CHAPTER ONE

GENERAL INTRODUCTION

1.0. INTRODUCTION

This chapter being the first provides an introductory overview to the study. It embodies the background to the study, the statement of problem, the research questions and objectives, the research methodology, the literature review, theoretical framework, justification and significance of the study, the scope of the study, its limitations, and conceptual definition of key terms and synopsis of the chapters. This chapter therefore sets the pace for this research.

1.1 BACKGROUND TO THE STUDY

International economic law governs the rules and regulations that facilitate economic relations between countries. This body of law addresses trade, investment, finance, competition, and development on a global scale. The concept of competition in international economic law centers on creating a fair environment where businesses and countries can engage in economic activities without unfair advantages or practices. The history of competition in economic law is tied to the development of trade and commerce over centuries, as societies sought ways to regulate and benefit from cross-border economic interactions.^[1]

In ancient times, trade routes such as the Silk Road and maritime networks connected different civilizations, enabling the exchange of goods, services, and ideas. These interactions required basic rules to ensure fairness and prevent disputes. Over time, as trade expanded, the need for structured regulations became evident. By the medieval period, trade laws began to take shape in Europe, guided by customs and principles that aimed to protect merchants and prevent monopolies. For instance, during the 17th and 18th centuries, mercantilist policies dominated, emphasizing state control over trade to achieve economic strength.^[2]

The industrial revolution in the 19th century brought unprecedented economic growth and increased international trade. However, it also raised concerns about monopolistic practices and the exploitation of weaker economies. During this period, countries began adopting antitrust laws, such as the Sherman Antitrust Act of 1890 in the United States, which sought to address unfair competition and promote free markets. These developments influenced the evolution of competition law on an international scale.^[3]

The 20th century marked a turning point in international economic law with the establishment of global institutions aimed at fostering economic cooperation and competition. After World War II, the creation of the General Agreement on Tariffs and Trade (GATT) in 1947 and the World Trade Organization (WTO) 1994, provided a platform for countries to negotiate trade rules and settle disputes. These organizations played a pivotal role in reducing barriers to trade and promoting competition among nations. Similarly, international agreements on investment and finance, such as those under the International Monetary Fund (IMF) and the World Bank, sought to ensure stability and fairness in global economic interactions.^[4]

Competition in international economic law involves ensuring that no single country, corporation, or group of entities gains excessive control over markets to the detriment of others. This principle is particularly important in addressing practices such as dumping, subsidies, and cartelization, which can distort markets and harm less developed economies. However, achieving fair competition is complex due to differences in national interests, economic capabilities, and legal systems. While developed countries often advocate for stringent competition rules to protect their industries, developing nations may prioritize growth and economic sovereignty.^[5]

The importance of a competition regime in a liberalized economy is to curtail and restrain manipulative and unfair trade practices, guarantee market stability, encourage new business entrants^[6] as well as promoting clear business conduct, and creating a level playing field for the benefit of all economic agents.^[7] With the spread of competition regimes worldwide, as well as the increased rate at which developing countries are adopting competition law,^[8] one is left to wonder if there is a correlation between the adoption of competition law and economic development. This concern may not be unconnected to the view held by some scholars that competition law played a key role in the economic development of several developed nations.^[9] An empirical research carried out in 2008 which studied competition regimes in 117 countries between 1995 and 2005 showed massive economic growth in countries with competition regimes when compared with countries without competition regimes.^[10] This could be the reason why many developing countries are adopting competition law based on this belief that it will lead to their economic development.^[11] Although the core of the above view on the role of competition in economic development is valid, it suffers from a flaw in its application. This is because it overlooks the role of effective implementation of law and places much emphasis on its adoption only. Implementation of competition law comes with several challenges which require high level of technical skill and expertise to address, ^[12]therefore a law that is neither properly implemented nor implemented at all will most likely fail in achieving its purpose. As a result of the solid background of most developed countries in competition law, many of them have gone ahead of developing countries to address most of these challenges owing to the abundance of technical skills and expertise in the developed countries.^[13] The same cannot be said of developing countries, many of which are yet to enact a competition law, while some of them that have adopted one are still are still struggling with the procedural and institutional challenges as well as the problem of balancing competition objectives with the national developmental agenda and public interest considerations (PIC) in the implementation of the law.^[14] As such, it can be argued that the competition laws in these developing countries are not effectively implemented to fully address the challenges that necessitated their enactment.

1.2. STATEMENT OF THE PROBLEM

Competition in international economic law is meant to ensure fairness in global trade, but it faces significant challenges. One major issue is the imbalance between developed and developing countries, with wealthier nation’s often dominating trade rules to their advantage.^[15] Multinational corporations also engage in practices like monopolies and price-fixing, which harm smaller businesses.

The rise of the digital economy creates new challenges, as traditional competition laws struggle to regulate large technology companies.^[16] Inconsistent enforcement across countries and limited resources in developing nations make it difficult to address unfair trade practices like dumping. These issues create barriers to achieving a truly fair and competitive global market.

1.3. RESEARCH QUESTIONS

There is the main research question and the specific research questions:

1.3.1 Main Research Question

How effective is international economic law in ensuring fair competition in global trade?

1.3.2 Specific Research QuestionS

• What constitutes competition in international economic law?
• What are the challenges faced in ensuring fair competition in international economic law/
• What are the prospects to competition regarding the existing international economic law framework?
• What policy recommendations can be made to ensure fair competition in international economic law?

1.4 RESEARCH OBJECTIVES

1.4.1 Main Research Objective

• To assess the effectiveness of international economic law in ensuring fair competition in global trade.

1.4.2 Specific Research Objectives

• To examine the concept of competition in international economic law.
• To examine the challenges faced in ensuring fair competition in international economic law.
• To examine the prospects of completion under international economic law framework.
• To develop policy recommendations for ensuring fair competition in international economic law.

[1] Silk Road Project. “The History of Ancient Trade Routes.” Silk Road Review, 2019,p 16.

[2] Adam Smith’s The Wealth of Nations London 1776,p 23.

[3] Sherman Antitrust Act, U.S. Federal Law, 1890,p 12.

[4] World Trade Organization. “Overview of the WTO Agreements.” WTO Publications, 2021,p 7.

[5] United Nations Conference on Trade and Development. “Fair Competition in Global Markets.” UNCTAD Reports, 2020.

[6] Thomas K. Cheng, Ioannis Lianos, and Daniel D. Sokol (Eds), Competition and the State (Salford University

Press 2014),p34.

[7] Richard Posner, Antitrust Law (2nd ed University of Chicago Press 2001),p 259

[8] Kathryn McMahon, ‘Competition Law and Developing Economies: Between “informed Divergence” and

International Convergence’ in Ariel Ezrachi (ed), Research Handbook on International Competition Law

(Edward Elgar Publishing 2012),p 12.

[9] Lawrence White, ‘The Role of Competition Policy in the Promotion of Economic Growth’ (2008) Law &

Economic Research Paper Series Working Paper No. 08-23, New York University School of Law.

[10] Kronthaler Franz, ‘Effectiveness of Competition Law: An Empirical Analysis’ Munich (2008),p8

https://www.researchgate.net/publication/237250308 accessed 2 March 2019.

[11] Bukola Akinbola and Enyinnaya Uwadi, ‘Antitrust as a Panacea for Economic Development in Nigeria’

(2017) 11 (2) Ife Juris Review; Simon J Evenett, ‘Links between Development and Competition Law in

Developing Countries’ (2003) < https://www.alexandria.unisg.ch/22161/1/dfidpaper.pdf > accessed 20 dec

2024.

[12] Douglas Gale and Hamid Sabourian, ‘Complexity and Competition’ 73 Econometrica No. 3,2005 739

[13] Aditya Bhattacharjea, ‘Who Needs Antitrust? Or, Is Developing-Country Antitrust Different? A HistoricalComparative Analysis’ in Daniel Sokol, Thomas Cheng and Ioannis Lianos (eds), Competition Law and

Development (Stanford University Press 2013)

[14] Azza A. Raslan, ‘Public Policy Considerations in Competition Enforcement: Merger Control in South Africa’

(2016) Centre for Law, Economics and Society Research Paper Series 3/2016.

[15] Hoekman, Bernard M. Global Trade Governance: What Is the Role of Competition Policy? World Trade Organization, 2019.

[16] Gerber, David J. Global Competition: Law, Markets, and Globalization. Oxford University Press, 2010.