1. Pradeep S. Mehta, Secretary General Interim Review Meeting
Political Economy of Competition and Regulation in Developing Countries
Pradeep S. Mehta, Secretary General
CUTS International
Interim Review Meeting
7Up4 project, The Gambia
July 30th, 2009

2. Background
Appropriate regulation, competition policy and law are fundamental requirements in a market oriented economy
Developing countries pose unique challenges
Political economy considerations influence regulatory institutions and are under researched.
Strong need exists to address and overcome problems

3. Problems Lack of political will to adopt and implement the law
Constraints that frustrate the adoption and implementation of competition and regulatory regimes
Lack of political will to adopt and implement the law
Non-conducive government policies
Conflicting objectives of stakeholders
Overlap between competition and regulatory authorities
Public interest considerations

4. Contd…. Barriers posed by vested interests
Lack of competitive neutrality
Unsynchronised regulation
Lack of basic institutional infrastructure
Lack of commitment to growth as a political objective

5. Consequences
Over or under regulation depending upon pressure exerted by interest groups
Sub-optimal level of competition especially in industries where competition has to be sustained by cooperation among players (roaming agreement)
Use of regulation to promote economic power of vested interest groups at the expense of weaker socio economic groups
Proliferation of anti-competitive practices leading to lower output, limited choice, and poor quality

6. Overcoming problems
Alignment of competition policy outcomes and creation of incentives for all stakeholders
Political will and consensus for reforms
Mechanism to synchronise regulatory activities
Prioritisation of work
Allocation of behavioural issues to competition authorities, and structural issues to the regulators

7. Contd… Pursuit of public interest as an important policy objective:
Promotion of employment opportunities
Promotion of participation of SMEs in the economy
Pursuit of efficiency objectives including promotion of adaptability, and economic development
Resolution of conflict through trade offs

8. Recommendations for the Future
Important to create a culture of competition
Necessary to better understand the nexus among regulation, politics and markets
Customisation is necessary
Perceived successes and failures should be studied
Consumer advocacy and empowerment is crucial

9. Thank You
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