Competition Advocacy: Time for a Rethink

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Competition AdvocacyTime for a Rethink?

• Simon J. Evenett, www.evenett.com

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A summary of my argument

• Much less thought appears to be given to the
  advocacy function of competition agencies than to
  the enforcement function.
• Yet ICN and OECD documents recommend that
  developing countries prioritise advocacy.
• There is no serious quantitative evidence to
  support this policy recommendation and for good
  reasons.
• Consistent, effective competition advocacy
  requires considerable thought when laws are being
  designed and when implemented.
• Even so, there are doubts about just how much
  advocacy can really achieve.

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The ICNs definition of competition advocacy

• Competition advocacy refers to those activities
  conducted by the competition agency related to
  the promotion of a competitive environment for
  economic activities by means of non-enforcement
  mechanisms, mainly though its relationships with
  other government entities and by increasing
  public awareness to the benefits of competition
  (ICN 2002, i)
• it has often been argued that in transition and
  developing countries competition agencies should
  give priority to advocacy over enforcement
  actions (ICN 2002, iii).
• In the 2004 ICN report on competition advocacy
  the qualifier it has often been argued that
  was removed.
• So developing countries have their marching
  orders!!!

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Comments on the ICNs definition of competition
advocacy

• Why associate competition advocacy with
  competition agencies?
• What is the latters comparative advantage?
• What is the relationship between the competition
  agency and other providers of competition
  advocacy?
• Emphasis on supply of advocacy and not on what
  recipients will do with the advice received.
• What does it mean to promote a competitive
  environment for economic activities?
• Could be interpreted as an efficiency-based
  objective.
• Relationship to non-efficiency objectives.
• What is the scope of the advocacy function
  especially when compared to the enforcement
  function?

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Should competition advocacy be prioritised over
enforcement?

• Enforcement capacities etc may take time to
  develop but is advocacy really that different?
• Analytical skills to perform advocacy take time
  to develop.
• Credibility with policymakers may take time to
  develop.
• Why should policymakers/other senior officials
  listen to the competition agency at all?
• Computing the benefits associated with
  enforcement actions is hard enough, what about
  doing so for advocacy?
• Key challenge attribution problem.
• Even when a quantitative estimate can be put on
  the benefits of a state decision not to impose an
  inefficient regulation, what proportion of the
  gain is due to advocacy?

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Three policy recommendations

• Design really matters especially with respect to
  the scope of advocacy and the recipients of
  competition advocacy.
• Keep an open mind about priorities ignore the
  OECD and ICN advice on this matter.
• Have realistic expectations about what advocacy
  can achieve.
• As Stalin said of the Pope How many divisions
  does the Pope have?
• Competition agencies dont directly deliver
  votes, campaign contributions, and other forms of
  political support.
• Competition advocacy is not a substitute for
  support for pro-competitive reforms at the most
  senior levels of government. Political will
  cannot be outsourced.