Pan-African Network for Promoting Competition and Consumer Welfare launched
Mauritius to have a competition law in 2007, says Minister
 

Mauritius, March 30, 2007

Participants from over a dozen countries of sub-Saharan Africa agreed to launch the “Pan-African Network for Promoting Competition and Consumer Welfare” here today.

A resolution to this effect was adopted at a 2-day international conference on the subject held in Mauritius. The conference entitled, “Competition Policy, Private Sector Development and Poverty Reduction in Africa” was organised by CUTS International and the Ministry of Industry, SMEs, Commerce & Cooperatives of Mauritius with the support of the Department for International Development (DFID), UK and the Norwegian Agency for Development Cooperation (NORAD), Norway.

Speaking at the formal opening of the conference, Rajeshwar Jeetah, Minister of Industry, SMEs, Commerce & Cooperatives conveyed that the Mauritian government was committed towards adoption of the country’s new Competition Law in 2007. “Promoting democracy is at the heart of the government’s policy, and the government strongly believes that the competition law would promote economic democracy in the country”, he affirmed. He reiterated the keen interest that the Mauritian Prime Minister has, for the law to be in place at the earliest.

The conference deliberated on the progress of a regional project on competition policy referred to as the 7Up3 project that CUTS has been engaged with implementing over the last two years in seven countries of eastern and southern Africa: Botswana, Ethiopia, Malawi, Mauritius, Mozambique, Namibia and Uganda.

Pradeep S Mehta, Secretary General of CUTS International underscored that research findings of the 7Up3 project strongly suggest that project countries, and indeed others from the developing world should tailor their competition laws in accordance with prevailing socio-economic-political realities, rather than blindly following industrialised country models of competition regime evolution and administration.

“For small countries with resource constraints, it will be useful to explore hybrid laws or hybrid regulators, like in Peru. Mauritius with a total population of 1.2mn is a case in point”, said Mehta. “It would not be advisable for small countries to have many laws to be administered by different regulators”.

During the ensuing discussions, a consensus emerged that for small economies like Mauritius, Malawi, etc. there was a need to explore the possibility of a hybrid law integrating competition, consumer protection and utility regulation.

“There is a strong correlation between the efficiency of competition enforcement and growth and therefore reduction in poverty”, observed Roger Nellist of the Investment Climate Team, DFID, UK. He brought to fore evidences that showed how economies have benefited through an efficient process of competition enforcement.

Practitioners like Peter M Njoroge, Chairman of the Monopolies & Prices Commission, Kenya; Douglas Reissner, Member, Competition Commission of Namibia and experts like S Chakravarthy, former Member of India’s Monopolies & Restrictive Trade Practices Commission of India stressed on the imperative of adopting and implementing effective competition regimes in the region to reap the benefits of privatisation and liberalisation and curb their negative effects.

A need was felt to garner wider support and motivation for pushing national governments to adopt and effectively implement competition regimes in the region. In response, there was a consensus to develop a network of individuals and organisations interested to pursue the cause of competition reforms and consumer welfare in Africa. As a result, the “Pan-African Network for Promoting Competition and Consumer Welfare” was launched, with International Network of CSOs on Competition (INCSOC) being its Secretariat.

PANPROC, as this network was referred to would be a platform to share knowledge and understanding on competition matters and to demonstrate the benefits of a healthy competition regime to the wider public and policy-makers in the region. A Steering Committee of this network would be developed, along with a 5-year work-plan for members to take forward by among other means, linking it with other networks and facilities on socio-economic policy aspects.

The momentum gained through the implementation of the 7Up3 project and demonstrating the benefits of competition to multiple stakeholders in the region would be sustained through national-level workshops to be held in each of the 7Up3 project countries on competition policy and law over a period of the next nine months.

‘Competition Toolkits’ individually tailored for competition administrators and other stakeholders in each country will be prepared to move forward in the right direction to implement competition regimes.

ARE REGULATORS EFFICIENT AND INDEPENDENT?–EFFECTIVE CONSUMER ADVOCACY REQUIRED
 

New Delhi, March 24, 2007

Regulatory agencies face a number of constraints in implementing their mandate. These range from political interests to business interests. Powerful political interest and powerful business interest will attempt to capture regulatory agencies, while disorganised consumers find it difficult to organize themselves into coalitions due at to a number of reasons.

It was in this context the symposium emphasised the role of consumer advocacy in attempting to bring consumer interest to the forefront. Another theme that cut across all the different sessions of the symposium was ‘political will’.

MEDIA PLAYS A CRUCIAL ROLE

Experts highlighted that despite all good intentions in framing competition policies, their implementation was dependent upon the will of the government to take the process forward. India’s example, where the fiercely independent media played a major positive role during the transformation was cited as a lesson for other developing countries.

Local conditions or the institutional context was another theme that reverberated across the sessions. In designing an institutional framework for a new regulatory agency, a US type independent regulatory agency could be an option, as could regulation by contract. Besides these two polar cases, a hybrid system combining attributes of the two was proposed as a model for utility sectors especially water.

In the water sector, private participation is most frequently structured as a concession or lease contract, to be monitored by specialized regulatory agencies or courts. But most governments have not used contracts since they are incomplete and compliance is voluntary and it is accepted that welfare outcomes are better under a regulatory agency.

In judging performance of a regulatory agency, the outcomes could be quantitative but what variables determine performance may be subjective. It could be overall FDI as one paper argued or it could be the effect on price, quality of service, access to the services etc. Which outcomes matter or are important would again be a function of the local context.

DON’T AIRLIFT EXPERIENCE FROM RICH COUNTRIES

One area of future research highlighted in the discussion was to develop measures of effectiveness of regulatory agencies. And to make the regulatory regime of developing countries more effective, technical assistance was proposed as an instrument. While technical assistance in needed, a word of caution was sounded in that ‘airlifting’ developed country regimes on to the developing country context is neither desirable nor optimal.

For small developing countries, other policy instruments could be considered complementary to establishing regulatory regimes. If the size of the market makes it inefficient to establish single sector or single country regulators, two possibilities exist. Either one could have a multi sector regulator in a small country like Barbados or a multi country, single sector regulator is an option through regional cooperation arrangements as in the Caribbean.

Country based studies voiced concern on independence (autonomy), expertise and accountability of competition and regulatory authorities in developing countries. The concerns mostly relate to funding of regulatory agencies and their hiring (and firing) practices. Developing country studies showed how difficult it is for governments not to get involved in funding and in hiring decisions of regulatory agencies. Interestingly, the paper from Belgium echoed similar concerns for developed countries.

Market-friendly systems, not business friendly systems can lead to economic growth
 

New Delhi, March 23, 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.

Experiences of Competition Law from around the World
 

New Delhi, March 21, 2007

CUTS International is organising an international research symposium from 22-24th March to deliberate on political economy constraints that developing countries face in implementing their competition and regulatory regimes. Considering the presence of several experts/practioners on Competition Law, CUTS International, FICCI and SILF organized an interactive workshop, titled “Experiences of Competition Law from around the World” on March 21st in New Delhi.

Pradeep Mehta, Secretary General, CUTS International and Lalit Bhasin, Co-Chairman FICCI’s committee on Corporate Law & Legal Affairs & President, Society of Indian Law Firms welcomed a gathering of experienced competition practitioners and experts in Competition Law in the said seminar. In his welcome address, Mr. Mehta emphasised that the seminar has got together experts from various countries, which would share their experience in dealing with Competition regimes. This would help us in understanding the functioning of competition regimes across the globe and derive necessary lessons for implementing the same in India.

Frederic Jenny, Judge, French Supreme Court, gave a brief snapshot of Competition Laws from around the world and elucidated on the requirement for a Competition Law in the keynote address. He emphasised that there is a need to create awareness among the general public about competition and benefits of having a competition policy/law in a given country. Vinod Dhall, Member, Competition Commission of India in his inaugural address, gave a brief snapshot of history of Competition Law in India.

The seminar was widely attended by representatives from law firms, CCI, business houses and media. This indicates the keen interests that various stakeholders in India have in understanding and knowing the competition issues and how it would effect their behaviour.

Norway strengthens its ties with CUTS International
 

Jaipur, March 14, 2007

An agreement was signed today between Norwegian Agency for Development Cooperation (NORAD) and CUTS International here in Jaipur to consolidate a project on strengthening competition regimes in seven countries of eastern and southern Africa. The first stage of the project had been successfully implemented by CUTS, and an independent evaluation had recommended NORAD to support activities of the second stage of this project.

A delegation of 15 Parliamentarians headed by Mr. Thorbjorn Jagland, President of the Norwegian Parliament (Stortinget), currently touring India were witness to the signing of the agreement. The delegation were visiting CUTS and had a discussion with CUTS researchers and staff, taking stock of the organisation’s work on international trade and competition policy and law activities in various parts of the developing world.

The stage is set for CUTS to implement project activities in the seven project countries – Botswana, Ethiopia, Malawi, Mauritius, Mozambique, Namibia and Uganda. The project entitled, ‘Capacity Building on Competition Policy in Select Countries of Eastern and Southern Africa’ (also referred to as the 7Up3 project) is consistent with the ‘Trilateral Development Cooperation’ (TDC) approach operationalised by CUTS in its work on international development projects especially on issues like – international trade and competition policy and law. The TDC approach envisages provision of technical assistance by a southern provider to a southern recipient, with support from a northern donor.