NATIONAL TRAINING WORKSHOP ON COMPETITION POLICY AND LAW FOR MOZAMBIQUE

1. NATIONAL TRAINING WORKSHOP ON COMPETITION POLICY AND LAW FOR MOZAMBIQUE KASTURI MOODALIYAR SENIOR LECTURER IN COMPETITION LAW- UNIVERSITY OF WITWATERSRAND SOUTH AFRICA MOODALIYARK@LAW.WITS.AC.ZA

2. SADC perspective on competition issues The Southern African Development Community (SADC) has been in existence since 1980. • Member states include: Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, United Repulic of Tanzania, Zambia and Zimbabwe.

3. SADC Objectives • Achieve development and economic growth, alleviate povety, enhance the standard and quality of life of the people of Southern Africa and support the socially disadvantaged through regional integration; • Evolve common political values, systems and institutions; • Promote and defend peace and security; • Promote self-sustaning development on the basis of collective self-reliance, and the interdependence of Member States; • Achieve complementarity between national and regional strategies and programmes; • Promote and maximise productive employment and utilisation of resources of the Region; • Achieve sustainable utilisation of natural resources and effective protection of the environment; • Strengthen and consolidate the long-standing historical, social and cultural affinities and links among the people of the region.

4. SADC perspectives on competition policy • Competition Policy aims to promote competition, its purposes is not to protect is not to protect a specific competitior but rather to enhance the process of competition. • Public interest objectives are increasingly being explicitly included in competition policy especially in develoming countries. • The objectives of Zambia’s competition policy, for eg, include the promotion of innovation, and South Africa’s competition policy requires that the promotion of small and medium sized (SME) enterprises be considered in merger evaluation. Both innovation and SME promotion are usually key industrial policy objectives.

5. Competition Policy in SADC • Trade and market liberalization were key features of the Structural Adjustment Programmes adopted by most SADC countries during the 1980’s and early 1990’s. Markets were opened to new competition and market forces were freed in sectors that were previously fettered by price and other controls. • The wave of privatisation, with the state retreating significantly from the sphere of productive economic activity, with state-owned monopolies being taken over by private interests, or protected monopolies being exposed to market forces, generated renewed interest in regulatory oversight of infrastructure and other previously state controlled sectors. • The retreat of the state opened opportunities that could be seized by private concentrations of economic power and which could produce outcomes no more efficient or equitable than those associatedwith the previously state-owned enterprises.

6. Competition Policy Challenges in SADC • The lack of capacity in the area of competition policy poses sginificant challenges in SADC. A number of countries including Swaziland and Botswana, are drafting legislation, some with assistance of the United Nations Conference on Trade and Development (UNCTAD), resources from the region and Comesa. • The recently concluded Southern African Customs Union (SACU) agreement requires that each member country have a competition poicy, proving impetus for policy devlopment. • WTO members have agreed to start negotiations on a multilateral agreement on Competition in 2005. This has also motivated focus on the role and significance of competition policy in a developing country context.

7. Competition Policy Challenges in SADC • Implementation of the SADC Trade protocol has highlighted the challenges of regional integration in SADC. • Implicit in the process of integration is a complex tension between national and regional priorties. • In the case of competition policy, this exists in that that policy is bounded within national jurisdictions, reflecting national prioties. • Regional integration in the form of cross-border investment and trade activities means that competition has a national but increasingly a regional character too.

8. Competition Policy Challenges in SADC • Privatisation is an important and competition-related issues for SADC countries. Many SADC countries have privatised. In some cases extensively, previously state-owned enterprises or public utilises. • The objectives of privatisation may be articulated to include a rationalisation of the role of government in the productive sphere of the economy and the attraction of foreign direct investment. In this context the competition implications of privatsation are important. • If a private monopoly is replacing a public monopoly, how cn the abuse of market dominance be precluded, and what will be the relationship between competition policy and sector-specific regulation that may apply in the case of telecommunications or a transport sector?

9. Competition Policy Challenges in SADC • The challenges implicit in the process of regional integration, for the conduct and implementation of ocmpetition policy, are considerable. • As regards merger control, the impact of the merger in retail or the production of consumer goods in South Africa, for eg, on other SADC countries could be significant. The impact of the merger would need to be assessed. • Regarding restrictive practices, the task of competition authorities, given their national jurisdiction, is complicated in the assessment of restrictive practices, by the regionalisation and globalisation of markets. Restrictive proactices usually involve action by firms with commmercial presence in one country on the market of another country wheter they have market presence. • The national character of of competition law precludes the competence to investigate or sanction firms located in another country. The benefits of collaboration in the assessment of restrictive practices that may spill over into other markets is however obvious.

10. Conclusion • Effective implementation of competitoin policy requires substantive capacity in both the public and private sectors. It is possible however, to devlope capacity-sharing modalities which can assist especially the smaller coutnries in the region, and also play an important role in promoting regional policy convergence in the area of competition policy. • The linkages between trade, investment and competition pose significant challenges for policy makers in SADC. As the SADC region becomes more integrated in terms not only of trade but also other cross-border economic activities, and the region becomes more globally integrated, the importance of competition policy, at national, regional and multilateral level increases. • The development of markets requires effectvie intervention to ensure that efficient and equitable outcomes are possible, and that they materialise. • Competition policy is necessary to counter the powerful incentive to rig the market process and skew the distribution of the benefits of trade liberalisation, perhaps especially intra-regional trade liberalisation.

11. COMESA perspective on competition policy • Common Market for Eastern and Southern Africa was established in 1994. • A regional trade and investment integration grouping comprosing 19 countries in Eastern and Southern Africa. • Comesa’s goal: to create an internationally competitive economic community with high standards of living for its people.

12. COMESA Membership • Burundi • Comores • Congo • Djibouti • Egypt • Eritrea • Ethiopia • Kenya • Libya • Madagascar • Malawi • Rwanda • Seychelles • Sudan • Swaziland • Uganda • |Zambia • |Zimbabwe

13. Comesa Free Trade Area (FTA) • Comesa FTA launched on 31st October 2000. • 13 Member states participating in the FTA: • Burundi • Comores • Djibouti • Egypt • Kenya • Libya • Madagascar Malawi Mauritius Rwanda Sudan Zambia Zimbabwe

14. FTA implications and the need for Competition framework • FTA intensified competition among economic operators; desire to cut corners (through sub-standards goods, no labels, etc) appeared real. • Secretariat invoked provisions of Article 55 of Comesa Treaty which prohibits anti-competitive behaviour before the launch of FTA in 2000. • In April 2000, proposed formulation of competition regulations under Art.55.

15. Proposal for Regional Competition Regulations- Re Article 55. • Proposal was accepted in 2001 after effects of the FTA were felt and need for safeguards and regulation of competition became obvious. • Formulation of regional law (regulations) took place in six months and adoption took 2 yrs. • Reason for delays- opposition from business interests and low level of awareness & appreciation among policy and decision-makers.

16. FTA implications and the need for Competition framework • To take the process forward, COMESA embarked on extensive national consultants and took Trade Ministers through a technical session on merits and relevance of CLP in economic development and regional integration. • Regional law finally implemented in December 2004.

17. Future steps • Setting up Regional Competition Commission; Staffing the Commission and training its staff; • Educating stakeholders on their rights and obligations in relation to Regional Competition Relations. • Ensuring anti-competitive practices are outlawed in practice.

18. END • THANK YOU