Kim Them Do
II. The current proliferation of competition law and policy in developing countries
ASEAN competition law and policy
CEEC competition law and policy
The incentives for introduction of competition law and policy
III. Competition law and policy and economic development
East Asian experience
The Central and Eastern European experience
Developing countries have argued that a WTO framework on competition law and policy could not support efforts to promote economic development and that the detrimental effects of international cartels are not their chief concern. As a result, on the one hand, they have blocked these initiatives for further negotiations, on the other hand, they are pursuing active domestic competition law and policy because they have come to recognize the substantial significance of this regulatory instrument as a tool that can help them reach their goals. Many competition law scholars are devoting greater attention to developing country interests and are debating how domestic competition law and policy play a crucial role in the economic development.
These issues have become one of the central topics of current research. Although the literature on this respect is abundant; it is worth emphasizing the fact that there is no common trend in the contemporary discourse on the role of competition law and policy in the context for the operation of a competitive market economy in developing countries. It is not surprising in view of the diverse range of the research interest, priority of policy consideration and methodology.
Viewed from the economists’ perspective, the interface between trade and competition is one of the most important policies needs to be addressed in the ongoing effort of structural adjustment; it could significantly impact on the macroeconomic outcomes.
On the contrary, the international management literature focuses on the anticompetitive practices of business firms, because of the benefits they may enjoy in engaging in developing countries. While legal scholarship is preoccupied with questions of the quality of competition regulation, theorists of institutional development advocate that capacity building, technical assistance, competition advocacy and promotion of consumer welfare are as important as competition law. Even more importantly, culture scholars suggest that a common competition culture could lead to better enforcement practice and efficient outcome of cooperation of the competition authorities.
n the past, a handful of scholars have discussed the role of this discipline at the WTO; it was tempting to relocate the turn in competition scholarship within the context of international competition law and policy generally. Theoretically and in practice there has not been and is not currently a process of creating a global framework on competition law and policy in the WTO, nor is there is any likelihood of such a process in the foreseeable future. As a result, the level of attention to, and political and scholarly salience of arguments have greatly decreased in recent years.
In the current environment some scholars continue to use this discourse in moving to the centre of academic writings about complementary role of international property rights and human rights in the competition issues.
Given these questions are obviously complex, it may be said that the relationship among these considerations is a highly controversial one and the future discourse is unclear because there is no severe pressure to highlight this discipline while the protectionist pressure is globally increasing. In this context, one future possible feature in this trend is worth exploring: how to estimate the contributory role of developing countries as the emerging driving force in the world competition community.
Generally, the overarching point of these theoretical discussions is that competition is always good; its intensity is desirable as well as needed for consumers. The beneficial nature of competition in the free market is self evident because the positive effects of healthy competition provide a clear example for this. That would mean that price fixing, market sharing agreement, tying schemes and predatory actions are bad.#
Specifically, consumers may have more choice with lower price and higher quality. Allied with this, innovation is necessary in the well functioning competitive market. Without competition pressure, large producers have no incentives to improve their products and to make them cheaper. Most importantly, competition regime today could no longer be a domestic matter; but would instead be considered as a fundamental strategy of government to respond to the challenge in the globally-connected market.
In pursuing this objective, policy makers could not only facilitate domestic firms to compete with their rivals in the home market, but would help them gain advantages over foreign competitors in an international competition.
Finally, they may expect enormous socioeconomic implications: increasing of job creation and tax revenues will be reached and maximizing of wealth and standards of living will benefit for the whole of the society.
Empirical researches tell us otherwise: competition is not a panacea and its strength needs to be understood along with its limitations. The process of competition and the promotion of consumer welfare are politically desirable and need to be normatively protected; but they are just one aspect among others and its significance should be placed in the context of the operation of the developing market.
More specifically, maximum competition in products, capital and labor market could not always generate positive effects as generally expected. The virtue of competition alone could not bring about the drastic change in the society and competition regime would not be able to perform miracle in the economy. Although models of the political economy of development in developing countries should not rely only on this discipline, most of detailed macroeconomic research in Latin America, Columbia, Chile, South Africa and others affirmed that competition is linked to economic development and growth.
Based primarily on the experiences of early modernizers like Japan and Korea and assumed that there is a correlation between the economic development and the introduction of competition law and policy in developing countries, this article attempts to address this hypothesis to a limited extent and asks whether this link is positive. Due to the diversity of the level of development stage, the increasing heterogeneity and diverging interests of developing countries, it is impossible to discuss all of their characteristics in detail here.
For the analytical purpose, this article will highlight a number of typical problems of the developing countries and economies in transition, not the least developed countries.
II. The current proliferation of competition law and policy in developing countries
Currently over 70 developing countries have introduced competition law while many others continue to debate how best to adopt it in the future: the trend is becoming global. It is beyond the scope of this section to provide the complete list and discuss the main features of all the developing countries that have this legislation in place, but a brief overview of ongoing efforts by the Association of Southeast Asian Nations (ASEAN) and the Central and Eastern European Countries (CEECs) area serves as an illustration.
ASEAN competition law and policy
ASEAN was established in Bangkok in 1967 by Indonesia, Malaysia, the Philippines and Singapore. Brunei Darussalam joined in 1984, Vietnam in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. In 2010, this bloc contains approximately 600 million people with GDP of more than US$1.8 trillion. Its main objectives are economic growth, social progress, protection of the peace and stability in the region. The organization holds summit meetings at which the heads of each member government meet to discuss and resolve regional issues. One of its most remarkable areas of progress in regional economic integration has been an agreement on the ASEAN Free Trade Area (AFTA).
ASEAN has launched several economic cooperation schemes for implementing open regionalism, especially with the ASEAN plus Three (China, Japan and South Korea), ASEAN plus Six (China, Japan, South Korea, India, Australia and New Zealand) and ASEAN-EU (ASEM), in order to find a balance between regional integration and global liberalization. ASEAN is criticized for being too soft in its approach to human rights violations and in promoting democratization process.
Since ASEAN is committing to developing its integrated regional market, its member countries need to introduce and/or modernize their domestic competition law and policy to enhance fair competition among firms and to review their anticompetitive business practice. To date, national competition law has been enacted in most ASEAN member countries, some a long time ago (Thailand in 1979, Indonesia in 1999) and others much more recently (Singapore in 2004, Vietnam in 2005). Malaysia has no comprehensive competition law but introduced a Code on Takeovers and Mergers in 1998 and is the most recent country to have enacted a competition law, namely in May 2010; the Philippines have some laws dealing with some competition issues: e.g. monopolies are prohibited by constitutional law and some unfair competition conducts are restricted by penal law. Laos has just begun with a Decree on Trade Competition while Brunei Darussalam, Myanmar and Cambodia do not yet have fully fledged competition law.
Competition regime is not only about control and prevent of abuse of market power of firms but also about development of competition advocacy, competition culture and protection of consumer interests.
In fact, in Malaysia and Thailand, among others, restricting anti-competitive practice of firms became a policy priority after measures to promote the role of private sector have had some negative effects on the market. In addition, the interests of consumers are less represented than those of producers. As a result, organizing and promoting consumers’ interests should be a main task in future for policy makers in ASEAN.
In practice, these countries’ competition laws are designed to cure negative effects rather than to prevent them because these regulations were mostly ex officio administrative authorities rather than filed complaints. Even though Thailand and Indonesia have a systematic set of competition laws and some experience in dealing with enforcement activities and international cooperation, they need to strengthen the effectiveness of their laws.
Most ASEAN countries’ competition laws are not as advanced as the OECD countries and a comprehensive regional system of merger control does not exist in this area. Because of the diversity of development stages within the bloc, it is difficult to design a uniform competition regime for the whole of the ASEAN. What is truly problematic in these countries is design and enactment of competition law has not been well enough, its enforcement has been ineffective, political interferences by government officials in decision making are pervasive, legal loopholes are certainly inevitable, lack of adequate resource is a matter of particular concern, etc…
Under these circumstances, a flexible mechanism should be gradually strengthened and technical assistance for procedural mechanisms, institution-building, human resources and discursive practice are strongly required.
Although the EU has rich experience in dealing with this respect, the ASEAN cannot take this particular EU jurisdiction as a workable model because the EU is the most comprehensive and sophisticated form of political, economic, social, cultural and monetary integration. Most specifically, the EU is a supranational organization able to promulgate laws.
To achieve this objective the ASEAN Experts Group on Competition (AEGC) was established in March 2008 to facilitate the development of regional competition policy. This body will be operating within the framework of the project „Institutional and Capacity Building for the ASEAN Secretariat“, a cooperation of the ASEAN Secretariat and InWEnt Capacity Building International, Germany, and commissioned by the Foreign Office of the Federal Republic of Germany. Its main objective is to find a strategy that meets the various needs of member countries. It also fosters cooperation and networking among the agencies concerned.
Specifically, the AEGC focuses on providing best practice for member countries. Most notably, the ASEAN Regional Guidelines on Competition Policy and the Handbook on Competition Policies and Laws in ASEAN for Businesses is published in 2010. The AEGC has received significant technical and financial donor support, particularly from Germany through InWEnt (Capacity Building International) and German Technical Cooperation (GTZ).
Other sources of technical assistance include the Asian Development Bank Institute, Australia, the European Union (EU), Japan, the Organisation for Economic Cooperation and Development (OECD) and the United States (US).
In brief, introducing and strengthening of the competition law and policy in the ASEAN is currently ongoing and the improvement of enforcement techniques is still a developing story with an unclear outcome. The regulatory cooperation within the bloc will be far from being straight-forward in the near future, although some tentative steps are being taken in this direction.
CEEC competition law and policy
On 1 May 2004 ten candidate CEEC countries joined the EU in establishing a market economy and adopted legislation containing the principles of EC competition law, especially those on restrictive agreements, abuse of dominant position and merger control. The wording of the CEEC competition legislation is similar to the rules to Article 101-102 TFE (Ex Article 81-82 EC). Most of these countries have introduced the market dominance test and leniency program. Poland and Hungary were the first members to adopt this legislation in 1990; Slovakia in 1994 and other CEECs introduced this document between1990-1994.
The weakness of CEEC competition law is still a serious problem to be addressed in these integrative endeavors. Competition culture is certainly a new public issue; the competition authorities are poorly equipped and enforcement is ineffective, especially in Poland, Slovakia and Malta. In contrast to the old EU member states, the competition authorities of some CEECs are responsible not only for the enforcement of competition law but also for protecting the interests of consumer. But the main questions arise in this context: how they can fulfill this double mission without expertise or experience. The protection of the rights of consumers is still underdeveloped in Poland, Hungary, Estonia, Latvia, Lithuania and Slovenia.
There are many reasons for this unsatisfactory situation.
First, the teleological disparity between EC and CEEC competition laws remains a difficult matter which will need to be resolved in the long run. While the objective of the former is to achieve an internal integration of the well-established markets of the old members, the main purpose of the latter is to transform centrally-planned economies into market-based one. Due to radical changes in their society these countries have many new policy issues, and competition regulation is just one component amongst the others. Arguably, these countries need to establish the market to be operated. Their policymakers are mainly concerned with the adjustment of market structure, privatization of state firms and creating an attractive business environment.
The market structures of these transitional economies are small and vulnerable; their market behaviors are completely different to those of the larger markets in the old member states; and the prohibition of collusion and exclusionary behavior by new entrants in the small market may not lead to the same effects in the developed markets. Because of the conceptual and contextual differences the implementation of strong EU competition law in the emerging CEEC market is not a smooth undertaking.
Second, the modernization package and new merger regulations came into force on 1 May 2004, the day of the accession of the CEECs. The main objective of these regulations is the decentralization of the enforcement power of the Commission with the abolishment of the notification system; the national competition authorities and national courts are empowered to apply EC competition laws directly. The CEECs are far from being capable of implementing this huge task because they have almost none of the legal infrastructure necessary to do so, especially as they were not granted any transitional time.
The newly-established European Competition Network plays an important role to achieve a consistent enforcement system in the whole EU. The interface between EC and CEEC competition law within the European Competition Networks (ECN) is required by law (Article11of Regulation 1/2003); but cooperation between the two blocs is not straightforward.
Third, based on the special characteristics of a transitional economy, lawmakers of the CEECs are free to design their domestic competition law to fit their countries. Surprisingly enough some go further than EU law requires.
The two most striking features in this respect are the implementation of private enforcement and the criminal sanction. First, Hungary, Slovenia, Lithuania, and Latvia provide a remedy for civil dispute before the national court, while there is no legal basis to do so in EU law. Second, Estonia and Hungary apply criminal sanctions for the most severe violation of competition law. This practice is contrary to EU competition law, in which private damage action and criminalization is just a theoretical dispute among legal scholars and policy makers.
Fourth, although CEEC competition law conform with the EU competition
law, there are variations in their application in their jurisdictions: the Czech Republic, Lithuania and Malta use a definition of dominance test based on the 40 percent market share while Italy fails to do so. Lithuania assesses mergers solely against a market share test of the merged firms, while Slovenia looks further at the volume of the sales of the merged parties. The standards used to determine harm to market participants vary greatly from country to country.
To summarize, although the internal coherences of application, enforcement techniques and cooperation have been considerably improved, the current interface between the EU and CEEC law systems illustrates that the harmonization of competition law and policy in the whole EU is not yet fully achieved.
The incentives for introduction of competition law and policy
On both conceptual and practical grounds, there are many incentives why the ASEAN, the CEECs and the other developing countries seek to respond to these emerging concerns. Possibly the general driving forces behind the politics and socioeconomics of these countries are the aspect most worthy of attention.
With the dramatic shift in the international context, the socioeconomics and politics of developing countries have changed remarkably. One of the reasons in support of the adoption of domestic competition law and policy is closely related to the move towards trade liberalization, deregulation, technological innovation and globalization. Not only policy makers but also consumers in these countries are now aware that market failures are worsening their sluggish economies and the promotion of more market oriented policy could improve the living condition considerably.
These trends are more obvious than ever before, as all of the centrally-planned economies have broken down systematically. State failure is becoming a fact, and nobody believes that public monopolies and state pricing control could best serve the people as ideologically presumed any longer. This perception is increasingly growing with the result that the competitive market-driven economy is becoming a politically and socially desirable strategy to follow. These issues are obviously broader, but the ability of the market mechanism to contribute to overall economic progress has been deeply explored in the contemporary economic development literature.
Arguably most importantly, Sen, one of the modern legal philosophers, maintains that the promotion of well-functioning markets, domestically and internationally, is inevitable because there are two reasons for this:
First, markets are necessary to provide the resources that are required if human rights are to be advanced and protected by societies and to promote development.
Second, markets are a social platform which enables the participants to develop the personal freedom and accept the tolerance for individual diversity. In general terms, markets need to be understood as both an instrument for material advancement and an aspect of individual liberty. This dual contribution of markets to human welfare and development, as Sen has explained, widely acknowledged in the current academic discussion.
Sen’s argument was made certainly with erudition, but his persuasiveness has been supported by an empirical finding. Research finds that 82 % of people in 47 countries; both developed and developing countries, have positive views about trade and 66% have positive views about free market, as a poll in an October 2007 demonstrated. Inevitably, a further question is raised in this context: sustaining growth and ensuring everyone benefits from the market reform will be challenging.
Conceptually, the most important academic and official opinions are similar: All good things for the country could go together: Economic growth, social mobilization, political institution and cultural value all will have been changing for the better in tandem. Even more importantly, macroeconomic stability and development of institutional infrastructure must be top priority and an appropriate governance mechanism (institutional maturity, well-trained resources and sound law) is needed to ensure the well-functioning operation of the market.
In order to reach this objective, developing countries require a comprehensive political and economic approach in favor of an appropriate development strategy rather than mixing trade and competition policy; they expect that the benefits of technology transfer and foreign investment could serve to enhance rather than impair development. Viewed from this perspective, they fail to examine that competition law and policy is a useful means of ensuring the efficient allocation of resources in a national economy, because they contend that state firms always have a dominant role to play in the development of the domestic market and that government interventionist measures are powerful enough to control restrictive business practices imposed by firms. In addition, while they argue that a competition law and policy would not be urgently needed, the majority of international institutions and aid donors are not put intensive pressure on them for change.
The change in the competition paradigm in economies in transition provides a strong rationale for policy makers to initiate their market reforms. One of the priorities of the regulatory reform project is to make competition law and policy friendlier to the developmental dimension. What way, then, does the process of transplantation of the CEECs competition law and policy?
Obviously, it is difficult to answer this question without looking further at the accompanying deepening of EU law harmonization in the context of EU enlargement. Generally, the accession literature tells us that different contexts offer unique opportunities and impose different constraints. It is well-known that the transplantation of an existing EU law is not only a break with the Communist legacy but also a polity affirmation with motivation and interest. Technically speaking, the adoption of the totality of the acquis communautaire numbering some 80.000 pages is not easy task for the Accession States.
Unlike the case of East Asian experience, the complementary role of trade liberation and competition policy has not been much examined in the enlargement literature. Lawmaking comes from within, but the CEECs’ road to accession to the EU is certainly a bargaining chip in the negotiation; the EU negotiators have not only analyzed the costs and benefits but have also pressed the recipients for other concessions; they have provided them with a law model as well as massive financial and technical assistance.
Consequently, the CEECs competition law and policy has not been a result of a gradual development in the background of a bottom- up reform, but in the context of political negotiation and a strong top- down approach has been strictly used.
In addition, country analysis illustrates that the efforts of regulatory reforms of developing countries have been financially supported by all the international, regional institutions and developed countries (the International Monetary Fund, World Bank, UNCTAD OECD, US and EU). These aid donors encourage the recipient countries to adopt competition law and policy as a relevant tool to advance their reforms and are using their power and leverage to press them to accept this introductory option as conditionality for aid, as the case studies of Indonesia and Jordan illustrated.
Practically, although the developing countries foresee that enforcement of competition law would not be effective for many institutional and cultural reasons, they have to choose this option to improve not only their bargaining position in negotiating with international and regional aid donors but also to make their local market environments more attractive. In doing so, they hope that they offer the legal certainty, the favorable business climate and more returns to investment for foreign investors. These circumstances may justify why they take account of the introductory option for competition law and policy seriously.
In sum, the adoption of competition law and policy regime in developing countries is determined by a broad variety of factors.
III. Competition law and policy and economic development
Whatever their underlying motivations, it is hard to appreciate how the adoption of this discipline could play a crucially contributory role in promoting economic development in developing countries because there is no mono causal connection between these variables and there are multiple interdependences between the two objectives. The East Asian and Central and Eastern European economic development success story provided no sufficient evidence for such a positive in past economic development literature.
The East Asian experience
Generally, scholars on East-Asian competition law and policy claim that this past success story does not provide the best lesson for countries in transition. During the post-war reconstruction period Japan and Korea did not have maximum level of competition in their domestic markets. On the contrary, they reached an optimal degree of broadly-based cooperation by their domestic firms for their export strategy. The interventionist influences of Japan’s politics in its domestic industrial structure are powerful enough to form domestic cartels that become a best financial resource to fund foreign investment strategy and a key driver of competition and development. The special relationship between government, business, banking and finance is not unique; it is a typical feature of crony capitalism in East Asian politics.
Korea enacted competition law in 1980 and experience indicates that failure to introduce competition law and policy at a sufficiently early stage of the development process necessitates readjustment of industrial policy later on. Certainly, these corrective measures are inevitably costly. If competition law and policy were to be timely introduced in the course of this regulatory reform process, the rising costs of adjustment measures may be saved and economic achievements may be better balanced.
This lesson is significant for the policy makers of countries in transition, who need to consider how and when best to adopt this legislation. More significantly, this East-Asian economic wonder does not permit domestic firms to prevent the risk of unemployment and the failure of firms as many policy makers presumed. This needs to be explored thoroughly in future literature.
In order to better appreciate the past economic performance of China and Vietnam we should pay more attention to their distinct particularities than to general theoretical considerations. Focusing solely on an export-oriented policy, China has increased the international competitiveness of state firms and promoted economic development with the support of various measures rather than with comprehensive competition law and policy.
Empirical research finds that industrial policy is a central part of development strategy in China and that it has undergone three stages of development:(1) from the late 1970s to the mid- 1980s, it promoted competition, (2) from the mid-1980s, it limited competition and (3) since the mid-1990s it has both promoted and limited competition. China has made huge economic advances over the past time without the support of a competition law because the Antimonopoly Law became effective on 1 August 2008.
That is the same case of Vietnam where the economic reforms were launched since 1986. A central feature of these reforms has been greater reliance on market forces; a competition law and policy was apparently less significant than a foreign trade policy. Vietnam has changed rapidly in the past 10 years; its economic growth is still growing at 7 percent a year and owes a good deal with the thawing of its relations with the US in putting a lot of efforts of trade and investment links.
Viewing from this perspective, there is no starting point for us to discuss a question whether a competition law and policy would benefit the whole of the society because a Vietnamese law on competition was entered into force on 1 July 2005. The good intention of Vietnamese late reformers in enacting competition law has been seriously undermined by factors such as its ineffective enforcement, lack of human capacity and political dependence of the competition authority.
Apart from arguments regarding the desirable enforceability of law; there is a fundamental question raised in this context: China and Vietnam are driving toward what they call a ‘socialist oriented market economy’. As a result, economic liberalization has been accompanied by gradual political loosening. Other scholars, especially with political theory, are debating how China and Vietnam can best use the competition law and policy to preserve the foundations of free competition without political democracy.
This debate seems much complicated in view of the operation of free market economy. Inevitably, there are a lot of constraints for them to apply law accordingly: the dominant role of the state enterprise, a heavy government intervention in trade policy and lack of political support for competition culture. The goal of creating a healthy competition policy under state guidance is highly controversial. China and Vietnam are currently seeking a path that away from dogmatically conservative and liberal views in favor of something more pragmatic and moderate. The search for the proper balance between state-led and market-led solutions in this context remains a challenge. Shared assumptions in the literature tell us that they require a clear, effective and authoritative competition law and policy. This appears to be particularly true.
From the perspective of free trade policy and its purposes, policy makers in Singapore and Hong Kong have argued that there is no need for them to introduce competition legislation because their innovative business environments have been best assisted by a broader public policy mix and they are open economies with a strong investment policy. Hong Kong is a small and externally oriented economy and the free trade policy is competitive for goods and services.
Hong Kong has adopted general laws of competition on 20 March 2007 and is going to bring such a law forward. It is expected that a law will take effect in the near future. In the context of free trade negotiation with the US, Singapore has committed not to discriminate against US firms and adopted competition law in 2004 as a part of free trade agreements with the US. As a result, competition culture comes to be affirmed as an emerging value to permeate into social life.
In brief, under these circumstances, competition law and policy should not appear to be their main policy consideration. These countries are relatively new members of the competition law community, it is clear that there is a little experience of the law.
The Central and Eastern European experience
How does the CEECs competition law and policy to contribute to the economic development? A full analysis of economic development of the CEECs is beyond the scope of this section, but in the very basis sense, it may be said that before joining the EU, these CEECs have had the same basic characteristics: their economies have been small and centrally planned and have had no competition law; state firms have had absolute power in fixing prices and distributing goods and services within the closed market system; and the fluctuations of world price markets have had little effect on the domestic market.
Empirical research on the macroeconomic transformation in the CEECs finds that Poland and Slovenia recovered earliest from transition. Economic growth has been impressive in the CEECs because growth was dominated by remarkable increases in total factor productivity, but the record experience was unusual: growth in the three Baltic countries (Estonia, Latvia, and Lithuania) is faster than in the five Central European countries (the Czech Republic, Hungary, Poland, Slovakia, and Slovenia).
Apart from the initial shocks, the economic development in the most the CEECs has been clearly above the overage of the emerging market countries, but the catching up process is with the EU will be challenging. It is hard to foresee the macroeconomic development of the CCEEs in the near future because the global recession is continuing to worsen the world economy and the negative effects of investments of business firms in emerging countries are certainly inevitable.
In addition, one of the most distinct particularities for the divergence between the CEECs and EU economy is structural asymmetry; the implementation gap of law remains large in the CEECs and the process of EU law harmonization are going on. In implementing competition law and policy, the CCEEs should draw on lessons from the experience of the EU. Yet challenges remain.
Perhaps most important but far from easy to quantify will be the benefits from the adoption of EC competition law and policy in the CEECs. There are many reasons for this.
First, it is not surprising in view of public policy consideration. In particular, we need to look further to the experience more from the general laws of economic and social development than competition law and policy. The market must pre-exist and work well for them to be established.
Second, some prior conditions must be fulfilled and many public policy instruments need to be applied for market structures to be transformed.
Third, a democratic political structure becomes crucial in making conditions of local market development as favorable as possible for foreign firms.
Fourth, the well-managed restructuring of state-owned firms through privatization produce more dynamics in the emerging market. Five, while entrepreneurial skills and competition culture are still underdeveloped, a competition law is just a part of the other policies behind the functioning of the market. Most relevantly, these countries are under increasing pressure to conform to the domestic competition and consumer protection.
In summary, the benefits from the EU competition law and policy in the CCEEs are not fully proven because there is no straightforward method to be applied in practice. This issue needs more systematic attention.
The discussion above suggests two conclusions. First, the trend of introduction of competition law and policy in developing countries is continuing; the incentives for this option are various; this question has not been fully explored in current literature and evaluations of its impacts on economic prosperity have produced ambivalent results.
It is difficult to argue that there is an extraordinarily urgent need for developing countries to make competition law to respond to the emerging challenge in the contemporary economic downturn landscape because this law is just one component of a broader policy mix in this developmental dimension. How best to meet this objective is a complex matter and depends on the specific circumstances of the country concerned, and more country profile analysis is needed.
Second, it is generally agreed that developing countries need a lot of support in the enforcement of their legislations. The arguments often heard about issues of institutional weakness, lack of expertise and experience, need for more capacity building and technical assistance are not new insight in nature and are one-sided. More empirical examinations and more country analysis on these issues are needed in the future.
For analytical purposes of this paper the role of international cooperation between competition authorities in competition law and policy has been excluded from the discussion, but one related aspect has to be addressed in this context: the fruitful cooperation at the global and regional levels would be facilitating the enforcement of competition law and policy and fostering economic development and growth.
Indisputably, the ongoing efforts of developing countries in improving institution, infrastructure and capacity are needed for the implementation of competition law and policy. This step would be seen necessary for promoting further economic development, as discussed above.
However, it is not sufficient to capture the problems coming from abroad: negative impacts of spillover effects caused by international cartels, export cartels, mergers and acquisitions and intellectual property rights on the domestic economy. It is clear that these problems cannot be unilaterally resolved by introducing and strengthening their national law regime, international, regional and bilateral cooperation between competition authorities would instead be helpful to deal with this.
Experience of the vitamin cartel case shows that failure to cooperate urgently needs to be addressed and placed in the context of the negotiation among developing countries because this omission leads to further consequences: they become a safe haven for such arrangements in the future as they have no or unenforceable legislation.
Encouragingly, there is a noticeable trend towards effective cooperation between competition authorities in the OECD area. This cooperation has responded to this challenge in a variety of fruitful ways, especially in facilitating the enforcement of domestic competition law.
One of the most striking question remains: how developing countries will and should behave in their relations with one another in dealing with this matter in question? They need to focus more on how to better understand this complex challenge and how to reach a better outcome.
Apparently, these emerging problems can be resolved only with the support of developed countries and donors agencies. If an agreement on global competition issues were to be reached, it is most likely that the substantial barriers to the enforcement of domestic competition legislation and economic development in development countries would be partly removed.
For this reason, it is time for them to reflect their confrontational strategy in international cooperation on competition issues accordingly.
This paper has been previously published in Manchester Journal of International Economic Law Volume 8, Issue 1: 18-35, 2011.
 The reason for opposition of developing countries is the level of trade liberalization in the agricultural products in the course of the world trade development. Some Africans countries agreed to negotiations on these issues provided that they would have an access of cotton to the US market. India has had a strongest voice within this group and had formed a coalition with Bangladesh, Cuba, Ghana, Indonesia, Kenya, Malaysia, Mauritius, Tanzania, Thailand, Venezuela, and Zimbabwe, (with Pakistan and Sri Lanka, joining informally) to resist the extensions of negotiations to regulation of Singapore Issues within the WTO, see ‘Communication from India’ , WT/WGTCP/W216/, 26 September 2002.
 They argue that they would not be able to overcome the regulatory burden and compliance costs if agreement on these issues were to be implemented.
 “With respect to the three Singapore issues, i.e. investment, competition policy and transparency in government procurement, the General Council decided on General Council 1 August 2004 that these issues, mentioned in the Doha Ministerial Declaration in paragraphs 20, 22, 23, 25 and 26 respectively, will not form part of the Work Programme set out in the Declaration and therefore no work towards negotiations on any of these issues will take place within the WTO during the Doha Round”, see www.wto.org/english/tratop_e/draft_text_ge_dg_31july04_e.htm
 There is a vast literature on this subject, see for example Cook & Fabella & Lee, ‘Competitive Advantage and Competition Policy in Developing Countries’ (Cheltenham: Edward Elgar, 2007); Drexl‚ Gestaltungsansätze für eine internationale Wettbewerbspolitik – Handlungsanregungen für das weitere Vorgehen in: Oberender (Eds.): Internationale Wettbewerbspolitik. Berlin, Duncker & Humblot, 2006, p. 41 – 72; Evans & Jenny, ‘Trustbusters: Competition Policy Authorities Speak Out, Competition Policy International’, 2009 available at http://ssrn.com/abstract_id=1430659; Gal, ‘Competition Policy in Small Market Economies’, (Cambridge: Harvard University Press, 2003); Mehta & Chakravarthy, ‘Dimensions of Competition Policy and Law in Emerging Economies’, Discussion Paper, CUTS, 2010; Stewart& Clarke & Joekes, ‘Competition Law in Action: Experience from Developing Countries’ (Ottawa: International Development Research Center, 2007); Cernat & Holmes (eds.), ‘Competition, Competitiveness and Development: Lessons from Developing Countries’, Geneva, UNCTAD, 2004.
 Davidson, ‘Creating Effective Competition Institutions : Ideas for Transitional Economies’ in Asian-Pacific Law & Policy Journal Vol. 6 Issue 1 , p. 71; Hoekman & Mavroidis‚ ‘Economic Development, Competition Policy and World Trade Organization’, Journal of World Trade 37(1) 1.27, 2003; Mateus, ‘Competition and Development- Towards an Institutional Foundation for Competition Enforcement, World Competition 33, 2, 275-300, 2010; UNCTAD, ‘The Relationship between Competition, Competitiveness and Development’, TD/B/COM2/CLP/30 23 May 2002; UNCTAD, ‘The Relationship between Competition and Industrial Policies in Promoting Economic Development’, TD/B/CI/CLP/3 27 April 2009.
 According to the theory of complementarity, the possible benefits of trade liberalisation could not be achieved if anti-competitive practices by firms are prevalent in the market. For a general discussion see Do, ‘The Perspectives of International Cooperation in Competition Law and Policy’, in: Zeitschriftt für Wettbewerbsrecht (ZWeR) Journal of Competition Law, 3 .September 2009, p. 289-314 (298)
 For further reference see Mateus as note 5 above, p. 276.
 It is encouraging to see that understanding of competition culture is growing considerably in transatlantic discussions. Regulators, practitioners and legal scholars are the main factors that contribute to reaching the general spirit of competition policy. They are beginning to think, talk about and assess issues of competition policy in the same language, see Do, as note 6 above, p. 303.
 For a good overview of the various proposals for including competition law in the WTO see Marsden ‘A Competition Policy for the WTO’ (Cameron May 2003); for the recent development with fuller reference see Noonan, ‘The Emerging Principles of International Competition Law’, (Oxford: Oxford University Press, 2008).
 See for example Anderson & Wager, ’Human rights, Development, and the WTO: the Cases of Intellectual Property and Competition Policy’ in:Journal of International Economic Law 9(3), 707–747.
 See Davidson as note 5 above p.79.
 For a recent review of the literature see Mateus as note 5 above at p. 277.
 For a further reference see Mateus as note 5 above at p. 277.
 The WTO does not define developing countries but the Advisory Centre on WTO Law has classified the categories of developed countries, developing countries and least developed countries, see http://www.acwl.ch/e/tools/doc_e.aspx.
 Evans & Jenny, as note 4 above providing a brief overview of the global antitrust enterprise; see also Stewart et al, as note 3 above, p. 4.
 For the latest development see for example http://www.globalcompetitionforum.org, for a pointed review see Haytion & Deng,’Antitrust around the World: An Empirical Analysis of the Scope of Competition Law and their Effects’, 74 (22) Antitrust Law Journal 2007.
 See Brooks & Evenett, ‘Competition Policy and Development in Asia’, 2005; Brooks, ‘Competition Policy and Development’; ERD Policy Brief, Asian Development, 2005; Medalla ‘Competition Policy in East Asia’2005; Terhechte, ‘ASEAN/APEC’ in: Terhechte (Hrsg.)‘Internationales – Kartell und Fusionskontrollverfahrensrecht; International Cartel and Merger Enforcement Law’, p. 1956-1964, 2008; Thanadsillapakul, ‘The Harmonization of ASEAN Competition Law and Policy and Economic Integration’ in Inif Law Rev.3, 1, 2004; Wattanapruttipaisien ’Competition, State Aids and Subsidies in ASEAN’ OECD-DAF/COMP/GF/WD2010/ 62.
 For a detailed account, see http://en.wikipedia.org/wiki/ASEAN
 Terhechte in: Terhechte (Hrsg.) as note 17 above p. 1957.
 The most notable example here has been the case of Myanmar. Since Myanmar’ admission ASEAN refused to use political pressures to improve the human rights condition there and rejects proposal for economic sanctions. Recently, ASEAN wants the US and Europe to lift sanctions against Myanmar after the election and release of its opposition leader Aung San Suu Kyi. For the latest development see http://www.reuters.com/article/idUSTRE70F0D320110116
 Brooks as note 17 above, p 2.
 Brooks as note 17 above, p 2.
 Brooks as note 17 above, p. 4.
 Davidson as note 5 above p.79.
 For the latest development see http://www.inwent.org.vn/insights-into-our-work/the-6th-asean-experts-group-on-competition-aegc-capacity-building-workshop-has-been-held-in-hanoi-march-22-24-2010.html
 See also http://gc21.inwent.org/ibt/en/modules/gc21/ws-FLEXasec/info/ibt/index.sxhtml
 See Wattanapruttipaisien as note 17 above p. 4
 See Wattanapruttipaisien as note 17 above p. 4
 See Wattanapruttipaisien as note 17 above p. 5
 See Consumer International (CI), ‘Consumers and Competition, A Consumer welfare analysis of the retail markets in the 14 EG Member States’, 2007; Cseres, ’The Interface between EC Competition Law and the Competition Law of New Member States: Implementation or Innovation’, Working Paper, 2006-06, available at http://ssrn.com/paper=905960; Geradin & Henry, ‘Competition Law in the New Member States: Where do we come from? Where do we go?’ in: Modernization and Enlargement: The Major Challenges for EC Competition Law, 2005 available at http://ssrn.com/abstract=617923.
For a detailed discussion of convergence and divergence between the EC and CEEC competition rules see Cseres, as note 30 above, p. 5.
Cseres, as note 30 above, p.7.
Cseres, as note 30 above, p.22.
Geradin & Henry as note 30 above, p.11.
Cseres, as note 30 above, p.7.
Cseres, as note 30 above p.13-16.
Cseres, as note 30 above, p 8.
 For the recent development see Gippini-Fournier Eric, ‘The Modernization of European Competition Law: First Experience with Regulation 1/2003’, Community Report to the FIDE Congress 2008, available at http://ssrn.com/abstract=1139770
Geradin & Henry as note 30 above, p.17-25.
Gippini-Fournier Eric as note 38 above, Cseres, as note 20 above, p. 9.
Cseres, as note 30 above, p.14 -16.
Cseres, as note above 30 p.19.
Art. 399-402 of Estonian Penal Code: physical person can be punished by means of a fine up 1600 Euro or up to three years imprisonment.
 Section 14 of the Hungarian Criminal Code: cartel activities are to be punished with imprisonment of up to five years
 For an extensive discussion see Cseres, as note 30 above, p. 19- 20.
 In practice, there have been very few damages claims before the courts of the Members States. For a theoretical discussion see Waelbrock & Shoshan, ‘Study on the Condition of Claims for Damages in Case of Infringement of EC Competition Rules, 20 August 2004, available at >http://europa.eu.int/comm/competition/antitrust/others/private_enforcement/comparative_clean_en.pdf>
The difficulty to improve the EC competition law in dealing with matter in question is a serious obstacle, on this argument see >http://europa.eu.int/comm/competition/antitrust/others/private_enforcement/index_en.htm>
Consumers International as note 30 above, p. 21.
Consumers International, as note 30 above, p.21.
Consumers International, as note 30 above, p.21.
 See generally Gal, ‘The Ecology of Antitrust: Preconditions for Competition Law Enforcement in Developing Countries’ in Cernat & Holmes (eds.), as note 4 above, p. 21-52.
Cernat & Holmes, as note 4 above p.16-18.
Of course, there are many mainstreams in the macroeconomic development literature, but one of the best references is Sen, Development as Freedom (New York: Knopf, 1999); these arguments are extremely insightful. Perhaps most similarly, Petersmann, following Hayek, Sen and others, emphasizes the crucial significance of economic freedom. He argues that market freedoms are indispensable for human autonomy and self determination, see Petersmann, ‘How to Constitutionalize International Law and Foreign Policy for the Benefit of Civil Society?’ 20 Mich J Int’l L. 1998 1 p. 17, see also Mateus as note 5 above at p. 277.
See Sen, as note 53 above p. 4-5.
 Pew Research Center, ‘World Public Welcomes Global Trade – But not Immigration’, see
Cernat & Holmes, as note 4 above p.10-15; Brooks as note 17 p. 6.
 For a general discussion see Walker, ‘Central Europe’s Second Constitutional Transition: The EU Accession Phase‘ in: Czarnota, Krygier, Sadurski (eds.) ‘Rethinking the Rule of Law after Communism’, (Central European University Press, Budapest, New York, 2005) p.342-369. Based on the constitutional law perspective Walker examined the implications of the accession of various CCEEs to the EU in the context of legal transformation.
 See Walker as note 57 above, p. 346.
 See Walker as note 57 above p. 343.
The CEECs have received 11 billion Euro of co-financing for institution building support and technical assistance on the PHARE Programme, see Geradin & Henry as note 30 above p. 7.
After being pressed in opening the domestic market, developing countries have introduced the developmental plans and/or adaptation of structural adjustment programmes (privatization, deregulation, trade liberalization, legal security for property rights etc…). These macroeconomic reforms were based on the background of the Washington Consensus, its results were much debated in the development literature. One of the best references here is Stiglitz, ‘Making Globalization Work’, W. W. Norton New York, 2006.
 The Model Law on Competition and Handbook on Competition Legislation are the most important working products of the UNCTAD for developing countries. The UN Set of Multilaterally Agreed Equitable Principles and Rules for Controls of Restrictive Business Practices remains the only universal model for international competition law and policy. During the 1990s UNCTAD continued to pursue its original objective and reaffirmed the basic relevance of the UN Set at Trade Review Conferences in 1985, 1990, 1995, 2000 and 2005. Some developing countries adopted their legislation guided by the Set and suggested upgrading this Set as a pre-eminent model with binding effect. Politically, developing countries may be best able to mobilize their resources to move forward in this setting. For the latest development see http://unctad.org/en/docs/tdrbpconf7L14_en.pdf
One of the most significant changes in the OECD’s objective is recognizing the greater role of developing countries and offering the Outreach Programmes It has created a global and regional competition centre, organizes yearly conferences, conducts peer reviews, offers technical assistance and help with building capacity and produces various recommendations and reports for developing countries. In the peer review process the OECD aims to create compliance with best practice by the inexperienced partner, for example in the case of Mexico and Brazil. For a latest development see http://www.oecd.org/document/28/0,3746,en_40382599_40393118_40424028_1_1_1_1,00.html
Since 1991 the US Agency for International Development (USAID) has been a partner to more than 50 developing countries. The US is as one of the best provider of effective methods to competition authorities in developing countries and will continue to do so against the background of bilateral or regional agreements; see www.ftc.gov/oia/ftcdojtechnicalassist.pdf.
The EU has concluded several bilateral free trade agreements which include a competition chapter, including with Mediterranean countries, South Africa, Mexico and Chile, see http://ec.europa.eu/competition/elojade/international/; for detailed discussion see Valle Lagares, ‘International Agreements Regarding Cooperation in the Field of Competition: The New Strategy of the European Commission’, Journal of European Competition Law & Practice, 2010, p. 1-3; see also Evans & Jenny, as note 4 above, p. 73.
See Evans & Jenny, as note 4 above, p.8.
 Indonesia adopted competition regime in 1999 as a condition to obtaining rescue fond from the IMF, see Fox, ‘Antitrust and Regulatory Federalism: Races Up, Down, and Sideways’, 75 N.Y. U. L. Review 1781 (2000); for the case study see Solan & Jones& Dicker & Weber Waller, ‘Indonesia: Intersection of Human Rights, Financial Markets and Competition’ in 25 Brooklyn J. Int’l Law 1 1999, 161, 176-183.
 See >http://www.competition.gov.jo/eng/index.html>
 Brooks, as note 17 p. 6, arguing that promoting a competition culture in the population is not a top priority in policy consideration, see also Cernat & Holmes, as note 4 above, p.16-18;
See generally UNCTAD ‘World Investment Report 1997’, discussing the relationship between FDI liberalization and competition law and policy in promoting economic development in developing countries.
 Cernat & Holmes, as note 4 above, p.16-18.
See source cited as note 4 above.
The classic reference here is World Bank, ‘The East Asian Miracle: Economic Growth and Public Policy’, (Oxford: Oxford University Press, 1993); for a general discussion on competition policy see Khermani & Meyerman, ’East Asian’s Economic Crisis and Competition Policy’ in: Global Competition Review (Aus- Sept 1999) p.10-17; for a good overview of the current regulatory development see Furse ‘Antitrust Law in China, Korea and Vietnam’ (Oxford: Oxford University Press, 2010)
 Mehta & Chakravarthy, as note 4 above, p. 23.
Japan forced mergers in a variety of industries and encouraged formation of cartels. Cartels existed mainly in the form of the legally recognized horizontal Keiretsu, normally centered on one bank and trading company. The term Keiretsu refers to a set of companies with interlocking business relationships and shareholdings, see Mehta & Chakravarthy, as note 4 above, p. 19; UNCTAD 2009 as note 4 above, p. 10.
 See Furse, as note 73 above, p.215; Seon Hur, ‘The Evolution of Competition and its Impacts on Economic Developments in Korea’ in Cernat & Holmes, as note 4 above, p. 235-249, 2004; Mehta & Chakravarthy, as note 4 above, p. 12; UNCTAD 2009 as note 4 above, p. 10
 See source cited note 73 above
 The objective in encouraging collusion was to make Japan more competitive in the international market, see Mehta & Chakravarthy, as note 4 above, p. 19; UNCTAD 2009 as note 4 above, p. 10.
 Beresford distinguished alliance capitalism and cronyism. Both are two sides of the same coin, but the latter has primarily political rationale which associates with the goal of regime maintenance. Close relationships between business and government are more personalised than in the case of alliance capitalism. Vietnam is degenerating into cronyism; on the contrary, South Korea and Taiwan are satisfying the changing aspirations of their expanding educated middle classes, see Beresford, ‘Doi Moi in Review: The Challenges of Building Market Socialism in Vietnam’, Journal of Contemporary Asia, Vol. 28 No. 2 May 2008 p. 221-243 with further reference.
 The Monopoly Regulation and Fair Trade Act (MRFTA) have been enacted on 31 December 1980, entered in force on 1 April 1981. To date, this Act has been amended on over ten occasions. For an good overview see Furse, as note 73 above, p. 215
 See Contribution of the Republic of Korea to the WTO Working Group Trade and Competition Policy (WGTCP) W. 56 para. 13; Contribution of the Republic of Korea, DAF/COMP/GF/WD (2009) 26 OECD, 16 January 2009.
 See Brooks, as note 17 above p. 6-7.
See Khermani & Meyerman as note 73 above.
 See Mehta & Chakravarthy, as note 4 above, p. 14 discussing that China created the so-called ‘national champions’ in selected strategic areas such as electricity generation, coal mining, automobiles, iron and steel and the like; see also Furse, as note 73 above, p. 67.
 See generally Beresford as note 79 above.
 Jiang X, ‘Promoting competition and maintaining monopoly: Dual functions of Chinese industrial policies during economic transition’ Washington University Global Studies Law Review, 149-69, available at http://www.law.wustl.edu/Publication/WUGSLR/volume_1.html.
 See generally Furse as note 73 above, p. 67;Emch & Hao, ‘The New Chinese Anti-Monopoly Law- An Overview’, GCP MAGAZINE 2 (Nov. 2007), available at http://www.globalcompetitionpolicy.org/index.php?id=604&action=907.
 See Beresford as note 79 above p. 221.
 See Furse as note 73 above, p. 305; for a critical discussion see also Furse, ‘Competition Law on Vietnam: A Critique’ in World Competition 33 Nr.1, 2010, p. 163-171.
 See Do, as note 6 above p. 304, footnote 80 arguing in practice, socialism in China and Vietnam appears as far away as ever.
 For further discussion see Beresford as note 79 above, Furse, as note 73 and 90 above.
 See Emch & Hao as note 87 above; Furse as note 90 above.
 Contribution of Singapore to the WTO Working Group on Trade and Competition Policy WGTCP/W28
 Contribution of Hong Kong/ China to the WTO Working Group on Trade and Competition Policy WGTCP/W26; see also APEC_OECD Integrated Checklist on Regulatory Reform: Addressing Regulatory Competition Policy, and Market Openness Policy Issues- Hong Kong, China, 2006/SOM3/EC015, 23; see also Furse as note 73 above, p. 123.
 For more on the current development see http://www.cedb.gov.hk
 See Evans & Jenny, as note 4 above, p.8; see also http://www.fta.gov.sg/fta/pdf/FTA-ussafta_Agreement_Final.pdf
 From a macroeconomic perspective see Schadler et al, ‘Growth in the Central and Eastern European countries of the European Union’, Washington, D.C.: International Monetary Fund, 2006.Occasional paper 252.
 See Schadler et al, as note 98 above, p. 1.
 See Schadler et al, as note 98 above, p. 1.
 See Schadler et al, as note 98 above, p. 1.
 See Schadler et al, as note 98 above, p. 6.
 See Cseres, as note 30 above, p. 5.
See Cseres, as note 30 above, p. 5.
 See Brooks as note 17 p. 6; Wattanapruttipaisien as note 17 above p. 5
 Based on the diversity of developmental stage in developing countries, Brooks emphasized that the donor agencies should identify their priority of aid policy consideration accordingly. For countries in transitions or at early stage of market development, macroeconomic stability and development of institutional infrastructure must be top priority. For developing countries with more developed market system, promoting a competition culture in the population and ensuring the political independence of a competition authority is becoming increasingly important in the reform process, see Brooks as note 17p. 6
See, Do ‘A Bad Problem Getting Worse: Regional Trade Agreements and the Future of the Multilateral Framework on Competition Policy and Law’ in Zeitschrift für Wettbewerbsrecht (ZWeR) Journal of Competition Law, 4. December 2010, p. 353 discussing the question whether there is a link between regionalism and multilateralism in the contemporary competition policy discourse.The effects of the inclusion of competition provisions in RTAs cannot be seen as a building block because of their ineffectiveness and unenforceability, nor can they be seen as a stumbling block because their practical relevance is minimal. The proposed multilateral framework on competition law and policy should go further than the competition-related provisions of RTAs.
 Decision 2003/2 COMP/E-1/37.512- Vitamins 2003 OJL6/1.
 Evenett & Levenstein & Suslow, ‘International Cartel Enforcement: Lessons from the 1990s’, 24 (9) the World Economy (2001) 1221–45.
 Hammond, ‘Recent development, Trends, and Milestones in the Antitrust Division’s Criminal Enforcement Program’ Wash. D. C: 56th ABA Antitrust Section Meeting 2008; for the EU anti-cartel enforcement activities see http://ec.europa.eu/competition/cartels/statistics.pdf.
 Do, ‘Developing Countries and the Possible Future WTO Framework on Competition Law and Policy – Another Look at a Current Controversy’(in Forthcoming) arguing that developing countries need to frame their perceptions of the benefits in the possible future cooperation mechanism by identifying some negative impacts on their home markets. They shall, therefore, have a common interest in generating such cooperation and return to the table of negotiation. Worse still, there is a lack of reliable information and data that would allow proper quantification. For this purpose, they need to prepare their next step to increase their participatory power in cooperating with a strategic partner in the background of negotiation-oriented coalition. In this respect, the International Competition Network (ICN) may be able one of the best suitable partners for them for informal collective action.