Download - 1 GREETINGS TO PARTICIPANTS AT THE LAUNCH MEETING OF 7Up3 PROJECT AT ENTEBBE 22-23 MARCH 2005
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1
GREETINGSTO
PARTICIPANTS AT THELAUNCH MEETING OF
7Up3 PROJECT
AT ENTEBBE
22-23 MARCH 2005
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COMPETITION POLICY AND INTERESTS OF THE POOR
Dr. S. CHAKRAVARTHY
(Profession : Civil Servant)
Formerly, Member, Monopolies and Restrictive Trade Practices Commission, Member, High Level Committee on Competition Policy and Law And Member of Committee for
Drafting the Law.Presently, Adviser/Consultant Competition Policy and Law
HYDERABAD,INDIA
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RUBRIC OF COMPETITION RUBRIC OF COMPETITION LAWLAW
COMPETITION LAWS GENERALLY OVER THE WORLD HAVE THE FOLLOWING
FOUR COMPARTMENTS
ANTI-COMPETITION AGREEMENTS
ABUSE OF DOMINANCE
MERGERS, AMALGAMATIONS, ACQUISITIONS AND TAKE-OVERS
FOSTERING COMPETITION(ADVOCACY)
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PRE - REQUISITES FOR COMPETITION POLICY
INDUSTRIAL POLICY SMALL SCALE INDUSTRIAL SECTOR
POLICY PRIVATISATION AND REGULATORY
REFORMS TRADE POLICY STATE MONOPOLIES POLICY LABOUR POLICY
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SMALL SECTOR PROTECTION
• POLICY - ENCOURAGE AND PROMOTE SMALL, COTTAGE AND HANDLOOM SECTORS
• RESERVATIONS FOR THE SMALL SCALE SECTOR
• THEY SUFFER FROM OLD TECHNOLOGY, LACK OF RESOURCES AND MANAGEMENT, HIGH COST OF PRODUCTION AND SALE
• GLOBAL COMPETITION CAN EXTINGUISH THE SMALL SCALE AND COTTAGE SECTORS
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TRADE POLICY
THIS INCLUDES (ESSENTIALLY WTO – RELATED)
TARIFFS QUOTAS SUBSIDIES ANTI-DUMPING ACTION DOMESTIC CONTENT REGULATIONS
EXPORT RESTRAINTS TRADE POLICY NEEDS TO CONFORM TO
COMPETITION PRINCIPLES
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STATE MONOPOLIES POLICY
STATE MONOPOLIES AND PUBLIC ENTERPRISES -
AGENTS OF GOVERNMENT WITH SOCIO-ECONOMIC AND POLITICAL GOALS
BUT SUCH ENTERPRISES SHOULD ALSO BE IN COMPETITION TO SUBSERVE CONSUMER INTEREST
APPROPRIATE BLEND OF COMPETITION PRINCIPLES AND GOVERNMENT POLICIES TOWARDS STATE AND OTHER MONOPOLIES
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CAN COMPETITION LAW BE PRO-POOR?
NOT EXPLICITLY IN THE WORDING OF COMPETITION LAW
BUT PRO-POOR CONCERNS ARE ARTICULATED AS BELOW :
“POVERTY REDUCTION HAS NORMALLY BEEN SEEN AS A SPECIFIC MEASURE AND ALWAYS REMAINED AT THE SIDELINES OF ECONOMIC POLICY MAKING BUT COMPETITION POLICY IS AN ELEMENT THAT CAN MAINSTREAM DEVELOPMENT AND POVERTY REDUCTION AND PUT THEM AT THE CENTRE OF ECONOMIC POLICY REGIMES” – RUBENS RICUPERO, SECRETARY GENERAL, UNCTAD
“MARKETS WORK FOR THE POOR, BECAUSE POOR PEOPLE RELY ON FORMAL AND INFORMAL MARKETS TO SELL THEIR LABOUR AND PRODUCTS, TO FINANCE INVESTMENT AND TO INSURE AGAINST RISKS. WELL-FUNCTIONING MARKETS ARE IMPORTANT IN GENERATING GROWTH AND EXPANDING OPPORTUNITIES FOR POOR PEOPLE” – WORLD INVESTMENT REPORT, 2001
IT IS FOR THE COMPETITION AUTHORITY TO PRO-ACTIVELY GIVE A SHAPE TO THE SPIRIT BEHIND PRO-POOR CONCERNS
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TABLE: SOCIO - ECONOMIC INDICATORS OF SELECT AFRICAN COUNTRIES
Unit Kenya South Africa
Tanzania Zambia Uganda Namibia Malawi Ethiopia
Population Millions 31.1 43.6 37.2 10.0 24.7 1.8 10.7 67.7
GNP/Capita US $ PPP 1000 9400 610 870 1200 4500 660 700
Adult IlliteracyMale >15 Fem >15
Percent 1430
1415
2143
1427
2646
5569
2757
5475
Poverty < National
Poverty Line
Percent 50 50 51.1 86.0 35 N.A. 54 64
Note: UGANDA, NAMIBIA, MALAWI AND ETHIOPIA ARE COVERED BY 7UP3 PROJECT AND KENYA, SOUTH AFRICA, TANZANIA, ZAMBIA WERE COVERED BY 7UP1 PROJECT OF
CUTS
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ANTI - COMPETITION AGREEMENTS HORIZONTAL RESTRAINTS
CARTELS {FIXING PURCHASE OR SALE PRICES (EXPORT CARTELS EXEMPTED) }
BID-RIGGING (COLLUSIVE TENDERING)
SHARING MARKETS BY TERRITORY, TYPE ETC.
LIMITING PRODUCTION, SUPPLY, TECHNICAL DEVELOPMENT
VERTICAL RESTRAINTS
TIE-IN ARRANGEMENTS
EXCLUSIVE SUPPLIES
EXCLUSIVE DISTRIBUTION
REFUSAL TO DEAL
RESALE PRICE MAINTENANCE
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PRO-POOR: BATA CASE
• BATA HAS DOMINANT PRESENCE IN FOOTWEAR MARKET
• IT ENTERED INTO AGREEMENT WITH SMALL SCALE MANUFACTURERS (COBBLERS AND POOR LEATHER WORKMEN) FOR PURCHASE OF FOOTWEAR
• AGREEMENT STRIPULATED THAT THE SMALL MANUFACTURERS SHOULD USE ONLY MOULDS SUPPLIED BY BATA
• MRTP COMMISSION HELD THIS AS A RESTRICTIVE PRACTICE AND PREJUDICIAL TO PUBLIC INTEREST
• BUT MRTP COMMISSION RECKONED THE INTERESTS OF SMALL POOR MANUFACTURERS AND ALLOWED THE RESTRICTION TO CONTINUE
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IMPORTS OF 12 CARTELISED PRODUCTS BY DEVELOPING COUNTRIES, 1990-2000
0
2
4
6
8
10
12
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
YEAR
US $ billion
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IMPACT OF HARDCORE CARTELS IN SOME AFRICAN COUNTRIES
• HARDCORE CARTELS IN HEAVY ELECTRICAL EQUIPMENT, STEEL AND ALUMINIUM IMPACTED SOME AFRICAN COUNTRIES ADVERSELY
• THESE CARTELS INDULGED IN OVER CHARGING AND BID-RIGGING
• CONSEQUENTLY, COST OF POWER GENERATION PLANTS WENT UP STRETCHING TREASURY
• DAMAGES AMOUNTED TO ZIMBABWE – US $ 44 MILLION KENYA - US $ 34 MILLION SOUTH AFRICAN CUSTOMS UNION – US $ 270 MILLION
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SYNDICATE CARTEL IN ZAMBIA
• A SYNDICATE IS A GROUP OF FIRMS ACTING IN CONCERT
• IN ZAMBIA TRANSPORT OPERATORS FORMED A SYNDICATE, UNITED TRANSPORT AND TAXIS ASSOCIATION
• THE SYNDICATE FIXED PRICES AND PREVENTED OUTSIDERS TO ENTER TRANSPORT BUSINESS
• HIGHER PRICES ADVERSELY IMPACTED CONSUMERS PARTICULARLY, THE POOR
• ZAMBIA COMPETITION COMMISSION NOTED THAT UTTA IS A CARTEL
• TRANSPORT OPERATORS SUBSEQUENTLY BEHAVED MORE RESPONSIBLY TOWARDS CONSUMERS
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EXCLUSIVE SUPPLY/DISTRIBUTION AGREEMENT IN ZAMBIA
• HYBRID POULTRY FARM (HPF) AND GALAUNIA HOLDINGS (GH) ENTERED INTO AN AGREEMENT, HPF SELLING FARM AND POULTRY UNITS TO GH
• AGREEMENT HAD EXCLUSIVE DEALING ARRANGEMENTS
• GH TO PURCHASE ONLY DAY OLD CHICKS FROM HPF AND HPF TO HAVE THE RIGHT OF FIRST REFUSAL, SHOULD GH RESELL THE FARM
• GH SHOULD NOT RAISE ANY OTHER POULTRY AND ENTER BUSINESS OF HATCHING CHICKENS.
• ZAMBIA COMPETITION COMMISSION RULED THAT HPF AND GH ABUSED THEIR DOMINANCE AND WERE FORECLOSING COMPETITION
• THE VERTICAL AGREEMENT WAS NULLIFIED
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TIED SALES – AN INDIAN CASE
• GOVERNMENT OPERATES A PUBLIC DISTRIBUTION SYSTEM (PDS) THROUGH FAIR PRICE SHOPS
• PDS SUPPLIES RICE, WHEAT, SUGAR AND KEROSENE TO PEOPLE BELOW POVERTY LINE AT SUBSIDISED PRICES
• FAIR PRICE SHOP KEEPERS FORCED POOR PEOPLE TO PURCHASE RAZOR BLADES AND MATCH BOXES IF RICE/WHEAT WERE TO BE SUPPLIED
• THIS TIED SALE DEVASTATED PDS CLIENTELE
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ABUSE OF DOMINANCE
DOMINANCE MEANS A POSITION OF STRENGTH ENABLING AN ENTERPRISE TO OPERATE INDEPENDENTLY OF COMPETITIVE PRESSURE AND TO APPRECIABLY AFFECT THE RELEVANT MARKET,COMPETITION AND CONSUMERS.
ABUSE OF DOMINANCE ARISES IF AN ENTERPRISE
• IMPOSES UNFAIR /DISCRIMINATORY PURCHASE OR SALE PRICES (INCLUDING
PREDATORY PRICES)
• LIMITS PRODUCTION,MARKETS OR TECHNICAL DEVELOPMENT
• DENIES MARKET ACCESS
• CONCLUDES CONTRACTS SUBJECT TO OBLIGATIONS HAVING NO CONNECTION
WITH THE SUBJECT OF THE CONTRACTS.
• USES DOMINANCE TO MOVE INTO OR PROTECT OTHER MARKETS
RELEVANT MARKET = RELEVANT PRODUCT MARKET + RELEVANT GEOGRAPHIC MARKET
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PREDATORY PRICING – MODERN FOOD INDUSTRIES CASE
• PREDATORY PRICING IS A GENRE OF ANTITRUST VIOLATION
• IT IS SELLING GOODS AT PRICE BELOW COST WITH INTENT TO ELIMINATE COMPETITION/COMPETITORS
• ACTION BEFORE MRTP COMMISSION AGAINST MODERN FOOD INDUSTRIES PRODUCING BREAD AND BAKERY ITEMS FOR THE OFFENCE OF PREDATORY PRICING
• COMMISSION RULED MERE CHARGING PRICE BELOW COST CANNOT LEAD TO INDICTMENT - MALAFIDE INTENT TO ELIMINATE COMPETITION/COMPETITIORS SHOULD BE PROVED
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COMBINATIONS MERGERS/AMALGAMATIONS
1. REDUCTION IN NUMBER OF PLAYERS
2. ACQUISITION OF ENORMOUS ECONOMIC STRENGTH
3. DISCOURAGEMENT OF NEW ENTRANTS
PEJORATIVE EFFECTS
4. DICTATION OF PRICES
5. DOMINANCE
COMPETITION LAW TO HAVE SURVEILLANCE OVER COMBINATIONS
REGULATION ON COMPETITION PERSPECTIVE
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CONSOLIDATION – CEMENT INDUSTRY CASE
• IN JUNE 2003, GRASIM (BIRLA CO) ACQUIRED CEMENT DIVISION OF LARSEN AND TOUBRO (L & T)
• THIS COMBINE NOW CONTROLS 25 % OF INSTALLED CAPACITY
• GUJARAT AMBUJA CEMENT LTD AND ASSOCIATED CEMENT COMPANY (ACC) COMBINED AND CONTROL 20 % OF INSTALLED CAPACITY
• THIS CONSOLIDATION HAS RESULTED IN A DUOPOLY • CONSEQUENCE – FRESH ADDITIONS TO CAPACITY
DAMPENED, SMALLER UNITS GETTING EXTINGUISHED, NEW PLAYERS DETERRED AND SMALLER PLAYERS DRIVEN OUT
CANNIBALISATION OF MARKET SHARES OCCURS WHEN DOMINANT COMPANIES ENTRENCH AS MONOPOLIES
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COMPETITION ADVOCACY
THE COMPETITION AUTHORITY NEEDS
TO PARTICIPATE IN THE FORMULATION OF
POLICIES AND REVIEWING OF POLICIES RELATING TO COMPETITION
TO CREATE COMPETITION CULTURE
TO ACT AS COMPETITION ADVOCATE
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INTELLECTUAL PROPERTY INCLUDESINTELLECTUAL PROPERTY INCLUDES
1. COPYRIGHT AND RELATED RIGHTS
2. TRADE MARKS
3. GEOGRAPHICAL INDICATIONS
4. INDUSTRIAL DESIGNS
5. PATENTS
6. LAYOUT – DESIGNS OF CIRCUITS
7. PROTECTION OF UNDISCLOSED INFORMATION.
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DICHOTOMYDICHOTOMY
• IPRs ENDANGER COMPETITION• COMPETITION LAW ENGENDERS COMPETITION• EXISTENCE OF IPRs MAY NOT BE CHALLENGED BY
COMPETITION LAW• EXERCISE OF IPRs MAY BE CHALLENGED BY
COMPETITION LAW• THE LITMUS TEST FOR INVOCATION OF
COMPETITION LAW IS DETRIMENT TO PUBLIC INTEREST OR CONSUMER INTEREST
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KITTY OF UNREASONABLE CONDITIONS
(ANTI-COMPETITIVE)
PATENT POOLING (LOCKING TECHNOLOGY) TIE-IN ARRANGEMENTS (ACQUIRE PARTICULAR
GOODS SOLELY FROM PATENTEE) ROYALTY PAYMENT AFTER EXPIRY OF PATENT PROHIBIT LICENSEE TO USE RIVAL TECHNOLOGY PROHIBIT LICENSEE FROM CHALLENGING
VALIDITY OF IPR GRANT BACK REQUIREMENT (ANY KNOW-HOW OR
IPR ACQUIRED BACK TO THE LICENSOR) FIXING PRICES FOR THE LICENSEE TO SELL TERRITORIAL AND CUSTOMER RESTRICTION Contd Next
Slide
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KITTY OF UNREASONABLE CONDITIONS
(ANTI-COMPETITIVE)
COERCING LICENSEE TO TAKE LICENSES IN IP EVEN IF HE DOES NOT NEED THEM (PACKAGE LICENSING)
RESTRICTING SALE OF PRODUCT TO THOSE OTHER THAN DESIGNATED BY LICENSOR (OFTEN FOUND IN LICENSING OF DUAL USE TECHNOLOGY)
IMPOSING TRADE MARK USE REQUIREMENT INDEMNIFICATION OF LICENSOR TO MEET
EXPENSES IN INFRINGEMENT PROCEEDINGS UNDUE RESTRICTION ON LICENSEE’S BUSINESS CONDITION ON LICENSEE TO EMPLOY/USE STAFF
DESIGNATED BY LICENSOR LIMITING THE MAXIMUM AMOUNT OF USE OF THE
INVENTION
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IPRS AND TRADITIONAL KNOWLEDGE
INNOVATIONS USUALLY IN FORMAL SYSTEMS (R&D LABS, UNIVERSITIES)
INNOVATIONS ALSO IN INFORMAL SYSTEMS (ARTISANS, FARMERS, TRIBES) – KNOWN AS TRADITIONAL KNOWLEDGE (TK)
TRADITIONAL MEDICINE (TM) AN IMPORTANT TK IN INDIAN VILLAGES
TK AND TM ARE HANDED DOWN FROM GENERATION TO GENERATION, PARTLY CODIFIED AND PARTLY NON - CODIFIED
GRANT OF PATENTS ON INNOVATIONS LINKED TO TK AND TM IS A MATTER OF CONCERN
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BENEFIT SHARING MODEL KANI TRIBALS IN SOUTH WESTERN INDIA – SETTLEMENTS IN
FORESTS THEY COLLECT NON - TIMBER FOREST PRODUCTS AND USE
THEM SCIENTISTS ON A RESEARCH PROJECT FOUND KANIS
ENERGETIC AND AGILE – MUNCHING SMALL BLACK FRUITS DETAILED INVESTIGATIONS REVEALED THAT THE BLACK
FRUIT CONTAINED MAINLY ANTI-FATIGUE PROPERTIES A DRUG NAMED JEEVANI WAS RELEASED FOR
COMMERCIAL PRODUCTION 50 % OF LICENSE FEE AND ROYALTY PAYABLE BY THE
COMMERCIAL FIRM PASSED ON TO THE KANI TRIBAL TRUST TO BE USED FOR THEIR WELFARE
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DOHA DECLARATIONDOHA DECLARATION
• CLARIFIES THAT CLAUSES UNDER TRIPS WILL NOT OVERRIDE PUBLIC HEALTH CONCERNS
• ENDORSES THE NEED FOR TRIPS TO ADDRESS PUBLIC HEALTH PROBLEMS FOR LDCs & DCs - HIV/AIDS, TB,
MALARIA ETC.
• RECOGNISES IMPORTANCE OF IPR PROTECTION BUT APPRECIATES REALITY OF UNAFFORDABLE HIGH
PRICES OF PATENTED DRUGS
• PERMITS MEMBERS OF WTO TO INTERPRET AND IMPLEMENT MEASURES TOWARDS PROTECTION OF PUBLIC
HEALTH AND ACCESS TO MEDICINES
• RECOGNISES THE RIGHT OF MEMBERS TO DETERMINE GROUNDS FOR COMPULSORY LICENCE IN
NATIONAL EMERGENCIES
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IMPLICATIONS OF DOHA IMPLICATIONS OF DOHA DECLARATIONDECLARATION
§ “ACCESS TO MEDICINES FOR ALL” IS NOW A GROUND TO GRANT
COMPULSORY LICENCES
§ THIS COVERS ANY DISEASE AT THE DISCRETION OF THE COUNTRY
CONCERNED
§ TO TAKE ADVANTAGE OF DOHA DECLARATION, DEVELOPING COUNTRIES
NEED TO PASS LEGISLATION PERMITTING ISSUE OF COMPULSORY
LICENCES
§ DEVELOPING COUNTRIES NEED TO MAKE A DETAILED ANALYSIS OF DOHA
DECLARATION AND BRING IN APPROPRIATE LEGISLATIONS, RULES AND
GUIDELINES BENEFICIAL TO HEALTH CARE NEEDS OF THE COUNTRY AND
DOMESTIC INDUSTRIES
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PRE-CANCUN GENERAL COUNCIL DECISION OF 30 AUG 2003
COMPULSORY LICENSE PERMITTED FOR PRODUCTION OF PHARMACEUTICAL PRODUCTS FOR EXPORT TO AN ELIGIBLE IMPORTING MEMBER COUNTRY
THE IMPORTING COUNTRY SHOULD HAVE INSUFFICIENT OR NO MANUFACTURING CAPACITY IN THE PRODUCT
ENTIRE PRODUCTION SHOULD BE EXPORTED TO THAT COUNTRY
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FINALE
COMPETITION POLICY AND COMPETITION LAW NEED TO BE COMPLEMENTARY AND IN TANDEM
COMPETITION POLICY SHOULD BE FLEXIBLE TO MEET THE NEEDS, ASPIRATIONS AND GOALS OF THE COUNTRY AND PRO-POOR POLICIES SHOULD BE FACTORED IN
COMPETITION POLICY AND LAW SHOULD BE SO DRAFTED THAT THEY ARE AN EMPOWERMENT TOOL IN THE HANDS OF CONSUMERS, PARTICULAR THE POOR.
POOR CONSUMERS SHOULD HAVE ACCESS TO BASIC NEEDS AND COMPETITION JUSTICE.
POLITICAL SUPPORT NEEDS TO BE ANCHORED FOR THIS PURPOSE. COMPETITION ADVOCACY AND AWARENESS GENERATION SHOULD BE
UNDERTAKEN IN A BIG WAY BY THE COMPETITION AUTHORITY, CIVIL SOCIETY AND THE GOVERNMENT.
COMPETITION POLICY AND LAW SHOULD BE INTERPRETED BY THE COMPETITION AUTHORITY AND THE COURTS TO SUBSERVE THE INTERESTS OF THE POOR (THIS DOES NOT IMPLY THAT THE LAW SHOULD BE INTERPRETED AGAINST THE WELL-TO-DO CONSUMERS).
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MY IDEA OF A BETTER ORDERED WORLD IS ONE IN WHICH MEDICAL DISCOVERIES WOULD BE FREE OF PATENTS AND THERE WOULD BE NO PROFITEERING FROM LIFE OR DEATH.
Prime MinisterWHO Conference, Geneva
HUMANE COUNSELHUMANE COUNSEL
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WHAT IS NEEDED IS NOT ANY “ISM” BUT “PRAGMATISM” ORPOORAGMATISM
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THANK YOU
FOR YOUR
KIND ATTENTION