GREETINGS TO PARLIAMENTARIANS AT THE NATIONAL TRAINING WORKSHOP ON COMPETITION POLICY AND LAW ACCRA, GHANA 29 APRIL

1. GREETINGS TO PARLIAMENTARIANS AT THE NATIONAL TRAINING WORKSHOP ON COMPETITION POLICY AND LAW ACCRA, GHANA 29 APRIL 2010

2. BENEFITS FROM COMPETITION Dr. S. CHAKRAVARTHY (Profession : Civil Servant) Formerly, Member, Monopolies and Restrictive Trade Practices Commission, Member, High Level Committee on Competition Policy and Law And Member of Committee for Drafting the Law. Presently, Adviser/Consultant Competition Policy and Law HYDERABAD, INDIA

3. LPG PARADIGM PRE-REFORMS POST-REFORMS • LIBERALISATION • PRIVATISATION • GLOBALISATION • LICENSING • PLANNING • GOVERNMENT

4. L P G PARADIGM( POST - REFORMS) • POLICY CHANGES POST-REFORMS INCLUDE: • DEREGULATION AND SIMPLIFICATION OF LICENSING AND • APPROVAL PROCEDURES • EXEMPTION OF A SPECIFIC AND SIGNIFICANT NUMBER • OF INDUSTRIES FROM LICENSES, APPROVALS AND QUOTAS • NEW ECONOMIC ADJUSTMENT MEASURES • DIVESTITURE AND SALE OF GOVERNMENT ASSETS • GRADUAL DECLINE IN THE INTERVENTIONIST ROLE OF • THE PUBLIC SECTOR • PRIVATISATION • ENCOURAGING COMPETITION

5. JENNY ON REFORMS AND COMPETITION “THE WIDELY HELD PERCEPTION THAT REGULATED ECONOMIES IN WHICH COMPETITION IS RESTRAINED THROUGH GOVERNMENT REGULATION ARE INEFFICIENT, UNDEMOCRATIC OR UNFAIR EXPLAINS TO A LARGE EXTENT WHY WE HAVE WITNESSED A PATTERN OF CHANGES IN MANY COUNTRIES OVER THE LAST DECADE INCLUDING DEREGULATION OF ECONOMIES, PRIVATISATION AND INCREASING RELIANCE ON COMPETITION IN THE MARKET PLACE”

6. NEED FOR COMPETITION REGIME • COMPETITION POLICY AND COMPETITION LAW ARE REQUIRED • EFFECTIVE COMPETITION POLICY PROMOTES A COMPETITIVE BUSINESS ENVIRONMENT AND IMPROVES STATIC AND DYNAMIC EFFICIENCIES • COMPETITION LAW PREVENTS ABUSE OF MARKET POWER AND CURBS ANTI-COMPETITIVE PRACTICES

7. RUBRIC OF COMPETITION LAW FOUR COMPARTMENTS ARE GENERALLY THE CORE OF COMPETITION LAW: • ANTI-COMPETITION AGREEMENTS • ABUSE OF DOMINANCE • MERGERS, AMALGAMATIONS, ACQUISITIONS AND TAKE-OVERS • FOSTERING COMPETITION

8. BENEFITS OF COMPETITION –AN ILLUSTRATION • IN THE EUROPEAN UNION IMPLEMENTATION OF COMPETITION POLICY RESULTED IN REMOVAL OF BARRIERS TO TRADE • INCOME INCREASED BY 1 TO 1.5 % • THIS CREATED 30 – 90 THOUSAND JOBS • INFLATION DECREASED BY 1 TO 1.5 %

9. WALL OF PROTECTIONISM AGAINST IMPORTED SILK • KARNATAKA IN SOUTH INDIA PRODUCES SILK FABRICS, FAMOUS THROUGHOUT THE WORLD • SILK FABRICS IMPORTED FROM CHINA WAS PERCEIVED AS A THREAT BY DOMESTIC FIRMS • DIRECTOR GENERAL OF ANTI-DUMPING IN INDIA SLAMMED A HEAVY LEVY ON CHINESE FIRMS • PROTECTIONISM EMASCULATED COMPETITION • TRADE POLICY PREVAILED OVER COMPETITION • PUBLIC INTEREST PREVAILED OVER CONSUMER INTEREST WAS THIS RIGHT?

10. IMPACT OF HARDCORE CARTELS IN SOME AFRICAN COUNTRIES • HARDCORE CARTELS IN HEAVY ELECTRICAL EQUIPMENT, STEEL AND ALUMINIUM IMPACTED SOME AFRICAN COUNTRIES ADVERSELY • THESE CARTELS INDULGED IN OVER CHARGING AND BID-RIGGING • CONSEQUENTLY, COST OF POWER GENERATION PLANTS WENT UP STRETCHING TREASURY • DAMAGES AMOUNTED TO ZIMBABWE – US $ 44 MILLION KENYA - US $ 34 MILLION SOUTH AFRICAN CUSTOMS UNION – US $ 270 MILLION

11. SMALL SECTOR PROTECTION • POLICY - ENCOURAGE AND PROMOTE SMALL, COTTAGE AND HANDLOOM SECTORS • RESERVATIONS FOR THE SMALL SCALE SECTOR • THEY SUFFER FROM OLD TECHNOLOGY, LACK OF RESOURCES AND MANAGEMENT, HIGH COST OF PRODUCTION AND SALE • GLOBAL COMPETITION CAN EXTINGUISH THE SMALL SCALE AND COTTAGE SECTORS • COMPETITION LAW COULD EXEMPT SMALL SECTOR FOR A SPECIFIC PERIOD OF TIME TO ENABLE IT TO BRACE ITSELF TO MEET THE CHALLENGE OF COMPETITION

12. CAN COMPETITION LAW BE PRO-POOR? NOT EXPLICITLY IN THE WORDING OF COMPETITION LAW BUT PRO-POOR CONCERNS ARE ARTICULATED AS BELOW : “POVERTY REDUCTION HAS NORMALLY BEEN SEEN AS A SPECIFIC MEASURE AND ALWAYS REMAINED AT THE SIDELINES OF ECONOMIC POLICY MAKING BUT COMPETITION POLICY IS AN ELEMENT THAT CAN MAINSTREAM DEVELOPMENT AND POVERTY REDUCTION AND PUT THEM AT THE CENTRE OF ECONOMIC POLICY REGIMES” – RUBENS RICUPERO, SECRETARY GENERAL, UNCTAD “MARKETS WORK FOR THE POOR, BECAUSE POOR PEOPLE RELY ON FORMAL AND INFORMAL MARKETS TO SELL THEIR LABOUR AND PRODUCTS, TO FINANCE INVESTMENT AND TO INSURE AGAINST RISKS. WELL-FUNCTIONING MARKETS ARE IMPORTANT IN GENERATING GROWTH AND EXPANDING OPPORTUNITIES FOR POOR PEOPLE” – WORLD INVESTMENT REPORT, 2001 IT IS FOR THE COMPETITION AUTHORITY TO PRO-ACTIVELY GIVE A SHAPE TO THE SPIRIT BEHIND PRO-POOR CONCERNS

13. PRO-POOR: BATA CASE • BATA HAS DOMINANT PRESENCE IN FOOTWEAR MARKET • IT ENTERED INTO AGREEMENT WITH SMALL SCALE MANUFACTURERS (COBBLERS AND POOR LEATHER WORKMEN) FOR PURCHASE OF FOOTWEAR • AGREEMENT STRIPULATED THAT THE SMALL MANUFACTURERS SHOULD USE ONLY MOULDS SUPPLIED BY BATA • MRTP COMMISSION HELD THIS AS A RESTRICTIVE PRACTICE AND PREJUDICIAL TO PUBLIC INTEREST • BUT MRTP COMMISSION RECKONED THE INTERESTS OF SMALL POOR MANUFACTURERS AND ALLOWED THE RESTRICTION TO CONTINUE

14. IS A COMPETITION LAW REQUIRED AT ALL? • WITH GLOBALISATION, THERE IS LIKELY TO BE SIGNIFICANT RESTRUCTURING OF MANUFACTURE, TRADE AND SERVICES • DOMESTIC CONSOLIDATION AND ENTRY OF FOREIGN ENTITIES • ANTI-COMPETITION PRACTICES MAY SURFACE AS A CONSEQUENCE • WTO FALL OUT OBLIGATIONS NEED TO BE ADDRESSED • REGULATORY AND ADVOCACY FUNCTIONS NEED TO BE POSITED • WITHOUT A COP, TRADE TRAFFIC MAY PREJUDICE CONSUMER INTEREST • COMPETITION LAW WILL BE A COP AND A FRIEND

15. ROAD MAP • COMPETITION POLICY AND COMPETITION LAW NEED TO BE COMPLEMENTARY AND IN TANDEM • COMPETITION POLICY SHOULD BE FLEXIBLE TO MEET THE NEEDS ASPIRATIONS AND GOALS OF THE COUNTRY. FOR INDIA, PRO-POOR POLICIES SHOULD BE FACTORED IN • COMPETITION LAW NEEDS TO BE GRADUALLY PHASED IN TO AVOID TURBULENCE • THERE SHOULD BE POLITICAL WILL TO ENFORCE COMPETITION LAW EFFECTIVELY AND EFFICIENTLY • NO LAW IS BETTER THAN A POORLY ADMINISTERED LAW

16. ONE WOULD LIKE TO AVOID THE DANGER OF HOLLOW PURISM THAT HAS MADE SO MUCH OF MODERN ECONOMICS UNFIT FOR ACTUAL USE AMARTYA SEN INDIAN NOBEL LAUREATE

17. WHAT “ISM” DO WE WANT? DO WE WANT ECONOMIC NATIONALISM PROTECTIONISM NATIONAL CHAMPIONISM OR CONSUMERISM ? ANSWER IN THE NEXT SLIDE. (PARDON MY ENGLISH ON THIS SLIDE)

18. WHAT IS NEEDED IS NOT ANY “ISM” BUT “PRAGMATISM” ORPOORAGMATISM

19. THANK YOU FOR YOUR KIND ATTENTION