Cartel regulation in three emerging BRICS economies: cartel and competition policies in South Africa, Brazil and India - a comparative overview

Afrika, Sasha-Lee Stephanie and Bachmann, Sascha-Dominik (2011) Cartel regulation in three emerging BRICS economies: cartel and competition policies in South Africa, Brazil and India - a comparative overview. The International Lawyer, 45 (4). pp. 975-1005. ISSN 0020-7810

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“Antitrust laws in general, and the Sherman Act in particular, are the Magna Charta of free enterprise. They are as important to the preservation of economic freedom and our free enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms. And the freedom guaranteed each and every business, no matter how small, is the freedom to compete- to assert with vigour, imagination, devotion, and ingenuity whatever economic muscle it can muster.”

This 1972 dictum of the United States Supreme Court, read in conjunction with sections 1 and 2 of the US Sherman Act, stresses the importance of balancing the demands of a free market economy with the necessity to promote consumer welfare by limiting anti-competitive corporate market distortion. In the developing world, many states including South Africa have made some measurable progress in enacting competition legislation, or antitrust laws as they are known in the USA. South Africa is a developing country with a very recently established competition regime. The majority of the population is plagued by poverty and lack of services. Consequently, anti-competitive business activities by corporations affect on a most severe scale the poor of society: it is the poor who bear the heaviest burden of anti-competitive behaviour such as price fixing, price discrimination and market distortion leading to a market without sufficient competition. Cartel activity prevents consumers and other market stakeholders from enjoying the benefits of a free and fair market. Thus, the existence of cartels in an economy such as South Africa can have an overall negative impact on the formation of a competitive and prosperous market economy. South Africa depends on direct foreign investment and has thus an interest in demonstrating to a prospective investor that she takes a proactive stand on fair competition and the “preservation of economic freedom.” In general, cartels, the “supreme evil of antitrust”, whose activities constitute one of the “most egregious offence(s) under competition law,” particularly those involving Multinational Corporations (MNCs), often have a particularly negative impact on developing market economies: market dominance, its distortion and an absence of consumer welfare are just some possible consequences.

This article argues that increased cross border co-operation through bilateral agreements between domestic competition authorities in the developed world can regulate anti-competitive cartel activities effectively. To discuss this argument, the competition policies and laws of three emerging economies, namely South Africa, India and Brazil, are compared with the competition law of the European Union. This country selection was made based on their shared category as emerging and developing as well as Newly Industrialized Countries (NICs) reflecting on their similarities in terms of market nature, economic impact and potential market challenges. Brazil and India are members of the so called BRIC group .South Africa is the youngest member to join BRIC and the strongest single emerging economy on the African continent. Another similarity is the fact that all three states are member parties to the International Competition Network (ICN) but not to the Organization for Economic Cooperation and Development (OECD), whose members are mostly developed nations. These organizations, together with organizations such as the European Union and other regional anti-competition bodies, play an important role to ensure that cartels are identified, investigated and subsequently regulated in terms of international and domestic competition legislation and policies of the countries affected. Subsequently, the role and functions of these two organizations in regard to limiting anti-competitive activities, especially cartels, are scrutinised within the scope of the chosen domestic jurisdictions.

The article also provides an insight into cartel activities in these three emerging economies and poses the question on which of the existing methods of cooperation can be identified as the most effective one for addressing cartel activities. It provides a short overview of the existing international institutions and enforcement bodies which promote and coordinate international competition policies and anti-cartel initiatives. The cooperation methods identified and utilised by the ICN will be briefly analysed in order to support the authors’ view on the relevance and importance of bilateral cooperation agreements for the conclusion of successful cartel investigations.

Keywords:Cartel Regulation, BRICS ECONOMIES, International Trade Law, European and International Competition Law, South Africa, India, Brazil, Bilateral and international competition cooperation
Subjects:M Law > M140 Comparative Law
M Law > M221 Business and Commercial Law
M Law > M130 Public International Law
Divisions:College of Social Science > Lincoln Law School
ID Code:6401
Deposited On:03 Oct 2012 06:26

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