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Competition Law, Part 12

They can also refer to general basic rules of conduct established in those various codes/guidelines that have common features. However, the main aim of a regional competition law for ASEAN could be to facilitate the development of a strengthened regional market, as envisaged in the 1998 agreements setting up AIA, AFAS and AFTA.

1.5 Regional competition law and policy and open regionalism

The development of an ASEAN regional competition law and policy would be a new approach in this region, and even national competition law in each individual ASEAN country has not yet effectively and efficiently developed. Hence, a regional law can be justified from the inadequacy of the national competition law of the ASEAN members as discussed in section 1.2 above. I will not discuss here in detail the contents of a regional competition policy per se, as it is beyond the scope of this article. But I will discuss here the link between an ASEAN regional competition law and the concept of open regionalism.

I have already pointed out the functions of a feasible ASEAN regional competition law and policy (see introduction) that should include:

(1) to facilitate the liberalisation of trade and investment in ASEAN;

(2) to enhance free and fair competition among firms in ASEAN by monitoring behaviour of firms engaging business in the region, and;

(3) to ensure a proper competitive balance between intra- and extra-ASEAN business enterprises.

These three functions of a feasible ASEAN regional competition law and policy will play an important part in facilitating ASEAN open regionalism. It will, firstly, ensure that ASEAN keeps its regional market open for both intra- and extra- regional trade and investment (the first two functions). These have been discussed above in sections 1.1, 1.2.1, 1.3 and 1.4. The third function is fundamental to open regionalism, to ensure a proper competitive balance between intra- and extra- ASEAN firms.

Competition law and policy should help promote the growth of small and medium enterprises(24). The liberalisation of trade and investment based on fair competition grounds will enable local small and medium firms to develop their economic strength, upgrade their technological production processes, and improve managerial systems and commercial skills, in order to compete with the foreign firms. Competition law will ensure that firms, local or foreign, cannot engage in restrictive business practices, abuse a dominant position, or form a cartel or any form of unfair practice that might damage other firms. Therefore, under such fair competition circumstances every firm either small or large can compete with each other in their relative market, size and field of business. Furthermore, competition law would permit ASEAN countries to evaluate the economic benefit from the influx of foreign firms, on the basis of whether they will damage local small and medium firms, so that they could employ competition policy in protecting local firms. This can be done through, for example, a merger control regulation so that TNCs cannot merge or acquire another company to create or strengthen their commercial dominance in the market. This would encourage foreign investment to be made on a "green field" basis that can contribute to the regional economy, ensuring that it competes with other firms (local or foreign) on the same fair basic grounds and conditions.

Part 13


(24)  See Whish, Richard and Sulfrin, Brenda (1993) Competition Law. 3rd edition London/Edinburgh: Butterworths.