Reading. The Contemporary World
Reading. The Contemporary World
doi: 10.1093/jaenfo/jnaa019
Article
The current COVID-19 virus is both a health and economic crisis, which has spread
beyond the places in which it originated and affected countries and markets world-
wide. Logically, competition policy enforcers when applying competition law and
advising policymakers on government interventions in dealing with this crisis should,
therefore, look beyond national borders.
The COVID-19 crisis came at the time when the policy debate criticizing the ac-
tivities of competition authorities has been broad and wide-ranging from questioning
the inadequacy of the consumer welfare standard, to concerns about the current
merger control standards. Competition authorities faced questions about the effec-
tiveness of their activities and whether competition may be skewed, favouring large
firms to the detriment of smaller ones or certain economic classes of the population
over others. It is against this background that competition agencies face COVID-19.
The current COVID-19 crisis will pass and despite the varying levels of success of
previous state interventions, stimulus packages can prevent a more severe downturn
and be instrumental to the recovery and stability of markets. It is, therefore, best to
find a compromise between competition law and policy and industrial policy rather
than focusing on their potential conflicts.
This said, a realistic approach to competition law enforcement in times of
COVID-19 necessitates taking account of the unique economic characteristics of the
current crisis.
According to an IMF report ‘growth in Asia is expected to stall at zero percent in
2020. This is the worst growth performance in almost 60 years, including during the
Global Financial Crisis (4.7 percent) and the Asian Financial Crisis (1.3 percent).’
This exogenous shock requires measures to protect people, jobs, and industries
directly. All Association of Southeast Asian Nations (ASEAN) countries are hit by
the global tourism slowdown, and by lower commodity prices. Within the Asia,
* Hassan Qaqaya, Senior Fellow, Melbourne Law School, Melbourne, Australia. Email: hassan.qaqaya@
unimelb.edu.au
C The Author(s) 2020. Published by Oxford University Press. All rights reserved.
V
For permissions, please e-mail: [email protected]
1
2 Journal of Antitrust Enforcement
low-income countries are among the most vulnerable given the limited fiscal space,
as well as comparatively underdeveloped health infrastructure and essential food
stockpiles.
In addition to the impact of lockdowns measures, two other factors may influence
the position of the ASEAN region:
• Global recession: the IMF expects the global economy ‘to contract in 2020 by 3
percent—the worst recession since the Great Depression. This is a synchronized
contraction, a sudden global shutdown’. ASEAN’s key trading partners are
expected to contract sharply, including Australia, Japan, Europe, and the USA.
• China’s recession: the IMF predicts that China’s growth to decline from 6.1 per
cent in 2019 to 1.2 per cent in 2020. This sharply contrasts with China’s growth
performance during the Global Financial Crisis. Most observers do not expect a
Chinese fiscal stimulus of about 8 per cent of GDP this time, and China won’t
help ASEAN’s growth as it did in 2009.
The above factors will further disrupt the integration of ASEAN countries into
the global value chain that is the backbone of their trade and investment strategies.
The ASEAN’s immediate response to the COVID-19 crisis has been two-fold: a
‘light touch’ approach to enforcement of competition law, including authorization of
crisis collaboration between competitors when this is necessary, and the establish-
ment of the several COVID-19 multi-ministerial task forces to tackle immediate
harmful consumer problems arising from the crisis, as well as rescue failing
businesses.
Like other countries, ASEAN responses to the pandemic crisis were largely influ-
enced by political pressure and took various forms of government intervention
including, inter alia:
• the provision of cash and credit injections into the banking sector to maintain
liquidity for commercial and trade transactions;
• the setting-up of national stockpiles of essential commodities and health products,
including temporary bans on the exports of essential commodities such as rice, and
the facilitation of joint-buying, joint production and sales, as well as the exchanges
of information;
• requiring competition agencies to apply a flexible approach to enforcement and in
some cases temporarily suspending the application of some of the provisions of
competition law;
• state bail out of firms in most sectors of the economy.
importantly, to the extent that a market failure impacts the welfare in other ASEAN
jurisdictions, increased cooperation can be instrumental in addressing the concern of
other ASEAN members. This approach requires policymakers to perceive ‘competi-
tion area’ as more of a legal intervention than a political one.
ASEAN made giant steps in this direction by adopting a 10-year Strategic
Action plan on Competition, 2025, developing guidelines on the formulation and
enforcement of competition laws, conducting peer reviews of competition law,
providing extensive capacity-building programmes, as well as establishing an ASEAN
Enforcement Network. These developments have established strong foundations on
which further cooperation, particularly, relevant to the current crisis.
In an ever more open and interdependent world economy, effective enforcement
requires the application of competition law and policy in the context of broader
global cooperation. The advantage of ASEAN approach to regional cooperation and
integration is that it is premised on free-market economies that would allow all
ASEAN countries to benefit from greater access to global markets. This enables dy-
namism, growth, and economic development within each ASEAN Member State na-
tional markets. For this reason, ASEAN decided that it is in their long-term interest
that all members have competition law and policy regimes in place and are equipped
with the necessary expertise, resources, and legal infrastructure to effectively imple-
ment them.
Different ASEAN countries will apply different approaches according to their cir-
cumstances, and it cannot be expected that an approach that works for one country
could be imposed on another. The powerful forces that shape nations’ competition
and regulatory systems are often unique to a particular nation, and national differen-
ces impose significant limitations on cooperation, particularly in times of economic
crisis. However, the strong and flexible foundations that ASEAN has adopted as a pil-
lar of their regional integration provide the tools for a coordinated and comprehen-
sive approach to addressing the COVID-19 crisis while preserving competitive
markets.