Comprehensive Review of Potentially Anti-Comprehensive Laws and Regulations APEC Economic Committee March 2020 Project Summary Report EC 04 2018A Comprehensive Review of Potentially Anti-Competitive Laws and Regulations Economic Committee February 2020 APEC Project EC 04 2018 A Produced by Philippines Project Team Centre for Competition Policy, University of East Anglia +44 (0)1603 593715 For Asia-Pacific Economic Cooperation Secretariat 35 Heng Mui Keng Terrace Singapore 119616 Tel: (65) 68919 600 Fax: (65) 68919 690 Email: [email protected] Website: www.apec.org © 2020 APEC Secretariat APEC#220-EC-01.2 2 | P a g e Table of Contents Executive Summary ...................................................................................................................... 7 APEC Secretariat’s RFP Project No. EC 04 2018A, “Comprehensive Review of Potentially Anti- Competitive Laws and Regulations.” ............................................................................................. 7 Preamble and Overview ...................................................................................................................... 7 1. Purpose of the Project ............................................................................................................ 7 2. Structure of this Project Report .............................................................................................. 7 3. Our Assessment ...................................................................................................................... 7 4 The Future ............................................................................................................................... 8 Chapter 1 ..................................................................................................................................... 9 Merits of Competition Policy (and Competition Impact Assessment) ............................................. 9 1.1 Introduction .......................................................................................................................... 10 Part A: background .................................................................................................................... 11 1.2 Competition .......................................................................................................................... 11 1.3 Competition Impact Assessment .......................................................................................... 12 Part B Empirical Evidence ........................................................................................................... 13 1.4 Previous CIAs for other economies ....................................................................................... 13 1.5 The beneficial effects of deregulating markets: an ongoing meta-study ............................. 16 1.6 Advocacy ............................................................................................................................... 18 1.7 Conclusions ........................................................................................................................... 19 Chapter Two .............................................................................................................................. 20 Draft Manual ............................................................................................................................. 20 1 Executive summary ............................................................................................................. 21 1.1 What regulations can be reviewed? ..................................................................................... 21 1.2 Who should use the manual? ............................................................................................... 21 1.3 How does the review work? ................................................................................................. 21 1.4 Why should a review be performed? ................................................................................... 21 2 Introduction ....................................................................................................................... 22 2.1 Regulation often has competitive impacts ........................................................................... 22 2.2 Competition yields substantial economic benefits ............................................................... 22 2.3 Ensuring regulations are not anti-competitive is therefore worthwhile .............................. 22 2.4 Competition assessment of new and existing regulations is the best way to achieve this goal 22 2.5 Appropriate weight should be given to the results of competition assessment. ................. 23 3 Principles of competition assessment .................................................................................. 24 3.1 Limit barriers to entry for new companies ........................................................................... 24 3.1.1 Does the regulation create exclusive rights? ................................................................ 24 3.1.2 Does the regulation create license or permit systems? ............................................... 25 3 | P a g e 3.1.3 Does the regulation raise the cost for a company to enter or leave a business activity? 26 3.1.4 Does the regulation place geographical barriers on trade? ......................................... 26 3.2 Does the regulation restrict potentially competitive company actions? ............................. 26 3.2.1 Does the regulation establish price rules? .................................................................... 26 3.2.2 Does the regulation restrict advertising? ..................................................................... 27 3.2.3 Does the regulation set standards that would not be chosen by many informed consumers? ................................................................................................................................... 27 3.2.4 Does the regulation create differential costs of operation for businesses? ................. 27 3.3 Do not encourage potentially anti-competitive co-ordination by companies ..................... 28 3.3.1 Does the regulation create a self-regulatory regime? .................................................. 28 3.3.2 Does the regulation generate sharing of sensitive information? ................................. 28 3.3.3 Does the regulation exempt a company or industry from competition law? .............. 29 3.4 Ensure consumers receive sufficient information and choice .............................................. 29 3.4.1 Does the consumer have sufficient information and ability to choose well? .............. 29 4 Procedure for making regulation more pro-competitive ...................................................... 30 4.1 Identify those regulations to review ..................................................................................... 30 4.2 Apply the principled technical review to identify potential restrictions to competition ..... 30 4.3 For those potential restrictions identified, complete a more thorough review, gathering information and consulting as needed ............................................................................................. 30 4.4 For substantial, actual restrictions, identify alternatives ..................................................... 31 4.5 Compare alternatives and select preferred option(s) .......................................................... 31 4.6 Implement change ................................................................................................................ 31 5 How this process fits into the Philippines legal framework ................................................... 32 5.1 Advisory role of the competition authority .......................................................................... 32 5.2 Regulatory improvement structure ...................................................................................... 33 5.3 Consideration of competition in the legislative process ...................................................... 34 6 Conclusion .......................................................................................................................... 37 6.1 Competition assessment can be implemented with minimal resource investment ............ 37 6.2 Many economies have successfully carried out competition assessments.......................... 37 6.3 The benefits of competition assessment can be substantial ................................................ 38 7 Glossary ............................................................................................................................. 39 8 Further Reading .................................................................................................................. 41 The Manual in brief: a checklist .................................................................................................. 42 Limit barriers to entry for new companies ....................................................................................... 42 Does the regulation restrict potentially competitive company actions? ......................................... 42 Do not encourage potentially anti-competitive co-ordination by companies ................................. 42 Ensure consumers receive sufficient information and choice .......................................................... 42 4 | P a g e Annex for manual .....................................................................................................................