By Arryan Mohanty
Published on: January 11, 2024 at 11:30 IST
One of the most critical cornerstones of contemporary competition law is competition support, which strives to create, increase, and reinforce market awareness of competition.
Section 49 of the Competition Act, 2002, requires the CCI to assist in enhancing competition. “Competition advocacy” refers to activities to promote a competitive environment for economic activities.1
Customers are the primary beneficiaries of competition policy and law, as their welfare is the Competition Act’s goal. The act of influencing or supporting a particular plan or programme is known as support.
The willingness of people to simply accept the law is crucial to the effective implementation of any programme or regulation.
In this regard, support is always vital in ensuring the disposition and acceptability of any policy or regulation. Raising public awareness is essential to establishing a competition culture in the country. It is common knowledge that a competition agency should only enforce its country’s competition law.
Different public policies and institutional arrangements could also significantly reduce competition. Indeed, various government interventions in the marketplace usually hasten personal restrictive business practices.
Thus, the mandate of the competitive workplace extends beyond simply enforcing competition legislation. It should also have a more prominent role in forming its country’s economic policies, which can harm competitive market structure, company conduct, and economic performance.
It should take on the role of a competition advocate, acting proactively to elicit government policies that decrease entry barriers, promote deregulation and trade liberalisation, and minimise unnecessary government intervention in the marketplace.
It is also vital for competition agencies in developing nations to collaborate on competition support. These countries’ economic policies are changing fundamentally; markets have grown more open; new governments and restricted institutions are formed; trade has assumed a more significant impact; and state-owned firms are privatised.
Competition policy should play an important role throughout this transition period; nevertheless, it is difficult for a substitute competition agency to gain the influence and, thus, the abilities that it needs for this purpose.
It has long been recognised that independence is essential for a contest agency’s enforcement function, but it is also a fundamental component of adequate support.
Independence has two components: structural and operational. A bureau created as a separate organisation, not as part of a ministry, is answerable for its budget to the parliament or general assembly and is structurally independent. All else being equal, it will cherish its relative freedom in terminating its social control and support functions.
Meaning of Competition Advocacy
A frequently accepted definition of competition advocacy covers those efforts of a competition agency designed to promote competition separate from those involving competition law enforcement.
Competition authorities in all nations should engage in competition advocacy, but the considerations above suggest that those in poor countries should do much more so. Certain events in the early phases of a market economy, such as privatisation and regulatory reform, considerably impact how the new economy evolves.
It is preferable to implement these adjustments correctly from the start rather than try to change them later, and the competition agency’s participation as an advocate for competition has apparent value in this regard.
Furthermore, most developing countries need more appropriate competition cultures, and the agency must begin constructing one. Given these circumstances, competition authorities in underdeveloped nations should be more active in competition advocacy than their counterparts in affluent countries.
At the same time, they may need more foundation for doing so – they may still need the independence, resources, or credibility required for effective advocacy. This conundrum has no obvious solution. Simply put, the agency must use good judgement in selecting and pursuing its advocacy efforts.
It must seek out issues that are economically significant and politically visible, do not require a large amount of resources, and have a reasonable possibility of success. It must continue to focus on developing a competitive culture through strong public relations and information dissemination. Most significantly, it must recognize its responsibilities in terms of law enforcement. It must take the same attention and devote at least as much labour to detecting and pursuing legal infractions as it does in its advocacy efforts.
It is accepted that a competition authority must do more than simply enforce competition legislation when carrying out its duties. The mandate of competition authorities worldwide includes competition advocacy, which goes beyond simply implementing competition law.
The competition agency must work closely with policymakers in forming the country’s economic policies, which may impact the functioning of competitive markets and the behaviour of private participants, among other things.
It must operate as a competition advocate, proactively promoting government policies that lower entry barriers, encourage deregulation, and otherwise minimise unnecessary government interference in the market.
It is frequently stated that competition agencies must take initiatives to support forming a competitive culture through competition advocacy. Most emerging countries are undergoing fundamental changes; markets are becoming more open; new government and regulatory institutions are being built; trade is gaining clout; private companies are entering markets, and so on. As a result, competition agencies must play a key advocacy role in this transition period.
To carry out their activities, competition authorities have numerous tools at their disposal. However, a lesser-known but frequently practical approach is “competition advocacy.” Competition advocacy generally employs persuasion rather than compulsion to persuade governments to embrace policies that promote competition and improve consumer welfare and choice. Competition advocacy can be particularly effective in fostering a “culture of competition” and educating essential stakeholders on competition’s economic and consumer benefits.
According to the Raghavan Committee, the CCI’s role is more than enforcing the Competition Law. Developing the country’s economic policies is required, which may hurt competitive market structure, company conduct, and economic performance.
As a result, the Commission must also serve as a competition advocate to bring about government policies that lower entry barriers, promote deregulation and trade liberalisation, and encourage market competition.
Hence, there is a clear link between competition advocacy and competition law enforcement. Competition aims to create a more competitive market structure without the CCI’s direct participation.
CCI must establish relationships with government ministries, departments, regulatory organisations, and other bodies to draft and implement policies impacting demand and supply positions in various markets.
Such partnerships will allow communication and the quest for less destructive alternatives to competition and consumer welfare. CCI must promote better and more informed economic decision-making by encouraging competition discourse.
Competition advocacy must be open and honest to protect the CCI’s integrity and capability. The Commission can improve competition advocacy by creating effective media relations and emphasising the significance of competition policy/law as an integral part of the government’s economic framework.
Why is Competition Advocacy Important?
It is accepted that a competition authority must do more than simply enforce competition legislation when carrying out its duties. The mandate of competition authorities worldwide includes competition advocacy, which goes beyond simply implementing competition law.
The competition agency must work closely with policymakers in forming the country’s economic policies, which may impact the functioning of competitive markets and the behaviour of private participants, among other things.
It must operate as a competition advocate, proactively promoting government policies that lower entry barriers, encourage deregulation, and otherwise minimise unnecessary government interference in the market.
It is frequently stated that competition agencies must take initiatives to support forming a competitive culture through competition advocacy. Most emerging countries are undergoing fundamental changes; markets are becoming more open; new government and regulatory institutions are being built; trade is gaining clout; private companies are entering markets, and so on. As a result, competition agencies must play a key advocacy role in this transition period.
To carry out their activities, competition authorities have numerous tools at their disposal. However, a lesser-known but frequently practical approach is “competition advocacy.” Competition advocacy generally employs persuasion rather than compulsion to persuade governments to embrace policies that promote competition and improve consumer welfare and choice. Competition advocacy can be particularly effective in fostering a “culture of competition” and educating essential stakeholders on competition’s economic and consumer benefits.
Competition advocacy refers to the activities carried out by the competition authority to promote a competitive environment for economic activities through non-enforcement mechanisms, primarily through its relationships with relevant stakeholders and by raising public awareness of the benefits of competition.
Competition advocacy includes two types of activities:
- activities undertaken by competition agencies aimed at various policymakers to influence the adoption of a competition regime and
- competition agencies’ activities aim to raise public awareness about the benefits of competition and the role of competition policy in promoting and protecting competition.
Globally, about 140 countries have competition laws, with many more in the process. Experience in industrialised nations demonstrates that broad public support is required to adopt and effectively implement a competitive policy.
Effective advocacy programmes to promote and safeguard competition, as opposed to law enforcement, are crucial in creating a competition-enabling environment.
On the one hand, this entails persuading governments to refrain from enacting policies that benefit specific interest groups at the expense of other actors and consumers.
It also entails assisting regulatory authorities in precisely establishing the borders of economic regulation by identifying which markets are typified by natural monopolies or other market failures and where regulation, rather than competition, should be implemented.
Another important component of an effective advocacy programme is the competition authorities’ efforts to raise awareness of the benefits of competition among other stakeholders (other government entities, the judicial system, market forces, and the general public) through various awareness-raising initiatives. When these advocacy campaigns are effectively implemented, they improve the effectiveness of law enforcement.
Also, an International Competition Network (ICN) 2002 Advocacy Study shows why competition advocacy is prioritised over competition law enforcement. The findings were as follows:
The extension of market reform has resulted in an extensive rule-making process in developing and transition nations. Early dialogue between the competition authority and other rule makers may ensure that competition is the foundation for legislation.
Liberalisation has also increased the activities of interest groups in their efforts to reclaim lost privileges. Competition authorities are considered less vulnerable to regulatory capture by interest groups than sector-specific regulators, for example, and through lobbying, competition authorities can inculcate competitive values in sector-specific regulation, minimising the potential of regulatory capture.
Pre-requisites for Effective Competition Advocacy
The following are the requirements for effective competition advocacy:
One of the main conditions under institutional reforms guaranteeing the effective implementation of competition legislation free of political pressures is the independence of competition authority.
The rationale for such reforms is based on the premise that the most efficient institutional arrangements and sound policy judgements can only be achieved if the institutions concerned are free of political constraints.
As a result, competition authorities must maintain a high level of independence from political influence. Independence has long been acknowledged as a necessary component for effective competition advocacy.
However, independence has two aspects: structural and operational. A structurally independent agency is established as a separate body, not part of a line ministry. It is directly accountable to the parliament or legislature for its budget.
In the context of competition advocacy, operational independence refers to the agency’s freedom to make comments and otherwise participate in government and regulatory matters and take positions independent of those held by others in the public and private sectors.
The ICN’s detailed study on competition advocacy emphasised the significance of operational independence. The analysis discovered that rules that expressly authorise, if not compel, the competition agency to comment on proposed legislation or regulations can strengthen operational independence. In contrast, the agency is disadvantaged when it can only comment or participate in a topic if invited or permitted by another government institution.
The agency’s resources should be sufficient to support its enforcement and advocacy tasks. It should be self-sufficient in terms of raising funds. Unfortunately, most competition authorities worldwide need more resources to carry out tasks.
Inadequate resources constitute a significant impediment to successfully implementing a competition regime and engaging in competition advocacy efforts.
Given the economic limits, competition agencies must plan for adequate resource allocation between efforts focused on successful law enforcement and advocacy roles.
The competition agency must establish a reputation as an effective and unbiased champion for competition. Its reputation must extend throughout the public and commercial sectors; policymakers, consumers, and others must understand how competition benefits an economy and trust the competition agency as an advocate for solid competition policy.
Role of Competition Advocacy
Competition advocacy plays a crucial role in promoting competitive markets and fostering economic efficiency. It involves activities aimed at influencing public and private sector decision-makers to adopt policies and practices that enhance competition in markets. The primary goals of competition advocacy include:
A competition agency can influence government policy through competition advocacy by providing alternatives less harmful to economic efficiencies and consumer welfare.
In transition and developing countries, competition advocacy can be especially significant in trade liberalisation, economic regulation, state aid, local government administration, and privatisation. These topics are briefly explored below:
- Trade liberalisation
Trade and economic liberalisation increased market competitiveness by expanding the number of goods and services with higher quality and lower pricing. However, anti-competitive actions carried out by economic actors or fostered by ineffective government policies have offset the benefits of liberalisation.
With market-oriented reforms, the market became more crowded, resulting in competition. However, several abuses made their way into the system at the same time. Price limits and market regulations were implemented to help balance the system.
However, they could have been more effective. This is why, to ensure a healthy market and economic democracy, countries enacted competition and economic regulatory legislation. As previously said, trade policy has significant ramifications for establishing competitive markets.
Tariff reductions, investment controls, import restrictions and quotas, domestic production or content requirements, and the like are among the most significant actions the competition agency can promote.
A competition agency’s involvement in developing trade policies through competition advocacy could include teaching policymakers and consumers about the actual costs of trade barriers.
- Economic regulation
Competition advocacy should play a role in establishing industry standards such as safety and environmental protection. It should not, however, be involved in the technical elements of defining those standards, as that is the regulator’s role.
The competition agency’s mission should be confined to ensuring transparency and creating a fair playing field among service providers through competition advocacy.
Competition agencies should work hard to ensure that competition rules are consistently and adequately incorporated into new laws and regulations, particularly when encouraging competition in regulated areas like energy and telecommunications.
In Denmark, for example, the competition authority examines markets regularly to identify dysfunctional ones. Following consultation with crucial sector ministries, it makes specific recommendations on how regulation should be improved to improve competition.
- State aids
Concerning state aid, competition advocacy aims to promote equitable circumstances for all market participants. The competition authority must closely scrutinize subsidies, levies, preferential loans, capital injections, public procurements, and other benefits for selected and privileged market players or regions because they might be damaging to competition.
- State-owned firms
Economic reforms in certain developing market nations result in local governments owning communal service infrastructure such as water supply and public transport.
In such cases, there is a conflict of interest because the local authorities are both the owners of these assets and the representatives of the interests of the communities.
In this case, the competition agency may recommend asset privatisation and the introduction of competition wherever possible, as well as inform local authorities of some of the most common restrictive business practices used by service providers and suppliers, such as bid rigging, cartelization, and so on, and assist them in adopting practices that prevent or detect such anti-competitive practices.
- Privatisation
In most countries, state-owned enterprises are shielded from the discipline of competitive market forces, and aside from benefiting from government-imposed entry barriers, price controls, and subsidies, state-owned enterprises are exempt from applying competition law (except in countries of the former Soviet Union).
As a result, privatisation of state-owned firms is a significant priority in every country. This presents an essential responsibility for the competition agency to ensure that state monopolies do not simply become private monopolies.
Overall, competition agencies must cultivate partnerships with government ministries and regulatory bodies founded on mutual respect and admiration for expertise and policy mandates. The agency should encourage discourse and debate, and its viewpoint should always be backed up by accurate data and rigorous research.
- Role in building public awareness
The competition agency’s job is essential to instill a competitive culture in the country. “A culture of competition among stakeholders and the wider business community is necessary for the effective enforcement and promotion of competition law and policy,” according to a paper prepared by the International Competition Network for its 2006 Conference. “In this context, a culture of competition refers to the business community’s awareness of the rules of competition law, as well as the media’s, the judiciary’s, and the general public’s overall responsibility to ensure that such rules are followed in the interest of competition and overall economic development…The absence of such a culture has afflicted nearly all young agency organisations.”
Consumers with a poor competition culture will readily submit to the mistreatment of producers and suppliers who abuse their dominating positions. In such a culture, producers will become complacent and uninterested in innovation. In contrast, consumers will actively seek better options, wider variety, and lower pricing in a competitive culture.
Both consumers and the business sector must be made aware of the benefits and drawbacks of the competition system. A culture of competition will emerge when all parties are aware of the norms of competition. A judicial system that understands competition concepts is critical to efficiently executing competition legislation and strengthening competition culture.
In this instructional process, the competition agency plays an important role. Most relevant stakeholders in emerging and transition economies need more experience or exposure to the competition regime and an understanding of the benefits anticipated to accrue from its implementation.
However, the agency faces a significant challenge in raising knowledge and support for competition policy among stakeholders. Making information about its activities available in the public domain, regularly publishing its enforcement decisions, organising press conferences, seminars, workshops, and conferences with stakeholders to promote understanding of the role of competition in a market economy, and so on are some of the most commonly used methods of raising public awareness.
Aside from the broad or “informa” means outlined above, the competition agency may have various tools to carry out its competition advocacy tasks. For example, statutes in Canada, Italy, the Republic of Korea, and the Russian Federation provide the competition agency with a specific responsibility to present its views on certain issues to the appropriate ministry or regulatory body.
Advocacy in the Competition Act, 2002
Recognising the importance of the various stakeholders, the Act emphasises CCI’s competition advocacy initiatives at three levels: policymakers (Central and State Governments), sectoral regulators, and the general public.
The law requires both the Central and State Governments to seek advice from the CCI. On the other hand, CCI can provide its view on competition policy to the government on its own; no reference is required.
As a result, advocacy is a crucial instrument in most jurisdictions for encouraging competition in regulated areas. Regulators must notify the CCI of any draft regulations so it can provide an opinion on the competition dimensions.
The Act expressly provides for competition advocacy to raise awareness and give training on competition issues among diverse stakeholders. In addition to consumers and consumer organisations, such programmes target businesses, professionals, the media, legislators, bureaucrats, and the judiciary.
Other stakeholders, such as consumer organisations, industrial bodies, trade associations, professional bodies, research institutes, and other civil society organisations, play an equally significant role in fostering a competitive culture in the country. They are encouraged to support the CCI’s activities.
Tools of Advocacy & Role of CCI
Competition authorities make excellent use of a variety of competition advocacy techniques. Seminars and workshops are powerful methods for reaching a specific audience. The message can be spread far and wide by publishing pamphlets, guidelines, and articles and placing them on websites.
Many competition authorities may express their views on proposed legislation and public policy, so that legislators and policymakers evaluate the competition dimensions and present reasons for departing from them for the benefit of the public.
The CCI should conduct market studies to understand the condition of competition in various sectors to advise the relevant authorities on the required modifications to usher in greater competition where there is weak or no competition, as the case may be.
Advocacy enables competition agencies to broaden their reach and play a vital role in areas where they are typically overlooked.
Recognising the importance of the various stakeholders, the Act emphasises CCI’s competition advocacy initiatives at three levels: policymakers (Central and State Governments), sectoral regulators, and the general public.
The law requires both the Central and State Governments to seek advice from the CCI. On the other hand, CCI can provide its view on competition policy to the government on its own; no reference is required.
As a result, advocacy is a critical instrument in most jurisdictions for encouraging competition in regulated areas. Regulators must notify the CCI of any draft regulations so it can provide an opinion on the competition dimensions.
Advocacy allows competition agencies to expand their reach and play an essential role in areas where they are often disregarded.
CCI must develop, publish, and post guidelines in the public domain addressing competition law to raise public understanding.
Such guidelines benefit businesses by increasing clarity regarding the provisions of competition law and how they are enforced. The concept of competition and its significance in business are relatively new to the Indian business sector.
There is an urgent need to raise public understanding of the benefits of competition and the contribution of competition legislation, particularly among the business community. The CCI has been tasked with raising public awareness.
Competition Law and CCI can assist the government and government entities by:
- Raising awareness among various levels of government officers about the negative impacts of anti-competitive measures implemented by suppliers, manufacturers, and others.
- Aiding in identifying areas where bid-rigging, cartelization, or abuse of dominance may occur more frequently.
- Assisting in protecting small businesses, self-employed individuals, and micro-retailers from abuses of dominance by more giant corporations.
- Increased allocative efficiencies in the labour market positively influence wages, working conditions, and worker well-being.
- Learning about the legal remedies available under competition law.
- Assisting them in the development of competition compliance programmes.
- Providing competition guidance in the development of competition-compliant policies.
- Creating a positive image of the country’s economic and commercial policies in the eyes of the rest of the world
Glimpses of Competition Advocacy Initiatives Taken By CCI
The CCI has undertaken competition advocacy efforts in collaboration with the Central Government and State governments and other stakeholders such as business chambers, consumer activists/associations, academic institutions, and statutory bodies of professionals such as lawyers, chartered accountants, cost accountants, and company secretaries.
CCI has undertaken the following measures to promote and raise understanding of competition law and capacity building in competition matters:
- Workshops and seminars at the national and state levels
- Attending special lectures by the officers in the CCI
- Papers and research were released to advocate for competition and raise awareness of competition issues.
- Building the capacity of stakeholders or CCI officials to participate in the competition regulatory process.
- Conducted competition-related sectoral/regulatory effect assessments, market studies, and research projects.
- Consultation papers are published/posted on the Commission’s website.
- Press conferences and public announcements
Competition Advocacy at the International Level
Competition advocacy is primarily local in that competition authorities lobby with authorities in their jurisdiction to implement a competition regime, and competition authorities attempt to improve stakeholders’ understanding of the benefits of competition policy and law.
It should be noted that several international organisations, including the Organisation for Economic Cooperation and Development (OECD), the World Bank (WB), and the United Nations Conference on Trade and Development (UNCTAD), among others, provide technical assistance to national competition authorities for them to carry out their advocacy activities.
Many competition authorities, including the United States Department of Justice, the United States Federal Trade Commission, and the European Commission, are also active in technical assistance programmes, both individually and in collaboration with international organisations.
Many national competition authorities, such as the Irish and Finnish Competition Authorities, are involved in competition advocacy. During 1988-1995, the Finnish Competition Authority (FCA) played a vital lobbying role in initiating attempts to deregulate closed Finnish sectors, particularly in telecommunications.
The United Kingdom implemented a system in 2002 that requires all government entities to examine the impact of proposed legislative acts on competition. The UK competition authority, the Office of Fair Trading (OFT), in collaboration with the UK Cabinet Office, advises regulators and central government on how to avoid potential competition constraints and how to draft new laws to make them more pro-competitive.
The OFT, operating under section 7 of the Enterprises Act, 2002, can, among other things, bring legislation or proposed laws that may harm competition to the attention of ministers.2
The competition authority in South Africa is expressly mandated to scrutinise measures that will distort competition. Section 21 (k) of the South African Competition Act, 1998 mandates the Competition Commission to “review legislation and public regulations and report to the Minister concerning any provision that permits uncompetitive behaviour.”3
Established the National Competition Policy (NCP) in Australia in 1995 was a significant driver of competition advocacy. The NCP was in charge of bringing to the forefront of regulators’, policymakers’, and government’s minds the necessity of competition and the question of how competition may lead to economic advantages and efficiencies.
Competition neutrality is one of the NCP’s outstanding accomplishments. As a result of their public ownership, several government business activities gained certain advantages over their private sector competitors (such as tax exemption, lower financing costs due to government guarantees, and exemption from restrictions affecting private sector activity).
The NCP eliminated this hindrance to efficient resource allocation and ensured that public firms experienced the exact costs and commercial pressures as their private sector counterparts.
The Canadian Competition Act, 1986 empowers Canada’s Commissioner of the Competition Bureau (CB) to advocate for competition before regulatory authorities. Section 125 of the Act empowers the Commissioner to make representations and call evidence before any federal board regarding competition.4
Section 126 allows the Commissioner to make representations and call evidence about the competition at the request of any provincial board or on his initiative with the permission of the relevant provincial authority.5
The Commissioner also attends high-level officials’ groups and submits to Parliament committees on topics connected to the Competition Act or any other matter pertinent to competition policy (for example, in the aviation industry). Draft bills may also be reviewed and commented on by the CB. Its recommendations are not binding on regulatory agencies.
Conclusion
In India, competition advocacy has had a significant impact. It has enhanced company knowledge of the implications of anti-competitive practices, encouraging compliance with competition regulations. Furthermore, advocacy efforts have affected governmental reforms to make the market more competitive.
However, difficulties persist. Enforcing competition rules and promoting a competitive environment in numerous sectors are critical challenges. Some industries continue to suffer challenges relating to market power concentration, entrance hurdles, and a lack of a level playing field.
Adapting to the expanding digital economy also presents new obstacles for competition advocacy. To promote fair competition in the digital environment, issues such as data privacy, platform dominance, and algorithms affecting customer decisions necessitate novel ways.
In the future, continual efforts in competition advocacy will be critical. Strengthening enforcement mechanisms, increasing stakeholder participation, and adjusting to evolving market dynamics would be critical to ensuring India’s economic progress through competitive markets.
Finally, competition advocacy in India is critical for building a competitive market environment, fostering innovation, and protecting consumer interests. Its role in influencing policies, creating awareness, and engaging stakeholders is critical to achieving a fair, vibrant marketplace promoting economic development.
References
- competition/prosecutionandlawenforcement/32033710.pdf
- competition-advocacy-an-analysis-of-provisions-under-competition-law-of-india/
- competition%20advocacy.doc
Endnotes
1. The Competition Act, 2002, s.49, No.12, Acts of Parliament, 2002 (India)
2. Enterprises Act, 2002, s.7 (United Kingdom)
3. Soth African Competition Act, 1998, s.21(k)
4. Canadian Competition Act, 1986, s.125
5. Canadian Competition Act, 1986, s.126
