|CUTS>CITEE>7 Up Project|
Study of Competition Regimes in Select Developing Countries
of the Commonwealth
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.
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.
it is one thing to have a competition law and another to have an
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
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
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.
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.
Competition Culture in Developing Countries” has been defined as
the mission statement, while the vision statement reads as: “Towards
a Healthy Global Competition Culture”.
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;
problems and suggest solutions, including on the basis of good practices
suggest ways forward
to strengthen existing legislation and institutions dealing with
competition and consumer protection issues;
building needs of the government, its agencies and the civil society;
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.
output of this project as planned, are country research reports,
seminars and an advocacy document designed to:
on lessons learnt, highlighting how to create a better competition
and catalogue technical assistance requirements and possible resources;
among the competition agencies of different countries.
project is being implemented by CUTS under the close supervision of an
international advisory committee who are experienced in competition and
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.
country specific research reports of the project are designed to be
of relevant existing literature
with local stakeholders
synthesis reports are designed to be based on the country specific
reports and wide consultation with the advisory committee.
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.
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
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:
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.
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.
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.
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.
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:
phase-I country report of each project country;
on the compiled and comparative analysis of all these reports;
highlights of the Phase-I; and
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
will be two parts to the research
Preliminary questions covering cross-border issues.
Three case studies:
Case study on an international merger (as far as possible, same
case in all countries)
Legal-economic case study of one sector (as far as possible, same
case in all countries)
Legal-economic case study on a sector (to be chosen by the
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
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.
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.
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.
Centre For International Trade,
Economics & Environment (CITEE)
D–217, Bhaskar Marg, Bani Park,
Jaipur 302 016, India,
D-217, Bhaskar Marg, Bani Park, Jaipur 302 016, India
Ph: 91.141.2282821, Fax: 91.141.2282485