ADVOCACY AND CAPACITY BUILDING
ON
COMPETITION POLICY AND LAW
IN THE MEKONG COUNTRIESREGION
(7-Up Mark II Project)
OPERATIONAL STRATEGY NOTE
MISSION
Shaping Competition Culture in Developing CountriesPromoting effective markets through competition policy and law
VISION
Towards a Healthy Competition CultureTowards a competition culture for economic development
CUTS Centre for Competition, Investment & Economic Regulation
D-217, Bhaskar Marg, Bani Park,
JAIPUR-302 016, India
Ph: 91-141-207 482(3 lines)
Fx: 91-141-207 486/203 998
Email:
Website:
CUTS International / CUTS Centre for Competition, Investment & Economic RegulationGordon House, 6 Lissenden Gardens
London, NW5 1LX, UK
Ph: 44.207.482 8830
Fx: 44.207.482 8831
Email: / D-217, Bhaskar Marg, Bani Park,
JAIPUR-302 016, India
Ph: 91-141-207 482(3 lines)
Fx: 91-141-207 486/203 998
Email:
Website:
I. INTRODUCTION
1.1. Background
1.2. Goals
1.2.1. Main goals
1.2.2. Secondary goals
1.3. Outcomes
1.3.1. Substantive outputs
1.3.2. Project events
1.3.3. Operational documents
1.3.4. Advocacy-cum-Capacity Building activities
1.4. Risk management
1.4.1. Risk of outputs not being produced or events failing to attract targeted audience
1.4.2. Risk of outputs failing to realise into outcomes
1.4.3. Others
II. PROJECT MANAGEMENT
2.1. Networking
2.2. Internal resource management
2.3. Project partners
2.4. Core Researcher
2.5. Project Coordination & Management Unit
2.6. Project Advisory Committee
2.7. Donor
III. PARTNERING
3.1. Partnering in project countries
3.2. Dispute settlement mechanism
3.3. Monitoring
3.4. Institutionalisation of National Reference Group (NRG)
IV. STUDIES AND EVENTS
4.1 Preliminary Country Paper
4.2 Questionnaire design
4.3 Launch Meeting
4.4. Fieldwork and the Phase I activities
4.5. Phase II activities-Advocacy and Capacity Building
4.6. Comparative Study
4.7. Final Meeting
4.8. Reporting
4.8.1. Monitoring and reporting
4.8.2. Evaluation and reporting
V. OUTREACH
5.1 Newsletters
5.1.1. E-newsletter
5.1.2 Hardcopy newsletter
5.1.3. Information dissemination on local media
5.2. Country Reports, Documents and Papers
5.3. Occasional publications
VI. WEB PAGE
VII. PUBLICITY
VIII. BEYOND PROJECT
Annex I
Term Of Reference
PARTNERS’ RESPONSIBILITIES
Annex II
PROJECT ACTIVITY TIME CHART
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1.INTRODUCTION
Background – 1.1
Goals – 1.2
Expected Outcomes – 1.3
Risk Management – 1.4
2.PROJECT MANAGEMENT
Networking – 2.1
Identification of needs and sources – 2.2
New Office – 2.3
Project Partners – 2.4
Core Researcher – 2.5
Arrangement at CUTS – 2.6
Project Advice – 2.7
3.PARTNERING
Partnership Arrangements – 3.1 – 3.7
Formation of National Reference Group – 3.8
4.STUDIES AND EVENTS
Preliminary country paper – 4.1
Questionnaire design – 4.2
Launch Meeting – 4.3
Fieldwork and First phase activities – 4.4
Second Phase activities – 4.5
Preparation of final report – 4.6
5.PUBLICATIONS
Newsletters – 5.1
Preliminary country paper – 5.2
Second Phase and final reports – 5.3
Occasional publications – 5.4
6.WEBSITE
6.1 – 6.2
7.PUBLICITY
7.1 – 7.2
8.BEYOND PROJECT
8.1 –8.6
9.ANNEXURES
Annex 1 – Partners' Responsibility
Annex 2 – Service Contract
Annex 2A – Scope of Work (Forming part of the service contract)
Annex 3 – Annotated agenda for country paper on competition regimes
Annex 4 – Questionnaire outline for interviews during first phase
Annex 5 – 7-Up Project Launch Meeting
Annex 6A – Activity/Duration List
Annex 6B – Bar Chart for activities
Annex 6C – Pert Chart for activities
I. INTRODUCTION
1.1. Background
1.1.1.The last two decades have seen most developing economies in the world, including those once committed to central economic planning, taking great efforts in their progression toward the market economy. In this agenda for reform of most these countries, comprehensive development of the legal and regulatory framework has been a focus, with competition law and policy as an integral part, especially now that the need for, and the role of, such a law and policy in the development process is broadly accepted in principle.1.1.2. From an antitrust-centric point of view, competition law and policy prohibits various restraints of trade and creates public or private rights of actions to enforce such prohibitions. By keeping a check on concentration of economic power, outlawing and penalising rent-seeking behaviours, preventing anti-competitive practices by dominant firms, eliminating artificial restrictions on entry, exit and pricing in industries where they exist; competition law and policy ensures the competitive operation of the market, thereby providing individual entrepreneurs, small and medium sized business with opportunities for participation in the economy, and providing the consumer with reduced prices, better quality and wider choices by firms; all toward the ultimate goal of economic efficiency, growth and equity. A country with an effective competition legislation is also equipped with the legal instrument to either individually or through cooperation with foreign counterparts to challenge firms’ cross-border anti-competitive market behaviour, which is a rising phenomena in the liberalisation and globalisation context.
1.1.3.From an integrated perspective, as regulatory reforms stimulate structural changes, effective enforcement of competition law and policy is needed to prevent private market abuses from reversing the benefits of reforms, especially in developing countries where the low level of policy effectiveness and economic management capacity can easily facilitate economic and political turmoil on the way to market systems. Furthermore, as there is now widespread recognition, one of the most important contributions of a competition policy regime, especially in reform processes, other than antitrust law enforcement, is to serve as a an advocate within the government and the country at large for reliance on market processes and business rivalry to organise economic activity. A competition authority can supply an institutional counterweight within the government to promote liberalisation measures and resist overt or subtle efforts to sabotage market-oriented reforms. Through a variety of advocacy and education activities, the competition agency can provide valuable support for policy measures, ensuring the appropriate role of government intervention in the economy and the correct choice of strategies for promoting growth; for example through participating in developing privatisation programme, advising legislators on drafting economic reform legislations, and participating in regulatory proceedings conducted by other government institutions with authority to determine competition policy in specific economic sectors.
1.1.4.It is well-recognised, nonetheless, that in order to achieve all the aforementioned policy objectives and contribute most to the reform cause, competition laws and policies in developing countries must be well-adapted to their national development circumstances, taking into account all the local economic, social, and cultural dimensions, etc and by no means a copy or derivative of developed-country style laws. They are also to be supported and promoted by efficient institutions, which are well equipped with sufficient capacity and skills. Toward such policies and concomitant institutions, in our view, it is necessary, at the first instance, for developing countries to foster public acceptance as well as widespread participation and contribution of various national stakeholders into the policy-making process; build up the capacities and skills of the [future] competition authority and complementary institutions. In the whole process, it is important for them to learn from their own experiences. Externally, sharing and comparing the learnings with other country’s experience will also help them to overcome the impediments to having an effective competition regime.
1.1.5.Given the above background, the present project (codenamed as the 7-Up MARK II Project) endeavours to accelerate the process toward a formal competition law and policy, which has been absent until now in three developing countries, viz. Cambodia, Lao PDR and Vietnam; and advance the environment in which the law and policy can be enforced for better results; through various research-based advocacy and capacity building activities.
1.1.6.The three Mekong countries viz. Cambodia, Laos and Vietnam, are selected to be beneficiaries of this project. All are pursuing market-oriented reforms, which entail an explicit demand for an effective competition law and policy. Given the local capacity and resource constraints, technical assistance is needed. The need has been underscored by the integration and cooperation process of these countries into regional and multilateral economic systems. Specifically, it is the immediate task of catching up with other country members of ASEAN, the regional cooperation framework of which they have recently acceded to, and the accession process into the WTO. Moreover, given the strong links between these three countries (geographical, cultural, historical, socio-political, economic, etc.), a comparative study and integrated advocacy-cum-capacity-building programme among them will be a practical approach to cross-fertilise and consolidate expertise and resources from the perspectives of developing countries, helping to achieve synergies and contribute to policy and performance developments in the competition area in all the three. Whereas, CUTS, as a developing country-based research-cum-advocacy group with rich experience as regards competition law and policy and a vast network of contacts in the developing world; can stand out as the optimal deliverer of the needed technical assistance to the project countries (More about CUTS at
1.1.7.In order to accomplish the Mission: “Enabling the regulatory framework through effective competition regimes” and to achieve its goals (as mentioned below) the project, in brief, will:
- prepare an economic mapping and inventory of laws in each of the project countries, from the perspective of their market-oriented reform efforts, progresses, problems, etc and the development of an economic regulatory framework and institutions;
- conduct a survey of the existing policy framework for competition in each of the three project countries covering competition-specific provisions embodied in various legislations, competition rules in sectoral regulation, organisation and division of responsibilities between law enforcement institutions (including courts, dispute settlement mechanisms, etc); with special attention on the competition aspects of the reform process in these countries, for example in liberalisation, privatisation, regional and international integration, etc;
- collect information on the nature of market/competition and the prevailing anti-competitive practices in project countries, as well as the effects of cross-border competition issues on their economies;
- assess the effectiveness of the policy regime as well as institutions in place in the project countries in preventing, handling or remedying domestic and cross-border restrictive business practices;
- identify problems in the economic regulatory framework of each country and, henceforth the need for and potential role of a competition legislation in the country;
- analyse the draft competition legislations in place, highlight problems and recommend solutions
- initiate policy debates and promote contributions from the civil society and the private sector to the legislation and hence advocate for its promulgation and enforcement from the bottom;
- generate policy recommendations relevant to other LDCs and developing countries paying due regard to national economic, social and cultural differences;
- build capacity in understanding competition issues and policies with all stakeholders, especially civil society, as well as promote respect and social responsibility toward the effective implementation of the legislation;
- help build domestic constituencies for policies which promote ‘reliance on market processes and business rivalry to organise economic activity’, with competition law as the core regulatory instrument;
- carry out training and capacity building for government officials, civil society representatives at national and regional levels through workshops, courses and distribution of reader-friendly materials, etc;
- help the project countries, as well as other developing countries with similar contexts, to establish their interests and develop capacity to articulate their positions and views when dealing with issues related to competition in different international fora; and
1.1.2 The globalisation of markets stemming from trade liberalisation, de-regulation, privatisation, and increased investment flows have led to re-evaluating the role and importance of competition law and policy in fostering economic development.
1.1.3 Since 1997, when the WTO established a working group to study the interaction between trade and competition policy, much interest has been raised in several countries in regards to having a competition law-policy as part of their respective government’s legal-economic framework. In 1990, less than 35 countries had competition legislation in place, whereas today, the number stands at approximately 80 countries. In addition, more countries are in the process of strengthening existing laws or enacting new legislation dealing with competition matters, including industrial economies such as Canada and UK, as well as developing countries such as India, Indonesia and Thailand.
1.1.4 It is one thing to have a competition law and another to have an effective competition law. The effectiveness of a law is dependent on several factors: nature and scope of the law, institutional design, independence of the competition authority from political influence, administrative capacity, research and investigation support and the like. The overall policy environment of the country also matters substantially. In absence of some of these critical factors, the goals of fostering market-oriented policies to enhance economic efficiency and consumer welfare are defeated, with effects on the overall economic development of the country.
1.1.5 In order to establish what is the best way forward for developing countries to have effective competition laws, it is necessary, at the first instance, to learn from their own experiences. Secondly sharing and comparing the learning with other country’s experience will also help them to overcome the impediments to having an effective competition regime.
1.1.6 Given the above background the present project (popularly called as the 7-Up Project) endeavours to study the competition regimes of selected developing countries, which have similar legal systems, and are at similar levels of economic development.
1.1.7 Keeping this criterion in mind, seven Commonwealth countries viz. India, Pakistan, Sri Lanka, South Africa, Zambia, Kenya and Tanzania have been selected for the purpose of the study. All have had a competition law for over three years and have a legal system based on the English common law. Of these, South Africa has adopted a new law in 1998, while India is currently considering enacting a new law. These and other nations have seen the need to change their competition laws, in light of the changing business environment.
1.1.8 In order to accomplish the Mission: “Shaping Competition Culture in Developing Countries” and to achieve its goals (as mentioned below) the project, in brief, will:
evaluate the existing competition law and its implementation on few basic principles: budgets, composition and structure of the competition regime and authority;
evaluate the appropriateness of the law, keeping the specific considerations of the economy in mind. Also assess if any specific considerations of the economy have been taken into consideration while the laws have been framed. If yes, what were the considerations, and how has it helped the economy?
identify typical problems and suggest solutions, including on the basis of good practices elsewhere;
suggest ways forward to strengthen existing legislation and institutions dealing with competition and consumer protection issues;
look at the progress of deregulation and the setting up of independent regulatory structures, and their approach to competition and consumer protection issues;
examine how the investment policy structures are being designed to look at the competition interface;
assess capacity building needs of the government, its agencies and the civil society;
develop strategies for building expertise among the competition agency officials, practitioners and civil society;
help build constituencies for promoting competition culture by actively involving civil society and other influential entities during this exercise;
create an advocacy group at national and international levels to pursue the necessary and required reforms.
evaluation of the effectiveness of co-operation agreements between countries dealing with cross-border issues
- to look into areas where there have been sectoral exclusions, since in some cases, it may be required to exclude one or two important business sectors from the purview of competition law/authority.
1.2. Goals
1.2.1. 1.2.1 Main goals
The project endeavours to::- aTo delineate measures that will help the developing countries, in general, and the selected countries, in particular, to develop and strengthen their competition regimes that would be effective in tackling domestic as well as cross-border competition issues, on the one hand and promote healthy competition culture, on the otherssist project countries to design and implement effective competition laws and policies that will contribute to the development of their economic regulatory framework and complement their market-oriented reform and integration efforts, toward equitable growth, development and poverty reduction;.
- Promote improved networking amongst competition authorities including consumer organisations (this point would be elaborated to include or even word it as `Examining the feasibility of establishing consumer advocacy groups’)build the capacity of various national stakeholders, with special emphasis on policy-makers, government officials who will be enforcing the laws and civil society representatives, i.e. consumer groups, the media, academia and businesses, etc; and promote improved networking and communications between and amongst these stakeholders to promote healthy competition culture; and