Final Report - World Trade Organization

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Act, 2002. 143 Apart from these four grounds the South African Commission may also exempt agreements relating to Intellectual Property Rights (IPRs). 144 Thus, certain anti-competitive licensing agreements in respect of, for example, pharmaceuticals may also be exempted. The exemption, however, is not automatic and can be revoked. 145 The WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) recognises that certain licensing practices or conditions pertaining to IPRs restrain competition, and that countries can deal with such practices in their legislation. 146 The South African law recognises this by making the Competition Commission a gatekeeper. The existing Indian law does no such thing, but suitable provisions have been made in the new law to cover IPR abuses. Zambia is another country that specifically exempts arrangements and agreements relating to the exercise of IPRs. Although none of the other project countries seem to specifically exempt IPRs from their competition laws 147 it is, however, not clear whether IPR laws in these countries contain provisions that give them an overriding power. On the other hand, Zambia’s neighbour: Zimbabwe has included IPR issues quite clearly under its competition law. Many developed country jurisdictions like the US, Japan, EU and Canada have some form of guidelines or regulations regarding the treatment of IPR and/or technology licensing practices under competition legislation. The US agencies regard IP as being essentially comparable to other forms of property and is neither exempted from scrutiny, nor particularly suspect under the anti-trust law. The EU rules call for a balance between the need for innovation and the maintenance of competition within the common market. Under Article 81 (ex art. 85) of the Treaty of Rome 148 all agreements, decisions or concerted practice between undertakings which may affect trade between the Member States and which have as their object or effect, the prevention, restriction or distortion of competition within the common market are prohibited. However, the EU treaty also provides for the possibility of exemptions from this prohibition. In a case before it, the European Court of Justice has held that the abuse of IPR is covered under the Treaty of Rome. Enterprise Specific Both the Kenyan and Indian governments are given wide powers to exempt any enterprise that performs a sovereign duty on behalf of the state. 149 This of course leads to the question: what is a sovereign duty Pakistan’s MRTPO exempts all state enterprises from its application. 150 The services of professionals such as doctors, engineers and lawyers are currently not exposed to the competition law in Tanzania. These professionals claim that price-fixing in these services is in the interest of consumers. It was widely voiced in the 2 nd Tanzanian NRG meeting that these services should be covered under the competition law. See Table 5. Sector Specific Regulation Despite significant changes in technology, several segments of infrastructure (telecom, power, transport etc) will retain elements of a natural monopoly. As a result some kind of price regulation will remain a necessity. Typically, sector specific regulatory authorities set maximum tariffs and performance standards. In several project countries the competition related activities are overseen by the sector regulator, whereas in others this is done by the competition authority. See Table 6. 143 MRTPO, Section 5 (2)(a). 144 CA 1998, Section 10 (4). 145 Ibid, Section 10 (5). 146 TRIPs, Article 40. 147 Although IPRs are not specifically exempted in Kenya, Section 5 of the RTPMPC Act provides a blanket exemption to all trade practices conferred by an Act of Parliament. This means that IPRs were effectively exempted even before the new Industrial Property Act, 2001, which is TRIPs compliant. 148 As amended and consolidated by the Treaty of Amsterdam. 149 See RTPMPC Act, Section 5 and CB 2001, Clause 52 respectively. 150 MRTPO, Section 25. 46 w Pulling Up Our Socks
Table 5: Enterprise specific exemptions Country Enterprise specific India (MRTPA, 1969 & CA 2002) Kenya Pakistan South Africa Sri Lanka Tanzania Zambia l l l l l l l l l l l l l l Any class of enterprises if such exemption is necessary in the interest of security of the state or public interest. Enterprises performing sovereign functions on behalf of the Central Government or State Government. Trade practices directly and necessarily associated with the exercise of trading privileges conferred on any person by an Act of Parliament or Government Agency in accordance with Act of Parliament. Trade practices directly and necessarily associated within the licensing of participants in certain trades and professions by a government agency in accordance with Act of Parliament. Any undertaking owned by the Central Government or the Provincial Government. Undertakings owned by a body corporate established by the Government by law. Undertakings whose Chief Executive is appointed by or with approval of the Central Government or Provincial Government. Trade Unions and their members for actions necessary to carry out their purposes. Rules of a professional association such as accountants & auditors, surveyors, attorneys & advocates, medical etc. Promotion of ability of small firms and those owned by historically disadvantaged persons to become competitive The abuse of dominance provisions do not apply to firms below a certain threshold 151 Any enterprise that has entered into an Agreement with the Greater Colombo Economic Commission under Section 17 of the Greater Colombo Economic Commission Law, No. 4 of 1978. Professionals such as lawyers etc. Such business or activity as the Minister may, by statutory instrument, specify. The division of labour between sector specific regulatory bodies and the competition authorities is often unclear; sectoral regulators are typically assigned tasks (other than price determination) that impinge on competition in the sector. Moreover, sector specific regulatory authorities are not restricted to infrastructure sectors; specialised bodies also often regulate activities not necessarily having natural monopoly elements. This makes the overlap between the functions of sector specific regulators and competition authorities even more complex, and gives rise to potential conflicts. The possible conflicts between the competition authority and sector-specific regulators will be discussed in Chapter 5. Although very few competition laws specifically exempt sectors from the purview of that law, this does not necessarily mean that sectors such as utilities are not exempted from the law. The specific laws regulating a certain sector could have provisions that supersede the generic competition law. However, it may be possible that RBPs of such sectors would continue to be covered by the competition law, and structural and basic issues could be left to the sector regulators. 4.4.2 Importance of exemptions The competition laws in the 7-Up countries provide a lot of scope for exempting certain practices, enterprises or sectors from their purview. Even when something is not specifically exempted in the competition law itself, this does not prevent legislators from doing so subsequently in other laws. In the new Indian law, the government has assumed the power to declare exemptions through a notification. Albeit, the notification has to be placed before the parliament within six months of its adoption for approval. 151 Section 6 of the CA 1998 states that the Minister of Trade and Industry in consultation with the Commission must determine that threshold in terms of annual turnover, irrespective of their market share. The market share thresholds for determining dominance are set out in Section 7. Pulling Up Our Socks w 47
Page 1 and 2: PULLING UP OUR SOCKS - A STUDY OF C
Page 3 and 4: PULLING UP OUR SOCKS -A Study of Co
Page 5 and 6: C O N T E N T S LIST OF TABLES.....
Page 7 and 8: List of Tables Table 1: Socio-Econo
Page 9 and 10: Foreword Since the second part of t
Page 11 and 12: Preface The title of this research
Page 13 and 14: Executive Summary Introduction Tran
Page 15 and 16: Table A: Human Resources in the Com
Page 17 and 18: Chapter-1 Introduction: The 7-Up Pr
Page 19 and 20: Chapter-2 Socio-Economic Context of
Page 21 and 22: Table 2: Industrial Structure India
Page 23 and 24: countries, state-owned enterprises
Page 25 and 26: Chapter-3 Background and Objectives
Page 27 and 28: In Kenya, most transactions in the
Page 29 and 30: In India, engineering services, ele
Page 31 and 32: promulgated in 1988 had ‘control
Page 33 and 34: Chapter-4 Scope and Coverage 66 4.1
Page 35 and 36: Sri Lanka’s Fair Trading Commissi
Page 37 and 38: competition law doesn’t frown so
Page 39 and 40: dominance’ investigations, focusi
Page 41 and 42: takes over or merges with ‘x’ t
Page 43 and 44: a state’s exercise of governmenta
Page 45: Table 4: Practice specific exemptio
Page 49 and 50: The approach of the South African a
Page 51 and 52: Chapter-5 The Competition Authoriti
Page 53 and 54: This bundling of powers is increasi
Page 55 and 56: The methods of analysing the static
Page 57 and 58: Table 8: Facilities Country India K
Page 59 and 60: Commission in handling cases. It al
Page 61 and 62: Further, the competition authoritie
Page 63 and 64: all 7-Up countries can learn from t
Page 65 and 66: Chapter-6 Competition Authorities:
Page 67 and 68: In a globalising world it may be a
Page 69 and 70: It can well be expected that when t
Page 71 and 72: CAs are not aware of many of the in
Page 73 and 74: Chapter-7 Competition Issues with I
Page 75 and 76: Box 1: International Cartels - The
Page 77 and 78: administrative fine not exceeding t
Page 79 and 80: corporations: GE and Honeywell, bec
Page 81 and 82: Box 3: The Cola Saga in India The c
Page 83 and 84: to the removal of quantitative rest
Page 85 and 86: Chapter-8 Conclusions and Recommend
Page 87 and 88: acking of the government or lacks t
Page 89 and 90: ones is their general lack of funds
Page 91 and 92: 2. International donors could finan
Page 93 and 94: hands of a few families, Pakistan
Page 95 and 96: Annexure-1: The Acts Country Year A
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COUNTRY PARTNERS 1. India National
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Annexure Table 2a: Coverage of Enti
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Annexure Table 3a: Monopolisation,
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Annexure Table 3b: Restrictive Trad
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Annexure Table 3c: Mergers & Acquis
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Annexure Table 3d: Unfair Trade Pra
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Annexure Table 4b: Status, Power an
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Annexure Table 4c: Sanctions and Re
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Annexure-4 SURVEY QUESTIONNAIRE Com
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16. How many Members (Governing Com
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26. What is the system of evaluatio
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38. What powers and functions does
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52. If yes, what are the criteria f
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58. Status of pending (from the dat
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65. Time taken for completion of ad
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75. What are the obstacles that the
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94. (a) If any, which are the secto
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Annexure-5 What the Stakeholders Th
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This is particularly true in the ca
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Advocacy The NRGs also felt that it
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Frederic Jenny, Chairman of the WTO
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insignificant market share prior to
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CUTS Centre for Competition, Invest
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