COMPETITION POLICY AND
ECONOMIC DEVELOPMENT
PRESENTATION AT
CUTS-ARC CAPACITY BUILDING
WORKSHOP, LUSAKA 7TH MARCH, 2011
BY SAJEEV NAIR, COMPETITION POLICY
RESEARCHER
Sajeev.agroin@gmail.com
COMPETITION POLICY &
ECONOMIC DEVELOPMENT
WHAT IS A POLICY:
• A POLICY IS A STATEMENT OF INTENT, OBJECTIVES,
PRINCIPLES, GUIDELINES OR COMMITMENT
• COMPETITION/ANTI-TRUST POLICY IS ONE AMONGST
MODERN PUBLIC POLICIES
• PUBLIC POLICY DEFINED AS THE COURSE OF ACTION OR
INACTION TAKEN BY THE STATE WITH REGARD TO A
PARTICULAR ISSUE
• POLICY VS. LAW: WHILE LAW CAN COMPEL OR PROHIBIT
BEHAVIOR OF LEGAL ENTITIES, POLICY MERELY GUIDES
ACTIONS TOWARDS CERTAIN DESIRED OUTCOMES
• A COMPETION POLICY DOES DIFFER FROM COMPETITION
LAW/ACT
COMPETITION POLICY & ECONOMIC
DEVELOPMENT
ECONOMIC DEVELOPMENT: IT IS A
PROCESS WHEREBY A COUNTRY
TRANSFORMS ITSELF FROM LOW LEVELS
OF ECONOMIC AND SOCIAL ATTAINMENT
TO HIGHER LEVELS OF ATTAINMENT IN
TERMS OF HUMAN DEVELOPMENT,
POVERTY REDUCTION, DIVERSIFICATION
OF ECONOMY, APPLICATION OF MODERN
TECHNOLOGY, INFRASTRUCTURE AND
EFFICIENT PRODUCTION AND DELIVERY OF
GOODS AND SERVICES.
HOW DOES COMPETITION POLICY PROMOTE
ECONOMIC DEVELOPMENT?
COMPETITION POLICY IS COMPLIMENTARY TO OTHER
SECTORAL POLICIES WHICH AIM TO ACHIEVE ECONOMIC
PROGRESS AND EFFECTIVE MANAGEMENT OF THE
ECONOMY VIZ.
• TRADE AND INDUSTRIAL POLICY
• INVESTMENT/PRIVATISATION POLICY
• REGULATORY POLICY
• LABOUR POLICY
• ENVIRONMENTAL POLICY
• REGIONAL DEVELOPMENT/EMPOWERMENT POLICY
• INTELLECTUAL PROPERTY POLICY, ETC.
• CONSUMER WELFARE POLICY
OBJECTIVES OF COMPETITION
POLICY
• THE MAIN OBJECTIVE IS TO “PRESERVE AND PROMOTE
COMPETITION” AMONG ECONOMIC ENTITIES TO ENSURE
EFFICIENT ALLOCATION OF RESOURCES
• EFFICIENT ALLOCATION OF RESOURCES THROUGH
COMPETITIVE PROCESSES IS PIVOTAL FOR ENSURING
CHOICE OF QUALITY, LOW PRICES AND ADEQUATE SUPPLY
OF GOODS AND SERVICES TO CONSUMERS /PRODUCERS IN
THE ECONOMY.
• THEREFORE, COMPETITION POLICY IS AN INSTRUMENT OF
ACHIEVING ECONOMIC DEVELOPMENT
COMPETITION POLICY AS A
TOOL OF ECONOMIC GROWTH
• COMPETITION POLICY HAS BECOME AN INTEGRAL
PART OF THE INSTRUMENTS PROMOTING
ECONOMIC GROWTH IN THE DEVELOPING
COUTRIES
• ACCORDING TO PROF. MICHEL PORTER (2004)
“INCENTIVES AND RULES GOVERNING
COMPETITION SHOW A STRONG RELATIONSHIP TO
NATIONAL PRODUCTIVITY”
• HE ARGUES THAT COMPETITION POLICY SHOULD
RESPECT AND PROTECT INTELLECTUAL
PROPERTY RIGHTS;
• DO NOT USE COMPETITION LAWS/POWERS TO
ACHIEVE NON- COMPETITIVE GOALS
APPROACHES TO COMPETITION
POLICY
• THERE HAS BEEN SOME ELEMENT OF DIS JOINT BETWEEN
THE DEVELOPED AND THE DEVELOPING COUNTRIES IN
TERMS OF PRIORITISING COMPETITION POLICY OBJECTIVES
–PRIMARILY DUE TO THE DEVELOPMENTAL GAP AND THE
NATURE OF COMPETITION CHALLENGES THAT EXIST
• COMPETITION POLICY IN DEVELOPED COUNTRIES FOCUSES
MORE ON FIGHTING CARTELS (PRICE FIXING, MARKET
ALLOCATION,ETC)
• WHILE COMPETITON POLICY IN THE DEVELOPING
COUNTRIES FOCUSES MORE ON MERGERS, UNFAIR TRADE
PRACTICES, UNSAFE GOODS, AND OTHER DEVELOPMENTAL
OBJECTICES.
• HOWEVER, PROMOTING CONSUMER WELFARE IS A
COMMON OBJECTIVE IN COMPETITION POLICIES OF ALL THE
COUNTRIES.
COMPETITION AND CONSUMER WELFARE POLICY
IN THE ZAMBIAN CONTEXT
•
THE IDEAL COMPETITION POLICY FRAMEWORK FOR ZAMBIA
SHOULD HAVE THE VISION OF GUIDING THE IMPLEMENTATION OF
THE COMPETITION AND CONSUMER PROTECTION ACT- 2010
•
THE POLICY SHOULD BE ENHANCING ECONOMIC GROWTH AND
DEVELOPMENT OF ZAMBIA BY NOT ONLY REGULATING AND
CONTROLLING ANTI-COMPETITIVE BUSINESS PRACTICES OF
ECONOMIC AGENTS IN THE MARKET BUT ALSO ACHIEVING
COMPETITIVE OUTCOMES, SUCH AS ECONOMIC EFFICIENCY,
BETTER CHOICE, HEALTH, SAFETY AND ENSURE VALUE FOR
MONEY TO CONSUMERS.
•
THE POLICY FRAMEWORK SHOULD PROVIDE A FUNCTIONAL,
COMPETITIVE AND CONGENIAL BUSINESS ENVIRONMENT TO
PRIVATE SECTOR, JOINT SECTOR AND PUBLIC SECTOR OF
VARIOUS SIZES TO OPERATE AND GROW WITHIN THE FRAMEWORK
OF FAIR COMPETITION, ECONOMIC JUSTICE, GOOD CORPORATE
GOVERNANCE, CONSUMER PROTECTION AND PUBLIC WELFARE.
COMPETITION AND CONSUMER WELFARE POLICY
IN THE ZAMBIAN CONTEXT
CONTD…
• The competition policy framework should enable
Zambia to realize the benefits of a variety of
competition outcomes such as economic
efficiency, diversification of the economy,
checking monopolies, limiting concentration of
economic power, more choice, provision of
quality products and lower/competitive prices to
the consumers. The policy therefore should
have the objective of attaining competitive and
consumer welfare outcomes in the country.
COMPETITION AND CONSUMER WELFARE POLICY
IN THE ZAMBIAN CONTEXT
CONTD…
The national policy on competition and consumer welfare should have
the following mutually complimentary and reinforcing objectives:
• integration of competition and consumer protection provisions in all
policies and laws, having impact on the welfare of consumers in the
market;
• effective implementation of the consumer protection legislation;
• product safety and protection of interest of consumers;
• strengthening cooperation with regulatory bodies, intergovernmental and non-governmental organizations
• efficient, speedy and low cost settlement of consumer disputes by
creating appropriate mechanism across the country
• harmonising competition and consumer welfare activities of sector
regulators in line with the Competition and Consumer Protection Act2010 by addressing policy coherence issues in a systematic manner
COMPETITION AND CONSUMER
WELFARE POLICY STRATEGY
contd…
A “competition and consumer welfare strategy” which
should be part of the competition and consumer
protection policy framework, covering the following:
• identify the potential intervention areas, sectors and
segments of the economy
• to create coherence and consistency among the diverse
sectoral policies that have a bearing on competition and
consumer welfare;
• Suggest measures for improving the quality of goods
and services through standard and labelling
requirements for domestically produced and imported
goods.
CONCLUSIONS
• The Competition and Consumer Welfare policy of
Zambia should aim for a coherent competition and sector
regulatory environment; and provide a level playing field
for large, medium and small enterprises in the country
• Suggest appropriate support structure and institutions
necessary for promoting institutional linkages between
competition authority and sector regulatory institutions.
• Promote research and product testing activities that help
consumer welfare
CONCLUSIONS
CONTD…
• This policy strategy must provide for a comprehensive approach in
implementing Zambia’s competition and consumer welfare
challenges:
• Fostering economic growth and thereby reduction of poverty through
economic efficiency and competitive business environment;
• Strengthening the growth and dynamism of the small and medium
sector enterprises by improving competitiveness, product
diversification and innovation;
• Capitalizing institutional capacity building opportunities available for
the competition watch dog through bilateral, regional, and
multilateral arrangements