The Significance of Competition Law and Policy in Economic Development and Integration April 2004 Ross Jones Deputy Chairman, Australian Prudential Regulation Authority (APRA) Former Commissioner, Australian Competition and Consumer Commission (ACCC)

2 OUTLINE 1 Trade, growth and competition Competition law and policy for developing countries Advocacy Special problem of being small ? Future benefits of competition law and policy

3 TRADE AND GROWTH 2 Growth creates demand for imports and capacity for exports Technological innovation increases productive capacity Falling transport costs enhance trade opportunities Deliberate international and domestic trade liberalisation

4 PRODUCTIVTY, GROWTH & COMPETITON 3 Australia’s experience OECD research indicates that anti- competitive market restrictions may reduce the employment rate by as much as 3% from OECD average

5 4 BENEFITS OF COMPETITIVE MARKETS Competition is not a goal in itself Instrument of economic development Importance of efficiency Breaking up monopoly

6 5 COMPETITION LAW & COMPETITION POLICY Competition law is about private constraints on competition Competition policy is about applying competition principles to evaluate government policies and regulations

7 6 All allegedly harmful practices should be assessed in their own market context Differences in a country’s stage of development or differences in the size of the market do not lead to differences in basic competition law COMPETITION LAW & POLICY FOR DEVELOPING COUNTRIES

8 7 Where governments have made a conscious decision not to give high priority to competition law, there is still a very strong case for rigorous competition policy EMPHASIS ON COMPETITION POLICY

9 ADVOCACY AND COMPETITION POLICY 8 Strong need to develop a consumer constituency for competition policy Sometimes advocacy is stronger for competition law than competition policy

10 SPECIAL PROBLEM OF BEING SMALL? 9 Small and dominant business elite closely connected to government Power of large multinational firms

11 STRONGER REGIONAL & INTERNATIONAL COMPETITION RULES 10 Deficiency of national laws in dealing with multinational agreements between firms Removal of domestic policy inconsistencies

12 CURRENT & FUTURE BENEFITS OF COMPETITION LAW & POLICY 11 Breaking international cartels Breaking domestic public monopolies Improving domestic flexibility and resilience to external shock