Competition Reforms in Key Markets for Enhancing Social & Economic Welfare in Developing Countries (CREW Project)

CUTS InternationalOpening Meeting in India28th May 2013, New Delhi (India)Overview of the Project & Issues for Discussion (Opening Meeting)Competition Reforms in Key Markets for Enhancing Social & Economic Welfare in Developing Countries

Outline2IntroductionAbout the ProjectPhase-I ActivitiesIssues for Discussion (Opening Meeting)

3I. INTRODUCTION2. What is Competition Reforms?5[Competition reforms comprise of the following]

Enabling government policies designed to facilitate a level playing field (fair competition) in a sector

Well-designed regulatory framework, adequately resourced regulatory institutions & effective actions for promoting fair competition in a sector

Well defined competition legislation and effective enforcement mechanisms

6II. ABOUT THE PROJEC T

Competition Reforms in Key Markets for Enhancing Social and Economic Welfare in DCs (CREW Project)1. Goal & Objectives7GoalTo better demonstrate measurable benefits from effective competition reforms in DCs, for ensuring long-term support for competition

ObjectivesEnhance understanding of benefits from competition reforms in DCs (consumers & producers)Develop & test a methodology to assess efficacy of competition reforms in benefitting consumers and producers in specific marketsAdvocate to key actors (National & International) for greater support to competition reforms in key marketsSustain momentum on competition reforms and take it forward 2. Outputs & Outcome8OutputsDocumented evidence of benefits from competition reforms in key marketsDialogues involving multiple stakeholders on benefits of competition reforms in DCsStrategy for capacity building of DC competition agencies and sector regulatorsFramework (Tool) for monitoring and evaluating the process of competition reforms in DCsDemand from elsewhere (other sectors and/or countries) for similar exercise

Outcome Greater attention and impetus for competition reforms in key DC markets resulting in consumer and producer benefits

3. Implementation Plan94 Countries: Ghana, India, The Philippines & Zambia2 Sectors: Staple Food & Passenger Transport

Phase I: Assess implications of competition reforms in specific markets; identify causes of existing consumer & producer concerns RESEARCH & CONSULTATIONSPhase II: Design a composite methodology to quantify (actual & potential) benefits of competition reforms using existing (ex-post & ex-ante) methods DESIGN & CONSULTATIONSPhase III: Test the veracity of this methodology in micro-locations (four project countries); and use results for advocacy ADVOCACY & PUBLIC EDUCATION10III. PHASE-I ACTIVITIES1. Steps & Milestones in Phase-I11Preparatory Work in Countries (partners, stakeholders, literature, information)Review of sectoral reform (Policies, Legislation, Statutory Instruments and Sectoral programmes)Stakeholder Mapping Fact Finding Exercise Outline of Diagnostic Country Report (DCR) Constitution of NRGFirst NRG MeetingDiagnostic Country Report draftSecond NRG MeetingDiagnostic Country Report final

2. Indicators of Consumer Welfare12 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 customersChoice: New firms/products enter otherwise concentrated markets Price: Prices are reduced in a contestable marketTime savings by consumers3. Indicators of Producer Welfare13 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 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 Level-playing field: principle of competitive neutrality observed Transparency in market: Well laid out policies and predictable implementation processes (market regulators)

4. Consumer & Producer Welfare Defined (Sectors)14STAPLE FOODPASSENGER TRANSPORTCONSUMER WELFAREAvailability of good quality staple food at right prices for ordinary consumersAvailability of good quality transport services to ordinary consumers at right prices within city (intra-city) to get to workplace, markets, college/university on a daily basis & also on busy inter-city routesPRODUCER WELFAREParticipation of private entities in procurement, storage and distribution of staple food and how they benefitRight price and fair terms for producers (and their groups) in : both inputs and outputs marketsEase of entry of new players (an operator) in a specific geographic market for providing such servicesFare and terms of service in case of Inter-city Transport services for small traders travelling to nearest market town to sell their produce5. Components of DCR(STAPLE FOOD & PASSENGER TRANSPORT)15Identify elements of competition reforms (policies, legislation, statutory instruments and sectoral programmes) to be examined in each sectorIdentify institutions with the responsibility to carry out these reforms assess performance & analyse challengesAssess implications of these reforms on consumers and producers benefits and losses Highlight concerns that consumers and producers still have in spite of these reforms and isolate factorsEstimate how addressing some of these causes can help overcome these concerns16IV. ISSUES FOR DISCUSSION (OPENING MEETING)1. Issues in State Selection (Staple Food)17Laws and regulations implemented at the state level (state subject) so important to identify states for CREW researchComponents of the supply chain (state level experience and impact of reforms) Procurement, Storage and Marketing & DistributionKey elements of reforms across the supply chain to be look at:Procurement: prices to producers (MSP programme), PDS, buffer stockStorage: private participation and regulation, warehouse receiptsMarketing & Distribution: agriculture marketing (APMC reforms and state reactions)

2. Suggestion about possible states (Staple Food)18Products to be considered vis--vis states: Wheat & Rice to help determine states to be selected for studyA number of states have done well, overall w.r.t to reforming agriculture sector why did they succeed and achievements vis--vis consumer and producer gainsAssessment of reasons for success & failures in states to derive lessons

Segment of Supply ChainSuccessful statesNot so Successful statesProcurement PunjabUttar PradeshStorageRajasthan, Madhya PradeshOrissaMarketing & DistributionJharkhandBihar3. Issues in State Selection (Passenger Transport)19Bus transport offers interesting insightsBoth inter-city and intra-city elements of bus transportDifferent states adopted different models in bus transport (public, private and public-private) and a comparison across these models can provide useful lessons in CREWElements of consumer welfare: price setting, passenger safety, quality and reliability of service and routing (demand-supply gap)Elements of producer welfare: ease of entry in the market, ease of movement of small traders using passenger transport

4. Suggestion about possible states (Passenger Transport)20 Segregate list of states based on the model of service provision: Public (largely), Private (largely) and Public-Private and choose states/cities

Suggested sample:Inter-city: 2 routes in each of the selected 3 statesIntra-city: 3 cities

Model of Service ProvisionINTER CITYINTRA CITYPrivate Orissa, MPMangalore, Ahmedabad, Baroda, Bangalore, etc.Public Gujarat, Haryana, PunjabChennai, New Delhi, etc.Public -PrivateTN, Rajasthan, Karnataka, WB Jaipur, Kolkata, Indore, Bhopal5. Key Questions (Staple Food)21What benefits have accrued to producers from the MSP reforms undertaken in the states?What are some of the problems that the states are facing vis--vis MSP reforms?How has been the experience of private players been in providing warehousing in the states?What arrangements have worked well in ensuring PPPs in this area?What are some of the outstanding challenges?Has APMC reforms in states taken into consideration consumer welfare (i.e., provision of quality staple in low prices)?What are the likely implications on private entities in states adopting APMC reforms? What are some of the good practices adopted by states?

6. Key Questions (Passenger Transport)22What models of PPP have been used by states in passenger transport and how have they benefitted consumers & producers?Is there a scientific and logical method of fare determination? How transparent is the process?What efforts have been made at the national/state levels to improve passenger safety and what are the results?Can a method be developed for charging small traders the right tariffWhat are some entry barriers in intra-city and inter-city transport in the states? What factors have contributed to them?On inter-city routes what is the level of choice that passengers have?What are some of the good practices in the states?

23Thank You!

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