International Trade Aspects of Competition Policy

Recently competition policy has become an important trade policy issue, since many policy makers now see competition policy as an important instrument to secure market access' to foreign markets. This paper analyzes this issue both from a theoretical point of view and from the review of the recent development of the Japanese competition policy. While voluntary trade cartels have a strongly negative international spillover, export cartels or international cartels do not constrain market access,' and export restraints were often used to ameliorate trade frictions. Moreover, domestic cartels often have a positive international spillover on the export from foreign countries. Thus, the recent focus on competition policy from market access' concern is misleading. The Japanese government has substantially strengthened its competition policy in the 1990s, especially in terms of drastic reduction of cartels exempted from the application of Antimonopoly Law and in strengthening its enforcement against cartels. While these changes of competition policy would be highly beneficial to the Japanese economy, it is not clear whether such policy changes could have a substantial impact on market access.'