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Competition and Corruption - Tina Soreide - 2014 OECD Global Forum on Competition
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Competition and Corruption - Tina Soreide - 2014 OECD Global Forum on Competition

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This presentation by Tina Soreide was made at the first session of the 2014 Global Forum on Competition (27-28 February) which focused on fighting corruption and promoting competition. Find out more …

This presentation by Tina Soreide was made at the first session of the 2014 Global Forum on Competition (27-28 February) which focused on fighting corruption and promoting competition. Find out more at http://www.oecd.org/competition/globalforum

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  • 1. Corruption and Competition OECD, PARIS 28-29.02.2014: GLOBAL FORUM ON COMPETITION Tina Søreide Economist, The Faculty of Law, University of Bergen, Norway
  • 2. The competition corruption dynamics Corruption – the solution when competition control gets tough? Corruption – contracts – profits Corruption – market power - contracts – profits Corruption – lower costs – contracts- markets – profits Corruption – politics – priorities – criteria - contracts- profits Corruption vs other government failures; what’s the difference? – - The character of ‘trade in decisions’ - The more competition is reduced, the more profitable for those involved Competition control; rarely designed to address corruption … but, countries with weak competition control are more exposed
  • 3. Defining corruption LEGAL LEGAL GREYZONES ILLEGAL Honest and professional business conduct Ordinary marketing Marketing targeted at specific individuals: exclusive excursions, sports tickets, gourmet evenings, etc. Unsolicited proposals, with all details of an unplanned project prepared Middlemen and agents, ‘personal relationship is what counts’ Gifts to political parties – by condition of a certain benefit Quid pro quos – a way of covering corruption? ‘Facilitation payments’ – ‘to get the procedures going’ Bargaining on opportunities for reconcessioning (profitable solutions for the firm) Violations of rules of communication (as if they were not important) Persuade politicans at home to put pressure on local gvms. (difficult to prosecute) Acquire secret information about evaluation, use of ‘fronts’ Misuse of ‘facilitation payments’ (makes corruption ‘less illegal’) Expensive gifts to people involved in the tender procedure Buy secret information about competitors’ bids Local partnership with relatives of people with authority Bribes to individuals with influence on the procedure
  • 4. Advantages obtainable - along the whole sector value chain PLANNING FINANCING PROCUREMENT DELIVERY RESULT
  • 5. Implications Corruption & competition - far more than bid rigging • Violation of competition law • Cost reductions, tax exemptions, biased interpretation of law • Politics & national champions Consequences observed in markets Not fought by competition control alone …but anticorruption not enough either Outcome control vs procedure control (ex utilities) Governance vs sector dysfunctions (ex construction)
  • 6. Legal framework - more than penal code and procurement rules - significant variation across OECD countries ; law and enforcement UNDUE INFLUENCE/ CORRUPTION SECTOR GOVERNANCE, REGULATION AND CONTROL UNDUE INFLUENCE AT/FROM THE POLITICAL LEVEL LEGAL APPROACHES PREVENTION DISCLOSURE Competition law, procurement rules, criminalization of corruption, employer liability, Audits, leniency, whistleblower protection, confidentiality-rules, access to information laws Public lobby register, impartiality requirements, independent sector regulation and control Media, watchdogs, whistleblowers, auditors/NAO
  • 7. Liability and sanctions + debarment in public procurement (problem solved in compliance + selfcleaning?) Blame on individuals Protecting markets and innocent employees, avoiding free-riders Heavy fine on corporations Hit profits & bonuses + owners, avoid scapegoats
  • 8. Some other serious policy concerns • The OECD convention is too asymmetrically enforced. Free & fair markets - a public good; bribery abroad is not ok for securing national commercial interests • Financial secrecy facilitates the corruption that hampers competition; too condoned by some OECD governments • Transparency International’s National Integrity Studies across Europe: The barriers against political corruption are too weak • Dealing with corruption as an obstacle to competition is a political matter; it has to start at the top