WORLD TRADE
ORGANIZATIONWT/WGTCP/W/234
26 June 2003
(03-3412)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM THE EUROPEAN COMMUNITY
AND ITS MEMBER STATES
The following is the final text of a communication received from the Permanent Delegation of
the European Commission, which was circulated as an advance copy for the Working Group's
meeting of 26-27 May 2003.
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Flexibility and Progressivity
INTRODUCTION
Discussions in the WGTCP since the beginning of its work in 1997 have often touched upon
the development dimension of competition policy and a number of illustrative examples of
competition laws which had been specifically adapted to the particularities of developing economies
have been shared with the rest of the group.1  In addition to this, paragraph 25 of the Doha Ministerial
Declaration explicitly mentions that "[F]ull account shall be taken of the needs of developing
countries and least-developed country participants and appropriate flexibility provided to addressthem."
An effective competition regime is a key element of good governance, helping governments
to make their economies more efficient and better able to benefit from increased trade and investment
flows.  As such, an effective competition regime is an important element of a development strategythat integrates trade and investment as a major source of economic growth and of the resources
needed for development.  As for a WTO Agreement on Competition, its purpose would be to make a
"culture of competition" develop and take root in the economic fabric of all WTO Members.  Also,
the increasingly international dimension of anti-competitive practices calls for a co-ordinated
international response, and this is another key area where a WTO Agreement on Competition can playan important role, not least in the interest of developing countries, by setting up a model of
international co-operation and helping all WTO Members to become active partners in such co-
operation, bearing in mind that competition enforcement has to take place first and foremost at the
domestic level
2.  To this end, it would provide a core of principles and provisions that could guide
WTO Members in laying down the basic design of their competition regime, thus underpinningexisting competition regimes and stimulating and facilitating the creation of new ones. In line with
                                                     
1 The EC and its Member States have tabled two written communications specifically addressing
various aspects of competition and development. See WT/WGTCP/W/140 and 175.
2 "Domestic " being understood in this context as within one jurisdiction, be it national or regional, as
the case may be.WT/WGTCP/W/234
Page 2
these goals, a WTO Agreement on Competition s hould not aim at harmonising competition laws
across the WTO Membership, as doing so would defeat the very purpose of such an Agreement.
Finally, there seems to emerge, from the discussion in the WGTCP, a sense that a WTO
Agreement on Competition of the type suggested by the EC and other proponents should offer realbenefits for all WTO members alike and consequently all WTO members would have an interest in -
and should be put in a position of benefiting from - such an agreement, including the provisions on
international co-operation, from as early a stage as possible. In other words, this would imply creating
the necessary incentives for all WTO members to adhere to an agreement while at the same time
avoiding the obligations of that agreement becoming burdensome to such a point that they may
outweigh the benefits.
Within these general considerations on the role of competition and of a WTO Agreement in
development strategies, the "developmental" aspects of the debate in the WGTCP have been targeted
at three main objectives:
(a) Identify the most basic principles and provisions, which could be implemented by all WTO
Members, including developing and least developed Members, without imposing a given
model of competition regime drawn from the experience of only part of the Membership
3 (in
other words, no "harmonisation" of competition regimes).
(b) Address the capacity constraints that could make implementation of both a WTO Agreement
on Competition and – even more important – of a domestic competition regime, no matter
how desirable, difficult or even impossible for developing and least developed Members.
(c) Identify ways to make the scope and applicability of a WTO-based domestic competition
regime adapted to the need of each WTO Member, and in particular of developing and leastdeveloped Members.
The EC and its Member States have addressed the issues concerning the objective (a) above
in many submissions to the WGTCP
4 in as full a manner as possible and they will be referred to in
this submission only in passing.
The issues under (b) and (c) have been addressed by many participants, including the EC and
its Member States, as part of many written submissions and oral statements, under the headings of
either "flexibility and progressivity" and/or "special and differential treatment".  At this stage of the
debate in the WGTCP, however, it appears useful to present the ideas that have emerged in this
connection in a more coherent fashion. Some of these issues concern essentially developing and least
developed countries. As such, they could be dealt with under the heading of "special and differentialtreatment".  Other issues concern all Members and, even though they have a more dramatic impact on
developing and least developed countries than they have on developed Members, it would be hard to
justify dealing with them under the SDT heading.  Ye t, all these issues are intertwined and it is only
by looking at them together that one could begin piecing together the picture of problems and
solutions in this area.
For these reasons, the EC and its Member States have chosen to address all issues concerning
both capacity constraints and scope and applicability together, under the overall heading of "flexibility
and progressivity".  It must be clearly understood, however, that these issues affect exclusively or
                                                     
3 This regardless of the fact that a majority of WTO Members, comprising both developed and
developing countries, has already adopted a competition regime.
4 To list only those tabled since the Doha Mini sterial Conference: WT/WGTCP/W/184, 193, 222 and
229.WT/WGTCP/W/234
Page 3
disproportionately developing and least developed Members and that, taken together, the ideas
suggested to address them represent special and di fferential treatment, even though some of the
relevant provisions could apply to all WTO Members, irrespective of their level of development.
A. F LEXIBILITY
1. The scope of a WTO Agreement and the "design" of domestic competition law: no
harmonisation
The structure and substantive content of a WTO Competition Agreement as proposed by the
EC provides for a high degree of flexibility, necessary in order to respect the differing levels of
development, needs and policy priorities of all WTO members.
To begin with, the EC proposal does not call for a complete multilateral definition of the
substantive scope of a domestic competition regime. The only substantive provision that we envisage
would be an obligation for WTO Members to enact in their domestic competition law a ban on hard
core cartels.  We do expect that a great number of WTO members (as is already the case among those
who already have a competition law) would want to include other substantive provisions in their
domestic competition laws, dealing with issues such as a wider range of cartels, abuses of a dominantposition, monopolisation and merger control, in addition to a ban on hard core cartels. Nevertheless, a
WTO agreement should not entail an obligation fo r domestic competition laws to include any such
additional substantive provisions. That should be a policy choice of each WTO member.
As regards provisions dealing with the basic foundations of a domestic competition law -
whatever its substantive scope - the EC proposal is based on the three core principles of transparency,
non-discrimination and procedural fairness.  The use of the word "principles" is not casual here.
While the exact wording and degree of precision of multilateral provisions on these three issues is
obviously a matter for negotiations, we have tried to make it clear that these must remain general and
must not dictate how they are going to apply in  a domestic competition framework. For example:
(a) In the area of transparency, a multilateral obligation to make laws, regulations and
guidelines of general application publicly available cannot prescribe the means to achieve
this (for example, actual publication vs. electronic dissemination).
(b) In the area of non-discrimination, our core principles submission
5 allows a maximum of
flexibility to WTO members by proposing a limitation to prohibition of discrimination in theletter of the law, regulation or guideline of general application, in order to eliminate any hint
of interference with the way individual decisions are taken.
(c) In the area of procedural fairness, we have suggested that an obligation to provide a judicial
review of administrative decisions should be drafted so as not to prejudge (i) whether or notcompetition law is enforced through administrative decisions (in some legal systems this can
be done through judicial decisions only) and (ii) what kind of judicial body should do the
review (the ordinary courts, administrative tribunals where they exist, a specialised
competition tribunal, …).
These are obviously only a few examples, but we hope they give a clearer idea of what kind
of core principles provisions we en visage in a WTO Competition Agreement.
In conclusion, the EC proposal is for a minimum set of multilateral provisions which will
influence and guide WTO Members in setting up a domestic competition regime, including
                                                     
5 WT/WGTCP/W/222WT/WGTCP/W/234
Page 4
mechanisms that will make it "self-correcting" (a typical such provision would be the obligation of a
judicial review of some sort), while avoiding any tendency towards harmonisation of such regimes
across WTO Members.
2. Exclusions and exemptions
In our earlier submission on "core principles"6 we stressed that the issue of sectoral exclusions
and exemptions from the scope and application of co mpetition law is of great importance from both a
competition and a trade perspective.  We believe that WTO Members should retain the policy space
they need to maintain and implement important domestic policies that respond to their social,
economic and developmental objectives.
We also recognised that it constitutes a question of great sensitivity and complexity both
among developing countries as well as OECD members, including the EC and its Member States,
even though it may be of particular significance fo r those developing countries who do not yet have a
domestic competition law or whose law is still relatively recent and untested.
When analysing recent developments, the trend ha s clearly been to eliminate such exclusions
or to define them in increasingly narrow terms7.  We have therefore suggested that a flexible approach
would be to focus - at this stage - on the essential question of transparency and its application to
sectoral exclusions and exemptions, as well as their review over time. For instance, the Working
Group (and later the proposed Competition Policy Committee) could also usefully examine the
experience of WTO Members who have phased out exemptions and exclusions (including the reasonsfor and the timing of such phasing out), as well as the domestic processes employed to enact such
exemptions and exclusions.  Furthermore, the domestic legal framework should be left free to define
the scope and modalities of exclusions and exemptions, provided they do so in a transparent and
predictable manner.
3. Regional approaches
In cases where a competition law regime (and along with that possibly also an enforcement
agency) has been - or will be - established at the regional  rather than national level, parties to such
regional agreements - particularly small countries/economies - may find the development of a separate
national  competition regime (or certain parts of it, such as merger review) unnecessary and decide
that the regional competition regime is sufficie nt to effectively enforce competition law throughout
the region.  This, of course, will not - and should not - exclude the country in question from adoptinga domestic competition law as well, later or at the same time, and which could co-exist with a regional
competition regime.  For example CARICOM and COMESA are examples of regional groupings with
competition among their competences
8
Moreover, the role of competition regimes in fostering regional economic integration,
consolidating regional markets and making them more attractive to both domestic and foreign direct
investment should not be overlooked.
                                                     
6 WT/WGTCP/W/222
7 The EC itself has virtually no such exclusions or exemptions from competition rules laid down in the
treaty. For example, agricultural cartels are full y included, as a recent fine imposed from the EC
Commission on a cartel concerning bovine meat shows. EC Regulations known as "block
exemptions " are, despite the name, a means of applying EC competition law by declaring certain
types of agreements authorised.
8 In 2002, the EC approved €745,000 of technical assistance to COMESA for competition capacity
building, and on March 3 2003, an EC-funded €1.5 million programme for competition law and
enforcement in ANDEAN was announced.WT/WGTCP/W/234
Page 5
4. Administrative and resource implications of competition enforcement
While a number of jurisdictions in both developed and developing countries have chosen to
establish a competition authority charged solely with the application and enforcement of competition
law (for the sake of brevity, "administrative enforcement"), this should by no means be taken as the
only way of ensuring such application and enforcem ent.  To begin with, some countries may choose
to rely on judicial enforcement of competition law, either exclusively or in combination with
administrative enforcement.  Moreover, judicial en forcement itself can take different forms (e.g.
private actions by affected competitors and/or actions by a public prosecutor).
Among countries who have a preference for administrative enforcement, the more frequent
model is that of a "dedicated" competition agency or authority (that is, one that is solely dedicated to
the task of enforcing competition law) and a fairly large number of countries have chosen to establish
such an independent competition authority.  Yet, there may be a number of reasons, including the
administrative structure and tradition of a country, as well as budgetary restrictions, which may lead a
country to either establish or designate an authority charged with other tasks as well to also apply and
enforce its competition law.  This could be an agency for consumer protection or other regulatory
matters, just as it could be a government ministry.  For example, many competition enforcementagencies, in both developed and developing countries, deal with both competition and consumer
protection
9.
Clearly, in order to have any deterrent effect, a competition enforcement agency needs to
establish its credibility by completing successful investigations, and this cannot be done withoutadequate staff and resources.  Moreover, it should also be a real partner in international co-operation.
However, there cannot be any established norms for "adequacy", as this depends on individual factors
such as the size of the relevant market, the le vel of economic activity within it, the nature and
sophistication of the economic operators, other laws and regulations affecting the competitive
behaviour of firms, as well as more "subjective" factors, such as how well rooted a "culture ofcompetition" is among firms operating in that market.  Thus, it is obvious to us that a WTO
Competition Agreement could not possibly aim at establishing international standards for the level of
resources that a country chooses (or rather, in most cases, can afford) to allocate to competition
enforcement.  All which can be said at this stage is that the resource implications for a small
developing economy are, in absolute terms, ve ry much  smaller than those needed for the
implementation even of similar provisions in a large developed economy such as the EU or the US,
while recognising that, in relative terms, this could still represent a considerable expenditure of
resources for a developing countries with many competing priorities.  Nevertheless, this has to be seen
also in light of recent studies such as the research paper initially presented before the WGTCP in
February 2003
10, the World Bank report Global Economic Prospects 2003, and other studies, which
have pointed to the net benefits for developing countries that might arise, in the medium- or long
term, from the existence of a competition policy and its effective implementation, in particular asregards to a ban on hard core cartels.
B. P
ROGRESSIVITY
5. Implementation periods and plans
The concept of progressivity would apply principally to those WTO members who have yet to
adopt a competition law and/or establish a competition agency or other relevant enforcement
                                                     
9 Examples are the Office of Fair Trading in the UK, the Australian Competition and Consumer
Commission, the Polish Office of Competition and Consumer Protection, and the Jamaican FairTrade Commission.
10 WT/WGTCP/W/228WT/WGTCP/W/234
Page 6
authority. For this group of countries, an obligation to have a domestic law and enforcement authority
in place from the entry into force of a WTO competition agreement could place an unreasonably
onerous burden upon them.
Rather, such countries should - in the light of their particular circumstances, including level of
development as well as administrative and judicial "infrastructure" - be allowed reasonable and more
individualised time-periods within which to ad opt a domestic (or regional) competition law and
establish an enforcement authority.  Such time-periods could be modulated according to the level of
development, as well as to the wishes and needs of each country.
In order to avoid de facto "implementation backloading", these time periods could be
accompanied by indicative implementation plans, who could help these countries map out the stepsneeded to establish a WTO-compliant domestic competition regime and the time needed for each step.
Needless to say, the provision of adequate technical and capacity-building assistance will be
of key importance here.  Developed countries should assume their responsibility for supporting the
implementation, through technical assistance and cooperation.  Also, through the activities of a WTOCompetition Policy Committee, implementing countries could benefit from the experience of other
WTO members.
6. Progressive development of a domestic competition regime
This is an issue that links to the point made earlier, under the heading of "flexibility", in
relation to the substantive scope of a domestic competition regime.  As is known, our proposal
envisages only a minimum of substantive provisions: those concerning a ban on hard-core cartels. It is
obvious that countries that choose to go beyond that can do so in a progressive manner. Indeed, as a
matter of fact, while broad anti-cartel provisions and some form of anti-monopoly or abuse of
dominance provisions are very common at an early stage, merger control provisions tend to appear indomestic competition regimes only at a later stage.  Clearly, the kind of WTO Competition
Agreement we envisage would leave total freedom to WTO Members to expand the substantive scope
of their competition law beyond hard-core cartels (if they so wish) at their own rhythm and according
to their own priorities.
In this respect, the establishment of a WTO Competition Policy Committee and of an
appropriate mechanism for WTO Members to exchange views and experiences would be an importantsupport for Members in making their competition regime evolve and stay adapted to their economic
situation and needs.
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