Transcript Competition Policy and Law: Lessons from Other Countries Dr. Selim Raihan Presented by

Competition Policy and Law:
Lessons from Other Countries
Presented by
Dr. Selim Raihan
Presented at the Workshop on Competition Policy & Law
CUTS International & Central Institute for Economic Management (CIEM), Vietnam
April 27 and 28, 2006
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In this session we will discuss…..

Competition policy in different countries.

Some case studies: What are the evidences of
competition policy helping consumers in other
countries?

Lessons that Vietnam can derive from cross
country experiences
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Competition Policy
in Different Countries
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 Australia
 Malaysia
 India
 South Africa
 Chile
 Venezuela
 Bangladesh
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Competition Policy in Australia

Australian competition policy dates from 1906 when
the first Federal law dealing with restrictive practices
was enacted.

Contemporary Australian competition policy stems
from the 1965 Trade Practices Act.

Liberalisation of the economy in the mid 1970s and the
1980s (tariff cuts of 1973, floating of the dollar, and the
elimination of foreign exchange controls).

The Competition Policy Reform Act was enacted in
1995.
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The NCP's Institutional Framework

The Australian Competition and Consumer
Commission (ACCC): An independent statutory
authority
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The National Competition Council: An independent
advisory body

The Australian Competition Tribunal: A quasi-judicial
review body
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For details please see…..

Global Competition Forum Website:
www.globalcompetitionforum.org

Parliament of Australia: Parliament Library:
http://www.aph.gov.au/library/intguide/econ/ncp_ebrief.htm
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Competition Policy in Malaysia
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No national competition policy and law.
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Sectoral approach to competition and regulation.

Policies of deregulation and liberalisation of the
economy since the 1980s

There are about 30 laws to regulate certain activities
of enterprises and to protect consumer interests.

Under these laws a consumer or trader may seek
redress through the appropriate Ministry, public
agency or via the Civil Courts.

No administrative authority for determining
appropriate business ethics and trade practices.
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For details please see……

Global Competition Forum Website:
www.globalcompetitionforum.org

Lee, Cassey (2004) : Competition Policy in
Malaysia, CRC Working Paper 68.
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Competition Policy in India

India had a competition law since 1969 by the name of
Monopolies and Restrictive Trade Practices Act.

That law became redundant for several reasons.
Therefore a new law has been drafted.

India has consumer protection act and corporation
working for securing consumer rights against any anticompetitive practices of firms.

The Consumer Protection Act is known as COPRA
(1986). It recognizes the rights such as safety,
information, choice, representation, redress, and
consumer education to the consumers.
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For details please see……

Global Competition Forum Website:
www.globalcompetitionforum.org

CUTS Centre For Consumer Action Research
And Training (CART): “Consumer Rights And
Its Expansion Rights And Responsibilities”
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Competition Policy in Bangladesh

No formal competition policy and law.

No formal competition authority.

Different governmental policies: Trade policy,
Industrial policy, Exchange rate policy, FDI policy,
Privatisation policy, Labour Policy, etc.

The Monopolies and Restrictive Trade Practices
(Control and Prevention) Ordinance Promulgated in
1970 is still in force in Bangladesh, which provides
for taking action against any unfair competition or
concentration of economic power, or illegal trade
practices.
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For details please see……

Global Competition Forum Website:
www.globalcompetitionforum.org

BEI (2005), “Competition Scenario in
Bangladesh”, Prepared for CUTS-International
Within the framework of the 7Up2 Project
“Advocacy and Capacity Building on
Competition Policy and Law in Asia”
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Competition policy in South Africa

The Competition Commission plays a pivotal role in
creating environment for efficient business sector and
in ensuring competitive prices and greater product
choice for consumers.

The Competition Act (Act. No.89 of 1998) was
passed by Parliament in September 1998.

The enforcement agencies are the Competition
Commission, the Competition Tribunal and the
Competition Appeal Court.
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For details please see……

Global Competition Forum Website:
www.globalcompetitionforum.org

Comparative Study of Sectoral Regulation in
Developing Countries: Lessons for policy,
Governance and Implementation -A Case
Study of South Africa.
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Competition policy in Latin American Countries

The Chilean system of protection of Competition in
markets is integrated by The Tribunal for the Defence
of Free Competition and The Economic National
Prosecutor's Office. The Decree-Law 211 of 1973 is
the legal framework of this system.

The free competition regime in Venezuela started in
1992 when the government settled a group of new
policies in order to prepare the country to face
globalisation process, including to the Law to
Promote and Protect the Exercise of Free
Competition.
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Case Studies
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The Indian Case Study

A gas supplier in India was forcing the buyers to buy hot
plates with fresh gas connection.
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The Competition Authority held such a practice.

The Authority directed that the gas agency should make it
clear on the invoice that the hot plates were purchased
voluntarily.
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Further a notice board should be prominently displayed in
the agency’s premises that the customers were free to
purchase hot plate either from Ghoten Gas agency or from
any other source.
Source: CUTS “Competition Policy and Law Made Easy”
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The Malaysian Case Study

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Prior to 2002, MAS was a monopoly operator in the
domestic airline market.
With the entry of AirAsia the domestic airline market
became more competitive.
AirAsia offers no-frills domestic flights at low fares.
MAS responded by offering 50 percent discounts for ten
seats in every flight.
AirAsia also responded to MAS’s pricing strategy by
offering lower fares.
Despite MAS’s plea for government intervention to
resolve the perceived ‘price war’, the government has
maintained that the competition between the two firms
as healthy competition.
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The Spanish Case Study

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Four Sugar producers in Spain were engaged in
market allocation agreement that restricted sugar
supply to the level at which maximum monopoly
profits could be earned.
As a result. Spanish sugar prices, for many years,
were 5 to 9 percent higher than those in the rest of
Europe.
The Spanish Service for the Defence of Competition
uncovered the cartel and slapped 8.7 million euros
fine on the four producers.
Source: Report of the Ministerial level meeting of the OECD, 2000
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The Kenyan Case Study

South Africa Bottling Company Pty (SABCO) proposed
of taking over all the other bottling companies and
consolidating them into one entity.

The Kenyan competition authority decided that such a
plan would lead to both horizontal and vertical
concentration of market power and the likely abuse of
dominance, and accordingly stopped the process from
going further.

Thus, the Kenyan authority, dealing with a huge global
company, applied the competition law to foreclose likely
anticompetitive practices in the market.
See pages 14,15 of UNCTAD, April 2002: Recent Important Competition Cases
in Developing Countries
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The Argentinean Case Study
Four foreign companies active in Argentina as
suppliers of medical oxygen to public and private
hospitals were fined 70.3 million pesos (US$ 24
million) for operating a price cartel for medical
oxygen.
See page 4 of UNCTAD, September,2005 : Recent Important Cases
Involving More Than One Country
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The Brazilian Case Study
Three chemical or pharmaceutical firms (Roche,
BASF and Aventis Animal Nutrition, the latter
formed through the merger of Rhône-Poulenc and
Hoescht) fixed the prices and allocated market
shares of bulk vitamins in Brazil as an extension of
their participation in an international vitamins cartel
which was prosecuted in the United States.
See pages 5,6 of UNCTAD, April 2002: Recent Important Competition
Cases in Developing Countries
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Lessons for Vietnam……
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Components of competition policy
Competition Policy
Government Policies
Competition Law
Private Actions
Deregulation
and
Privatization
Trade Policy
Industrial
Policy
Consumer
Policy
Regulations Governing
Capital and FDI
Other
Policies
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Competition Law (National)
Anti-Competitive
Agreements Between
Firms
( Collusion)
e.g.
Abuse of a Dominant
Market Position
e.g.
•Import cartels
•Price fixing
•Market sharing
•Bid rigging
•Limiting production or
investment
•Refusal to buy or supply
•Tie-in arrangements
•Exclusive-dealing
arrangement
•Resale price maintenance
•Territorial allocation between
supplier and dealer
•Predatory pricing
•Price discrimination
•Excessive pricing
•Exclusionary
vertical restrictions
•Abuse of intellectual
property monopoly
Regulation of Mergers
to Prevent Tactics to
Gain Excessive
Dominance in a
Market
Applies to:
•Total unification of
the companies
involved
•Buying of sufficient
shares in a company
so as to have a say in
policy formulation
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Need for a Competition Policy
Benefits of to Consumers:
Ensures a fair deal in the market place with
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The best possible choice of quality,
The lowest possible prices, and
Adequate supplies of commodities.
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Benefits for efficient producers

A safeguard against practices that could drive companies out of
business.
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Lower entry barriers in the market promote entrepreneurship and
growth of small and medium enterprises.
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Efficient allocation and utilization of resources ensures more output
and employment (although in the short run there can be some job
losses, which should be covered by some safety-net programs).
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Control of international competition, such as international cartels,
that may adversely affect a country’s trade and development.
On the whole, a competition policy maintains and promotes the
competitive spirit and culture in the market.
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Globalization and the need for Competition Policy
Globalization and Competition
Outcome of
threat to
Concentration of Market Power
Therefore, we need competition policy to monitor, prevent and
control anti-competitive practices.
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Concluding Observations

Competition policy and law and consumer protection
policy can take different forms for different countries.

There are verities of anti-competitive practices and
consumer abuses, so the regulatory authority should
be innovative in nature.
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For developing countries, resource constraint is one
of the major problem in establishing competition
authority.
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It is very important that the reports on anticompetitive practices be published in the media to
raise the awareness of the consumers.
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Thank you!!
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