Brief Overview of the CREW Project

Rijit Sengupta

CUTS InternationalCREW Project Inception Meeting

13-14 March 2013, Jaipur (India)

Outline of Presentation

I. Background and Introduction- Genesis- Competition reforms- Why CUTS interest?- Making competition regimes effective

II. About the CREW project - Goal & Objectives- Outputs & Outcome- Implementation- Caveats

2

A story from Kenya: Cane farmers laud increased competition in sugar sector

3

I. Genesis – a felt need

Competition can promote consumer and producer/business welfare – not much doubt

Competition not an end in itself, but a means for achieving developmental goals

Presence of competition law not adequate, a comprehensive approach necessary - competition reforms

DCs suffer from implementation challenges:

- Government support often meager

- Limited stakeholder understanding & support

- Development partners’ priorities

- Etc.

Implementation key to linking competition with developmental gains

4

II. Competition reforms – conceptual clarity

5

Competition reforms = A + B + C

A: Enabling government policies that promote competition in markets

B: Appropriate regulatory framework, institutions and actions for promoting competition in sectors

C: Well defined competition legislation and effective enforcement mechanisms

III. Why did CUTS get interested?

•How to better demonstrate positive impacts of competition reforms on DC consumer & producers? •Is there a way to isolate such benefits of competition? •Is there an way to communicate with key decision makers?

6

IV. Existing evidence & experience

Studies/Evidence

Japan (2001) - positive effects of competition on industrial growth

S. 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

Mexico (2008) – liberalisation (basic goods) benefit consumersOthers

Enforcement experience

Regulatory enforcement (including competition enforcement) benefits producers/suppliers and protects consumers – Many cases

7

VI. CREW Project – Goal & Objectives

Goal

To better demonstrate measurable benefits from effective competition reforms in DCs, for ensuring long-term support for competition

Objectives

Enhance understanding of benefits from effective competition reforms in specific DC markets

Develop & Test a methodology to assess efficacy of competition reforms in benefitting consumers and producers

Advocate to key actors (National & International) for greater support to competition reforms in DCs

Sustain momentum on competition reforms and take it forward in DCs

8

VI. CREW project – Outputs & Outcome

Outputs

Document evidence of benefits in key markets

Dialogue involving multiple stakeholders on benefits

Strategy for capacity building of competition agencies

Framework that guides 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

9

VI. CREW Project - Implementation

4 Countries: 2 Asian & 2 African

2 Sectors: High impact on the poor

10

Phase I: Identify ‘indicators’ and ‘enablers’ of an effective competition regime (Diagnostic report)

Phase II: Develop Framework for Competition Promotion (FCP) for the 2 sectors

Phase III: Apply sectoral FCPs in micro-locations in 4 project countries

VI. Programme Logic (Phase-I)

Background Paper

11

Two Sectors (& Four Countries)

1st NRG Meeting

Outline of DCRs(a)Degree and nature of competition (markets): CHECK-LIST OF COMPETITION CONCERNS(b)Identification of Consumer & Producer benefits/losses: PROBLEM IDENTIFICATION(c)Enabling and/or Opposing factors: STRATEGIC FINE-TUNING

Draft DRCs (4)

2nd NRG Meeting

Distil Commonalities (each sector)

Discussion Paper

(a) INDICATORS of benefits of competition reforms for consumers and for producers;(b) Evolving a common methodological framework(c) Selection of Methods and Tools (country/sector specific)

VII. Benefits of competition reforms for Consumers

12

Price: Prices are reduced in a ‘contestable market’

Access: Goods and services reach consumers in areas where they were not available earlier

Quality-Price ratio: High quality goods and services available for low prices for consumers (value for money)

Choice: New products enter otherwise ‘concentrated’ markets

Time Savings: Amount of time saved by the consumer in availing a service/good

VII. Benefits of competition reforms for Producers Ease of entry:

- No entry barriers for firms to enter new markets

Productivity gains

- Easy access to ‘inputs’ market

- No impediments to access infrastructure

- Considerable ease of doing business

Revenue gains or cost savings

Ability to access markets

- Free movement of goods, services

13

VIII. CREW Project – Caveats

It is not a project only about competition enforcement, it is much more comprehensive/broad in scope

It will not measure the full-range of impacts of competition on producers and consumers in the countries

Evolve and validate a methodology for doing so in micro-locations

Activities will be restricted to 4 countries and 2 sectors

Uptake of the exercise in other countries would depend on interest of beneficiaries

14

Thank You

www.cuts-ccier.org/CREW

15