GREETINGS
TO
PARLIAMENTARIANS
AT THE
NATIONAL TRAINING WORKSHOP
ON
COMPETITION POLICY AND LAW
ACCRA, GHANA
29 APRIL 2010
BENEFITS FROM COMPETITION
Dr. S. CHAKRAVARTHY
(Profession : Civil Servant)
Formerly, Member, Monopolies and Restrictive Trade
Practices Commission, Member, High Level Committee on
Competition Policy and Law And Member of Committee for
Drafting the Law.
Presently, Adviser/Consultant
Competition Policy and Law
HYDERABAD, INDIA
LPG PARADIGM
PRE-REFORMS
POST-REFORMS
• LICENSING
• LIBERALISATION
• PLANNING
• PRIVATISATION
• GOVERNMENT
• GLOBALISATION
L P G PARADIGM
( POST - REFORMS )
POLICY CHANGES POST-REFORMS INCLUDE:
•
DEREGULATION AND SIMPLIFICATION OF LICENSING AND
APPROVAL PROCEDURES
• EXEMPTION OF A SPECIFIC AND SIGNIFICANT NUMBER
OF INDUSTRIES FROM LICENSES, APPROVALS AND QUOTAS
• NEW ECONOMIC ADJUSTMENT MEASURES
• DIVESTITURE AND SALE OF GOVERNMENT ASSETS
• GRADUAL DECLINE IN THE INTERVENTIONIST ROLE OF
THE PUBLIC SECTOR
• PRIVATISATION
• ENCOURAGING COMPETITION
JENNY ON REFORMS AND
COMPETITION
“THE WIDELY HELD PERCEPTION THAT
REGULATED
ECONOMIES
IN
WHICH
COMPETITION IS RESTRAINED THROUGH
GOVERNMENT REGULATION ARE INEFFICIENT,
UNDEMOCRATIC OR UNFAIR EXPLAINS TO A
LARGE EXTENT WHY WE HAVE WITNESSED A
PATTERN OF CHANGES IN MANY COUNTRIES
OVER
THE
LAST
DECADE
INCLUDING
DEREGULATION
OF
ECONOMIES,
PRIVATISATION AND INCREASING RELIANCE ON
COMPETITION IN THE MARKET PLACE”
NEED FOR COMPETITION
REGIME
COMPETITION
POLICY
AND
COMPETITION LAW ARE REQUIRED
EFFECTIVE COMPETITION POLICY
PROMOTES A COMPETITIVE BUSINESS
ENVIRONMENT AND IMPROVES STATIC
AND DYNAMIC EFFICIENCIES
COMPETITION LAW PREVENTS ABUSE
OF MARKET POWER AND CURBS ANTICOMPETITIVE PRACTICES
RUBRIC OF COMPETITION LAW
FOUR COMPARTMENTS ARE GENERALLY THE
CORE OF COMPETITION LAW:

ANTI-COMPETITION AGREEMENTS

ABUSE OF DOMINANCE

MERGERS, AMALGAMATIONS,
ACQUISITIONS AND TAKE-OVERS

FOSTERING COMPETITION
BENEFITS OF COMPETITION –
AN ILLUSTRATION
• IN
THE
EUROPEAN
UNION
IMPLEMENTATION OF COMPETITION
POLICY RESULTED IN REMOVAL OF
BARRIERS TO TRADE
• INCOME INCREASED BY 1 TO 1.5 %
• THIS CREATED 30 – 90 THOUSAND
JOBS
• INFLATION DECREASED BY 1 TO 1.5 %
WALL OF PROTECTIONISM AGAINST
IMPORTED SILK
• KARNATAKA IN SOUTH INDIA PRODUCES
FABRICS, FAMOUS THROUGHOUT THE WORLD
SILK
• SILK FABRICS IMPORTED FROM CHINA
PERCEIVED AS A THREAT BY DOMESTIC FIRMS
WAS
• DIRECTOR GENERAL OF ANTI-DUMPING IN INDIA
SLAMMED A HEAVY LEVY ON CHINESE FIRMS
• PROTECTIONISM EMASCULATED COMPETITION
• TRADE POLICY PREVAILED OVER COMPETITION
• PUBLIC INTEREST
INTEREST
PREVAILED
WAS THIS RIGHT?
OVER
CONSUMER
IMPACT OF HARDCORE CARTELS IN SOME
AFRICAN COUNTRIES
• HARDCORE CARTELS IN HEAVY ELECTRICAL
EQUIPMENT, STEEL AND ALUMINIUM IMPACTED SOME
AFRICAN COUNTRIES ADVERSELY
• THESE CARTELS INDULGED IN OVER CHARGING AND
BID-RIGGING
• CONSEQUENTLY, COST OF POWER GENERATION
PLANTS WENT UP STRETCHING TREASURY
• DAMAGES AMOUNTED TO
ZIMBABWE – US $ 44 MILLION
KENYA
- US $ 34 MILLION
SOUTH AFRICAN CUSTOMS UNION – US $ 270
MILLION
SMALL SECTOR
PROTECTION
• POLICY - ENCOURAGE AND PROMOTE SMALL, COTTAGE
AND HANDLOOM SECTORS
• RESERVATIONS FOR THE SMALL SCALE SECTOR
• THEY SUFFER FROM OLD TECHNOLOGY, LACK OF
RESOURCES
AND
MANAGEMENT,
HIGH
COST
OF
PRODUCTION AND SALE
• GLOBAL COMPETITION CAN EXTINGUISH THE SMALL
SCALE AND COTTAGE SECTORS
• COMPETITION LAW COULD EXEMPT SMALL SECTOR FOR A
SPECIFIC PERIOD OF TIME TO ENABLE IT TO BRACE ITSELF
TO MEET THE CHALLENGE OF COMPETITION
CAN COMPETITION LAW BE PROPOOR?
NOT EXPLICITLY IN THE WORDING OF COMPETITION LAW
BUT PRO-POOR CONCERNS ARE ARTICULATED AS BELOW :
“POVERTY REDUCTION HAS NORMALLY BEEN SEEN AS A SPECIFIC
MEASURE AND ALWAYS REMAINED AT THE SIDELINES OF ECONOMIC
POLICY MAKING BUT COMPETITION POLICY IS AN ELEMENT THAT CAN
MAINSTREAM DEVELOPMENT AND POVERTY REDUCTION AND PUT
THEM AT THE CENTRE OF ECONOMIC POLICY REGIMES” – RUBENS
RICUPERO, SECRETARY GENERAL, UNCTAD
“MARKETS WORK FOR THE POOR, BECAUSE POOR PEOPLE RELY ON
FORMAL AND INFORMAL MARKETS TO SELL THEIR LABOUR AND
PRODUCTS, TO FINANCE INVESTMENT AND TO INSURE AGAINST RISKS.
WELL-FUNCTIONING MARKETS ARE IMPORTANT IN GENERATING
GROWTH AND EXPANDING OPPORTUNITIES FOR POOR PEOPLE” –
WORLD INVESTMENT REPORT, 2001
IT IS FOR THE COMPETITION AUTHORITY TO PRO-ACTIVELY GIVE A
SHAPE TO THE SPIRIT BEHIND PRO-POOR CONCERNS
PRO-POOR: BATA CASE
• BATA HAS DOMINANT PRESENCE IN FOOTWEAR
MARKET
• IT ENTERED INTO AGREEMENT WITH SMALL
SCALE MANUFACTURERS (COBBLERS AND POOR
LEATHER WORKMEN) FOR PURCHASE OF
FOOTWEAR
• AGREEMENT STRIPULATED THAT THE SMALL
MANUFACTURERS SHOULD USE ONLY MOULDS
SUPPLIED BY BATA
• MRTP COMMISSION HELD THIS AS A RESTRICTIVE
PRACTICE
AND
PREJUDICIAL TO
PUBLIC
INTEREST
• BUT MRTP COMMISSION RECKONED THE
INTERESTS OF SMALL POOR MANUFACTURERS
AND ALLOWED THE RESTRICTION TO CONTINUE
IS A COMPETITION LAW
REQUIRED AT ALL?
• WITH GLOBALISATION, THERE IS LIKELY TO BE
SIGNIFICANT RESTRUCTURING OF MANUFACTURE,
TRADE AND SERVICES
• DOMESTIC CONSOLIDATION AND ENTRY OF FOREIGN
ENTITIES
• ANTI-COMPETITION PRACTICES MAY SURFACE AS A
CONSEQUENCE
• WTO FALL OUT OBLIGATIONS NEED TO BE
ADDRESSED
• REGULATORY AND ADVOCACY FUNCTIONS NEED TO
BE POSITED
• WITHOUT A COP, TRADE TRAFFIC MAY PREJUDICE
CONSUMER INTEREST
• COMPETITION LAW WILL BE A COP AND A FRIEND
ROAD MAP

COMPETITION POLICY AND COMPETITION LAW NEED TO BE
COMPLEMENTARY AND IN TANDEM

COMPETITION POLICY SHOULD BE FLEXIBLE TO MEET THE
NEEDS ASPIRATIONS AND GOALS OF THE COUNTRY. FOR
INDIA, PRO-POOR POLICIES SHOULD BE FACTORED IN

COMPETITION LAW NEEDS TO BE GRADUALLY PHASED IN TO
AVOID TURBULENCE

THERE SHOULD BE POLITICAL WILL TO ENFORCE
COMPETITION LAW EFFECTIVELY AND EFFICIENTLY

NO LAW IS BETTER THAN A POORLY ADMINISTERED LAW
ONE WOULD LIKE TO AVOID
THE DANGER OF HOLLOW PURISM
THAT HAS MADE SO MUCH
OF MODERN ECONOMICS
UNFIT FOR ACTUAL USE
AMARTYA SEN
INDIAN NOBEL LAUREATE
WHAT “ISM” DO WE WANT?
DO WE WANT
ECONOMIC NATIONALISM
PROTECTIONISM
NATIONAL CHAMPIONISM
OR
CONSUMERISM ?
ANSWER IN THE NEXT SLIDE.
(PARDON MY ENGLISH ON THIS SLIDE)
WHAT IS NEEDED IS
NOT ANY “ISM” BUT
“PRAGMATISM” OR
POORAGMATISM
THANK YOU
FOR YOUR
KIND ATTENTION