Introduction

Introduction

Graeme Samuel

Chairman of the Australian Competition and Consumer Commission

Graeme Samuel was appointed chairman of the Australian Competition & Consumer Commission in July 2003.

Prior to his appointment he was president of the National Competition Council, chairman of the Melbourne & Olympic Parks Trust, a commissioner of the Australian Football League, a member of the Board of the Docklands Authority, and a director of Thakral Holdings Limited. He relinquished all these offices to assume his position with the ACCC.

He is a past president of the Australian Chamber of Commerce and Industry, a past chairman of Playbox Theatre Company and Opera Australia, a former trustee of the Melbourne Cricket Ground Trust and former chairman of the Inner & Eastern Health Care Network.

Mr Samuel was a partner of the law firm Phillips Fox & Masel from 1972 to 1980, executive director of Hill Samuel Australia Limited and subsequently Macquarie Bank Limited from 1981 to 1986 and co-founder of Grant Samuel & Associates in 1988.

Mr Samuel was appointed an officer of the Order of Australia in 1998.

Few corners of the globe have seen economic upheaval near the monumental levels experienced in the Asia-Pacific region in the past decade.

Global Finance recently labelled 2008 as 'Asia's big year', noting the developing Asian region was on track to rival or even surpass western Europe as a pool of financial services revenue within a decade. With the Asian Development Bank noting persistent annual growth rates in GDP across the region of more than 8 per cent, it is not hard to see the influences driving such bold predictions.

Middle income countries of the region such as Indonesia, Malaysia, Thailand and the Philippines all reported GDP growth in 2006 nearly twice the global average and well in advance of Western economies in the United States, Europe and Great Britain.

The staggering charge of these economies, most notably China and India, and the opening up of previously closed markets to international capital and trade, has raised the floodgates of competition in the region and made the case for competition reform increasingly compelling. It has brought with it a number of new challenges.

With China and India accounting for nearly half the world's population, a new, massive class of consumers is rapidly emerging, presenting governments with issues of ensuring the welfare of these increasingly affluent citizens.

The increasing engagement of these countries with developed economies and with each other has also led to an increasing exposure to and engagement with competition. The influence of multi­nationals and foreign competitors has at the same time highlighted to Asia-Pacific nations the need for competitive reforms on the domestic front as they strive to become more efficient and therefore more competitive with increasingly present foreign businesses.

The response from many countries has been an embracing of internationally recognised forms of competition best practice. Competition policy has the power to drive prosperity for citizens and countries, as recognised by the exponential growth and implementation of competition law in the region.

In August this year, China's long-awaited antimonopoly law comes into effect, some 13 years after proposals for a comprehensive antitrust law were first considered.

While China's existing laws already prohibit certain forms of anti-competitive conduct, the move to a more formal commitment to enforce competition provisions has been heralded as a significant and necessary step forward in the evolution of the rapidly expanding economy.China's accession to the World Trade Organization and the obligations that membership imposes on the country has also been a significant driver of competition policy development.

Vietnam has also seen some recent major developments in the areas of competition and trade. In December 2004, Vietnam passed its competition law, which took effect in July 2005. The Vietnam Competition and Administration Department was also established in 2004 and is responsible for competition law enforcement and consumer protection. Vietnam became a member of the WTO in January 2007.

In Singapore, traditionally one of the region's economic success stories, merger control provisions came into force in July last year, arming the Competition Commission of Singapore with greater powers to prevent mergers likely to be contrary to the national interest. The country also reached an important milestone in January this year when it recorded its first cartel decision, resulting in fines totalling more than US$184,000 for the six pest-control companies concerned.

2007 also saw Nepal unveil the Competition Promotion and Market Protection Act designed to shield businesses and consumers from bid rigging, price fixing, exclusive dealing, unconscionable conduct and other anti-competitive conduct.

This blossoming of competition reform in line with the growth of many of the Asia-Pacific region's developing economies is recognition of the now internationally accepted importance of competition policy to the prosperity and welfare of nation states.

The development of a number of free-trade agreements has also played a role in encouraging the growth of competition policies broadly aligned between Asia-Pacific countries.

In many ways the International Competition Network has also been instrumental as a global body that provides an effective resource tool for competition agencies with competition regimes at varying levels of development. In particular, the ICN offers practical guidance on various aspects of competition law enforcement by drawing on the experiences of competition agencies and regimes around the world.

The ICN has been a highly effective forum for the discussion and dissemination of best practice around the world. Its role in offering new regimes a valuable source of guidance and information and in encouraging established, well-regarded competition authorities to assist developing nations has been commendable.

But the vast diversity of political and economic systems contained in the region means these advances have not been universal.

Competition regimes in the Asia-Pacific region currently range from non-existent to countries rated by Global Competition Review as ranking in the top five in the world for enforcement activities.

Many of the countries now engaging with the difficult transition to competitive, open economies are facing tough questions for the first time.One of the potential conflicts several nations have begun grappling with is the opposing forces of competition policy and the desire to create national champions.

Smaller countries like Singapore face dilemmas of scale when their banks and other large businesses begin trying to compete with much larger, multinational competitors.

The temptation for these countries is to allow mergers that may otherwise be considered to result in a lessening of competition at the domestic level, to enable those firms to reach a size that permits them to competeon the world stage.

China too continues to deal with the increasing presence of large, foreign firms establishing themselves on its soil and competing with domestic Chinese companies. The path from slow, unresponsive state-controlled monopolies to lean, internationally competitive businesses is a difficult one, where competition policy can at times be seen as standing in the way of national development, rather than fostering it.

In dealing with the difficulties posed by the transition towards competitive and open economies, the experiences of other jurisdictions and the lessons learned are an invaluable tool in shaping efficient and effective competition regimes and enforcement practices.

The experience of long-established regimes in North America, Europe and elsewhere suggest that, in the long run, a policy designed to encourage strong competition at the domestic level ultimately provides greater benefits and prosperity to citizens than a policy of nurturing national champions. It is also worth remembering that the US and Europe, generally regarded as among the world's leaders in this area, took decades to develop effective competition regimes, as did Australia - amid howls of protest from business. Developing Asian economies cannot expect overnight results.

But as businesses are forced to fight for customers, they respond by becoming more efficient, more responsive and better able to offer value and lower prices to appeal to clients. They also begin to understand the benefits even if their lives are not as comfortable.

Economies also become more appealing to outside investment where they are seen to be embracing strong competition policies.

But committing to competitive reform is not about reaching a destination, it is a constant journey that requires regular reassessment, comparison and willingness to take hard decisions.

Take for instance, Australia, which introduced the Trade Practices Act in 1974. It finds itself at an important junction in the evolution of its competitive regime. After several years of debate the Australian government has released a draft Bill proposing the criminalisation of cartel conduct, allowing courts to send serious cartel offenders to jail for the first time. If passed by the Parliament, the amendments to the Act would bring Australia into line with a number of overseas jurisdictions already in possession of such powers, including the US, Korea, Japan and Canada.A major review of its merger assessment processes is being undertaken by the Australian Competition and Consumer Commission (ACCC), and potential legislative changes in areas relating to predatory pricing have been flagged by the recently elected federal government.

Elsewhere in the region, countries are considering or have just introduced merger assessment provisions, while others are looking to the merits of offering leniency to cartel members that confess their actions.Judging by recent developments, it appears the commitment to good competition policy is growing as strongly as the economies looking to implement it.

The promotion of fair, vigorous and lawful competition is crucial to ensuring economic well-being and protecting the interests of consumers. Anti-competitive conduct, in any form, removes the competitive disciplines on business and the resultant incentives to provide consumers with:

  • lower prices;
  • higher quality of goods and services;
  • choice and convenience; and
  • information to enable consumers to make that choice.

Competition reform is difficult, takes time and is usually met with strong opposition from those who stand to benefit from protectionism. It is however, a proven path to improving consumer and community welfare.

The ACCC is encouraged by the developments in its region, and looks forward to closer integration of competition laws with its neighbours. In 2006 the ACCC and the New Zealand Commerce Commission adopted a protocol for cooperation in merger reviews. Australia is also currently in the process of negotiating free trade agreements with a number of countries including Chile and Japan. The competition chapters of these agreements include terms to facilitate cooperation between the parties with regard to competition matters.

Greater cooperation and communication across competition agencies in the Asia-Pacific is key to ensuring the effective and consistent enforcement of competition laws against anti-competitive conduct affecting regional economies. It is a fundamental step towards reducing cartel safe-havens and minimising the level of consumer detriment across the region.

The ACCC stands ready to share experiences gained over the past three decades and looks forward to learning from the experiences of our neighbours in the unending goal of making all our markets better able to serve the needs of our people.

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