COMPETITION POLICY AND ECONOMIC DEVELOPMENT PRESENTATION AT CUTS-ARC CAPACITY BUILDING WORKSHOP, LUSAKA 7 TH MARCH, 2011 BY SAJEEV NAIR, COMPETITION POLICY RESEARCHER

COMPETITION POLICY & ECONOMIC DEVELOPMENT WHAT IS A POLICY: A POLICY IS A STATEMENT OF INTENT, OBJECTIVES, PRINCIPLES, GUIDELINES OR COMMITMENT COMPETITION/ANTI-TRUST POLICY IS ONE AMONGST MODERN PUBLIC POLICIES PUBLIC POLICY DEFINED AS THE COURSE OF ACTION OR INACTION TAKEN BY THE STATE WITH REGARD TO A PARTICULAR ISSUE POLICY VS. LAW: WHILE LAW CAN COMPEL OR PROHIBIT BEHAVIOR OF LEGAL ENTITIES, POLICY MERELY GUIDES ACTIONS TOWARDS CERTAIN DESIRED OUTCOMES A COMPETION POLICY DOES DIFFER FROM COMPETITION LAW/ACT

COMPETITION POLICY & ECONOMIC DEVELOPMENT ECONOMIC DEVELOPMENT: IT IS A PROCESS WHEREBY A COUNTRY TRANSFORMS ITSELF FROM LOW LEVELS OF ECONOMIC AND SOCIAL ATTAINMENT TO HIGHER LEVELS OF ATTAINMENT IN TERMS OF HUMAN DEVELOPMENT, POVERTY REDUCTION, DIVERSIFICATION OF ECONOMY, APPLICATION OF MODERN TECHNOLOGY, INFRASTRUCTURE AND EFFICIENT PRODUCTION AND DELIVERY OF GOODS AND SERVICES.

HOW DOES COMPETITION POLICY PROMOTE ECONOMIC DEVELOPMENT? COMPETITION POLICY IS COMPLIMENTARY TO OTHER SECTORAL POLICIES WHICH AIM TO ACHIEVE ECONOMIC PROGRESS AND EFFECTIVE MANAGEMENT OF THE ECONOMY VIZ. TRADE AND INDUSTRIAL POLICY INVESTMENT/PRIVATISATION POLICY REGULATORY POLICY LABOUR POLICY ENVIRONMENTAL POLICY REGIONAL DEVELOPMENT/EMPOWERMENT POLICY INTELLECTUAL PROPERTY POLICY, ETC. CONSUMER WELFARE POLICY

OBJECTIVES OF COMPETITION POLICY THE MAIN OBJECTIVE IS TO “PRESERVE AND PROMOTE COMPETITION” AMONG ECONOMIC ENTITIES TO ENSURE EFFICIENT ALLOCATION OF RESOURCES EFFICIENT ALLOCATION OF RESOURCES THROUGH COMPETITIVE PROCESSES IS PIVOTAL FOR ENSURING CHOICE OF QUALITY, LOW PRICES AND ADEQUATE SUPPLY OF GOODS AND SERVICES TO CONSUMERS /PRODUCERS IN THE ECONOMY. THEREFORE, COMPETITION POLICY IS AN INSTRUMENT OF ACHIEVING ECONOMIC DEVELOPMENT

COMPETITION POLICY AS A TOOL OF ECONOMIC GROWTH COMPETITION POLICY HAS BECOME AN INTEGRAL PART OF THE INSTRUMENTS PROMOTING ECONOMIC GROWTH IN THE DEVELOPING COUTRIES ACCORDING TO PROF. MICHEL PORTER (2004) “INCENTIVES AND RULES GOVERNING COMPETITION SHOW A STRONG RELATIONSHIP TO NATIONAL PRODUCTIVITY” HE ARGUES THAT COMPETITION POLICY SHOULD RESPECT AND PROTECT INTELLECTUAL PROPERTY RIGHTS; DO NOT USE COMPETITION LAWS/POWERS TO ACHIEVE NON- COMPETITIVE GOALS

APPROACHES TO COMPETITION POLICY THERE HAS BEEN SOME ELEMENT OF DIS JOINT BETWEEN THE DEVELOPED AND THE DEVELOPING COUNTRIES IN TERMS OF PRIORITISING COMPETITION POLICY OBJECTIVES –PRIMARILY DUE TO THE DEVELOPMENTAL GAP AND THE NATURE OF COMPETITION CHALLENGES THAT EXIST COMPETITION POLICY IN DEVELOPED COUNTRIES FOCUSES MORE ON FIGHTING CARTELS (PRICE FIXING, MARKET ALLOCATION,ETC) WHILE COMPETITON POLICY IN THE DEVELOPING COUNTRIES FOCUSES MORE ON MERGERS, UNFAIR TRADE PRACTICES, UNSAFE GOODS, AND OTHER DEVELOPMENTAL OBJECTICES. HOWEVER, PROMOTING CONSUMER WELFARE IS A COMMON OBJECTIVE IN COMPETITION POLICIES OF ALL THE COUNTRIES.

COMPETITION AND CONSUMER WELFARE POLICY IN THE ZAMBIAN CONTEXT THE IDEAL COMPETITION POLICY FRAMEWORK FOR ZAMBIA SHOULD HAVE THE VISION OF GUIDING THE IMPLEMENTATION OF THE COMPETITION AND CONSUMER PROTECTION ACT THE POLICY SHOULD BE ENHANCING ECONOMIC GROWTH AND DEVELOPMENT OF ZAMBIA BY NOT ONLY REGULATING AND CONTROLLING ANTI-COMPETITIVE BUSINESS PRACTICES OF ECONOMIC AGENTS IN THE MARKET BUT ALSO ACHIEVING COMPETITIVE OUTCOMES, SUCH AS ECONOMIC EFFICIENCY, BETTER CHOICE, HEALTH, SAFETY AND ENSURE VALUE FOR MONEY TO CONSUMERS. THE POLICY FRAMEWORK SHOULD PROVIDE A FUNCTIONAL, COMPETITIVE AND CONGENIAL BUSINESS ENVIRONMENT TO PRIVATE SECTOR, JOINT SECTOR AND PUBLIC SECTOR OF VARIOUS SIZES TO OPERATE AND GROW WITHIN THE FRAMEWORK OF FAIR COMPETITION, ECONOMIC JUSTICE, GOOD CORPORATE GOVERNANCE, CONSUMER PROTECTION AND PUBLIC WELFARE.

COMPETITION AND CONSUMER WELFARE POLICY IN THE ZAMBIAN CONTEXT CONTD… The competition policy framework should enable Zambia to realize the benefits of a variety of competition outcomes such as economic efficiency, diversification of the economy, checking monopolies, limiting concentration of economic power, more choice, provision of quality products and lower/competitive prices to the consumers. The policy therefore should have the objective of attaining competitive and consumer welfare outcomes in the country.

COMPETITION AND CONSUMER WELFARE POLICY IN THE ZAMBIAN CONTEXT CONTD… The national policy on competition and consumer welfare should have the following mutually complimentary and reinforcing objectives: integration of competition and consumer protection provisions in all policies and laws, having impact on the welfare of consumers in the market; effective implementation of the consumer protection legislation; product safety and protection of interest of consumers; strengthening cooperation with regulatory bodies, inter- governmental and non-governmental organizations efficient, speedy and low cost settlement of consumer disputes by creating appropriate mechanism across the country harmonising competition and consumer welfare activities of sector regulators in line with the Competition and Consumer Protection Act by addressing policy coherence issues in a systematic manner

COMPETITION AND CONSUMER WELFARE POLICY STRATEGY contd… A “competition and consumer welfare strategy” which should be part of the competition and consumer protection policy framework, covering the following: identify the potential intervention areas, sectors and segments of the economy to create coherence and consistency among the diverse sectoral policies that have a bearing on competition and consumer welfare; Suggest measures for improving the quality of goods and services through standard and labelling requirements for domestically produced and imported goods.

CONCLUSIONS The Competition and Consumer Welfare policy of Zambia should aim for a coherent competition and sector regulatory environment; and provide a level playing field for large, medium and small enterprises in the country Suggest appropriate support structure and institutions necessary for promoting institutional linkages between competition authority and sector regulatory institutions. Promote research and product testing activities that help consumer welfare

CONCLUSIONS CONTD… This policy strategy must provide for a comprehensive approach in implementing Zambia’s competition and consumer welfare challenges: Fostering economic growth and thereby reduction of poverty through economic efficiency and competitive business environment; Strengthening the growth and dynamism of the small and medium sector enterprises by improving competitiveness, product diversification and innovation; Capitalizing institutional capacity building opportunities available for the competition watch dog through bilateral, regional, and multilateral arrangements