1. 1 Introduction to Competition Policy and Law National Training Workshop on Competition Policy and Law Gaborone, Botswana: 25 – 27 July 2007 Presenter: John Preston

2. 2 What is ‘Competition’? The process of rivalry between firms striving to gain sales and make profits Motive: self-interest (a problem for some) but outcome mostly beneficial for society Not an event - a process Not automatic – needs to be nurtured

3. 3 Benefits of Competitive Markets Encourage - efficiency and innovation - economic growth - lower prices, better quality, wider choice - national competitiveness Effectiveness of state-provided infrastructure funding (bid-rigging reduces what the state can do)

4. 4 What can Hinder Competition? Anti-competitive actions by firms Inappropriate government regulations and policies - Difficult entry conditions - Preferences for SOEs - Protection for privatized SOEs - Non-transparent public procurement practices - Control of regulated sectors - Trade policy and industrial policy In practice, competition problems widespread

5. 5 Competition Policy Few countries have a comprehensive national competition policy – but can be worthwhile. Australia a good example Actual competition policy can be inferred Wide range of public policies affect competition: SOEs, regulated sectors, trade policy, industrial policy, tax policy, labour policy

6. 6 Competition Law Sub-set of competition policy Provides mechanism for identifying, investigating and analysing competition problems, and for corrective action Now over 100 countries, majority still fairly new ‘Per se’ vs. ‘rule of reason’ approach Exemptions and exceptions Aims to protect the process of competition, not competitors Penalties must have realistic impact Relationship with sector regulators

7. 7 Is Competition Law Necessary? Not just a luxury for rich countries – a necessity for democratic market economies (Stiglitz, 2001) Why aren’t liberal trade policies sufficient? - Non-tradable goods and services - Cartels can exist even with an open economy

8. 8 Content of Competition Law Three central elements: - collusion and cartels, e.g. bid rigging (virtually all laws) - abuse of dominance (virtually all laws) - mergers and acquisitions (two out of three laws) Other possible elements included in some competition laws: - consumer protection - fairness and equity - unfair trade practices - assisting market integration (EC) - protection of smaller firms National and regional competition law

9. 9 Competition Authorities Created by the competition law Investigate and analyse competition problems Able to seek remedies: own powers/courts Need operational independence for day to day work Can undertake worthwhile advocacy

10. 10 Conclusions Competition policy: - wide scope; affected by many other public policies - important for economic growth and consumer welfare Competition law - a sub-set of competition policy - a valuable tool for protecting competition in markets - needs appropriate supporting policies