In today's globalized world, most developing countries are undergoing fundamental changes: Markets are becoming more open; new government and regulatory institutions are being formed; trade is assuming greater influence; private players are being introduced in the markets, etc.
These changes have promoted competition in the market, by increasing the number of goods and services with better quality and lower prices. At the same time, the reform has resulted in anti-competitive practices undertaken by economic players that were induced by inappropriate government policies, which negated the gains of liberalization.
The market-oriented reforms bring several players in the market resulting in high competition. But at the same time, many abusers found their way into the system. To balance the system, price controls and market regulations were put in place. But by and large they proved ineffective. Therefore, many countries adopted competition and economic regulatory laws to promote a healthy market and economic democracy.
In developing countries, the spread of market reform has given rise to an intensive rule making process that lowers barriers to business entry in the market, promotes de-regulation and trade liberalization, and otherwise minimizes unnecessary government intervention in the marketplace.
In the course of reform the restrictive private business practices are often facilitated by various government interventions in the marketplace -- eg by granting monopoly rights or via licensing arrangements that limit business entry to the market.
The trade policy of the present market economy emerges as an important reform for the development of competitive markets. Liberalized trade policies such as reducing tariffs, investment controls, import restrictions and quotas, domestic production or content requirements, and the like are among the most significant measures that can be advocated by the competition agency. The role of a competition agency in the formation of trade policies by means of competition advocacy could involve informing both policy makers and consumers about the true costs of trade barriers.
The goal of competition advocacy, in relation to state aid, is to ensure equal conditions for all market operators. State aid such as subsidies, taxes, preferential loans, capital injections, public procurements, and other benefits for the selected and privileged market operators or regions, need to be carefully scrutinized by the competition agency as these can be harmful to competition.
Thus, the mandate of a competition commission (CC) should go beyond merely enforcing the competition law and see the authority participate more broadly in the formulation of its country’s economic policies, which may adversely affect competitive market structure, business conduct and economic performance. The important task for CC is to play an important advocacy role in this transition process.
The International Competition Network (ICN) in 2002 outlined that “competition advocacy refers to those activities conducted by the competition authority related to the promotion of a competitive environment for economic activities by means of non-enforcement mechanisms, mainly through its relationships with other governmental entities and by increasing public awareness of the benefits of competition.”
CC is not only mandated to enforce competition law, but also practically perform all necessary activities to establish a competitive environment, including those that do not fall under the enforcement category and the two main branches of advocacy: (i) activities directed at other public authorities in charge of regulation or rule making and (ii) activities directed at all constituencies of the society with the aim of raising their awareness on the benefits of competition and of the role competition policy can play in the promotion and protection of competition.
The 2002 report of ICN also recommended that the activities of a CC should include the promotion of a competitive environment for economic activities by means of non-enforcement mechanisms, mainly through its relationships with other governmental entities and by increasing public awareness on the benefits of competition. It is often said that it is especially important for competition agencies to take steps to ensure a thriving competitive culture through competition advocacy.
Most developing countries lack suitable competitive cultures, and it is important for the competition authority to begin the process of building one. The role of the competition agency is required to build a competitive culture in the country.
“A culture of competition among stakeholders and the wider business community is necessary for the effective enforcement and promotion of competition law and policy. A culture of competition in this context refers to the awareness of the business community, governmental agencies, non-governmental agencies, the media, the judiciary, and the public, of the rules of competition law, and their overall responsibility to ensure that such rules are observed in the interest of competition and overall economic development.” These circumstances suggest that competition authorities in developing countries should be relatively more active in competition advocacy than their counterparts in developed countries.
The important component of creating a competition-enabling environment is an effective advocacy program to promote and protect competition -- which is different from the enforcement of laws. On the other hand, it is also to convince governments to abstain from adopting measures that protect specific interest groups, thereby resulting in harm to other players and consumers.
The CC will recommend and suggest the regulatory authorities clearly delineating the boundaries of economic regulation. CC will study and identify which markets are characterized by natural monopolies or other market failures, where regulation, rather than competition, should be put in force.
The scope of the BCC
Bangladesh’s law has provision of advocacy through some promotional activities as mentioned in the clause 8(g): To take necessary plan of actions for developing awareness among the people about the matters relating to competition by way of dissemination, publication, and any other means; and 8(h): To develop mass awareness by way of conducting research, seminar, symposium, workshop, and other similar means about the anticompetition agreement and activities and to publish and disseminate the result of such research and to give recommendations to the government for their effective implementation. The commission may further elaborate the advocacy function of Bangladesh Competition Commission (BCC).
BCC may primarily focus on improving the media relations of the authority, including direct relations and social media initiatives to present and explain its activities. The authority is also engaged in media monitoring as a source of information on specific market practices, which may ultimately give rise to competition concerns.
Under a standard competition law, the commission is required to proactively interact with the government departments/ministries, media, and all other stakeholders, such as, the business community and organizations, academia, consumer organizations, and professional bodies, as an advocate of competition, and foster conditions to create a more competitive policy regime, market structure, and business behaviour.
BCC has substantial scope for advocacy across economic sectors in Bangladesh. Accordingly, new legislative amendment proposals may be prepared to reinforce the role of the authority, especially in regard to offering competition opinions on different policy issues and laws related to any specific competition concerns.
The aim of competition advocacy is to foster conditions that will lead to a more competitive
market structure and business behaviour without the direct intervention of the BCC. Another important component of an effective advocacy program includes efforts by the competition authorities to raise the awareness of other stakeholders, such as other government entities, the judicial system, market forces, and the public at large, about the benefits of competition through various awareness-raising initiatives.
These advocacy programs, when effectively implemented, enhance the effectiveness in the enforcement of the law.
MS Siddiqui is Non-Government Adviser, Bangladesh Competition Commission.
