Competition in Context: The Limitations of Using Competition Law as a Vehicle for Social Policy in the Developing World

By Hazel, Diane R. | Houston Journal of International Law, Spring 2015 | Go to article overview

Competition in Context: The Limitations of Using Competition Law as a Vehicle for Social Policy in the Developing World


Hazel, Diane R., Houston Journal of International Law


I.   Introduction II.  Competition Policy in the Developing World      A. Trade Liberalization      B. Competition Law as a Complement to Trade         Liberalization      C. Contribution of Competition to Economic Growth         and Development III. Examination of Competition Law Goals      A. Evolution of Antitrust Law Goals in the United         States      B. Current Accepted Antitrust Goals in the United         States IV.  Developing Countries' Approach to Competition      Law      A. Distrust of Competition Policy and Law      B. Rejection of Western Approach to Competition         Law      C. Emergence of Competition Laws that Respond to         Specific Historical, Cultural, and Economic         Conditions      D. Characteristics of Developing Countries Leading to         Customization of Competition Laws      E. Inclusion of Public Interest Considerations in         Objectives and Analysis V.   Case Study of South Africa      A. Apartheid in South Africa      B. Political Background Leading to Adoption of         South Africa's Competition Act      C. Public Interest Factors in South Africa's         Competition Act      D. Competition Law in Other Southern African         Countries VI.  Discussion      A. Arguments for Inclusion of Public Interest         Considerations      B. Arguments Against Inclusion of Public Interest         Considerations      C. Examination of Competition Law in Developing         Countries      D. Developing Countries Should Avoid Public Interest         Considerations and Proceed Deliberately in         Adopting Competition Laws      E. Recommended Way Forward VII. Conclusion 

I. INTRODUCTION

The number of countries that have adopted competition laws has grown exponentially over the past two decades. Of the over 100 nations that have adopted some form of competition law, three-quarters are in the developing world. (1)

Various factors have contributed to the growing adoption of competition policies and laws, particularly in developing countries. In particular, globalization and its effects--such as cross-border mergers--have contributed significantly to the perceived need for competition laws. (2) Although some may believe that the effects of globalization are limited to the developed world, developing countries may be particularly susceptible to the market power of large international firms if not regulated. (3)

Further, a number of studies have concluded that strong competition policy and robust competition at the country level foster economic growth. (4) Economic growth refers to a rise in national or per capita income that usually accompanies an increase in the production of goods and services. (5) As such, competition policy has become part of the emerging orthodoxy in economic growth policy. (6) Competition law is a subset of competition policy. Generally, competition laws seek to guard against the creation and misuse of market power and also facilitate the functioning of the markets by curing artificial obstructions that market players create. (7) In addition, enforcement of a competition law by an empowered competition authority helps in dismantling barriers to new business development and improving the availability of goods and services to poor populations. (8) So at least in theory, a well-conceived competition law--as a part of an overall competition policy--may reduce barriers that reinforce economic disadvantage.

For these reasons, the adoption of competition laws has become one of the cornerstones of the liberalization and promarket reforms sweeping through many developing countries. In particular, the neoliberal international development policies associated with the "Washington Consensus" embraced the enactment of competition laws in developing countries as part of its overall policy agenda. (9) The Washington Consensus emerged in the 1990s and represents the set of ten policies that the U.S. government and international financial institutions believed were necessary elements of reform that all countries should adopt to increase economic growth. …

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