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p. 47 of 62 BACK | NEXT Purpose and Structure of the Toolkit Overview of Practices Controlled by Competition Law Countries with Competition Law Systems Benefits of Competition Policy Practices Controlled by Competition Law Key Concepts and Tools Competition, Privatization, and Regulation Emerging Economies Enforcement Mechanisms Role of the Legislature, the Government and Ministers Independent Competition Authorities Accountable Competition Authorities Design of the Competition Authority Procedures of the Competition Authority Transparent Decision-Making Powers of the Competition Authority Sanctions Leniency Program Competition Law Compliance Programs Administrative Guidance Role of the Courts Miscellaneous Points ADB Resources and Projects Other Resources Glossary and List of Abbreviations

Competition Law Toolkit : Enforcement Mechanisms

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B. Independent Competition Authorities

The independence of the competition authority, free from the influence of the government, is crucial if stakeholders are to believe in the integrity of the system. The application of competition law to particular cases is a technical matter. Did the parties enter into a cartel? Is there an argument that an agreement that restricts competition may nevertheless lead to economic efficiencies? Did a dominant firm sell its goods or services at less than average variable cost? These are very specialized questions, and key concepts such as those discussed in Key Concepts and Tools—market definition and market power—are used in order to reach the appropriate solution. Independent competition authorities are established precisely so that they can be staffed with people with the appropriate skills to make decisions. It is inevitable that companies under investigation will do all that they can to ensure an outcome favorable to their own economic interest, and there is an obvious danger that politicians might be pressured to influence the decision-making of the competition authority. This makes it vital for the competition authority to be absolutely independent and that it is seen to be so. This means that the members of the authority should be appointed for a fixed term, and that it should only be possible to remove them on specified grounds, such as conviction for a criminal offense. If the power to dismiss is too wide, it is obvious that a mere threat to dismiss might "discipline" an individual into deciding a case in a way that will be favorable to the government or its supporters.

Not only should there be formal independence, it is also important that the government should not be able to use other methods, e.g., threatening to reduce the budget of the competition authority if it makes, or is thought to make, a decision in conflict with the government's own desired outcome.

One way of reinforcing the independence of the competition authority is to design the appointment process in a way that avoids the selection of people who are likely to make decisions favorable to the wishes of the government. Ideally, appointment to the authority should be by open competition and should entail external scrutiny of the process by independent figures (if appropriate) from abroad. There should be clear, qualitative criteria for the appointment of members of the authority, and these should be applied in a non-discriminatory manner. It is highly undesirable that there should be a provision for members of a competition authority to be removed from office in the event of a change of government.

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