I was part of a great workshop last week looking at competition laws in really small countries – as in Pacific Island States, such as Vanuatu, the Solomon Islands, Samoa and Tonga. The forum raised a bunch of questions about how to structure competition laws and where they fit in broader economic policy.
For example, in some states there are few ‘companies’ and no consumer protection laws. Rather than starting with US or EU style competition laws, a better starting point might be consumer protection laws together with broader government reform (e.g. removing limits on government purchasing) and pushing for free trade (reducing explicit or implicit import barriers). Competition laws may become an adjunct to these broader reforms, for example, to prevent incumbent monopolists from erecting barriers to keep imports out of the market.
Two participants, Fiji and PNG, already have competition laws, broadly similar to those in Australia. The authorisation provisions of our laws seem to be really useful for small countries. These rules – which allow a competition authority to ‘authorise’ conduct that would otherwise be a breach of competition laws if the (economic) benefits outweigh the costs - can help create buy-in to the laws and avoid laying waste to business by court delays. By making the authorisation process public it also has an educative role.
Indeed, education about the benefits of competition as an instrument of growth and development, seems to be a critical first step in the process of legal change. While the benefits often seem obvious to economists, they are usually opaque to everyone else! Indeed, there is a clear lesson for Australia. Competition authorities need to both guard against anti-competitive behaviour but also actively promote the benefits of competition. Without a champion, it is too easy for pro-competitive laws and institutions to lose out to vested interests.
Thanks to the Small States Network for Economic Development, and the participants. I hope they learnt as much as I did!