Harmonization of Competition Policies in a Regional Economic Integration

By Cunningham, Richard O.; LaRocca, Anthony J. | Law and Policy in International Business, Summer 1996 | Go to article overview
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Harmonization of Competition Policies in a Regional Economic Integration


Cunningham, Richard O., LaRocca, Anthony J., Law and Policy in International Business


With the ongoing reduction of tariff end customs barriers worldwide, increasing attention is being paid to the effects of anticompetitive markets and uneven application of competition laws on international trade. Private litigation has begun to explore the links between competition law and international trade, as reflected in recent high-profile cases such as the petitions filed last year by Kodak(1) and the U.S. pipe and tube industry(2) under Section 301 of the Trade Act of 1974.(3) National governments and international organizations now openly acknowledge that vigorous application of competition law can promote international trade.(4) The international community has identified competition policy as one of the new generation of trade issues to be addressed in upcoming trade discussions.(5) There is already a lively debate in the academic community and among policy-makers over whether a comprehensive international competition code should be developed, or alternatively whether a multilateral organization should pursue a more general set of principles.(6)

This question is not a new one for regional trade arrangements. The larger and more prominent regional economic arrangements involving industrialized countries, such as the European Union (EU), the Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA), and the North American Free Trade Agreement (NAFTA), have all dealt, directly or indirectly, with the issue of harmonizing competition laws and practices among member countries.(7) Regulation of competition has been a less important issue in regional economic arrangements involving less industrialized countries, but even in those arrangements it has received increasing attention.(8) For example, the member countries of the Andean Pact recently adopted standards for addressing regional market distortions caused by anticompetitive practices.(9)

The degree and types of harmonization adopted by regional arrangements have varied, however, from the creation of a supranational competition law and enforcement authority--as in the EU--to the more general undertaking in NAFTA that the parties shall "adopt or maintain measures to proscribe anti-competitive business conduct and take appropriate action with respect thereto."(10) The issue continues to attract significant attention and study by these organizations. For example, NAFTA established a Working Group under Article 1504 for the specific purpose of studying issues related to the competition laws of the member states.(11) A Working Group on competition policy is expected to be created in connection with discussions involving the Free Trade Area of the Americas.(12) At the most recent forum of the Asia-Pacific Economic Cooperation (APEC), participants agreed to study ways to cooperate in the area of competition policy.(13)

The experience of these regional arrangements provides a helpful guide to the issues that arise when nations attempt to harmonize competition laws and practices and to the different approaches available. The purpose of this paper is to explore those issues and approaches. Part I examines the threshold question of what is meant by harmonizing competition law. While harmonization is most commonly thought of as addressing substantive legal standards, harmonization of procedural rules and enforcement priorities is often at least as important to achieving the objective of expanded regional trade. Part II discusses the principal types of anticompetitive practices that need to be addressed by regional harmonization efforts, whether by harmonizing substantive legal standards (for example, in the creation of a competition "code") or by harmonizing procedural rules or enforcement. Finally, Part III briefly describes the efforts of several regional arrangements to harmonize and coordinate the competition laws and policies of member states.

I. THE ELEMENTS OF COMPETITION LAW HARMONIZATION

Harmonization of competition laws and policies can occur at three distinct levels: (1) substantive law, (2) procedural requirements, such as notification of mergers and acquisitions, and (3) enforcement practices.

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