Competition Policy under Economic Recessions: Historical Changes and Implications

Pinguang Ying

doi:10.4236/me.2013.43a026

Abstract

Before the current financial crisis, economic recessions in history were always accompanied by relaxation or abandon of competition policy. However, in the current financial crisis, although different jurisdictions have different practices, most jurisdictions have kept the bottom line of competition policy enforcement. Such historical transformation roots in deep reflections on historical failures and the popularization of competition policy as well as the strengthening of the competition authorities. Chinais one of the few countries still weakening competition policy enforcement during the current financial crisis. In fact, there are several mechanisms contained in competition laws and policies, such as the exemption of cartels, the defense of business concentrations and the coordination between competition authorities and sector regulators, which provide some space of flexible competition policy enforcement during economic recessions. Considering China’s short history of competition policy enforcement and consistent tradition of government intervention in economy, it is strongly advised to hold on the bottom line of competition policy and pay more attention to government-led anti-competitive conducts during economic recessions.

Highlights

The financial crisis triggered by the US subprime loan problem quickly swept through the world, and many countries have introduced various economic stimulus plans to promote economic recovery
From the perspective of historical comparison, it can be concluded that competition policy during economic recessions in history shows two distinctive characteristics: on the one hand, economic depressions in history were always accompanied by the compromise of competition policy with no significant differences among different jurisdictions; on the other hand, in the current financial crisis, different countries followed a personalized or even opposite route in competition policy enforcement
The great changes of competition policy mentioned above raise two questions: First, why the economic recessions in history were always accompanied by suspension of competition policy while many jurisdictions have changed this regular practice during the current financial crisis? Second, why were there different competition policy enforcement practices in different countries during the current crisis? The following text will try to look for the answers to these two questions

Summary

Introduction

The financial crisis triggered by the US subprime loan problem quickly swept through the world, and many countries have introduced various economic stimulus plans to promote economic recovery. Many people (especially in China) still insists on that the competition policy enforcement during economic recessions should be relaxed or abandoned, or at least the competition policy enforcement should give way to the industrial policy This paper refutes this point of view from the history and reality angles, and puts forward some general advices on the competition policy enforcement during economic recessions after comparing diverse choices of competition policy by distinct jurisdictions during different economic recession periods. It is the basic focus of this paper that how competition policy should respond to cyclical changes of economy, especially in the special circumstances of economic recession Starting from this perspective, the article will firstly compare the choice of competition policy among different jurisdictions under economic recessions in the history and their enforcement performance, and analyze the similarities and differences of competition policy among major countries and regions during the current financial crisis and their causes. It will put forward some general advices on the choice of competition policy under economic recessions after comparing and analyzing the mechanism and logic behind the shift of competition policy enforcement

Comparison of Competition Policy under Economic Recessions in History

Different Versions of Competition Policy under the Current Financial Crisis

Reflections on the Historical Changes of Competition Policy

The Reasons for the Changes of Competition Policy

The Mechanisms Supporting the Changes of Competition Policy

The Goals of Competition Policy during Economic Recessions

The Flexible Enforcement of Competition Policy during Economic Recessions

The Priority of Application

Findings

Conclusions