Promoting Acceptance of a Competition Regime – Competition Law as new Safety Valve

This paper focuses on the research area relating to “Identifying and Overcoming Political Economy and Governance Constraints to the Effective Implementation of Competition and Regulatory Laws”.

Competition law is an integral part of any general policy to enhance competition. Reduction of customs tariffs, encouraging private participation in industry, and inviting foreign investors to the domestic market do not by themselves complete the process of market liberalisation. The necessity for market liberalisation and it benefits are by now largely accepted even in developing countries, as concrete results such as improved standards of living and higher GDP are evident. The challenge then, is to increase the acceptability of competition law as part of this process.

This paper will discuss how, similar to trade remedy measures, competition law has the potential to act as a ‘safety valve’ in the domestic context. As a result of liberalisation, foreign investors have an increasing presence in developing countries. However, domestic players may feel increasingly threatened as foreign players begin to dominate the domestic market not only by way of direct competition, but also acquisition of domestic competitors. The existence of an effective competition regime can ensure that all players, whether domestic or foreign, adhere to the principles of fair competition, thus providing the “level playing field” that domestic players so often demand.