Competition Policy: Some Emerging International Aspects

A paper is available which identifies aspects of competition policy which have not, to date, been considered in Australia. Key points are outlined below:

Negotiations about market access (concerning investment, competition and intellectual property) are becoming more important than trade policy. This concerns the constraints implicit in different systems of capitalism, rather than the actions of government.

The results of these negotiations (of which the US / Japan Strategic Impediments Initiative was an important early example) will determine which of several competing systems of capitalism dominate. Many are seeking democratic, rule based systems.

Competition policy involves that which prevents restraints on trade. Internationally this is just a loose arrangement. Currently most countries endorse free trade, and provide less room than previously for non-economic / public interest criteria to affect competition.

Despite this there is great dispute about what competition policy ought to be. Issues include:

· 'System friction' which refers to the existence of several different market models, where a firms' performance is influenced by its capabilities and the characteristics of its home system.

· Another debate concerns the competitive implications of strategic / managed trade (eg by government support for new technology sectors), whose relevance economists dispute because of the difficulties governments would have in obtaining / mobilising the information needed to do this successfully. However competition policy has moved out of the realm of economics alone, and also involves business school based theorists.

· An even more difficult issue involves the role of innovation in competition which those dealing with competition policy have been slow to recognise. It raises the role of 'strategic alliances'.

Competition policy has also become central to the political power and interests of nation states. Several mechanisms to harmonise competition policies have been established.

Doern G: 'Towards an International Anti-trust Authority - Key Factors in the Internationalisation of Competition Policy', Governance: V9, N3, July 1996:

However the above article has not considered whether the democratic, rule based system which Western societies prefer will be the system which dominates - given that the reverse would be preferred by economically powerful East Asian communities. It has also not considered whether the information management strategies of East Asian societies might allow the information obstacle to strategic trade management to be overcome.

3/10/96