1. Introduction to Competition Policy & Law
Cornelius Dube
National Training Workshop under the 7up4 Project

2. What is Competition?
The process of rivalry between firms striving to gain sales and make profits
Motive: self-interest, but outcome mostly beneficial for the society
Competition is not just an event, but a process
It is not automatic – needs to be nurtured

3. Benefits from Competition
Efficiency and Innovation
Economic growth (private sector development)
Consumer welfare gains
Lower prices,
better quality,
More choice
Easy access

4. What is competitiveness?
It is a comparative concept
Refers to ability and performance of a firm, sub-sector or country to sell and supply goods and/or services in a given market.
Focus is not on how that ability arose, whether fair or unfair becomes a competition issue.
Firm competitiveness compares a firm with its rivals in terms of ability and supply terms for goods.
National competitiveness captures the awareness and preparedness of a country to challenges posed by global competition

5. Promoting Competition Curbing Anti-competitive Practices
Competition Reforms
COMPETITION REFORMS
Promoting Competition
Curbing Anti-competitive Practices
COMPETITION POLICY
COMPETITION LAW

6. Impediments to Competition?
Government Policy
Difficult entry/exit conditions
Non-transparent public procurement
Implications of other policies
Anti-competitive Practices
Restrictive Business Practices
Unfair Trade Practices (misleading advert, tied-selling, false claims, etc.)
Lack of awareness and understanding
Lack of buy-in among policymakers
Absence of public demand and support

7. Competition Policy National Competition Policy Statement
Government commitment to promote competition in all sectors
Could result in refinement of other policies (trade policy, industrial policy, investment policy, public procurement policy, etc.)
Ideally, a precursor to a competition law
Very few countries have a national competition policy (e.g., Australia, Botswana, Mozambique, etc.)

8. Competition Law Sub-set of Competition Policy
Aims to protect process of competition and not competitors
Consist of a set of rules to curb ACPs
Sets up the Competition Authority
Over 120 countries have adopted
National and Regional Competition Law
Often Competition Policy and Competition Law used interchangeably – NOT CORRECT

9. Provisions under a Competition Law
Anti-competitive practices prohibited fall under three categories:
Anticompetitive agreements (all laws)
Abuse of Dominance (all laws)
Anticompetitive Mergers (most laws)
Competition Advocacy is also provided for (many laws)
Competition authorities are also set up under a competition law
Administrative issues governing the operations of the competition authorities

10. Competition Authority
Agency created as per the provisions of the Competition Law
Legislated structure and functions
Main functions – investigative (Competition Commission) and sometimes adjudicative (Competition Tribunal)
Need to maintain functional autonomy, and be accountable
Try to gain public support for its actions
Perform the function of competition advocacy effectively and promote competition culture
Cooperate with other regulatory agencies

11. Anticompetitive agreements
Are of two types: Horizontal agreements and Vertical agreements
Horizontal agreements- firms in same business (competitors) agreeing not to compete
Includes cartel agreements which are prohibited
Bid rigging agreements
Output restrictions
Price fixing
Market allocation
Vertical agreements involve firms enjoying a supplier customer relationship
Exclusive supply/purchase agreements
Tie-ins
Resale price maintenance

12. Abuse of dominance
A firm in a dominant position prohibited from abusing the position
Occurs in two ways: Exploitative and exclusionary practices
Exploitative practices are those meant to exploit customers of the dominant firm
Excessive pricing
Discrimination
Tied selling
Exclusionary practices are those aimed at driving competitors out of business
Predatory pricing
Refusal to deal
Hoarding raw materials

13. Anticompetitive mergers and Acquisition
Firms may try to cheat competition through mergers.
Three types of mergers: Horizontal; vertical and conglomerate
Horizontal mergers involve competitors and most harmful to competition as they reduce the number of players
Vertical mergers include firms in a supplier-customer relationship and can result in foreclosure
Conglomerate mergers involve firms in different lines of business, and the fear is the “deep pockets” concern where firms become so huge with big financial resources which they can abuse.

14. Competition Enforcement and Consumer Welfare
QUALITY
ACCESS
CHOICE
PRICE
Market Allocation Cartel restricting access
Poor quality goods/services by a firm abusing dominant position
Tied-selling restricting consumer choice
Price-fixing cartel leading to excessive prices
Competition Authority’s Enforcement Actions

15. Conclusions Competition enforcement leads to consumer welfare
National stakeholders need to recognise their role in promoting competition
Competition agencies in DC and LDCs need to strengthen their communication/dissemination functions
Policymakers/Government need to prioritise competition reforms
Development partners/donors need to support the process

16. THANK YOU!