7th CUTS-CIRC Biennial Conference on Competition, Regulation and Development
DAY 1 - Tuesday, November 16, 2021
Welcome to the 7th edition of the CUTS-CIRC Biennial Conference on Competition, Regulation and Development organised by CUTS International and the CUTS Institute for Regulation & Competition (CIRC), in partnership with the Organisation for Economic Co-operation and Development (OECD), European University Institute (EUI) and Overseas Development Institute (ODI). These sessions have been organised to deliberate upon macro and micro issues to crystallise the path for an inclusive and resilient economic recovery with a focus on the global south.

Introduction
The inaugural session discussed the impacts of diminishing multilateralism on the prospects for an inclusive, resilient and sustainable post-pandemic economic recovery. It set the stage for subsequent discussions at the conference by focusing on the underlying reasons for the challenges faced by multilateralism today.
 
The discussions examined the constraints to greater multilateral cooperation in the context of trade policy, climate policy, competition policy and other regulatory areas.
 
Session Highlights
At the outset, the discussion noted that the world had been reeling under indiscriminate global impact of the pandemic. Apart from distortions in different sectors, such as healthcare, education, retail and manufacturing, there had been a severe impact on the economies of both developing and developed nations.
 
The theme for this session was primarily driven by two factors, both of which have great impact on politics, economics, and society at large. The first is increasing inequality, and the second is the issue of resilience. The panellists noted how these issues had been further exacerbated by the pandemic.
 
The scepticism about the beneficial role of trade as an instrument of multilateral economic policy today, and of institutions, such as the World Trade Organisation (WTO) was highlighted. It was also noted that in the face of pressures to advance protectionist policies, nations were resorting to various public policy measures which were adversely affecting the competition landscape. The panellists emphasised the importance of evaluating the impacts of all protectionist measures to analyse whether they genuinely achieved their stated objectives.
 
The discussions recognised that profits of digital platforms and Big Tech had skyrocketed in the past few years, particularly during 2011- 2015. More specifically, after the onset of COVID-19, an increasing online dependence has been witnessed. This dependence, coupled with the concentrated power of a few online market players, had created gatekeepers that posed entry barriers in the digital ecosystem. This market concentration led to increased profits for firms and decreased wages for workers, and also contributed to widening income inequality globally. Competition law and policy would have to play a critical role in addressing this concentration and aim to improve economic outcomes that could maximise trade on digital platforms, and develop ecosystems that could balance both innovation and consumer welfare.
 
The panellists also discussed the interplay between the notions of multilateralism and sovereignty. It was highlighted that a constraint to multilateralism was the asymmetry between sovereignty and the idea of cooperating institutionally, which could sometimes cause a breakdown in multilateral action.
 
Conclusion
The inaugural session highlighted the need for even greater multilateralism today, to tackle the issues of global commons that the world collectively confronts. A reformed multilateralism considers the diverse views and needs of global community, is the need of the hour. Interdependence is a defining feature of today’s world, and it needs shared values and rules that reflect all voices. A failure to revitalise multilateralism risks fragmentation of rules and suboptimal, inadequate response to global challenges. 
  
Way Forward
The session highlighted that trade is only one part of the larger pathways to globalisation that have caused inequality. Governments at all levels, assisted by a robust civil society operating within a multilateral, rules-based framework need to cooperate to tackle the challenges arising from iniquitous globalisation.
 
A running theme of the discussions was recognising that international cooperation in the form of multilateral efforts was the most effective way to respond to existing and emerging global challenges.
 
Panellists

  • Welcome Address by Pradeep S Mehta, Secretary General, CUTS International
  • William E Kovacic, Professor, Law and Policy, George Washington University
  • Isabelle Durant, Deputy Secretary-General, United Nations Conference on Trade and Development (UNCTAD)
  • Arancha González Laya, Former Minister of Foreign Affairs of Spain
  • Rathin Roy, Managing Director, Research and Policy, Overseas Development Institute
  • Sangeeta Verma, Member, Competition Commission of India
  • Moderated by Nitin Desai, Former Under-Secretary-General for Economic and Social Affairs, United Nations

Introduction
The pandemic has hit small and medium firms and the big firms seem to have gained from it. This has increased the market power in various sectors, especially the digital sector. At the time when job creation is a prime agenda for governments around the world, such growing market power and market concentration can pose big hurdles in achieving this, consequently adding to the growing economic inequality. Therefore, an effective competition policy is important to ensure that growing market power and concentration do not result in rising inequality. The panellist raised the question of the need for government intervention and stated that it is important to enforce competition policy.
  
Session Highlights
The session underlined the importance of competition law and policy in building an inclusive and resilient economy. While competitive economies are resilient economies, emphasis also needs to be given to make the economy more inclusive serving the whole population. Growing the pie is not an inclusive approach but equitable distribution is needed to make the economy more inclusive. Further, competition law is often heavily weakened in periods of economic downturns, which leads to the establishment of new monopolies. As excessive market powers harm growth and innovation, it also results in a decline of business dynamism, entry, exit and entrepreneurial efforts. Thus, the competition policy framework needs to be made more robust so that the economy can become inclusive and resilient.
 
Rising market power has made monetary and fiscal policies less effective. In such a scenario, though, competition law and policy cannot solve every societal problem in a country, yet, can be used to prioritise the welfare of vulnerable groups like low-income groups. For instance, a bread cartel may be prioritised over a luxury handbag cartel even if the total welfare loss is equal.
 
As the experience and resources of each country are different, rather than having an overarching competition design, a country-by-country approach should be taken for designing and implementing the competition law and policy. This may be done by not adopting a one size fits all approach but by adopting a tailored approach for countries individually.
 
COVID-19 has increased digitalisation in the economy. Competition policy for digital markets needs to look at unique aspects that shape competition, including network effects creating scale advantages, economies of scope, reliance on large volumes of user data, switching costs for consumers, and intellectual property rights. Digitalisation may have helped in the economy’s recovery to an extent, but the nature of competition is changing with digitalisation and digital concentration has effectively increased. There may also be other risks from economic concentration unrelated to competition such as systemic risks, rent-seeking behaviour. However, competition agencies should not be agitated about more or less competition, but understand changes in its nature.
 
The panellists highlighted that the network effect in a digital setup leads to rising marginal benefits and information goods lead to declining marginal costs in the market. Also, data collection by dominant firms differs from the reality of the economics of data markets. Market power, especially after the pandemic, is on the rise and competitive intensity may be falling in the digital sector. A whole-of-government approach may be followed to ensure inclusive economic growth. For this, advocacy may play an important role for the competition authority and other regulators to build positive relationships with market players. Further, competition policy should include public interest criteria which consist of concerns for small businesses, among other things. Several jurisdictions, such as Botswana, Eswatini, Kenya, Namibia, Zambia, Australia have been following public interest criteria within the competition law itself.
 
Conclusion
The session highlighted the change in the market due to increasing concentration and market power. In the most traditional areas of competition law, theories are settled but with digitalisation, people are still working on finding answers to competition issues. Therefore, competition authorities need to take a proactive approach and engage with stakeholders such as market players and the government itself to make the economy more inclusive and resilient. Governments, with advice from competition authorities, can build a regulatory framework which is more inclusive. The competition policy should also complement the fiscal and monetary policy and align itself with the goal of the government.
 
Way Forward
It is important not to have regulatory activism but rather, regulations must be flexible, adaptable and sustain both consumer and producer welfare. There is a need to form a wider regulatory commission and fewer inter-sectoral regulatory commissions. With this, there is a need for flexibility among the working of regulatory bodies. A vigilance mechanism and regulations should be introduced to prevent abuse of dominance and algorithmic collusions in the market. Competition authorities can set up a separate branch for small businesses and Micro, Small and Medium Enterprises (MSMEs) to ensure complete inclusion. At the same time, it is important to identify pro-competition measures according to the evolving digital markets.
 
Panellists

  • Daniel Schwarz, Senior Associate, Clifford Chance and Ex-IMF Counsel
  • Nicolas Petit, Professor, European University Institute
  • Lynn Robertson, Competition Expert, OECD
  • Thula Kaira, Consultant, Competition and Regulatory Law and Policy, AB & David and Former CEO, Competition Authorities of Botswana and Zambia
  • Geeta Gouri, Former Member, Competition Commission of India
  • Moderated by Allan Fels, Professorial Fellow, University of Melbourne

Introduction
The session discussed the importance of equitable access to COVID-19 vaccines to facilitate economic recovery and growth. Although border restrictions affecting medical supplies have been rolled back, new forms of impediments such as strong intellectual property rights (IPRs) and lack of technology transfer have taken their place. This discord between intellectual property and access to public health is embodied perfectly by the status quo at the WTO, India and South Africa led proposal for a temporary waiver of obligations under the Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement finds many takers but also a few key opposers.
 
The panellists highlighted how a holistic approach covering areas of intellectual property (IP), transfer of technology and competition policy could create an ecosystem that can resolve the current health crisis and enhance the capacity to tackle inevitable epidemics/pandemics in the future.
 
Session Highlights
If the COVID-19 pandemic highlighted the grave extent of worldwide inequality, the global response has only exacerbated existing gaps. The panellists deliberated upon the lack of traction received by equity based collective mechanisms like the WHO COVID-19 Vaccines Global Access (COVAX) facility and COVID-19 Technology Access Pool (C-TAP) and the lukewarm use of voluntary initiatives like licensing to increase access to vaccines.
 
Pharmaceutical companies have blocked the access to intellectual properties and manufacturing know-how for vaccine development through the calculated use of regulatory arbitrage and creative legal argumentation. However, it must be emphasised that the unprecedentedly swift materialisation of these very technologies was made feasible only by the overwhelming support provided by governments through heavy subsidisation and premarket commitments. Thus, a refusal to collaborate strikes as doubly unjust. In the opinion of various panellists, COVID-19 vaccines must be considered as a global public good. Not only have they been created through institutional support, but they must also be protected by the same.
 
There is a divide at the WTO on the best path forward, a temporary waiver of TRIPs obligations (India and South Africa) or more emphasis on TRIPs flexibilities, such as compulsory licensing (European Union). While there was consensus among panellists that TRIPs must be a part of the solution and not the problem, they warned against complete reliance on a TRIPs based solution as,

  • First, existing flexibilities in TRIPs come with their own set of caveats, coercions, and bureaucratic cartwheels, and
  • Second, unlike pharmaceuticals for HIV AIDS, the COVID-19 vaccines are not easily re-engineerable.
Thus, without commensurate focus on the transfer of technologies and the strengthening of logistical capacity, even the most liberal use of compulsory licensing or a complete IP waiver will fail to make vaccines accessible.
 
The panellists lamented the lack of a global competition framework that could have prevented regulatory arbitrage by pharmaceutical companies or IP owners. Competition laws can play an important role in safeguarding public health by limiting the abuse of IPRs. However, an overall lack of enabling legislative frameworks, insufficient harmonisation of domestic rules and limited resources for enforcement hinder developing countries from utilising competition policies to attain their regulatory objectives.
 
In this regard, cooperation among competition regulators to ensure equity in pricing of products and stricter conditionalities for technology transfer, particularly when technology was developed using public funds, become a sine qua non for a sustainable health policy. If we want to facilitate technology transfer, we need a holistic and cohesive ecosystem of regulations. What is missing from the trilateral initiatives of the World Health Organisation (WHO), the World Trade Organisation (WTO) & the World Intellectual Property Organisation (WIPO) is a pillar dedicated to competition. The United Nations Conference on Trade and Development (UNCTAD) Intergovernmental Group of Experts on Competition Law and Policy can serve as an excellent platform for harmonising domestic policies under a global competition framework. Cooperation at other fora, including BRICS as well as the WTO, can also be accelerated.
 
Vaccine access is also tied up with issues of logistics and distribution management. International institutions such as the World Bank, the WHO, and other crisis-based organisations with resource personnel on the ground can play a crucial role.
 
Conclusion    
The inevitable challenges posed by rising variants and existing inequity in vaccine access threaten the nascent economic recovery. Rationally and morally, it is imperative for the international community to overhaul the existing legal and economic infrastructure for vaccine development and other public health resources.
 
Way Forward
New rules encapsulating lessons from the gravely iniquitous response to the present pandemic are required to create an ecosystem resilient enough to deal with similar disasters in the future. The growing monopoly in the pharmaceutical sector, if unaddressed, will evolve from an economic threat to an existential one. Considering that common losses brought by confrontation are always more significant than the expected gains of interested parties, it is in the long-term interest of all to facilitate cross-border cooperation in regulating markets. Balancing exclusive rights with a dynamic antitrust policy is indispensable for achieving equity in access to healthcare.
 
Panellists 
  • Bernard Hoekman, Director, European University Institute
  • Ellen 't Hoen, Director, Medicines Law & Policy
  • Alexey Ivanov, Director, BRICS Competition Law and Policy Centre
  • Hardin Ratshisusu, Deputy Commissioner, Competition Commission of South Africa
  • Moderated by Mohan Kumar, Chairman, Research and Information System for Developing Countries
Facebook
Twitter
Link
YouTube
LinkedIn
We will be grateful if you could re-circulate.
Please send us your feedback at dks@cuts.org and aks@cuts.org
CONSUMER UNITY & TRUST SOCIETY 

Jaipur • New Delhi • Chittorgarh • Kolkata • Hanoi • Nairobi • Lusaka • Accra • Geneva • Washington DC

www.cuts-international.org

Copyright © 2021 CUTS International, All rights reserved.