Brief Proceedings
LAUNCH MEETING OF THE 7-UP PROJECT
Jaipur, India, December 20-21, 2000.
COMPARATIVE STUDY OF COMPETITION REGIMES IN SEVEN DEVELOPING COUNTRIES OF THE COMMONWEALTH
TABLE OF CONTENTS
I. INTRODUCTION
II. OPENING SESSION
III. SESSION I: WHAT IS HAPPENING IN THE INTERNATIONAL SCENE
IV. SESSION II: WHAT IS HAPPENING IN THE DEVELOPED WORLD
V. SESSION III: THE DEVELOPING COUNTRY EXPERIENCES
VI. SESSION IV: “WHY NEW COMPETITION LAWS?”
VII. SESSION V: CROSS-SECTORAL ISSUES
VIII. SESSION VI: COUNTRY PRESENTATIONS
IX. SESSION VII: WORKING GROUPS ON QUESTIONNAIRE AND METHODOLOGY
X. SESSION VIII: STRATEGIES FOR PROJECT IMPLEMENTATION
I. INTRODUCTION
1.1 CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE) is conducting a two-year research programme, “The 7-Up Project: Comparative Study of Competition Regimes of Seven Developing Countries of the Commonwealth,” with the support of DFID, UK. The countries selected for the project are: India, Pakistan, Sri Lanka, Tanzania, Zambia, Kenya and South Africa with some contribution from Zimbabwe.
1.2 The launch meeting of the project was organised in Jaipur, India, on December 20-21, 2000. The meeting was organised basically to decide how to implement the project and take it forward to achieve its desired goals. It would provide a common platform for various experts and representatives of partner countries and different organisations and institutions to meet and benefit from one another’s experiences. The main objectives of the meeting were to:
· Orient and familiarize all partners about the whole project and with each other;
· Take stock of the preliminary country papers sent in by the partners;
· To establish the detailed methodology of the field study and plan for the same; and
· Adopt a plan of action for the project and settle terms of reference with the partners.
1.3 The meeting was attended by various experts, competition practitioners, former and present executives of various international organisations such as UNCTAD, WTO, World Bank, and competition authorities of different countries including Australia, Brazil, South Africa, Zambia, India, etc in addition to the project partners. The meeting was designed as a seminar on the first day and as a workshop on the second day. It was segmented into eight sessions and was organised as follows:
1.4 There were five sessions on the first day of the meeting. The Opening Session of the meeting started with a welcome address by Mr. Pradeep S Mehta, Secretary General, CUTS, India. He also introduced the project to all the participants and highlighted the objectives of the project as well as that of the meeting. The other experts who addressed the participants during the session were:
Prof. Frederic Jenny, Vice President, Conseil de la concurrence, France, spoke about the relation between competition law and competition policy;
Mr. Allan Asher, Director, Global Campaigns, Consumers International, UK, emphasised the importance of an effective competition law in today’s world;
Mr. Peter Holmes, University of Sussex, UK talked on how to get optimum benefits from the meeting, especially for the researchers;
Mr. K. C. Ganjwal, Secretary, MRTP Commission, India talked about the significance of the project in the changing global scenario.
1.5 The First Session was titled “What’s happening on the International Scene” and was chaired by Prof. Frederic Jenny. In this session, Mr. Robert Anderson, Counsellor, Intellectual Property and Investment Division, WTO threw light on the ‘State of Play on Competition Policy in the WTO’ and Mr. Rajan Dhanjee, Legal Affairs Officer, Competition & Consumer Protection Branch, Division of International Trade in Goods, Services & Commodities, UNCTAD, highlighted the ‘Outcomes of the UNCTAD’s Fourth Review Conference on the ‘UN Set’.
1.6 The Second Session was on “What’s happening in the developed world” Mr. R. Shyam Khemani, Director, Law and Economic Consulting Group, UK spoke about ‘Dealing with cross-border competition concerns’ and Mr. Bernard ‘Joe’ Phillips, Head of Division, Competition & Consumer Policy, OECD, talked on ‘Fight Against International Cartels’. The session was chaired by Mr. Peter Holmes.
1.7 The Third Session was about “Developing Country Experiences” and was chaired by Mr. Allan Asher. In this session, Mr. George Lipimile, Executive Director, Zambian Competition Commission spoke on the ‘Experiences of Least Developed Countries of Sub-Saharan Africa with Special Reference to Zambia’. Mr. Gesner Oliveira, Ex. Chairman, Competition Bureau, Brazil highlighted the ‘Institutional Challenges for Implementing Competition Policy in Developing Countries like Brazil’. ‘Experiences from India’ were shared by Mr. G. R. Bhatia, Additional Director General (I & R), MRTP Commission, India.
1.8 Session four was titled,“Why new competition laws?” Mr. Sothi Rachagan, CI – ROAP, Malaysia, chaired the session. Here, Mr. Phil Evans, Consumer Association, UK spoke about ‘The UK experience’. ‘The South African Story’ was presented by Mr. Shan Ramburuth, Competition Tribunal, South Africa and Mr. Pradeep S Mehta talked about ‘What’s Happening in India’, where he highlighted the proposed competition law in India and its likely implications.
1.9 “Cross-sectoral Issues” were discussed at the fifth session of the meeting, which happened to be the last of the day. Mr. Cezley Sampson, Lead Advisor, Privatisation and Regulation, Presidential Parastatal Sector Reform Commission, Tanzania highlighted the ‘Roles of Competition Authority and Utility Industry Regulators in a Liberalised Market Environment in the Context of a Developing Country’. The other speaker of the session was Mr. Luis Tineo, The World Bank, Washington. The session was chaired by Mr. R. Shyam Khemani.
1.10 On the second day of the meeting, that is, December 21, 2000, there were three sessions, of which Session Six was for “Country Presentations”. It was divided into two parts. In this session, the representatives of the partner organisations from the project countries presented their preliminary country papers and highlighted the important issues. In the first part of this session, Mr. Sajid Kazmi, Sustainable Development Policy Institute, Pakistan, Ms. Thushari de Zoysa, Institute of Policy Studies, Sri Lanka, Mr. Moses Tekere, Trade & Development Studies Centre, Harare, Zimbabwe and Mr. Manish AgarwaL, Delhi School of Economics, New Delhi, represented their respective countries.
1.11 The response panel of the session constituted of Prof. Frederic Jenny, as the chairperson and Mr. Gesner Oliveira, Mr. Bernard Phillips and Mr. Phil Evans as the other members of the panel.
1.12 In the second part of the session, presentations were made by Mr. David Ong’olo, Spellman & Walker Co. Ltd., Kenya, Mr. Simon Roberts, University of Witwatersrand, South Africa, Mr. Cezley Sampson, Tanzania and Mr. Muyunda Illilonga, Zambia Consumers Association, Zambia. The response panel constituted of Mr. R. Shyam Khemani, as the chairperson and Mr. Peter Holmes, Mr. Allan Asher and Mr. Robert Anderson as the other members.
1.13 In the Seventh Session, three working groups were made to discuss the methodology of field surveys, etc and frame questionnaires. Each group was given specific topics to discuss and was required to give the highlights of the discussions in the meeting. The final outcomes of the working groups were presented in a joint session.
1.14 Session eight was the last session of the launch meeting and was chaired by Mr. Pradeep S Mehta. In this session, the strategies for the implementation of the project and methodology for research were discussed. At the end of the session, the participants expressed their hope and optimism about the success of the project in achieving its goals. The meeting ended with the closing remarks and vote of thanks by Mr. Pradeep S Mehta.
II. OPENING SESSION
2.1 The meeting started with a welcome note by Mr. Pradeep S Mehta. He introduced the project to all the participants and highlighted the objectives of the project as well as those of the meeting. He explained that the meeting was meant for evolving design and planning for implementing the project. He also explained the desired way for the progress of the meeting. He said that the countries selected for the project have some commonalties like high levels of concentration in most sectors of the economy and a number of differences. The countries could gain to a large extent from the experiences of one another. He wished that the meeting would give the maximum possible output at the end of two days.
2.2 He then requested Prof. Frederic Jenny to say a few words. Prof. Jenny complemented that it was an important project and that the launch was definitely an important aspect of the project. He suggested that the goals of competition policy should be identified in the context of developing economies and it should be seen as to how the competition law could prevent the abuse of the economies by the MNCs and how it could increase welfare of the consumers. He said that the effectiveness of competition law should be seen as an instrument for development of economies. He also commented that he was struck by the diversity among the project countries and to find the best way forward was what was required.
2.3 Mr. Mehta then introduced Mr. Allan Asher and requested him to put forward his views. Mr. Asher observed that if the project emerged successful, it would probably change the whole world. He said that the project would be replicated many times if it were successful. He stressed that many factors like price fixing, bid-rigging, market abuses, etc. affect consumers in particular and the country in general. This alone is a good reason to look at one aspect of competition policy, which is the competition law. He commented that “competition policy is a means to an end and not an end in itself.” He said that the whole country was being penalised for the lapse in enforcement of competition policy and complemented that it was appreciable that the project entwines academicians, civil society, inter-governmental organisations, etc. He opined that there are tough questions to be asked and that the countries might not be receptive at the beginning. But once they understood the issues clearly, they would certainly agree. He assured of Consumers International’s co-operation in implementation of the project.
2.4 Mr. Peter Holmes, the project overseer, congratulated CUTS for taking up such an ambitious project and stressed on how important it was for the researchers to interact with each other. He suggested that in the meeting, the bulk of questions should come from the researchers and the speakers should try not to lecture the participants but emphasise on the exchange of views and make their presentation as useful for the participants as possible. He said that the project aimed at providing technical assistance to the developing countries and for this, the researchers should also produce academic reports, which could be used in Universities and could serve as useful inputs for the Governments.
2.5 Mr. Robert Anderson said that more or less, all important aspects were covered and suggested that it was time for the researchers to introduce themselves to the participants in order to facilitate the purpose of the meeting.
2.6 Mr. K. C. Ganjwal welcomed all on behalf of MRTP Commission, and the Government of India. He said that CUTS has taken up the project at a very crucial time. The proposed new Competition Law for India would be taken up at any time by the Cabinet for discussion and the project would enable CUTS to give useful suggestions for the new competition law.
2.7 To summarise, the issues raised during the discussion can be broadly classified into the following sub-headings:
Objectives of the project
2.8 The objectives of the project are to compare the competition regimes in the select developing countries with a view to:
· assessing the commonalities and diversity in the competition regimes in seven countries under the study;
· learn from the success and failure stories of each country being studied; and
· suggest ways and means to improve the competition culture in these countries.
Objectives of the Meeting
2.9 The core objectives of the project were:
· Orienting and familiarising all partners about the whole project and with each other.
· Taking stock of the country papers sent in by the partners.
· Establishing the detailed methodology of the field study and plan for the same.
· Adopting a plan of action for the project and finalise the terms of reference with the partners.
Goals of competition policy
2.10 From the developing countries’ standpoint, the goals of a competition policy could be as follows:
· Creating a level playing field by providing small and medium scale enterprises an opportunity to compete with powerful multinational corporations.
· Enhancing efficiency of the business enterprises and of the economy as a whole.
· Consumer welfare.
· Enfranchising those who have so far been economically disfranchised on this issue (e.g., competition policy complementing the poverty reduction objectives of the government).
Commonalities and differences
2.11 Countries selected represent a broad spectrum. There are two large developing countries, four mid-sized developing economies and two least developed countries. They have some commonalties such as high business concentration in most sectors of the economy. But they have a number of differences including:
· Economic policy objectives: e.g., Pakistan has a policy of encouraging large establishments so as to help them gain economies of scale, whereas South Africa has a policy of encouraging small and medium scale enterprises to flourish and underserved population to better utilise the economic opportunities.
· Incentive mechanisms: e.g., price control, promotion of employment, restricting interlocking relationship between firms and closely monitoring financial institutions.
· Institutional structure: Some competition authorities are independent of the government whereas some are not.
· Remedies: Various remedies are provided depending on what are the objectives of the competition policy. Such variables as effectiveness, design, goal and interface with domestic realities have been taken into consideration while providing the remedies to the affected group(s).
Issues to be taken into consideration
2.12 Issues to be taken into consideration can be broadly classified into the following clusters:
2.12.1 Fundamental issues
· Competition policy should not be too narrow in its focus. It should complement and supplement the broader development objectives.