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Competition Reforms in Key Markets for Enhancing Social & Economic Welfare in Developing Countries (CREW Project). Rijit Sengupta , Director CUTS International. Outline. About CUTS CREW Project: Rationale & Objectives Conceptual Clarity: Competition Reforms, Implications on Beneficiaries
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Competition Reforms in Key Markets for Enhancing Social & Economic Welfare in Developing Countries(CREW Project) RijitSengupta, Director CUTS International
Outline • About CUTS • CREW Project: Rationale & Objectives • Conceptual Clarity: Competition Reforms, Implications on Beneficiaries • Selection of Countries & Sectors • Pro-Competitive Policies & Implications on Beneficiaries (Cons., Prod.) • Anti-Competitive Policies & Implications on Beneficiaries (Cons., Prod.) • Way Forward - Advocacy
About CUTS • Consumer Unity and Trust Society was established 31years ago, HQ in India • Vision: “Consumer sovereignty within the framework of social justice, economic equality and environmental balance within and across borders” • Implemented research based advocacy and capacity building projects on competition policy and law issues across over 30 countries • Worked closely with local civil society, government and other stakeholders to promote a healthy competition culture across DCs • Assisted various government departments and agencies in outreach and capacity building on competition reforms • CUTS presence and activities in the ASEAN region – CUTS Hanoi. • Other locations: Nairobi, Lusaka, Accra, Geneva • Institutional partnership with EAC, ECOWAS on Trade, Competition and Consumer Protection; hope for the same with ASEAN Sectt.
Project Rationale • Little disagreement about the importance of promoting competition in markets among scholars and practitioners • Impact of competition on welfare, especially in developing country market often not well documented • Competition reforms is not a priority public policy area for DC policymakers, and only a few in government and other actors appreciate the power of fair markets • Visibility of competition reforms in DC policy circuit can be enhanced through documented evidence of benefits • Need to examine implications of competition reforms in key DC markets, which touches on everyday interests of DC consumers and producers
Project Objectives • To enhance international understanding of the benefits from, and best practices in, effectively implementing competition regimes in developing countries • To develop and test a methodology for assessing the efficacy of competition regimes in achieving impacts on developing country consumers and producers • To advocate for greater importance to competition policy and law issues in the national development strategy • To sustain the momentum on fast tracking competition reforms, gained from stakeholder awareness, understanding about the benefits and participation in related process in developing countries
Competition Reforms • Enabling government policies, promoting/distorting competition • Well designed regulatory framework, encouraging competition and regulating it • Well defined competition legislation and effective enforcement mechanisms
Project Countries and Sectors • Project countries: Ghana, India, The Philippines & Zambia • Sectors: Staple Food and Bus Transport • Nature of sectors/markets: Everyday concern of an average citizen and is also characterised by large number of small producers/operators
Pro-Competitive Policies and Implications on Consumers, Producers • Seed sector reforms in Bihar (India) leading to better access to quality seeds for farmers at low cost • seed production increased by 7 folds (yr 2005-10) • Private players increased from 1 to >10 (yr 2005-10) • 87% surveyed farmers reported better access, 79% reported improved quality and 77% reported better affordability
Pro-Competitive Policies and Implications on Consumers, Producers • Fertliser sector reforms & regulatory actions (Plant & Fertilisers Act 2010) in Ghana increased availability of quality fertilisers (import data) and enhanced usage (> 40kg/ha) • In Philippines, strict implementation of moratorium (2000) on issuance of bus licenses in EDSA, Metro Manila can save over US$120mn/annually • Policies enabling import of second hand buses in Zambia and Philippines created the ‘bus market’ to meet local consumer demand
Anti-Competitive Policies and Implications on Consumers, Producers • Quantitative Restriction (QR) on rice import in The Philippines leading to considerable consumer loss (> US$ 3bn) • Monopoly in city bus service to AMTS (Ahmedabad) creates huge stress on govt. revenue (loss in 2013 ~ US$ 28 mn/annum) • Monopoly status to GSRTC (Gujarat, India) in inter-city segment created entry barriers for small operator, promoted rent-seeking • Collusive behaviour among fertiliser importers in Zambia has led to considerable losses for the government (CCPC case)
Way forward: using evidence to influence policy Bus Transport: • Need for greater attention to Public Transport Services, through a well designed regulatory framework and agency (national level and state level in India) • Regulatory framework – economic regulation, PPP, safety • Promoting competition in public procurement of transportation services (PPP) • Promoting competition in inter-city bus transport can reduce/arrest revenue drain • What role should Associations of Transport Operators (Unions) play? Staple Food: • Possible replication of successful private engagement in inputs markets (seeds), in others • Sharing of good practices among government departments/regulators across states/countries • Discussion on pro-competitive rice market in Philippines: once import quota is abolished • Reviewing structure and functions of National Food Agencies: exploring options for public-private-participation to address inefficiencies and reach
“As with most instances of judging by catch phrase, the law evolves in three stages (i) An extreme case arises to which a court responds (ii) The language of the response is then applied – often mechanically, sometimes cleverly, to expand the application. With too few judges experienced enough with the subject, the doctrine expands to the limits of its language, with little regard to policy. (iii) Such expansions ultimately become ridiculous, and the process of cutting back begins” - Philip Areeda, “Essential Facilities, An Epithet in Need of Limiting Principles”, 58 ANTITRUST L.J. 841 (1990)
