A Convergence Of Domestic Competition Rules

Chapter 6 referred to the obligation of candidate countries to harmonize their domestic laws on the basis of EC competition law. This process of forced transposition, however, is not imposed on the non-candidate countries (Hakura 1998). Nevertheless, some of these countries have spontaneously adopted domestic legislation that shares common characteristics with EC competition law, but without transposing EC rules to their full extent. Whether deeper harmonization is desirable is an issue that needs to be explored.

This chapter explores the concept of regulatory convergence. First, it discusses the meaning of the concept, as well as the various ways in which convergence can be achieved. Second, it reviews the rationales for harmonization, as well as the benefits that could be generated by this process. Third, since convergence would also impose some costs, it suggests the need to engage in a cost/benefit analysis of convergence before engaging in this process. This section also explores how these costs could be covered, as well as various strategies for reducing such costs. Fourth, because of the costs and the risks generated by a process of transposition of EC competition law in the MPs, the need for caution is suggested, whereby the transposition should be initially limited to EC competition rules prohibiting agreements between competitors and abuses of a dominant position. Fifth, attention is also drawn to the importance for the competition authorities of the MPs to establish priorities as well as an enforcement agenda. Sixth, it examines various alternatives to the convergence model, which is promoted by the EC.

Over the last few years, several official documents produced by the EC institutions have evoked a "convergence" of competition rules of the partner countries towards EC competition rules. 171

BOX 9.1: THE NEW NEIGHBORHOOD POLICY

The European Commission Communication "Wider Europe-Neighborhood: A New Framework for Relations with our Eastern and Southern Neighbors" of March 2003 defines principles for a proximity policy of an enlarged European Union. It proposes that neighboring countries not on the road to full membership "should be offered the prospect of a stake in the EU's Internal Market and further integration and liberalization to promote the free movement of persons, goods, services, and capital." It "recognized that geographic proximity increases the value of developing a comprehensive policy of close association." It states that the EU acquis "could serve as a model for countries undertaking institutional and economic reform," but does not specify the desirable degree of regulatory convergence. To implement the agenda of deeper integration, the communication calls for "better targeted EU development assistance," a closer partnership with other donors, and additional financial assistance "conditional on meeting agreed targets for reform." It proposes the preparation of Action Plans with clear reform benchmarks, and at a later stage possibly new Neighborhood Agreements. With New Neighborhood Policy activities being coordinated by the Commission's DG Enlargement, the extensive adjustment experience gained in the enlargement process may made available to the MPs.

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