Competition Law in Developing Countries, Thomas CHENG

Thomas Cheng

This section selects books on themes related to competition laws and economics. This compilation does not attempt to be exhaustive but rather a survey of themes important in the area. The survey usually covers publication over the last three months after publication of the latest issue of Concurrences. Publishers, authors and editors are welcome to send books to catherine.prieto@univ-paris1.fr for review in this section.

In the present book, Thomas K. Cheng is proposing, through extensive literature review and case studies from different jurisdictions, what type of competition law should be adopted by developing countries. Similar to the approach adopted by renown authors, Eleanor Fox and Michal Gal, the central thesis of Mr. Cheng throughout his book is to subtly rebuke the call for convergence, which is an “illusionary pursuit,” and, rather, to root for informed divergence in competition law. For Mr. Cheng, a developing country needs a contextualized approach for an effective competition law, that should be driven by the degree of economic growth and development that a developing country wants to achieve. These goals, as set out by Mr. Cheng, should be “at the center of their economic policy, including competition policy.” In order to reach this thesis and applying it, Mr. Cheng begins by constructing the theoretical framework relevant for developing countries, in which economic growth and development play a central role. He then applies this framework to the main areas of competition law enforcement, which can be further adapted by each developing country according to its specific needs and economic characteristics.

In addition to the introduction and conclusion, the book is comprised of 13 chapters that follow the methodology of analysis set out by Mr. Cheng. Chapter 1 explains the basic premise of the book and the diversity of developing countries. Chapters 2 to 7 construct the theoretical framework to be used to reach the proposed approach through an extensive literature review. Chapter 8 then summarizes the literature review and arguments explored in the previous chapters in order to put forward the proposed approach to be applied to design a competition law for a developing country. Finally, chapters 9 to 13 apply, in concreto, the proposed approach described in chapter 8 to the different substantive and enforcement aspects of competition law.

Chapter 1 discusses the basic premise and the diversity of developing countries. It elaborates on the need for an informed divergence and how it is more suitable to developing countries and more realistic, while also explaining the importance of other development policy tools to developing countries and their pivotal role in competition law. In addition to some of the distinctions with developed countries, this chapter explains that even amongst developing countries themselves, there is diversity.

Chapters 2 and 3 deal with the concepts of economic growth and economic development. Chapter 2 discusses the relevant determinants that can really achieve economic growth, with some emphasis on the concept of “inclusive growth” and its relevance. It then explains the meaning of economic development and what should be its objective, which tends to be mainly poverty alleviation. The chapter is then concluded with some discussions on the difference between economic growth and development and what areas should be taken into consideration in order to assess the contribution of competition law to their achievement. Chapter 3 is discussing the different models used in order to assess economic growth and what aspects each model aims to emphasize.

Chapters 4 to 6 deal with the relationship between competition and the relevant economic policy areas, namely, economic growth, economic development, as well as industrial policy. Chapter 4, dedicated to economic growth, uses some of the models discussed in chapter 3 in order to show the impact of competition, and the limitations thereof, on the different aspects of economic growth. Chapter 5 then deals with the relationship between competition and economic development and, more specifically, poverty alleviation. It presents the general approaches on how to take into consideration poverty concerns in competition law. It then gives more concrete examples on some of the priority sectors and issues, which if taken into consideration by a competition authority and policy makers in a developing country in their competition law enforcement, economic development can be achieved. Chapter 6 fully discusses the relationship between competition and one of the most controversial economic policy areas, industrial policy. It debates the relevance of such policy to a developing country, especially in light of how this policy has benefited a great number of Asian countries in alleviating poverty. Notably, this chapter discusses the justifications and critiques of the use of industrial policy in developing countries. These discussions are then used to propose an approach on how to reconcile industrial policy with competition policy.

Chapter 7 concludes the theoretical literature review by exploring the common economic characteristics in developing countries to justify why convergence is an illusionary pursuit, as well as to inform developing countries to determine which area of competition law and policy needs adaptation according to each developing country’s specific characteristics.

Chapter 8, the cornerstone of the present book, summarizes all the arguments discussed in the previous chapters and advances the proposed approach, which consists of the following five pillars: a growth and development focused approach; special focus on poverty and development needs; accommodations of industrial policy; taking into account the economic characteristics of developing countries; and taking into account the enforcement capacity of developing country authorities.

Chapters 9 to 13 apply this proposed approach to the substantive and enforcement aspects of competition law. Chapter 9 deals with cartels and restrictive agreements. It highlights the fact that cartels are severely prohibited in developed and developing countries alike, but some adjustments must be undertaken to the rules governing their proof. In addition, it discusses non-cartel horizontal agreements and the role that some of these agreements can play in the promotion of productivity growth, as well as vertical agreements and how they can be more problematic in a developing country. Chapter 10 is dedicated to abuse of dominance. It begins by highlighting the importance for a developing country to focus its enforcement efforts on abuse of dominance cases. It then explains the economic characteristics of developing countries related to abuse of dominance, and then it applies some of these characteristics, in the context of the proposed approach, to the different elements of abuse of dominance. Chapter 11 deals with merger control. It begins naturally by discussing that a developing country needs merger control, even amidst the existence of a great number of arguments against it. In the discussions, this chapter points out the necessary substantive and enforcement rules for a merger policy in a developing country that needs to be adapted. Chapter 12 deals specifically with the intellectual property—competition interface. It presents first a literature review on the relationship between competition and both laggard innovation and frontier innovation, as each type of innovation can impact the design of competition law differently. It then explains the different approaches that can be used for this interface generally, and then to specific conducts. Chapter 13, finally, applies the proposed approach to all enforcement aspects of competition law. It starts with the enforcement challenges that a competition authority in a developing country faces, and how to adapt to these challenges. It then tackles specifically advocacy and regional competition enforcement, as they can alleviate many of these challenges.

The present book of Mr. Cheng is definitely one of the most extensive works that has been done for competition policy in developing countries. Mr. Cheng takes us through a long but necessary journey, or the odyssey as he correctly calls it, in order to establish and apply his central thesis of informed divergence for an effective competition law for developing countries. This book is indeed very informative to competition authorities and advocates in developing countries, to international organizations and competition authorities in developed countries that provide technical assistance, as well as to businesses and practitioners who wish to understand the environment and status of competition in a developing country.

Although Mr. Cheng states that his work is mainly based on a theoretical framework, he successfully and extensively uses multiple case studies from a great number of developing countries’ jurisdictions, especially when he is applying his framework to the substantive and enforcement aspects of competition law. The extensive literature review on the relevant economic policy areas, which amounts to half of the book, may seem dense and unnecessary, but this exploration is essential for many reasons. Generally, the linkage of competition law to other economic and development policy areas for developing countries is very important, not only to understand how and why these policies should be at the center of competition law design and enforcement, or even how to balance between them, but also to give competition authorities the guidance on how to strengthen competition law design and enforcement by the use of these economic policy areas, which are always more recognizable and familiar to policy makers than competition policy. In addition, the fact that Mr. Cheng insisted on taking into consideration industrial policy is indeed a brave choice due to the surrounding controversies. This choice is most relevant and realistic because almost all developing countries apply one form or another of industrial policy measures, and that a competition authority can rarely change effectively a restrictive measure due to lack of independence. The integration of industrial policy considerations in competition law is thus unavoidable. Therefore, the literature review that backs up the thesis of the current book leads to the formulation of an approach that is truly relevant and effective to developing countries. Consequently, the application of this approach to the different aspects of competition law yields an effective and realistic guide, that can be even further tailored by developing countries.

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Fatma El-Zahraa Adel, Competition Law in Developing Countries, Thomas CHENG, September 2020, Concurrences N° 3-2020, Art. N° 95984, pp. 233-234

Publisher Oxford University Press

Date 27 May 2020

Number of pages 608

Visites 81

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