively. Some of
    these challenges are related to the functioning
    of the competition agency. Others are inherent to
    the environment within which the agency operates
    for example
  • (i) the limited indigenous expertise on
    competition law and policy, (ii)the lack of
    competition culture,(iii) a deficient judicial
    systems and (iv) a limited access to business
    information.

15
Results of the research
  • UNCTAD annual surveys identified
  • (a) Conflict with other policy objectives In
    some countries, the governments are reluctant to
    enforce competition law because they, rightly or
    wrongly, believe that these actions unnecessarily
    constrain the ability of the governments to
    exercise their sovereign rights to achieve other
    policy objectives.
  • (b) Resistance from vested interests Business
    people are understandably reluctant to see
    profitability eroded by increased competition.
    Thus, it is not unusual for them to petition
    government in order to maintain barriers to entry
    and practices that facilitate collusion.
  • (d) Tension with sector-specific regulators
    Despite massive changes in technology, several
    segments of the infrastructure in developing
    countries are natural monopolies, because of the
    limited size of markets and the lack of
    entrepreneurial zeal to make risky investments in
    sectors with high gestation periods.

16
Results of the research
  • UNCTAD annual surveys identified
  • (e) Resource and capacity constraints Resource
    and capacity constraints are perhaps among the
    most significant problems facing competition
    authorities in developing economies.
  • (f) Lack of political will and independence A
    common feature in most young competition
    agencies( not the only ones) is the absence of
    political ownership and support for competition
    policy. This follows both from the power of
    vested interests and from poor governance more
    broadly.
  • The absence of political ownership translates to
    political interference in the activities of the
    competition agency, undermining its independence
    as a professional watchdog of competition.
    Several features of the environment in which
    young competition agencies operate have been
    identified. Many relate to the political
    environment and to resistance to the possible
    redistributive effects of effective competition
    policy

17
UNCTAD Capacity building and technical assistance
cycle
18
Review of UNCTAD capacity building activities../..
  • At the national level, UNCTAD provides assistance
    related to
  • (a) Assistance in the preparation of competition
    and consumer protection laws and related
    legislation
  • (b) Consultative meeting to review of draft
    competition laws with representatives of
    governments. These activities represent an
    essential step on the way of competition
    legislation adoption
  • (c) Intensive courses on competition laws and
    policies including training courses on
    evidence-gathering in competition cases
  • (d) Training courses for judges on issues related
    to competition laws and policies
  • (e) Training courses on the implementation of
    competition law for newly appointed
    commissioners and
  • (f) Studies and reports on a possible framework
    for cooperation on competition policy, trade and
    related issues for regional integration groupings

19
Review of UNCTAD capacity building activities../..
  • At the regional level, UNCTAD provides
    assistance related to
  • In this regard, UNCTAD worked closely with many
    regional organizations on issues
  • related to competition and consumer policies.
    These groupings include ALADI, ASEAN, CARICOM,
    CEMAC, COMESA, ECOWAS, SACU, SADEC , SELA and
    WAEMU.
  • COMPAL is a programme on competition and consumer
    protection policies for Latin America, supported
    by the Swiss State Secretariat for Economic
    Affairs (SECO).
  • AFRICOMP The new Competition Programme for
    Africa (AFRICOMP) was officially launched in
    Geneva on 22 June 2009.
  • Mediterranean Competition Forum project
  • Tunis-UNCTAD competition centre

20
Sofia Competition Forum a Cooperative Response
  • Competition Authorities in the West Balkans have
    common goals
  • Increased informal contacts between competition
    authorities
  • Technical consultations competition authorities
    learning from each other
  • No one country has all of the answers
  • Each competition agency brings unique insight and
    experience based on our own economic development
    experiences
  • Competition agencies learn from each other
  • Share a common goal competition for the benefit
    of their fellow citizens and business as well as
    regional integration.

21
Issues for discussion
  • (a) Are there types or timing of technical
    assistance that are more effective in raising the
    domestic political status of a competition
    agency?
  • (b) The optimal duration for a technical
    assistance project in competition law and policy
    to be effective has been estimated at 10 years
    based on the United Sates experience in
    providing this type of assistance. Does the EU
    and its member States and the OECD share the same
    experience?
  • (c) Cooperation between donors, providers and
    recipients is beneficial. What can be done to
    make this cooperation winwin for each
    stakeholder? How can coordination and synergy be
    promoted in a context where there seems to be
    competition among providers despite scarcity of
    resources ?

22
Issues for discussion
  • (d) Given that the impact of technical assistance
    on recipient authority
  • performance appears to vary systematically with
    its absorptive capacity and socioeconomic
    development, how can the absorptive capacity of
    the recipient agency be improved?
  • (e) Planning and evaluation of the effectiveness
    of technical assistance
  • programmes have been pointed out as essential to
    enhance the enforcement capabilities of a young
    competition agency. What should be evaluated,
    that is, what are the indicators of success or
    failure? When is evaluation most useful, either
    for the recipient or the donor? Does EU DG Comp,
    EU member States and OECD have experience of
    changes made as a result of earlier evaluations?

23
Concluding remarks
  • Although there is an agreement about the
    fundamental principles of an effective
    Competition agency
  • No one country has all of the answers
  • Each competition agency brings unique insight and
    experience based on its own economic development
    experiences
  • Competition agencies learn from each other hence
    the need for cooperative intitiatives and
    responses to local and regional needs
  • Capacity building should be calibrated to suit
    the circumstances of the beneficiary agency
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