The only universal, voluntary instrument on competition in existence - the UN´s 1980 Competition Code - will be reviewed by competition experts meeting in Geneva from 25 to 29 September.
Competition is among the top issues in the daily economic press today, with the advent of globalization; sweeping market-oriented reforms, including privatization of traditional state monopolies; and the growing concentration, and potential abuse, of market power through mergers and acquisitions. Ever since Seattle, the expected benefits of globalization have been increasingly contested by public opinion. Many voices, including from Member States, are calling for more than voluntary principles and rules to regulate competition at the multilateral level. The European Union, Japan, Republic of Korea and other States have urged that a multilateral competition framework be considered in a new round of multilateral trade negotiations.
Increased competition at all levels through economic reforms which rely more and more on market forces is a powerful tool to increase efficiency. However, unbridled competition - that is, competition without rules - tends to increase inequalities and create monopolies. Hence the need felt in all developed (OECD) countries, most economies in transition and a rapidly growing number of developing countries to adopt national competition legislation and effective enforcement mechanisms that promote competition, encourage innovation and avoid undue concentration of market power in a few hands. Regional groupings of States - the main example being the EU and, more widely, the European Economic Area, but also many others in Asia, Africa and the Americas - have been considering the adoption of rules at the regional level as well.
The UN Code was adopted in 1980 under the name "Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices". Its objectives included ensuring that such practices did not "impede or negate the realization of the benefits that should arise from the liberalization of tariff and non-tariff barriers affecting world trade, particularly those affecting the trade and development of developing countries". While aiming "to protect and promote social welfare ... and the interests of consumers", it also recognized that competition increases efficiency. And in keeping with the objective of creating a more equitable environment, it endorsed the principle of "preferential or differential treatment for developing countries".
Since the last review of the Code, at the Third Review Conference in 1995, most developing countries and economies in transition have shown interest in competition policy. Some 60 countries have already adopted competition laws, and many others have begun the drafting process. Due to a lack of experience, financial resources and political support, however, many of them have been unable to implement their competition rules in such a way as to have an effective impact on the economy.
The imperative need to reconcile efficiency with equity in competition matters was recognized by UNCTAD X last February, which declared that: "In addition to national efforts, the international community as a whole has the responsibility to ensure an enabling global environment through enhanced cooperation in the fields of trade, investment, competition and finance ... so as to make globalization more efficient and equitable" (Bangkok Declaration, paragraph 4). UNCTAD X accordingly mandated the secretariat inter alia to help countries develop their national regulatory and institutional framework in the area of competition law and policy; to strengthen the capacity of public institutions for competition and consumer protection in developing countries; and to study the developmental impact of possible international agreements on competition. UNCTAD has been cooperating closely with the World Bank and the WTO in carrying out these tasks, of which the Fourth Review Conference is a main outcome.
The Conference will review all aspects of the UN Competition Code. It will look at experiences gained in international cooperation; provisions on restraint against anti-competitive practices, including international carTs; the role of competition policy in addressing the exercise of inTlectual property rights; and best practices in enforcement of competition laws. It will propose a strengthened role for competition authorities in fostering a "culture of competition" by educating society. And it will address competition policy in such strategic sectors as Tecommunications and regulated industries. Finally, the Conference will consider an updated version of UNCTAD´s Model Law, which contains specific merger control rules.
In preparation for the Conference, five regional seminars were organized, all of which adopted recommendations for action by the Review Conference. These include such novel ideas as launching a UN Day on competition and consumer protection and setting aside a percentage of the fines obtained in combating anti-competitive practices for a fund to promote competition laws and policy and educate consumers in developing countries. Improving the effectiveness of training and technical assistance was also recommended through monitoring and peer reviews by competition authorities in regional forums.
For background information, see documents TD/RBP/CONF.5/3 (Assessment of the operation of the Set); TD/RBP/CONF.5/4 (Experiences with international cooperation); TD/RBP/CONF.5/6 (Competition policy and the exercise of inTlectual property rights, which provides a comparative analysis of the relevant principles and rules, particularly in the EU and the US); and TD/RBP/CONF.5/7 (UNCTAD´s revised Model Law).
