Final Report - World Trade Organization

It can well be expected that when the CA is not
even legally autonomous, there will be interference
from the Government, which has been proved both
in Kenya and Tanzania. In Kenya of course the
Minister was right in overruling CA’s decision in the
Coca Cola case. However, this cannot be generalised
as it is not known if the Minister took the right and
impartial decision in all the cases that have been
overruled. It may, however, be noted that in Kenya
the Minister is well within his lawful right to overrule
any decision of the CA.
In Tanzania, the arrangement is quite different. Here
even though the CA functions under the Ministry, its
decisions are binding except in M&A cases. In the
Kibo Breweries v. Tanzania Breweries Limited
case, the CA’s decision was binding and neither the
Minister nor any other senior officer in the Ministry
was required to play any role. However, the
Permanent Secretary of the Ministry of Industry and
Trade who was a member of the TBL’s board
supported the company in contravening the order of
the CA. 208 This is a blatant violation of the law of
the land.
The CA being de jure autonomous of course does
not necessarily mean that it will enjoy de facto
autonomy. This was evident in Pakistan where the
Government interfered in a number of cases, the
cement cartel case being the most notable one. The
competition authority tried to curb cartelisation and
collusive pricing by the manufacturers but the
government intervened to fix prices at a ‘mutually
acceptable’ level. 209
No such undue intervention by the Government was
reported in other 7-Up countries. In Sri Lanka, it is
believed that government interference is there, but it
was not apparent in so far as handling of the cases
are concerned. In case of India and Sri Lanka it may
be quite possible that by remaining relatively inactive,
especially in controversial and difficult cases, the CAs
ensured that the vested interests did not feel any need
to interfere in their affairs.
There might be other kinds of external influence on
the CAs as well. Public opinion is one such factor.
Sometimes competition authorities get swayed by
public opinion/emotions or national sentiments and
take decisions, which may not be the best or required
to promote competition. The takeover of East Kenya
Bottlers Co. Ltd by Coca Cola in Kenya became a
national issue there. Even though it did not raise any
major competition issue as such the CA decided to
block it, partly because it was highly influenced by
the public opinion. Secondly, because it violated an
undertaking by Coca Cola to not to take over any
further bottling plants in the country.
Similarly in Zambia, the Chilanga Cement case
became a national issue and ZCC, even though was
initially swayed by the public mood, finally allowed
the takeover with some conditions, which was
probably the best option before it. However, still many
people in Zambia feel that ZCC should not have
allowed the takeover.
Public perception on competition may not be
necessarily correct. CAs need to take decisions
based on merits (of promoting and maintaining
competition) and not popular perceptions. Sometimes
CAs devote much of regulatory resource in a case
that may not be important from competition viewpoint
but on public mood, which may have been whipped
up by the media, which in turn could have been
orchestrated by some interested party. But
conserving regulatory resource, which is scarce is
very important. Prioritising the cases on merits may
help in this regard.
Lobbying by different interest groups can also make
a difference in many jurisdictions. In India, for
example, the MRTPC was found to be quite active
in one case but exhibiting complete silence in the
other case. This may raise doubts if the MRTPC
indeed acts on its own. In the soda ash case, the
domestic soda ash lobby: AMAI lobbied for the case,
which was backed by few big industrial houses of
the country. In the cement cases the sufferers are
ordinary consumers. Even the appellant, the Builders
Association of India is an association of small builders
who do not wield much power.
It was also generally observed that businesses are
more active in lobbying and consumer movement is
weak in most countries. It is quite possible that the
competition authorities might find it difficult to
maintain a balance between business and consumer
interests in a situation where there is lot of business
lobbying but no countervailing influence. India is an
208 See CUTS, 2002, Competition Law & Policy - A Tool for Development in Tanzania, table 6.
209 CUTS, 2002, Competition Regime in Pakistan - Waiting for a Shake-Up, section 4.2.6.
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