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NATIONAL TRAINING WORKSHOP
ON COMPETITION POLICY AND
LAW FOR MOZAMBIQUE
KASTURI MOODALIYAR
SENIOR LECTURER IN COMPETITION
LAW- UNIVERSITY OF WITWATERSRAND
SOUTH AFRICA
[email protected]
SADC perspective on
competition issues
The Southern African Development Community
(SADC) has been in existence since 1980.
 Member states include: Angola, Botswana,
Democratic Republic of Congo, Lesotho,
Madagascar, Malawi, Mauritius, Mozambique,
Namibia, South Africa, Swaziland, United
Repulic of Tanzania, Zambia and Zimbabwe.
SADC Objectives
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Achieve development and economic growth, alleviate povety, enhance
the standard and quality of life of the people of Southern Africa and
support the socially disadvantaged through regional integration;
Evolve common political values, systems and institutions;
Promote and defend peace and security;
Promote self-sustaning development on the basis of collective selfreliance, and the interdependence of Member States;
Achieve complementarity between national and regional strategies and
programmes;
Promote and maximise productive employment and utilisation of
resources of the Region;
Achieve sustainable utilisation of natural resources and effective
protection of the environment;
Strengthen and consolidate the long-standing historical, social and
cultural affinities and links among the people of the region.
SADC perspectives on competition
policy
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Competition Policy aims to promote competition, its purposes is
not to protect is not to protect a specific competitior but rather to
enhance the process of competition.
Public interest objectives are increasingly being explicitly
included in competition policy especially in develoming
countries.
The objectives of Zambia’s competition policy, for eg, include the
promotion of innovation, and South Africa’s competition policy
requires that the promotion of small and medium sized (SME)
enterprises be considered in merger evaluation. Both
innovation and SME promotion are usually key industrial policy
objectives.
Competition Policy in SADC
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Trade and market liberalization were key features of the Structural
Adjustment Programmes adopted by most SADC countries during the
1980’s and early 1990’s. Markets were opened to new competition and
market forces were freed in sectors that were previously fettered by
price and other controls.
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The wave of privatisation, with the state retreating significantly from the
sphere of productive economic activity, with state-owned monopolies
being taken over by private interests, or protected monopolies being
exposed to market forces, generated renewed interest in regulatory
oversight of infrastructure and other previously state controlled sectors.
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The retreat of the state opened opportunities that could be seized by
private concentrations of economic power and which could produce
outcomes no more efficient or equitable than those associatedwith the
previously state-owned enterprises.
Competition Policy Challenges in
SADC
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The lack of capacity in the area of competition policy poses sginificant
challenges in SADC. A number of countries including Swaziland and
Botswana, are drafting legislation, some with assistance of the United
Nations Conference on Trade and Development (UNCTAD), resources
from the region and Comesa.
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The recently concluded Southern African Customs Union (SACU)
agreement requires that each member country have a competition
poicy, proving impetus for policy devlopment.
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WTO members have agreed to start negotiations on a multilateral
agreement on Competition in 2005. This has also motivated focus on
the role and significance of competition policy in a developing country
context.
Competition Policy Challenges in
SADC
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Implementation of the SADC Trade protocol has highlighted the
challenges of regional integration in SADC.
Implicit in the process of integration is a complex tension
between national and regional priorties.
In the case of competition policy, this exists in that that policy is
bounded within national jurisdictions, reflecting national prioties.
Regional integration in the form of cross-border investment and
trade activities means that competition has a national but
increasingly a regional character too.
Competition Policy Challenges in
SADC
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Privatisation is an important and competition-related issues for
SADC countries. Many SADC countries have privatised. In
some cases extensively, previously state-owned enterprises or
public utilises.
The objectives of privatisation may be articulated to include a
rationalisation of the role of government in the productive sphere
of the economy and the attraction of foreign direct investment.
In this context the competition implications of privatsation are
important.
If a private monopoly is replacing a public monopoly, how cn the
abuse of market dominance be precluded, and what will be the
relationship between competition policy and sector-specific
regulation that may apply in the case of telecommunications or a
transport sector?
Competition Policy Challenges in
SADC
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The challenges implicit in the process of regional integration, for the conduct and
implementation of ocmpetition policy, are considerable.
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As regards merger control, the impact of the merger in retail or the production of
consumer goods in South Africa, for eg, on other SADC countries could be
significant. The impact of the merger would need to be assessed.
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Regarding restrictive practices, the task of competition authorities, given their
national jurisdiction, is complicated in the assessment of restrictive practices, by
the regionalisation and globalisation of markets. Restrictive proactices usually
involve action by firms with commmercial presence in one country on the market
of another country wheter they have market presence.
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The national character of of competition law precludes the competence to
investigate or sanction firms located in another country. The benefits of
collaboration in the assessment of restrictive practices that may spill over into
other markets is however obvious.
Conclusion
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Effective implementation of competitoin policy requires substantive capacity in
both the public and private sectors. It is possible however, to devlope capacitysharing modalities which can assist especially the smaller coutnries in the
region, and also play an important role in promoting regional policy convergence
in the area of competition policy.
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The linkages between trade, investment and competition pose significant
challenges for policy makers in SADC. As the SADC region becomes more
integrated in terms not only of trade but also other cross-border economic
activities, and the region becomes more globally integrated, the importance of
competition policy, at national, regional and multilateral level increases.
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The development of markets requires effectvie intervention to ensure that
efficient and equitable outcomes are possible, and that they materialise.
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Competition policy is necessary to counter the powerful incentive to rig the
market process and skew the distribution of the benefits of trade liberalisation,
perhaps especially intra-regional trade liberalisation.
COMESA perspective on
competition policy
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Common Market for Eastern and Southern
Africa was established in 1994.
 A regional trade and investment integration
grouping comprosing 19 countries in Eastern
and Southern Africa.
 Comesa’s goal: to create an internationally
competitive economic community with high
standards of living for its people.
COMESA Membership
•Burundi
•Comores
•Congo
•Djibouti
•Egypt
•Eritrea
•Ethiopia
•Kenya
•Libya
•Madagascar
•Malawi
•Rwanda
•Seychelles
•Sudan
•Swaziland
•Uganda
•|Zambia
•|Zimbabwe
Comesa Free Trade Area (FTA)
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Comesa FTA launched on 31st October 2000.
13 Member states participating in the FTA:
Burundi
Comores
Djibouti
Egypt
Kenya
Libya
Madagascar
Malawi
Mauritius
Rwanda
Sudan
Zambia
Zimbabwe
FTA implications and the need for
Competition framework
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FTA intensified competition among economic operators; desire
to cut corners (through sub-standards goods, no labels, etc)
appeared real.
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Secretariat invoked provisions of Article 55 of Comesa Treaty
which prohibits anti-competitive behaviour before the launch of
FTA in 2000.
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In April 2000, proposed formulation of competition regulations
under Art.55.
Proposal for Regional Competition
Regulations- Re Article 55.
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Proposal was accepted in 2001 after effects of the
FTA were felt and need for safeguards and regulation
of competition became obvious.
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Formulation of regional law (regulations) took place in
six months and adoption took 2 yrs.
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Reason for delays- opposition from business
interests and low level of awareness & appreciation
among policy and decision-makers.
FTA implications and the need for
Competition framework
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To take the process forward, COMESA
embarked on extensive national consultants
and took Trade Ministers through a technical
session on merits and relevance of CLP in
economic development and regional
integration.
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Regional law finally implemented in
December 2004.
Future steps
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Setting up Regional Competition Commission;
Staffing the Commission and training its staff;
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Educating stakeholders on their rights and obligations
in relation to Regional Competition Relations.
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Ensuring anti-competitive practices are outlawed in
practice.
END
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THANK YOU