A Deregulated Economy without Competition law Free Market or Free Jungle? Third Business Law Conference of the Nigerian Bar Association March, 2008 Abuja, Nigeria Dr Philip Marsden Director and Senior Research Fellow Competition Law Forum

Why not to have a competition law The skeptics Trade liberalisation is enough: foreign entry Domestic de-regulation is enough: local competition Higher priorities; opportunity costs Fears of mis-enforcement … and the usual self-serving business points

Response to the skeptics Trade and other liberalisation is not enough (HK, Singapore) Competition policy bolsters and polices liberalising markets Higher priorities – once you have a market, you need a referee Benefits outweigh costs Mis-enforcement unlikely if law implemented properly

The real benefits Catalyst for market reforms Counterweight to entrenched business and regulatory interests Preserves benefits of privatisation Prevents private fiefdoms Better than the alternative: direct regulation

When is a country ripe for a competition law? Increasing economic development, industrialization and size of an economy Stronger reliance on market forces; less state-dominated economic activity; less state aid, less subsidies Increasing openness to trade and dependence on FDI Support of international organizations Increased membership in regional trade agreements Less corruption

Desert v. Jungle Desert: under-developed economy: few resources, little economic activity…much more important things to worry about Jungle: Rich in resources, growing economy, increasing development, predators lurking: time to preserve and build on economic gains

Transplant Transplanting a market framework law Legal landscape is already jungle-like; tangle of laws; over-regulation; private enterprise can’t breathe Market even more so: predators kill each other off Competition law - to provide order out of chaos: what order, evolutionary? –To make overlapping laws coherent and efficient –To prevent predation, abuse of dominance, cartels

Transplant Will the sapling survive? Support of both government and business to put down roots Rule of law and legal certainty: to battle winds of change Enforce in daylight: avoid the fungus of corruption - transparency, publicity Needs a constant gardener: The Bar The Bench Research organizations

Transplant Can it adapt to local conditions? The test: can it achieve its goals? Proponents: the gardeners Opposition: the protectionists Apathy Communication is crucial

What to focus on? Market studies; research Educating media, departments, business Build collateral institutions Government restraints – especially barriers to entry by entrepreneurs Bid rigging and cartels

The law itself Cautious: first of all, do no harm Basic law or comprehensive law implemented in stages Support private actions Compulsory process powers Independent staff Judicial deference to the agency Regional cooperation

The draft bill Multiple goals - some conflicting; have a policy to handle conflicts: i.e. small enterprise, but low prices for consumers Commission will be responsible for competition, consumers and unfair trade: excellent idea, unique Antidumping provisions - price-raising powers…thus need to use a predation test

The draft bill Clear threshold for dominance - predictable…may be under- or overinclusive…consider economic analysis Mix of tests: ULC and SLC…defined? Can you handle all the complaints?

Building Capacity Independent agency Independent officials - one job to do and do it well Economists Due process and firm but well-reasoned decisions

Enforcement stance Government restraints on entry Ban cartels, esp bid-rigging in government procurement contracts Build recognition and acceptance via media Go easy on joint ventures and distribution agreements

A Deregulated Economy without Competition law Free Market or Free Jungle? Third Business Law Conference of the Nigerian Bar Association March, 2008 Abuja, Nigeria Dr Philip Marsden Director and Senior Research Fellow Competition Law Forum