Press Releases : March 2007

“There is no perfect competition and markets cannot be left alone for determining better market access. There is a need to develop market-friendly systems for the benefit of all the stakeholders. In most developing countries, laws were drafted or applied in a business-friendly manner, which does not help economic development”, said Dr Supachai Pantichpakdi, Secretary General , UNCTAD.

Panitchpakdi was speaking at the inaugural session of a Research Symposium, “Political Economy Constraints in Regulatory Regimes in Developing Countries”, organized by CUTS Institute of Regulation and Competition here.

The symposium is a part of a research programme entitled “Competition, Regulation and Development Research Forum (CDRF), to stimulate research and deliberations on competition and regulatory implementation issues in developing countries.

Most developing countries have adopted market-oriented reforms as part of the globalization and liberalization process. Nevertheless, due to various reasons, distortions arise in the working of the market process. Developing countries pose unique challenges for competition and regulatory law enforcement. What matters is proper design and implementation of competition and regulatory regime, suitable to the needs of the developing countries.

“The economic landscape is undergoing changes in various economies and government has undertaken activities to counter market failures such as implementing of competition law or policies in various jurisdictions” observed Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister of India. “With the advent of a Competition Law in India, in the near future, we would face problems between the sectoral regulators and the competition authority. To tackle this, it would be necessary to make the legislations very clear at the initial stage”.

Dr. Supachai acknowledged the work of CUTS for raising the critical consumer voice in international fora. He elaborated about the political will problems that he had to face in implementing the competition law in Thailand. This is a problem that is faced by large number of economies, even including India.

Mr. Panitchpakdi also referred to the efforts of UNCTAD in developing healthy competition culture through their work on competition law & policy. He hoped that the key learnings of this symposium would enhance the already fruitful cooperation between UNCTAD and CUTS.

Other speakers, who spoke at the opening session included Dr Fredric Jenny, Judge French Supreme Court; Dr Nitin Desai, Roger Nellist and Pradeep Mehta, CUTS expressed their views on economic development and competition issues in Developing Countries.

The first technical session covered issues of “Political Economy Constraints in Competition and Regulatory Regimes and Constraints faced by Competition and Regulatory Agencies”.

In all seven papers were presented. The objectives of enacting Competition Law and Policy were discussed and the potential conflicts between promoting efficiency and public interest objectives were highlighted. The debate focused on whether in a developing country competition law and policy can be used for poverty reduction. The opinion on a direct link was divided, although a suggestion was made that a consistent application of competition law can lead to greater access to the previously disenfranchised people.

Political governance approach to competition policy suggests that the former merits attention for tackling to tyranny of vested interests, promoting economic efficiency for producers and consumers. “Competition policies in developing economies should be judged explicitly against its contribution to tackling the tyranny of vested interests for better poverty reduction outcomes”, said Max Everest Philips of the DFID, UK.

It is widely recognised that competition policy has an important role to play in both developed and developing countries. There is however a crucial difference between the two when it comes down to enacting and implementing such laws. Developing and transitional economies often fall short in implementing such laws for several political and economic constraints, said Valentina Zoghbi of the International Bar Association. Other important issues like, regulatory capture and public interest were also discussed.

“High levels of market concentration in many industries across the manufacturing sector, as well as in the service sector and even in agriculture require a strong focus on the structural features of the market”, said Urmila Bhola from the Competition Tribunal South Africa. In this light it is essential that competition authorities establish credibility and reputation to acquire legitimacy in their on specific context.

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