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BUILDING SUPPORT FOR COMPETITION
REGULATION – THE IMPORTANCE OF
THE CONSUMER INTEREST
Robin Brown and Howard Hollow
Foundation for Effective Markets and Governance
Australia
1 Successful introduction of competition regulation, as for
other kinds of regulation, needs whole of government,
business and broad civil society support.
2 Education and information – different programmes for
different groups needed
3 A constituency for competition regulation cannot be
artificially generated.
4 The ordinary consumer voice and the small business voice
need support
5 Regulatory change creates winners and losers
6 Regulators do not operate in political vacuums.
Regulation is whole of society process - triangular
governance
7 The value of a single, independent competition and
consumer protection regulator
1 Getting whole of government, business and broad civil
society support.
Distinguish competition policy and competition regulation
(law).
*Competition policy determines which sectors of an
economy should be exposed to competitive markets. For
example, in many countries there is very limited exposure if
any of health and education services to competitive markets.
*Competition regulation is intended to contribute to the
benefits flowing from exposure of sectors to competitive
markets.
All areas of government need some
understanding of competition regulation.
Clearly particular areas need higher levels of
understanding such as
·
those concerned with industry and
commerce policy and programmes
·
those concerned with monitoring or
operating state owned enterprises
·
those concerned with law reform and
enforcement, and
·
judicial officials
Regulatory policy cannot remain too far out of
step with public opinion.
The successful message is that competition
regulation is for consumers and is just as important
for the advancement of consumers’ interests as
consumer protection regulation.
The process of gaining support of government,
business and civil society took a very long time in
Australia –1967 to mid to late 1980’s. We hope
other countries can do better.
A collaborative process is the key
2 Education and information – different
programmes for different groups needed
Overcoming negative and indifferent attitudes
and gaining early civil society support for
competition regulation requires extensive
education and information and advocacy by
trusted agents.
Quite basic education on market processes is
needed by many groups.
Business and lawyers and others who advise
business need targeted programmes

What we mean by the word market

Who is involved in markets

The various kinds of markets

How markets work

What is done when they do not
CORPORATE COWBOYS
AN APPARATUS TO HARNESS MARKET FORCE
A BETTER APPARATUS
3 A constituency for competition
regulation cannot be artificially generated.
It is critical that civil society support for
competition regulation is built on existing
civil society groups and networks
4 The ordinary consumer voice and the small
business voice need support
Consumer groups are effective civil society
advocates, but need assistance
Consumer voice without support not as loud as the
voice of producer interests
Often the producer adversely affected by
competition regulation will falsely assert that its
interests are the same as the public interest
-Various models for supporting the
consumer voice
-Even in developed countries state support
is provided EG In the UK there are bodies
set up by government, but independent
from it, to research, educate and advocate
on behalf of consumers
-Many small business sectors will benefit
from competition regulation to limit the
power of larger businesses, but their voice
may also need support
Supporting the Consumer Voice
Advocacy agency set up by government
 Advocacy agency statutory independence
 Funding a national association of civil
society consumer groups

Consumer groups in OECD countries funded by
selling product information - ?LDCs and DCs
Continuity is important and normal aid
project funding is not very satisfactory
5 Selling the benefits – but regulatory change does
create some losers
-Regulation should have and be shown to have the
dual goals of efficiency and equity. Improved
efficiencies in particular markets and the overall
GDP improvement can be shown
-But ensuring equitable sharing in the benefits
requires effective consumer protection regulation
and other interventions
-As well as developing an understanding of the
benefits, there must be openness that there will be
short-run adjustment costs and some losers
6 Regulators do not operate in political vacuums
Regulation is whole of society process - triangular
governance
There is an important role for civil society in
maintaining government support for competition
regulators to ensure the law is improved as needed
and not watered down and to ensure adequate
resourcing for the regulator
Consumer groups play an important continuing
role supporting competition regulation
They counterbalance negative business pressure
They test the exemption process
They extend the eyes and ears of the regulator
They stimulate the regulator to action
- small watchdogs to keep the big watchdog alert
They help interpret the regulator’s actions for the
community
Once introduced, the highest levels of compliance
with competition regulation, like other kinds of
regulation, requires continuing government,
business and broad civil society support.
Compliance is limited as understanding is limited.
The wider the civil society support for any form of
regulation the wider is the base of the compliance
pyramid thus the more effective is the work of the
regulator.
triangular governance
the state
business /
producers
civil society /
consumers
The Regulatory Compliance Pyramid
Incapacitation
Criminal Penalties
Civil Penalties
Warnings
Compliance Education
The apex of the pyramid has to be
real and seen to be real
That is, the Consumer and
Competition Regulator must be
seen to have the authority to
enforce the law and not be open
to political interference
The Regulatory Compliance Pyramid with strong
triangular support
Government
Producers
Consumers
The Regulatory Compliance “Pyramid” with weak
triangular support
Government
Producers
Consumers
7 The value of a single, independent competition
and consumer protection regulator
The effectiveness of a competition regulator will be
greatly improved if it is also the consumer
protection regulator and is a whole of economy
regulator.
A combined competition and consumer
protection regulator will enjoy greater confidence
amongst consumers and a more positive image in
public debate, thus stronger support for its work.
For example in Australia the AUSTRALIAN
COMPETITION AND CONSUMER COMMISSION
is portrayed in the media as the “Consumer
Watchdog” whether it is warning or enforcing in
relation to a consumer protection matter or a
competition matter.
There are significant synergies and economies of
scope if one regulator can work on making a
market work in terms of both competition and
consumer protection issues.
The general competition and consumer regulator
should have an overview role in relation to special
market sector regulators to ensure consistency
across all markets and to guard against regulatory
capture
Producer
Groups
The People
Civil Society
Consumer
Groups
Parliament
Courts
Executive
Consumer Competition
Policy Advisory Council
Consumer Competition Regulator
Co-regulatory
Agencies
Market Sector Regulators
The Market
Outline of Technical Assistance for New
Competition Regulatory Regime
·
assistance in the development of an
appropriate structure for the regulator;
·
assistance with recruitment of appropriate
staff;
·
development of programs for
implementation of the legislation – this would
include devising procedures (and developing
procedures manuals) for:
- dealing with complaints and enquires;
- prioritising, planning and conducting
investigations and collecting evidence;
- reporting and assessing outcomes of
investigations;
- dissemination of information on outcomes and
designing effective media strategies:
- developing appropriate processes for exemption
functions (including analysis of applicant
submissions, market enquires; analysis of
submissions of interested parties, development of
evaluation techniques, preparation of decisions,
promulgation of decisions, development of
appropriate review procedures); and
- streamlined consideration of mergers and
acquisitions.
·
development of programs of guidance for
administrators and business, other government
organisations and the community generally;
·
development of training programs and staff
exchanges;
·
educating those groups to be effected by the
legislation; and
provision of on gong technical support