Starting from the observation that, over the last 30 years, antitrust / competition law has had a rate of adoption across the world almost without parallel in the history of economic regulation, this article – which can be found here – examines one particular aspect of the global adoption of competition law systems: what jurisdictions must do to build the institutions needed for effective competition law implementation, and in particular, to develop programs that improve economic performance. The underlying assumption is that “improvements in institutional arrangements [i.e. institutional design and policy implementation] tend to yield superior policy outcomes.”
The article is structured as follows:
- Part II sets out the major assumptions that underpin the theory outlined in the article. These assumptions are based on “a large and growing body of literature on the development of new competition law systems”, on “a benchmarking project undertaken by the George Washington [which] has collected information about ten major institutional characteristics for the world’s 130 competition law systems”, on reports and peer reviews about countries prepared by competition agencies, and on interviews.
Such assumptions focus on the importance of institutional design and policy implementation capacity. They also include an understanding of what is a “good” competition system – which is a potentially controversial topic. In this respect, the article attacks measures of success based on the activity of competition enforcement regimes. Instead, it is argued that: “In the first decades of a new competition agency, resources should be allocated primarily to the enhancement of institutional foundations and agency capability, and secondarily to the exercise of law enforcement or rulemaking powers. The key institutional foundations include: processes for defining goals, choosing a strategy to realize the agency’s objectives, selecting projects, and testing evidence rigorously; regular investments in knowledge; the disclosure of enforcement intentions and analytical methods; and routine evaluation.” It is held that only like this can it be ensured that the results of an agency’s activity are socially beneficial.
- Part III considers the specific obstacles that a jurisdiction must surmount to establish an effective competition law regime. In doing so, the paper emphasizes that the establishment of a well-functioning competition system in most jurisdictions is likely to be a relatively slow process. It is suggested that it takes roughly twenty to twenty-five years from the adoption of a law to determine whether a new competition law regime is on the path to successful implementation over the longer term. This is because, for the most part, an older, better-established, and more experienced agency is more likely to be in a strong position to respond to and recover from the challenges it may face (such as learning how to use the agencies’ power, recruiting and retaining capable staff, overcoming judicial resistance, surviving changes in leadership, and other economic and political shocks).
- Part IV presents the principal evolutionary paths that new competition systems have taken. It is argued that one can identify recurring patterns in how competition systems evolve. In particular, three main patterns are identified: (i) Early Ascent Followed By Decline; (ii) Flat Line (i.e. systems that never got off the ground); and (iii) General Upward Progression. It is argued that “the path most closely associated with implementation success is a gradual upward sloping curve of progress—a condition that underscores the importance of sustained, incremental improvements to institutions entrusted with key implementation tasks.”
- Part V presents the main factors that determine the rate at which new systems gain implementation proficiency. Key considerations include resources (financial outlays and human capital), agency leadership, political commitment and stability, and the quality of supporting institutions, such as courts and universities.
- Part VI offers some conclusions about the path to success. The main conclusion is that, given a choice between consumption in the form of starting new cases or other programs and investment in institution-building, new systems are well advised to emphasize investment when allocating resources in the first decades of their development.
I am broadly sympathetic to the arguments advanced in this article, even if I’m the first to admit I do not have solid evidence with which to back my preference (unlike the authors). I’m also supportive of the article’s inter-disciplinary methodology – which provides a good example of the practical benefits from engaging in serious academic work.
My impression (intuition?) – which nonetheless builds on my previous work on international trade / the EU, on which there is quite a lot of evidence – is that institutional frameworks are key; and that, if they fail, the best will, personnel and substantive doctrines in the world cannot make up for it. Hence, I found my head nodding in agreement when I read sentences such as: “competition law agendas of international organizations such as the Organization for Economic Cooperation and Development were rich in discussions regarding what substantive competition programs systems should pursue but lean in treatment of how to effectuate them. To a striking degree, policy implementation issues were seen as mere technical details to be sorted out once the competition law had been passed. In drafting new competition statutes, external advisors often provided off-the-rack solutions from other jurisdictions with little tailoring to account for local conditions or implementation capabilities.”
I have to point out (hand on heart) that I also think that we – alongside academics, public officials, practitioners and other international organisations – are focusing more and more on institutional / background matters; and (head bowed in shame) that I’ve been guilty of the same sins I am condemning here – to the point where I was advised by people who know better to tone it down and allow for the “possibility of future upgrades or gradual, phased implementation”. Having said that, I am a bit disappointed by the lack of reference to, and discussion of the sources identified in Part II above in the body of the Article – particularly regarding the literature on the topic, and the “benchmarking project undertaken by the George Washington [which] has collected information about ten major institutional characteristics for the world’s 130 competition law systems”. As it is, this is an article that presents a theory, would lots of (very appealing) examples. But it would be good to have something – perhaps another, more detailed, paper – outlining in a more systematic manner how this theory is supported by the evidence.