7Up Project
 
CUTS>CITEE>7 Up Project
Home
About CUTS
CITEE
CCIER
CART
CHD
C-SPAC
CUTS-ARC
Contact CUTS
spacer
 

 

 

7-Up Project

Event Reports

7-UpDate

6 Progress Report

7 Progress Report

8 Progress Report

Phase-I Country Reports

Friends of Competition

Final Report

Symposium on Competition Policy and Pro-poor Development, 19 February 03, Geneva

Periodicals

Newsletters

ReguLetter

E-Newsletters

7 Update

 

The 7-Up Project  

Comparative Study of  Competition Regimes in Select Developing Countries of the Commonwealth

INDEX

Project Description

Expected Output

Methodology and Time Frame

Project Partners

progress of the project

Preliminary Findings

Impact of the Project in First Year

The Way Ahead

Background

A good competition law and policy is a requirement for any market-based reforms. In as much as reforms are brought about to rein in unnecessary command and control measures, a competition law ensures the promotion of a fair market, which is not exploited by dominant businesses. The current phase of globalisation and liberalisation is adding new and complex dimensions to competition issues pushing authorities to redefine the concepts like dominance and abuse of dominance etc. Moreover, the advent of the World Trade Organisation has added new dimensions to the scenario. 

Since the time the WTO took up the examination of the interaction between trade and competition policy in 1997, much interest has been raised in several countries. Secondly, many countries have been facing pressure to draft new and effective competition laws, both internally, in cases such as UK and India, as well as from the multilateral institutions, such as in Indonesia.

But it is one thing to have a competition law and another to have an effective competition law. The effectiveness of a law depends on several factors: drafting, control, budget, independence, research and investigation support etc. The overall policy environment of the country also matters substantially.

In order to establish the best way for developing countries to have effective competition laws, it is necessary to learn from their own experiences. Sharing the same will also help them to overcome the drawbacks, which prevent them from having a good and effective competition regime.

BACK TO INDEX

Project Description

Given the above background an effort is being made by CUTS Centre for International Trade, Economics and Environment (CUTS-CITEE), to study the competition regimes of select developing countries, which have had some experience of the same and are at similar levels of development. The project is being funded by the Department For International Development (DFID), UK.

In keeping with these criteria, seven developing countries of the Commonwealth have been selected, namely, India, Pakistan, Sri Lanka, Zambia, Kenya, Tanzania, and South Africa. Out of the seven countries, in three (South Africa, Tanzania & Zambia), the competition laws are relatively new, two countries (India & Sri Lanka) are in the process of adopting a new law while two others are considering adopting a new law or a review of the existing law. Enactment of competition laws or replacement of old competition laws are taking place in response to the changing needs of time.

“Shaping Competition Culture in Developing Countries” has been defined as the mission statement, while the vision statement reads as: “Towards a Healthy Global Competition Culture”.

With the above mission and vision, briefly the project is trying to:

·        evaluate the existing competition law and its implementation on a few basic principles: budgets, autonomy, composition and structure of the competition regime and authority;

·        identify typical problems and suggest solutions, including on the basis of good practices elsewhere;

·        suggest ways forward to strengthen existing legislation and institutions dealing with competition and consumer protection issues;

·        assess capacity building needs of the government, its agencies and the civil society;

·        develop strategies for building expertise among the competition agency officials, practitioners and civil society to deal with anti-competitive practices, including cross-border abuses more effectively; and

·        help build constituencies for promoting competition culture by actively involving civil society and other influential entities during this exercise.

BACK TO INDEX

 Expected Output

The output of this project as planned, are country research reports, seminars and an advocacy document designed to:

·        disseminate information on lessons learnt, highlighting how to create a better competition culture;

·        identify and catalogue technical assistance requirements and possible resources;

·        foster cooperation among the competition agencies of different countries.

BACK TO INDEX

Methodology and Time Frame

The project is being implemented by CUTS under the close supervision of an international advisory committee who are experienced in competition and related issues.

The project has two components: research and advocacy.  

The research component includes an evaluation of the existing competition regime in the first year and study of cross-border competition concerns and the awareness, understanding and ability of the competition authorities to deal with these issues, in the second year.

The country specific research reports of the project are designed to be based on:

·        Study of relevant existing literature

·        Field study, and

·        Consultation with local stakeholders

The synthesis reports are designed to be based on the country specific reports and wide consultation with the advisory committee.

The advocacy component of the project includes raising awareness among the various groups of stakeholders through meetings and publications. In this regard a National Reference Group, involving various stakeholders, has been formed in all the project countries.

The project was launched on 1st September 2000 and will be completed by 31st August 2002. The first phase of the project is already completed. It is however expected that the project will be some beyond project activities to implement some of the results of the project including providing technical assistance to governments and civil society.

BACK TO INDEX

Project Partners

Keeping in view that there are two types of activities (research & advocacy), two partners are involved most of the countries. However, exception has been made in case of those where one organisation has the capability to carry out both type of activities. The partners are:

Sr

Country

Research Institution/Main Party

NGO/Associated Party

1.

India

National Council of Applied Economic Research , New Delhi

CUTS Centre for International Trade, Economics & Environment, Jaipur

2.

Pakistan

Sustainable Development Policy Institute (SDPI), Islamabad

The Network for Consumer Protection

Islamabad

3.

Sri Lanka

Law & Society Trust (LST)
Colombo

Institute of Policy Studies (IPS)

Colombo

4.

Kenya

Institute of Economic Affairs (IEA)
Nairobi

 

5.

Zambia

CUTS Africa Resource Centre

Lusaka

Zambia Consumers Association (ZACA), Kitwe

6.

Tanzania

The Economic & Social Research  Foundation (ESRF), Dar es Salaam

 

7.

South Africa

Institute for Global Dialogue (IGD),

Johannesburg

Trade and Industrial Policy Secretariat (TIPS), Johannesburg

BACK TO INDEX

Progress of the Project

7-Up Project is running in its fifth quarter now. In the first quarter of the Project, primarily the preliminary activities were completed. Partners were identified in each of the seven project countries. An international advisory body named as Project Advisory Committee was formed to guide the project implementation and an Operational Strategy Note was prepared to give a micro picture of the process and methodology involved over the period of two years of the Project duration. As a first step to achieve the goals of the project, the partners prepared a preliminary country paper to give a brief description of the existing competition law and other regulations, market position, socio-economic characteristics, etc. in each of these countries. A comparative analysis of these papers was made by Prof. Rakesh Basant, the core-researcher of the Project as well as at CUTS.

In the second quarter, the Project was formally launched at a meeting held in Jaipur, India in the month of December 2000. The meeting was attended by the project partners and various experts, competition practitioners, former and present executives of various international and regional organisations and competition authorities of different countries, including Australia, Brazil, South Africa, Zambia, India. 

The research methodology and strategies for the implementation of the Project were discussed and a comprehensive questionnaire including questions on issues related to institutional framework of competition authority in the project countries was prepared. Guidelines were set for the formation of a National Reference Group comprising of various stakeholders for the advocacy component of the Project. A preliminary list of proposed members of NRG for India was prepared by CUTS and was circulated to all partners in other countries as a model to enable them to prepare lists for their respective countries. 

The third quarter, possibly the most crucial quarter in the first phase of the project, covered activities related to research, formation of the National Reference Group and preparation of the Phase-I country report. The researchers got the questionnaires filled from the concerned authority and collected all the relevant data. This data was then put into a draft country report for which a format was suggested by the core researcher of the Project and was sent to the partners. This report was to be discussed at the NRG meeting. The partners finalised the members of their NRG, which included representation from all stakeholders. The dates of the NRG meetings were also decided during this period. 

The fourth quarter was the last quarter of Phase I of the Project. During this period, NRG meetings were organised and the Phase-I country reports were prepared in each project country. These Phase-I country reports were compiled and collated to form Draft Phase-I Report. The Phase-I culmination meeting was also held in the first week of September. This also marked the beginning of Phase-II of the Project.  The purpose of the meeting was to take stock of Phase-I and chalk out a plan of action for Phase II. The meeting involved:

·        sharing phase-I country report of each project country;

·        discussion on the compiled and comparative analysis of all these reports;

·        lowlights & highlights of the Phase-I; and

·        brainstorming on shaping Phase-II

The meeting was attended by international experts from various organisations such as the UNCTAD, WTO, OECD, European Commission, World Bank, Consumers International, International Development Research Centre, as resource persons, besides partners and researchers, to take stock of the progress of the project and share their experiences about the subject.

The Meeting presented the results of the first year of the Project which examined and compared the domestic competition regimes of India, Pakistan, Sri Lanka, South Africa, Kenya, Zambia and Tanzania. The study focused on how the differences in economic structure and policies of these countries affect their competition policy requirements. The project revealed the importance of a vibrant consumer movement for the meaningful enforcement of competition law.

BACK TO INDEX

Preliminary Findings

The Objectives and scope of the competition law and its framework of implementation vary significantly across countries. For example some countries include unfair trade practices while others do not; some require pre-notification and approval of all mergers, while others need such approval only for horizontal mergers & acquisitions and still others do not need approval at all. Some competition authorities are also enforcement agencies, while others essentially have investigative and advisory role. The literature of course has identified independence of the competition authority, clearly defined jurisdictions and transparency in its working as some of the most important elements of the required legal and administrative framework.

A few aspects of the coverage and implementation of competition law that needs serious attention and have been highlighted in the country papers are noted here:

·        Certain project countries (e.g., Sri Lanka, Kenya and probably Tanzania) are not able to deal with the cross-border issues.

·        The law in Sri Lanka does not have explicit provisions to deal with horizontal and vertical restraints.

·        Public sector/state monopolies are outside the purview of competition law in Pakistan, Sri Lanka and Kenya.

·        The competition law does not adequately deal with the problems of collusive tendering in Kenya. The potential for such collusion is very high as the Government of Kenya is a major buyer in the economy.

·        Vertical mergers are typically allowed in South Africa under the assumption that only horizontal mergers have an adverse impact on competition.

Most 7-Up countries have very limited experience of competition related regulation. And, therefore, the administrative systems are needed to facilitate rapid movement on the learning curve. Among other things, administrative aspects include autonomy of the competition authority, its internal organisation and the powers vested with the authority.

Another important finding that came out through the country reports is that it is essential to have good advocacy and a strong support base to enforce the laws effectively. At the same time they also recognised the need for a strong consumer movement in ensuring that. However, it was also recognised that the consumer movement in these countries (with the exception of India) was rather weak, and needs to be strengthened. For example, in one of the countries, the competition authority handled some 68 cases over 1998-2000, but not a single complaint was received from any consumer organisation or such other NGOs.

BACK TO INDEX

 Impact of the Project in First Year

The project has already started showing its impact in the 7-Up countries, both direct and indirect, within one year of its implementation. Competition policy and law have been a little known area even in countries like India and Pakistan whose experiences with such policy and law have been fairly long. But now there is an increasing awareness on competition law and policy in all these countries. The major contributing factor to this has been the NRG meetings that were held in these countries. In fact in Pakistan, there was a strong demand from the NRG members to make it a permanent body that will lobby with the government on competition and consumer issues. Although it was one of the motives behind forming the NRGs, it is encouraging to note that such a proposal came spontaneously in the meeting rather than being pushed by the project implementers.

Another interesting aspect of this growing awareness is that, it is not limited to the project countries only. It is having some spillover effects in other developing countries also. Moreover, the project is being considered as first such study in the developing world. Hence CUTS has been receiving queries from different places, on competition issues in the context of developing countries.

In India, CUTS has been providing inputs to the new Competition Bill which has already been placed in the parliament. The bill has now been referred to a select committee of the parliament which is now discussing it with different groups of stakeholders. Considering CUTS’ work in the area of competition policy, the Consumer Coordination Council (CCC), the apex consumer organisation in India, has requested CUTS to represent the consumers before the committee. CUTS will be using this opportunity to share the learning of the project with the law-makers of the country.

Similarly, in Sri Lanka also a new bill is under consideration and the NRG meeting there pondered over the various aspects of the bill and came out with many important suggestions. It is expected that the government there would give due considerations to those suggestions.

In Pakistan the growing awareness on competition issues has led to demand for a thorough review of the competition law, if not a new law, as people there feel that the existing law is not good enough in the changing scenario both within the domestic economy and outside. A similar concern has been raised in Kenya also and people feel drastic changes are required in the existing competition law. The NRG in Kenya has also raised the demands of a comprehensive consumer protection Act and better regulatory mechanisms. The government is seriously considering them.

A comprehensive consumer protection Act is under consideration in Zambia also. Zambia Competition Commission celebrated a “Competition Day” to raise awareness on competition issues among the people. The project had a direct contribution to this celebration. CUTS published 10 posters and five booklets for the Zambia Competition Commission on their request for this day.

In Tanzania, there is a good competition law. However, the implementation of the law has been slow and inadequate. The project has been able to raise the awareness on the law as well as usefulness. It has also been recognised that one of the main factors for poor implementation of the law there is the total absence of a consumer movement in the country. A strong need has been felt, particularly within the civil society to launch a consumer movement in the country. In this regard they have also solicited technical and other assistance from CUTS.

Another notable development in Tanzania as that took place as a result of the 7-Up project findings is that the Foreign Investment Advisory Service of the World Bank is launching a project there to assist the government there it its effort to attract more foreign direct investment and maximise its impact on the economy. The main focus of the project would be to analyse the relationship between competition policy and anti-competitive practices and FDI.

In South Africa, where a good competition law and enforcement mechanism are already in place, the existing consumer movement, although not very strong, has resolved to take up competition issues more seriously. There has also been a demand for a comprehensive consumer protection Act in the country.

Mr. Pradeep S. Mehta, Secretary General, CUTS was invited by the Competition Commission of South Africa to attend an international seminar organised by them where he was requested to speak on the role of competition policy in development. He also a made a presentation at a seminar on “Trade and Competition Issues in the run up to Doha” in London on 21sr June, where he shared the learning and experiences gained from the project in its first phase.

CUTS has also been invited for a regional conference on competition law & policy to be held in the end of November in Kampala to be organised by COMESA and International Law Institute of Uganda. They have proposed to have a special presentation on the 7-Up project in the conference.

CUTS is organising an international symposium on “Competition Policy & Consumer Interest in the Global Economy”, in Geneva on 12-13th October. The programme is being sponsored by the International development Research Centre (IDRC), Canada. The audience of the programme will be made of two main target groups: civil society organisations from developing countries and representatives from the permanent missions of the WTO.

BACK TO INDEX

The Way Ahead

As indicated earlier, phase II of the project (second year) will give strong emphasis advocacy. However, research work will also continue. While in phase I, the focus was on institutional framework and capabilities of competition authorities, phase II will deal mainly with cross-border competition issues. The first part of the research, a questionnaire on cross-border competition concerns for competition agencies and stakeholders, would be conducted during October and November. Draft results would be collated and presented at the next interim meeting to be held on 15th December in Jaipur. Case studies would be conducted subsequently after further discussion to take place at the interim meeting.

The research outline has already been designed to reflect the cross-border concerns that are of most relevance to the project countries and to allow for comparability between the countries.

There will be two parts to the research

1.      Preliminary questions covering cross-border issues.

2.      Three case studies:

i.                     Case study on an international merger (as far as possible, same case in all countries)

ii.                   Legal-economic case study of one sector (as far as possible, same case in all countries)

iii.                  Legal-economic case study on a sector (to be chosen by the partner)

Advocacy component of the project would involve awareness generation and capacity building of the civil society, especially consumer organisations so that they can advocate for a healthy competition culture at the national level. The phase I reports that have come out are going to be published very soon after due revisions which will serve the purpose of advocacy documents. This will ensure a balanced and informed advocacy in the project countries.

As part of advocacy there is going to be another NRG meeting in each of the project countries in the last week of October and first week of November, 2001. Efforts will be made to make it a permanent forum for debate and discussions on competition policy.

There has been a demand for the consumer organisations of some African countries for publishing booklets on anti-competitive practices prevalent in their country. This will help them immensely in their advocacy efforts as well as capacity building. We are in the process of finalising of the terms of reference for these booklets. This will be done initially for the project countries in Africa but later on may cover some other countries also.  

CUTS proposes to intensify its advocacy efforts at international levels through its network which it is already doing now. An online forum on competition and regulatory issues has already been launched. The reports of the project whenever they come will provide with additional tools for such advocacy efforts.

BACK TO INDEX

CONTACT US

CUTS Centre For International Trade, Economics & Environment (CITEE)

D–217,  Bhaskar Marg,  Bani  Park, 

Jaipur  302 016,  India,

Ph: +91(0)141-228 2821

Fax: 91.141.2282485  

Email: cuts@cuts.org  

Top

Copyright 2005 Consumer Unity & Trust Society (CUTS), All rights reserved.
D-217, Bhaskar Marg, Bani Park, Jaipur 302 016, India
Ph: 91.141.2282821, Fax: 91.141.2282485