Lanterna Rally

Author: Bernard M. Hoekman

Publisher:

Published: 1999

Total Pages:

ISBN-13:

June 1997 Instead of focusing on hard-core anticompetitive behavior, between 1991 and 1995, Bulgaria's Commission for the Protection of Competition tended to deal with unfair trade practices and contract enforcement problems. Remedies for egregious violations of the law were not dire enough to pressure firms to abide by the law. Recently proposed amendments to the law may strengthen the law's deterrent effect. Hoekman and Djankov investigate the activities of the Bulgarian competition office, the Commission for the Protection of Competition, for the years 1991-95. They provide descriptive statistics on the industry incidence of investigations, the types of behavior investigated, and the frequency with which violations were found and penalties imposed. Although the Commission tried to focus on nontradable sectors and to target both cartel and abuse-of-dominance cases, the remedies they imposed appear to have been rather ineffective. Moreover, instead of focusing on hard-core anticompetitive behavior, much of the Commission's activity centered on unfair trade practices (such as false advertising, trademark infringement, and the behavior of ex-employees of specific enterprises). Many enforcement cases basically dealt with contract enforcement problems. Only a small percentage of cases concerned collusive practices that restricted entry/expansion, such as bid rigging, price-fixing, and market allocation. And remedies for egregious violations of the law were not dire enough to give firms a strong incentive to abide by the law. Recently proposed amendments to the law should go some way toward allowing the Commission to focus more narrowly on anticompetitive practices and to strengthen the law's deterrent effect. This paper-a product of the International Trade Division, International Economics Department-is part of a larger effort in the department to monitor the economics of transition.