Strengthening anti-trust laws

The regulation of private business practices that restrict competition is called competition (or antitrust) policy. Competition policies raise issues for international trade and investment and affect the ability of foreign firms to contest markets.

Competition policy refers to the removal or control of government measures and private business practices that limit the contestibility of markets i.e. that allow incumbent firms to sustain monopolistic behaviour over an extended period of time. The aim of competition policy is to remove, or prevent, barriers to entry or exit in specific domestic markets.

International agreement on minimum standards in those competition-policy measures could be negotiated and implemented bilaterally, regionally, and globally at the World Trade Organization. At the international level, governments might agree on certain initial steps to accomplish greater contestability: "national treatment" for foreign-controlled firms, abolition of most international cartels (including those that are now sanctioned), and establishment of mandatory consultation procedures when one government believes that private business practices in another nation foreclose exports or direct investment. There should also be premerger notification requirements for transborder or other mergers having cross-border effects.

Following the Singapore Ministerial Meeting in 1996, a WTO Working Group on the interaction between Trade and Competition Policy was established to explore the relationships between the two types of policy. It continues to meet but differences of view exist within it. The main proposal in this area, which has been put forward for inclusion in the New Round Agenda is for the development of a multilateral framework of competition rules. This is supported by the European Commission. It may be regarded as a horizontal measure in the sense that its implementation could have implications for the implementation of a number of other measures, and the impacts these may have (e.g. the proposed multilateral framework agreement relating to investment and proposed changes in trade defence instruments, such as anti-dumping measures.

The European Union (EU) supports negotiations within WTO on a framework of multilateral rules on competition. This framework would include the following elements: 1. core principles and common rules relating to the adoption of a competition law, and its enforcement; 2. common base line disciplines to be applied to anti-competitive practices with a significant impact on international trade and investment (e.g. 'hard-core' cartels); 3. provisions on international co-operation, which could include provisions on notification, consultation and surveillance in relation to anti-competitive practices with an international dimension, and exchanges of non-confidential information. It could also incorporate concepts of negative and positive comity (while not imposing a binding obligation to investigate on behalf of another country); and 4. application of WTO disputes settlement adapted to the specifics of competition law. The basic function of dispute settlement would be to ensure that domestic competition law and enforcement structures are in accordance with the provisions agreed internationally. The EU proposals exclude practices of purely domestic significance, do not refer to anti-dumping, and do not specify target dates.