A Multilateral Forum on Competition Necessary to deal with cross border anticompetitive practices

Geneva, September 25, 2012

“UNCTAD and the WTO should jointly host a multilateral forum on competition law & policy, in particular to deal with distortions in the primary commodities trade, which impact food security among other deleterious effects” said Pradeep S. Mehta, Secretary General of CUTS International and member of the WTO Panel on Defining the Future of Trade.

“Such a joint initiative would help having both developed and developing countries on board” he added while introducing the session on “Interaction between trade and competition policy” organised by CUTS as part of the WTO Public Forum here yesterday.

Mr. Hassan Qaqaya, Head of Competition and Consumer Policies Branch, recalled that “UNCTAD gives support to developing countries in developing their competition regimes.”

Nearly 130 countries have now adopted a competition law and time has come to revive the discussions on a multilateral framework to deal with restrictive and unfair practices that hinder the positive developmental impacts of global trade. In addition, according to the Chairman of the International Competition Network Mr. Eduardo Perez Motta, “we are moving towards better international coordination”. When the WTO was established in 1995 only about 35 countries had a competition law.

“Australia could certainly be ready to participate in such discussions, whatever the forum,” said Tim Yeend, Ambassador and Permanent Representative of Australia to the WTO.

In 1997, the World Trade Organization had established a working group on the interaction between trade and competition policy (WGTCP) to explore the linkages and see whether a multilateral agreement on competition can be incorporated in future trade negotiations at the WTO. First carried forward in the Doha Development Agenda but opposed by developing countries, competition policy was dropped from the agenda in 2004. Fifteen years later, “many developing countries have adopted competition laws and even signed Free Trade Agreements that include competition provisions,” observed Mr. Yoichi Otabe, Ambassador of Japan.

“The developing countries opposition was a result of the after taste of the Uruguay round. If the proposal would come today, it would be received very differently” observed Carlos Braga, Director of the Evian Group.

Robert Anderson, Counsellor at the Intellectual Property Division of the WTO pointed out that “competition authorities in the countries of origin of the export cartels do not act against these cartels because they do not affect their domestic markets. In the victimised countries, competition authorities often do not have powers to act against the export cartels.”

Among the many possible reasons, Mr. Anderson mentioned the fact that they may lack extra-territorial jurisdiction, or may not have the means to gather the evidence they would need to convict the cartels in their jurisdiction.

Export cartels have a significant influence on prices in general and on the swing of prices of primary products in particular. As a result of price fixing conspiracies during the 1990s, developing countries paid about 20-25 billion US Dollars in excessive prices. In a recent study for CUTS, the noted economist and Chairman of the OECD Competition Committee, Frederic Jenny has highlighted the overcharge paid by India due to anticompetitive practices in the global potash market, estimated at a billion US Dollar per year.

For further information please contact:
Julien Grollier, +33 6 84 70 52 53, jg3@cuts.org