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The concentration of economic and political power: a priority for competition law and policy in developing countries?

Amine Mansour, Developing World Antitrust Blog, 18 January 2015

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In the literature dealing with competition law and policy in developing countries, there appears to be a consensus according to which competition law cannot contribute to development unless it wins its battle against what is called the concentration of economic and political power. Before getting into more details, the idea of concentration of economic and political power deserves some words. The concept in itself is not clear. The idea can be understood either as the collusion between the economic and the political powers leading to a concentration of the two or as the holding of both powers by the same person(s) at the same time. Of course, the concentration can be in reality more complex and subtle than what was described and consist of a mix of the two forms. Regardless of the view one may have on the understanding of the concept, it’s less important to focus on the form of the concentration of economic and political powers than on the effect of such concentrations. The very concrete impact can be disastrous for an economy. In order to realize the magnitude that this impact can have, it is interesting to analyze first why powerful economic groups and individuals may attempt to capture political institutions. In reality, according to the developmental conception of competition, it is very important to empower low income people, to protect them against economic power and to ensure that they fully participate and contribute to the economic life. This presupposes a specific view to the goals of competition, a view where specific categories of people, the low income ones, are benefiting from the redistribution of wealth. (The consumer welfare standard does not deal with the question of which category of people benefit from the redistribution). The inevitable reaction of rational powerful economic groups is to reject such position as it not only endangers the expansion of their power and wealth but also threatens to shrink it. One way to reject such rules is to capture government power if it is not already the case. Such a conflict illustrates where the antagonism lies between developmental competition law and the concentration of economic and political powers.

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