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Introduction to the Competition Assessment Framework Seminar on Enhancing Development through a Competition Culture 14 August 2008, New Delhi. Roger Nellist Acting Head Growth and Investment Group Department for International Development London r-nellist@dfid.gov.uk. Why it matters.

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Introduction to theCompetition Assessment Framework Seminar onEnhancing Development through a Competition Culture 14 August 2008, New Delhi

Roger Nellist

Acting Head

Growth and Investment Group

Department for International Development

London

r-nellist@dfid.gov.uk

why it matters
Why it matters
  • Why are we interested in (fair) competition?

‘Competition is absolutely essential at every stage of economic development’ (Robert Solow, Commission on Growth and Development, May 2008)

  • Role for Competition Policy

‘Strong competition policy is not just a luxury to be enjoyed by rich countries, but a real necessity for those striving to create democratic market economies’ (Joseph Stiglitz, Nobel Prize Winner, August 2001)

  • Reflections on Competition Policy

‘An active competition body is an essential element in the architecture of a modern market economy’ (Indian Prime minister, 2006)

dfid support for competition policy
DFID support for Competition Policy
  • Technical

National regimes (inc Peer reviews); Market studies (India, Bangladesh, VN); COMESA RCP; UNCTAD; international Roundtables; Competition Assessment Framework (CAF)

  • Building a broad-based culture of competition

Four major CUTS policy/advocacy programmes in 27 Africa and Asia countries

  • Research

ODI research project (5 countries, using CAF+);

CUTS political/economy of competition/regulatory regimes

competition assessment framework 2008
Competition Assessment Framework (2008)

Downloadable at:

http://www.dfid.gov.uk/pubs/files/caf-2008.pdf

Growth and Investment Group

Department for International Development

London SW1E 5HE

r-nellist@dfid.gov.uk

n-godfrey@dfid.gov.uk

t-allan@dfid.gov.uk

competition assessment framework caf
Competition Assessment Framework (CAF)

In part, a response to:

“The ‘really big’ distortions to competition are in poor countries”

Distortions to competition are not always obvious: “they have to

be dug out of each market”; “they are hard to find…(and)

significant forces gain from their existence”

(William Lewis, The Power of Productivity, 2004)

competition distortions may be hidden
Competition distortions may be ‘hidden’…..
  • Some barriers overlooked through familiarity, or accepted without further thought, especially where they are long-standing
  • Barriers affecting intermediate goods/services may be obscured in price/supply of final goods/services
  • Significant policy/regulatory barriers may exist at State/local government level in some sectors, but attention may focus on national level

...Need for systematic analysis of the state of competition…

caf design considerations
CAF: Design considerations
  • Practical diagnostic policy tool for use by policy makers and others in developing countries;
  • Reflects public sector restraints on competition as well as private sector ones;
  • Recognises role of ‘vested interests’ as well as more ‘technical’ impediments to competition;
  • Builds on best and evolving good practice, but recognises more limited data, capacity and experience in many DCs;
  • Developed as by-product of DFID-FIAS partnership with CCI;
  • Pilot use, to be extended/updated with experience.
the caf approach summary 1
The CAF Approach: Summary (1)
  • CAF poses sets of questions grouped by theme
  • Select sectors important to economy or consumers
  • Identify relevant markets, competitors and market structure
  • Look for barriers to entry (natural, strategic, regulatory, gender)
  • Do Government policies/institutions hinder competition? (all levels of government, SOEs, public procurement, regulated sectors, trade and industrial policy, unequal enforcement of laws)
the caf approach summary 2
The CAF Approach: Summary (2)
  • Identify vested interests
  • Look for signs of anti-competitive conduct by firms (abuse of dominance, collusion and cartels, M&As, vertical issues, other)
  • Drawing Conclusions on state of competition in relevant market, and possible corrective actions
  • Annexes: Typical competition issues in 8 Sectors (Agriculture, Construction, Distribution, Energy, Finance, Manufacturing, Telecoms, Transport)
examples of caf in use
Examples of CAF in Use
  • Some of the CCI market competition studies
  • Bangladesh and Vietnam
  • ODI Research Programme (5 countries in Africa and Asia)
  • CUTS 7Up4 programme countries (West Africa)
  • UK OFT training programme in recent EU accession countries
  • National training WSs (e.g. East/Southern Africa)
  • Growth diagnostics (Making Markets Work for the Poor)
competition assessment framework 200811
Competition Assessment Framework (2008)

Downloadable at:

http://www.dfid.gov.uk/pubs/files/caf-2008.pdf

Growth and Investment Group

Department for International Development

London SW1E 5HE

r-nellist@dfid.gov.uk

n-godfrey@dfid.gov.uk

t-allan@dfid.gov.uk