The Harmonization of Competition Policies Among Mercosur Countries

1. Introduction

The harmonization of competition policies has been on the agenda of the Southern Common Market (Mercosur) project since the signing of the Asunción Treaty in March 1991. According to its first article, that treaty involves "the coordination of macroeconomic and sectoral policies between the States Parties in the areas of foreign trade, agriculture, industry, fiscal and monetary matters, foreign exchange and capital, services, customs, transport and communications and any other areas that may be agreed upon, in order to ensure proper competition between the States Parties;" and, therefore, "the commitment by the States Parties to harmonize their legislation in the relevant areas in order to strengthen the integration process."

Under this ambitious framework, Mercosur countries have signed, in December 1996, a protocol that indicates the guidelines toward a common competition policy in the region. The implementation of this protocol will imply, among other institutional innovations, that all member countries will have an autonomous competition agency in the near future; that the national law will cover the whole economy; that the competition agency will be strong enough to challenge other public policies whenever necessary, and that the member countries will share a common view about the interplay between competition policy and other governmental actions. Following the Mercosur philosophy, the protocol does not create supranational organisms, and the effectiveness of the regional disciplines will rely on the enforcement power of the national agencies.

This paper analyses the potential roles to be played by this protocol at the national and regional levels. Section 2 discusses the conflicting situations that can be engendered by the process of economic reform and examines the scope for enduring competition rules under such circumstances. Section 3 reviews the protocol, highlights the institutional requirements for its implementation, and shows that the concept of competition advocacy is also relevant at the regional level. Finally, some concluding remarks are made in section 4.

2. Institutional Reform, Economic Integration and Transparency

The economic reforms and the preferential trade agreements launched by Latin American countries in the recent past have, in principle, the same objective, which is the promotion of a new style of economic growth based on market transparency, industrial efficiency and consumer welfare. Each reform has a particular role in this endeavor. Macroeconomic stabilization should reduce the uncertainty of market signals, including relative prices and government’s credibility. Trade liberalization should expose domestic firms to international competition, thus inducing lower prices and better products and services. Privatization should cut down transaction costs by improving the supply of basic services such as telecommunications, energy and transport. Competition policy should remove entry barriers and monitor business practices. Finally, regional integration should open new opportunities for industrial specialization and stronger international competitiveness.

Despite these promising results, economic reform can also engender conflicting situations. For instance, the use of exchange rate anchors to stop inflation, combined with delays in the execution of the fiscal reform, creates trade deficits which bring protectionist pressures and eventual reversals in the trade liberalizing process. The shortage of tax revenues confuses the privatization process, by highlighting the government’s cash flow problems and distracting the public attention from more important issues, such as the regulatory framework to be implanted. The reintroduction of protectionist mechanisms and the transformation of public enterprises into private monopolies are government-generated entry barriers that imply additional work for the antitrust authorities. These contradictions diminish the potentialities of the regional integration projects.

Moreover, the process of economic reform inaugurates a transition period wherein the old rules have been abolished and the new ones are yet to be enforced. This is the ideal environment for rent seeking activities oriented toward one shot gain. The most typical examples are the procedures used for selling state firms and the temporary changes of import tariffs. These practices provoke long lasting distortions and stimulate the continual postponement of some reforms, in order to keep open the channels for attending special interests.

A process of technological convergence is transforming several branches of activities into a unified information industry, encompassing telephone, television, computer, software and consumer electronics. This convergence also creates new interindustry linkages for a variety of businesses such as newspapers, book publishing, advertising, data processing and consultant services. From the point of view of competition policy, this process implies a continual review of the criteria for measuring relevant markets, entry barriers, economies of scope, productivity standards and market power. For the regulatory agencies, it means an additional challenge, which is the establishment of accurate rules that circumvent the problems of capture and asymmetric information without hampering the rate of technical progress. In Argentina, like in most Latin American economies, the debate about regulatory reform is just beginning, but its results will delimit the enforcement power of competition law in the country.

Another example of temporary tensions within the process of economic reform is the recent Argentine import policy. Following the regional trend, the government introduced a series of trade liberalizing measures in the period 1989/1993. They included the elimination of specific tariffs and several non tariff barriers, and the introduction of a three-tier tariff structure (0% for raw materials, 11% for intermediate goods and 22% for consumer goods). Although allowing room for tariff escalation, the new structure signified a generalized decline of protection rates throughout the economy. The only sector that had remained protected by quantitative import restrictions was the auto industry (see Chudnovsky et al., 1996).

However, the 1991 macroeconomic stabilization plan provoked exchange rate appreciation, trade deficits, and some additional exceptions to the trade opening process. Since 1992, the most relevant measures have been a 10% surcharge on imports, the so-called "statistics tax", quotas on selected products from the paper and food industries, the return of specific tariffs for a few apparel goods, and, most notably, the intense use of antidumping actions. As table 1 shows, from May 1992 to May 1996, the Argentine government has initiated 128 antidumping cases against 39 different countries. From the view point of competition policy, all trade barriers have a similar effect, which is to strengthen the market power of domestic firms. Among the mechanisms that reduce contestability, antidumping measures are particularly efficient, because they hit only the most aggressive potential competitors. Thus, not by chance, Brazilian firms have been the priority targets for the Argentine cases, due to the free trade conditions created by Mercosur.

Table 1
Argentina: Antidumping Actions (May 1992 — May 1996)

Source: World Trade Organization.

The Brazilian import policy since July 1994 provides a complementary illustration of the peculiar situations engendered by economic reform. In the period 1988/1993, the government implemented a trade reform that radically changed the conditions of competition in the country. After six decades of economic growth based on import substitution policies, domestic industries were exposed — for the first time — to the competition of imported goods. The new tariff structure was supposed to grant a steady and homogenous level of effective protection to all industries. Accordingly, by July 1993, the average rate of effective protection was 14.5%, and only few sectors were outside the range 10% — 20%. The outstanding exception was, again, the auto industry, which had a 130% protection rate (see Kume, 1996).

However, after July 1994, import rules became volatile, in order to accommodate the amount of foreign trade to the short run needs of the macroeconomic stabilization plan. In a first stage that lasted until December 1994, the government’s objective was to impose a quick decline of domestic prices through currency appreciation and additional tariff reductions for goods that had significant impact on the inflation indexes. Food products and basic inputs were the preferred targets, and the immediate consequence was to amplify the range of effective protection, since lower tariffs on inputs imply greater protection for final goods.

In 1995, the major macroeconomic problem was not price discipline anymore, but the trade deficit. And import restrictions were back, with the consequences reported at tables 2 to 4. Between July 1994 and September 1996, out the 13,428 tariff lines that compose the Brazilian Harmonized System, 11,183 items have been changed (see Baumann et al., 1997). As table 3 shows, capital goods and intermediate inputs were among the most affected industries, wherein import rules have switched more than five times! Considering the forward linkages of theses industries, such changes signified unstable relative prices for the whole economy. 2 Table 4 gives examples of ad-hoc swings that included assorted goods such as cars, telephone sets, detergents, pesticides, synthetic filaments and packing machines.

As table 4 shows, the import policy for autos has been highly unstable since 1994. After a brief attempt of reducing nominal protection to 20% in September 1994, five months later the government raised the tariff to 70%, and in December 1995 established a new set of incentives that went beyond those granted by the Argentine automotive regime. The Brazilian Decree nº 1761 combined all types of import substituting mechanisms: import quotas, minimum levels of domestic inputs, export performance targets, tax rebates and the like.

The automotive industry is an international oligopoly that has a long tradition of influencing trade negotiations and national policies. The 1965 auto-pact between Canada and the United States, the export promotion policies implemented by the Brazilian government in the seventies, the 1981 U.S.— Japan VER agreement, and the tariff swings listed in table 4 are just a few examples of that tradition. Due to the industry’s size and production linkages, the investment decisions made by the assembly firms often generate macroeconomic consequences that affect not only employment and GDP growth rates, but also the balance of payments conditions and the national rhythm of technical progress. Since these economic figures can be easily transformed into political power, the auto industry has been able to extract privileges from governments worldwide for many decades.

Table 2

Brazil: Changes of Import Tariffs (July 1994 — September 1996)

Table 3
Brazil: Examples of industries that had more than five tariff changes during 1994/1996

Table 4
Brazil: Examples of tariff swings

Source: Baumann et al. (1997)

Besides the market distortions already illustrated by the preceding examples, the automotive regime implies an additional challenge to the enforcement of competition rules in Mercosur. Imagine that the Brazilian antitrust authorities have found convincing evidences of price fixing among the industry’s leading firms. The most immediate action for repressing such behavior would be to stimulate import competition, a solution that the government could not allow at this moment. An eventual surge of car imports would contradict not only the provisions of Decree 1761, but, more important, the current macroeconomic priorities of controlling the trade deficit and ensuring the credibility of the Real Plan.

Under this awkward circumstance, the best strategy for the antitrust authorities would be the promotion of market transparency, as a first step toward enduring competition rules in the long run. This can be attained by a system of economic indicators that would keep the public informed about the current conditions of competition in the country. The system should include all the relevant industries and describe their evolution in terms of size, structure, efficiency patterns, entry barriers and market power of incumbent firms. These indicators would provide answers for the three basic questions that can be raised about the current conditions of competition, namely: [1] Do they impose enough discipline on the established firms, thereby protecting the public interest, or leave open space for unfair practices? [2] Do they allow domestic producers to follow the international rhythm of technical progress? [3] Are the regulated industries meeting the international levels of productivity?3

The Protocol’s is enforced by the Trade Commission of Mercosur (TC) and the Committee for the Defense of Competition (CDC).4  The TC has adjudicative functions, while the CDC is responsible for the investigation and evaluation of cases. Modeled after the Brazilian law, the proceedings and adjudication of cases are conducted on a three stage basis. Proceedings are initiated before the competition authority of each country at interested party’s request. The competition agency, after a preliminary determination on whether the practice has Mercosur implications, may submit the case before the CDC for a second determination. Both evaluations must follow a rule of reason analysis in which a definition of the relevant market and evidence of the conduct and the economic effects must be provided. Based on this evaluation, the CDC must decide whether the practice violates the Protocol and recommend that sanctions and other measures be imposed. The CDC ruling is submitted to the TC for final adjudication by means of a Directive. As part of these procedures, the Protocols establish provisions for preventive measures and undertakings of cessation. This mechanism allows the defendant to cease the investigated practice under compliance of certain obligations agreed upon with the CDC. The monitoring of these measures and the enforcement of the sanctions bears upon the national competition authorities.

Some problems may be anticipated with this system. As said before, the substantive and procedural provisions of the Protocol apply only to practices with Mercosur implication. Given the fact that the national agencies, the CDC and the TC are independent in their judgements at each stage and that one can overrule the other at the following stage, the process of defining the Mercosur dimension of each case may be cumbersome under this system. At each stage, the agency may apply a different criterion to define the relevant market. For instance, the national agencies may well use a restrictive criterion for market definition and close the investigation. The other way around may happen if the applied criteria are more permissive. The same problems can be anticipated regarding the evaluation of the evidence and the economic effects of the practice. There is a large controversy about the limitations of applying economic analysis to anticompetitive practices. Nonetheless, assuming that each criterion is adequately defined by the national agencies, it does not ensure that other definitions and approaches may not be yielded by the CDC. Likewise, although it is expected that CDC’ rulings are adopted by the TC, the latter has, though, power to overrule the former based on its own criteria.

Furthermore, given the little experience developed by each country regarding these practices, both the preliminary and the CDC analyses may lead to inconsistent results. This also may well open doors for discretion and political influence at any stage if the bodies base their decisions on considerations other than technical ones, particularly in the analysis of the practices’ effects on the market. Thus, it remains to be seen how well the intergovernmental coordination mechanisms of the Protocol work, and how sound and politically neutral are the criteria applied to the practices investigated. These issues lead to consider a more preventive approach toward the practices of an extraterritorial dimension, since many of these practices are possible only when there is an unbalance regarding their treatment at each national level. To address this crucial area, the Protocol contains provisions for the harmonization of domestic competition policy and law.

Harmonization of Domestic Competition Law

Within any regional agreement governments may still protect domestic firms after dismantling border controls, either by failing to provide (or provide inadequately) proper competition regulations and institutions or simply by deliberate non-enforcement of them. These attitudes produce a new type of market "advantage" over countries with stricter competition rules. Two typical procedures performed by firms outside a country which distort competition conditions in the domestic market may illustrate the need for harmonization: price discrimination and collusion.

International price discrimination is the result of setting prices in the export market below those of the national market. Firms do this usually with the aim of penetrating new markets and eliminating competition once there to raise prices later in monopolistic circumstances. Such practices are feasible when the exporting firm enjoys a dominant position in its domestic market. This condition is acquired either by structural barriers that prevent market access to firms from other countries, or by anticompetitive practices that prevail in the firms’ market. In both circumstances, the exporting firm has the ability to impose prices and other commercial conditions into its market, which are sufficient to enable it to set lower prices in the foreign market, or to enter into concerted action with the dominant firms in the foreign market.

Practices involving collusion are the result of agreement between competitors in the domestic market (export or import cartels) or between competitors of the domestic country and the foreign country (international cartels) with the purpose of increasing market power by dividing markets or fixing output and prices. This type of practice is difficult to counteract, basically because it is achieved by taking advantage of a position of impunity or immunity with respect to competition laws. Assuming the existence of competition laws in the countries involved, because such practices are detected within the foreign country, it will be difficult to enforce them because the competition agency has to verify the existence of monopolistic practices or market barriers in other jurisdiction.

When monopolistic practices are not verified in the country where the distortion was created, firms may act freely. If, for example, discriminatory prices are detected in the importing country, competition laws are irrelevant. First, due to the jurisdiction problem, and second because such prices have no anticompetitive impact on the domestic market of the exporting country. Indeed, the peculiarity of this kind of discrimination is to distort only the conditions of production in the importing country, but not the trading partner’s market, where the competition law could be applied. In the case of collusion agreements is the same, and difficulties are greater if the practices in question are implemented by firms protected by rules of exception which exclude them from the sphere of competition law, i.e., state monopolies, export cartels or enterprises in sectors or activities which have been exempted.

The provisions of the Protocol dealing with practices with extraterritorial effects touch upon the surface of these issues. They seek to solve problems whose causes may well be attributed to a lack of competition enforcement in the countries where the investigated firms operate. As usual, it is more costly to remedy facts afterwards than preventing them. Relying exclusively on the Protocol provisions may be risky. More effective would be to apply common standards where the practice is originated and leave only complex cases to the Mercosur institutions. By addressing anti-competitive practices with standards directed at the behavior of firms in their turf, governments eliminate a typical root of potential market fragmentation.

The only successful experience in this direction has been that of Australia and New Zealand in the framework of their free trade area agreement of 1983, which established a mandate for the harmonization of restrictive commercial practices. This mandate resulted in New Zealand's adoption in 1986 of a new competition law assimilated to the terms of Australia's laws. In 1988, both countries adopted a protocol following which the application of antidumping measures was eliminated, and agreement was reached regarding the application of competition laws to conduct affecting trade between the countries. Furthermore the powers of inquiry of the agencies were extended to jurisdiction in the other country by requiring companies subject to inquiry to provide information. Other attempts to achieve harmonization are reflected in the NAFTA, the Group of Three and the Andean Group (see Tineo, 1996). However, there are no lessons to be drawn from these endeavors. The case of Australia and New Zealand exhibit many helpful analogies in treating the subject of integration agreements for which application does not depend upon supranational organs, as in the case of Mercosur.

To this end, the Protocol calls the member countries "to adopt within the period of two years, common rules for the control of acts and contracts, of any kind, which may limit or in any way cause prejudice to free trade, or result in the domination of the relevant regional market of goods and services, including which result in economic concentration, with a view to preventing their possible anticompetitive effects in Mercosur." Furthermore, it also calls the countries "undertake, within a two year period, to draft joint standards and mechanisms which shall govern State aid susceptible to limit, restrict, falsify or distort competition and to affect trade between the States Parties." These provisions set up the basis for a comprehensive competition policy harmonization to be completed by the end of 1998. The process, as clearly stated, goes beyond the treatment of anticompetitive practices to include structure concerns and competition advocacy. For Mercosur countries this means a long road of work.

At present competition is approached very differently by Mercosur countries. For instance, Uruguay and Paraguay do not have competition laws in place, leaving this process to be governed by the market following trade liberalization and deregulation. In Argentina 5 and Brazil 6, although competition laws exist, their components, enforcement mechanisms and policy goals differ greatly. In Argentina, the competition regime focuses only on preventing anticompetitive conduct. At present the Argentine Congress is working on a bill to improve the enforcement of the current law, clarify enforcement standards, introduce the evaluation of economic concentrations, and make the Competition Commission independent from the Ministry of Economy. In Brazil, the amendments introduced to the law in 1994 made competition policy a critical complement of its trade and investment policies. They raised CADE to a status independent of the Ministry of Justice, of which it had previously been a subordinate part. CADE was given competition advocacy powers to ensure that conditions encouraging competition would not be affected by other provisions connected with privatization and regulatory reform of natural monopolies. Regulations were introduced to control economic concentrations, anticompetitive practices were more broadly defined, and CADE was given more precise standards for analyzing and evaluating such practices. This has made Brazil’s policy contrast with the rest of Mercosur, being the only one showing initial signs of the coherent approach conceived by the Protocol.

At a Mercosur level, each country’s approach remains also to be seen. It could be possible that countries apply identical standards for both domestic and external trade restraints or differently for domestic and external trade, restricting the protection of competition in favor of domestic consumers and permitting anticompetitive practices aimed at boosting the export capacity of domestic firms. In addition to the substantive differences in approach to the fostering of competition, countries may differ in their enforcement methods. It could be possible that some countries, though their laws may penalize the same practices, differ in how to define them and measure their effects on competition. Similarly, in some countries the laws may not be enforced or the agencies may not be sufficiently trusted. In some countries, industrial policies may be used to foster competition. In some countries the focus is more on market structures than on the behavior of firms. In some countries sizable sectors may be exempted from the competition regime, while in others specific anticompetitive practices may be subject to administrative authorizations.

These differences may be more likely to be encountered when certain practices are deemed to spur trade and lead to more efficient production as is the case of mergers and other economic concentrations mentioned as well in the Protocol. The quest for monopolistic profits based on each country’s type of action or omission as regards of competition triggers a number of practices that affect market integration. Since fostering competition conditions in integrated economies depends not only upon the observance of antitrust rules, but also upon the continual surveillance of trade and investment barriers, a competition advocacy component is included in the Protocol.

Regional Competition Advocacy

The use of common competition rules to correct the imbalances of the integration process can lead to different styles of law enforcement. Two factors, advanced — among others — by Rodriguez & Williams (1996), highlight the risks of an exclusive focus on prosecuting anticompetitive practices at any cost. First, the evidence linking trade growth to anticompetitive practices is yet to be gathered. Second, there is also lack of data on the welfare costs from extraterritorial anticompetitive practices compared with the cost of prosecuting and sanctioning them. It is true that price discrimination and cartels are harmful practices to the integration process and they deserve scrutiny. However, consideration must be given to the costs and limited technical capabilities of both the Mercosur institutions and the national agencies in handling these cases.

A more promising alternative is to promote regional competition advocacy, at least during the consolidation period of integration, for the reasons discussed in section 2. As we saw, in a context of unfinished reforms, transparency is the main instrument for controlling both anticompetitive practices and inconsistent government policies. To this extent, a technical committee on public policies that distort competitiveness has been operating since 1995. Its goal is to identify government measures affecting competition and decide whether they are compatible with the operation of the custom union. The scope of measures examined include exceptions granted under the Mercosur regime, taxes, government procurement and other discriminatory policies. This committee has advanced little in its agenda as there are many conflicting topics involved. However, there are two areas related to firms’ performance not covered by any Mercosur instrument which deserve attention. The former is the harmonization of regulatory frameworks to natural monopolies run either by State enterprises or by privatized firms. The latter are the treatment of dumping actions and the progressive elimination of the dual standard of analysis for export prices and domestic prices for one favoring the application of a harmonized competition regime. The Protocol is particularly keen in regard to State subsidies that affect competition conditions. If the CDC is successful in identifying and eliminating the distorting fiscal incentives existing in Mercosur countries, it could turn this committee into a center forum to advance further initiatives in those untouched areas.

Implementation

The harmonization process of such diverse areas of competition requires the accomplishment of a number of prior sub-processes like, for instance, those listed in article 30 of the Protocol. The program of cooperation therein described will allow countries to identify grounds of commonality and divergence regarding the goals and scope of competition and its implications for Mercosur integration. It will also lead to the identification of exceptions which might allow those anticompetitive practices that affect the market of another country, i.e., state monopolies and import and export cartels. These efforts may engender a coherent set of regulations on conduct and structure as well as common procedural rules and enforcement standards to be applied by independent agencies. The final outcome will be a common approach to the treatment of anticompetitive practices, i.e., horizontal and vertical practices and abuse of dominant position, especially those of a discriminatory nature as well as methodologies for merger evaluation.

Although not explicit in the Protocol, the above cooperation program includes four clear cut stages of implementation at the national level. A crucial peculiarity of this process is that each stage can only be developed after the attainment of the preceding one. The first stage is the enactment of a national law containing the provisions required by the Protocol. The second is the creation of an autonomous and properly staffed antitrust agency. The third is the establishment of transparent operational routines by the antitrust agency, such as the publication of annual reports, guidelines to orient the private sector, consistent enforcement criteria, etc. The fourth is the consolidation of competition advocacy as the fundamental domestic task of the antitrust agency.

4. Conclusion

Until a few years ago antitrust was just a domestic issue in some advanced economies. Nowadays it has a new title — competition policy — and became a noteworthy topic on the international agenda. This change was provoked by several factors, such as the simultaneous trends toward globalization and regional integration, the rebirth of capitalism in Eastern Europe, the Latin American economic reforms, the creation of the World Trade Organization and the new analytical instruments for dealing with regulatory reform in open economies.

It is therefore a new subject everywhere. At the WTO, the debate about the effectiveness of a multilateral agreement on competition rules is yet to begin. As Hoekman (1997) observed, the possible outcomes may vary from doing nothing to a fully harmonized international law, and a consensus view is far from emerging. Within the scope of the Free Trade Area of the Americas (FTAA), a working group on competition policy was established on May 1996. Its mandate includes, among other initiatives, the exchange of views on the operation of competition policy regimes in the region, the identification of cooperation mechanisms among governments and the elaboration of specific recommendations on how to proceed in this matter.

In this context, if the institutional innovations discussed in this paper are accomplished, the Mercosur Protocol will turn into a basic reference on the harmonization of competition policy among trading partners. Otherwise, it probably will add complexity to an already intricate theme.

References

Amstrong, M., Cowan, S., and Vickers, J. (1994), Regulatory Reform: Economic Analysis and British Experience, The MIT Press.

Baumann, R., Rivero, J., and Zavattiero, Y. (1997), "As Tarifas de Importação no Plano Real", Discussion Paper, Comissão Economica para a América Latina e o Caribe (CEPAL), Brasilia.

Bourdet, Y. (1992), "Policy Toward Market Power and Restritive Practices", in Yves Bourdet (ed.) Internationalization, Market Power and Consumer Welfare, London: Routledge.

Comisión Economica para America Latina y el Caribe - CEPAL (1994), "La Crisis de la Empresa Pública, las Privatizaciones y la Equidad Social", Dicussion Paper, Série Reformas de Política Pública 26, Santiago de Chile.

Chudnovsky, D., Porta, F., and Chidiak, M. (1996), Los Límites de la Apertura, CENIT, Buenos Aires.

Hoekman, B. (1997), "Harmonizing Competition Policy in the WTO System", World Economic Affairs, Vol. 1 (2), Winter.

Klingler, R. (1996), The New Information Industry, Brookings Institution: Washington.

Kume, H. (1996), "A Política de Importação no Plano Real e a Estrutura de Proteção Efetiva", Discussion Paper n. 423, Instituto de Pesquisa Econômica Aplicada: Rio de Janeiro.

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Footnotes

Mr. Tavares de Araujo has previously held positions with the Brazilian government, as well as the Inter-American Development Bank and the United Nations Economic Commission for Latin America and the Caribbean. He has a Ph.D. from London University.

Luis Tineo, Consultant. Mr. Tineo was previously general counsel to the Venezuelan Ministry of Economic Planning. Prior to joining the OAS Trade Section he was with the Inter-American Development Bank.

¹ Regulatory reform is a sensitive issue everywhere. In the United Kingdom, the rules for the telecommunication industry have been on the public agenda since 1981, when British Telecom (BT) was split from the Post Office, and the privatization process lasted until 1993, when the final tranche of BT’s shares was sold. According to Armstrong et al. (1994), policy in this area is still far from settled. In the United States, the debate which led to the 1996 Telecommunications Act has been alive since 1982, when the local telephone companies were separated from AT&T, and, apparently, will not be concluded soon. For instance, Klingler (1996) argues that the Act is focused on competition problems that were relevant in the past and does not address the current structural changes of the information industry.

² It should be noted that, in most cases, the first tariff change was due to the establishment of Mercosur Common External Tariff in January 1995. Afterwards, subsequent changes have been made through continual restatements of the list of exceptions to the common tariff.

³ For a discussion about the use of economic indicators as competition policy instruments, see Tavares de Araujo, 1995, 1996.

⁴ Both bodies are composed by representatives from each member country. However, in the case of the CDC, countries’ representatives must come from the respective competition agencies.

⁵ Law for the Protection of Competition, No. 22.262, July 7, 1980. Argentina passed the region’s first law on competition in 1919, being amended in 1947 and 1980 (see OAS, 1997).

⁶ Law for the Prevention of Practices Against the Economic Order, No. 8.884, June 11, 1994. Prior to this law, Brazil enacted its first law on competition in 1962, being amended in 1990, 1991 and 1994 (see OAS, 1997).