Final Report - World Trade Organization

Chapter-1
Introduction: The 7-Up Project
In the past, most developing countries were
characterised by large state-owned sectors in highly
concentrated industries and inefficient firms operating
in domestic markets that were insulated by trade
barriers. Since the early 1970s many of these
countries have adopted new policies of trade
liberalisation, de-regulation and privatisation. While
these processes are taking place and developing
countries are remodelling their state-dominated
economies into market economies in much the same
way as the so-called economies in transition are
doing, new challenges arise from these same
processes. Developing countries are seeking
instruments to control and strengthen the functioning
of market forces to cater to their own specific
development needs. More and more developing
countries recognise the importance of implementing
an effective competition policy and law, to achieve
the maximum benefit from the process of
liberalisation.
There are, however, divergent views on both the need
and appropriateness of competition law and policy
for developing countries. Some argue that the
promotion of competition in the domestic market may
not always be conducive to industrial growth and
international competitiveness. 1 Others suggest that
the liberalisation of international trade is sufficient to
promote competition and therefore the formulation
of a competition policy and law is unnecessary. Still
others argue that even if competition law is desirable
in the abstract, the probability of improper
enforcement, misuse of bureaucratic power or
regulatory capture is so high in developing countries
that the expected costs of such legislation outweigh
the possible benefits.
In order to find out and analyse the realities of having
and implementing competition legislation in developing
countries, CUTS, Jaipur, India, has implemented a
two-year research and advocacy project entitled ‘A
Comparative Study of Competition Regimes in
Select Developing Countries of the
Commonwealth’. The project has been undertaken
in seven countries, supported by the UK
Government’s Department for International
Development (DFID) and carried out in association
with local NGOs and research organisations as
partners. 2
1.1 The Project: Objectives and Process
Work on the project, popularly known as the 7-Up
project, started in September 2000. It was formally
launched during a meeting on December 20/21, 2000,
organised in Jaipur, India. The seven countries that
have been selected for the project are: India, Pakistan
and Sri Lanka in South Asia; and Kenya, South
Africa, Tanzania and Zambia in Southern and Eastern
Africa. These countries were selected on the basis
that they had all enacted competition legislation and
had some experience in its implementation.
The main objectives of the project are to:
(i) conduct an evaluation of existing competition
legislation and its implementation;
(ii) identify typical problems and suggest solutions,
inter alia, based on practices prevailing
elsewhere;
(iii) suggest ways forward to strengthen existing
legislation and institutions dealing with
competition issues;
(iv) assess the capacity building needs of the
governments, their institutions and civil society;
(v) develop strategies for building expertise among
the competition agency officials, practitioners
and civil society at large;
(vi) help build constituencies for the promotion of a
competition culture; and
(vii) create advocacy groups at both national and
international levels to pursue the necessary and
required reforms.
1 The argument is that the restriction of competition in the domestic market might be necessary for companies to achieve economies of
scale which will enable them to compete with foreign firms that have already achieved such economies of scale in international trade.
2 See Annexure-2 for details on Project Partnership Arrangement.
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