The workshop on Economics of Competition Policy was held at the Yasaka Nha Trang hotel on 22-23 February 2017. This workshop had over 50 participants, being officials of APEC competition authorities, delegates and experts. The participants came from almost all member economies of APEC.
Speakers at the workshop include:
- Dr. Nguyen Dinh Cung, President of the Central Institute for Economic Management;
- Professor Yannis Katsoulacos from the Competition and Regulation European Summer School;
- Professor Frederic Jenny, European Center for Law and Economics of ESSEC;
- Professor Howard Shelanski, from Georgetown University Law Center;
- Professor Joseph Harrington, from the Wharton School, University of Pennsylvania;
- Professor Fiona Scott Morton, Yale University School of Management;
- Dr. Warren Mundy, Managing Director, Bluestone Consulting Company;
- Mr. Mitsuru Kikkawa, Deputy Director, Economic Research Office at the Japan Fair Trade Commission.
The presentations were well-organized to facilitate understandings and discussion of the participants. Regarding The Role of Market Definition and Market Power: Established Practice and Recent Developments, Professor Katsoulacos focused on reviewing Market Definition and Market Power in terms of current approaches and proposed alternatives influencing enforcement of Competition Policy, including analysis of critism and weaknesses of each approach.Acknowledging the complexity of these abovementioned issues as well as measurement techniques, discussionssuggested the need to be cautious in analysis of market definition, market power in connection with enforcement of competition policy. At the same time, competition agencies in developing countries are also advised to work with more data in these analyses.
Regarding Horizontal Collusion and Cartels: Successes and Challenges, Professor Harrington analysedcurrent situation of, including causes and limitations, and proposes remedies to deal with the issue of horizontal collusion and cartels. The presentation covered various examples of shutting down cartels and impacts of collusive practices to effective enforcement of competition policy.The presentation notes that enforcement has significantly intensified but whether it has lowered the presence of cartels is still in questions. Accordingly, if enforcement is not proving successful (in lowering the cartel rate), more effort is needed to discover and shut down active cartels by not excessively relying on leniency programs; adopting whistleblower programs; and engaging in screening.If enforcement is proving successful, firms may choose to engage in less explicit forms of collusion and this will call fora broader notion of unlawful collusion; greater use of economic evidence to prove liability; and an environment that promotes private litigation.
Regarding The Economic Analysis of Mergers,Professor Shelanski discussed impacts of mergers on pricing developments, namely, looking for whether the merger cause upward pricing pressure or downward pricing pressure.The presentation also covered a series of remedies to address negative impacts of mergers if occurred. Then discussionsthen focused on merger remedies in terms of appropriateness, goals, eligible types and transparency. Experiences show that behavioural remedy is highly effective in highly regulatory economies and thattechnology innovation and dynamic considerations are extremely important for sustaining dynamic incentives.At the same time, getting related data is also challenging, especially in developing countries. Discussions also revealed that the effectiveness of remedies may likely depend on various factors, including size, diversity, and openness to entry of an economy; accountability of public officials; and relationship between government and industries.
Regarding Direct evidence, economic evidence, presumptions and standards of proof in competition law cases, ProfessorJennyanalyzed economic evidence in cartel cases; economic evidence in connection with the abuse of dominance; optimal enforcement of the competition law and standard of proof.Discussions revealed that presumptions vary among countries and regions and cautions are necessary to consider model of application. It was also noted that any related instruments may be misused in the reality.
Regarding Online Vertical Restraints: theory, evidence, and competition policy, Professor Morton discussedmajor issues of online commerce in connectionwith competition policy, including Resale Price Maintenance enforcement and free-riding problem.The presentation showed theInternet exacerbates some market failures in a variety of areas, including retail services, platform creation, exclusive brand, and search comparison. Also,the presentation covered international experience in enforcement of regulations to prevent potential harms caused by the abuse of internet and distorted use of online search engines to manufacturers. From the discussions, the issue of regulating online commerce is quite new to developing economies.However, international experiences of the US and EU will provide useful lessons in designing and enforcing regulations over online businesses so as to promote competition without causing harms to consumers.
Regarding Enforcement issues in rapidly changing/ high tech markets, Professor Jenny coveredenforcement issues in various dimensions, including Competition Law and Innovation ; and Competition Law and Disruptive Innovations. The presentation emphasized the complex nature of relationship between competition and innovation, suggesting the need for a multidimensional approach to competition law enforcement. Discussions show that, with regard to global business models, the advice for small economies was that they should engage in convergence process with the purpose to build a common understanding and take rigorous response collectively in favor of consumers’ benefits, thus influencing transnational corporations to have economic incentives to change their ways of behaving.
The workshop also dedicated a session for discussing experiences of various APEC member economies. Dr. Nguyen shared the experiences of Vietnam in Enhancing Competitive Neutrality between SOEs and Private Enterprises.Evidences were presented on unfair competitionbetween SOEs and the private sector, with many advantages and privileges to SOEs. So, together with SOEs reforms, it is necessary to revise competition law and set up a new capable competition authority.On Experiences of Australia in competition reform in infrastructure industries, Dr. Mundy elaborated on the framework of institutional design aimed to ensure successfulcompetition reforms in infrastructure industries. The presentation stresses the vital importance of independence and separate functions in setting up new competition agencies. The Ex-post Evaluation of Competitive Pressure from Imports in the Review of Business Combination as shared experiences from Japan was covered by Mr. Kikkawa.The presentation focuses on ex-post evaluation of competitive pressure from imports/related markets in the review of business combination (case of merger between Furukawa-Sky Aluminum Corp. and Sumitomo Light Metal Industries, Ltd) and from related Markets(Capital Tie-up of Kirin Group and Kyowa Hakko Group) and draws some policy implications for Japanese Business Combination Reviews.
In discussion, participants expressed concerns, especially over institutional arrangements of completion authorities, their functions as well as related enforcement of competition policies. Discussions also emphasised the critical importance of setting up independent competition authorities. There is no “one size fit all” models/solutions. Instead, there should be tailor-made solutions, taking into account of specific circumstances of each economy under consideration.
Vietnam would like to thank the Competition and Regulation European Summer School, and APEC Policy Supporting Unit for efforts in co-organizing the Workshop. Vietnam also thanks Australia; Japan; Papua New Guinea; Peru; Philippines; Chinese Taipei; United States for co-sponsoring the project in 2016./.