1. Competition Education and Advocacy in Nepal
Navin Dahal
Research Director
11/16/2018
SAWTEE

2. Background
Transition from controlled economy to liberalisation, in mid 80s and early 90s
Liberalisation included:
financial liberalisation (banking, insurance, finance companies, decontrol etc.)
external sector liberalisation (rationalisation and reduction of tariffs, removal of QRs)
real sector reform (privatisation of SOEs, health, education, infrastructure etc.)
Increased competition in financial, aviation, public health, education etc.
11/16/2018
SAWTEE

3. Competition problems
Economic concentration and lack of market contestability
In manufacturing sector
High – cement, iron & steel, paper, milk
Moderate – sugar
Low – textile, vegetable ghee
In services
High – commercial banking, life insurance
Moderate – aviation
Low – media
11/16/2018
SAWTEE

4. Competition problems (cont..)
Cartel
FMCG, banking, construction materials, airlines, brick manufacturers
Interesting case of sugar cartel
Syndicate system – surface transportation
Collusive bidding (e.g., pipes and supplies to the army)
Tied selling (e.g., cement, hospital, schools)
11/16/2018
SAWTEE

5. Policy and legal regime
Tenth Plan – competitiveness
Constitution – Directive Principles aims at reducing economic concentration (Article 25.2)
Black Marketing and Certain Other Offenses (Prevention and Control) Act – price list (Section 3)
Industrial Enterprises Act, 1992 – competitiveness
Foreign Investment and Technology Transfer Act, 1992 – competitiveness
11/16/2018
SAWTEE

6. Policy and legal regime (cont..)
Consumer Protection Act, 1997
guarantees consumers’ rights to choose (Section 6.1.C)
prohibits collusion, fixing of quotas, hoarding and creation of artificial scarcity (Section 7)
controls monopoly and unfair trade practices (Section 8.1.B).
11/16/2018
SAWTEE

7. Problems
There is no well defined competition policy in Nepal and no comprehensive legislation
Laws that exist are not implemented
Very rare cases of attempt to implement include banning the syndicate system, but it is still operative
Classic “political economy”
Strong business lobby
Weak and unorganised consumers
Rent seeking government
11/16/2018
SAWTEE

8. Recent developments WTO Commitment to enact Competition Law
Drafting a competition law by the Ministry of Industry, Commerce and Supplies
SAWTEE is involved in Competition Education and Advocacy Project (CAEP)
11/16/2018
SAWTEE

9. Objectives of the CAEP
Inculcating competition culture among the stakeholders
Creating atmosphere for the formulation and enactment of competition friendly policies and legislation
Ensuring participation of stakeholders in the process of formulation of competition policy and laws and their implementation and enforcement
Building capacity of stakeholders to act as a watchdog to prevent anti-competitive practices
11/16/2018
SAWTEE

10. Activities
Research
Status of Competition in Nepal
Publications and information dissemination: briefing papers, newsletters, CD Rom, E-newsletters, websites
Quarterly Newsletter
11/16/2018
SAWTEE

11. Activities Capacity building Creation of networks and pressure groups
Regional Workshops
Creation of networks and pressure groups
Briefing Paper
A primer on Competition Policy
Competition in Financial Services
Interface of Competition and Sectoral Regulation
Competition Implication of WTO Membership
11/16/2018
SAWTEE

12. SAWTEE Advocacy
Abuse of IPR that have adverse impact on consumer welfare and competition; CC can recommend parallel import or compulsory licensing
Selection of General secretary of CC thorough open competition
Provision of independent fund for CC
Provision of compensation to the sufferer
Burden of proof to the guilty
11/16/2018
SAWTEE

13. SAWTEE Advocacy Registration of business associations
Development Dimensions
Exemptions
SMEs
Farmer’s Cooperatives
R & D Firms
Export cartel
11/16/2018
SAWTEE

14. Thank You !
11/16/2018
SAWTEE