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Competition Law, Part 2
Therefore, ASEAN regional competition laws and policies play a multifunctional role, i.e. to encourage the free flow of trade and investment, to monitor the behaviour of firms, and to evaluate the economic role or potential dominance of extra-ASEAN TNCs in the region. A single ASEAN competition law, rather than separate competition laws in each ASEAN country, would ensure that competition is evaluated on a regional basis, thus maintaining the principle of open regionalism in ASEAN. I will discuss this topic below.
Unlike the assumptions of neo-liberalism (Picciotto, 1998: 738)(5), competition law and policy accepts the important role of states and good governance institutions in regulating firms’ behaviour. This perspective is also more compatible with the new approach of positive integration ideology (Picciotto, 1998: 739)(6). Moreover, competition law generally takes a pro-consumer policy perspective that takes into account the public good and social welfare. This ensures that the advantages of liberalisation within ASEAN resulting from economic integration would directly contribute to the general public wealth through consumers.
Section 1.2 surveys existing ASEAN laws relating to unfair competition and considers how they function and whether they are effectively enforced. Section 1.3 focuses on the rationale for a regional ASEAN competition law. The rationale for implementing regional competition law and policies is that the removal of internal barriers should not be allowed to result in companies creating territorial exclusivity through cartels or the abuse of dominant position. Control of restrictive business practices in the process of liberalisation is a key element in the new approach to positive integration (Picciotto, 1998: 735-8). This approach is unlike neo-liberalism, which tends to assure that the free market needs no control, regulation or restriction, either by government or public bodies.
1.1 Competition Law as a Reinforcement Function of ASEAN Investment Regime and Regulations
1.1.1 Why does ASEAN require Competition Law?
Firstly, since ASEAN aims to strengthen economic integration in the region, it needs laws and institutions to support the implementation and elaboration of trade and investment liberalisation within the ASEAN market. The interaction between government, consumers, and producers results in the concern that a rules-based system needs to be strengthened. How the competitive process actually works and to what extent the government should regulate the relationships between producers and consumers is significant. In this sense, competition law is essential as an instrument to regulate fair competition because, as I mentioned earlier, it is compatible with liberalisation since it is basically neutral and non-discriminatory.
Secondly, in an emerging ASEAN free market economy, monopolies and restrictive business practices are viewed as undesirable because they are likely to distort prices and the efficient allocation of resources. Therefore, contestability has to be realised, so that free entry and the competitive pressure of new competitors will function and balance market power and structure in the ASEAN market. The goal of market contestability and undistorted competition is to create an ultimate public benefit for the consumers, to enable great varieties of product ranges at the minimum price that fundamentally strengthens consolidation of social wealth and of general consumers.
(5) Neo-liberalism regards regulation as an unnecessary burden; as Picciotto stated, the perspective of neo-liberal ideologues toward economic integration is that "…international integration means the creation of open markets, which requires only strong provision for the protection of property rights, the maintenance of public order, and not much else". See Picciotto, 1998: 738.
(6) Picciotto argues that the current phase of restructuring of the global political economy needs the creation of positive linkages across regulatory regimes, to facilitate a shift from negative to positive integration. This can also be applicable to economic integration at a regional level. See Picciotto,