IMPORTANCE OF COMPETITION POLICY AND LAW: DEVELOPING COUNTRIES PERSPECTIVE by Philippe Brusick Former Head Competition & Consumer Policies Branch, UNCTAD DITC

IMPORTANCE OF COMPETITION POLICY AND LAW CONTENTS: Economic benefits of competition; Need for competitive infrastructure; Developing countries suffer most from anti- competitive practices; Competition policy and law are essential development components; They need to be complemented by market- oriented reforms; Conversely, market reforms cannot succeed without appropriate competition policy and law.

ECONOMIC BENEFITS OF COMPETITION Static Efficiency: –Lower prices –Better quality –More choice Dynamic Efficiency: –Efficient allocation of resources –Management, processing and technological improvements –Product innovation

NEED FOR COMPETITIVE INFRASTRUCTURE INFRASTRUCTURE –Transport, Banking,Insurance UTILITIES –Energy, Telecoms, water. DISTRIBUTION –Large Distribution Chains, Global Importers IMPORTANT SECTORS FOR LDCs : –Tourism, Mining, Agriculture ALL BASICALLY IMPORTANT TO ENSURE A COMPETITIVE ECONOMY

DEVELOPING COUNTRIES SUFFER MOST FROM ANTI-COMPETITIVE PRACTICES INADEQUATE INFRASTRUCTURES –ISLAND, LAND-LOCKED STATES –POOR COMMUNICATIONS LEAD TO SEGMENTED MARKETS AND LOCAL MONOPOLIES LOW CAPITAL FORMATION –HIGH INTEREST RATES AND LACK OF ENTREPRISE CULTURE LEAD TO STATE MONOPOLIES & INEFFICIENCIES ASSYMETRY OF INFORMATION –CONSUMERS UNAWARE OF RIGHTS –TOTAL LACK OF COMPETITION CULTURE

NEED FOR COMPETITION POLICY AND LAW INADEQUATE INFRASTRUCTURES: Segmented markets are prone to cartel formation and monopolies, reduce efficiency of independent business LOW CAPITAL FORMATION: State or private monopolies with excessive rents distort ressource allocation, reduce efficiency and impair growth of SMEs ASSYMETRY OF INFORMATION: Lack of entrepreneurial capacity as markets are foreclosed to new entrants by entrenched interests.

MARKET-ORIENTED REFORMS NEED COMPETITION RULES Deregulation and Privatization FDI liberalization Trade liberalization Need safeguards against anti-competitive abuses: –International cartels –Abuse of dominance by large firms –Mergers & takeovers monopolizing domestic markets

GRADUAL IMPLEMENTATION OF COMPETITION LAW START WITH MOST HARMFUL CARTELS FOLLOW WITH MERGER CONTROL THEN ABUSE OF DOMINANCE PRIORITIZE SCARCE RESOURCES FOCUS ON BENEFITS FOR ECONOMY FOR GENERAL CONSUMERS, incl. THE POOR

BUILD CREDIBILITY OF COMPETITION AUTHORITY PUBLISH REPORT EXPLAIN ACTIONS SEEK TO OBTAIN A RATING GET SUPPORT OF THE MEDIA AND PUBLIC OPINION MAXIMIZE VISIBILITY AND MAKE EXAMPLES INDEPENDENCE / CREDIBILITY SHOW TANGIBLE RESULTS GET INCREMENTAL BUDGET INCREASE ACTIVITIES

CONCLUSION: Competition is not a luxury reserved fror the rich; It is a necessity for the poor Developing countries, and especially the poor, are those who suffer most from distortions created by anti-competitive practices. The global trend of adopting competition laws and policies in developing countries and LDCs is an encouraging confirmation of the views expressed in this note.

THANK YOU FOR YOUR ATTENTION

THANK YOU FOR YOUR ATTENTION