Category: Competition Policy

Climate change is one of the key disruptors of economies, and most competition policies and laws are flexible enough to be part of the solution provided they are appropriately designed and effectively implemented. “We need a “whole of all governments” approach to deal with the present crisis of climate change with competition policy tools” said Pradeep S Mehta, Secretary General of CUTS International while opening the discussions. His stress was on the global community to act together

“On 5th of December 1980 the United Nations adopted the UN Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices, which to date remains the only multilaterally agreed instrument on Competition Policy”, he recalled, as today’s event celebrated World Competition Day in commemoration of this date.

Synergies between competition and climate policies can play an important role in greening the economy, including by incentivising for green innovation, curbing entry barriers to flow of environmentally benign goods and services, and empowering consumers to make informed decisions. Competition policy is also key to ensure efficient allocation of capital needed to reach environmental goals.

Yet, competition authorities may face challenges when undertaking competition assessments, such as determining which and to what extent environmental effects may be taken into account; how environmental efficiencies can benefit consumers; which timeframe for environmental effects to adopt; and how to balance environmental effects with other types of effects. Therefore, sensitising and building capacities of competition authorities on the interface between competition policy and climate change should be a priority.

In this regard, international organisations such as UNCTAD, World Bank and WTO can assist developing countries to create, develop and improve competition law and policy, consumers’ lives, and achieving sustainable development goals.

Discussing how competition law and policy can support sustainability, experts on the panel noted that, in certain cases, some horizontal agreements or cooperation between competitors may lead to greater benefits for consumers and the society. In fact, firms through such cooperation can leverage complementarities and achieve greater scale and productivity in reaching environmental objectives. Taking this into account may sometimes require clarifying the objectives of competition law, its definition of consumer welfare, incorporating considerations of sustainability in their competition assessments, and adjusting legislation accordingly.

As a case in point, it was noted that in 2021 Austria adopted the Cartel and Competition Law Amendment Act to allow for the consideration of sustainability goals, which was followed by the Austrian Competition authority “Sustainability Guidelines”, providing guidance for competition law exemptions of some environmental sustainability agreements.

The Dutch Competition Authority also published in 2021 “Guidelines on Sustainability Agreements”, providing guidance on the application of competition law to sustainability initiatives and to considering the rationale for adopting exemptions in this context. This had been supported by a 2021 technical report commissioned by the Dutch and the Greek competition authorities.

Such paradigm shifts in competition enforcement have been observed in the past, and can contribute to ensure the continued relevance of regulators’ actions in a changing world. For instance, the “wait and see” approach of competition authorities towards digital markets changed towards legal amendments, use of data analysis, tighter law enforcement and “ex-ante” regulation in recent years due to the rise of digital platforms and the increased weight of data in market power.

Experts however cautioned that sustainability approaches in competition law and enforcement remain new, and being experimented by a few advanced competition regimes so far. Before time is ripe for their adoption by smaller or younger competition authorities in developing countries, experience of practice will need to be further acquired and lessons shared through exchange of knowledge and cooperation. In conclusion, CUTS’ Secretary General Pradeep S. Mehta emphasised the need for better governance and increased policy coherence with some key policy issues related to competition and climate change, including by taking into consideration the role of intellectual property rights.

He added that even the UN Guidelines for Consumer Protection has a full chapter on sustainable consumption which has direct relation to curbing adverse climate change actions. Even the SDGs Agenda at Goal 12 deals with Sustainable Consumption and Production. “We have so many international instruments to deal with the issue of climate change and economic governance and thus we need a forward looking narrative for a better tomorrow, through all appropriate means”, he said.

On the panel were Pradeep S Mehta, Secretary General, CUTS International; Teresa Moreira, Head, Competition and Consumer Policies Branch, UNCTAD; Antony Taubman; Director, IP, Government Procurement and Competition Division, World Trade Organization. The discussion was moderated by Rashid S Kaukab, Executive Director, CUTS International Geneva.

“Today couldn’t be a better day to celebrate the World Competition Day”, said Philippe Brusick, Former Head of the Competition and Consumer Protection Policies Branch at UNCTAD and the President of CUTS International, Geneva, General Assembly, today in Geneva while speaking at a roundtable discussion organised by CUTS International in celebration of the World Competition Day.

“Indeed, on 5th of December 1980 the United Nations adopted the UN Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices which to date remains the only multilaterally agreed instrument on Competition Policy and paved the way for enormous progress on consumer welfare”, he added.

He was joined by Ambassador Yi Xiaozhun, WTO Deputy Director-General who, in his welcome address, recalled that it is indeed fitting and appropriate to celebrate the UN Set milestone on this day. “I am happy to celebrate with you the World Competition Day, which is intended to remind us of the role competitive markets play for people”, he said.

This year, celebrations addressed the theme “Linkages between Competition and Intellectual Property.” The two areas share the same goals of economic efficiency and consumer welfare, and should therefore not only be seen as compatible but also complementary. Nevertheless, it was acknowledged that challenges sometimes arise when they seem to clash in certain circumstances.

According to Teresa Moreira, the new Head of UNCTAD’s Competition Policy and Consumer Protection Branch, “While intellectual property aims to encourage innovation by rewarding investment and R&D, the exercise of IPRs occasionally gives rise to competition concerns, e.g. in cases of refusals to license, infra-technology restrictions, patents and standards setting processes, and pay for delay settlement.”

The discussion reminded that the interface between the two issues is already recognized in existing WTO agreements, particularly the TRIPS agreements where Article 8 recognizes that appropriate measures may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.

“Other relevant provisions include TRIPS Articles 31 and 40, with the latter recognizing the potential adverse trade effects of licensing practices or conditions pertaining to IPRs which restrain competition.” said Robert Anderson, Counsellor and Team Leader for Government Procurement and Competition Policy at the WTO Secretariat.

Exploring avenues for harnessing the complementarities between the two disciplines, Giovanni Napolitano, Consultant at WIPO for the IP and Competition Policy Division, indicated that WIPO facilitates MoUs between IP Offices and Competition authorities for them to exchange know-how and better engage with each other.

The discussions highlighted the need for greater documentation of cases from developing countries where competition authorities have successfully used competition tools to tackle IPR abuses. While some case examples exist, such as the Refusal to License Patents in AIDS medications in South Africa, more systematic identification of relevant cases could help developing countries overcome the challenges they face at the interface of the two issues.

International Days are observed to draw the attention of the society at large on issues that are extremely important for human development in the present and particularly for the future.

Competition Policy falls into this category, and this is why a global movement led by CUTS International at the initiative of its Secretary-General Pradeep S. Mehta has been celebrating and calling for the adoption of a World Competition Day on 5th December, date of the adoption of the first-ever Set on Competition Policy by the UNGA 36 years ago. “I do remember when Pradeep Mehta first advocated the idea of a World Competition Day, which was a new and innovative idea to stimulate interest and giving rise to discussions on the role of competition around the globe.”, said Mr. Anderson.

In 2012, UNCTAD also joined CUTS in the promotion of the World Competition Day which since then has swiftly gained popularity amongst Competition Authorities worldwide. Currently, 24 countries have supported the call including the United Kingdom, Russia, Sweden, Austria, Afghanistan, Tanzania, Spain, Gambia, etc.

This year, CUTS invited the Geneva community to celebrate the World Competition Day by exploring the interaction between the digital economy and competition policy. The digital economy is a major driver of economic growth in the 21st century and is fuelled by the rapid emergence of digital innovations. While digital markets have the potential to foster competition and innovation, some of their characteristics can also enhance the risk of certain anticompetitive practices. In this context, the event released a study analysing contemporary competition law and policy challenges faced in the digital economy and e-commerce, including in developing countries.

In his opening remarks, Hannu Wager, Senior Counsellor, Intellectual Property, Government Procurement and Competition Division, World Trade Organization (WTO) recalled that while competition-related work has been put on hold by the WTO General Council in 2004, related aspects continue to be addressed in Trade Policy Reviews among other regular activities. He also noted that this year’s WTO World Trade Report highligted the relevance of competition policy for digital trade..

“Digital innovation has resulted in the emergence of new “winner-takes-all” dynamics. In particular, the emergence of tech giants such as Amazon, Alibaba and Google raises important potential concerns about market dominance. Many governments and regulatory authorities are turning to competition policy to address perceived excesses of market power and/or to ensure a level playing field for smaller firms”, he quoted..

Presenting highlights from his new study on “Competition Concerns in Cross-border E-Commerce: Implications for Developing Countries” (https://goo.gl/j7wDMC), Philippe Brusick, Former Head of Competition Branch of UNCTAD, and Chairperson of the General Assembly, CUTS International, Geneva, reviewed anticompetitive practices arising in the digital economy. These include horizontal and vertical restraints, unilateral conduct by dominant firms, as well as anticompetitive concentrations. .

While the digital markets-powered digital economy may foster competition and innovation through more products and market players, some of its characteristics can also enhance the risk of certain anticompetitive practices. A typical concern is the prevalence of network effects whereby the size of a platform is a major competitive advantage, hence increasing risks associated with market dominance. Other concerns include the emergence of multi-sided internet platforms that facilitate transactions between different types of users have made it more difficult for competition authorities to define the relevant market. Also, the increasing use of artificial intelligence, e.g. on price comparison websites, may facilitate not only conscious price collusion by firms but also unintended price collusion through automatic price-parallellism decisions by algorithms..

“Existing competition law might need to be adapted to the types of challenges faced by competition authorities in the digital economy,” Mr. Brusick said..

This was echoed by Ebru Gökçe Dessemond, Economist at UNCTAD, who noted that a number of competition authorities are engaged in updating their enforcement tools. A case in point is the recent revision of the German Competition Law, which now categorises digital platforms as markets even if they seem to provide free services to users. In a recent breakthrough decision, the German Bundeskartellamt also decided that Facebook had a dominant position in Germany for social networks, because of their network effect, which enabled it to impose unclear and unfair trading conditions of user data.

“This is interesting because it amounts to say there was abuse of dominance towards consumers, i.e. suppliers, rather than players down the value chain such as advertisers. It also considers that the unfair price paid by consumers is not in money but in the amount of personal data they are obliged to give to be part of the dominant platform,” she remarked..

Nadezhda Sporysheva, Economic Analyst at the Intellectual Property, Government Procurement and Competition Policy Division of the WTO emphasised the following characteristics as being intrinsic to competition law enforcement in digital markets: (i) data as a primary competitive asset; (ii) privacy as an important component during the merger reviews; and (iii) the definition of the relevant market and market power. In particular, as digital markets often involve nominally free products, a key competitive factor concerns control over data. She remarked that competition in digital markets is influenced by additional forces that are largely absent in conventional markets, namely network effects and externalities, ‘scale without mass’ and switching costs, which tend to result in market concentration and barriers to entry into the relevant markets..

“The cross-border dimension of the activity of digital firms can result in cross-jurisdictional spillovers in therms of competition enforment,” she added. This has been exemplified by cases of conflicting stances across jurisdictions towards abuses of dominant position and merger or their impact across national markets, as shown by the Microsoft case in China..

Earlier in the discussion, Philippe Brusick recalled that the celebration of December 5 as World Competition Day has long been advocated by CUTS with the support of numerous competition authorities. International Days are observed to draw the attention of the society at large on issues critical for human development. The date refers to the adoption of the first-ever Set of Principles on Competition Policy by the UN General Assembly on December 5, 1980. “To this day, the UN Set remains the only multilateral agreement on competition,” he recalled..

The webinar was organised by CUTS International and CUTS Institute for Regulation & Competition to invite the global community to celebrate the World Competition Day (WCD) on 5th December by releasing a Toolkit for practitioners and people on “Competition and Access to Healthcare”.

The toolkit provides guidance on using both ex-ante and ex-post competition policy as tools to enhance access to healthcare, the urgency of which has increased in the wake of Covid-19.

“In the context of Covid-19, today’s theme is particularly timely and topical. Indeed, it has never been more important to ensure adequate flexibilities in the intellectual property regime to allow medication and medical equipment to be more freely available without IPR restrictions”, said Mehta.

Released today (available at https://bit.ly/3l68bs8), the publication prepared by CUTS International and CIRC aims to contribute to an enabling policy environment that promotes competition in the market, including removal of entry barriers and market distortions, and inducing ease of doing and running businesses. Indeed, to keep the market competitive, competition law enforcement alone may not be sufficient.

The Toolkit provides guidance on using both ex-ante and ex-post competition policy as tools to enhance access to healthcare, the urgency of which has increased in the wake of Covid-19.

It also captured case laws and recommendations across areas such as: (i) Regulation and Competition Policy; (ii) Pro-competition Patent Laws; (iii) Horizontal Agreements; (iv) Vertical Arrangements; (v) Abuse of Dominance; (vi) Pay for Delay; (vii) Mergers and Acquisitions in the Pharma Industry; (viii) Frivolous Litigation; and (ix) Covid-19 Responses.

These will help competition authorities around the world tackle some of these challenges, and a number of its recommendations and issues addressed were discussed with expert panellists today.

On the panel, experts reviewed some of the complex and sophisticated anti-competitive practices seen in the healthcare and pharmaceutical sector. These involve inter alia excessive and unfair pricing of patented drugs; Pay for delay agreements between patent holder and generic producers to delay generic entry and keep prices of drugs artificially high;

Strategic mergers leading to monopolies or duopolies reducing competition, resulting in price increase and loss of innovation; Agreements such as exclusive supply or distribution, resale price maintenance, and “refusal to deal” etc.

Rashid S. Kaukab, Executive Director, CUTS International, Geneva moderated the rich session while Dr. Arvind Mayaram, Chairman, CUTS Institute for Regulation & Competition introduced the Toolkit in an elaborate manner.

Other speakers included Teresa Moreira, Head, Competition and Consumer Policies Branch, UNCTAD; Hardin Ratshisusu, Deputy Commissioner, South African Competition Commission; Carlos Correa, Executive Director, South Centre; Alexey Ivanov, Director, BRICS Competition Law and Policy Centre, HSE, Moscow; and Antony Taubman, Director, IP, Government Procurement and Competition Division, World Trade Organization.

Among other recommendations provided by the Toolkit are: (i) Compliance training programme for the stakeholders to prevent anticompetitive behaviour; (ii) In-house pharmacies and diagnostic services at hospitals should be for convenience and emergencies; (iii) Doctors should be encouraged to prescribe generic medicines; (iv) Strengthening of competition advocacy to address information asymmetry; (v) Regular competition assessment of healthcare sector; and (vi) Compulsory licensing should be resorted to in exceptional circumstances.

Finally, it was also recalled that, on 5th of December 1980, the United Nations adopted the UN Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices.

To date, this “UN Set” remains the only multilaterally agreed instrument on Competition Policy, and paved the way for enormous progress on consumer welfare. Since then, a global movement led by CUTS International has been celebrating and calling for the adoption of a World Competition Day on 5th December.

To date, over 24 countries have supported the call and celebrated this Day, some of which like Philippines having officially adopted it at national level.

The video recording of the event is available below.