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Competition Law, Regulation and SMEs in APEC: Understanding the Small Business Perspective

To be edited by:

Dr Michael T. Schaper

Adjunct Professor, Curtin University of Technology, Western Australia

Deputy Chairman, Australian Competition & Consumer Commission

Email: michael.schaper@accc.gov.au or Michael.Schaper@gmail.com

and

Dr Cassey Lee

Senior Fellow, Institute of Southeast Asian Studies, Singapore

Email: cassey_lee@iseas.edu.sg

 

 

Initial expressions of interest (which should be submitted in the form of an abstract of approximately 300 words) are being sought by 1st August 2014.

 

Overview

The aim is to produce a book that will help regulators, policy-makers, competition law enforcement agencies, industry associations, small business groups, elected officials and researchers in the APEC countries to better understand how competition law affects small and medium-sized enterprises (SMEs). 

Competition law (sometimes also referred to as “anti-trust” or “trade practices”) is now a well-established feature of most national economies, with more than 180 countries now having such regulatory frameworks.

However, SMEs are often one of the hardest stakeholder groups to deal with. They are often strongly opposed to the introduction of competition laws; the level of compliance is often poorly-known and difficult to monitor within the sector; and they are difficult to reach in terms of education and information programs about their rights and responsibilities.

Yet SMEs represent the biggest single group of trading enterprises in every country, and indeed globally, so they are an important sector that competition agencies need to better understand. Whilst there is a global forum of competition agencies (the International Competition Network), to date it has had little focus on SME issues.

How can competition agencies effectively deal with micro-, small- and medium-sized enterprises? This book will be an edited anthology of contributions that examine such issues.

 

Pre-publication Symposium

In addition to publication in the book, a number of contributors will be invited to attend a special pre-publication symposium to be held by the Institute of South East Asian Studies in Singapore, at which the prospective chapters and issues raised in the book will be discussed in more detail. This will also assist authors in refining their contributions before final submission. ISEAS will meet the travel and accommodation costs of this event.

 

Book Structure

The publication will consist of several distinct sections, within which the various individual chapter contributions will be placed:

•           Introduction

An overview chapter, provided by the editors, which discusses the broad context, major issues and themes of the book. It will also discuss the major characteristics of the SME sector in Asia and the APEC region, including its size, structure and operating processes.

•           Part 1: Theories and Concepts

Chapters in this section will discuss the various frameworks and issues around SMEs and competition regulation, as well as the existing body of economic and legal research.

•           Part 2: Tools and Implementation

How, and in what way, can competition agencies configure their laws, enforcement activities, educational outreach and internal processes so that SME issues are satisfactorily addressed?

•           Part 3: Case Studies

These contributions will provide examples of how different competition agencies from APEC countries have already dealt with SMEs. How have these existing agencies structured their laws, operations, enforcement, education and engagement activities to take into account small firm needs?

•           Conclusion: Future Research

This final chapter will synthesize key themes of the book and discuss possible future research directions.

It is envisaged that each contributed chapter will be between 3,000 and 5,000 words long. There will be a total of approximately 20 chapters. More detailed examples of possible material for parts 1, 2 and 3 are attached at the end of this document.

 

Projected market audience for book

This book will be of interest to the following prospective readers:

  • Public-sector policymakers identifying market needs and designing interventions
  • Competition agencies, and members of the ICN
  • Regulatory agencies
  • Elected officials, such as parliamentarians and Ministers
  • International and national economic development and business advisory organisations
  • Small business industry associations
  • Legal practices and economic consultants working in the competition regulation area
 

Who Are We Seeking Contributions From?

Given the intended practical nature of this publication, we encourage contributions from competition agencies, industry associations, business advisors and legal practitioners, as well as academics.

 

Project Timeline

The proposed schedule for the project are as follows:

·         Deadline: 1 August 2014 - Initial expressions of interest should be submitted in the form of an abstract of approximately 300 words.  

·         September 2014 – Selection of paper writers / contributors

·         February 2015 – Deadline for first draft

·         April 2015 – Singapore APEC Study Centre Symposium at ISEAS

·         May 2015 – Editors to provide feedback for revisions

·         August 2015 – Final draft due

 

Indicative references

Foer, A.A. (2001) “Small Business and Antitrust” Small Business Economics Vol.16 No.1 (February), pp.3-20.

Kampel, K. “The Role of South African Competition Law in Supporting SMEs” in Cook, P.; Fabella, R. & Lee, C. (eds.) (2007) Competitive Advantange and Competition Policy in Developing Countries Cheltenham: Edward Elgar, pp.237-260.

Ncube, P. and Paremoer, T. (2009) “Competition Policy in South Africa and Small Business: A Review of Enforcement Cases” Paper presented to the 3rd Annual Competition Conference, Competition Commission of South Africa.

Neumann, M. (2001) Competition Policy: History, Theory and Practice Cheltenham: Edward Elgar.

Schaper, M.T. (2010) “Competition Law, Enforcement and the Australian Small Business SectorSmall Enterprise Research Vol.17 No.1, pp. 7-18.

Schaper, M.T.; Clear, A. & Baker, G. (2010) “Competition Policy and Entrepreneurship Development: Some International Comparisons” European Competition Law Review No.6, pp. 226-230.

Storey, D.J. (2010) “The Competitive Experience of UK SMEs: Fair and UnfairSmall Enterprise Research Vol.17 No.1, pp. 19-29.

US Small Business Administration – Office of Advocacy (2008) “Analyzing the Impacts of Antitrust Laws and Enforcement on Small Business” July. Report prepared for the SBA; contract no. SBAHQ-06-M-0476.

APPENDIX: Possible Topics[1] For Each Part

 

Part 1: Theories and Concepts

Chapters in this section will discuss the various frameworks and issues around SMEs and competition regulation, as well as the existing body of economic and legal research.

Assessing the impact of competition policy on the SME sector. Papers which might seek to evaluate how the introduction/application of competition law has impacted on small firms. For example, do divestments lead to more firms entering the market? Do enforcement of cartels subsequently lead to more market entrants or growth of the non-cartel firms?

Levels of knowledge about competition law. What degree of understanding do small firm owners and other decision-makers in a small firm have about antitrust and competition law? This is important in assessing the level of practical knowledge that SMEs have about competition law, and will also impact on their ability to comply with the law. It would be useful to know, for example, if their level of knowledge is higher or lower than that of the general public. It would also be helpful to determine if particular types of firms are more likely to be compliant than others.

Barriers and triggers to utilisation of legal remedies by small firms. Most competition regimes allow affected parties to initiate their own actions, but the extent to which these are used by SMEs is poorly understood. Some initial evidence suggests that new and small enterprises are less likely to seek legal redress than a large firm when a competitor breaches antitrust or trade practices law (Ncube and Paremoer 2009), but further research is needed to confirm if this is indeed correct, and to determine what factors might encourage or prevent SMEs from seeking their own legal redress.

Co-operation, collusion and cartel behaviour. Cartels and other arrangements that attempt to “fix the market” are seen as serious breaches of competition laws, and can now lead to criminal liabilities in many countries. On the other hand, many SMEs also engage in co-operative behaviour designed to facilitate business activity. Do small business owners understand the difference between these different types of behaviour? To what extent do they already engage in such activities?

The impact of competition policy changes on small business. When new competition dynamics are introduced into a specific industry sector (such as a new policy initiative that makes it easier for new firms to enter), how does this affect the existing SME population within that sector? Are particular types of small business more likely to survive, thrive or fail than other firms?

The impact of divestitures and antitrust enforcement on small firm market entry. When a regulator forces a divestiture, corporate breakup or other enforcement action into a highly-concentrated industry, theory suggests that this will provide a “breathing space” into which small firms can now move (Neumann 2001). However, limited case study analysis by the US Small Business Administration (2008) has indicated that this does not always occur: frequently small firms cannot regain a foothold in the market. Is this true in most circumstances? Further research to prove or disprove this finding would be helpful to competition policymakers.

Vertical restraints and production networks. SMEs are often involved directly or indirectly in outsourcing and off-shoring activities.  Are such SMEs affected by vertical restraints?  Do such problems feature in production networks involving SMEs?  Are such problems addressed effectively by existing competition laws?

Services liberalization and family-owned SMEs.  The liberalization of services sector has provided MNEs with market access to the services sector in many countries.  This has increased competitive pressure on family-owned SMEs especially in the retail sector.  Are such SMEs affected by any anti-competitive business practices adopted by foreign MNEs? If so, have such problems been adequately addressed by existing competition laws?

 

Part 2: Tools and Implementation

How, and in what way, can competition agencies configure their laws, enforcement activities, educational outreach and internal processes so that SB issues are satisfactorily addressed?

Working With Industry Groups and Third Parties.  SME owner-managers often heavily rely on information-sharing and other influences from their business peers, industry associations, and personal networks. This affects what they know about a particular set of laws (such as competition regulations), their attitudes towards compliance with such laws, and their willingness to learn more about the issue. How do competition agencies do this?

Structuring The Law. Some national competition frameworks make specific legal provisions that attempt to take into account SME needs. For example, some provide exemptions for SMEs in certain situations; others allow for collective bargaining, industry codes, reduced penalties, or treat SMEs as consumers.

Internal Agency Operations. How can the staffing, investigation of complaints, decision-making, etc of an agency be configured to take into account SME needs?

Information, Education and Advocacy. Outreach to the SME sector, and providing them with information, is essential. How can this be done?

 

Part 3: Case Studies

These contributions will provide examples of how different competition agencies from around the world have already dealt with SMEs. How have existing agencies structured their laws, operations, enforcement, advocacy, education and engagement activities to take into account small firm needs?

This section will look at the experience of various competition agencies, or branches of such agencies, or might even examine an issue from the point of view of a third party, such as an SME association or government policy maker. Papers can seek to either examine an agency’s total engagement with SMEs, or alternatively may look at a particular issue and how a particular agency dealt with it. Case studies which highlight lessons, outcomes or issues applicable to other countries will be especially appreciated. 

Preference will be given to cases drawn from both Asia (for example, ASEAN member nations, Japan, Republic of Korea), or the wider APEC region (such as Australia, New Zealand, the US, Canada and Latin America), although well written examples from countries outside these regions will also be considered.



[1] Part of the text is this section is taken in toto from the Schaper (2010) paper.