Interventions by Interventions by Civil Society on Civil Society on

Competition IssuesCompetition Issues

Geneva - January, 29th of 2004

Conference of the International Network ofConference of the International Network of Civil Society Organizations on CompetitionCivil Society Organizations on Competition

SummarySummary

• Conditions for civil society participation.Conditions for civil society participation.

• Cases.Cases.

• Possible obstacles.Possible obstacles.

• Lessons from the Brazilian case.Lessons from the Brazilian case.

Conditions for civil Conditions for civil society participationsociety participation

Four conditions…Four conditions…

1) Transparency;

2) Competition Advocacy;

3) Efficient communication channels (access to the authorities);

4) Organization of Civil Society;

Relevant legislationRelevant legislation

• Law # 8.884 of June 11, 1994Law # 8.884 of June 11, 1994

• Project of Law 184 / 2003Project of Law 184 / 2003

• Resolution # 15 of August 19, 1998Resolution # 15 of August 19, 1998

• Directive # 849 of September 22, 2000Directive # 849 of September 22, 2000

Transparency

• Judgment sessions are public.• Relevant decisions are published in the

official Gazette. • Most documents are public.• Norms and regulations are subject to

public consultations.• A federal public attorney accompanies A federal public attorney accompanies

the case.the case.• Public hearings and consultations.Public hearings and consultations.

Example of Transparency

• Law 8.884“Article 12. The Attorney General of the Republic, after hearing the Higher Council, shall appoint a member of the Attorney General Office of the Republic to handle the cases submitted to CADE for review.”

Example of Transparency

• Resolution #15Resolution #15• Article 5. Upon the receipt of the

proceeding, the Reporting Reporting Commissioner Commissioner shall verify jointly with SEAE, the realization of the market consult about the effect of the transaction. If necessary, the Reporting Reporting Commissioner Commissioner will reach the reasonable measures according the Exhibit IV.

Example of Competition Advocacy

• Law # 8.884Law # 8.884

Article. 7 The CADE board shall:

……………………………………………

XVII Answer consultations on matters within its sphere of authority.

Example of Competition Advocacy

Law # 8.884 “ Law # 8.884 “ Article 14. SDE shall:Article 14. SDE shall:………………………………………………………………………………………………………………

……

XV-XV- advise the publicadvise the public on the various forms on the various forms of violation of the economic order, as of violation of the economic order, as well as the means to curb such well as the means to curb such violations; ”violations; ”

Example of Efficient Communication Channels

• Law # 8.884Law # 8.884“ “ Article 44. Upon invitation of the CADE Article 44. Upon invitation of the CADE

president in response to an indication president in response to an indication of the reporting official, of the reporting official, any person may any person may provide CADE with clarifications on provide CADE with clarifications on relevant mattersrelevant matters.”.”

Example of Efficient Channel of Communication.

• Directive # 849Directive # 849“ “ Art. 6Art. 6thth The representative or third The representative or third

interested part, even so not being part interested part, even so not being part of the fact, will be able to assist the of the fact, will be able to assist the authority, supplying documents and authority, supplying documents and necessary information to the procedural necessary information to the procedural instruction.”instruction.”

Organization of Civil Society

• Consumer groups and associations.Consumer groups and associations.

• Competition associations (IBRAC, Competition associations (IBRAC, GEDECOM).GEDECOM).

• Competition section of the Brazilian bar Competition section of the Brazilian bar association.association.

Regulatory Agencies (RAs)Regulatory Agencies (RAs)

• Before any relevant decision the RAs should accomplish a public consult.

• Public Associations can indicate a member to follow a process.

• The RAs got to follow the Executive Police.

• Contracts should be on official press.

• An Ombudsman is nominated.

Practical Examples of Practical Examples of

Civil Society Civil Society

ParticipationParticipation

The AmBev Case(2000)

• The two largest Brazilian breweries merged into one.

• AmBev gained control over more than 60% of the market.

ANTARCTICA

BRAHMA

AMBEV

1) Three kinds of assets to make possible a 1) Three kinds of assets to make possible a new competitor in 8 months:new competitor in 8 months:

a) Sale of Bavária branda) Sale of Bavária brand

b) Share of the Distribution Net - 4 + 2 years b) Share of the Distribution Net - 4 + 2 years

c) Sale of 05 units in all regions of the countryc) Sale of 05 units in all regions of the country..

Cade’s decisions – Cade’s decisions – Ambev case:Ambev case:

AMBEV:AMBEV:Sale of 05 unitsSale of 05 units

Cuiabá/MTCuiabá/MT

BrahmaBrahma

Getúlio de Vargas/RSGetúlio de Vargas/RS

AntárcticaAntárctica

Ribeirão Preto/SPRibeirão Preto/SP

AntárcticaAntárctica

Salvador/BASalvador/BA

BrahmaBrahma

Manaus/AMManaus/AM

AntárcticaAntárctica

2) Offering of access to distribution net of 2) Offering of access to distribution net of Ambev in each of 5 Brazilian regionsAmbev in each of 5 Brazilian regions

Cade’s decision Cade’s decision AmBev case: AmBev case:

Cade’s decision Cade’s decision AmBev case: AmBev case:

3) Ambev could not close a unit in the next 3) Ambev could not close a unit in the next 4 years without making a public offering.4 years without making a public offering.

4) Workers´ Retraining and Repositioning 4) Workers´ Retraining and Repositioning Program Program

Cade’s decision Cade’s decision AmBev case: AmBev case:

Conditions for civil society Conditions for civil society participation in this caseparticipation in this case

• 6 Public Hearings.6 Public Hearings.

• Public Session of Judgment. Public Session of Judgment.

• Live Transmission of the Judgment by Live Transmission of the Judgment by

TV. TV.

• Decisions available to the public.Decisions available to the public.

Public Hearing on Public Services

Consequences of a price increase...

• Public services are a large part of a consumer basket.

• If electricity tariff increases by 10 %, the Consumer Price Index increases by 0,44 %.

Utility Sectors affect the poor... (1994 - 2003)

138%221%

606%

223%

CPI electricityfix telephone water

Fonte: Folha de S.Paulo

Public Hearings have been important...

• Choose the best index to readjust Electricity

• Criterion for productive factors

• Choice of price index for long term contracts

Public Participation is increasing…

710 10 11

35

49

98 99 00 01 02 03

Number of Public hearings on ANEEL

Public Hearing about Electricity issues

Possible ObstaclesPossible Obstacles

Institutional

under-investment

Political market failure

The Political Economy of Competition Policy

Lessons from the Lessons from the Brazilian case.Brazilian case.

Transparency and Transparency and Communication are very Communication are very

important but not important but not sufficient…sufficient…

Organization of civil society is essential and is the big challenge of

us.

Thank You!Thank You!

More information...More information...

gesner@fgvsp.brgesner@fgvsp.brandrew@ips.lkandrew@ips.lkc-cier@cuts.orgc-cier@cuts.org

scazufca@yahoo.com.br scazufca@yahoo.com.br rodrigo.silva@poli.usp.br rodrigo.silva@poli.usp.br

www.gesneroliveira.com.brwww.gesneroliveira.com.br