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					A Deregulated Economy without Competition law
         Free Market or Free Jungle?

Third Business Law Conference of the Nigerian Bar Association
             25-28 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
             25-28 March, 2008 Abuja, Nigeria


                                            Dr Philip Marsden
                                            Director and Senior
                                            Research Fellow
                                            Competition Law Forum

				
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