Enhancing Social & Economic Welfare through Competition Reforms in Developing Countries

Competition Reforms in Key Markets for Enhancing Social & Economic Welfare in Developing Countries CREW Project: Investigation & Operational Plan PROJECT PLANNING MEETING 8-9 November 2012 Bonn, Germany

Outline of the Discussions Outline of the Discussions Introduction About the Project Research, Advocacy & Capacity Building Management & Programmatic issues 2

I. INTRODUCTION 3

Meeting Agenda Meeting Agenda Day I (8th November 2012) Welcome Introduction of Participants Purpose of Meeting Discussion on Substantive Issues Research (2hrs) Light Lunch Discussion on Substantive Issues Advocacy & Outreach (1.5 hrs) Tea Break Capacity Building (1.5 hrs) Recap & Close of First Day 1030hrs: 1040hrs: 1050hrs: 1100hrs: 1300hrs: 1330hrs: 1500hrs: 1530hrs: 1700hrs: 4

Meeting Agenda Meeting Agenda Day II (9th November 2012) 0900hrs: Discussions on Programmatic Issues Reporting & Management Donor Coordination Project Advisory Committee (Composition, Role & Engagement) 1100hrs: Tea Break 1115hrs: Discussions on Programmatic Issues Technical Oversight (Sub-Committee, Advisers, PAC) 1300hrs: Light Lunch 1330hrs: Discussions on Programmatic Issues Plan for Inception Phase 1500hrs: Recap & Closing 5

Participants Participants GIZ (Germany) Johanna Speer, Eiko Kauffmann & Sebastian Gilcher DFID (UK) - Miguel Laric CUTS International - Pradeep S Mehta, Rijit Sengupta, Cornelius Dube & Julian Mukiibi Project Advisers - Fred Jenny & Shyam Khemani Others - Representative of DIE, Germany 6

Purpose of the Meeting Purpose of the Meeting Harmonise implementation process involving all actors Highlight key substantive issues Discuss certain programmatic components Identification of the project countries Discussions on possible sectors: criteria Discuss the Operational Plan for the Inception Phase Enhance familiarity between the project team and donors Sign the Contract(s) 7

II. ABOUT THE PROJEC T 8

CREW Project CREW Project Goal & Objectives Goal & Objectives Goal To better demonstrate measurable benefits from an effective competition regime in DCs, for ensuring long-term support for competition reforms Objectives Enhance understanding of benefits from effective competition regimes in DCs Develop & Test a Methodology to assess efficacy of competition reforms in benefitting all Advocate to key actors (National & International) for greater support to competition reforms in DCs Sustain momentum on competition reforms and take it forward 9

CREW project CREW project Outputs & Outcome Outputs & Outcome Outputs Documented evidence of benefits from competition reforms in key markets Dialogues involving multiple stakeholders on benefits of competition reforms in DCs Strategy for capacity building of DC competition agencies and sector regulators Framework that guides the process of competition reforms in DCs Demand from other countries for similar exercise Outcome Greater attention and impetus for competition reforms in key DC markets resulting in consumer and producer benefits 10

CREW Project CREW Project - - Implementation Implementation 4 Countries: 2 Asian & 2 African 2 Sectors: High impact on the poor Phase I: Phase I: Identify indicators and enablers of an effective competition regime (Diagnostic report) Phase II: Phase II: Develop Framework for Competition Promotion (FCP) for the 2 sectors Phase III: Phase III:Apply sectoral FCPs in micro-locations in 4 project countries 11

CREW Project CREW Project Caveats Caveats It is not a project only about competition enforcement, it is much more comprehensive in scope It will not measure impacts of competition on producers and consumers Activities will be restricted to 4 project countries and 2 sectors Uptake of the exercise in other countries would depend on interest of beneficiaries 12

III. KEY PROJECT ELEMENTS 13

Effective competition reforms process: Effective competition reforms process: tracing the pathway tracing the pathway (Theory of Change) (Theory of Change) Foundation: Consensus for reforms Facilitation: Reforms are planned Action: Reforms undertaken & Political Economy issues addressed Outcome: Policies refined, enforcement and revenue gains Result: New products/services enter markets and offer more choices at low cost to consumer Goal: Social and Economic welfare Illustration 14

Project Phases Project Phases Phase I Indicators for measuring benefits of competition (countries) Enabling (critical) factors Phase II Development of FCPs (2 sector) 4 Steps Phase III Application of FCPs (micro-locations in 4 countries) - Research (market studies, competition distortion) - Advocacy - Capacity building - Media Outreach - Additional Activities (RECs, other sectors) 15

Project Countries Project Countries: Criteria for Selection : Criteria for Selection Presence of a functional competition law Presence of an active competition enforcement agency Local (research and advocacy) institutions with orientation on competition and consumer protection issues 2 countries each from the regions: Africa and Asia One country in each region of DFID s interest One member state each of SADC and ASEAN Electricity as one of the two sectors CUTS experience of having implemented an earlier project CUTS confidence of implementing the activities 16

Criteria for selecting Criteria for selecting Sectors Sectors - - discussions discussions High impact on the poor Essential goods and services Availability of data Existence of a sector regulator Donor interest Etc 17

Critical issues in Critical issues in Research Research Indicators of benefits from competition (Consumers & Producers) - Identifying the indicators - Measuring the indicators (qualitative & quantitative methods) - Creating a comprehensive framework Existing evidence, research findings, approaches/methods Selecting Project Countries criteria Discussion on criteria for selecting sectors Availability of data in project countries Local research capacity International expertise 18

Measuring Measuring Indicators Indicators to assess benefits to assess benefits Method - A INDICATOR-1 Method - B BENEFITS Method - C INDICATOR-2 Method - D Method - E INDICATOR-3 Method - F Methods = Qualitative + Quantitative 19

Benefits Benefits of competition reforms for Consumers of competition reforms for Consumers (Indicators) (Indicators) Access: Goods and services reach consumers in areas where they were not available earlier Quality: Quality of goods and services enhanced by firms to attract customers Choice:New firms/products enter otherwise concentrated markets Price:Prices are reduced in a contestable market 20

Benefits Benefits of competition of competition reforms reforms for Producers for Producers (Indicators) (Indicators) Level-playing field:principle of competitive neutrality is observed Access to essential services: firms can easily access infrastructure networks, etc. Free movement of goods & services: Mobility not affected by policies, practices (inputs & outputs) Predictability of regulatory actions: Legislations enforced by autonomous yet accountable institutions 21

Benefits Benefits of competition of competition reforms for Producers (Indicators) (Indicators) reforms for Producers Cost savings: Effective implementation of strategies to reduce costs, e.g. improved application of ICT tools Fair market processes: Easy entry and exit in markets; considerable ease of doing business Transparency in market: Well laid out policies and predictable implementation processes (market regulators) 22

Existing Existing Evidence Evidence & applicable & applicable Methods Methods Research findings Japan (2001) - positive effects of competition on industrial growth South Korea (2003) - competition reforms a remarkable turning point Tanzania (2004) - competition increased firm-level productivity Jordan (2005) impact of concentration & barriers on productivity Egypt (2005) liberalisation of market leading to productivity gains Australia (2005) - AU$ 20 billion gain in real GDP from NCP International experience Relevant organisations (research organisations, international donors, IGOs, international organisations) Useful existing approaches Available data (country and sector level) 23

Enforcement Enforcement & Advocacy & Advocacy Experience Experience Consumer benefits Collective price fixing by Cambodian boaters (2005) Cartelisation in city bus service in Nepal, Uganda (2005) Concerted practice w.r.t interest rates among Namibian banks (2006) Abusing dominance in Mauritian milk sector (2007) Lack of competition in mobile phone market in Togo (2010) Producer benefits Orange monopoly in Indonesia affecting farmers (1991) Price-fixing in auctioning of tobacco in Malawi (2005) Relieving cotton farmers from abusive practices in Zambia (2006) Highlighting challenges for SMEs in Namibia (2006) 24

Application of FCPs: Application of FCPs: Advocacy & Outreach Advocacy & Outreach Impact of ACPs on producers, consumers Advocacy related to competition distorting policies Parliamentary outreach and discussions Government-Business Forum Media (information) campaign 25

Application of FCPs: Application of FCPs: Capacity Building Capacity Building Training Workshop for CAs and Sector Regulators - Enhance enforcement capacity (based on market studies) - Highlight need for coordination of actions (CA + SR) National Orientation Workshop (other sectors) - Expanding support for competition reforms - Better buy-in (other sectors) 26

IV. MANAGEMENT & PROGRAMMATIC ISSUES 27

Key issues: Key issues: Development partners Development partners Role Propose PAC members Guide project implementation process Participate in internal review Involve closely with external evaluation Stock-take project progress, periodically Act in coordination Engage country-offices in project countries/region Involve other donors & IGOs Other donors to join in supporting CREW subsequently 28

Key issues : Key issues : Development partners Development partners Reporting & Management Donor Coordination Reporting arrangements GAANT Chart Operational Strategy Note (OSN) Budget Amount Value for Money (VfM) indicators: (i) Admin expenses (travel & OH) as % of total expenses (phase- wise) (i) Admin expenses (travel & OH) per output or country (phase- wise) (iii) Programmatic expenses (research, validation and application) as % of total expenses (phase-wise) 29

Key issues: Key issues: Technical oversight Technical oversight Advisers Two Advisers (Shyam Khemani & Fred Jenny) Point out relevant techniques, methods Guide in developing ToRs of reports, etc. Advise on sources of useful information Secure useful reports, data Help draft and re-draft parts of reports Play an active role in outreach Get involved in capacity building activities Associate Organisation Draf tthe background paper Assist in preparing sectoral FCPs 30

Key issues Key issues: : Project Project Advisory Advisory Committee Committee Composition: International experts, practitioners from regions, international organisations, donors, RECs, etc. Role Point sources of useful information (techniques, methods, data ) at country/sector levels Quality control of project reports, briefs, etc. Strategic advise (advocacy & outreach) Finalisation of project countries (4) Advise for choosing sectors (2) Address challenges in implementation Get involved in capacity building 31

Key issues Key issues: : Project Advisory Committee Project Advisory Committee Meetings & Interactions (Project Team) Physical meetings once a year (CREW meetings) Meetings on sidelines of international conferences (OECD GCF, UNCTAD IGE, ACF, etc.) SKYPE meetings (bi-annual) Quarterly reports and feedback Any other possibilities 32

Plan for Inception Phase Plan for Inception Phase Planning Meeting Drafting the Operational Strategy Note (OSN) Identification of PAC members ToR of Project Adviser(s) Identification of Project Associate Organisation (PAO) Drafting of background paper by PAO, Measuring impacts of competition reforms : suggested approaches & methods Inception Meeting in February 2013 (Nairobi, Kenya) Identification of sectors 33

Any other issues Any other issues 34

Thank You CUTS Team Beginnings are always exciting! 35