Competition policy is critical for the attainment of consumer welfare and the sustainable development goals (SDGs)
Modern Ghana, December 13, 2015
Although about two-thirds of the world’s gross domestic product (GDP) is driven by consumers, yet they are often not given the recognition and the importance they deserve, which often sees them being subjected to anticompetitive behaviour 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 during a conference organised by CUTS International at Eka Hotel in Nairobi on the 12th December 2015.
The two day conference was organised as a combination of CUTS flagship Biennial Competition, Regulation & Development Conference as well as a final conference of the project entitled ‘Competition Reforms in Key Markets for Enhancing Social & 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. It is only combined effort at regional level that is strong enough to deal with such connections.
Speaking during the same occasion, Mr Fredrick Jenny, who is the Chairperson of the OECD Competition Policy Committee, also pointed out that 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. 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.
In highlighting the findings from the CREW project, which was implemented in four countries (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/economic liberalisation can be derived fully by the citizens/country. 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 demonstrated how competition policy can be a useful tool for the attainment of SDGS. The first goal, “End poverty in all its forms everywhere” and the second goal, “End hunger, achieve food security and improved nutrition, and promote sustainable agriculture” 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 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 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 makes competition policy very relevant.
Secondly, Goal 3 is about “Ensuring healthy lives and promoting well-being for all at all ages”. However, 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.
Thirdly, competition policy can also be seen to be relevant in the attainment of goals 4 to 9 of the SDGs. Anticompetitive practices characterize private education, 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 need to be complemented by competition policy.
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