Domestic Competition Regimes In The Mediterranean Partners

Author:Damien Geradin
Profession:Professor of Law at the University of Liège and Director of the Global Competion Centre

State of Adoption of Domestic Competition Laws in the Mediterranean Partners. Content of Domestic Competition Laws. The candidate countries. The non-candidate countries. Israel. The Maghreb Countries. Jordan. Egypt. Lebanon. Boxes.


Page 47

The analysis contained in Chapter 6 showed that one of the major requirements imposed on the CEECs is that these countries are submitted to an obligation of convergence of the domestic legislation around EC competition law, through a transposition of the acquis communautaire. 107 The Mediterranean Partners (MPs) that are candidate countries (Cyprus, Malta, and Turkey) have to comply with a similar obligation. 108 By contrast, non-candidate MPs are not submitted to an obligation of convergence of their competition rules around EC competition law, although, as will be seen below, the Commission is encouraging these countries through a variety of means to engage into a convergence process.

This chapter analyzes the domestic competition rules of the MPs. It is divided into three sections. After examining the state of adoption of domestic competition rules in the partner countries, it briefly summarizes their content and provides an evaluation of the effectiveness of these rules.

State of Adoption of Domestic Competition Laws in the Mediterranean Partners

A preliminary distinction has to be made between two groups of countries. The first consists of the three countries engaged in the accession process (Cyprus, Malta, and Turkey), two of which will join in May 2004, and which are accordingly submitted to strong domestic obligations. Their candidate status requires that they transpose in their domestic legal order the entirety of EC competition law. The second group of countries is composed of the rest of the MPs that are linked to the EC by an association agreement, that does not specifically impose domestic obligations.

Page 48

In May 2004, enlargement will increase the number of EU member states from 15 to 25 and their total population from 375 to 450 million. With average per capita GDP in the New Member States (NMSs) less than half of that in the old members states, nominal GDP of the economic block will increase by 4 percent. EU enlargement is relevant for the MPs for at least three reasons. First, the process of economic integration between the EU and the NMS during the last decade and a half provides valuable lessons for Euro-Mediterranean integration. Second, EU enlargement entails trade liberalization between the MPs and the accession countries. Hence, it creates opportunities for increased trade between the NMSs and the MPs. Third, the eastern European and the southern Mediterranean countries compete for certain exports markets and investment flows. EU enlargement is likely to shift the balance in this competition to the disadvantage of the MPs-unless they find ways to also deepen their integration with the EU. Two factors reinforcing the reform challenge arising from EU enlargement are increased global competition in low value-added goods and multilateral trade liberalization.
Source:Müller-Jentsch, Daniel. Forthcoming 2004. "Deeper Integration and Trade in Services In the Euro-Mediterranean Region."

These countries are neither obliged to have an EC-compatible domestic competition law, nor even to have a competition law. As a result, MPs have followed different options at the domestic level. Depending on such options, we have divided these countries in four categories. The first category is composed of Israel that has had a modern set of competition rules since 1988, offering a high level of protection to economic operators. 109 The second category includes the Maghreb countries (Algeria, Morocco, and Tunisia) that have adopted national competition laws that are patterned on the French Ordinance of 1 December 1986. 110 A third group is composed of countries that have just adopted or are in the process of adopting domestic competition legislation. This is the case of Jordan, Egypt, and Lebanon. 111 The novelty of such rules makes it difficult to evaluate their effectiveness. Finally, a last group is composed of the countries (Syria, and the West Bank and Gaza) that have not yet adopted domestic competition laws and are not in the process of doing so.

Content of Domestic Competition Laws
The candidate countries

Candidate countries have to implement the acquis communautaire in the competition field and are receiving assistance from the European Commission in doing so. The annual reports on the progress of the candidate countries towards accession provide useful and accurate information on the actual content of the national competition laws of these countries. 112

Cyprus enacted a national competition law in 1989. 113 This legislation is built on the principles of EC competition law. As regards institutional features, a Commission for the Protection of Competition (CPC) has been created to inquire, decide, and sanction the violations of Articles 4 and 6 of the Law. 114 All interested individuals can introduce an action before the CPC. The institution can also self-initiate proceedings. Already in 1993, the European Commission declared that the Cyprus competition law was very close to EC competition standards. 115 The accession procedure, however, required a range of improvements, such as a better transposition of secondary community legislation, a higher level of enforcement, and the adoption of measures designed to strengthen the administrative capacity of the CPC. Cyprus has therefore progressively gone further, so as to meet the compliance requirements imposed by the EC, and has adopted both merger and State aids control Laws. 116

Page 49

Country Law Date of Approval
Algeria Law no. 2000-03 August 5, 2000
Cyprus Protection of Competition Law 207/89 November 30, 1989
Israel Restrictive Practices Trade Law, 5748-1988 July 26, 1988 Amended 2000
Jordan The Competition Law no. 49 for Year 2002 August 15, 2002
Malta Competition Act February 1, 1995
Morocco Price Liberalization and Free Competition Act July 5, 2000
Tunisia Competition Law no. 94 July 29, 1991 Amended 1993, 1995, 1999, 2003
Turkey Law on the Protection of Competition (Law No. 4054) December 13, 1994
Notes: In Egypt there have been several attempts to develop and adopt a competition law, but none have yet managed to be adopted into law. In Lebanon, regulatory reforms designed to increase the competitiveness of the economy are in the legislative pipeline, but have not yet been adopted. No Competition Laws have been adopted in Syria and West Bank and Gaza.

The latest regular report produced by the European Commission showed very satisfactory results. Cyprus has made steady progress in the adoption of competition rules equivalent to EC competition law and now enjoys an efficient State aid law and authority. 117 At the institutional level, however, further improvements remain possible and desirable. For instance, the Commission considers that the CPC should adopt an enforcement policy that provides a greater degree of deterrence and focuses on hardcore infringements. The CPC is also encouraged to enhance competition advocacy among the economic and judicial spheres. Notwithstanding these points, the European Commission has come to the conclusion that Cyprus' domestic competition legislation sufficiently complied with EC competition law, and that accession negotiations in this field could be provisionally closed.

Page 50

Over the last few years, the Turkish government has invested substantial resources in the country's Competition Authority (hereafter, the "Authority"). The Authority has a staff of 315, including 84 competition experts and assistant competition experts. The average age of Authority staff is in the late twenties and the motivation of the staff is generally high. Although the salary of the competition experts has slightly eroded in recent years, most of them consider their salary package competitive with the private sector, especially at the junior level. The main reason why many young professionals are interested in working for the Authority relates to the quality of the training they receive. For instance, the Authority has a generous scholarship program, which allows its professional staff to attend specialized teaching programs in leading American and European universities with the only commitment that they return to the Authority for a period of two years once they have completed their degree.
Source: Interview by the author with officials of the Turkish Competition Authority on October 21, 2003.

The evaluation of Malta by the EC is also satisfactory. Malta adopted a "Competition Act" in 1995. 118 In substance, this legislation prohibits restrictive agreements and abuses of a dominant position in terms equivalent to those of Articles 81 and 82 of the EC Treaty. Malta has also recently adopted a national merger control regulation. As regards State aids, a Business Promotion Act was passed in 2001 that details the requirements to be met, in order to grant aid to industry. In its latest report towards accession, the Commission considers the situation satisfactory, although it regrets: (i) a persistent lack of transparency in the field of State aids; (ii) possible further improvements regarding, among other things, fiscal aids; and (iii) a partial exclusion of public undertakings from the scope of application of the antitrust legislation. This legislation was adopted in June 2002. The control of mergers was previously realized through the application of Section 9 of the Competition Act that provides for a prohibition of the abuse of a dominant position.

At the institutional level, further work is still required concerning the enforcement...

To continue reading