Lessons from Other Countries Presented by Dr. Selim Raihan
In this session we will discuss….. • Competition policy in different countries. • Some case studies: What are the evidences of competition policy helping consumers in other countries? • Lessons that Bangladesh can derive from cross country experiences
Competition Policy in Different Countries • Malaysia • India • Vietnam • South Africa • Chile • Venezuela
Competition Policy in Malaysia • No national competition policy law. • Sectoral approach to competition and regulation. • Policies of deregulation and liberalisation of the economy since the 1980s • Deregulation of trade and investment, privatisation of power generation, the distribution sector, telecommunications, transport and the postal services boosted overall market competitiveness.
Competition Policy in Malaysia (Cont.) • No administrative authority for determining appropriate business ethics and trade practices. • There are about 30 laws to regulate certain activities of enterprises and to protect consumer interests. • Under these laws a consumer or trader may seek redress through the appropriate Ministry, public agency or via the Civil Courts.
Malaysia (Continued…) Competition Policy in Malaysia (cont.) For details please see • Global Competition Forum Website: www.globalcompetitionforum.org • Lee, Cassey (2004) : Competition Policy in Malaysia, CRC Working Paper 68.
Competition policy in India • India had a competition law since 1969 by the name of Monopolies and Restrictive Trade Practices Act. • That law has become redundant for several reasons. Therefore a new law has been drafted.
Competition policy in India (cont.) • India has consumer protection act and corporation working for securing consumer rights against any anti-competitive practices of firms. • The Consumer Protection Act is known as COPRA (1986). It recognizes the followings rights to the consumers: • Safety • Information • Choice • Representation • Redress • Consumer Education
Competition policy in India (cont.) For details, please have a look at: • CUTS Centre For Consumer Action Research And Training (CART): “Consumer Rights And Its Expansion Rights And Responsibilities” • CUTS :“Articles on Consumer Policy and Issues”
Competition policy in Vietnam • Sector wise policies and regulations. • A competition Law promulgated in 2004 with a competition Authority • The Competition Authority - • Controls the process of economic concentration • Investigates unfair competition practices • Sanctions unfair competition practices
Competition policy in Vietnam (cont.) For details: Comparative Study of Sectoral Regulation in Developing Countries: Lessons for policy, Governance and Implementation -A Case Study of Vietnam.
Competition policy in South Africa • The Competition Commission plays a pivotal role. • The Competition Act (Act. No.89 of 1998) was passed by Parliament in September 1998. • The enforcement agencies are the Competition Commission, the Competition Tribunal and the Competition Appeal Court.
Competition policy in South Africa (cont.) For details: • Global Competition Forum Website: www.globalcompetitionforum.org • Comparative Study of Sectoral Regulation in Developing Countries: Lessons for policy, Governance and Implementation -A Case Study of South Africa.
Competition policy in Latin American Countries • The Chilean system of protection of Competition in markets is integrated by The Tribunal for the Defence of Free Competition and The Economic National Prosecutor's Office. The Decree-Law 211 of 1973 is the legal framework of this system. • The free competition regime in Venezuela started in 1992 when the government settled a group of new policies in order to prepare the country to face globalisation process, including to the Law to Promote and Protect the Exercise of Free Competition.
The Indian Case Study • Ghoten Gas Agency, a Kolhapur based gas supplier in India, was forcing the buyers to buy hot plates at the time of releasing fresh gas connection. • The Competition Authority held such a practice. • The Authority directed that wherever a customer purchased a hot plate simultaneously with a fresh gas connection, the gas agency should make it clear on the invoice that the hot plates were purchased voluntarily. • Further a notice board should be prominently displayed in the agency’s premises that the customers were free to purchase hot plate either from Ghoten Gas agency or from any other source. Source: CUTS “Competition Policy and Law Made Easy”
The Malaysian Case Study • Prior to 2002, MAS was a monopoly operator in the domestic airline market. • With the entry of AirAsia the domestic airline market became more competitive. • AirAsia offers no-frills domestic flights at low fares. • MAS responded by offering 50 percent discounts for ten seats in every flight. • AirAsia also responded to MAS’s pricing strategy by offering lower fares. • Despite MAS’s plea for government (Ministry of Transport) intervention to resolve the perceived ‘price war’, the government has maintained that the competition between the two firms as healthy competition.
Case study-:South Africa The Spanish Case Study • Four Sugar producers in Spain were engaged in market allocation agreement (apart from price fixing, sales quota agreements) that restricted sugar supply to the level at which maximum monopoly profits could be earned. • As a result. Spanish sugar prices, for many years, were 5 to 9 percent higher than those in the rest of Europe. • The Spanish Service for the Defence of Competition uncovered the cartel and slapped 8.7 million euros fine on the four producers. Source: CUTS “Competition Policy and Law Made Easy”
Case study-: Kenya The Kenyan Case Study • South Africa Bottling Company Pty (SABCO) proposed of taking over all the other bottling companies and consolidating them into one entity. • The Kenyan competition authority decided that such a plan would lead to both horizontal and vertical concentration of market power and the likely abuse of dominance, and accordingly stopped the process from going further. • Thus, the Kenyan authority, dealing with a huge global company, applied the competition law to foreclose likely anticompetitive practices in the market. See pages 14,15 of UNCTAD, April 2002: Recent Important Competition Cases in Developing Countries
The Argentinean Case Study • Four foreign companies active in Argentina as suppliers of medical oxygen to public and private hospitals were fined 70.3 million pesos (US$ 24 million) for operating a price cartel for medical oxygen. See page 4 of UNCTAD, September,2005 : Recent Important Cases Involving More Than One Country
The Brazilian Case Study • Three chemical or pharmaceutical firms (Roche, BASF and Aventis Animal Nutrition, the latter formed through the merger of Rhône-Poulenc and Hoescht) fixed the prices and allocated market shares of bulk vitamins in Brazil as an extension of their participation in an international vitamins cartel which was prosecuted in the United States. See pages 5,6 of UNCTAD, April 2002: Recent Important Competition Cases in Developing Countries
Lessons for Bangladesh • Competition policy and law and consumer protection policy can take different forms for different countries. • There are verities of anti-competitive practices and consumer abuses, so the regulatory authority should be innovative in nature. • For developing countries, resource constraint is one of the major problem in establishing competition authority. • Consumer welfare should be explicitly mentioned in the legislation. The role of consumer in CL should also include the right of consumer organizations to bring complaints to the CA. • It is very important that the reports on anti-competitive practices be published in the media to raise the awareness of the consumers.