Competition Law and Economic Regulation

Competition law and economic regulation are two legal tools the government can utilize to supervise the market. Competition law seeks to reinforce the operation of the market mechanism by proscribing certain anticompetitive behaviors and preventing firms from abusing its dominant position. Economic regulation, on the other hand, usually involves direct and coercive changes from the government in certain industrial sectors, especially to resolve problems regarding market failure. The main issue addressed in this paper is the conflict between competition policy and regulatory policy. In particular, in the 1980s, many traditionally highly-regulated industries were faced with the trend of deregulation and liberalization. Many Eastern Asian countries, having adopted developmentalism in the past, are notably challenged by the concurrent application of competition law and economic regulation. In fact, Taiwan itself is among one of these nations. By comparing the decision of Trinko v. Verizon of the United States Supreme Court to the holdings of Deutsche Telekom as well as Telefónica of Justice of the European Union, the underlying policy decision and the discourse shift can be seen by analyzing the reasoning of both courts. Under such circumstances, competition law is served as a cross-industrial and overarching legal framework to maintain market mechanism. The main focus of this paper is therefore to discuss how competition law interact with other regulatory tools when entering each industry. The concrete legal representation reflecting such issue in Taiwan is present in Article 46 of the Fair Trade Act, which has undergone two revisions, gradually transitioning from respecting the regulatory framework of each industrial authority to adopting the principle of prioritizing the Fair Trade Act. In fact, the competition policy indeed plays a more important role than ever. Nevertheless, this paper argues that basing the discussion on the traditional legal system rules such as “economic basic act” and “lex specialis derogat legi generali” should be avoided. Similarly, it is not adequate to reach the core of this issue by solely looking at the legislative purpose of the Fair Trade Act. Instead, this study urges that the appropriate solution can only be found by returning to the analysis of the actual theory between competitive law and economic regulation. Moreover, upon reaching a conclusion to this question, this paper will proceed to further discuss about the application of Fair Trade Act within the existing regulation of Financial Act, Electric Industry Act, and Telecommunications Act in the financial, electronic, and telecommunications industries respectively. This paper compares between the legislative backgrounds of other jurisdictions, supplementing with discussions on economic and competitive law theories. A list of comprehensive factors on deciding whether the Fair Trade Act shall be applied to or exempted is then compiled so as to serve as reference for Taiwan’s legislation. Meanwhile, the power division between competition and regulatory authorities is unavoidable when discussing about this issue, and is therefore included in the analysis in this paper.