Can Small Economies benefit from a Multilateral Framework on

Competition?

Taimoon Stewart

The University of the West Indies

Republic of Trinidad and Tobago

tstewart@fss.uwi.tt

Questions asked

• What does a Multilateral Framework on competition (MFC) offer small economies?

• What do small economies need?

• What are the trade offs in joining an MFC?

• Under what conditions can a small economy benefit from an MFC?

What does a MFC offer small economies?

• Cooperation with more mature competition commissions, providing:– Coordination of technical assistance– Voluntary cooperation with exchange of non-

confidential information– Assistance to deal with international

cartels??

• providing a forum for discussions and learning from others, including peer review

What do small economies need?

– need cooperation and technical assistance– Are affected by international cartels

• CARICOM – reliance on tourism – adversely affected by operations of international tour operators

• Are more vulnerable to operations of international cartels because import dependent, e.g., Vitamin Cartel & Electrical Equipment Cartel (Jamaica)

What are the trade offs in joining an MFC?

• Would be required to enact competition legislation (against cartels)– Small economies do need competition law

• Empirical Evidence from CARICOM countries of:– Cartel activity and other anti-competitive agreements– Abuse of Dominant Market position– Anti-competitive mergers

• Have become haven for int’l cartel activities

– Cooperate in exchange of information• Human resource constraint in small economies

Circumstances under which Small Economies can benefit?

• Need– To include as core principles “flexibility” and

“progressivity”• Tailor cartel law to exempt import and export

cartels created to achieve MES• Tailor Merger Control Regulation so as to be able

to capture local firms in the non-tradable sector, but allow for MES in firms that face competition from imports and/or export

• Need time to implement regime--moratorium.

How to benefit continued?

– S&D treatment applied to cooperation:• Investigating international cartels, given power

assymmetry– More advance level of cooperation in investigation

• In demands for information• Concerns about Peer Review- what would be the

implications for implementation of findings, even if voluntary

Conclusion

• Yes, Small Economies can benefit from a multilateral regime

• There has to be a recognition of the severe constraints faced by these economies

• Must have built in concessions that would make the regime work for them

• Venue has to be one that is seen to be working for all parties

The contradictions of the Caribbean

• The Caribbean is in serious socio-economic crisis at present, with the withdrawal of preferential treatment, and the closure of development options

• Unemployment is as high as 25-30 percent in the banana producing countries

• We need to limit exploitation of the consumers through enforcement of competition law and we need to tackle international cartels

• Despite these problems, the Caribbean gives us a glimpse of paradise, so beautiful are the islands