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Competition Laws and Economic Integration in ASEAN
Dr. Lawan Thanadsillapakul*
The rise and fall of the East Asian countries have shown that in the face of the dynamic global economy and economic crises encountered by ASEAN, these countries need to develop their sustainable regional market. To create and strengthen an ASEAN market replacing the current separate national ASEAN markets, regionalisation of ASEAN laws and regulations, especially those relating to trade and investment is required in order to facilitate the free flow of goods, capital, services, and labour for achieving such aim. A more liberalised trade and investment regime in ASEAN will better enhance their free economies and create a more favourable trade and investment climate in the region.
Consequently, ASEAN countries need to develop the effective legal systems for encouraging and overseeing increasingly competitive business activities in the region. The necessity of eliminating barriers to entry of trade and investment creates a need to provide, at a regional level, an effective protection against unfair competition (1) to govern the economic activities and transactions of those TNCs located in the ASEAN region. As more liberal trade and investment regimes are established in ASEAN countries, there is an increasing requirement for competition rules to regulate fair competition among business players, as well as to supervise their behaviour (2). There would be very little point in eliminating various barriers and national boundaries imposed by ASEAN countries if these governmental restraints were replaced by concentrations and other restrictive business practices as well as concerted practices among private firms (Korah, 1997a: 1). Therefore, agreements restricting competition as well as the abuse of dominant positions of market power should be controlled (3) under competition laws. This is the rationale for regional competition law for strengthening economic integration in ASEAN.
This article will analyse the scope and basis for a comprehensive competition law in ASEAN for implementing economic integration in the region. Section 1.1 focuses on competition law and policy as the reinforcement function of ASEAN investment regime and regulations. Since ASEAN will develop its integrated regional market, it requires a regulatory regime that can facilitate free movement of trade and investment intra-ASEAN. Competition law is compatible with "open regionalism" (4) because it is basically neutral and non-discriminatory. Moreover, the development of a regional competition law and policy that enhances fair competition among firms doing business in the region might also provide a basis for evaluating the economic benefit to ASEAN of entry by a foreign investor on competition grounds, rather than the discriminatory criteria used in screening procedures.
*Assistant professor at the School of Law, Sukhothai Thammathirat Open University, Thailand. She graduated LL.B and LL.M from Thammasat University, LL.M from Vrije Universiteit Brussels, Belgium and Ph.D. from Lancaster University, UK
(1) As stated by UNCTAD the main objective of competition laws is "to preserve and promote competition as a means to ensure the efficient allocation of resources in an economy, resulting in the best possible choice of quality, the lowest prices and adequate supplies for consumers". UNCTAD (1996e) "Competition Policy and Legislation: Information Note 21". Note by the UNCTAD Secretariat to the Intergovernmental Group of Experts on Competition Law and Policy, UNCTAD document TD/B/RBP/INF.37, mimeo.
(2) The liberalisation of FDI policies can lead to an increase in competition in national or regional market. See UNCTAD, 1997: chapter IV.
(3) To control here means to check, to verify, and to vet; in substantive rules of the competition laws. It means to exercise restraint or direction on the free action of another, to command those to comply with the rules in order to keep the market open and refrain from the abuse of dominant market power.
(4) Thanadsillapakul, Lawan (2000) Open Regionalism and Deeper Integration: The Implementation of AFTA, AIA, and AFAS, the article is posted at http://www.worldbank.org.eapsocial, and also posted in the CEPMLP Internat Journal at http://www.cepmlp.org/journal/ Dundee University.