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Title: Competition%20Policy%20and%20Law:%20Lessons%20from%20Other%20Countries


1
Competition Policy and Law Lessons from Other
Countries
  • Presented by Dr. Selim Raihan

Presented at the Workshop on Competition Policy
Law CUTS International Central Institute for
Economic Management (CIEM), Vietnam April 27 and
28, 2006
2
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 Vietnam can derive from cross
    country experiences

3
  • Competition Policy
  • in Different Countries

4
  • Australia
  • Malaysia
  • India
  • Bangladesh
  • South Africa
  • Chile
  • Venezuela

5
Competition Policy in Australia
  • Australian competition policy dates from 1906
    when the first Federal law dealing with
    restrictive practices was enacted.
  • Contemporary Australian competition policy stems
    from the 1965 Trade Practices Act.
  • Liberalisation of the economy in the mid 1970s
    and the 1980s (tariff cuts of 1973, floating of
    the dollar, and the elimination of foreign
    exchange controls).
  • The Competition Policy Reform Act was enacted in
    1995.

6
The NCP's Institutional Framework
  • The Australian Competition and Consumer
    Commission (ACCC) An independent statutory
    authority
  • The National Competition Council An independent
    advisory body
  • The Australian Competition Tribunal A
    quasi-judicial review body

7
For details please see..
  • Global Competition Forum Website
    www.globalcompetitionforum.org
  • Parliament of Australia Parliament Library
    http//www.aph.gov.au/library/intguide/econ/ncp_eb
    rief.htm

8
Competition Policy in Malaysia
  • No national competition policy and law.
  • Sectoral approach to competition and regulation.
  • Policies of deregulation and liberalisation of
    the economy since the 1980s
  • 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.
  • No administrative authority for determining
    appropriate business ethics and trade practices.

9
For details please see
  • Global Competition Forum Website
    www.globalcompetitionforum.org
  • Lee, Cassey (2004) Competition Policy in
    Malaysia, CRC Working Paper 68.

10
Competition Policy in India
  • India had a competition law since 1969 by the
    name of Monopolies and Restrictive Trade
    Practices Act.
  • That law became redundant for several reasons.
    Therefore a new law has been drafted.
  • 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 rights such as safety,
    information, choice, representation, redress, and
    consumer education to the consumers.

11
For details please see
  • Global Competition Forum Website
    www.globalcompetitionforum.org
  • CUTS Centre For Consumer Action Research And
    Training (CART) Consumer Rights And Its
    Expansion Rights And Responsibilities

12
Competition Policy in Bangladesh
  • No formal competition policy and law.
  • No formal competition authority.
  • Different governmental policies Trade policy,
    Industrial policy, Exchange rate policy, FDI
    policy, Privatisation policy, Labour Policy, etc.
  • The Monopolies and Restrictive Trade Practices
    (Control and Prevention) Ordinance Promulgated in
    1970 is still in force in Bangladesh, which
    provides for taking action against any unfair
    competition or concentration of economic power,
    or illegal trade practices.

13
For details please see
  • Global Competition Forum Website
    www.globalcompetitionforum.org
  • BEI (2005), Competition Scenario in Bangladesh,
    Prepared for CUTS-International Within the
    framework of the 7Up2 Project Advocacy and
    Capacity Building on Competition Policy and Law
    in Asia

14
Competition policy in South Africa
  • The Competition Commission plays a pivotal role
    in creating environment for efficient business
    sector and in ensuring competitive prices and
    greater product choice for consumers.
  • 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.

15
For details please see
  • 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.

16
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.

17
Case Studies
18
The Indian Case Study
  • A gas supplier in India was forcing the buyers to
    buy hot plates with fresh gas connection.
  • The Competition Authority held such a practice.
  • The Authority directed that 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 agencys 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

19
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 MASs pricing strategy
    by offering lower fares.
  • Despite MASs plea for government intervention to
    resolve the perceived price war, the government
    has maintained that the competition between the
    two firms as healthy competition.

20
The Spanish Case Study
  • Four Sugar producers in Spain were engaged in
    market allocation agreement 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 Report of the Ministerial level meeting
    of the OECD, 2000

21
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

22
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

23
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

24
  • Lessons for Vietnam

25
  • Components of competition policy

Competition Policy
Government Policies
Competition Law
Private Actions
Deregulation and Privatization
Industrial Policy
Consumer Policy
Trade Policy
Regulations Governing Capital and FDI
Other Policies
26
Competition Law (National)
Anti-Competitive Agreements Between Firms (
Collusion) e.g.
Regulation of Mergers to Prevent Tactics to Gain
Excessive Dominance in a Market
Abuse of a Dominant Market Position e.g.
  • Import cartels
  • Price fixing
  • Market sharing
  • Bid rigging
  • Limiting production or investment
  • Refusal to buy or supply
  • Tie-in arrangements
  • Exclusive-dealing arrangement
  • Resale price maintenance
  • Territorial allocation between supplier and dealer
  • Predatory pricing
  • Price discrimination
  • Excessive pricing
  • Exclusionary vertical restrictions
  • Abuse of intellectual property monopoly

Applies to
  • Total unification of the companies involved
  • Buying of sufficient shares in a company so as to
    have a say in policy formulation

27
Need for a Competition Policy
  • Benefits of to Consumers
  • Ensures a fair deal in the market place with-
  • The best possible choice of quality,
  • The lowest possible prices, and
  • Adequate supplies of commodities.

28
Benefits for efficient producers
  • A safeguard against practices that could drive
    companies out of business.
  • Lower entry barriers in the market promote
    entrepreneurship and growth of small and medium
    enterprises.
  • Efficient allocation and utilization of resources
    ensures more output and employment (although in
    the short run there can be some job losses, which
    should be covered by some safety-net programs).
  • Control of international competition, such as
    international cartels, that may adversely affect
    a countrys trade and development.

On the whole, a competition policy maintains and
promotes the competitive spirit and culture in
the market.
29
Globalization and the need for Competition Policy
Globalization and Competition
threat to
Outcome of
Concentration of Market Power
  • Therefore, we need competition policy to monitor,
    prevent and control anti-competitive practices.

30
Concluding Observations
  • 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.
  • It is very important that the reports on
    anti-competitive practices be published in the
    media to raise the awareness of the consumers.

31
  • Thank you!!
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