Inadequate regulation of restrictive business practices in service industries

There is international concern about the prevalence of restrictive business practices in the services sector by consulting firms and other enterprises, in relation to the design and manufacture of plant and equipment. It is of particular concern in those practices faced by prospective new exporters, in particular from developing countries. Such practices include: agreements fixing prices, including as to exports and imports; collusive tendering; market or customer allocation arrangements; allocation by quota as to sales and production; collective action to enforce arrangements, for example by concerted refusals to deal; concerted refusal of supplies to potential importers; collective denial of access to an arrangement, or association, which is crucial to competition. These may take the form of formal, informal, written or unwritten agreements or arrangements between rival and potentially rival enterprises; and are of concern when the practices limit access to markets or otherwise unduly restrain competition, having or being likely to have adverse effects on international trade, particularly that of developing countries, and on the economic development of these countries.

Such practices may be used individually, or in combination with other practices. For example, collusive tendering or 'bid-rigging' may involve the fixing of prices, as well as market or customer allocation arrangements, and an agreement to allocate sales and production by quota may involve collective action to enforce the arrangements, for example by concerted refusals to deal or collective denial of access to an arrangement or association which is crucial to competition.

The restrictive business practices described above are likely to be aimed at securing the highest possible prices for the goods or services exported. Such practices are also likely to be aimed at retaining the traditional suppliers' position in those markets where there is a nascient domestic production or where new foreign supplies, in particular from developing countries, enter the international market.