Competitive Policy Approach between the US and Australia - Case Study Example

Competitive Policy Approach between the US and Australia Student’s Name Institutional Affiliation Abstract This paper will discuss the comparison between Australian and the United States competitive policy approach. From the dimension of competitive law, there are accruing benefits that results from collaborating with and harmonizing the contribution of distinct authorities to thwart distorting impacts of anti-competitive practice. Nonetheless, certain benefits that can be achieved from the perspectives of trade as well as competitive policy, as competition agencies may contribute to goals on trade policy through organizing and collaborating in attaining objectives on competition policy. The objectives of competitive policy is to improve the welfare of the consumer by providing efficiency in resource allocation through reducing government barriers related to trade or by promotion of competition. Introduction Following present legislation in both Australia and the United States, under Australia’s Trade Practices as well as the United States Clayton Act and Sherman Act, they stipulate similar objectives in addressing anti-competitive practices. Both countries have similar legislations in the areas of mergers, cartels, acquisition as well as other types of horizontal and vertical moderation in areas related to consumer protection. This comparison of policy has facilitated the two countries to have a considerable advancement in coming up with a successful collaborative agreement on matters relating to competition (Clyde & Reitzes 1995). In April 1999, the Australian Government and that of the United States signed up a pact that allowed the Australian Competition and Consumer Commission (ACCC) and the United States Department of Justice and Federal Trade Commission to support one another. Most notably, the pact aimed at enabling the two countries to have the ability to exchange classified information on a mutual basis for the purpose of anti-trust enforcement. Globalization Recent trend in globalization have enabled businesses to have a far reaching cooperation on bilateral platforms between any two countries as well as competition agencies in the implementation of competition laws. This collaboration is becoming stronger between the United States and Australia. The development of global commerce has created a room for enhanced cooperation and harmonization among anti-trust authorities since the prevailing anti-competitive bustle goes beyond national boundaries. For countries to achieve developments in better collaboration and harmonization, they have to be in line with corresponding competition policy. Any disregard of these policies may interfere with resulting potential benefits from cooperation alignment between the countries. In this respect, it is crucial to maintain a certain level of competitive policy in order to obtain any level of successful cooperation among competing countries (Kattan 1996). However, there are arrays of problems that results from globalization and goes national bounders. For instance, this is confirmed with rising activity of global cartel that emanate from liberalization. Although trade liberalization is advantageous, it is likely to exert pressure on firms that conventionally dominated certain domestic markets. In the view of competition, some of firms have decided to collude rather than to compete in order to expand to expand their operation jointly and benefit from the economies of scale. Such collusions exist in both the United States and the Australia where firms in the same industry at different level of production come together and jointly decide on the output and prices (Averitt 1997) . Domestic Competition Policy It is worth noting that both the United States and Australia have their own domestic competition policy. Under circumstances where domestic competitive policy relies on the changes occurring in internal market there is possibility of occurrence of negative externalities. Competition in both the United States and Australia have a principal interest nurturing cooperation between various agencies to prevent such a devastating occurrence of negative externalities as firms strive to compete (Averitt 1997) . This is made possible by the Government of both countries to come up effective enforcement regarding their corresponding domestic competition laws. If competition policy can be well coordinated, some of distortions in markets may be eliminated. Secondly, if competition policy in both countries is enacted in line with competition legislation to eliminated the any conflict in each of the countries jurisdictions related to matters pertaining to trade. However, multinational corporations have different national competition rules based on the country of operation. For example, Australian Multinational Corporation in the United States are subjected to the US competition policy. Similarly, US companies that operate in Australia also adopt competition policy that is incorporated in Australia. Although competition policy may vary across jurisdictions, there are certain procedures as well as time frames that are followed in each country to prevent distortion that may come along as a result of trade liberalization (Klein 1998). If competition policy is not well formulated and implemented firms may be faced with numerous costs related to production of goods and services, which amplify uncertainties that may disrupt trade flows as well as international investments. Mergers In the recent past, competition policy in both the United States and Australia had its focus on mergers. However, several international mergers call for merging firms to comply with various jurisdictions in the country of operation. Each entity is supposed to follow the stipulated guidelines that are incorporated in competitive policy across each country of operation and firm rates itself based on the outcome. Therefore, multinational activity may lead to accelerated transaction costs as firms locating in different jurisdictions have to adjust and seek to adopt competitive policy in those countries. However, there are main challenges that are facing Australian firms located in the US and the United States entities located in Australia due to differing competition policy. Under, certain circumstances, mergers may have pro-competitive repercussions in diverse jurisdiction not supported authorities in any other competition legislation (Swanson et al 1998). This uncertainty across various jurisdictions may also be advantageous to some firms, as they may not incur some of the costs that are associated in adopting competition policy in various jurisdictions. However, the United States and Australia are trying to harmonize their competition policy to transact business together and eliminated barriers related to trade. This has improved trading ties between the two countries as a result of effective competition policy that are meant to benefit Australian Multinational corporations in the United States and the United States multinational corporations in Australia. Although the United States and Australia are trying to enforce their competitive policy in different platforms, issues relating to anti-competitive practices are of different magnitudes in both countries and leads to distortion, where some markets are aimed for anti-competitive practices (Averitt 1997). In cases where anti-competitive activity is encouraged in a particular country may lead to less access to opportunities presented in the market, although multinational firms may contribute to additional competition, which may advantageous to domestic firms in a certain country. International Cooperation The United States and Australian have benefited from international cooperation relating to enforcement of competition laws. Effective competition policy and well organized enforcement agencies may be advantageous to firms and harmonized competition laws between the United States and Australia has resulted to some benefits that each country enjoys. However, international competition policy have been subject to scrutiny in the recent past where it has been discussed at international level in distinct platforms such as OECD and the WHO. Competitive policy emanate from joint implication of all the laws, policies as well as institutions that seek to protect, employ or utilize market competition. Basic competition laws in the United States are in the form of federal statutes, but their interpretation is derived from the common law where the courts are recognized as the supreme authorities (Kahn 1986). The powers and the functions of the independent judiciary in the United States court systems maintain the competitive policy in the United States the same also applies in Australia though the Australian competitive policy is not as rigorous as that of the US. In spite of the participants’ multiplicity judges acting in different capacities to uphold laws related to competition may be required to apply various legal jurisdictions to achieve the objectives as well as the provisions of the competition policy. However, in comparison between the United States and the Australian competition policy, the US competition law is more dynamic and strong. Its provisions are highly flexible and can accommodate and solve all probable competition problems that may result after the change of regulation to allow enhanced market competition. The law has been successful in the United States and Australian Government is trying to adopt certain provisions in competition laws to strengthen their existing competition policy and reinforce trading ties with the United States. Conclusion In conclusion, there is elevated degree of steadiness in the purpose as well as primary structure of the United States and Australia as far as competition policy is concerned. Additionally, there exists a greater degree of collaboration between the two countries based on the way they enforce competition laws. This touches on the extent to which they exchange classified information and attaining verification derived from other jurisdiction. In the context where the two countries would like to enhance their Free Trade Agreement, the competitive policy will work together to minimize the implications of anti-competitive practices that may result to negative externalities in respective countries. Therefore, through harmonizing competitive policy the two countries may benefit from the same. References Averitt, N. & Lande, R. 1997. “Consumer Sovereignty: A Unified Theory of Antitrust and Consumer Protection Law”, Antitrust L. J. Vol. 65, p. 713. Clyde, P. S. and Reitzes, J. D. 1995. The Effectiveness of Collusion under Antitrust Immunity: the Case of Liner Shipping Conferences.Vol. 1, pg. 453. Kahn, A. E. 1986. “The Theory and Application of Regulation,” Antitrust L. J., Vol. 55, p. 177. Kattan, J. 1996. “The role of efficiency considerations in the Federal Trade Commission’s Antitrust Analysis,” Antitrust L. J., Vol. 64, p. 613. Klein, J. 1998. “A Stepwise Approach to Antitrust Review of Horizontal Agreements,” Address to the ABA Antitrust, p. 41. Swanson, Daniel G. and Diethelm, U. 1998. “Ignore US Antitrust Rules at Your Own Peril”, Wall Street Journal Europe, 9 February. Read More