The regulation of anti-competitive practices by private parties is an established aspect of economic regulation in national laws. By contrast, the linkage of competition issues to the concerns of investment liberalization in IIAs is a relatively recent phenomenon. It is the purpose of the present paper to discuss the principal issues arising out of the relationship between competition and investment, to undertake a review of existing competition related provisions in IIAs and to offer policy options in this regard.
In Section I, the paper identifies some of the main issues related to competition that arise in the context of foreign direct investment (FDI). First, it is necessary to determine the types of anticompetitive practices conducted by privately owned and operated undertakings, which are often referred to in international instruments as “restrictive business practices” (RBPs). Secondly, certain procedural issues arise in connection with competition rules and IIAs, in particular the issue of extraterritoriality and the issue of international cooperation in competition matters. The third major issue area addressed in the paper deals with the development of harmonization measures, mainly those that seek to create a unified substantive and procedural system of competition regulation at the supranational level and those that seek substantive harmonization of national competition policies.
Section II reviews the various ways in which competition is addressed in IIAs, focussing on the key issues identified in section I.
Section III highlights points of interaction between competition, on the one hand, and other general issues addressed in IIAs (i.e. those covered in other papers of this Series), on the other.
Finally, in the conclusions, the paper briefly examines the significance of different approaches to competition policy for economic development in individual countries and considers the various options open to negotiators when drafting competition provisions. The most basic choice is whether to include or to exclude provisions on this subject. Where the former choice is made, further alternatives exist as to how to deal with each of the issues identified in Section I.