Jenny: We need to overcome scepticism
Global Competition Review, December 14, 2015
Despite the widespread adoption of competition policies around the world, more still needs to be done to win over those sceptical of the benefits robust competition brings to economic development, Frédéric Jenny said on Saturday.Mark Briggs in Nairobi.
Jenny, who is chair of the Competition Policy Committee at The Organisation for Economic Co-operation and Development, said despite the almost complete demise of controlled economies in the last 20 years the value of competition policy was still not a universally accepted principle.
“What is obvious to economists is not so obvious to policy makers and the general public,” Jenny said.
The belief that lobbyists work to bend policy to their own ends clearly holds back acceptance of competition reforms, especially in smaller countries, Jenny said.
But, Jenny claimed, an overzealous fightback by authorities, who see themselves as the only true advocate of competition, has isolated many trade groups and other pro-competition business groups in developing countries.
This has led, in some instances, to businesses seeing competition authorities as engaged in “civil defence of consumers against companies,” Jenny said. “It has created a communication problem” between stakeholders, he said, and has diffused efforts to create effective competition policies.
He said he is also concerned by the poor collective understanding of the complexities of competition in a globalised world.
Competition theory, Jenny said, has not adapted to the reality of global markets affected by extreme variations in pay and working conditions and policies such as currency manipulation by some states.
“Promoting competition at the domestic level is relatively easy,” Jenny said. “But we have done a poor job of understanding the complex process of competition in a globalised world where not everyone has the same laws.”
Competition advocates must also be realistic and open about the short-term costs that result from competition reforms.
“We must recognise that competition places cost in the short term,” said Jenny, who added that the competition community has at times failed to offer good solutions to politicians faced with these short-term problems, including unemployment and regular elections.
With the perception that many countries have successfully developed without competition regimes, such policies are regarded as unnecessary in many developing nations.
“A lot needs to be done to convince policy makers competition is development-friendly. It is a powerful and pragmatic tool to improve people’s welfare,” Jenny said.
Jenny’s comments came during the 4th annual CUTS-CIRC Biennial Competition, Regulation and Development Conference, which concluded yesterday.
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