I.  INTRODUCTION

1.1 This is the 8^th 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:

• 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 last quarter now. The past one and a half years were full of hectic activities.

1.4 As the first step, the preliminary activities were completed in October 2000. 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.

1.5 The project was formally launched at a meeting held in Jaipur, India in the month of December 2000. 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.

1.6 The research methodology and strategies involved the division of the project into two phases. The first phase involved an examination of the institutional framework for the implementation of competition regimes in the project countries and the second phase involved selective studies on cross border competition concerns.

1.7 During the first phase of the project, Phase-I country reports were prepared by the researchers. These reports were primarily based on a comprehensive questionnaire that was addressed to the competition authority and included questions relating to its administrative and functional aspects. The Phase-I synthesis report, which is a comparison and collation of the individual phase-I country reports, was also drafted.

1.8 During the second phase, which covered cross border concerns, a case study approach was adopted. The researchers selected three case studies and an effort was made to do at least two similar cases in all these countries in order to facilitate comparison.

1.9 For the advocacy component of the project, a National Reference Group comprising of various stakeholders was set up in each of these countries. These groups deliberate upon the project deliverables before they are finalised. NRG meetings were organised during the first phase and the process would carry on during the second phase, and the momentum generated will perhaps spur the meetings  beyond the project project.

1.10 To take stock of the work progress and plan the way ahead, periodic meetings are organised under the project. The Phase-I culmination meeting was organised in September 2001 at Goa, India and the Phase-II Review Meeting was organised in July 2002 at Geneva, Switzerland. The final meeting is planned to be held in November 2002, also at Geneva to showcase the project before the trade community.

1.11 The following is a brief report of the progress made during the eighth quarter (June 2002 – August 2002) of the project.

II.         PROGRESS DURING THE EIGHTH QUARTER

2.1 Phase-I Country Reports

2.1.1 During this period, the final phase-I country reports were printed and dispatched to the respective partner organisations for being formally launched at the Phase-II NRG meeting. A copy of each report is enclosed.  

2.2 Phase-I Synthesis Report

2.2.1 The phase-I synthesis report was further revised and is in its final stages now. It is expected to be printed by the September/October 2002.

2.3 Phase-II Case Studies

2.3.1 During the period under review, the researchers were busy revising the case study reports prepared during the last two months. The revisions were made on the basis of the comments given by the members of the advisory committee and by CUTS. The case studies were also discussed at the Phase-II Review Meeting held at Geneva. The suggestions that emerged at this meeting have been taken into consideration by the researchers while doing the revision. Report on the Geneva review meeting follows later.

2.4 Phase-II Country Reports

2.4.1 The case study reports are now taking the form of Phase-II country reports. The researchers are compiling this information and preparing the drafts. These reports would be a kind of synthesis and not just a collection of the case studies.

2.4.2 The draft phase-II country reports would be discussed at the NRG meetings and finalised thereafter. These reports would then be published by the respective country partners.

2.4.3 The Phase-II Synthesis Report would be prepared on the basis of these draft country reports. An outline for the same has been prepared and is being enclosed vide Annexure A.

2.5 Phase-II Review Meeting, 5-6 July 2002, Geneva

2.5.1 The phase-II review meeting of the project was held in Geneva on 5-6^th July 2002. The purpose of the meeting was to deliberate upon the Phase-I synthesis report and discuss the phase-II case studies. Discussions were also held on the advocacy efforts that the partners plan to take in future in order to keep the momentum going.

2.5.2 The meeting was attended by the country researchers, members of the advisory committee and the representatives of some of the competition authorities. A brief report of the proceedings is enclosed vide Annexure B.

2.5.3 Meetings of the project partners and also of the advisory committee members were  organised on the fringe of this review meeting. Minutes of these meetings are enclosed vide Annexures C & D respectively.

2.6 Phase-II NRG Meeting

2.6.1 As mentioned in para 2.4.2, the partners are supposed to organise a National Reference Group meeting for phase-II of the project. The purpose of the meeting would be to formally launch the Phase-I country report and discuss the draft Phase-II country report.

2.6.2 As per the time schedule of the project, the NRG meetings were supposed to be organised by mid August. But due to delays in revising the case studies and preparing the phase-II country reports, the dates had to be shifted to September 2002.

2.6.3 However, the NRG meeting was organised in Kenya on 28^th August and went off quite well. The Phase-I report was launched and was covered by media as well. A brief report is enclosed vide Annexure E. 

2.6.4 The Phase-II NRG meeting of India was organised in June and was covered in the previous progress report. However, to launch the Phase-I country report, another meeting would be held in New Delhi on 4^th October 2002. 

2.7 The Advocacy Document

2.7.1 The Advocacy Document of the Project is planned to be prepared by the end of September 2002. This document would draw inputs from Phase-I Synthesis report and the final Phase-II case studies. The Phase-II country reports would also be considered for this purpose.

2.7.2 It would be approximately 25-30 pages long and would give the requisite information in the form of charts, tables, figures and illustrations wherever possible in order to make it reader friendly.

2.7.3 An outline of this advocacy document has been drafted and is being enclosed vide Annexure F. The outline would be finalised after incorporating the comments of the partners, researchers and the members of the advisory committee.

2.8     Project Related Travel

2.8.1     Rajeev Mathur, Director, CITEE, visited Lusaka during 14-15^th July 2002 and Nairobi during 20^th-23^rd July 2002.  He participated in the 2^nd Africa Regional Trade Workshop ‘Africa in the Global Market: Critical Issues for African Consumers’ organised by Consumers International (Regional Office for Africa) in collaboration with Consumer Information Network of Kenya, where he spoke about the Investment for Development Project (also supported by DFID) and the 7-up project and on competition policy generally. His visit was also essential to follow-up with the partners and researchers on various administrative issues concerning the project and take necessary actions. Further, he networked with the African NGOs during his visit.

2.8.2     Pradeep Mehta, Secretary General, CUTS visited Johannesburg and Lusaka during 24^th to 30^th August 2002 to look into some important matters related to the project. The opportunity of the World Summit on Sustainable Development was utilised for organising side events inter alia on Competition Policy in association with the Consumers Council of Korea and on Investment with SOMO, The Netherlands. In the meeting on competition, the relationship of competition with development, environment and consumers was discussed, and the role of civil society in advancing various objectives within the competition framework were discussed. Copy of the report is annexed vide: Annexure I.

2.8.3     Mehta and others in the CUTS team also networked extensively with the civil society and media persons on the occasion of the WSSD. Further, he and others from CUTS had consultations on the progress of the work on 7-Up project with the researchers in South Africa. He also visited Lusaka to visit the CUTS office to take stock of the progress of work on the two projects of competition and investment. He also had extensive consultations with George Lipimile, Executive Director of Zambia Competition Commission, and member of the 7-up project advisory committee. Mehta also had detailed discussions on the regional competition policy project with Mark Pearson and James Musonda of the COMESA Secretariat.

2.8.4     Furthermore, Mehta alongwith K S Sajeev of the CUTS Lusaka Centre and Deborah Akoth of the CUTS Competition Team had detailed discussions with Bridget Dillon, Social Development Adviser and Paul Barbour, Economic Adviser of DFID, Southern Africa on how the learnings of the 7-up project can be used in the civil society programme. This was a major breakthrough, as one of the objectives of the 7-up project is to raise the profile of competition policy and civil society interface with the DFID country offices. DFID, Southern Africa is in the process of developing a new programme to enable civil society to participate in economic reforms being undertaken in the region. DFID-SA also suggested to CUTS to send a concept paper on enabling consumer organisations in the region to work on issues of competition policy, etc.

2.8.5     Similarly, a meeting was held with Nick Dyer, Senior Economic Adviser and Mr, Ian Shapiro, Local Government & Civil Society Adviser, DFID, Nairobi in the month of March 2002. Nairobi-based research adviser of CUTS David Ongolo, also accompanied.  The results of the 7-Up project were discussed in detail and its relationship with Kenya and Tanzania. Dyer spoke about the civil society programme, which DFID-Nairobi desires to launch in Kenya in collaboration with the Government of Kenya and National NGO Council of Kenya, wherein the results could be used.

2.8.6     Mehta had also participated in the seminar on “Competition Law and Policy in a Global Context” at Capetown, South Africa, on 18^th March 2002. The seminar was organised by the International Bar Association (IBA), and Mehta made a presentation on the learnings from the 7-Up Project in a session on Competition Policy in Developing Countries. (The event was mistakenly not reported in the previous progress report).

III. OUTREACH

Newsletters

3.1 As per the Project Agenda, two newsletters are being published during the course of implementation of the project. One is a bi-monthly electronic newsletter called ‘7-UpDate’ and the other, a quarterly hard copy newsletter titled ‘ReguLetter’. The project partners are required to send inputs for these newsletters on a regular basis. During the eighth quarter of the project, the seventh issue of ReguLetter and the eleventh issue of 7-UpDate were published. Copies are enclosed vide Annexures H and I. These are being sent out regularly on dynamic electronic and postal lists of relevant and interested parties throughout the world.

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 seventh issue of the newsletter (No.7 June 2002) has been published. This 24-page newsletter talks about latest regulatory news on pharmaceuticals, airlines, utilities, financial sector, etc. besides a brief on the project progress. The cover story speaks about multi-sector regulators and their importance in regulating competition. The issue also carries an article on the competition law of Pakistan in addition to several interesting stories like class action on credit cards in the US; consolidation in certain sectors like breweries and advertising, difference in the opinion of the US courts on the process of unbundling and the corporate frauds which are bringing down the markets.

3.2.2 About four thousand copies of this newsletter were printed, keeping in view its increasing demand. These copies are being distributed to various stakeholders such as competition authorities, regulatory authorities, consumer organisations, media persons, intergovernmental organisations, etc. It is 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 September 2002. Planning is going on for the same and the writing would start soon.

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 eleventh issue of this e-newsletter (Vol. 2, No. 5) was circulated during this period. This issue covered a brief description of the progress of the 7-Up project and interesting news items on competition and regulation. It also gave information about the forthcoming events on competition policy and law being organised around the world.

3.4 CompetitiOnlineforum

3.4.1 A news item on the complaint filed by the Alkali Manufacturers’ Association of India (AMAI) to the Indian Competition Authority (Monopolies and Restrictive Trade Practices Commission) against the American Natural Soda Ash Corporation (ANSAC) and the decision in the case was posted on this forum. AMAI had alleged that ANSAC was acting as a cartel and was charging lower prices to eliminate Indian competitors as it had done in a few other countries in the past. The MRTPC injuncted ANSAC, whose appeal was turned down by the Supreme Court in an interim order. However, in its final verdict, the Supreme Court held otherwise stating that the Commission did not have jurisdiction in the matter, as ANSAC is situated outside India.

3.4.2 The case generated a lot of interest, as it addressed the newly emerging issue of extra-territoriality, and how developing country laws need to address it.

3.4.3 The “CompetitiOnline Forum” (competitionlineforum@yahoogroups.com ) is a discussion group initiated by CUTS to stimulate online discussion on various issues related to competition law and policy at national, regional and international level. The forum is providing a platform for interested parties to air their views, share information etc. It is probably the first of its type.

3.4.4 There are around 450 members in this Forum, which includes representatives of research institutions, NGOs, consumer activists, competition authorities, media, academia, etc. from all over the world and the list is expanded and updated regularly.

IV. IMPACT OF THE PROJECT

4.1 As mentioned in the previous progress reports, the project continues to show its impact in the 7-Up countries and beyond, both direct and indirect. There is an increasing awareness on competition law and policy in all the project countries. The major contributing factor to this has been the NRG meetings that were held in these countries, which act as a bottoms up approach.

4.2 In the sequence of queries being received by CUTS on the subject, an e-mail was received from Fifth Year Student of Law at the Indian Law Society's Law College, Pune, India. She complimented by saying that the CUTS Website is one of the most comprehensive Websites on these issues. She wanted to get information on competition policy. On similar lines, a request was received from British Institute of International and Comparative Law, London for sending the report on Indian competition law, which they had seen at the CUTS website.

4.3 The Legal Adviser at Tribuna Ecuatoriana de Consumidores, wrote to say that the work we are doing on competition law and policy has been very useful to them as in Ecuador they are working on a project of competition law that is in their Congress at present.

4.4 Comiti de Defensa del Consumidor Consumer Defense Committee, Bolivia complimented CUTS publications on competition, particularly Competition Policy and Law Made Easy (A copy was annexed with the 5^th Progress Report). They said that the monograph examines the subject in a nice and understandable manner for starters, especially in the developing countries. They have expressed their willingness to translate this monograph into Spanish and circulate it widely in Latin America. The possibility of doing so is being explored.

4.5 Pradeep Mehta, Secretary General, CUTS has been invited by the Institute for Consumer Antitrust Studies at Loyola University, Chicago to join the International Advisory Board of their new project on competition policy. Philippe Brusick,  Chief of the Competition Law & Policy and Consumer Protection Division of UNCTAD, Geneva and is a member of the project advisory committee, has also been invited to join this Board. The mission of the Institute is to promote a centrist vision of competition policy that includes but goes beyond the narrow view of allocative efficiency as the only goal for antitrust.  The board would be a way to learn about developments around the world and communicate them in order to promote a vision of competition policy that is different from what the Chicago school in the US would advocate. In addition, the Institute would seek to help countries, individuals and institutions to promote a culture of competition in their systems through research and advocacy.

4.6 In Kenya, the phase-II NRG meeting, organised on 28^th August 2002 was covered well by the media. The highlights of the Phase-I country report have been talked about and the issue of competition policy and law has been interestingly linked to Foreign Direct Investment.

4.7 The Editorial ‘Competition Policy in the New Economy: New or (Micro)Soft?’ of ReguLetter No. 5, December 2001, was picked up and reproduced by the World Trade Review, Islamabad, in its issue of 16^th –30^th April 2002.

V. MANAGEMENT & COORDINATION

5.1 As the project has now been extended by another three months, it was necessary to concretise various activities that would be completed during this time period. The scope of work and time schedule were planned at the phase-II review meeting at Geneva. Suggestions were taken from the researchers and advisory committee members also.

5.2 Besides the activities that were already there in the initial project plan, three other activities have been included:

(i)         Organising phase-II NRG meeting to launch the phase-I country report and discuss the case studies and draft phase-II country report;

(ii)         Preparing one handbook/ briefing paper/ monograph for advocacy purposes under the project. The topics that have been suggested are:

•       Cooperation on competition issues;

•       How is public interest actually implemented;

•       Competition and regulation interface;

•       Price collusion such as cartels, price fixing, etc.;

•       Tied sales/bundling/full line forcing;

•       Unfair Trade Practices; and

•       Capacity building

(iii)        Organising a follow-up meeting in December 2002 to take stock and show-case the work done during the project duration.

5.3 Formal letters were sent to the partners as ‘addendum to the original contract’ giving details of the activities to be completed along with the budget break-up. These contracts have been signed in almost all the project countries and copies have been received at CUTS. The remaining letters would be signed soon.

5.4 The basic framework for the final meeting, which is planned to be held in November 2002 in Geneva, has been planned. The lists of desired participants have also been prepared and the venue options have been worked out. The plans would be executed immediately once the date of the meeting is finalised.

VI. PROBLEMS, SOLUTIONS & CHANGES

6.1 Although the project made good progress during the quarter, some problems were also encountered. Changes and adjustments were made to cope up with them. During the period under review, the following problems were dealt with:

6.2 Meeting Deadlines: As usual, meeting the deadlines remains the primary concern. To ensure that all partners move at the same pace and complete the activities at almost the same time is quite difficult and time consuming. However, best efforts are made to see that the time line fixed for various activities is met to the extent possible.

6.3 Misunderstandings at the Geneva July, 2002, Meeting: Though the phase-II review meeting went quite well and all expectations from the meeting were met, we received some negative feedback on few administrative issues. These matters have now been sorted out and care would be taken to ensure that such problems do not occur in future.

6.4 Researcher in Tanzania:  Revising the case studies of Tanzania was a big problem as the researcher who had prepared the draft could not be contacted as he was a consultant and not a full time employee of ESRF. However, the Executive Director of ESRF took immediate steps and got the revisions done by another researcher who had worked on Phase-I country report also and is aware of the issues. The revised version is done very well and has been sent to the advisory committee for comments and suggestions.

VII. PLAN FOR THE NEXT FOUR MONTHS

7.1 The period from September- December 2002 are  the concluding four months of the project. All the remaining deliverables would be produced during this period and advocacy efforts to carry the objectives forward would be concretised.

7.2 Phase-I Synthesis Report would be finalised and published for wider distribution.

7.3 Phase-II NRG Meetings would be organised to launch the phase-I country reports and discuss the draft phase-II country     reports.

7.4 Phase-II Country Reports would be finalised after being deliberated at the NRG meetings and would then be published and distributed by the partners.

7.5 Handbooks/Briefing Papers: All project countries would prepare one handbook/monograph for advocacy purposes. The format for writing these documents would be sent to all and the topic would be decided by mutual consent.

7.6 Follow-up Meetings would be organised in each of the project countries in the month of December 2002. The purpose of this meeting would be to review the work done during the project period and concretise future advocacy efforts.