Political economy constraints in
implementing competition law regimes
in developing countries
Maher M. Dabbah
Director
Interdisciplinary Centre for Competition Law and Policy (ICC)
Queen Mary, University of London
7Up4 Project
CUTS International
The Gambia
30 July 2009
1. Introduction
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The unique circumstances of developing countries:
political, economic, social and cultural
The constraints:
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Political constraints
Influence of foreign countries and firms
The role of the government in the economy
Institutional parameters within the regime
Scope of the law
Lack of awareness of the concept of competition and its
importance
2. Political constraints
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Governments which are made of coalitions
Ideological disagreements are likely to arise
Achieving political compromises and consensus
The problem of short-lived governments and
short tours of politicians in ministerial positions
3.
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Influence of foreign countries and
firms
A developing country may not necessarily be 100% in
control of its own political and more relevantly its
economic affairs
Dilemmas are very likely over the extent and
effectiveness of competition enforcement when foreign
firms are involved
Bargaining power of foreign firms may be particularly
strong and they may enjoy the backing of their own
governments.
And of course there is the serious phenomenon of
lobbying, especially by special interests
4.
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Role of the government in the
economy
The need for government control is the subject
of heated debate
Governments: protecting the greater good of
citizens and upholding the principle of social
responsibility are supreme because people prefer
and feel safe with public control
Non-government voices: no real evidence of
this!
Role of the government in the economy
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Heavy government involvement is problematic
Local private firms may be excluded: one example is
the construction sector and the need to secure loans
 The government may operate a market sharing,
price-fixing agreement in partially privatised markets
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5.
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Fixing institutional parameters
The Questions
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Who should have responsibility for enforcing the law?
Should the relevant competition body in question be
independent or part of the executive branch?
Should courts have a role to play in the enforcement of the
law and if yes, what should that be?
What resources (including human and financial resources as
well as expertise) are needed and how can these be secured?
In case where more than one actor is involved in the
operation of the regime how can one ensure that bureaucracy
of the regime would not derail enforcement actions?
Fixing institutional parameters . . Cont./
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Two specific issues of particular importance and
deserve attention:
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FIRST: Structure, composition and powers of the relevant
competition authority
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Lack of independence
Political intervention and pressure: statutory and non-statutory based
‘Doubling’ of officials
SECONDLY: Lack of expertise
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Difficulty in attracting talent and expertise to new competition
authorities
6. Scope of the law
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Narrowing down the meaning of key terms such
as ‘entities’, ‘undertakings’, ‘persons’,
‘companies’ etc. to EXCLUDE public bodies
Limiting the definition of terms such as
‘collusion’ to ‘written’ contracts and agreements
and not mentioning ‘conspiracies’, ‘concerted
practices’ etc.
Use of exemptions and exclusions
Scope of the law . . Cont./
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Role of non-competition considerations:
Employment; general economic development etc.
 Existence of political pressure
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Bundling competition and non-competition
elements in the Law:
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Trade policy; unfair competition; anti-dumping; and
price control
7.
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Lack of sufficient awareness of the
concept of competition
This is very evident
The mentality of ‘defeating’ competitors
through dishonest and fraudulent practices
Undermining private forces deliberately by
public forces to ensure superiority of public
sector
8.
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Role of international organisations
Important contribution made by different
international organisations must be acknowledged
especially in relation to:
Enacting competition legislation
 Capacity building and technical assistance
 Reviewing competition regimes for improvement etc.
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Concerns of developing countries:
Need to avoid a top-down approach at all cost
 Need to have a dialogue
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Thank you!
Maher M. Dabbah
Email: m.dabbah@qmul.ac.uk