2 CIRC Conference: Building "Friends of Competition" in India Creating Competition Culture: Australian Experience By Professor Allan Fels, AO Dean, Australia and New Zealand School of Government (former Chairman of the Australian Competition and Consumer Commission) 24 th November 2011 New Delhi, India

REFORM DOES HAPPEN Most countries have competition law. Fewer have competition policy In the era of the market, competition is critical Competition gets some good results There is some business support for competition law Competition institutions get some results 3

THE FOUR Cs FOR ECONOMIC REFORM 1.Crises 2.Communication 3.Coalitions 4.Commitment 4

THE FIRST C: CRISES Can promote support for microeconomic reform Will this happen now in Europe? Note Mr Monti as Prime Minister of Italy. Does he have legitimacy? Crises, however, can generate anticompetitive outcomes This highlights the importance of how crises are framed What if there is not a crisis? Competition reforms are sometimes part of wider economic reforms With or without a crisis, competition reforms may get caught up as part of broader pro-market reforms Such reforms create momentum for competition policy 5

COMPETITION LAW AS PART OF BROADER PRO-MARKET REFORMS Independent monetary authority Opening up of economy Deregulation Reform of public utilities Competitive public procurement Competitive neutrality and state aids 6

THE SECOND C: COMMUNICATION The important need to communicate the case for competition law and policy initially and at all later stages The role of stories The need for educated leaders Competition institutions as sources of communication 7

COMMUNICATION REGARDING APPLICATION OF COMPETITION LAW CREATES SUPPORT FOR COMEPTITION LAW AND POLICY Competition cases have an educative effect Competition cases attract publicity –Create understanding of law –The media reports confrontation and conflict – in this case of regulator and big business –Harms to the community from anticompetitive conduct can be demonstrated –Findings of guilt are of public interest –Business takes notice of individual cases –Importance of strategic view of cases Properly enforced competition law builds support for competition law and creates pressure for national comprehensive competition policy Enforcement demonstrates commitment of competition law agency to competition policy 8

THE ROLE OF MEDIA A potentially valuable ally for reform but note some complications –Self interest of media proprietors –On some issues, media prone to criticise competition regulator –Claimed job losses due to competition law –“big brother” role of state, especially re small business –Mergers are often poorly understood –Role of merchant bankers in mergers 9

THE THIRD C: COALITIONS Big business? Small business Consumers Farmers Unions Bureaucrats Courts Politicians Academics International support 10

THE FOURTH C: COMMITMENT Principles Machinery Resources Independence Court system Committed institutions New interest groups? Education Financial rewards? 11

CONTRADICTORY ATTITUDES TO COMPETITION Most people and businesses want to buy from competitive markets and sell into competitive markets Most people do not want competition in relation to themselves In most cases, overall benefits to individuals of competition policy exceed its costs Often people want an exemption for themselves whilst supporting general competition policy 12

IDEOLOGICAL ISSUES Competition law involves: a)Seeking competition outcomes b)Substantial intervention in markets Some people support (a) and (b) Some support (a) but oppose (b) Some support (b) but not (a) – anti big business lobby Much support for competition law is really support for anti big business intervention, not for competition 13

Pro Intervention Pro Competition Anti Competition Anti Intervention 14 TRYING TO MAXIMISE NUMBERS IN TOP LEFT HAND CORNER

COMPETITION CULTURE VARIES From one country to another From one era to another From one part of government to another From one level of government to another 15