1 “What lessons for new competition authorities in Asia? -A case study of two countries: Vietnam & India” Vikas Kathuria, CUTS International 6 th Annual Asian Competition Forum Conference 6-7 December 2010, Hong Kong

2 Presentation Outline 1. About CUTS International 2. Objectives 3. Why comparison between India and Vietnam? 4. Evolution of competition regime in India and Vietnam 5. Key Lessons 6. Experience: Enforcement of Law 7. Way Forward

3 CUTS International  Genesis: consumer rights organisation estd. in 1983  Three resource centres in Calcutta, Delhi and Chittorgarh in India and four resource centres outside India: Nairobi, Kenya; Lusaka, Zambia; Hanoi, Vietnam; and Geneva, Switzerland  Broad areas of work: Trade, Regulation and Governance  Active programmes on competition, regulation and consumer policy and law issues in 30 countries of Africa, and Asia….and growing

4 Objective Purpose  Draw out some lessons for new competition authorities in the region and elsewhere Means  Comparison between India and Vietnam with respect to their experience in enforcing a competition regime

5 Why comparison between India and Vietnam? India  emerging economy  huge market  hot spot for investment  long tradition of dealing with competition law  New regime, also young Vietnam  fast-growing economy  huge foreign direct investment  opening of market and privatisation  young competition regime ECONOMIC

6 Why comparison between India and Vietnam? India  largest democracy  shifted from centrally planned economy to liberalised economy in 1991, but a mixed economy  populism and pressure groups are typical to any democracy Vietnam  socialist regime  centrally planned economy till “Doi Moi” process in 1986  dilemma between free market and state control POLITICAL

7 Evolution of competition regime in India  Articles 38 & 39 of the Constitution  MRTP Act, 1969 had outlived its utility  Reforms made MRTP Act obsolete  Adoption of Competition Act, 2002 (amended in 2007)  Establishment of Competition Commission of India (CCI) & Competition Appellate Tribunal (Compat)

8 Evolution of competition regime in Vietnam  “Doi Moi” process (Economic Reforms)  Growth momentum based on Doi Moi lost steam  Vietnam’s desire to join WTO, which it did finally in 2007  Competition Law: Dec, 2004 and effective from July, 2005  Establishment of Vietnam Competition Administration Department (VCAD) & Vietnam Competition Council

9 Approach to Competition Law India  Approach of the law is behavioural as against structural Vietnam  Approach of the law: a combination of both structural and behavioural, but leans more towards structural Lesson: Initially structural approach, but gradual shift to behavioural

10 Independence CriteriaIndiaVietnam Financial (Budgetary independence) CCI has to depend upon grants by the Government (proposal is made by CCI) VCC and VCAD have their budget allocated from the State budget, based on their own proposal and last year’s expenditures Institutional (Terms of appointment, governance structure, etc) Collegium selection procedure, but does not ensure independence  VCAD – DG appointed by the Prime Minister based on proposal of the Trade Minister  VCC – members are selected based on nominations by various ministries, appointed by the Prime Minister Lesson: Need to ensure less dependence upon Government

11 Accountability IndiaVietnam Accountability of CCI is towards the line ministry and not the parliament VCAD is a department of the Trade & Industry Ministry (Article 7) Lessons:  Government interference to be avoided  Accountability must be directly towards the Legislature

12 Competition Advocacy/Overlap IndiaVietnam  Section 49 of CA, 2002 contains specific provisions of competition advocacy  Sections 21 and 21A deal with the overlap issues between CCI and statutory authorities.  Decree No. 6/2006 by the Government on the tasks, functions, organisational structure and powers of the VCAD  Art 2(3) of the Decree: VCAD to determine and inform the relevant State agencies about laws and regulations which are not in conformity with the competition law and the necessary course of actions to take.

13 Competition Advocacy/Overlap IndiaVietnam  Central Govt. or State Govt. while formulating policies may make a reference to the Commission, and the Commission shall within sixty days give its opinion.  Commission is empowered to take suitable measures for the promotion of competition advocacy on its own  VCAD can organise educational and awareness raising programmes on competition issues Lessons:  Consultation with competition authorities to be made mandatory  Competition advocacy helps in creating competition culture

14 Enforcement of the Law IndiaVietnam  Sections dealing with regulation of M&A (Sec 5 and 6) have not been enforced.  Five judgments, close to 30 orders, 125 cases are still pending.  COMPAT is disposing off cases transferred from the erstwhile MRTP Commission  Passed final decision in two cases: aviation fuel (VINAPCO case – abuse of dominance) and insurance cartel  No M&As case as yet, but many related to unfair trade practices (esp. related to IPRs) resolved Key lessons:  Phased but effective implementation of the Law  Initially deal with cases that directly affect the consumers and economy (Prioritization)  Need to implement pending sections

15 Way Forward  Political economy aspect  One size fits all approach not possible, countries are free to decide the best framework for their case  Strong political will to effectively enforce provisions  Level playing field for private and public sector  Regulatory capture  Need to check control by line ministry  Need to have overarching law to harmonise practices  Capacity building and sensitisation  Need to build -- ‘Competition Culture’

16 THANK YOU!