Monday, July 21, 2014

Why Competition Law and Policy in ASEAN Has a Long Way to Go

Last week the annual ASEAN Competition Workshop was held in Singapore.  Attendees focused on achieving the ASEAN Economic Community (AEC) Blueprint goal of having a uniform national competition (antitrust) law and policy in each of the ASEAN member states by 2015.  So far, only five member states – Indonesia, Malaysia, Singapore, Thailand and Vietnam – have done so, with the other member states currently in the legislative process of adopting such laws.

That only half of ASEAN currently has met the AEC Blueprint goal with one year to go is not surprising.  Of the remaining five countries, one (Philippines) has a mish-mash of laws affected by its American legal legacies, one is a small market (Brunei) that probably did not see the need for a competition law, and three (Cambodia, Laos and Myanmar) are less-developed countries. 

It is also not surprising when one views competition policy from a political economy point of view.  The exercise of disproportionate market power, whether through cartel behavior, predatory pricing, or other unfair trade practices, results in windfall economic gains for a small group of companies at the expense of a much larger number of consumers.  Because the consumers have more difficulty organizing themselves to counter would-be market abusers, the government acts on their behalf through state agencies or authorizing private legal actions against unfair competition.  Hence ASEAN members, like most countries, have created independent authorities to deal with competition issues (there is little appetite in ASEAN for American-style private antitrust litigation).

Yet the relative slowness in adopting such regimes is precisely because of this political economy dynamic.  Competition policy is a vital part of establishing a single market in the AEC.   However, the priority of ASEAN leaders has been to focus on the establishing the single production base first, with a true single market to be established later, beyond 2015 (despite the continuing rhetoric equating the two goals).  This reflects the greater political difficulty in ASEAN to implement either strong regional institutions (like the EU) and/or robust treaty obligations and dispute resolution (like NAFTA) that are necessary to have effective market regulation, including, inter alia, competition law and policy.

As a result, competition issues, like most other market-related issues like consumer protection, are pursued in ASEAN on a stop-start, inconsistent basis, and implemented in a patchy way in the ASEAN member states; it will remain that way until ASEAN leaders realize that an effective single market will require reform of the ASEAN institutions. The AEC, in its ultimate form, will need an ASEAN mechanism that deals with a single AEC market, rather than 10 separate member state markets.