Transcript Competition Policy in Brazil

Competition Policy in Brazil
Daniel Krepel Goldberg
• Competition Policy versus Competition Law
• Brazilian legal framework (Federal Constitution
and Federal Law 8.884/94)
• Legal framework is adapted through caselaw +
legal analysis + antitrust authority priorities to
shape Competition Policy
• A market economy should have competition as
one of its pillars – Political Economy of
Competition
Competition Policy in Brazil
• What should be the goals of competition
policy?
• Apparent consensus: allocative efficiency
and consumer welfare
• There are however, other goals (equity)
• Should we prioritize goals?
Competition Policy in Brazil
• Prioritizing efficiency implies decisions
taken by antitrust authority should be within
a “Pareto-optimal arch”
• What about efficiency-neutral decisions (i.e.
bid-rigging)?
Competition Policy in Brazil
• Considering several principles for
competition policy, should there be an
optimal mix?
• Competition policy for developing
countries: some remarks
Competition Policy in Brazil
• Does competition policy work as tool for
growth?
• Two competing views: the Darwinian view
and the Schumpeterian view
• The Darwinian view: “Competition drives
enterprises to better adapt /or at least selects
the fittest”
Competition Policy in Brazil
• Does competition policy work as tool for
growth?
• Two competing views: the Darwinian view
and the Shumpeterian view
• The Darwinian view: “Competition drives
enterprises to better adapt /or at least selects
the fittest”; therefore it fosters productivity
Competition Policy in Brazil
• The Shumpeterian view: “While atomistic
firms operating in a competitive market
may be a perfect vehicle for static resource
allocation, large firms with substantial
market power are the most powerful engine
of innovation and output expansion”
• According to this view there is a trade-off
between growth and competition.
Competition Policy in Brazil
• Empirical evidence: Schumpeterian view
sustains that “beginning with a monopoly,
competition enhances efficiency up to a
certain level of market concentration”.
• This is called the “Inverted U-Shape”
hypothesis - intense competition hampers
innovation.
Competition Policy in Brazil
• Empirical evidence favors the Darwinian
hypothesis - intense competition is
positively correlated with growth and it
fosters innovation, productivity and growth.
Competition Policy in Brazil
• Now that we have established ‘competition
is worth it’, we should make it work!
• Competition policy in developing countries
should have (i) a sound legal framework;
(ii) enforcement priorities and above all (iii)
an advocacy component.
Competition Policy in a
Multilateral Framework
• Trade-offs and complementarities arising
from multilateral competition policy for
developing countries
• Does competition policy encourage trade?
Competition Policy in a
Multilateral Framework
• Possibilities for a multilateral competition
framework:
– national competition law and enforcement
regime; and/or
– modalities of voluntary international
cooperation.
• Multilateral merger rules or hard-core cartel
investigations
Competition Policy in a
Multilateral Framework
• Core principles
– Transparency
– Non-Discrimination: de jure or de facto
– Procedural fairness
• Multilateral enforcement
• Cooperation: technical assistance and peer
review
Competition Policy in a
Multilateral Framework
• Core principles
– Transparency – transparency means that laws,
regulations and guidelines of general application should
be published in a timely manner.
– This could or could not include exemptions and
decisions.
– Transparency has a number of positive externalities
(cooperation, legitimacy etc.)
– Above all, Transparency facilitates advocacy.
Competition Policy in a
Multilateral Framework
• Core principles
– Non-discrimination – Non-discrimination (de jure)
implies competition law regimes should not prescribe
discriminatory treatment based on nationality of agents
or firms.
– The problem of national champions (i.e. blockage of
mergers by foreign companies) – again, trade-offs with
so-called industrial policy.
– De facto discrimination could raise complex issues
within a multilateral setting.
Competition Policy in a
Multilateral Framework
• Core principles
– Procedural fairness – there should be some
procedural guarantees (rights of defence) under
which private parties have access to
competition authorities - here special care
should be taken, since there is a multitude of
possible institutional arrangements (e.g. Brazil).
Competition Policy in a
Multilateral Framework
• Core principles
– Procedural fairness – there should be some
procedural guarantees (rights of defence) under
which private parties have access to
competition authorities - here special care
should be taken, since there is a multitude of
possible institutional arrangements (e.g. Brazil).
Competition Policy in a
Multilateral Framework
• Conclusions
- There are benefits derived from the adoption of a
multilateral framework.
- However, international cooperation should be an
important (maybe more important) goal
- International cooperation should prioritize (i)
international hard-core cartels, (ii) technical
assistance and capacity building in competition
advocacy (the biggest challenge seems to be in
regulated sectors). Priority (ii) should yield
benefits to trade.