Interventions by Civil Society on Competition Issues

1. Conference of the International Network of Civil Society Organizations on Competition Interventions by Civil Society on Competition Issues Geneva - January, 29th of 2004

2. Summary • Conditions for civil society participation. • Cases. • Possible obstacles. • Lessons from the Brazilian case.

3. Conditions for civil society participation

4. Four conditions… 1) Transparency; 2) Competition Advocacy; 3) Efficient communication channels (access to the authorities); 4) Organization of Civil Society;

5. Relevant legislation • Law # 8.884 of June 11, 1994 • Project of Law 184 / 2003 • Resolution # 15 of August 19, 1998 • Directive # 849 of September 22, 2000

6. Transparency • Judgment sessions are public. • Relevant decisions are published in the official Gazette. • Most documents are public. • Norms and regulations are subject to public consultations. • A federal public attorney accompanies the case. • Public hearings and consultations.

7. Example of Transparency • Law 8.884 “Article 12. The Attorney General of the Republic, after hearing the Higher Council, shall appoint a member of the Attorney General Office of the Republic to handle the cases submitted to CADE for review.”

8. Example of Transparency • Resolution #15 • Article 5. Upon the receipt of the proceeding, the Reporting Commissioner shall verify jointly with SEAE, the realization of the market consult about the effect of the transaction. If necessary, the Reporting Commissioner will reach the reasonable measures according the Exhibit IV.

9. Example of Competition Advocacy • Law # 8.884 Article. 7 The CADE board shall: …………………………………………… XVII Answer consultations on matters within its sphere of authority.

10. Example of Competition Advocacy Law # 8.884 “ Article 14. SDE shall: ………………………………………………………… XV-advise the public on the various forms of violation of the economic order, as well as the means to curb such violations; ”

11. Example of Efficient Communication Channels • Law # 8.884 “ Article 44. Upon invitation of the CADE president in response to an indication of the reporting official, any person may provide CADE with clarifications on relevant matters.”

12. Example of Efficient Channel of Communication. • Directive # 849 “ Art. 6th The representative or third interested part, even so not being part of the fact, will be able to assist the authority, supplying documents and necessary information to the procedural instruction.”

13. Organization of Civil Society • Consumer groups and associations. • Competition associations (IBRAC, GEDECOM). • Competition section of the Brazilian bar association.

14. Regulatory Agencies (RAs) • Before any relevant decision the RAs should accomplish a public consult. • Public Associations can indicate a member to follow a process. • The RAs got to follow the Executive Police. • Contracts should be on official press. • An Ombudsman is nominated.

15. Practical Examples of Civil Society Participation

16. The AmBev Case(2000) • The two largest Brazilian breweries merged into one. • AmBev gained control over more than 60% of the market. ANTARCTICA AMBEV BRAHMA

17. Cade’s decisions – Ambev case: 1) Three kinds of assets to make possible a new competitor in 8 months: a) Sale of Bavária brand b) Share of the Distribution Net - 4 + 2 years c) Sale of 05 units in all regions of the country.

18. Manaus/AM Antárctica Salvador/BA Brahma Cuiabá/MT Brahma Ribeirão Preto/SP Antárctica Getúlio de Vargas/RS Antárctica AMBEV:Sale of 05 units

19. Cade’s decision AmBev case: 2) Offering of access to distribution net of Ambev in each of 5 Brazilian regions

20. Cade’s decision AmBev case: 3) Ambev could not close a unit in the next 4 years without making a public offering.

21. Cade’s decision AmBev case: 4) Workers´ Retraining and Repositioning Program

22. Conditions for civil society participation in this case • 6 Public Hearings. • Public Session of Judgment. • Live Transmission of the Judgment by TV. • Decisions available to the public.

23. Public Hearing on Public Services

24. Consequences of a price increase... • Public services are a large part of a consumer basket. • If electricity tariff increases by 10 %, the Consumer Price Index increases by 0,44 %.

25. Utility Sectors affect the poor... (1994 - 2003) 606% 223% 221% 138% fix telephone water CPI electricity Fonte: Folha de S.Paulo

26. Public Hearings have been important... • Choose the best index to readjust Electricity • Criterion for productive factors • Choice of price index for long term contracts

27. Public Participation is increasing… Number of Public hearings on ANEEL 49 35 11 10 10 7 98 99 00 01 02 03

28. Public Hearing about Electricity issues

29. Possible Obstacles

30. The Political Economy of Competition Policy Political market failure Institutional under-investment

31. Lessons from the Brazilian case.

32. Transparency and Communication are very important but not sufficient…

33. Organization of civil society is essential and is the big challenge of us.

34. Thank You! More information...gesner@fgvsp.brandrew@ips.lkc-cier@cuts.orgscazufca@yahoo.com.br rodrigo.silva@poli.usp.br www.gesneroliveira.com.br