Competition Policies in Emerging Economies
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Í-O'f ^ Claudia Schatan • Eugenio Rivera Editors Competition Policies in Emerging Economies Lessons and Challenges from Central America and Mexico Project of Canada’s International Development Research Center (IDRC) and the Economic Commission for Latin America and the Caribbean (ECLAC) “Strengthening Competition in Latin American Isthmus: National Policies and Institutions, Regional Coordination and Participation in International Negotiations” E C L H C ^ Spriringer International Development Research Centre Ottawa • Cairo • Dakar • Montevideo • Nairobi • New Delhi • Singapore C‘ Editors Claudia Schatan Eugenio Rivera ECLAC, Mexico City Director of the Area of Regulation Mexico Foundation Chile 21 www.cepal.org.mx Santiago [email protected] Chile A copublication with the International Development Research Centre PO Box 8500 Ottawa, ON, Canada KIG 3EI9 www,idrc.ca/[email protected] ISBN (e-book) 978-1-55250-401-7 ISBN: 978-0-387-78432-8 (Hardcover) e-ISBN: 978-0-387-78433-5 ISBN: 978-0-387-78434-2 (Softcover) DOI: 10.1007/978-0-387-78433-5 Library of Congress Control Number: 2008925636 © United Nations 2008 All rights reserved. This work may not be translated or copied in whole or in part without the written permission of the publisher (Springer Science-r Business Media, LLC, 233 Spring Street, New York, NY 10013, USA), except for brief cxceipts in connection with reviews or scholarly analysis. Use in connection with any form of information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed is forbidden. The use in this publication of trade names, trademarks, service marks, and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. Primed on acid-free paper 9876 5 4321 sprmger.com Competition Policies in Emerging Economies Lessons and Challenges from Central America and Mexico Foreword The challenges faced by market competition have been more widely recognized in the Latin American region over the last few years. There has been renewed interest in antitrust policies, in modernizing various regulations and achieving greater trans parency in the way firms operate. The relevance this topic has acquired has grown precisely at a time when the concentration of wealth has deepened regionally and globally. The lack of appropriate pro-competition legal and institutional frame works during the privatization process of large public enterprises in the 1980s and 1990s and a great number of ensuing mergers and acquisitions have made possible frequent anti-competitive practices, adversely affecting consumers and the competi tiveness of producers. In a number of public utility services essential to the economy, large privatized firms, formerly under public ownership, often act as monopolies. These practices have spread internationally. Economic liberalization and digitalization have made it easier to invest capital in foreign markets, but little has been done to curb abuse of market power in many developing countries where they operate. This book addresses competition policies in Central America and Mexico, particularly in the banking and telecommunications sectors, in which market distor tions have led to low levels of efficiency and competitiveness. In the cases of both of these sectors, access to credit and a modern telecommunications system is vital for the constant innovation and efficiency of their services. On the other hand, access to these services has become part of the population’s basic well-being. The arrival of foreign direct investment (both regional and international) in the banking system and in the telecommunications sector has not produced improvement in quality or more competitive prices of these services in most of the countries studied. An effectively enforced competition policy can go a long way towards strengthening these sectors, among others, especially in small economies where this policy faces many obstacles set up by strong economic and political interests. The experiences of the seven countries studied in this volume are a valuable point of reference for competition policy officials, who are either adapting their laws in order to strengthen and adjust them to their own realities, or else are enforcing newly enacted competition laws for the first time. The studies included in this book also provide a wide range of experiences in the difficult relationship that usually Foreword exists between competition policy officials and sector regulators and suggest ways of improving their cooperation. This volume contains the most important results of the project “Strengthening Competition in the Central American Isthmus; National Policies and Institutions, Regional Coordination and Participation in International Negotiations”, funded by International Development Research Center (IDRC) and implemented by Economic Commission for Latin America and the Caribbean (ECLAC). Within this project 18 national studies were carried out: three in each country of the Central American Isthmus covering general competition conditions, competition and regulation policy in the banking sector, and competition and regulation policy in the telecommunications sector. These documents, together with three similar studies on Mexico, nurtured three chapters of comparative analysis in this book. Another two chapters show a country case study of competition policy application (Costa Rica) and a sector case study - competition within the banking system - in Mexico. Finally, the conclusions of the book are presented in an international perspective, where the experiences of third developing countries are brought up and enrich the findings of the book. The efforts to improve competition conditions in the region have increased, but there is a long way to go. We can expect knowledge and experience to develop much more in the coming years. José Luis Machinea Executive Secretary ECLAC Acknowledgements Our sincere gratitude to IDRC for having financed the project “Strengthening Competition in the Central American Isthmus: National Policies and Institutions, Regional Coordination and Participation in Internationa] Negotiations” which was executed by ECLAC between 2004 and 2006. This book is the second one published by ECLAC on competition policy which has been funded by IDRC. The first one was Competition Conditions and Policies in the Central America and Caribbean Small Economies (written in Spanish), coordinated by Claudia Schatan and Marcos Avalos (published by Fondo de Cultura Económica and ECLAC in Mexico in 2006). This book reflects the findings of more than 25 documents produced in these endeavours. We deeply appreciate the work by all the consultants who participated in the IDRC/CEPAL project and made a direct or indirect contribution to this book. Besides Marcos Avalos, Fausto Hernández, Adolfo Rodríguez and Pamela Sittenfeld, who appear as authors, we would like to thank the background papers written by Claudio Ansorena, Pedro Antonio Argumedo. Edgar Balsells, Simon Evenett, Marco Fernández, Ricardo González, Greivin Hernández, Mauricio Herrera, Maribel Macias, Judith Mariscal, Francisco Molina, Gustavo Paredes, Diego Petrecolla, Antonio Romero, Marlon Tábora, Carmen Urizar, Leiner Vargas and Marlon Yong. We are sincerely grateful to Fernando Ramirez and Juan Luis Ordaz for their excellent technical support to produce the comparative Chapters 2, 3 and 4. This volume could not have been written without the cooperation of the compe tition authorities of the Central American Isthmus and Mexico, as well as other specialists and public officers of the countries of this region. Among them, special recognition is given to Isaura Guillén. Executive Director of Costa Rican Antitrust Authority (Commission to Promote Competition); Celina Escolán, Superintendent of Competition in El Salvador; Edgar Reyes, Director of Competition, Ministry of Economics of Guatemala; Santiago Herrera, General Coordinator, National Program of Competitiveness UCP-FIDE. Honduras; Julio Bendaña, General Director of Competition, Ministry of Promotion, Industry and Trade, Nicaragua; Gustavo Paredes, former President and Commissioner of the Free Competition Consumer Affairs Commission in Panama; Oscar Garcia, Head of Analysis and Market Survey, Authority for the Protection of Consumers and Defense of Competition in Panama; and, finally, Eduardo Pérez Motta, President of the Federal Competition Commission of México. All of them contributed to the discussion in Ackno w ledgemen ts workshops and seminars which enriched the documents that have provided the main inputs for this book. We also acknowledge the very valuable contribution of Andres Rius and Susan Joekes from IDRC to the substantive part of the IDRC/CEPAL project, which helped conceive solid studies, as well as Taimoon Stewart, who has done deep reflection on competition in small developing economies, for her thoughtful com ments. Observations from Sebastián Sáez and Verónica Silva, from the International Trade Division of ECLAC, Santiago, Chile, were also very helpful. Other organiza tions which provided support and made an important contribution to the discussion of the background papers for this book were the Central American Bank for Economic Integration in Honduras; the Economic Policy International Center for Sustainable Development, National University of Costa Rica; the Economic and Social Research Institute, Rafael Landivar