Lessons from Other Countries

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Lessons from Other Countries

• Presented by
• Dr. Selim Raihan

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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 Bangladesh can derive from cross
  country experiences

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Competition Policy in Different Countries

• Malaysia
• India
• Vietnam
• South Africa
• Chile
• Venezuela

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Competition Policy in Malaysia

• No national competition policy law.
• Sectoral approach to competition and regulation.
• Policies of deregulation and liberalisation of
  the economy since the 1980s
• Deregulation of trade and investment,
  privatisation of power generation, the
  distribution sector, telecommunications,
  transport and the postal services boosted overall
  market competitiveness.

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Competition Policy in Malaysia (Cont.)

• No administrative authority for determining
  appropriate business ethics and trade practices.
• 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.

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Malaysia (Continued)
Competition Policy in Malaysia (cont.)

• 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 has become redundant for several
  reasons. Therefore a new law has been drafted.

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Competition policy in India (cont.)

• India has consumer protection act and corporation
  working for securing consumer rights against any
  anti-competitive practices of firms.
• The Consumer Protection Act is known as COPRA
  (1986). It recognizes the followings rights to
  the consumers
• Safety
• Information
• Choice
• Representation
• Redress
• Consumer Education

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Competition policy in India (cont.)

• For details, please have a look at
• CUTS Centre For Consumer Action Research And
  Training (CART) Consumer Rights And Its
  Expansion Rights And Responsibilities
• CUTS Articles on Consumer Policy and Issues

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Competition policy in Vietnam

• Sector wise policies and regulations.
• A competition Law promulgated in 2004 with a
  competition Authority
• The Competition Authority -
• Controls the process of economic concentration
• Investigates unfair competition practices
• Sanctions unfair competition practices

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Competition policy in Vietnam (cont.)

• For details
• Comparative Study of Sectoral Regulation in
  Developing Countries Lessons for policy,
  Governance and Implementation
• -A Case Study of Vietnam.

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Competition policy in South Africa

• The Competition Commission plays a pivotal role.
• 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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Competition policy in South Africa (cont.)

• For details
• 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

• Ghoten Gas Agency, a Kolhapur based gas supplier
  in India, was forcing the buyers to buy hot
  plates at the time of releasing fresh gas
  connection.
• The Competition Authority held such a practice.
• The Authority directed that wherever a customer
  purchased a hot plate simultaneously with a fresh
  gas connection, the gas agency should make it
  clear on the invoice that the hot plates were
  purchased voluntarily.
• Further a notice board should be prominently
  displayed in the agencys 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

• 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 MASs pricing strategy
  by offering lower fares.
• Despite MASs plea for government (Ministry of
  Transport) 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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Case study-South Africa
The Spanish Case Study

• Four Sugar producers in Spain were engaged in
  market allocation agreement (apart from price
  fixing, sales quota agreements) 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 CUTS Competition Policy and Law Made
  Easy

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Case study- Kenya
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 Bangladesh

• 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.
• For developing countries, resource constraint is
  one of the major problem in establishing
  competition authority.
• Consumer welfare should be explicitly mentioned
  in the legislation. The role of consumer in CL
  should also include the right of consumer
  organizations to bring complaints to the CA.
• It is very important that the reports on
  anti-competitive practices be published in the
  media to raise the awareness of the consumers.