Final Report - World Trade Organization

Chapter-8
Conclusions and Recommendations
This chapter is the concluding part of the final report
of the 7-Up Project titled: “Pulling Up Our Socks”.
The project involved a comparative study of
competition regimes in seven developing countries:
India, Pakistan, Sri Lanka, Kenya, South Africa,
Tanzania and Zambia. It was implemented over 2000-
2002.
Contextual Background
The study showed a huge lack of competition culture
in all the project countries, and the fact that
awareness levels were quite low when the 7-Up
project was taken up. Whatever awareness existed
was mainly among a handful of businesses and
bureaucrats. Few in the media, academia and civil
society were aware, but that too was quite wanting.
Surveys conducted across a section of society in each
of the project countries confirmed this finding.
Fortunately, due to some internal realisation and
external factors, a desire to improve the competition
regime was reflected across all countries. The
external factors include the discussions at the WTO
on trade and competition policy, which were launched
in 1996 and accelerated after the 4 th Ministerial
Conference at Doha in November, 2001.
While the five developing countries: India (1969 and
2002), Pakistan (1971), Sri Lanka (1987 and 2003),
Kenya (1989) and South Africa (1979 and 1998) had
enacted competition laws much before, the two least
developed countries: Zambia (1995) and Tanzania
(1994) were late entrants. Ostensibly they enacted
their laws under pressure from international lending
institutions (ILIs) as a part of structural adjustment
programmes. This did pay well in Zambia, as it was,
within certain limitations, quite effective in curbing
various anti-competitive practices. On the other hand,
the two big ones: South Africa and India developed
new laws in 1998 and 2003 respectively to cope with
the changing times. The Sri Lankan parliament has
also passed a new law in early 2003. However, during
the project implementation it was found that Pakistan
is also in the process of adopting a new law, which
should come about in this year, or latest by 2004. Kenya
is believed to be considering a new law as well.
Tanzaina was a case in point as its 1994 law was
inoperative until recently, and changes were
proposed recently, including the name, to give it a
new thrust. Further, it has received generous financial
assistance from donors to implement the law.
If one looks at other cases of pressure from ILIs,
two cases come to mind. Firstly, Thailand which has
enacted a competition law in 1999, but the
implementation is badly lacking. One factor
responsible for this is the unholy nexus between
politicians and businessmen, and cronyism, which
exists in South East Asia, thus rendering it difficult
to implement the competition law even on a soft
basis. The public is totally ignorant about the law.
The other case is that of Indonesia, where the law is
being looked at as a part of the painful transition
process imposed by the ILIs. Furthermore, Indonesia
has no proper rule of law which also hampers any
sensible governance.
Other than Zambia and South Africa the political will
was lacking badly, which was evident by the budget
and quality of personnel appointed to administer the
law. All other countries were lagging behind
considerably in enforcement of otherwise reasonably
adequate laws. Budgets and appropriate personnel
were major drawbacks in effective implementation.
India has just enacted a new law and the jury is still
out as to how effective it will be. To start with the
budgetary allocations are quite poor, and it has a huge
agenda. The new law has been patterned on the basis
of the new law enacted in the UK, which has gradual
implementation: advocacy in the first year; restrictive
trade practices in the second year and merger review
in the third year. UK too had an old law (1973) when
it changed over to a new law in 1998 to cope with
changing circumstances and to align with the
European Community competition law.
The applicability of the competition law varied from
country to country, depending upon the economic
situation. For example, the South African law has
developed good jurisprudence on mergers, though it
lagged behind in reaching the common man as it did
not address various retail level abuses. On the other
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