November 18, 2016 | Commentary on Property and Economic Rights
On November 1st and 2nd, Cofece, the Mexican Competition Agency, hosted an International Competition Network (ICN) workshop on competition advocacy, featuring presentations from government agency officials, think tanks, and international organizations. The workshop highlighted the excellent work that the ICN has done in supporting efforts to curb the most serious source of harm to the competitive process worldwide: government enactment of anticompetitive regulatory schemes and guidance, often at the behest of well-connected, cronyist rent-seeking businesses that seek to protect their privileges by imposing costs on rivals.
The ICN describes the goal of its Advocacy Working Group in the following terms:
The mission of the Advocacy Working Group (AWG) is to undertake projects, to develop practical tools and guidance, and to facilitate experience-sharing among ICN member agencies, in order to improve the effectiveness of ICN members in advocating the dissemination of competition principles and to promote the development of a competition culture within society. Advocacy reinforces the value of competition by educating citizens, businesses and policy-makers. In addition to supporting the efforts of competition agencies in tackling private anti-competitive behaviour, advocacy is an important tool in addressing public restrictions to competition. Competition advocacy in this context refers to those activities conducted by the competition agency, that are related to the promotion of a competitive environment by means of non-enforcement mechanisms, mainly through its relationships with other governmental entities and by increasing public awareness in regard to the benefits of competition.
At the Cofece workshop, I moderated a panel on “stakeholder engagement in the advocacy process,” featuring presentations by representatives of Cofece, the Japan Fair Trade Commission, and the Organization for Economic Cooperation and Development. As I emphasized in my panel presentation:
Developing an appropriate competition advocacy strategy is key to successful interventions. Public officials should be mindful of the relative importance of particular advocacy targets, as well as matter-specific political constraints and competing stakeholder interests. In particular, a competition authority may greatly benefit by identifying and motivating stakeholders who are directly affected by the competitive restraints that are targeted by advocacy interventions. The active support of such stakeholders may be key to the success of an advocacy initiative. More generally, by reaching out to business and consumer stakeholders, a competition authority may build alliances that will strengthen its long-term ability to be effective in promoting a pro-competition agenda.
The U.S. Federal Trade Commission, the FTC, has developed a well-thought-out approach to building strong relationships with stakeholders. The FTC holds public publicized workshops highlighting emerging policy issues, in which NGAs and civil society representatives with expertise are invited to participate. Its personnel (and, in particular, its head) speak before a variety of audiences to inform them of what the FTC is doing and of the opportunities for advocacy filings. It reaches out to civil society groups and the general public through the media, utilizing the Internet and other sources of public information dissemination. It is willing to hold informal non-public meetings with NGAs and civil society representatives to hear their candid views and concerns off the record. It carries out major studies (often following up on information gathered at workshops and from non-government sources) in addition to making advocacy filings. It interacts closely with substantive FTC enforcers and economists to obtain “leads” that may inform future advocacy projects and to suggest possible lines for substantive investigations, based on the input it has received. It communicates with other competition authorities on advocacy strategies. Other competition authorities may wish to note the FTC’s approach in organizing their own advocacy programs.
Competition authorities would also benefit from consulting the ICN Market Studies Good Practice Handbook, last released in updated form at the April 2016 ICN 15th Annual Conference. This discussion of the role of stakeholders, though presented in the context of market studies, provides insights that are broadly applicable more generally to the competition advocacy process. As the Handbook explains, stakeholders are any individuals, groups of individuals, or organizations that have an interest in a particular market or that can be affected by market conditions. The Handbook explains the crucial inputs that stakeholders can provide a competition authority and how engaging with stakeholders can influence the authority’s reputation. The Handbook emphasizes that a stakeholder engagement strategy can be used to determine whether particular stakeholders will be influential, supportive, or unsupportive to a particular endeavor; to consider the input expected from the various stakeholders and plan for soliciting and using this input; and to describing how and when the authority will seek to engage stakeholders. The Handbook provides a long list of categories of stakeholders and suggests ways of reaching out to stakeholders, including through public consultations, open seminars, workshops, and roundtables. Next, the Handbook presents tactics for engaging with stakeholders. The Handbook closes by summarizing key good practices, including publicly soliciting broad voluntary stakeholder engagement, developing a stakeholder engagement strategy early in a particular process, and reviewing and updating the engagement strategy as necessary throughout a particular competition authority undertaking.
In sum, properly conducted advocacy initiatives, along with investigations of hard core cartels, are among the highest-valued uses of limited competition agency resources. To the extent advocacy succeeds in unraveling government-imposed impediments to effective competition, it pays long-run dividends in terms of enhanced consumer welfare, greater economic efficiency, and more robust economic growth. Let us hope that governments around the world (including, of course, the United States Government) keep this in mind in making resource commitments and setting priorities for their competition agencies.
This piece first appeared on Truth on the Market.