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Competition Policy and Law in Bangladesh Presented by: Taneem Ahad 13 May 2007

Competition Policy and Law in Bangladesh Presented by: Taneem Ahad 13 May 2007. What is Competition Policy (CP). Policies governing rivalry among firms and market structure conducive to such rivalry Market contestability Affects behavior of enterprises and consumers. Objective.

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Competition Policy and Law in Bangladesh Presented by: Taneem Ahad 13 May 2007

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  1. Competition Policy and Law in Bangladesh Presented by: Taneem Ahad 13 May 2007

  2. What is Competition Policy (CP) • Policies governing rivalry among firms and market structure conducive to such rivalry • Market contestability • Affects behavior of enterprises and consumers

  3. Objective • Promote competition by discouraging anti-competitive behavior

  4. Benefits • Consumers: Lower prices, higher quality, wider choices • Firms: Incentives for good performance and be innovative, improved productivity, ensures fairness, efficiency • Natural monopolies: Better regulation and price control, e.g. cable operator

  5. Benefits of Increased Competition: India’s Automobile • 4.0% of GDP in 2004–05, up from 2.8% in 1992–93. • More than $13.5b in investments during the past decade. • More than 1.12m automobiles produced in 2005–06 , compared with 264,000 in 1994–95. • Over $21.6b in annual turnover. • Direct employment of 0.5m and indirect 10m, compared with fewer than 100,000 before 1991.

  6. Policies that affect/are affected by CP • Trade Policy • Industrial Policy • Foreign Investment and Ownership Requirement • Privatization Policy • Consumer Protection • Government Procurement Policy

  7. Competition, Entry and Economic Growth

  8. GoB and CP • PRSP: Unfair business practices are alleged to be prevalent in Bangladesh in the production, importation and distribution of some goods and rendering of some services… • Ministry of Commerce

  9. MRTPO • Monopolies and Restrictive Trade Practices Ordinance (MRTPO) 1970 • Prohibits • Undue concentration of individual economic power • Unreasonable monopoly power • Unreasonable restrictive trade practices

  10. Nature of market/competition • Availability of data a major issue • No industry concentration ratio available and no time series data • Statistics: broad industry groups

  11. CP Survey Major anti-competitive practice: • Collective price fixing: 65% • Monopoly and bid rigging: 48% • Discriminatory dealings: 39% • Entry barriers: 30%

  12. Potential Sectors • Essentials: rice, sugar, pulse, edible oil, fresh vegetables • Pharmaceutical, power, telecom, toiletries, tobacco, cement, fertilizer, corrugated steel, financial services, intercity bus services, health services

  13. How to Make Effective CL • Good leadership: identify champions, independent agency • Political support • Active consumer movement • Relation with other policies

  14. Role of BICF • CP awareness raising: Government, businesses, consumers, media, academia, think tanks • Capacity building: • Exposure to regional/international best practices • Competition policy as part of university curriculum • Draft guidelines

  15. Sector Studies • Identify sectors based on: • Relative importance of the sector in terms of its contribution to GDP • Nature and type of enterprises • Impact on domestic consumers, esp. the poor • High visibility and impact

  16. Challenges • Political will and support • Enforcement of law • Expertise and availability of resources

  17. THANK YOU

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