IMPLEMENTATION OF COMPETITION LAW

- Experiences from Botswana

by

Thula Kaira - CEO

CUTS/IFC/BICF Seminar on Moving the Competition Law Agenda forward in Bangaladesh Dhaka, 2 - 3 July 2012

PRESENTATION OUTLINE1. Introduction

2. Rationale of Competition Policy and Law

3. Experiences from Botswana

4. Independence/Autonomy

5. Conclusions

1. INTRODUCTION

The Government of Botswana through its Cabinet adopted the National Competition Policy for Botswana in July 2005

The Policy preceded by an Economic Mapping Survey that noted levels of unemployment, increasing dominance of foreign firms in Botswana’s economy

1. INTRODUCTION cont’d

The EMS also highlighted:

The need to safeguard and

promote the growth and development of citizen-owned SMEs;

and

Other Government policy initiatives

such as the diversification of the

economy

1. INTRODUCTION cont’dArising

from the Policy, the Government through

its National

Assembly/Parliament

enacted the

Competition Act in

2009 whose

objectives in its

preamble are to:

Establish the Competition

AuthorityOutline its mandate

Regulate competition

in the economy

2. RATIONALE FOR COMPETITION LAW

• Comp.law controls selfish business gains & consumer exploitation; strives to facilitate broad-based wealth creation by ensuring & provoking open, fair markets e.g questioning contracts reviewing commercial & administrative barriers to domestic trade (just as trade law tries to do the same in intl trade)

• EG long-term exclusive contracts; IPRs; M&As leading to monopolisation, etc

RATIONALE cont’d

Markets are susceptible to be captured by greedy business

entrepreneurs to the detriment of other possible beneficiaries and

hence the need for a control system

UN SET of Principles & Rules on Competition

… States should, at the national level or through regional groupings, adopt, improve and effectively enforce appropriate legislation and implementing judicial and administrative procedures for the control of restrictive business practices, including those of transnational corporations… • … States, in their control of restrictive business practices, should

ensure treatment of enterprises which is fair, equitable, on the same basis to all enterprises, and in accordance with established procedures of law. The laws and regulations should be publicly and readily available

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3. EXPERIENCES FROM BOTSWANA Botswana is a member of the international

community of trading nations and its ability to access foreign markets requires that its firms are competitive. Competition precludes competitiveness (eg SACU FTA, SADC, EPAs…)

As Bangaladeshi embarks on a process of developing its law, there is need to identify and maintain a support base for a highly misunderstood, to include:

EXPERIENCES … cont’d

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Policy Makers/Politicians

Technocrats in Govt

Sector Regulators

Big Business

The Press

CSOs/Academia

Consumers

Small Business

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EXPERIENCES … cont’d Identification of the ‘friends of competition’

should ideally follow this order:The Policy Makers (for funding purposes)The technocrats (for regulations to be processed)The media (to begin to understand the concepts)

Ultimately, a small business and consumer base is the ultimate power base, but it depends on their proper understanding of the law (hence need for sustained advocacy)

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EXPERIENCES … cont’d Recognise Govt is the owner of the Competition

Policy and Law – thus its agents entrusted with implementing this law must take Govt policy into acccount.

In Botswana, we have had to:Master Govt developmental visionPlay an impartial advisory role (advocacy) to

Govt where there may be conflicts with policyTake into account ‘overriding’ public interests

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EXPERIENCES … cont’d

THE COMPETITI

ON AUTHORIT

Y IS

AGovt

Agency

Guided By

Other over-arching

National Policies

Accountable

to Govt through

the Minister

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EXPERIENCES … cont’d WHILE the law may be in the abstract for

most people, the effect of the decisions of a CA are usually self-evident (eg where a merger is prevented and loss of jobs occur) – theories dont sooth PAIN…

Developing countries such as Botswana have thus inculcated certain public interest considerations to be taken into account when dealing with competition matters, inter alia:

Maintain lower prices, higher quality or greater choice for consumers

Promote or maintain efficient production, distribution or provision of goods & services

Advance the strategic or national interest of Botswana in relation to a particular economic activity;

Provide social-benefits which outweigh the effects on competition;

EXPERIENCES … cont’d

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EXPERIENCES … cont’dOccur within the context of a citizen

empowerment initiative of Government;Further other national development

programs In this context, we have approved or rejected

mergers for instance based on P.I issues The Act also has exemptions (except for

cartels) based on P.I considerations

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EXPERIENCES … cont’d The State has limited the extent of application of

the law to sectors where there is a statutory monopoly (& this has to be respected by a CA):Botswana Meat CorporationBotswana Power CompanyAir Botswana (until recently)Botswana Telecomm. Company (on fixed

landline)Botswana Rail

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EXPERIENCES … cont’d DONT take on everything at once –

priortise eg:Contract farming arrangements in the

agriculture sectorRole of middle-men in excessive or

predatory pricing of agriculture goodsIndustries dominated by the same

firms (long term view)Protected SOEs

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4. INDEPENDENCE/AUTONOMY?Court of Appeal

High Court

Competition Commission

Minister of Trade

Competition Authority

INDEPENDENCE…cont’d There is need to ensure that the

investigation is separated from the adjudication in effect and not just on paper

Structural autonomy is relevant where there is a low culture of the rule of law

Accountability on use of funds and reporting to Parliament through an Annual Report are important

Need to have strict code of conduct CHE GUEVARA: ‘He who receives gifts

loses his freedom’…20

5. CONCLUSIONS Competition Policy should be carefully

handled because it easily attracts well coordinated, connected, resourceful and more powers enemies but weaker and fragmented friends

A competition law that does not make sense to policy makers and general citizenry will not be funded

Ideal expertise must be attracted, motivated and retained to develop advocacy & enforcement skills

Avoid quoting too many theories:

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JUST DO IT!

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THANK YOUFOR FURTHER INFORMATION:

Thula Kaira - CEOCompetition Authority

Plot 50664, Fairgrounds Office ParkPrivate Bag 00101

Gaborone, BOTSWANATel: +267 393 4278Fax: +267 312 1013

Email: Thula.Kaira@competitionauthority.co.bw Thulasonikaira@yahoo.com

FACEBOOK: Competition Authority – BotswanaTwitter: CompetitionBots