The 7-Up
Project, as it is
popularly known as, came half way through the research activities of
its second phase during the months of March and April 2002. The
project entitled “Comparative Study of Competition Regimes in
Select Developing Countries of the Commonwealth” is being
implemented by CUTS, Jaipur with the support of DFID, UK. The
countries selected for the study are India, Kenya, Pakistan, South
Africa, Sri Lanka, Tanzania and Zambia.
The
following is a brief report of the progress made by the Project
during the months of March and April 2002.
1.1
Phase-I Synthesis Report
During the
period under review, the Phase-I Synthesis Report was revised and
sent to the Project Advisory Committee for comments and suggestions.
The deadline for comments has been fixed as 30th April
2002. The last chapter of the report that would include the
conclusions and recommendations is yet to be prepared. This chapter
is being drafted and would also be sent for comments by the first
week of May 2002.
1.2
Phase-II Research
The second
phase of the project deals with cross border competition concerns
and three case studies would be taken up by each project country for
carrying out research. Partners were able to decide the cases they
would take up during phase-II.
In the
months of March and April, information on the selected cases was
collected and analysed. This information was then collated and the
study report prepared on the basis of an outline that was sent to
the partners in advance. Most of the draft case studies have been
submitted by the partners.
These drafts
would be finalised after review by the advisory committee and their
analysis would then form the Phase-II country report which would be
discussed at the Phase-II National Reference Group (NRG) meetings
and finalised thereafter.
1.3
Fringe Meeting of 7-Up
A 7-Up
meeting was organized on the fringe of the IDRC meeting on
competition policy organized in Montevideo on 18-19th
April 2002. Many of the Advisory Committee members as well as the
representatives of the partner institutions were attending the IDRC
meeting giving us the opportunity to organise the fringe meeting.
The purpose of the meeting was to take stock of the work progress
and plan the way ahead.
II. MAJOR
NEWS & VIEWS
1. Europeans
warn Pentagon over merger review
European regulators, companies
and antitrust lawyers yesterday expressed surprise and anger at
plans by the US Defense Department to require all big foreign
acquisitions of American companies to be approved by a national
security committee.
They attacked the proposal to
present all deals with foreign buyers worth US$100mn to the
Committee on Foreign Investment in the US as a protectionist
measure, and warned that it could further strain the relationship
between Washington and Brussels on antitrust matters.
"The plans will ring very
serious alarm bells in Europe," said Ralph Cohen, a partner at
the law firm S.J. Berwin. "The US authorities are introducing
an additional level of red tape which, from a European perspective,
will be seen as potentially protectionist."
In Brussels, officials from
the European Commission, which last year clashed with US antitrust
regulators over its decision to block General Electric's takeover of
Honeywell on competition grounds, said they had not been informed of
the Pentagon's plans. They said that if the plans were approved they
could hinder efforts to patch up the EU-US relationship, soured by
the GE-Honeywell decision.
European companies voiced
fears that the rules could be abused to favour domestic defence
suppliers, particularly in the current security climate. "There
has always been an element of Fortress America about US procurement
and there has been a strengthening of that view post September
11," said Giles Irwin, the finance director of Cobham, a
British defence contractor.
Others argue the hurdles are
already very high for defence contractors. BAE Systems is one of the
largest foreign suppliers to the US military and employs 23,000
people in 30 states, yet even it acknowledges that getting approval
for recent acquisitions of companies from Lockheed Martin was a
"tortuous process". "If we hadn't had such a home
base in the US, it would have been very hard," said a BAE
spokesman.
French officials suggested the
latest US moves were further signs of Washington's increasing
unilateralism and probably linked to tension on the transatlantic
trade front. Those involved in getting clearance for recent US
acquisitions say the proposal would have the biggest effect on
civilian industries making high-tech equipment that could be deemed
to have military uses. "This is a tacit admission that the line
is getting blurred between what is military and what is non-military
technology," said one manager.
However, a US banker based in
Europe argued the move by the Pentagon had to be seen in the context
of US security concerns. "People have lost their sense of
humour about the prospect of technology leaving the US, especially
after September 11. We spend billions each year creating the most
advanced defence-related technology, so no wonder they don't feel
comfortable with it landing in the hands of strangers, particularly
with Bin Laden at large."
(Paul Betts, Francesco Guerrera and Dan Roberts,
Financial Times, 06.04.02)
2.
Brussels
likely to fine Carlsberg and Heineken
Carlsberg
and Heineken, two of the world’s biggest brewers, are likely to be
fined after Mario Monti, European competition commissioner, accused
them of one of the “most blatant forms of anti-competitive
practice”.
The European
Commission claims the Danish and Dutch brewers agreed not to market
their products aggressively or compete intensively in each other’s
home markets during part of the 1990s. The alleged “market
sharing” was discovered by investigators after dawn raids at the
companies’ premises in 2000. Carlsberg and Heineken dominate the
market in the Netherlands and Denmark respectively, even though
their home countries account for less than 10 per cent of their
sales.
Mr.
Monti’s department said: “Although the alleged infringement
appears to have been terminated, the Commission treats this kind of
behaviour very seriously because market sharing is amongst the most
blatant forms of ant-competitive practices.” The move is part of
Commission efforts to crack down on cartels, which Mr. Monti once
called “the cancers” of the free market.
Carlsberg
denied any collusion with Heineken though it said the then chief
executives of the companies held talks between 1993 and 1996.
“Such contacts were courtesy relations and ordinary business
discussions,” the Danish brewer said. The Commission had attached
“incorrect significance” to these talks. Heineken said it did
not “share the view” of the European Commission and would
prepare its defence after studying the case.
The
Commission said yesterday’s statement did not prejudge the outcome
of the investigation. Under EU law, the companies have the right to
answer the objections and request a formal meeting with the Brussels
authorities before any decision is taken over fines. No final ruling
is expected for months.
The
Commission can fine companies 10 per cent of worldwide turnover,
which would amount to E916mn for
Heineken and over E400mn for Carlsberg. Mr Monti fined beer
producers last year for taking part in cartels in Belgium. Interbrew
was levied a penalty of E46mn for
its role.
(Francesco
Guerrera in Brussels and Clare MacCarthy in Copenhagen, Financial
Times, 02.03.02)
III.
AROUND
THE WORLD
a)
International
Meet on “Competition Law and Policy in a Global Context”
18 March 2002, Cape Town, South Africa
The
International Bar Association (IBA) in collaboration with South
African Competition Authorities organized this meeting. It was a
part of the IBA Global Forum on Competition Policy’s initiatives.
The programme focussed on comparative merger control analysis,
competition policy in developing countries and competition
compliance issues. It also had a special session on competition law
enforcement in South Africa. Competition experts from all over the
world participated in the event.
b) Internationalising
Competition Policy: Developing Country Perspectives, April 18-19,
Montevideo
The meeting
was organized by the International Development Research Centre,
Canada. The aim of the meeting was first to review what ground has
been covered by existing research and second to help IDRC define a
research strategy in this area that will complement existing work in
the light of post-Doha agenda and the IDRC’s own research
priorities.
c) Regional
Seminar on Competition Policy & Multilateral Negotiations, 16-18
April 2002, Hong Kong
The
conference was organized by UNCTAD in collaboration with Hong Kong
Consumer Council. It was essentially a capacity building exercise on
competition issues that the Doha Declaration envisaged for. The
programme was attended by representatives from several countries of
the Asia-Pacific region.
IV.
NEW
PUBLICATIONS
ReguLetter
No. 6, March 2002
This
quarterly newsletter of the CUTS Centre for International trade,
Economics & Environment aims to provide a forum, in particular
to the civil society, to understand the issues relating to
competition and regulation and promote a healthy competition culture
in the world.
The current
issue covers a brief description of the progress of the 7-Up
Project, news on industrial restructuring, corporate governance,
financial sector, utilities and an article on the competition regime
of Sri Lanka. The leader on the cover speaks about the need of
competent and credible corporate governance quoting the example of
the Enron scandal. The issue carries a brief on Microsoft
settlements and a write-up on the cement cartel in India. It carries
a special article on competition challenges in a globalising
economy, in the context of developing countries, based on some
experiences from South Africa.
V.
FORTHCOMING
EVENTS
a) 2nd
National Seminar on “Competition, Regulation & Investment:
Role in Economic Growth”, 8/9 June 2002, Chennai, India
CUTS
Centre for International Trade, Economics & Environment (CUTS-CITEE) will be organising the seminar in collaboration with
National Council of Applied Economic Research (NCAER), New Delhi. It
is the second event, in continuation to
the National Seminar organised on 11-12th January, 2002,
at Jaipur which aimed at generating and enhancing understanding on
competition and regulatory issues and their interface with
investment. The purpose of this meeting is to reach out to the civil
society in southern India.
b) 7-Up
Project: Review Meeting,
5/6 July 2002, Geneva
The Review
Meeting of the 7-Up Project with a focus on the 2nd phase
of the project covering cross-border issues would be organised on
5-6th July 2002 in Geneva. The meeting would deliberate
on the Phase-II research results of the project and the Phase-II
synthesis report would also be discussed. The meeting would chalk
out the action plan for the remaining period of project duration.
