Considerations for the Drafting of a Model Law or Laws on Restrictive Business Practices to Assist Developing Countries in Devising Appropriate Legislation

• DOI: 10.1177/0003603X7702200405
• Date: 01 December 1977
• Published date: 01 December 1977
• Subject Matter: Article

CONSIDERATIONS FOR THE DRAFTING OF A MODEL

LAW

OR LAWS

ON

RESTRICTIVE

BUSINESS

PRAC-

TICES TO ASSIST DEVELOPING COUNTRIES

IN DEVISING APPROPRIATE LEGISLATION

by

THE

UNITED

NATIONS

CONFERENCE

ON

TRADE

AND

DEVELOPMENT

SECRETARIAT·

I.

INTRODUCTION

1.

At

its

fourth

session, held in

Nairobi

from

5 to 31

May

1976,

the

United

Nations

Conference on

Trade

and

Develop-

ment

decided, in section

III,

paragraph

3, of resolution 96

(IV),

that:

"Action

should be

taken

at

the

international

level,

par-

ticularly

within

the

framework

of

UNCTAD,

includ-

ing:

...

(f)

Elaboration

of a model

law

or

laws on

restrictive

business

practices,

taking

into

account,

inter

alia,

the

principles

examined by

the

Second

Ad

hoc

Group

of

Experts

on

Restrictive

Business

Practices,

in or-

der

to

assist

developing

countries

in devising

appro-

priate

legislation".

2.

While

one of

the

main

original

thrusts

of

restrictive

business

practices

legislation

was to

control

the

existence

and

growth

of monopoly power,

increasing

control

of possible

abuses of

dominant

positions of

market

power

has

replaced

this

thrust.

Interestingly,

restrictive

business

practices

legis-

lation

exists in

conntries

with

different

economic

and

social

systems,

which would seem to indicate

that,

while

many

coun-

•

Trade

and

Development Board, Committee on Manufactures

Third

Ad

Hoc Group of

Experts

on Restrictive Business Practices,

Third

Session, Geneva, October 3, 1977.

Item

7 of the provisional

agenda.

831

832

THE

ANTITRUST

BULLETIN

tries may regard dominant positions of market power as

inevitable or even desirable, nevertheless such power can

readily lead to abuses and therefore needs to be subject to

control.

In

the case of developing countries, the creation and

existence of monopolies may be necessary given the small

size of markets, the need to create countervailing market

power nationally and internationally to

that

of transnational

corporations, economies, of scale, and infant industry con-

siderations.

3. One important point is

that

intergovernmental agree-

ments and acts specifically authorized by governments in pur.

suance of such agreements fall outside the ambit and even

the intent of restrictive business practices laws.

What

restric-

tive business practices laws

are

essentially concerned with are

acts and agreements engaged in by enterprises of their own

volition and hence not

at

the direction of governments.

It

is

because governments feel

that

restrictive business practices

frustrate or negate the fulfilment of their policies in the field

of trade and development

that

legislation exists in this field.

4. The object of this

paper

is to indicate the broad con-

siderations which seem to influence countries generally when

introducing restrictive business practices legislation, to de-

scribe briefly the present control of restrictive business prac-

tices in developing countries, and then to indicate the broad

considerations

that

might be taken into account in drafting

a model law or laws.

n.

THE

REASONS

FOR

RESTRICTIVE

BUSINESS

PRACTICES

LEGISLATION

5. Most developed countries and an increasing number of

developing countries have enacted, or

are

considering the

introduction of, restrictive business practices legislation. De-

veloping countries

that

have specific legislation on restrictive

business practices include Argentina, Brazil, Chile, Colombia,

India, Mexico, Pakistan and Yugoslavia, as well as the Carib-