Bert Foer Remarks from ICN Advocacy Working Group Workshop

On December 13, 2013, AAI President Bert Foer[1] spoke at the ICN Advocacy Working Group Workshop in Rome.  His remarks follow.

While there is universal agreement within the ICN that we want to create or improve something we call a “Competition Culture,” my thesis is that we need to become far more nuanced in our understanding of what this means in the context of an organization that represents well over 100 different nations, each with its own attitudes toward private property, the role and efficacy of markets, and confidence in governmental institutions.

I took an audio study course recently, titled “Customs of the World: Using Cultural Intelligence to Adapt, Wherever You Are.”[2] The teacher, David Livermore, President of an organization called the Cultural Intelligence Center, consults with multinational businesses trying to adapt to foreign cultures where they do or hope to do business. There are many corporate self-help books and courses that work over this territory. Professor Livermore provided about ten pairs of key cultural values that differ among societies. One value, for example, is time, where the pairing is “clock time” and “event time.” In some cultures, people place a huge value on punctuality whereas in some other cultures, people can never be “on time.”  In the latter, an event begins when all the people needed to be there arrive.  In “on time” cultures, the time orientation is clock time rather than event time.  Certainly a culture can fall somewhere in between and its position on the scale can change over time (so to speak). Another value pair, which is central to our discussion, is how much a culture emphasizes competition as opposed to cooperation.

Professor Livermore says, “Cultures that are more oriented around being cooperative place a priority on nurturing, supportive relationships while cultures that are more oriented around being competitive are more focused on achievement, success, and results.”[3] No culture is absolutely competitive or absolutely cooperative.

“Cooperative cultures and individuals are concerned about results and success but believe collaboration and reciprocal relationships are the best way to get there. Competitive cultures are concerned about teamwork and people working together effectively but believe competition is the best way to motivate people to work together.”[4] Livermore suggests that Thailand, Sweden, and Denmark are some of the most cooperative cultures on this scale, whereas most of the Western world of business is largely organized around a competitive model. Perhaps the most important point to draw from this is that each nation already has a competition culture—to some degree.

At root it is individuals who manifest cultural values.  In the competition/cooperation context, one individual may want to work hard, enjoy the best the world has to offer, and get ahead in a dog-eat-dog world while another may favor dialogue, sharing, and human rights,. It is the way these kinds of individual attitudes cluster and aggregate that allows us to identify a cultural trait.

Let’s step back a moment and ask: what is “culture” in the context of competition culture?  One well-respected definition of organizational culture goes as follows:

A pattern of shared assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to these problems.[5]

When we discuss competition culture, we are talking about widely shared assumptions about the role that competition should play in a particular society. And we can immediately see a number of complexities when we begin to apply the concept.  I will try to specify six of these complexities, each of which undoubtedly deserves greater amplification.

1.             Malleability of a Competition Culture.            Competition may be an important value within a culture, but its relationship with cooperation may vary from culture to culture.[6]  Competition is not to be viewed as a silo, isolated from other values. An example of interaction with other values would be the effect of such political values as trust in government versus trust in private enterprises. Where government is held in high regard, intervention in markets is likely to be given more importance than in nations where government is seen as corrupt, incompetent, or relatively unnecessary.

It was once thought that market systems and democratic systems must walk hand-in-hand;[7] that, like love and marriage in an old song, you cannot have one without the other. We believe today that this is not true—about politics or marriage. We know, for example, that there is such a thing as an evolving socialist market structure in autocratic China. We also know that some nations operated under a socialist government for a long period, with very little role for competitive markets or individual choices, yet they now boast markets and competition laws.  A key question for the ICN is how to develop a widely shared appreciation for the value of competition if the people in everyday life were long accustomed to a paternalistically directed economy (here is a coupon entitling you to buy a specific product at a specific store at a state-determined price) rather than one that was market-driven. How malleable, in short, is competition culture?

2.            Multiple Cultures within a Nation.                        Another complexity is that many nations contain more than one culture. There may be regional, ethnic, religious, professional and generational differences, for example, and each of these subcultures may be similar with regard to some values, such as punctuality, but may differ on the relationship between competition and cooperation.  The so-called north/south divide, sometimes seen within a single country, often creates varied lifestyles that accommodate different attitudes toward competition. Multiple cultures within a single nation may require compromises on the extent to which particular values will be reflected in laws and their enforcement.

3.            Subcultures as Targets.                        An implication of this observation for a competition authority that wishes to expand the appreciation of competition is that there are different target groups that must be considered. The ultimate long-term goal, from the ICN perspective, should be to develop a national competition culture that places a high value on competition and its protection through law, but the best means toward that goal may be to separate the nation into subcultures that must be individually addressed. In the Advocacy Working Group’s survey, for example, we ask questions regarding appropriate target subcultures, viz., other government agencies, judges, NGOs, and the media, each category presumably requiring its own outreach strategy.

In this context, we should not overlook relations between the staffs of different competition authorities. They too are influenced by their cultural background and the assumptions that they have grown up with about the proper relationship between competition and cooperation. It is not inaccurate to think of the ICN itself as a systematic effort to mold something resembling a unitary competition culture within the targeted subculture of national competition authorities. The difficulty of this task can be seen, for example, in the difference of opinions among ICN members as to whether “consumer welfare” is the only appropriate objective of antitrust. Cultural attitudes toward the role of efficiency vis a vis other values underlay these differences.

4.            Generations and Competition Culture.            Underlying national traits—the kind of characterizations we sometimes think of as stereotypical of a people—tend to change rather slowly. We need to determine whether the competition/cooperation scale is one that changes only very slowly or is more susceptible to education in the broadest sense. We hear, for example, about generations such as the so-called boomer generation of the post-World War II era, having their distinctive culture. And we generally understand that older people, who have imbibed their national traits much longer, are likely to be more embedded in an older set of values than the younger generations. This suggests that targeting different generational groups for change will present different challenges, but may also be a prioritizing tool.[8]

 5.             Where is Competition?            When we speak of a competition culture, we must be careful to note that much depends on where competition is lodged and where cooperation is lodged. Countries compete with each other in sports, economics, and war, but they also cooperate by providing fora (the Olympics, the United Nations), trading blocs, and rules (e.g., of trading or of military conflict). Bringing the discussion to antitrust, in some countries it may be traditional for private businesses to coordinate their activities very closely, in what may be a cartel-like atmosphere or a vertical alliance, the better to compete in a global marketplace, with the result that the companies are competing in some ways, but also cooperating.

Moreover, within companies themselves, the organizational structure may be unitary and hierarchical with everyone a loyal part of the team in an organization that seems almost to be sacred; or the firm may be organized so that the internal parts are highly competitive with each other.  In Washington, DC, there are law firms known for their close partnership adhesion, and others where the operative mandate is “You eat what you kill.” In addition, a government may play an active role within a particular economy, with state-owned or state-controlled enterprises competing with private businesses on a level playing field; or something like the opposite may be the case.  Within a culture, therefore, it is necessary to seek out where competition is or is not playing an important role.[9]

6.            Legitimacy and Legality.            In a book with the title “Co-opetition,” Brandenburger and Nalebuff observe that business is both War and Peace. “Business is cooperation,” they say, “when it comes to creating a pie and competition when it comes to dividing it up.”[10] It is a cute title and gives linguistic emphasis to one way the two poles of the competition/cooperation scale may interact.

But we do not want to carry the cultural scale too far. It was not generated by cultural anthropologists for the purpose of guiding antitrust policies. Sometimes the competition/cooperation scale seems to be made especially for antitrust analysis. For instance, in some countries, trade associations play a coordinating role among competing businesses, with competition law defining the legal relationship between competition and cooperation by holding that it may be legitimate for businesses to come together cooperatively to discuss technology, or even to agree on an industry standard, but they must not discuss price or key terms of trade.

In other areas of antitrust, it is not so easy to apply the competition/cooperation scale in a direct manner. For instance, when a monopolist abuses its dominance, the monopolist by definition is neither competing nor cooperating, so it is difficult to say that an antitrust intervention in this instance defines the difference between competition and cooperation. Yet at a deeper level, the intervention probably reflects cultural attitudes that are negative toward greatly centralized power such as monopoly, hence more favorably disposed toward competition.

This leads me to suggest that one can look at the mission of a national competition policy as drawing an authoritative line between what is and is not a legitimate form of competition, reflecting in what is likely to be a very imperfect way a culture’s attitudes toward competition.  Legitimacy is not merely a legal but also a normative concept, growing out of a society’s culture.

Because of the centrality of legitimacy, it is a mistake to think of competition culture as a kind of Platonic ideal. All we need do is create a competition culture around the world and markets will flourish and people will be happy. No! Competition cultures already exist and they are not alike.

Professor Eleanor Fox and I recently helped produce an ICN video for developing countries. Two speakers in the video said that there is no competition culture in their countries.A speaker from Egypt, before the recent uprising and its tumultuous aftermath, said there is not even a word for “cartel” in Arabic.  This is not to say, however, that there is no competition in these countries.  In fact there are competition laws and competition agencies, although the civil society may not share many assumptions about the value of markets or competition. Indeed, in many countries there are common problems that inhibit the growth of a competition culture: widespread corruption; a few families own nearly all the businesses so that all the owners are friends; a pro-competition whistleblower puts his very life at risk; the idea of a leniency program seems to be, at the very least, premature.  Even in situations like these, enforcement of competition law – e.g., to reduce the price of cartelized commodities—can demonstrate real value to individuals who in time can come to share the assumption that competition is better than price-fixing.

Conclusion - The ICN needs to continue its work of creating a common vocabulary and sense of community among antitrust officials so that it can move pragmatically toward ways in which a variety of competition cultures in nations that compete with each other can jointly help markets bring desired results to their citizens. We cannot allow ourselves to become defenders of the status quo in the name of a narrow competition theology. For many cultures, concerns about corruption, crony capitalism, firms that are too big to fail, and the growing gap between wealthy and poor will—and should-- affect attitudes toward market economics and even the goals of competition law.

If we wish to influence the development of more closely aligned  national competition cultures, we need to learn from cultural anthropologists and other social scientists in order to gain a realistic understanding of the varieties of competition culture that exist and how they might be changed.

I close with a question. In given nations, will relatively new laws about competition change the culture or will the underlying culture limit the effectiveness of the laws? Put differently, is the road to global harmonization of trade laws impeded only by the historic desire of nations to protect their own sovereignty, or are there more enduring problems of cultural diversity that must be contemplated? The evolving experience of the ICN will help us ascertain the degree to which an existing position on the competition/cooperation cultural scale is malleable. We are on an exciting and perhaps transformative venture.

 

Notes:

[1] Non-Government Advisor (NGA) to the International Competition Network and President, The American Antitrust Institute, www.antitrustinstitute.org.

I thank Eleanor Fox, Maurice Stucke, and Richard Brunell for their comments on the draft, but of course accept full responsibility for the paper.

[2] One of the Great Courses lectures by the Teaching Company.

[3] Id., Course Outline at 36.

[4] Id, 37.

[5] Schein,E.H., Organizational Culture and Leadership 246 (2004), quoted in Kae Hammerich and Richard D. Lewis, Fish Can’t See Water: How National Culture can Make or Break Your Corporate Strategy 26 (2013) .

[6] Although outside of the scope of these remarks, it is important to note that competition is by no means the only or most important value to a national culture. Of relevance are fundamental questions such as when certain items should be voluntarily bought or sold. When is competition the problem rather than the cure? When competition is desirable, what facets of competition are most important: e.g., price, innovation, diversity, choice, quality, etc.? All of this points to the problem that the word “competition” often means different things to different peoples.

[7] Only a third of a century ago, the political scientist Charles Lindblom drew a table of politico-economic systems, showing that all polyarchical (democratic) systems and no  authoritarian systems were private enterprise, market oriented. Charles E. Lindblom, Politics and Markets 161 (1977).

[8] When the American Antitrust Institute produced its film, Fair Fight in the Marketplace (see www.fairfightfilm.org), which was directed at a high school level audience, I was at first opposed to including a segment on the Microsoft browser case, because I thought it was too complicated to depict in the time allotted. The filmmakers, a generation younger, thought that this case would be both easy and exciting for our intended audience because of their personal experience with Microsoft products. This turned out to be correct.

[9] The late Robert Steiner, who had been president of a national toy manufacturer before serving as an economist in the USFTC, emphasized the sense in which retailers and their suppliers are in competition with each other to obtain the largest portion of the consumer’s dollar. See Gregory T. Gundlach and Albert A. Foer, Combining Horizontal and Vertical Analysis in Antitrust: The American Antitrust Institute’s Roundtable on the Implications of the Work of Robert L. Steiner, 49 The Antitrust Bulletin 821 (winter 2004). This type of competition receives little if any recognition in the US antitrust agenda.

[10] Adam M. Brandenburger and Barry J. Nalebuff, Co-opetition 4 (1996).