CPL AND DEVELOPMENTTHE CASE OF THE COMESA REGION

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CPL AND DEVELOPMENT-THE CASE OF THE COMESA REGION

• By
• Peter Muchoki Njoroge
• Chairperson
• COMESA Competition Commission

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CHARACTERISTICS WITH REGARD TO COMPETITION IN THE
COMESA REGION

• Government involvement in many sectors.
• Reliance on Governments to provide essential
  services for the majority education, health,
  water etc.
• Supremacy of the Executive vis a vis other
  government arms.
• Lack of Strong Competition Culture

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CHARACTERISTICS OF COMESA STATES contd

• Generally there is weak regulation. Probability
  of regulatory capture is high both industrial
  and political.
• High poverty levels associated T/Os.
• Policy Makers are also BOs or are highly
  intertwined with BOs. Vested interests have high
  propensities to converge.
• High Concentration of economic power.
• Lack of CPL in most countries eg in the COMESA
  region out of 19 member states there are only 2,
  3 or 4 fairly active CAs. CL has been promulgated
  in about 7 States.

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EXAMPLES OF RTPs IN THE COMESA REGION

• Trade agreements geographical market sharing,
  price fixing, economies of scope provisions,
  production quantities provisions ets.
• Cartelization through trade associations.
• Refusal or discrimination in supply.
• Predatory practices to repress
  competition.
• Collusive tendering BR.
• Collusive bidding at auctions BR

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NEED FOR CPL IN THE COMESA REGION

• The environment is conducive for proliferation of
  RTPs.
• RTP will spawn transparency and accountability
  which will go a long way towards controlling
  corruption.
• Promotion of good governance by introduction of
  enforceable rules. As already stated governments
  are involved in many sectors of the economy.
• As the majority of the people are poor, CPL will
  speak on their behalf. Consumer Welfare will be
  enhanced.

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NEED FOR CPL contd.

• Trade Associations are used to promote RTPs in
  key sectors such as Insurance, Banking,
  Manufacturing, Oil, Construction, Pharmacy,
  Medical etc. Some claim to embrace safety and
  best standards. CPL is needed to tame them.
• As stated earlier vested interests control many
  sectors of COMESA States economies. CPL is
  needed to tame these interests

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NEED FOR CPL contd.

• Enterprises, especially Multinationals, abhor
  adverse publicity. Any indication, therefore,
  that a Public Agency is investigating them spawns
  positive effects. The enterprise being
  investigated, and other enterprises, will desist
  from conduct involving RTPs.
• Competition Policy may be more important in
  developing countries than in developed countries.
  In many developing and least developed
  countries, many people subsist on less than one
  dollar per day.

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NEED FOR CPL contd

• That dollar when taken away, through
  uncompetitive practices, from the poor person
  disproportionately affects him more than it would
  affect people from richer countries.
• In situations where public funds are involved,
  for example in bid-rigging and collusive
  tendering, the dollar which would go to assist
  the poor in state provision of medicine or in
  providing universal primary education ends up in
  private pockets. This is anti-development.

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OVERARCHING NEED FOR CPL

• We subscribe to the view that Competition Policy
  may be more important in developing countries
  than in developed countries. In many developing
  and least developed countries, many people
  subsist on less than one dollar per day. That
  dollar when taken away, through uncompetitive
  practices, from the poor person
  disproportionately affects him more than it would
  affect a better-off person.

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OVERARCHING NEED cont

• In situations where public funds are involved,
  for example in bid-rigging and collusive
  tendering, the dollar which would go to assist
  the poor in state provision of medicine or in
  providing universal primary education ends up in
  private pockets. This is anti-development.

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OVERARCHING NEED contd

• Enterprises, especially Multinationals, abhor
  adverse publicity. Any indication, therefore,
  that a Governmental Agency is investigating them
  spawns positive effects. The company being
  investigated, and many other such companies, will
  desist from conduct involving RTPs.

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REGIONAL COMPETITION AUTHORITIES

• Will capture extra territorial violations on
  behalf of regions in more effective and
  coordinated methods.
• Treaties establishing regional economic
  cooperation initiatives normally have competition
  adherance provisions. Regional CAs are best
  placed to enforce obligations arising out of such
  provisions especially with regard to member
  states lacking CAs.
• Regional CAs have competition advocacy provisions
  within apposite regions e.g COMESA, EAC rules.
• Regional CAs may be less amenable to Industrial
  and Political capture.

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CONCLUSION

• CPL promotes development whether at regional or
  national levels.
• The characteristics (broached in Slide 1 etc)
  require taming by effective enforcement of CPL.
• CPL may be required more urgently in the COMESA
  region ( and in other comparable regions) than
  perhaps would be required in more developed
  regions. Money saved through enforcement of CPL
  will go into important services such as water,
  health and education.