Competition Law and Policy for Development: Insights from Nepal Dhrubesh Chandra Regmi South Asia Watch on Trade, Economics & Environment (SAWTEE)

Introduction PROFILE GDP in US $ 5.85 billion GDP per capita in US $ 269 GDP per capita (PPP)US$ 1370 GDP annual growth rate ( )2.3% Population24.6 million Annual Population growth rate2.3% Life Expectancy59.6 Adult Literacy44.0% Population below less than $1 day37.7% HDI Value0.504 HDI Rank140 Source: Human Development Report 2004 and Economic Survey 2004

Competition Issues in Nepal Nepal adopted Market oriented policies Nepal adopted Market oriented policies Need to develop competitiveness of the domestic industries. Need to develop competitiveness of the domestic industries. Optimum allocation of resources Optimum allocation of resources Consumer Protection Consumer Protection

Nature of Market / Competition Manufacturing Sector Manufacturing Sector Utilities Utilities Services Services

Sectoral Policies Sectoral Policies Telecommunications Sector Telecommunications Sector Financial Sector Financial Sector Civil Aviation Sector Civil Aviation Sector Power Sector Power Sector

Anti-competitive Practices in Nepal Predatory Pricing Predatory Pricing Tied Selling Tied Selling Collusive Bidding or Tendering Collusive Bidding or Tendering Resale Price Maintenance Resale Price Maintenance Creation of Artificial Scarcity Creation of Artificial Scarcity Price Discrimination Price Discrimination Unreasonably high Price Unreasonably high Price Syndicate System Syndicate System Cartel Cartel

Competitive and Anti-Competitive Legal Provisions 1935 – First Legal Order related to Competition in Nepal 1935 – First Legal Order related to Competition in Nepal Essential Commodities Regulation Act Essential Commodities Regulation Act Postal Act/ Royal Nepal Airlines Corporation Act Postal Act/ Royal Nepal Airlines Corporation Act Government Finance and Tender Management Act Government Finance and Tender Management Act Nepali Language Publication Corporation Act/ Prohibition to Foreign investment Act Nepali Language Publication Corporation Act/ Prohibition to Foreign investment Act Food Act Food Act Feed Act Feed Act Standard Measurement and Weight Act/ National Insurance Corporation Act Standard Measurement and Weight Act/ National Insurance Corporation Act

Competitive and Anti-Competitive Legal Provisions … Local Administration Act/ Education Act Local Administration Act/ Education Act Black Marketing and Certain Other Social Offences Act Black Marketing and Certain Other Social Offences Act Drug Act Drug Act Nepal Standard (Certification Mark) Act Nepal Standard (Certification Mark) Act Nepal Petroleum Act Nepal Petroleum Act Nepal Electricity Authority Act Nepal Electricity Authority Act Garbage Collection Act Garbage Collection Act

Competitive and Anti-Competitive Legal Provisions … The Constitution of Kingdom of Nepal / Citizen Investment Fund Act The Constitution of Kingdom of Nepal / Citizen Investment Fund Act Industrial Enterprises Act/ Vehicle and Transportation Act Industrial Enterprises Act/ Vehicle and Transportation Act Electricity Act/Insurance Act/ Foreign Investment and Technology Transfer Act Privatisation Act Privatisation Act Telecommunication Act/ Nepal Civil Aviation Authority Act Telecommunication Act/ Nepal Civil Aviation Authority Act Consumer Protection Act; Consumer Protection Act; Iodized Salt Act Iodized Salt Act Income Tax Act/ Nepal Rastra Bank Act Income Tax Act/ Nepal Rastra Bank Act

SAWTEE in the scenario SAWTEE has been actively involved since SAWTEE has been actively involved since Advocating for the need of a Competition law in Nepal Advocating for the need of a Competition law in Nepal Promoting Competition Culture Promoting Competition Culture Creation of networks and pressure groups Creation of networks and pressure groups Capacity building workshops Capacity building workshops

SAWTEE's Experience Till date there is no well-defined competition policy in Nepal and no comprehensive legislation-draft ready yet not enacted Till date there is no well-defined competition policy in Nepal and no comprehensive legislation-draft ready yet not enacted Nepal Government has committed to enact competition during its accession to the WTO (July 2004) Nepal Government has committed to enact competition during its accession to the WTO (July 2004) SAWTEE has been actively involved in pressurising the government to enact competition law SAWTEE has been actively involved in pressurising the government to enact competition law SAWTEE has also emphasised on the importance of an Independent Competition Commission SAWTEE has also emphasised on the importance of an Independent Competition Commission

Draft - Competition Bill Objectives Objectives Make the national economy competitive through open and liberal market economy Make the national economy competitive through open and liberal market economy Develop independent market in the country through optimal and equitable distribution and utilisation of national resources Develop independent market in the country through optimal and equitable distribution and utilisation of national resources Benefit the consumer by ensuring healthy competition in the goods and services sector Benefit the consumer by ensuring healthy competition in the goods and services sector Control anti-competitive practices Control anti-competitive practices

Provisions Anti competitive Agreements Anti competitive Agreements Abuse of dominance Abuse of dominance Mergers and Acquisition Mergers and Acquisition Monopolies Monopolies Restrictive Business Practices Restrictive Business Practices Competition Promotion Commission Competition Promotion Commission Other Important Features of the Bill Other Important Features of the Bill

Success - Elusive Unstable governments over the past few years Unstable governments over the past few years Business Community still apprehensive Business Community still apprehensive Unorganised Consumers Unorganised Consumers Awareness among stakeholders Awareness among stakeholders

Competition Law not enough Other issues to be addressed Other issues to be addressed  Supply side Constraints  Access to credit  Good governance