Statement by Mr. Petko Draganov, Secretary-General of UNCTAD
Intergovernmental Group of Experts on Competition Law and Policy, Eleventh session
Honourable Vice Minister,
Honourable Heads of Competition Agencies,
Ladies and gentlemen
I am pleased to welcome all of you to this eleventh session of the Intergovernmental Group of Experts (IGE) on Competition Law and Policy. I would also like to extend a welcome to Malaysia and Botswana, who have joined the IGE since our last meeting in 2009. Additionally, the Common Market for Eastern and Southern Africa (COMESA) with whom we have had long and close cooperation in the preparation of regional competition rules have also established a COMESA competition authority.
This is the first session of the IGE to be held since the Sixth United Nations Conference to Review All Aspects of the Set of Multilateral Rules on Restrictive Business Practices - the only multilateral code in existence on competition policy and law. As we seek to strengthen economic governance frameworks following the global financial crisis, competition policy offers us a quick win in the struggle to establish healthy markets and reduce inequality. The Code therefore represents an important element in current discussions over how to reform global economic governance.
Restrictive business practices are found in all economic sectors, but the poorest countries, such as the least developed countries (LDCs) tend to suffer the most, and are least able to deal with them. A correctly implemented competition policy is therefore essential for maintaining open, competitive markets that ultimately serve the process of poverty reduction and development. As you can see from the documentation available for this meeting, assisting LDCs is a core objective of UNCTAD´s work on competition law and policy.
In the past, however, insufficient attention has been given to competition or the necessity for clear rules and strong institutions. Yet, in pursuing a market-based approach to economic development, we need to recognize the need for appropriate competition laws and institutions that can facilitate the attainment of this objective. Competition policy and law should not, therefore, be regarded as marginal or luxury items that a developing country can postpone until later; they are instrumental for the establishment and maintenance of well-functioning markets and development.
Consequently, UNCTAD has been working for the past 20 years towards the formulation and implementation of norms aimed at preventing or prohibiting restrictive business practices, such as cartels and price fixing. I would recall in this connection that, last year, the Sixth United Nations Conference to Review all Aspects of the Set unanimously reaffirmed "the fundamental role of competition law and policy for sound economic development".
As well as ensuring fair and competitive markets, the other dimension of competition policy and law is the protection of consumers from economic interests that do not consider their well-being. In this connection, the Sixth United Nations Review Conference called on UNCTAD to organize two ad hoc expert meetings on the interface between competition and consumer policies. The first of these meetings is scheduled for July 2012, back to back with the next session of the IGE. It will be your task this week to decide on the agenda for this meeting.
While the level of competition legislation is varied internationally -many countries have no competition law and some have a long record in this area - it is true to say that each country must implement a competition framework at its own pace. Countries should take into consideration their own specific circumstances when formulating and implementing competition policy, and choose the right pace at which to move forward. For this reason, we must bear in mind the need to support countries that are still at the initial stages of familiarization with competition policy and law.
Reflecting this sentiment, a gradualist approach should also be adopted when promoting greater convergence of competition policies and laws within regional or sub-regional groupings. The need to promote greater convergence should not imply the imposition of commitments that countries are not yet ready meet. Experience and lessons learned from other countries should also be taken into consideration.
Allow me now to briefly return to the links I highlighted earlier between competition frameworks and good economic governance, which are both necessary for development. Global economic governance can be strengthened by increased efforts towards the international acceptance of competition rules and policies in both developed and developing countries. In a globalized economy, the universality of competition policy as a tool for ensuring good corporate governance, for example, is more important than it´s ever been. The recent financial and economic crisis has also added further weight to the argument for a universal set of principles on competition. Developed countries are now intensively reviewing some of their corporate governance practices in order to improve transparency and open and fair competition. These changes will inevitably have repercussions on the competitiveness of firms in developing countries.
Ladies and Gentlemen,
There is therefore much for this session to consider this week, which is reflected in the programme. Highlights include a peer review of Serbia´s competition law and policy; a discussion of the foundations of effective competition agencies; a look at coherence between competition and other government policies as well as international cooperation in specific competition cases; and finally, an examination of the effectiveness of capacity-building for young competition agencies. I am sure your consultations on these topics and the draft agenda of the twelfth IGE will provide valuable insights and further guidance for UNCTAD in this area.
Let me conclude by saying that governments must strike a balance: they must regulate markets and promote the interests of consumers, but at the same time reduce the costs of doing business. Sometimes there is a lack of coherence across ministries at the national level, and not enough coordination at the international level. For this reason, government regulation can sometimes be viewed as protectionist and working against competition, such as the buy local clauses in many stimulus packages introduced during the Great Recession. Finding consensus internationally, through forums like the IGE and the Review is currently as close as we can get to establishing international coherence on competition questions, and I therefore wish you all the best in your deliberations.