Consumer Courts in India

							                               Brief Proceedings

          LAUNCH MEETING OF THE 7-UP PROJECT
                      Jaipur, India, December 20-21, 2000.


 COMPARATIVE STUDY OF COMPETITION REGIMES IN SEVEN DEVELOPING
               COUNTRIES OF THE COMMONWEALTH

TABLE OF CONTENTS

I. INTRODUCTION

II. OPENING SESSION

III. SESSION I: WHAT IS HAPPENING IN THE INTERNATIONAL SCENE

IV. SESSION II: WHAT IS HAPPENING IN THE DEVELOPED WORLD

V. SESSION III: THE DEVELOPING COUNTRY EXPERIENCES

VI. SESSION IV: “WHY NEW COMPETITION LAWS?”

VII. SESSION V: CROSS-SECTORAL ISSUES

VIII. SESSION VI: COUNTRY PRESENTATIONS

IX. SESSION VII: WORKING GROUPS ON QUESTIONNAIRE AND METHODOLOGY

X. SESSION VIII: STRATEGIES FOR PROJECT IMPLEMENTATION




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I. INTRODUCTION

1.1 CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE) is
conducting a two-year research programme, “The 7-Up Project: Comparative Study of
Competition Regimes of Seven Developing Countries of the Commonwealth,” with the support of
DFID, UK. The countries selected for the project are: India, Pakistan, Sri Lanka, Tanzania,
Zambia, Kenya and South Africa with some contribution from Zimbabwe.

1.2 The launch meeting of the project was organised in Jaipur, India, on December 20-21, 2000.
The meeting was organised basically to decide how to implement the project and take it forward
to achieve its desired goals. It would provide a common platform for various experts and
representatives of partner countries and different organisations and institutions to meet and
benefit from one another‟s experiences. The main objectives of the meeting were to:
 Orient and familiarize all partners about the whole project and with each other;
 Take stock of the preliminary country papers sent in by the partners;
 To establish the detailed methodology of the field study and plan for the same; and
 Adopt a plan of action for the project and settle terms of reference with the partners.

1.3 The meeting was attended by various experts, competition practitioners, former and present
executives of various international organisations such as UNCTAD, WTO, World Bank, and
competition authorities of different countries including Australia, Brazil, South Africa, Zambia,
India, etc in addition to the project partners. The meeting was designed as a seminar on the first
day and as a workshop on the second day. It was segmented into eight sessions and was organised
as follows:

1.4 There were five sessions on the first day of the meeting. The Opening Session of the meeting
started with a welcome address by Mr. Pradeep S Mehta, Secretary General, CUTS, India. He
also introduced the project to all the participants and highlighted the objectives of the project as
well as that of the meeting. The other experts who addressed the participants during the session
were:
Prof. Frederic Jenny, Vice President, Conseil de la concurrence, France, spoke about the relation
between competition law and competition policy;
Mr. Allan Asher, Director, Global Campaigns, Consumers International, UK, emphasised the
importance of an effective competition law in today‟s world;
Mr. Peter Holmes, University of Sussex, UK talked on how to get optimum benefits from the
meeting, especially for the researchers;
Mr. K. C. Ganjwal, Secretary, MRTP Commission, India talked about the significance of the
project in the changing global scenario.

1.5 The First Session was titled “What‟s happening on the International Scene” and was chaired
by Prof. Frederic Jenny. In this session, Mr. Robert Anderson, Counsellor, Intellectual Property
and Investment Division, WTO threw light on the „State of Play on Competition Policy in the
WTO‟ and Mr. Rajan Dhanjee, Legal Affairs Officer, Competition & Consumer Protection
Branch, Division of International Trade in Goods, Services & Commodities, UNCTAD,
highlighted the „Outcomes of the UNCTAD‟s Fourth Review Conference on the „UN Set‟.

1.6 The Second Session was on “What‟s happening in the developed world” Mr. R. Shyam
Khemani, Director, Law and Economic Consulting Group, UK spoke about „Dealing with cross-
border competition concerns‟ and Mr. Bernard „Joe‟ Phillips, Head of Division, Competition &



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Consumer Policy, OECD, talked on „Fight Against International Cartels‟. The session was chaired
by Mr. Peter Holmes.

1.7 The Third Session was about “Developing Country Experiences” and was chaired by Mr.
Allan Asher. In this session, Mr. George Lipimile, Executive Director, Zambian Competition
Commission spoke on the „Experiences of Least Developed Countries of Sub-Saharan Africa with
Special Reference to Zambia‟. Mr. Gesner Oliveira, Ex. Chairman, Competition Bureau, Brazil
highlighted the „Institutional Challenges for Implementing Competition Policy in Developing
Countries like Brazil‟. „Experiences from India‟ were shared by Mr. G. R. Bhatia, Additional
Director General (I & R), MRTP Commission, India.

1.8 Session four was titled,“Why new competition laws?” Mr. Sothi Rachagan, CI – ROAP,
Malaysia, chaired the session. Here, Mr. Phil Evans, Consumer Association, UK spoke about
„The UK experience‟. „The South African Story‟ was presented by Mr. Shan Ramburuth,
Competition Tribunal, South Africa and Mr. Pradeep S Mehta talked about „What‟s Happening in
India‟, where he highlighted the proposed competition law in India and its likely implications.

1.9 “Cross-sectoral Issues” were discussed at the fifth session of the meeting, which happened to
be the last of the day. Mr. Cezley Sampson, Lead Advisor, Privatisation and Regulation,
Presidential Parastatal Sector Reform Commission, Tanzania highlighted the „Roles of
Competition Authority and Utility Industry Regulators in a Liberalised Market Environment in
the Context of a Developing Country‟. The other speaker of the session was Mr. Luis Tineo, The
World Bank, Washington. The session was chaired by Mr. R. Shyam Khemani.

1.10 On the second day of the meeting, that is, December 21, 2000, there were three sessions, of
which Session Six was for “Country Presentations”. It was divided into two parts. In this session,
the representatives of the partner organisations from the project countries presented their
preliminary country papers and highlighted the important issues. In the first part of this session,
Mr. Sajid Kazmi, Sustainable Development Policy Institute, Pakistan, Ms. Thushari de Zoysa,
Institute of Policy Studies, Sri Lanka, Mr. Moses Tekere, Trade & Development Studies Centre,
Harare, Zimbabwe and Mr. Manish AgarwaL, Delhi School of Economics, New Delhi,
represented their respective countries.

1.11 The response panel of the session constituted of Prof. Frederic Jenny, as the chairperson and
Mr. Gesner Oliveira, Mr. Bernard Phillips and Mr. Phil Evans as the other members of the panel.

1.12 In the second part of the session, presentations were made by Mr. David Ong‟olo, Spellman
& Walker Co. Ltd., Kenya, Mr. Simon Roberts, University of Witwatersrand, South Africa, Mr.
Cezley Sampson, Tanzania and Mr. Muyunda Illilonga, Zambia Consumers Association, Zambia.
The response panel constituted of Mr. R. Shyam Khemani, as the chairperson and Mr. Peter
Holmes, Mr. Allan Asher and Mr. Robert Anderson as the other members.

1.13 In the Seventh Session, three working groups were made to discuss the methodology of field
surveys, etc and frame questionnaires. Each group was given specific topics to discuss and was
required to give the highlights of the discussions in the meeting. The final outcomes of the
working groups were presented in a joint session.

1.14 Session eight was the last session of the launch meeting and was chaired by Mr. Pradeep S
Mehta. In this session, the strategies for the implementation of the project and methodology for
research were discussed. At the end of the session, the participants expressed their hope and



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optimism about the success of the project in achieving its goals. The meeting ended with the
closing remarks and vote of thanks by Mr. Pradeep S Mehta.

II. OPENING SESSION

2.1 The meeting started with a welcome note by Mr. Pradeep S Mehta. He introduced the project
to all the participants and highlighted the objectives of the project as well as those of the meeting.
He explained that the meeting was meant for evolving design and planning for implementing the
project. He also explained the desired way for the progress of the meeting. He said that the
countries selected for the project have some commonalties like high levels of concentration in
most sectors of the economy and a number of differences. The countries could gain to a large
extent from the experiences of one another. He wished that the meeting would give the maximum
possible output at the end of two days.

2.2 He then requested Prof. Frederic Jenny to say a few words. Prof. Jenny complemented that it
was an important project and that the launch was definitely an important aspect of the project. He
suggested that the goals of competition policy should be identified in the context of developing
economies and it should be seen as to how the competition law could prevent the abuse of the
economies by the MNCs and how it could increase welfare of the consumers. He said that the
effectiveness of competition law should be seen as an instrument for development of economies.
He also commented that he was struck by the diversity among the project countries and to find the
best way forward was what was required.

2.3 Mr. Mehta then introduced Mr. Allan Asher and requested him to put forward his views. Mr.
Asher observed that if the project emerged successful, it would probably change the whole world.
He said that the project would be replicated many times if it were successful. He stressed that
many factors like price fixing, bid-rigging, market abuses, etc. affect consumers in particular and
the country in general. This alone is a good reason to look at one aspect of competition policy,
which is the competition law. He commented that “competition policy is a means to an end and
not an end in itself.” He said that the whole country was being penalised for the lapse in
enforcement of competition policy and complemented that it was appreciable that the project
entwines academicians, civil society, inter-governmental organisations, etc. He opined that there
are tough questions to be asked and that the countries might not be receptive at the beginning. But
once they understood the issues clearly, they would certainly agree. He assured of Consumers
International‟s co-operation in implementation of the project.

2.4 Mr. Peter Holmes, the project overseer, congratulated CUTS for taking up such an ambitious
project and stressed on how important it was for the researchers to interact with each other. He
suggested that in the meeting, the bulk of questions should come from the researchers and the
speakers should try not to lecture the participants but emphasise on the exchange of views and
make their presentation as useful for the participants as possible. He said that the project aimed at
providing technical assistance to the developing countries and for this, the researchers should also
produce academic reports, which could be used in Universities and could serve as useful inputs
for the Governments.

2.5 Mr. Robert Anderson said that more or less, all important aspects were covered and suggested
that it was time for the researchers to introduce themselves to the participants in order to facilitate
the purpose of the meeting.

2.6 Mr. K. C. Ganjwal welcomed all on behalf of MRTP Commission, and the Government of
India. He said that CUTS has taken up the project at a very crucial time. The proposed new


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Competition Law for India would be taken up at any time by the Cabinet for discussion and the
project would enable CUTS to give useful suggestions for the new competition law.

2.7 To summarise, the issues raised during the discussion can be broadly classified into the
following sub-headings:

Objectives of the project
2.8 The objectives of the project are to compare the competition regimes in the select developing
countries with a view to:

   assessing the commonalities and diversity in the competition regimes in seven countries under
    the study;
   learn from the success and failure stories of each country being studied; and
   suggest ways and means to improve the competition culture in these countries.

Objectives of the Meeting
2.9 The core objectives of the project were:
 Orienting and familiarising all partners about the whole project and with each other.
 Taking stock of the country papers sent in by the partners.
 Establishing the detailed methodology of the field study and plan for the same.
 Adopting a plan of action for the project and finalise the terms of reference with the partners.

Goals of competition policy
2.10 From the developing countries‟ standpoint, the goals of a competition policy could be as
follows:

   Creating a level playing field by providing small and medium scale enterprises an opportunity
    to compete with powerful multinational corporations.
   Enhancing efficiency of the business enterprises and of the economy as a whole.
   Consumer welfare.
   Enfranchising those who have so far been economically disfranchised on this issue (e.g.,
    competition policy complementing the poverty reduction objectives of the government).

Commonalities and differences
2.11 Countries selected represent a broad spectrum. There are two large developing countries,
four mid-sized developing economies and two least developed countries. They have some
commonalties such as high business concentration in most sectors of the economy. But they have
a number of differences including:

   Economic policy objectives: e.g., Pakistan has a policy of encouraging large establishments so
    as to help them gain economies of scale, whereas South Africa has a policy of encouraging
    small and medium scale enterprises to flourish and underserved population to better utilise the
    economic opportunities.
   Incentive mechanisms: e.g., price control, promotion of employment, restricting interlocking
    relationship between firms and closely monitoring financial institutions.
   Institutional structure: Some competition authorities are independent of the government
    whereas some are not.
   Remedies: Various remedies are provided depending on what are the objectives of the
    competition policy. Such variables as effectiveness, design, goal and interface with domestic



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    realities have been taken into consideration while providing the remedies to the affected
    group(s).

Issues to be taken into consideration

2.12 Issues to be taken into consideration can be broadly classified into the following clusters:

2.12.1 Fundamental issues

   Competition policy should not be too narrow in its focus. It should complement and
    supplement the broader development objectives.
   Cost vs. benefits. At times, it is too costly for the developing countries to put a competition
    policy in place and implement the same. Having proper institutional mechanisms, expertise
    and human resources in place to implement the policy can prove too costly for the developing
    countries.
   Consumers‟ concerns should get prime importance. Interrelationship between competition
    policy, efficiency gains and consumer welfare should be carefully studied.
   Competition policy is a means, not an end, to enhance the welfare of the masses.
   Corruption and rent seeking behaviour thrive in markets where mechanisms to ensure
    competition do not exist.
   Competition policy can ensure that the benefits of globalisation reach the masses.

2.12.2 Domestic issues

   National competition legislation and their implementation aspects need serious attention.
   Competition policy can improve the performance of the supply side. A robust supply side will
    help the economy as well as consumers.
   Pre-dominance of trade policy over competition policy and consumer welfare must be
    checked.
   In the context of stakeholders suffering from “reform fatigue” it should be made clear that it
    takes time for the benefits to accrue.

2.12.3 Multilateral and regional issues

   Cross border competition problems.
   Possibility of multilateral rules on competition policy.
   Regional cooperation as a vehicle for promoting competition facilitating implementation of
    competition policy.
   Interface between national enforcement and international framework.
   Promotion of more informed dialogue on competition policy at the multilateral level.

2.12.4 Project specific issues

   People doing research should be more interactive. Bulk of the questions during the meeting
    should come from those doing research at the field because they are closer to ground realities.
   Cultural differences in each country under review should be carefully studied.
   The meeting should come out of ideas to help the researchers.
   Informal interactions/discussions do help.




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Expectations of The Resource Persons And The Participants

2.13 After this discussion, Mr. Pradeep S Mehta requested all those present, to introduce
themselves and also state their expectations from the project. The expectations of the resource
persons as well as participants can be broadly divided into the following six clusters:

2.13.1 Cluster One: Learning experience and opportunity to contribute

   Utilising the presence of the eminent resource persons, the issues at stake could be better
    understood and clarifications sought.

   Since some inter-governmental/multilateral agencies have rich experience in this area, there
    will be an opportunity for them to contribute in the discussion.

   The Meeting will provide an opportunity to learn more about competition policy issues so as
    to help the investigators become better investigators.

2.13.2 Cluster Two: Sharing of ideas and experience

   Unique opportunity to understand each other‟s competition problems and the ways they have
    been tackled. To this end country presentations are going to be extremely useful.

2.13.3 Cluster Three: Inputs to governments

   The experience gathered during the Meeting can be used by consumer and other advocacy
    groups to provide input to the government in the process of designing and implementation of
    competition policy and law.

   Since India is preparing a new competition law, the output of the discussions held during the
    Meeting will provide inputs to the government in shaping an effective competition law.

   Nepal is planning to prepare a competition policy and enact a competition law in the context
    of its becoming the member of the WTO. The experience gained during the Meeting could
    help the participant provide inputs to the government.

   Since both Sri Lanka and Pakistan are taking a fresh look at their competition policy regimes,
    the discussion will help groups working on policy issues to provide inputs to the government.

2.13.4 Cluster Four: Tackling cross-border abuses

   How cross border competition abuses can be tackled at the multilateral level.

   How regional cooperation can become an instrument of tackling cross border competition
    problems, both at the levels of SAARC and COMESA. This is particularly important because
    almost half the member countries of COMESA have already entered into a free trade
    agreement and SAARC countries are likely to launch a free trade agreement shortly.

   The Meeting will provide an opportunity to provide inputs to the WTO Working Group on
    Trade and Competition.


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2.13.5 Cluster Five: Replicating the Model

   If this project becomes a successful one, it could be replicated in other countries in the Asia
    Pacific Region, which are not directly involved in this project. However, some amount of
    fine-tuning and modification may be required to suit the national context of the country in
    question.

2.13.6 Cluster Six: Interface between competition and consumer policies

   The Meeting will provide an opportunity to understand the interface between competition and
    consumer policies, and how they could complement and supplement each other.


III. SESSION I: WHAT IS HAPPENING IN THE INTERNATIONAL SCENE

3.1 The session was chaired by Prof. Frederic Jenny with Mr. Robert Anderson of WTO and Mr.
Rajan Dhanjee as the speakers.

3.2 Mr. Anderson spoke on the State of Play on Competition Policy in the WTO. He started by
explaining some of the factors underlying the current interest in Competition Policy in the WTO.
The points that he mentioned were the following:

   A growing view that anti-competitive practices of TNCs and other firms cannot be dealt with
    at the national level alone.
   Competition Policy is important to promote internal efficiency and to take advantage of the
    potential gains from liberalisation.
   Tariff and conventional non-tariff barriers might be replaced by private anti-competitive
    arrangements.
   Growing incidence of potential conflicts of jurisdictions in anti-trust cases.
   Importance of rules on competition policy to ensure that the markets work to the benefit of
    consumers/common people, not merely of private firms.

3.3 At present a working group at WTO is working on the issue of competition policy. A number
of delegates at the WTO hold the view that competition policy should be included in the next
round of multi-lateral trade negotiations. Other delegates, however, disagree.

3.4 Some possible elements of a multilateral framework on competition policy which have been
proposed by some countries include the basic principles on competition policy, possibly including
a commitment to take measures against hard core cartels. It could also set out
modalities/provisions of cooperation on national legislation, institution building and specific
investigations. Measures to enhance technical cooperation and institution building would likely be
an important element of such a framework, if it is eventually developed.

3.5 Mr. Anderson expressed that there is a concern, in some elements of the consumer movement,
that work on competition policy in the WTO would be adverse to the interests of the consumers.
This needed to be clarified; in fact, appropriate competition policy would provide tools to ensure
that the TNCs or other firms do not misuse the power achieved through greater market access.




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3.6 Mr. Dhanjee gave a brief background, where he mentioned that UNCTAD‟s is mandate in the
area of competition policy originates from the Set of Multilaterally Agreed Equitable Principles
and Rules for the Control of Restrictive Business Practices, unanimously adopted in 1980 by
United Nations General Assembly resolution 35/60. The Set‟s provisions are not binding, but
have the political weight of a G.A. resolution. UNCTAD‟s work in this area included the
elaboration of a Model Law which provided a check-list of the typical provisions contained in a
competition law, together with a commentary highlighting the approaches adopted by different
countries; this provided guidance without affecting the discretion of countries to choose policies
considered appropriate for themselves. Other work included: Studies on competition issues;
technical cooperation to assist developing countries in elaborating and implementing their
competition laws and policies; an annual meeting of the Intergovernmental Group of Experts on
Competition Policy to discuss and exchange experiences in this area (the next meeting will be
held from 2 to 4 July 2001); and collaboration with other international organisations active in this
area, including technical support to the WTO Working Group‟s discussions. Details were
available at www.unctad.org/en/subsites/cpolicy/index.htm.

3.7 Review Conferences on the Set were held every five years, the last one having been held from
23 to 29 September 2000. The resolution adopted by the Fourth Review Conference laid down a
framework for future work in this area, comprising institutional capacity building, competition
advocacy and educating the public, studies on competition, competitiveness and development,
and inputs to possible international agreements on competition. The structure and content of the
resolution had been strongly influenced by the Jaipur Declaration adopted in April 2000 at an
UNCTAD/CUTS seminar, as well as declarations adopted at other regional seminars. There were
many common elements between UNCTAD‟s work and the CUTS project, and thus much scope
for mutual interaction and feedback.

3.8 After this, a few observations were made by Mr. Jenny, the Chairman of the session. He
observed that detailed and formal work is being done at UNCTAD to promote equitable
competition around the world. But the UNCTAD provisions are not binding whereas the WTO
has binding commitments. He then invited questions from the floor. Some of the important
questions that were raised and the answers given to are as follows:

3.9 The first question that was asked was whether WTO could play any role in breaking cartels
like OPEC. In response, it was stated that there are two types of cartels that need to be
distinguished. One is private cartel and another is cartel formed by governments. The view was
expressed that it would be relatively straightforward to take measures against private cartels under
competition laws, but cartels based on sovereign government action were another matter and it
was not clear what, if anything, could be done about this.

3.10 Another question was related to the UNCTAD model law. Mr. Dhanjee said that term is a bit
of misnomer. There cannot be anything like model law. Some broad guidelines and approaches
can be formulated. But the law has to be framed keeping in view the specific conditions of the
country in mind. But UNCTAD is giving some knowledge and sharing experiences and empirical
findings particularly in regards to cases of RBPs having effects of upon more than one country.


3.11 Responding to a question on whether WTO is assisting the TNCs get more market access
and thereby to get them dominance in small countries, which they might abuse afterwards, it was
stated that, on the contrary, competition rules could help to prevent abuses by TNCs. WTO is a
rule-based system, which in any case would be more favourable to weaker and small countries
than a system where there is no rule.


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3.12 Regarding the question of dispute settlement in a possible mutilateral framework, it was
stated that, nothing is final at this stage and developing countries should come with ideas. The
main purpose of a multilateral framework, if it were ever adopted, would be to support the
national competition policies of the individual countries. There can also be flexibilities and
countries need not accede to all the provisions, at least in the beginning.

3.13 Finally the Chairman observed that there are pessimistic views towards competition policy
which need to be removed. He also remarked that the relationship between economic
development and competition policy is not properly understood by the economists and the
governments and this need serious attention.


IV. SESSION II: WHAT IS HAPPENING IN THE DEVELOPED WORLD

4.1 This Session constituted of two presentations and was chaired by Mr. Peter Holmes. The
session mainly focused on the biggest obstacles in the way of competition policy. Mr. Shyam
Khemani made the first presentation on “Dealing with cross-border competition concerns”

I. Dealing with cross-border competition concerns

4.2 Mr. Khemani started with stating the factors that cause friction in the market, for instance,
Government intervention, private restrictions, etc, which tend to segment markets. He focused on
Restrictive Business Practices (RBPs) and explained the types and effects of these RBPs.

4.3 Types of RBPs with an international dimension

1. Price Cartels/Collusions are mainly of the following types
     - International cartels (for example the vitamin price cartel)
     - International cartels promoted or neglected by the government (such as export cartels)
     - Cartels between domestic firms and international firms

2. Mergers & Acquisitions are of the following types:
    - Between firms outside the country (effects get spilled over to third countries through
       exports, investments and the like)
    - International takeover of domestic firms (may lead to reduction in import competition if
       the foreign firm competed with the domestic firm in the market of the host country)
    - Privatisation: this covers the cases where public sector enterprises are sold to international
       firms and these firms try to extract anti-competitive benefits such as raising of tariffs and
       the like. Competition agencies need to shed light on these cases to prevent the occurrence
       of anti-competitive effects.

4.3 Effects of the cross-border type RBPs

    -   These practices result in unilateral price rise, output restrictions and market segmentation.
    -   Competition policy concern also arises if a merger of two firms, based in two separate
        countries leads to efficiencies in one case, while lessening of competition in the other.

4.4 Instruments identified for dealing with the RBPs as listed above:

    -   Bilateral


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    -   Mutual legal assistance treaty (for instance US & Canada have an assistance treaty with
        respect to the issue of price-fixing arrangements
    -   Search for multilateral arrangements (for instance MERCOSUR, NAFTA)
    -   Codes of behaviour (for instance the UNCTAD set on RBPs )

II. Fight Against International Cartels

4.5 Bernard „Joe‟ Phillips, Head of Division, Competition & Consumer Policy, OECD, made the
second presentation. He mentioned about the institutional design of the OECD. He said that
OECD, an organisation with 13 developed countries as its members, does not create binding rules
for the member countries. The OECD publishes country studies for stimulating public debate. In a
similar fashion, the output of the current project in terms of country studies needs to be published
for wider public debate. This would prove to be a catalyst.

4.6 On the position of US vis-a-vis competition policy in a multilateral framework, it was pointed
that US favours this stand and has proposed a dialogue in the area of competition policy, which is
endorsed by the European Commission.

4.7 Obstacles to Competition Law and Policy: The following two obstacles were emphasised
    - Lack of political will
    - Short-term focus of governments

4.8 The Strategy to be adopted to overcome these obstacles is awareness, education and public
debate on the issue of competition policy and law.

4.9 Challenges of Cartels

    -   They create inefficiencies and reduce consumer welfare
    -   They distort world trade
    -   They reduce international competitiveness

4.10 Several examples of international cartels were cited, such as,
 Graphite Electrodes case
 The case of Stainless Steel Tubes
 Lysine case
 Vitamins case

4.11 In this context, the importance of identifying the effects on developing countries of
international cartels was emphasised.

OECD Anti-Cartel Recommendations

4.12 These recommendations cover agreements relating to price-fixing and urges government
action. The objective behind these is to improve the effects of anti-cartel provisions. Further, it
was pointed that non-member countries can also associate themselves with the recommendations.

What are the challenges?

   Cooperation between competition authorities of different countries
   Effective leniency programme for whistle blowers


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4.13 In the context of benefits of leniency programmes it was mentioned that they help in
penetrating into the cartel and also provide direct insider evidence of secret meetings. Given the
benefits from leniency programmes, it was emphasised that appropriate incentives need to be built
into these programmes. Further, evidence suggests that such programmes give results. In this
context, the example of US leniency programme was cited, which is said to be working well.
However, it was also pointed out that leniency programmes may serve limit cooperation between
competition authorities of different countries if one country decides not to blow whistle on the
whistle blowers.

4.14 At the end of the presentations, Mr. Peter Holmes invited questions from the participants to
make the session more interactive and fruitful. Several issues came up during this session and the
questions that were raised can be summarised as follows:

   How to deal with OPEC (Organisation of Petroleum Exporting Countries)?
    What are the jurisdictional issues in this context?
      -In the context of jurisdictional issue it was pointed that individual countries can police
      activities in their own boundaries and penalise the perpetrators of such practices.

 What are the obstacles to international cooperation other than that of leniency programmes?
 - One obstacle is the protection of confidential information. This requires the existence of
   information sharing agreements.
 - Another obstacle is lack of willingness on the part of the countries.
 - Cooperation between countries at different stages of development is difficult to materialise;
   this would enhance the importance of promoting co-operation among countries at similar
   levels of development, particularly in the regional context.

 Do the OECD anti-cartel recommendations cover export cartels?
- The Anti-Cartel recommendations cover export cartels. It covers all the practices that are
  covered by natural laws.

4.15 Issues for Researchers

   Collect examples of cross-border abuses that have had an impact on the respective country
    and analyse the response of the competition authority.
   Identify the effect of home country mergers on the host country and the effectiveness of
    national merger control. Further identify issues relating to cooperation in this respect.
   Explore the possibility of cooperation on cross-border issues in the South Asian Region.
   Ascertain the effects of cross-border issues in general.
   To explore the issue of cooperation between a developed country and a developing country
    where the company alleged of anti-competitive behaviour belongs to the developed country.
   How the vitamin companies have behaved in these countries?


V. SESSION III: THE DEVELOPING COUNTRY EXPERIENCES

5.1 The session was chaired by Mr. Allan Asher, where experiences of three countries viz. Brazil,
Zambia and India were presented.




                                               12
5.2 The first presentation was by Mr. George Lipimile who is the Executive Director of the
Zambian Competition Commission. At the beginning he gave a brief background and the
historical perspective of the Zambian competition policy. Zambia had a socialistic type of
economy till the early nineties and hence did not have the need to have a competition policy.

5.3 But things have changed since then. With liberalisation and globalisation of the economy it
became necessary to have a competition law. Moreover, the World Bank prescriptions for the
region included competition policy as one of the conditionalities. There was a time frame also.
Even COMESA of which Zambia is a member has a competition provision. However COMESA
has taken little action with its implementation. Probably it was a question of priority. There are
other pressing problems like education and health that need to be attended.

5.4 The problem with the African countries is that, with their budgetary constraints they cannot
allocate enough funds for implementation of the competition law. The countries also lack
adequate and competent staff and capacity to do the job as demanded by the law.

5.5 He observed that the competition laws in the African countries are more or less replicas of
similar laws of the developed countries, which are not very appropriate for them.

5.6 With a lack of investment and outdated technology domestic companies are finding it difficult
to compete with foreign firms even in their home country.

5.7 Capacities of the competition authority have been undermined by the privatisation process.
The government divestment programme is more concerned with generating more money from
asset sales rather than dealing with competition. The domestic government also does not have
adequate power to deal with the big TNCs and sometimes they concede major concessions in the
face of threats of leaving the country.

5.8 After the speech of Mr. Lipimile, the chairman made brief observations. He emphasised that
in the context of developing countries like Zambia, the issue of indigineous business and policy of
protecting the small-scale sector are major issues to be dealt with. The issues were:

1. Competition problems, which arise from state control of business enterprises.
2. Issues associated with the protection and promotion of indigenous businesses.
3. Policies designed to protect small and medium scale enterprises.
4. Competitive restrictions flowing from tariffs and border controls on imports.
5. The false assumptions made by governments and donors that enforcement capacity is just a
    function of legislation and establishing institutions.
6. The demonstrated need for sharing of information by competition bodies with similar
    agencies in surrounding countries.

5.9 The next speaker in the session was Mr. Gesner Oliveira, who chaired the Competition
Bureau of Brazil for two terms. He started with his idea of peculiarities of transitional economies
like Brazil. These are smaller domestic market, high entry barrier, greater potential for
efficiencies, large informal sector, poor institutional development and lack of competition culture.
These make the task of the competition authority in a developing country even more difficult.

5.10 He feels that a three-pronged role is necessary by agencies in such a situation:

    Repressive role- to check the abusive practices by the dominant firms.
    Preventive role- to keep check on mergers and acquisitions and


                                                 13
   Educative role- to help develop competition culture.

5.11 He informed the house that the number of important cases has increased manifold over the
last few years. He also explained how CADE (Brazil‟s competition authority) handled the cartel
of steel industry and merger of Colgate and Kolynos, and noted that the intervention led to
benefits to the consumers.

5.12 He also dealt with the issue of operations of the foreign companies and how that affects
competition in the country. The subsidiaries of two foreign companies can merge to decrease
competition. A foreign subsidiary can also buy its domestic competitor to do away with
competition.

5.13 CADE also takes up advocacy campaigns along with a range of partner organisations in
universities and civil society. But he expressed his concern that most universities do not teach
competition issues.
5.14 According to him the biggest challenges are:

   Dissemination of competition culture
   Overcome institutional underinvestment
   Engage into international cooperation and
   Interfere with the regulatory process

5.15 Boundaries between competition and economic regulation should also be carefully mapped
and understood.

5.16 He expressed his personal concern that CADE is going to have a changed system where one
Director General will replace a multi-member commission, which might undermine its
independence and authority.

5.17 After his speech, the Chairman made his brief remarks by saying that for all countries in the
“7 up ” study institutional development is an important issue. The workshop and the project
would be of some help in this regard. Other issues for the “7-up” partners to arise from this
presentation include cross government linkages, the vital role of civil society, the inter-
relationships between competition and consumer protection and that between competition and
economic regulation. Institutional design and the independence of bodies are also cross cutting
issues. After this he invited Mr. G. R. Bhatia, Additional Director General of MRTP Commission
of India to share his experiences.

5.18 Mr. Bhatia started with his observation that the MRTP Act (of 1969) was framed in a
different economic context where government was following a planned economy model. It was
framed with three basic objectives of controlling:
-Monopoly
-Concentration of economic power and
-Mergers and acquisitions

5.19 In 1984 the Act was ammended to give it more power to grant stay order and compensation.
It also included unfair practices under its jurisdictions. But in 1991 the economic policy of the
country took a turn and the govt. felt that increase of economic power and mergers and
acquisitions are necessary to make corporate giants who will be able to compete internationally.




                                                14
Hence the provisions of mergers and acquisitions were removed from the Act. The scope the Act,
was broadened to bring the public sector companies under its jurisdiction.

5.20 However, uncontrolled concentration of power and mergers and acquisitions started creating
problems. He gave example of the merger of HLL and TOMCO where the merged entity got 87%
of the market share.

5.21 Under this backdrop an expert committee on competition policy was set up under whose
recommendations a new Act is in the process. The proposed competition law seeks to promote
and maintain competition explicitly. He suggested that the existing MRTPC might be allowed to
“die” when the new law comes into force.

5.22 After this the chairman invited questions and observations from the floor. Issues that
surrounded the question-answer session are:

   What should be the dividing lines between the competition and regulation authorities?
   If the models of developed country are not appropriate, then what are the options?
   Why is Brazil moving from multimember commission to one member body?
   Does Brazil have regulatory authorities only at federal as well as state levels?
   How to make more funds available to competition authority when there are other important
    areas.

5.23 Responding to the questions, Mr. Oliveira observed that the competition should concentrate
more on implementing the competition law and the regulatory authorities should take sectoral
approach and economic regulation. He also stressed on consultation with consumer organisation
in dealing with the cases.

5.24 Some of the questions, of course, did not have any ready-made answers. One of the
participants emphasised that political will on part of the government is necessary to have an
effective competition policy.

VI. SESSION IV: “WHY NEW COMPETITION LAWS?”

6.1 Three countries‟ experiences were shared in this session. Two of them viz. United Kingdom
and South Africa have enacted a new competition law in the near past, while for the third – India,
a new competition bill has been drafted, waiting to be passed by the Parliament. The idea behind
this session was to learn from these experiences as to what are the factors that made these
countries pass new competition laws and abandon the old ones. In all the three countries the main
force behind the change of law was the change in their political and economic scenario.

United Kingdom

6.2 Mr. Phil Evans was the first speaker of this session. He explained why there was a new
competition law for UK and highlighted various economic and political factors for the same. The
following points emerged from his presentation:
  The process of liberalisation, beginning in the 1970s and exposure to the European
     Communities law during the same period have created a demand for the change in the
     existing competition law. Non-harmonised law with the EC law meant increase in the
     transaction cost because of multi-legal regimes.
  Immediate factors:


                                               15
   Previous governments had already thought thrice to change the law;
   Wide consultations were held and there was almost consensus on the change;
   New government, both pro-business as well as pro-consumer, saw the best opportunity to
     make both camps happy. Also looked at competition policy as a modernising process.
 Change in law brought institutional change as well. Monopolies & Mergers Commission gave
  way for Competition Commission. This was not only institutional change but also a
  psychological change. The quality of the decisions improved considerably.
 Cultural factors are also important for the functioning of an organisation.

South Africa

6.3 Mr. Shan Ramburuth gave an explanation for the adoption of a new competition law in South
Africa. He highlighted the following issues:
 Change in the South African politics was the main reason for the change in its competition
    law. The country saw a transition from an apartheid government to a democratic government.
 Three immediate reasons for the change were:
    Presence of political will;
    Inadequacy of the previous regime; and
    Need for the new South Africa to take into account the „public interest‟.
 The enactment of the new law was a product of participatory policy-making exercise. The
    competition policy principles were negotiated by business, labour and government
    representatives in a tripartite negotiating structure. Afterwards, a range of organised and
    powerful groupings that had an interest in competition policy took part in the policy-making
    exercise.
 Significantly, consumers were not represented directly into the process. Despite a strong civil
    society, autonomous consumer movement has not taken root in SA. In absence of consumer
    movement, it is upto the commission to represent consumer interests by being proactive.
 The SA approach has drawn heavily from the experience and practices of develop countries.
    But to ensure its relevance, the policy makers began to develop new approaches with
    developing countries with similar redistributional and poverty alleviation needs.
 One such innovation could be found in the declaration of the public interest objectives, which
    are to be taken into account in decision-making. The competition policy could not ignore the
    social needs of the people and competition is not a value in its own right but only in so far as
    it met socially desirable objectives. Considering this, in addition to the key objectives of
    efficiency and consumer welfare, the act includes objectives like protection of SMEs,
    promotion of employment and growth of black-owned enterprises.
 One of the most important improvements over the old legislation was the independence of the
    institutional setup. The old Act was implemented by a government department, whose role
    was to advise the Minister of Trade and Industry, who in turn, was not obliged to endorse its
    recommendations.
 New Act has created three institutions: the Competition Commission (the investigative and
    prosecutorial body), the Competition Tribunal (the adjudicative body) and the Competition
    Appeal Court (the appellate body), a specialist division of High Court.


India

6.4 „Why a New Competition Law for India?‟ - was explained by Mr. Pradeep S Mehta with the
help of some cases and issues, to start with. The following are the highlights:



                                                16
   Recently the Department of Company Affairs has directed the Director General to investigate
    whether there exists a cartel in the cement industry. Prima facie it seems that there exists a
    cartel, for at least three reasons: 1. Markets are generally slow, but the price of cement has
    increased considerably; 2. There is no shortage at the supply side; and 3. Demand is also
    somewhat stable.
   In the past also, the DG has twice investigated for collusive behaviour in the cement industry
    but failed to prove that. The main reason being that the existing law does not bestow adequate
    power upon them.
   When the existing competition law i.e. Monopolies and Restrictive Trade Practices Act was
    passed, then it had some relevance as there was a controlled and command economy with
    central planning as the key instrument. The objectives of the Act were to check economic
    concentration and to prohibit restrictive, monopolistic and unfair trade practices.
   In the old Act penalty provisions were absent. Only cease and desist provisions were made.
   Before the 1991 amendment, only the private sector was under the purview of the Act.
   The existing law has become less relevant since India undertook its reform process in 1991.
    Factors like deregulation, privatisation, inception of WTO etc. demand for a new competition
    law.
   Certain key elements, either missing or are not explicit in the existing law are: abuse of
    dominance; cartels; collusion; price fixing; predatory pricing; merger control; intellectual
    property rights; etc.

6.5 Next, he went on to enlist the future challenges, which are as follows:
 Constitution of benches – the efficacy of new law would depend upon the kind of people that
    would constitute the competition commission.
 Interface between competition authority and sectoral regulators (central and provincial).
 Interface between competition law and consumer protection law. There is an elaborate
    structure of consumer courts in India – National Commission at the National level; State
    Commissions at the Provincial level; and District Forums at District level. These courts deal
    with competition abuses at the retail level. There is a debate going on that the competition
    commission would look after the macro level competition concerns, while consumer forums
    would be given powers to deal with the retail level competition abuses. At present the existing
    competition authority has injunction powers while the consumer forums have only
    compensatory powers.
 Dealing with cross-border issues.
 Dealing with international trade instruments, e.g., anti-dumping measure.
 Consumer participation. Both resource problem as well as capacity building needs.
 Understanding elements of the competition policy, which is different from the competition
    law. There could be some government policies, which can reduce competition in the market.
    One has to deal with them also.

6.6 At the end of all the presentations, Mr. Sothi Rachagan, the chairperson of this session, invited
questions from the participants. The following questions were raised from the floor:

   Whether the takeover of TOMCO by Hindustan Lever has done any harm to the consumers or
    whether there has been any abuse of the market position?

Response: A lot of studies have been done about the fears of such take-overs but not about their
effects. More and more MNCs are also coming into play and there is no doubt that the price rise
in soaps and cosmetics is at a much faster pace than the normal inflation as a result of these
mergers and take-overs.


                                                 17
   Various Government monopolies are being transferred to private monopolies. What effect
    does that have on the consumers?

Response: There is a possibility of a jump of Government monopolies to private monopolies,
especially, in the utilities sector. But all new regulatory laws have a mandatory membership for
consumers, which is definitely a welcome move.

   There is a general perception that the sectoral regulators favour industrial regulators rather
    than the consumers. Is that recommended?

Response: This is not exactly true and it cannot be said that the consumer movement would be
unable to check this culture.

   Competition Commission‟s autonomy and consumer protection are closely related. How can
    the competition commission be really effective if it gets funding from the Government?

Response: Getting funds from the Government does not mean that the Government is ruling the
commission. It is an autonomous authority and can be really effective.

VII. SESSION V: CROSS-SECTORAL ISSUES

7.1 The speakers in this session were Mr. Cezley Sampson and Mr. Luis Tineo. The session was
chaired by Mr. R. Shyam Khemani. The main area of discussion was „The Roles of Competition
Authority and Utility Industry Regulators in a Liberalised Market Environment‟. The following
were the highlights of the presentations made at this session in the context of Regulatory Agency
vs. Competition Agency:

   Cross-sectoral dimension of competition policy raises the issue of institutional demarcation.
    Further, sound principles need to be built for determining primacy in case of any conflict
    between the regulatory agency and the competition agency. In this context, one suggestion is
    that the principles of competition law and policy can be taken as a benchmark for assessing
    regulatory policy.
   It is worth noting that regulatory agency takes measures to address the structural aspects
    whereas competition agency takes care of the behavioural dimension. Further the area of
    action for the utility regulators is narrow relative to the area of action by the competition
    agency.
   Important is to identify the correct interface between competition agency and the regulators.
   In connection to the conflict that may arise between the competition agency and regulatory
    agency, the example of Mexico was cited. In this country, the sectoral regulator can impose
    price fixation only after a certification from the competition agency. Further, if the firm in a
    particular sector loses its dominance, the certification can be withdrawn.
   Another example of Russia was cited where the competition agency has the power to over-
    rule the acts of regulators on competition grounds.
   Given that with time it is possible to introduce competitive elements in hitherto natural
    monopolies, the interface between competition agency and regulatory agency should be
    dynamic and ever evolving.
   Legislation is required to give the right to competition agency to see if the industry is
    competitive. Further, the continuous interaction of competition agency and regulatory agency
    should be made mandatory by law. This would help harmonising the two agencies.



                                                18
   Finally, regulation should be shaped in such a way as to make the regulators less
    interventionist.
   A competition agency is only likely to be successful as the regulator of utilities, if there is
    strong institutional capacity in the country, combined with well established competition
    judicial precedents.
   The need for independent industry regulators has accelerated in recent years with the
    expansion of privatization in various utility and infrastructure sectors such as electricity, water
    and transport.
   The critical areas where competition rules interact with industry specific rules are,
    interconnection or access, monopoly pricing, anti-competitive agreements and merger control.


VIII. SESSION VI: COUNTRY PRESENTATIONS

PART- I

8.1 During the first part of the session on country presentation, four presentations were made,
three from South Asian countries, namely, Pakistan, Sri Lanka and India and one from Africa,
namely, Zimbabwe. The presentation for Pakistan was made by Mr. Sajid Kazmi; for Sri Lanka,
the presentation was made by Ms. Thushari de Zoysa; Mr. Moses Tekere made presentation for
Zimbabwe and for India, Mr. Manish Agarwal made the presentation. An attempt has been made
in this report to bring out the highlights of each presentation.

Pakistan

8.2 The Monopoly Control and Restrictive Trade Practices Law, 1971

   The broad objectives of the law are to check undue concentration of economic power,
    monopolies and restrictive trade practices.
   Public Sector Undertakings are exempted from this law.

8.3 The Monopoly Control Authority

   Civil servants are appointed for tenure of five years. They are not very active and say that the
    cases are assigned to them at the end of their service when they neither have the capacity nor
    the time to work.
   It is funded by the Federal Government through grants, and over the time there has been a
    decline in the budgetary allocation.

   For default in complying with the directions of the authority, penalties amounting to rupees
    0.1 million and additional Rs 10,000 per day for continuous defiance are imposed.

   Any person/undertaking aggrieved by an order of the authority can appeal against it to the
    High Court within 60 days of the receipt of such order.

8.4 Consumer protection law

   Applicable in Islamabad and North West Frontier Province only
   Along with CPA, some other legislation also exists such as state regulation of various state-
    run utilities, regulatory frameworks, etc.


                                                  19
   Pakistan enacted competition legislation (MRTPO) in 1971. The law needs amendment more
    frequently.
   Penalties imposed by MRTPO are very low.

Sri Lanka

8.5 The highlights of the Sri Lankan presentation are as under:
 At the infant stage of competition policy formulation
 There is a law but there is no “focused” activism
 The manner in which Sri Lanka has approached the issue is different.
 The bulk of consumer protection law in Sri Lanka is found in the Consumer Protection Act
    No.1 of 1979 (CPA)
 Series of policy changes in an ad hoc manner, which result in a fragmented approach to policy
    formulation.
 Short term measures are taken and there is no continuous monitoring
 Each government, when it comes to power, changes the policy and as a result there is no
    effective implementation of these policies.


8.6 Institutional framework – Fair Trading Commission

   It is not necessarily an effective mechanism
   Minister has the power to hire and fire
   Political capture
   Not independent
   None of the actions of the ministers can be challenged at the court of law.
   Enforcement mechanism is in effective- The staff consists of only 27 people and there is lack
    of trained staff
   Budget allocation has been largely underutilised.
   Lack of confidence as a corporate watchdog
   Main function of FTC is price control. It has necessary interface with other regulatory
    framework, such as Department of Internal Trade (consumer protection authority).
   Absence of clear lines of authority in the hierarchy
   Institutional mechanism is weak in terms of stimulating competition and protecting
    consumers.

8.7 The legal system

   The Fair Trading Commission Act, 1987
   There are no clear definitions of various terms, which is very important for any law
   Sections 12, 13 & 14 of the Act deal with monopolies, mergers and anti-competitive practices
    respectively. The “public interest test”, which delimits the legality of such market
    structure/behaviour, is found in Section 15(1)(a).
   Section 12 of FTCA identifies existence of a monopoly under five specific instances.
   The decisions are not necessarily uniform, rather arbitrary at times.
   Lack of awareness regarding the importance of competition policy and there are delays in
    delivery of justice.
   Absence of best practices



                                               20
8.8 Competition Culture

   Competition culture is lacking in Sri Lanka
   New law is likely to amalgamate Fair Trading Commission and Department of Internal Trade
   Law exempts the government transactions and government authorities from the purview of
    Competition Authority.


Zimbabwe

8.9 It has some peculiar features in terms of Competition Policy.

   Zimbabwean economic history has been modeled by two factors
        -Race relation – concentration
        -Ideological conviction – socialistic ideologies, parastatal monopolies
   New economic policy – privatisation was a revenue-raising exercise rather than promoting
    competition.
   Thrust towards indigenising the economy, rather than inviting FDIs.
   Rather monopolistic economy – high degree of concentration of firms, barriers to entry, etc.
   All the empirical studies conducted so far confirm high degree of concentration. This is
    induced by the Government or by prevailing industrial policy.
   The need for competition law in Zimbabwe became paramount when the country adopted
    economic reform measures in 1990.
   Assumption that market reform will automatically bring competition in marketplace.
   Zimbabwe now has a competition law. It has not been effective. It has been drafted on the
    basis of model law, which has not taken into consideration political and economic issues faced
    by Zimbabwe.
   Enforcement of law – The Competition Commission has the power to regulate prices of goods
    and services. Its orders have the same effect as High Court or Magistrate Court judgement
   So far 45 different competition cases relating to mergers and acquisitions and abuse of market
    power have been handled
   Rothmann and BAT merger – The Commission approved the merger on the ground that it was
    beneficial. However, there was no concrete answer as to what ways was it so.

8.10 Two critical issues

1. Autonomy of Commission – wholly funded by the Government.
2. Integrity of the people manning the Competition Commission
       - Appointed by the president
       - They have failed to identify government actions
        - They tend to favour the government

8.11 Three major problems

    o   Suspicion from the private sector – composition, appointment and funding
    o   Lack of resources – funding and other sources.
    o   Work is complaint driven and not proactive.
    o   Competition is still in its infancy. They still have to learn a lot before they could make
        serious impact.



                                                21
India

8.12 To give a background, the general economic policies were discussed and the highlights of
the same as are under:
 The Industrial Policy of 1991 abolished licensing in all but 18 industries, many of which were
  subsequently delicensed.
 At present only seven industries are subject to licensing.
 Small-scale industry reservation policies have not undergone any major change since 1991.
 The import-licensing regime has been dismantled.
 All non-tariff barriers (NTBs) have been phased out from all tradables except consumer
  goods.
 The peak tariff rates have been brought down to maximum 50 percent from up to 355 percent
 Increasingly receptive attitude towards FDI and foreign licensing collaborations.
 Greater role was sought to be given to multinational enterprises.
 The policy allows automatic approval system for priority areas.
 Recently, the government has decided to permit up to 100 percent foreign ownership on
  automatic basis to investment proposals on ports and roads.

Competition Law

8.12 The objective of the Act was prevention of concentration of economic power, monopoly and
restrictive trade practices. Amendment in 1984, made provisions for the regulation Unfair Trade
practices. Amendment in 1991 brought public sector undertakings were brought under the
purview of the Act, but restrictions with regard to prior approval of Central Government for
establishing, expansion or amalgmations and takeovers of undertakings were deleted from the
statute.

8.13 MRTP Commission can only make recommendations to the government in cases of
monopolistic trade practices. But these recommendations have rarely been implemented.
Restrictive Trade Practices- The Commission, in such cases, can pass “cease and desist” order
Unfair Trade Practices – MRTP commission can pass its own orders and has been quite active.
However, the proposed Competition Bill provides that these cases should be dealt under the
Consumer Protection Act, 1986.

8.14 SEBI takeover code – just deals with protecting the interest of the minority shareholders, but
not from the perspective of enhancing competition.

8.15 Structure of the Competition Authority- In addition to chairman, the Commission has not
less than two and not more than eight members. Government makes the appointment of chairman
and members of the Commission. Evidence shows that retirees in the Judiciary and the Executive
are selected for these appointments.

8.16 The “High Level Committee on Competition Policy Law” has suggested the drafting of a
new competition law and repealing of the MRTP Act. Based on these recommendations, a draft
Competition Bill has been prepared by the Government to invite comments from various
stakeholders.

Panelists

8.17 At the end of all the presentations, a few observations were received from the panel:


                                                22
8.18 The observations made by Gesner Oliveira are as follows:

o Division of labour between competition authority and regulatory institutions.
     o Difficult to change the institutional configuration
     o In the early stage, it is easier to set the design.

o The presentations put great emphasis on the historical perspective and interaction with other
  policies. Case laws were not cited. Pattern of jurisprudence of various countries can be
  compared and analysed. It would be useful to have a kind of statistical analysis of the
  jurisprudence.

o Public interest question: Useful to try to identify certain patterns in the public interest
  questions. It is also important to know whether the application of the public interest provision
  is transparent or not.

o Interaction between Competition Policy and consumer protection: Public awareness helps.
  One launched by Competition Authority and Consumer protection agency jointly in Sao Paulo
  was useful.

o How consumer agencies/organisations could participate in the decisions and consultations for
  the process of competition policy. How consumer groups can participate in the monitoring of
  the implementation mechanism.

o Transparency mechanism: concern on political culture. Brazil‟s experience – compensate for
  the lack of credibility in the government through transparency mechanism. All the decisions
  taken in public could help. Public hearing has been useful in decisions making in the
  regulatory agencies.

8.19 Mr. Phil Evans made the following observations:

Two general observations:

o Social aspects and public interest criteria should be incorporated in the Competition Policy.
o Disparity in the competition policy of different countries according to different political
  scenario.

Specific observations:

o Regional nature of many economies necessitates application of law in the regional
  perspective.
o Provisions relating to appointment and dismissal of the members of the Commission are also
  important. Reappointment is bad, as they tend to develop loyalty towards the government.

8.20 Mr. Bernard Philips observed:

o There are wide differences among the countries. They are at different stages of economic
  liberalisation. There cannot be any ideological uniformity in terms of recommendation.

o India seems to be much more liberal than Sri Lanka or Pakistan. New draft competition law in
  India will go a long way to ensure competition in the marketplace. Competition authority


                                               23
   could be given power to investigate into the privatisation process (e.g. Mexico), to penalise
   the regional and local authority involved in rent seeking.

o Independence of the authority is a must.


8.21 Prof. Frederic Jenny, the chairperson of this session, made the following comments:

   o One of the issues being debated in WTO is: If there is a competition policy, is it necessary
     to have a competition law? International community should ponder over this issue. For
     example, Hongkong and Philippines do not have a competition law, but still, they have a
     competition policy.

   o Rule of law, competition law and investment- As per a study done by UNCTAD, when
     there is predictability due to competition law, foreign investment flows in. But countries
     from East Asia attracted a lot of investment without having competition laws.

   o Public interest issues: Protection of SMEs, purchase preference, price preference. In the
     short run they introduce distortions. But they have been contributing to economic growth.
     But in Korea it was unstable.

   o Reduction of market power could be a political goal as in Pakistan.

   o Independence – there has to be a political preparedness to be transparent.

   o There is no unique solution – FTC chairman in Korea became powerful and independent
     when he was elevated to the position of a minister.

   o Financial sector behaviour and access to credit are also important. For example, the
     financial sector acts as an entry barrier in Pakistan.


PART - II

8.22 During the second part of the session on country presentation, four presentations from
African countries, namely, Kenya, South Africa, Tanzania and Zambia, were made. After the
presentations four respondents (including the chairperson) made their critical remarks. Following
are the highlights of the country presentations as well as the issues raised by the responding panel
and the floor.

Kenya

8.23 Mr. David Ong‟olo, Principal Consultant, Spellman & Walker Associates, Nairobi, Kenya,
made the presentation. The following were the highlights of his presentation:
 There has been steady industrial and trade liberalisation in Kenya since 1986, however, of late
    there has been an emerging „legislative militancy‟ (assertive Parliament) against liberalisation.
 Price control is one of the objectives of the competition law of Kenya. Though there has been
    price decontrol since recent past, of late there is a wave in favour of price re-control and anti-
    liberalisation.




                                                 24
   Among the consumer abuses, tied selling is a big concern. There are also empirical evidences
    that after merger of certain entities, prices have increased.
   There is a need to revise the present competition law.

South Africa

8.24 Mr. Simon Roberts from the University of Witwatersrand, Johannesburg, made the
presentation and the following points were highlighted:
 Concentration, inequality, sluggish growth and high unemployment mark the South African
    economy. Growth rate has declined from 5% in 1970 to 2% in 1990. Few conglomerates
    control the economy. Certainly competition policy has a role to play, particularly in the supply
    side of the economy.
 New competition law was enacted in 1998 with objectives of increasing efficiency, enhancing
    consumer welfare, increasing employment, development of SMEs, increasing black
    ownership and enhancing international competitiveness of the domestic firms.
 „Dominance‟, according to the competition law, depends on market-share or market power.
    The law provides for a list of prohibited acts. However, there is no concept of joint dominant
    provision in the law.
 Regarding horizontal restrictive practices, there is a list that provides for practices that are per
    se illegal. The main criteria, however, is the degree of impediments to competition.
 Regarding merger, a threshold has been prescribed beyond which any proposed merger has to
    be notified. The volume of merger cases is a matter of concern to the competition
    commission.
 Another area of concern is the analytical requirements to assess any case.

Tanzania

8.25 Owing to Mrs. Faye Sampson, the compiler of the preliminary country paper, not being well,
the presentation was made by Mr. Cezley Sampson, Lead Advisor, Privatisation and Regulation,
Presidential Parastatal Sector Reform Commission, Dar es Salaam, Tanzania. He enlightened the
participants on the following points:

   Tanzania perhaps follows socialistic approach more than any other 7-Up country. It has a very
    strong parastatal policy, with 80% of the economy still under the public sector (1993 data).
    This is despite the fact that it has started liberalisation process since mid-1980s. Though fruits
    of liberalisation are still to trickle down, there is no such anti-liberalisation wave as in the case
    of Kenya.
   Competition law was enacted in Tanzania in 1994, primarily as a conditionality from the
    World Bank/IMF. The law sets up a competition commission and a competition tribunal.
    Apart from dealing with the restrictive trade practices, mergers etc. it also deals with
    consumer protection. However, these institutions are not independent of political interference
    and there is no system of accountability as well.
   „How to find independent source of funding for these institutions‟ is one of the main issues.
   There is no competition culture in Tanzania and competition concerns are also low on the
    priority list of the government. More so, these are not even very well understood.
   The main role, a competition policy can play in Tanzania, is to facilitate transition from
    control regime to a liberalised one.
   The paper also highlighted the key issues in the respective role of regulators and the
    competition authorities.



                                                   25
Zambia

8.26 Mr. Muyunda Illilonga of Zambia Consumers Association, Zambia, made the presentation.
He highlighted the following points:

   Competition is relatively a new issue in Zambia and a competition law exists in the form of
    Competition and Fair Trading Act, which came into force in 1995. The enactment was largely
    a consequence of the conditionality set by the IMF/World Bank.
   The working of the competition regime is without any clear consumer policy. Further, it also
    suffers from inadequate financial support.
   The law also does not provide for level playing field for the Zambian industries.

Panel response

8.27 At the end of all the presentations, a few responses were received from the panel:

8.28 Mr. Peter Holmes observed that:
 Analytical requirement, access to information etc. for the competition agencies are very
    relevant to come out from this project.
 What if the competition policy is most minor thing in determination of competition? There is
    a dire need for competition advocacy in certain countries such as Tanzania.

8.29 Mr. Allan Asher made the following observations:
 It is natural that competition policy in developing countries should be different from that of
    the developed countries, and hence, it is necessary to explore as to „how‟ and „what‟. Also an
    analytical study of such differences can throw some light on the desired characteristics of
    competition policy for the transitory period.

8.30 Mr. Robert Anderson made the following comments:
 Though there are common elements in the selected countries as far as problems are concerned,
    there may not be a common recipe. Some common issues are: lack of institutional capacity
    including human resources and financial resources; role of other regulators and limits on
    competition agencies; independence of competition agencies. There is a need for creative
    thinking for new solutions.
 One common ground for solutions is competition advocacy. How inter-governmental
    organisations like the WTO might help in this regard need to be explored.
 There are different ways to gain necessary independence for the competition agencies. Need
    to explore which way suits a chosen country.
 There was no mention about the role of international cooperation in institution building during
    the launch meeting. This was an important element, which should be considered.

8.31 The observations by Mr. Shyam Khemani are:
 Whether there is a need for competition law/policy for competition in the market place.
    Though Hong Kong has been saying that there is no such need, it is considering a competition
    law. Even Singapore is considering enacting a competition law. A competition law may not be
    needed for competition in a market in the beginning, but at some stage one would need to
    have competition law/policy to buttress the competition in the market.
 Regarding independence of competition agency, there may be different views between theory
    and practice. This needs to be highlighted.



                                                26
   Regarding cases, it has to be highlighted whether it is driven by the complaint only or by
    some politician for their own agenda.
   As far as price control is concerned, the outcome should mention whether the same is
    permanent or transitory.
   Access to finance should also be dealt upon, as without it no new enterprise can enter into a
    market. Hence it could be a significant entry barrier. Thus the study should also focus on the
    banking system of the respective countries.
   It would be good if the study could suggest some ways for the improvement of credibility of
    the competition agencies. One can go by the Australian experience, but there is a danger of
    backfiring.

8.32 Responses from the floor
 Once a competition regime is set up, even as a conditionality from IMF/WB, the government
    has to take initiative for its proper functioning. If there are any institutional or financial
    problems, the government should follow it up with the WB, instead of keeping silent.
 The project should reflect donor (say WB) & recipient (government) interface vis-à-vis
    competition regime.
 In Zambia, competition agency and utility regulators have some coordination. They do not
    work in isolation. For instance, the Executive Director of the Zambian Competition
    Commission is on the Board of regulators in the electricity sector. No rules or regulations
    affecting price or competition can be adopted by electricity regulators without having consent
    of the ZCC.
 The country researchers to identify particular goals (in the field of competition) of their
    respective countries and also to point out as to what they want from this project.
 Though an independent competition agency is needed, there is a genuine fear that it may turn
    into a „super policeman‟.
 Research outcome should also be made available to respective country‟s Geneva (WTO)
    delegates, so that they could take their positions vis-à-vis competition issues accordingly.
 The study should deal in details the „exemptions & exceptions‟, level of fine, appeal and
    review procedures.

8.33 To summarise the whole session, an attempt is being made to highlight the common and
different elements in the competition regimes across these countries and the works that need to be
done by the 7-UP project.

8.34 The Commonalities of the countries

   Historically the countries, after gaining their independence, have designed a policy of
    economic growth based on government intervention, industrial policy incentives or mixed
    economy models.

   Trade, investment and industrial policies tended to be highly protective of domestic
    enterprises, which restricted competition to a significant extent.

   Such policies led to concentration of economic power in the hands of small number of people.
    So much so that in the case of Pakistan only 22 families held 66% of industrial assets and
    87% of financial and insurance sector assets of the country.

   Rent seeking behaviour prevailed in all the countries, but the degree varied depending on the
    level of transparency and predictability in the government decision-making.


                                               27
   In order to check the concentration of economic power and monopolistic tendency of the
    private business enterprises, all the countries have some law or other in place. Similarly,
    institutional mechanisms were also put in place.

   Typical problems being faced by these countries include hostile regulatory environment, lack
    of proper implementation of the legislation, lack of independence and autonomy of the
    competition authorities, lack of resources and reactive nature of these authorities.

   “Political capture” of the competition authorities is a widespread concern.

   Ad hoc administrative rulings have produced anti-competitive outcomes or created legal
    uncertainty affecting investment and growth.

   Public interest criteria enlisted in all the jurisdictions have provided some discretionary
    powers to the competition authorities. This has led to anti-competitive and anti-consumer
    decisions being made at times.

   Competition culture is mostly lacking in all the countries.

   Consumer protection laws, in some form or other, exist in all the countries, however they have
    not been able to effectively protect the consumers.

8.35 The differences among the countries

   Sri Lanka and Zimbabwe introduced their competition laws in response to the challenges they
    faced due to liberalisation of their economies.

   Kenya, Zambia and Tanzania enacted competition laws, primarily as IMF/WB conditionality.

   India, Pakistan and Sri Lanka have, to a certain extent, realised the fact that their competition
    laws have not really been able to achieve the objectives they were supposed to realise and they
    are in the process of enacting new laws. India has already completed its homework and is in
    the process of tabling the new bill for Cabinet approval and subsequently for the approval of
    the Parliament. South Africa has also enacted a new law in the recent past upon realising that
    the old law was not good enough.

   Since the countries represented during the presentation were at different stages of economic
    liberalisation and they face different challenges, there cannot be any ideological uniformity in
    terms of recommendation.

   Public sector enterprises (PSEs) are exempted from the purview of the competition legislation
    in Pakistan and Sri Lanka. However, in the case of India, a provision to include them within
    the jurisdiction of competition authority was introduced through the amendment of MRTPA
    in 1991. In the case of Zimbabwe since the law was introduced much later, PSEs are also
    included under its purview.

8.36 What needs to be done?

   Study the new economic goals of competition policies.


                                                 28
   Study the interface between competition policy and regulatory frameworks on the one hand
    and competition policy and consumer policy on the other.

   Study the interface of competition policy with trade, investment and industrial policies
    pursued by these countries.

   Study a selected range of case laws to understand the patterns of jurisprudence in various
    countries. It would be useful to have statistical analysis of various jurisprudences and compare
    them.

   Study the selected cases where public interest criteria were used to adjudicate cases. Study
    whether the application of the public interest provisions has been transparent or not.

   Study whether and how financial sector can be included within the jurisdictions of
    competition authorities and what is the impact of competition (or lack of it) in financial sector
    on product market competition.

   Study whether and how regional and international rules on competition could help these
    economies reap the benefits of competition.


IX. SESSION VII: WORKING GROUPS ON QUESTIONNAIRE AND METHODOLOGY

9.1 In this session, the researchers from CUTS and the other partner organisations formed three
working groups to deliberate on the draft questionnaire and methodology of approach and other
research issues.

9.2 The groups were as follows:
Group I: Mr. David Ong‟olo, Mr. Ujjwal Kumar, Mr. Sajid Kazmi, Ms. Thushari Zoysa, Mr.
Jasson Shambusho.

Group II: Ms Faye Sampson, Mr. Muyunda Illilonga, Mr. Moses Tekere & Mr. Nitya Nanda.

Group II: Ms. Malathy John, Mr. Manish Agarwal, Ms. Anjali Bansal, & Mr. Simon Roberts.

9.3 Most of the other participants also joined the deliberations as Resource Persons. Mr. Phil
Evans, Mr. Peter Holmes and Mr. Allan Asher were the Lead Resource Persons of the groups I, II
& III respectively.

9.4 Each of the groups was allotted sets of questions on issues related to institutional framework
for enforcing the competition laws in the project countries. Group I was to take up questions
related to „Budget & Cost‟ and „Extent of Autonomy‟. Similarly, Group II was to take up „Staff
Composition‟ and „Infrastructure Facilities‟, while Group III discussed on „Cases & Outreach‟.
They were also given the brief outlines they could deliberate on.

9.5 The groups discussed on the issues and topics as allotted and came out with draft sets of
questions on them along with some guidelines on methodology of approach, target audience etc.
Finally outcomes of the group discussions were presented by the Leaders/Lead Resource Persons
of the groups in a join sitting. The presentations were followed by further discussions, which lead


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to some modifications in the draft questionnaires and the guidelines. The outcomes of the whole
exercise are as follows:


Draft Questionnaire
(Outcomes of Working Groups‟ Deliberations)




9.6 General Guidance:

1. There might be a number of agencies in a country, responsible for implementation of the
provisions of the competition law. It was decided that although brief information may be collected
on all such agencies, details will be collected only from the agencies, which are fully committed
to implementation of competition law.

2. Data sets should be for a minimum of 5 years ideally for 10 years

3. All data should be reported in national currencies. We assume the data will be nominal data

4. We need to incorporate time scales into each of the areas

5. The researcher may collect any other information not listed here, if he/she feels important.
However, attempt should be made to get more of statistical information.

9.7 Budget and costs

1. What is the annual budget of the CA (Both nominal and as a proportion of GDP and Federal
   Govt. Budget)?
a) If there is a shortfall, how is it met?
b) If there is an excess or saving, how is it accounted for?

2. What is the process for approving the budget?
a) Who approves the budget?
b) Who manages the budget?

3.   What are the sources of funding for the budget?
a)   govt. grant
b)   proceeds from fines
c)   filing fees

4. Is the expenditure audited?
a) by a govt. agency
b) by a private audit body

9.8 Extent of autonomy

1. Is the CA accountable to:
a) parliament
b) specific legislation


                                                30
c) independent body
d) government department

2.   What triggers an investigation?
a)   Can the authority trigger an investigation on its own?
b)   Can a reference come from the government?
c)   Can a complaint come from a private company?
d)   Can the complaint come from a private individual?

3.   What powers does the authority have?
a)   investigative
b)   prosecutorial
c)   adjucative
d)   advocacy
     i) general
     ii) statutory

4. Can the authority exempt agreements or abuses under its own volition?
a) individual agreements/abuses
b) categories/sectors of agreements/abuses

5. What is the procedure under which the authority takes decisions? Are the decisions:
a) binding
b) a recommendation subject to confirmation
   If subject to confirmation, then:
   a) Who makes the final decision?
   b) How often the recommendations have been accepted/rejected?


9.9 Staff Composition

1. How is the CA structured (Get an organisation chart)

2.   What is the staffing strength (Sanctioned & existing)?
a)   Members (full-time and part-time)
b)   Professionals
c)   Support staff

3.   How are the different categories of staff are distributed over different functional areas:
a)   Mergers & acquisitions
b)   Restrictive trade practices
c)   Research & investigation
d)   Finance & administration

4.   What are the professional/technical background of members and other staff
a)   law
b)   economics
c)   general administration
d)   MIS/systems




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(For member it has to be indicated that how many of the are from govt., judiciary, consumer and
business groups as well as other civil society organisations. )

5. What are the procedures for appointment/dismissal of members and other staff?

6. Staff Turnover (entry and exit of staff over that last five years)

7. Are salaries and benefits of the staff are comparable to the private sector?

8. Is it difficult to recruit the required staff with appropriate qualifications/skills?
If yes, then what are the reasons?

9. Is there any regular training programme for the staff at every level (Collect training
   manual/report if available)?

10. Where and how are the training programmes organised/staff sent out for training?

11. What is the system of evaluation of staff performance (Collect manual/report if available)?


9.10 Infrastructure & Facilities

1. Total office space

2. Telephone/fax/internet/e-mail

3. Computers/printers

4. Photocopier

5. Space of library

6. Library staff

7. No. of volumes

8. No. of periodicals subscribed


9.11 Cases and Outreach

1. What are the main types of cases (and their approx. number) that come before the competition
   authority?

a)   What do you mean by a case?
b)   Number of complaints and number of cases
c)   Sectors in which maximum cases have emerged
d)   Threshold criterion as to what leads to cases
e)   Actions taken in such cases; how are competition matters dealt with in the economy?
f)   Time taken to settle each case
g)   Effects of the cases


                                                   32
2. Who brings forward these cases?

a) Whether it is the ministers or the consumers or the competition authority on its own motion?
b) How effective is the competition agency itself?

3.   Is there any discernible trend?
4.   Is there a right for private action, such as by a consumer organisation?
5.   If yes, how many cases have been brought forward by such private action in last five years?
6.   Is there an annual report?

a) Main contents of the report
b) Availability of the report

7. Does the authority issue periodical press releases or organise press conferences?

a) How many conferences are organised?
b) When are such conferences organised?

8. Has the authority released any education material for public or businesses?
9. Is there any compliance education or training by the authority?

a) How aware is the authority itself in terms of the basic concepts?
b) What are the strengths, weaknesses and institutional problems of the agency?
c) How aware are the consumers about the issues?

10. Have any cases come up which have cross border implications such as with neighbouring
    countries?
11. Is there any regional co-operation arrangement, permanent or ad hoc?

a) Whether there is any need for such an arrangement?
b) Whether the arrangement is formal or informal?

12. If yes, what are its basis, kind and procedures?


X. SESSION VIII: STRATEGIES FOR PROJECT IMPLEMENTATION

10.1 It was the last session of the meeting. Chaired by Mr. Pradeep S Mehta, the session was to
discuss various aspects of the 7–Up Project, like its strategy, methodology, questionnaire for
interviews, progress, expected outcomes etc. The Chairman set the ball rolling by inviting all the
partners to reflect on the methodology, which they would adopt for the research work.

10.2 Mr. Simon Roberts of South Africa was the first person to express his opinion. According to
him, they have the framework and have identified a list of facts. But they are not very clear about
the rest of the methodology as yet. He suggested that we should evaluate various stages of
evolution of competition policy and that there are certain critical issues around which we need to
look. We need to focus on perceptions of different groups and there should be qualitative analysis
of the same.




                                                 33
10.3 The Chairman observed that a result oriented, open-ended interview technique is to be
adopted as the research methodology. We should be clear of what we want to get and the
questions framed should be direct and should cover various topics. He said that as soon as we
give options for a question, the qualitative analysis comes automatically.

10.4 Mr. Dhanjee wanted to know how the budgets of competition authorities of different
countries would be presented so that they become comparable. The Chairman reminded the house
about the suggestion that came from one of the participants that the budget allocations for the
competition authority should be analysed as a proportion of total government budget as well as
the GDP of the country. A consensus was achieved in the house in this regard.

10.5 Mr. David Ong‟olo of Kenya suggested that we should try, to the extent possible, to follow
one particular type of layout for what is expected, the length of the chapter, contents required, etc.
so that the output received becomes comparable.

10.6 For this, Mr. Bernard Phillips said that it was essential to have a common framework. He
said that this approach was followed even in various comparative studies conducted by OECD.
He said that it was desirable to have active correspondence between researchers working together.
There should be continuous exchange of information among them through e-mails and they may
also consult outsiders who might be helpful for their research.

10.7 Mr. Shyam Khemani complemented that for preliminary country papers, clear guidelines
about the structure, contents, etc. were given and the same approach should be followed in future
also.
10.8 Mr. Pradeep Mehta said that continuous co-ordination was being maintained with the
partners from CUTS office at Jaipur.

10.9 Mr. Peter Holmes suggested that the guidelines for the first part of the first phase were quite
clear but for the second part, had only so far developed the outline of the questionnaire, but it
should be able to go beyond the collection of questionnaire data. The preliminary country papers
would provide the necessary lead. He said that when we go through these papers in the light of
issues raised at the meeting and further develop the reports, we would find that many of the
questions to be further explored, would be common and the rest could be based on the key
country specific issues that the researchers and the discussion had already identified in the
presentations of the respective country papers.

10.10 Mr. Phil Evans suggested that, different questions should be framed for different groups
like consumer groups, regulatory agencies, etc. He suggested that we should take some of the
important elements, turn them into integrated set of questions and circulate to the researchers for
their study.

10.11 Mr. Moses Tekere of Zimbabwe opined that, the most important thing for research was
collection of elaborate data, which they were already doing. But he suggested that there should be
a common outline for such collection. He also suggested that some workshops should be
organised to provide a direction in respect of the methodology for the project. In response, Mr.
Pradeep S Mehta observed that this would be possible only if the resources permit and if proper
data has been collected.

10 .12 Ms. Malathy John of Sri Lanka argued that, while framing the methodology, one should
keep the expected outcomes of the project in mind. For framing the questions, one has to go



                                                 34
backwards – you expect something and then you frame questions to find out how to go ahead in
order to achieve the expected goals.

10.13 Mr. Pradeep S Mehta said that the expected outcome of the project is to improve the
competition culture within the country and to find out what are the problems in implementing the
existing competition laws. In order to improve the existing laws, the problems have to be clearly
identified. These problems can be internal as well as external. We have to decide how to deal with
such problems.

10.14 Mr. Mehta went on to say that there are a number of controls but nothing substantial is
happening. This is probably because there is no advocacy or consumer movement. He cited the
example of the vitamin case and the cement industry in India. He said that the cement industry in
India controls the cement industry in Sri Lanka. There are strong cross-border implications. There
are a lot of common issues between the countries but unless one has a scientific base, one cannot
compare them. He suggested that the probable base could be the amount invested in the
competition authority and the quality of work performed by this authority.

10.15 Mr. Mehta stressed on the development of a sense of ownership among all the project
partners. They should feel that they are doing their own work rather than working for somebody
else. He highlighted some of measures and issues that will go a long way in achieving the project
goals:

   Setting up of a National Reference Group (NRG): He said that a NRG would be set up in each
    of these countries which would continue as an advocacy group to provide information about
    what is required, etc. NRG would constitute of civil society, consumer groups, chambers of
    industry, Ministries of internal and external trade, etc. He said that each partner has to make
    sincere and strong efforts to make NRG as cross-sectional as possible. There may be
    differences in opinion about the phase one country report. The report has to be tested at the
    NRG meeting and the final draft would be prepared after that.
   There is a lot of literature on competition issues, which is already existing. A survey of that
    literature is crucial for the project.
   Interview notes of the investigations made by the researchers have to be furnished and not just
    the results of such investigations.
   The questionnaire will be finalised and the detailed guidelines for the project shall be prepared
    only after detailed discussions. It has to be ensured that the document is agreed to and
    accepted by all.
   For preparing the deliverables of the project and for making them more informative and
    useful, the partners should send us news clippings and other information on competition
    related issues on a continuous basis as the Indian newspapers do not report such news that are
    taking place in other developing countries.
   The partners can also look into the impact of “hard-core cartels” on their economy.

10.16 For the second phase of the project, he said that an action plan had not been chalked out as
yet. He said that it would be decided as a joint effort on the part of all the project partners on the
basis of correspondences, newsletters, discussions, etc. He expected that the first phase itself
would provide some sort of action plan for the second phase.

10.17 Mr. Peter Holmes opined that it was necessary to prepare tentative or general outline for the
second phase of the project. He said that the compilation prepared by the core-researcher of the
project, Mr. Rakesh Basant, could be used as a beginning by the researchers for second part of


                                                 35
first phase. The paper raises a number of important questions, which would help them in
preparing the questionnaire.

10.18 Mr. Shyam Khemani said that a road map has to be made, as we know where we want to
go. He suggested that although the cross-border issues are planned to be dealt in the second phase,
the researchers will come across such issues even in the first phaes. They should start collecting
information regarding the cross-border issues without waiting for the second phase to start.

10.19 Mr. Bernard Phillips recommended that a lot of country studies had been done at OECD
also and the information might prove to be beneficial for this project. He said that the information
was available on their website also. He suggested that the country papers or any other final
product should not have any factual errors and to ensure this, the same should be circulated to all
the interested parties within the country and the errors should be corrected. He also suggested that
public meetings or public debate would be helpful in getting the final output.

10.20 Mr. Cezley Sampson of Tanzania said that public awareness has to be stressed at the earlier
stages of initiatives and development. He also suggested that spread of awareness should be done
not only in the capital city but also in the rural areas.

10.21 Mr. Rajan Dhanjee observed that, at times, the campaigns by the civil society go too far
which raise questions on the very credibility of the institutions. He suggested that the civil society
should try to get the results without affecting the credibility of the competition agency. The civil
society must understand the importance of the competition agency.

10.22 Mr. Shyam Khemani said that the project report should be planned with the consensus of as
many parties as possible. It is our duty to publicise the report and make the necessary
amendments. The report has to stand on its merits and there can be no question of any
compromises.

10.23 In a similar note, Mr. George Lipimile said that since the project will give a lot of emphasis
on the functioning and effectiveness of the competition authorities, they should be given fair
chance to defend their positions.

10.24 Mr. Robert Anderson suggested that, the core group of people of the project should reflect
as to what has been suggested at the meeting and get on with it. Though they should not rush the
things, they must at least start the process.

10.25 Mr. Gesner Oliveira observed that this is the first project on competition regime of such
huge scale that is being implemented outside the OECD countries. Even in Latin America, there
has been no such project. The project is and will remain to be of immense interest to him and he
would be glad to be closely associated all through its implementation.

10.26 Mr. Robert Anderson informed the house that the issues being studied in the project are
also among the key topics being debated in the WTO Working Group on the Interaction between
Trade and Competition Policy. The outputs from the project could, therefore, be of considerable
interest and relevance. Mr. Dhanjee of UNDP echoed the similar sentiments.

10.27 Mr. Peter Holmes observed that the first part of the first phase went off quite well. In fact, it
has done much better than expected. He congratulated CUTS and all other partners the success
and expressed his hope that the same tempo and standards will be maintained throughout the
implementation.


                                                  36
10.28 At the end, Mr. Pradeep S Mehta, on behalf of CUTS, expressed his gratitude to DFID, the
partners and all others concerned with the project and thanked them all for their valuable
cooperation. All the participants too expressed their gratitude for being invited at such a large-
scale meeting and congratulated CUTS for taking up such an ambitious project.




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