1. Competition Reforms in Key Markets for Enhancing Social & Economic Welfare PHILIPPINES 1st Meeting of National Reference Group CREW Project Briefing Rafaelita M. Aldaba, PIDS 30 July 2013, PIDS, Makati City

2. Presentation Outline Background: Competition, parameters used in analysis of impact of competition reforms on consumer welfare, producer welfare Project Description CREW Project: Goal, objectives, outputs & outcome Scope & Implementation: 3 Phases Structure & Organization Competition Analysis: Rice, Passenger transport Project Status & Planned Activities till Oct-Nov 2013 Role of NRG Members

3. 1. Background & some definitions Competition: rivalry as firms independently strive for buyers patronage to achieve a particular business objective (profit, sales, market share) – Forces firms to become efficient & offer a wider selection of goods & services at lower prices Competition can be lessened by – Behavioral restraints such as collusive agreements to restrict prices or outputs & other anticompetitive business practices that negatively affect welfare – Government policies & regulations: barriers to entry such as permits, licenses; restrictions that are not equally applied to new entrants & incumbents; tariffs, quotas & other NTBs Competition Analysis – Consumer welfare, producer welfare (benefits)

4. Consumer Welfare Analysis IndicatorAnalytical Question AccessHas reach of goods and services widened to include consumers in areas where they were not available earlier (efficiency of distribution system)? Quality/P rice Are better quality goods and services available for consumers? Have prices changed substantially for such good/services ChoiceAre new products available to consumers? Are new firms offering wider variety of products? PriceHave prices change? Time savings Do offered goods & services help save time for consumers?

5. Producer Welfare (Benefit) Analysis IndicatorAnalytical Question Access to essential services Is there easy access for firms to public service & infrastructure networks such as power, water, internet, telephone etc? Free movement of goods and services Is mobility affected by policies & practices (inputs & outputs), infrastructure constraints? Predictability of regulatory actions Are legislations enforced by autonomous yet accountable institutions? Cost savingsHave new innovation activities led to reduction in costs?

6. Indicators of Producer Welfare (Benefits) IndicatorAnalytical Question Fair market processes Are new firms able to enter market easily (low cost) & existing firms able to exit or close businesses effectively? Level-playing field Is the principle of competitive neutrality observed between private and public enterprises? Transparency in market Do market regulators have well laid out policies & predictable implementation processes?

7. 2. CREW Project Goal & Objectives Goal – To better demonstrate measurable benefits from effective competition reforms in DCs for ensuring long-term support for competition Objectives – Enhance understanding of benefits from competition reforms in DCs (consumers & producers) – Develop & test a methodology to assess effectiveness of competition reforms in benefitting consumers & producers in specific markets – Advocate to key actors (national & international) for greater support to competition reforms in key markets – Sustain momentum on competition reforms & take it forward

8. Outputs & Outcome OUTPUTS – Documented evidence of benefits from competition reforms in key markets – Dialogues involving multiple stakeholders on benefits of competition reforms in DCs – Strategy for capacity building of DC competition agencies and sector regulators – Framework (Tool) for monitoring and evaluating the process of competition reforms in DCs – Demand from elsewhere (other sectors and/or countries) for similar exercise OUTCOME – Greater attention and impetus for competition reforms in key DC markets resulting in consumer and producer benefits

9. Project Implementation: 3 Phases PHASEMAJOR ACTIVITIES Diagnostic Phase Assess implications of competition reforms in specific markets; identify benefits and causes of existing consumer & producer concerns Design Phase Design a composite methodology to quantify (actual & potential) benefits of competition reforms Validation Phase Test the veracity of this methodology in micro-locations in project countries; and use results for advocacy Diagnostic -diagnostic country report Design -framework for competition promotion Validation -validate FCP -advocacy, public education

10. Sector-specific Consumer & Producer Welfare STAPLE FOODPASSENGER TRANSPORT CONSUMER WELFARE -Availability of good quality staple food. - Change in prices of staple food for ordinary consumers -Availability of good quality transport services to ordinary consumers within city (intra-city) to get to workplace, markets, college/university on a daily basis & also on busy inter-city routes - Change in prices PRODUCER WELFARE -Participation of private entities in procurement, storage and distribution of staple food - Change in prices of inputs and outputs -Access to road networks for a new player (operator) in a specific geographic market for providing such services - Change in bus fares

11. Project Structure & Organization CUTS International Implementation Team: CUTS International Project Advisory Committee (PAC): Country Level Country Partner Organizations (PH: PIDS & AER) National Reference Group (NRG) National Entities – Competition Agency – Sector Regulators – Private sector groups – Research Institutes & Think Tanks – Academe – Civil Society groups – Media

12. 3. Project Status & Planned Activities Inception Meeting: Countries & Sector selection Review of literature & Fact Finding in project countries Opening Meeting in project countries: April to May, 2013 (PH: May 7, 2013) Outline of Diagnostic Country Report (DCR) DCR Research Methodology- Nathan Associates Review of DCR Methodology by PAC members SectorsGhanaZambiaIndiaPH Staple foodMaize/RiceMaizeWheatRice Passenger transport Bus (inter, intra city)

13. DCR Activities Finalize the DCR Methodology (in countries) Research /Fieldwork to identify the following – competition reforms undertaken in markets – relevant stakeholders/respondents – benefits of reforms on consumers and producers – existing concerns, reform possibilities and estimated benefits from them Research Methodologies: Perception/Feedback Survey, Case Studies, Quantitative Analysis, Qualitative Analysis Conduct in-depth interview, perception surveys of relevant stakeholders/respondents Data Collation & Analysis Preparation of the draft DCR: impact of competition reform on consumer & producer welfare indicators; benefits from specific elements of competition reforms Presentation of the draft DCR in NRG-2 meeting to get feedback

14. 4. National Reference Group: Role NRG Multi-stakeholder group: experts & practitioners, competition scholars, sectoral stakeholders 15 members in each country Meet periodically to discuss project progress & issues Role of Members Guidance & support in project implementation Inputs in designing components of research Review important project documents - Diagnostic Country Report, Framework for Competition Promotion (FCP), etc. Access to country-specific network of institutions for data (literature, statistics, market environment, etc.) & project application tools Participate in project meetings CREW findings would help them in their own work agenda

15. NRG Meetings & Timelines PhaseNRGTentative Date Main Agenda INRG 1 July, 2013 Provide project orientation & update Discuss Conceptual Framework (Phase-I) Inputs on DCR Methodology (country-specific) INRG 2 October, 2013 Discuss Draft DCR Discuss DCR findings & refinements IINRG 3 January, 2014 Orientation on common findings of final DCR Discussion on development of Framework for Competition Promotion (FCP) Duration: May 2013-October 2015 Diagnostic Country Report (DCR) will gather evidence to understand the impact of competition reforms on consumers & producers; indicators of these impacts

16. NRG Meetings & Timelines PhaseNRGTentative Schedule Main Agenda IINRG 4July, 2014 Presentation of the sector specific FCPs Discussion on the FCP for fine tuning & refinement IIINRG 5Nov, 2014 Presentation of the final FCP Planning of country-specific implementation of FCPs IIINRG 6May, 2015 Discussion on the findings of the FCP after implementation (Impact Analysis) FCP: Framework for Competition (to be developed by CUTS) to guide the process of competition reforms in key markets & measure the impacts of such reforms

17. www.pids.gov.phwww.pids.gov.ph www.aer.org www.cuts-ccier.org/CREWwww.aer.org Thank you for your attention.