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1.1
This is the 6th quarterly report of the project titled “Comparative
Study of Competition Regimes of Select Developing Countries of the
Commonwealth” being supported by the Department for International Development,
UK. The project, popularly known as 7-Up, is being implemented by CUTS, Jaipur.
Its purpose is to undertake a comparative study of competition regimes in seven
developing countries of the Commonwealth. The countries which have been chosen
for the study are:
India
Kenya
Pakistan
South
Africa
Sri
Lanka
Tanzania
Zambia
1.2
The main objectives of the Project are:
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To
conduct evaluation of existing competition legislation and its
implementation on few basic principles such as budgets, composition and
structure of the authority;
-
To
identify typical problems and suggest solutions, including on the basis of
practices elsewhere;
-
To
suggest ways forward to strengthen existing legislation and institutions
dealing with competition issues;
-
To
assess capacity building needs of the government, its agencies and the civil
society;
-
To
develop strategies for building expertise among the competition agency
officials, practitioners and civil society;
-
To
help build constituencies for promoting competition culture by actively
involving civil society and other influential entities during this exercise;
and
-
To
create an advocacy group at national and international levels to pursue the
necessary and required reforms.
1.3
The project is running in its seventh quarter now. In its first quarter,
primarily the preliminary activities of the project were completed. Partners
were identified in each of the seven project countries. An international
advisory body named as Project Advisory Committee was formed to guide the
project implementation and an Operational Strategy Note was prepared to give a
micro picture of the process and methodology involved over the period of two
years of the project duration. As a first step to achieve the goals of the
project, the partners prepared a preliminary country paper to give a brief
description of the existing competition law and other regulations, market
position, socio-economic characteristics, etc. in each of these countries. A
comparative analysis of these papers was made by Prof. Rakesh Basant, the
core-researcher of the project, as well as at CUTS.
1.4
In the second quarter, the project was formally launched at a meeting held in
Jaipur, India in the month of December 2000. The meeting was attended by the
project partners and various experts, competition practitioners, former and
present executives of various international and regional organisations and
competition authorities of different countries, including Australia, Brazil,
South Africa, Zambia, India.
1.5
The research methodology and strategies for the implementation of the project
were discussed and a comprehensive questionnaire including questions on issues
related to institutional framework of competition authority in the project
countries was prepared. Guidelines were set for the formation of a National
Reference Group comprising of various stakeholders for the advocacy component of
the Project. A preliminary list of proposed members of NRG for India was
prepared by CUTS and was circulated to all partners in other countries as a
model to enable them to prepare lists for their respective countries.
1.6
The third quarter, possibly the most crucial quarter in the first phase of the
project, covered activities related to research, formation of the National
Reference Group and preparation of the Phase-I country report. The researchers
got the questionnaires filled from the concerned authority and collected all the
relevant data. This data was then put into a draft country report for which a
format was suggested by the core researcher of the project and was sent to the
partners. This report was to be discussed at the NRG meeting. The partners
finalised the members of their NRG, which included representation from all
stakeholders. The dates of the NRG meetings were also decided during this
period.
1.7
The fourth quarter comprised the last three months of Phase I of the Project.
During this period, NRG meetings were organised and the Phase-I country reports
were prepared in each project country, in a particular format, which was given
to all partners. The format was prepared by Rakesh Basant, the core researcher
of the project. These Phase-I country reports were compiled and collated to form
Draft Phase-I Synthesis Report. The Phase-I culmination meeting was also held in
the first week of September. This marked the beginning of Phase-II of the
project.
1.8
During the fifth quarter, i.e. the first quarter of Phase-II of the project, 2nd
NRG meetings were held to discuss the revised country reports and to finalise
the case studies for second phase. The partners were able to finalise the three
case studies to be taken up during the Phase-II of the project.
1.9
During the previous quarter, i.e. the sixth quarter, the project stepped
completely in its second phase. The preliminary activities to facilitate
research were completed and partners began to work on the case studies to be
taken up during phase-II of the project.
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2.1
Phase-I Country Reports
2.1.1
Phase-I country reports were revised on the basis of the additional information
that was collected by the researchers. During the period under review, the core
researcher and the CUTS 7-Up team went through these revised reports and gave
their final comments. The reports were finalised after incorporating these
comments. In case of India, the report is still being finalised.
2.1.2
It has been envisaged in the project plan that the country reports would be
printed and published for wider distribution with the aim to enhance awareness
on competition issues in developing countries. For this purpose, a common format
has been decided for all the reports. The country reports would now include a
foreword, a preface and a brief write-up on the highlights of the NRG
discussions in these countries.
A synopsis of the Phase-I synthesis would also be a part of the report.
This would make the reports more comprehensive and reader friendly.
2.1.3
The partners have started getting the foreword, preface and NRG highlights
written and are sending the same to CUTS. Once this is finalised, the reports
would go for editing and printing. The latest versions of the country reports
are available on -----------(WebSite Address)
2.2
Phase-I Synthesis Report
2.2.1
The draft Phase-I Synthesis Report prepared by Rakesh Basant was further revised
by him on the basis of the comments of CUTS and the consultants. The partners
and the country researchers were also requested to go through the draft,
especially their part and give their opinion. The revision was also done in the
light of the revised Phase-I country reports as well as the additional
information collected by the country researchers.
2.2.2
The synthesis report is now being finalised and would be sent to the members of
the advisory committee for comments. After incorporating the suggestions, the
report would go for printing, hopefully by the end of March 2002.
2.3
Phase-II Activities
2.3.1
The research methodology of Phase-II of the project involves three case studies
in each country with important cross-border implications: an international
merger; a sectoral study, preferably cement and a third case to be decided by
partners, preferably from the service sector.
2.3.2
During the given period, all project countries, except South Africa, were able
to finalise the case studies which they would take up during the second phase of
the project. The country researchers have also started collecting information on
these case studies.
2.3.3
In order to ensure uniformity in these reports and to facilitate the process of
comparison, it was considered necessary to have a common format for preparing
the case studies. The outline was prepared at CUTS and was finalised in
consultation with the partners, researchers and the members of the advisory
committee. The outline for the case study reports is being annexed vide Annex A.
2.3.4
In the beginning of Phase-II, questionnaires were prepared at CUTS for the field
survey to be done during the second phase. These questionnaires were finalised
after taking into consideration the suggestions made by the partners,
researchers and advisory committee members. There were two questionnaires- one
for the competition authority of the country and one for the stakeholders other
than the competition authority. These questionnaires are enclosed as Annexure B
and Annexure C.
2.3.5
The purpose of these questionnaires was to conduct a general survey in these
countries to find out the level of awareness of various stakeholder groups on
competition issues. The questionnaire meant for the CA was for a greater in
depth look.
2.3.6
During the months of November and December 2001, the country researchers got
these questionnaires filled up and are now in the process of analysing them. A
brief analysis of these questionnaires has already been done in Sri Lanka and
Zambia. The other partners would be able to complete this exercise by the second
week of March 2002.
2.3.7
2nd NRG Meeting
2.3.7.1
Phase-II of the project also involves organizing NRG meetings in the project
countries. All the project countries, except India, organized their 2nd
NRG meeting by the end of first week of December 2001. The India NRG meeting was
organised on 11th January 2002 in Jaipur. The meeting involved the
participation of different stakeholders of the country – consumer
organisations, competition and regulatory authorities, policy makers, business,
trade unions, academia and media. A brief report of the proceedings is annexed
vide Annex D.
2.3.8
Time Schedule for February-July 2002
2.3.8.1
To ensure timely completion of various activities and for the purposes of better
coordination, a time schedule has been prepared for the months of February to
July 2002. The time plan was prepared keeping in view the current status of the
project and considering the probable time duration that partners and researchers
would need to produce quality deliverables. The schedule was finalised after
consulting the partners and country researchers. A copy is annexed vide Annex E.
2.4
Project Related Travel
2.4.1
During this period, one of the CUTS’ staff members, K.S. Sajeev visited South
Africa (7th–9th February 2002), Zambia (9th
February 2002) and Tanzania (25th – 28th February 2002),
to review the progress of the project.
2.4.2
His visit proved to be very helpful in getting a stock of things and in pushing
the work forward. This visit was also very important because Sajeev would be
staying in Lusaka, Zambia for quite some time in order to monitor the activities
of CUTS ARC, particularly in context of the 7-Up Project in the African
countries.
2.4.3
Pradeep S. Mehta visited Paris during 14th-15th February
2002 to participate in the OECD Global Forum on Competition. He participated in
the meeting as a member of the CI delegation.
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3.1
As per the Project Agenda, two periodical newsletters are being published during
the project duration. One is a bi-monthly electronic newsletter called
‘7-UpDate’ and the other is a quarterly hard copy newsletter titled ‘ReguLetter’.
The project partners are required to send inputs for these newsletters on a
regular basis. During the sixth quarter of the project, the fifth issue of
ReguLetter and the eighth and the ninth issues of 7-UpDate were published.
Copies are enclosed vide Annexures
F, G and H. The Project Team has prepared lists of electronic as well as
postal addresses for the purpose of reaching out to target audience with these
newsletters. The mailing lists are being updated on a regular basis.
a)
ReguLetter
3.2
The purpose of this newsletter is to provide a forum, in particular to the civil
society, to understand the issues clearly and promote a healthy competition
culture in the world. It covers developments relating to competition policy and
economic regulations.
3.2.1
The fifth issue of the newsletter (No.5 December 2001) has been published. It is
a 24-page newsletter and carries a brief description of the progress of the 7-Up
Project, news on industrial restructuring, corporate affairs, financial sector,
utilities and an article on the competition regime of Indonesia. The leader on
the cover spoke about Microsoft and its anti-competitive practices. The fourth
installment of the featured paper, the Global Competition Review survey,
“Rating the Regulators” focused on six more competition authorities from
around the world. The survey appraises the abilities, and assesses the
efficiency of some of the most important national and supra-national agencies
shaping the business environment of the 21st century. This issue
(fifth) also carries some interesting stories like, EU busts vitamin cartel,
Andersen faces scrutiny and some views on the cartel formed by Organisation of
Petroleum Exporting Countries.
3.2.2
About four thousand copies of this newsletter were published, keeping in view
its increasing demand. These copies have been distributed to various
stakeholders in India as well as abroad such as competition authorities,
regulatory authorities, consumer organisations, media persons, intergovernmental
organisations, etc. It was also circulated to the project partners, country
researchers and members of the Project Advisory Committee.
3.2.3
The next issue of ReguLetter is scheduled to be published in the last week of
March and planning for the same has already been done. Writing work for the
issue would start soon. The core team is receiving inputs from the project
partners on a fairly regular basis.
b)
7-UpDate
3.3
7-UpDate, the electronic newsletter, has been designed to update various players
in the project and other target audience on the project progress, in addition to
reporting interesting news items, which have been reported across the globe on
competition and other related issues.
3.3.1
The eighth and the ninth issues of this e-newsletter were circulated during this
period. The eighth issue covered a brief description of the progress of the 7-Up
Project and a news that the controversial EU takeover regime may be reformed. It
also carried some viewpoints on OPEC cartel. The ninth issue of 7-UpDate carried
a viewpoint “break up the financial giants to avoid enron-like collapses”
and some interesting news items besides a brief write up on the project
progress.
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4.1
As mentioned in our previous progress report, the project has already started
showing its impact in the 7-Up countries, both direct and indirect. Competition
policy and law has been a little known area even in countries like India and
Pakistan whose experiences with such policy and law have been fairly long. But
now there is an increasing awareness on competition law and policy in all these
countries. The major contributing factor to this has been the NRG meetings that
were held in these countries.
4.2
Another interesting aspect of this growing awareness is that, it is not limited
to the project countries only. It is having some spillover effects in other
developing countries also. Moreover, the project is being considered as first
such study in the developing world. Hence CUTS has been receiving queries from
different places, on competition issues in the context of developing countries.
For instance an American researcher wanted some information on competition
policy and law in some African countries. He approached us for the same and we
were able to provide him with the required information.
4.3
An example of the growing popularity of the project is that it was mentioned at
an OECD competition conference held on 17/18 October 2001 in Paris.
At the conference, on a question whether any research was going on in
developing countries on competition, the Chairperson, Prof. Frederic Jenny
informed the audience about the 7-Up Project. The issue was raised again at the
OECD Global Competition Forum, held in Paris on 14-15th February
2002. Pradeep S. Mehta, Secretary
General, CUTS, participated in both the fora as a member of the CI delegation.
4.4.
Dr. Taimoon Stewart, Fellow, University of West Indies, wrote an article on the
7-Up
Project for a Trinidad & Tobago newspaper, “Guardian Life Column”. The
article covers briefly the lessons to be learnt from the experiences gained from
the project so far.
4.5
In India, CUTS has been providing inputs to the new Competition Bill which has
already been placed in the parliament. The bill has been referred to the
Standing Committee of the parliament which is now discussing it with different
groups of stakeholders. Considering CUTS’ work in the area of competition
policy, the Consumer Coordination Council (CCC), the apex consumer organisation
in India, has requested CUTS to represent the consumers before the committee.
CUTS has used this opportunity to share the learning of the project with the
law-makers of the country. Due to our lobbying, the Government is considering
some major provisions like leniency programme and whistle-blower protection in
the Act, which are not there in the original bill.
4.6
In Kenya, the national awareness on competition and consumer issues has been
heightened. In July and August 2001, soon after the 2nd NRG meeting, the
7 Up Programme Manager at the Institute of Economic Affairs (IEA), Mr.
Kwame Owino was requested by Kenya Television Network
(KTN) one of the leading TV stations, to appear in their programme to discuss
competition within the mobile telephony sub-sector.
4.6.1
Furthermore, following the 3rd NRG meeting, there was a full coverage of the
meeting in the most widely read daily in Kenya, "The Nation". A few days after the meeting on 7th.
November 2001, “The Nation had a full editorial entitled, “Abuse of consumer rights”. Drawing
from the NRG meeting, the editorial stated,
“Now comes the information that Kenya has no comprehensive consumer
legal protection. This leaves consumers exposed to all manner of
exploitation.” The editorial concluded, “Clamping down on the abuse of
consumer rights heavily depends, of course, on the consumer ability to detect
cheating and defend his rights. We know from experience that laws alone are
often not sufficient. If we are to get to the level where manufacturers and
retailers feel obliged to do their duty, we will first have to promote consumer
awareness”.
4.6.2
The current form of technical cooperation put at the disposal of the project
beneficiaries in mixed teams of Indian and Kenyan experts, has become key to
achieving a good learning experience in South-South co-operation.
The work and the collaboration of Indian and other South experts are also
contributing to building lasting solid relationships and to facilitate the
present and future mutually beneficial professional dialogue amongst South
professionals interested in competition issues.
4.7
In Pakistan, the project helped to bring the traditionally ignored issue of
competition and to some extent consumer protection to the discussion at the
centre stage. At the NRG meetings, the academics present felt the need to have
closer co-76operation among the civil society and media and promised to
encourage their students to pursue issues like competition and consumer
protection during the course of their research.
4.7.1
With the implementation of the project, a debate has been initiated among the
concerned quarters in Pakistan to look at the weaknesses of the existing
legislation. A demand for a thorough review of the competition law, if not a new
law, has emerged. People opine that the existing legislation is not good enough
in the changing scenario both within the domestic economy and outside.
4.8
In South Africa, where a good competition law and enforcement mechanism are
already in place, the existing consumer movement, although not very strong, has
resolved to take up competition issues more seriously. There has also been a
demand for a comprehensive consumer protection law in the country.
4.9
The impact of the project on
issues relating to competition policy and consumer protection in Sri Lanka is
reflected in two broad areas. One, as a motivating factor illuminating the
current problems and shortcomings evident in Sri Lanka’s competition policy
and consumer protection framework and pushing those with the power to make a
difference. Two, the project also
required the formation of a National Reference Group, a breeding ground of ideas
and contacts, allowing the flow of information between sectors that may not have
met if not for the project.
4.9.1
A new competition bill is under
consideration in Sri Lanka and the NRG meeting there pondered over various
aspects of the bill and came out with many important suggestions. It is expected
that the government would give due consideration to those suggestions.
4.10
In Tanzania, a member of the NRG Group, who was from the NGO sector, requested
Flora Musonda, the Senior Research Fellow of ESRF, to give a talk at the NGO
forum on consumer protection. The press picked up these issues and also
advertised many more such issues. Some youth are in the process of forming a
group to work for consumer protection. Flora also appeared on TV to discuss
competition and consumer protection issues.
4.10.1
Through interaction with the NRG, the competition authority realized that it was
not very well organised and is now in the process of reorganisation. Many
officials from the private sector and government are now more aware of the
competition issues and are actively pursuing them in their discussions and
policies. Likewise in Zanzibar, which is a part of Tanzania and yet has its own
trade and investment policies, there is a move to establish a more comprehensive
consumer protection watchdog.
4.11
A comprehensive consumer protection law is under consideration in Zambia also.
The formation of the NRG further strengthened the working linkages of many
economic players who hitherto had no direct interaction with each other and yet
their work was aimed at achieving a common goal. Many members in the NRG had no
prior in depth knowledge about competition and its effect on their work and
lives until they attended the NRG meeting.
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V
Management & Coordination
5.1
K. S. Sajeev has moved to CUTS- Africa Resource Centre, while Mwamba Makasa
continues to be the coordinator of the centre. Sajeev would coordinate the
activities of the project in African countries, in addition to looking at other
activities of the centre in Lusaka, Zambia. He has a fairly long experience of
coordinating cross-country projects in the SAARC region. His joining at CUTS-ARC
will reinforce the coordination process in the African countries of the project.
5.2
Ujjwal Kumar, who was providing research support to the project as a whole and
was particularly responsible for the India part of the study, has resigned from
CUTS for pursuing higher studies.
5.3
A young Dutch lawyer, Ralf van de Beek, has joined the project team at CUTS in
place of Ujjwal Kumar. Ralf has specialised in International Economic laws. He
brings in experience and insights from Europe which would be an additional
advantage for the project purposes.
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6.1
A project of such nature, comprising several countries, would certainly involve
some problems and changes during the course of its implementation. During the
period under review, the following problems were encountered:
6.2
Follow-up with partners: The most time consuming and difficult task is to
follow-up with partners and to coordinate various activities in such a way that
all project countries move together. Finalising the Phase-I country reports
proved to be very time consuming as all the reports had to be edited to give
them a common format. In some of the reports some sources from where the data
had been collected were found to be missing. This information had to be called
for again and led to a further delay in printing of these country reports.
6.3
South Africa is lagging quite behind the other partners because the partner
institution, Institute for Global Dialogue, does not have a researcher for the
7-Up project at the moment. Dr. Garth le Pere, Executive Director, is struggling
with the work and trying to be in line with the others. They are searching for a
researcher and the work is expected to proceed with full speed after this is
done.
7.1
The period from March to May 2002 would primarily focus on the finalisation of
Phase-II country reports and preparation of the draft Phase-II synthesis report.
The Phase-II country reports would be based on the case studies on which work
has already been started by the partners and researchers.
7.2
Phase-I Country Reports are almost finalised and would be sent for
printing very soon. They would be dispatched to the project partners for further
distribution.
7.3
Phase-I Synthesis Report would also be finalised after receiving comments
and suggestions from the members of the Project Advisory Committee on the
available draft. This report would also be printed along with the Phase-I
country reports.
7.4
Phase-II Country Reports would be drafted and finalised on the basis of
the three case studies that would be done by the partners and researchers. These
reports would essentially be a compilation of the analysis of the case studies.
Their finalisation would be done after receiving comments and suggestions from
the members of the Project Advisory Committee.
7.5
Phase-II NRG meetings would be organized, most probably, in the month of
May 2002. These meetings would deliberate on the Phase-II country reports. The
country reports would then incorporate the comments and suggestions, which would
emerge at the meeting and would be finalised in consensus with the members of
the NRG.
7.6
Phase-II Synthesis Report would be drafted once the Phase-II country
reports are finalised. As a preliminary step in this direction, an outline for
this report would be prepared and approved by the advisory committee. The report
would the
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