Competition Policy critical for Sustainable Development Goals

Nairobi, 12-13 December 2015

Competition Policy critical for Sustainable Development Goals

Spy Africa, December 14, 2015

Although about two-thirds of the world’s Gross Domestic Products (GDP) are driven by consumers, yet they are often not given the recognition and the importance they deserve, which often sees them being subjected to anti competitive behavior by a powerful network of businesses which controls capital.

This was said by Dr Mukhisa Kituyi, the Secretary General of the United National Conference on Trade and Development (UNCTAD) while speaking at a conference organised by CUTS International at Eka Hotel in Nairobi on the 12th December 2015.

The two day conference was organised at the behest of CUTS flagship Biennial Competition, Regulation and Development Conference as well as the final conference of the project titled ‘Competition Reforms in Key Markets for Enhancing Social and Economic Welfare in Developing Countries’ (referred in short as the CREW Project) which CUTS has been implementing since November 2012, with support from DFID (UK) and BMZ (Germany) facilitated by GIZ (Germany).

The conference’s main theme is ascertaining the relevance of competition and regulatory reforms in pursuing the recently launched Sustainable Development Goals (SDGs). Dr Kituyi pointed out that in any country, there is bound to be a connected network of business which has influence, such that national regulation might have challenges in controlling its abusive behaviour stressing that is only combined effort at regional level that is strong enough to deal with such connections.

Mr Fredrick Jenny, the Chairperson of the OECD Competition Policy Committee said while evidence has been presented on the benefits of competition reforms, there still remains some scepticism among some stakeholders about the importance of competition due to several reasons. He explained that one of the reasons why there is continued debate about the benefits of competition, even though more than 130 countries in the world have competition laws is due to the conspiracy theory, where powerful business and those with vested interest are lobbying against competition reforms as a way of protecting the gains of anticompetitive behaviour which negatively affects welfare.

Commenting on the findings from the CREW project, which was implemented in four countries namely Ghana, India, the Philippines and Zambia, the Secretary General of CUTS International, Mr Pradeep S Mehta indicated that there is value in having the right regulatory safeguards (mostly competition policy) in place to ensure that benefits of trade and economic liberalisation can be derived fully by the citizens and country.

He said although subsidies are generally a departure from normal competition principles, they can assist farmers in remote areas where the private sector might generally not be willing to participate if they are properly targeted and measures to safeguard their abuse are in place.
Mr Mehta also proffer how competition policy can be a useful tool for the attainment of SDGs. The first goal according to him is to “End poverty in all its forms everywhere” and the second goal he noted is to “End hunger, achieve food security and improved nutrition as well as promote sustainable agriculture” which Mr Mehta said can be threatened by anticompetitive practices which inflate basic food prices and make them unaffordable to the poor, thereby worsening poverty.

Abuse of dominance and cartels he disclosed are very prevalent in both developing and developed countries in the basic food sector, making competition law implementation very relevant as a tool for reducing prices which is a positive step towards poverty alleviation.

Sustainable agriculture according Mr Mehta is also threatened as there are a lot of competition distortions that can appear at different stages in the agriculture supply and value chains (seed, fertiliser, output, agro-processing etc) that can also threaten the attainment of the second goal. This, he stressed makes competition policy very relevant.

Explaining further how goal 3 can be a useful tool for the attainment of SDGs, Mr Mehta said Goal 3 is about “Ensuring healthy lives and promoting well-being for all at all ages”. He however said access to affordable medicine which is always a critical determinant of the state of health in developing countries is often compromised due to competition distortions in the pharmaceutical market which an effectively implemented competition law can address.

Competition policy according to the Secretary General of CUTS International can also be seen to be relevant in the attainment of goals 4 to 9 of the SDGs. Anticompetitive practices he said characterize private education and markets where the informal sector players are dominant (where women are mostly concentrated and thus has gender implications), energy, water and sanitation sectors. Measures done for the attainment of all these goals, Mr. Mehta said needed to be complemented by competition policy.

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