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Competition Policy in Latin America

Nov 2003
Working Paper
By  Bruce Owen
This paper reports on recent developments in Latin American competition (antitrust) policy from the perspective of the role competition policy in supporting market reform.

Competition policy is an instance of the use of law to influence economic behavior. More than eighty nations have enacted antitrust laws in the last twenty years, mostly based on U.S. and E.U. models. A review of the antitrust activity in Latin America shows that all the larger countries have active competition agencies using modern economic theories and procedures that rely chiefly on administrative agencies rather than the courts. The issues mirror those in the developed world, especially competition problems in the infrastructure sectors. Formal laws and regulations also tend to mirror those in the developed world, perhaps inappropriately so in light of the differing economic scales and cultural traditions of Latin American countries. In many Latin American countries increased openness to international trade probably is more important to consumer welfare than increased local competition in tradable goods and services, but receives less attention.

Some of the active agencies seem to have been quite successful, with Chile probably the leading example in sectoral reform and Mexico in price fixing and merger enforcement. In both cases there is a substantial national commitment to market reforms. In countries where the political and social commitment to market reforms is more ambivalent, or where other priorities prevail, competitionagencies appear to have been less successful. Argentina and Brazil fall into this category.

Coordination and regional integration of competition policy, both generally and within the context of the various customs unions(MEROSUR, Andes Pact, Caricom, FTAA, and WTO) remains an unachieved objective.