February 17, 2006

Since the early 1990s Nepal has ventured into the un-chartered territory of liberalization and market economy. After the restoration of democracy, the pace of economic globalization picked up in all spheres of national economy.

In 2003, Nepal marked another watershed in its economic policy vis-à-vis the entire global community. It became the 147 th member of the World Trade Organization (WTO).

The membership of the WTO guaranteed Nepal a privileged card that it could use to ensure access to the global marketplace. On the other hand, the same card also made it liable to allow the global traders to invade its territory. In one and a half years since the joining of WTO, Nepal has not been able to extract the promised benefits. Likewise, it has also not been swamped by the feared tides of globalization.

This last one and a half year has been a crucial period that has reminded Nepalese that nothing can be taken for granted, much less the membership of WTO. Apart from recognizing Nepal as a sovereign and separate economic entity, its membership has not yet resulted into any dramatic transformations in its socio-politico-economy.

Along with obtaining the membership of WTO, Nepal had also made a number of promises like opening up its trades in goods and services; lowering of custom tariffs; binding tariffs; legislative reforms and so on. Among one such promise is the creation of market-friendly open economic environment.

The creation of such environment, thus, demands enactment of proper laws and policies that can guarantee free and fair competition in the market. Competition Law, many trade experts have said, is the need of the hour to check mauling menace by unbridled monopoly.

The book “Status of Competition in Nepal” is a study-based book that not only traces the economic policies more particularly the monopolistic practices it has encouraged but also provides feedbacks to the policy-makers on the way forward.

Published by SAWTEE in cooperation with the Department for International Development (DfID), the book is an eye-opener on how the anti-competitive practices are disrupting the free market economic practices and how they are ultimately bleeding the naïve consumers.

The SAWTEE is also engaged in three-year advocacy program entitled Competition Advocacy and Education Program (CAEP) since February 2004 with the support from DfID. The program aims “to inculcate competition culture among the stakeholders; create an atmosphere for the formulation and enactment of competition friendly policies and legislation; ensure participation of stakeholders in the process of formulation, implementation and enforcement of competition policy and laws; and build capacity of stakeholders to act as a watchdog to prevent anti-competitive practices.”

“Anti-competitive practices are a set of unfair practices, which enterprises may use in order to distort or eliminate competition with the aim of acquiring and abusing monopoly power,” states the book.

It states anti-competitive practices such as collective price fixing; collusive bidding or tendering; tied selling; resale price maintenance; creating of artificial scarcity; price discrimination; predatory pricing; and unreasonably high pricing as existing in the country. It cites examples of price fixing by a group of domestic airlines; price fixing by brick-makers; telecom pricing and so on as being anti-competitive.

“Although domestic enterprises have been exposed to international competition due to the liberal investment and import regimes, Nepal does not have a competition law to ensure competition in the market,” the book writes. During its accession to WTO, Nepal made a voluntary commitment to enact competition law. The government says it is in the process of enacting the same.

Competition policy and/or law has prime significance since it is related closely with the safeguarding of naïve consumers. They are a part and parcel of good consumer policy aimed at safeguarding, promoting and furthering the interests of the consumers. In a sea of organized economic entities working constantly to maximize their profit, consumers remain the only unorganized bunch. And it is the duty of the state and the community to prescribe proper laws to promote their interests – which, in turn, is sure to promote the fair economic environment that provides equal opportunities for everybody to prosper.

The book provides a bird’s eye view on the issues related with the consumer protection and competition in the country. It is divided into eight chapters dealing with economic performance and policies; nature of market/competition; sectoral policies; consumer policy; anti-competitive practices; perspective on competition law and policy; competition law; and the way forward. Its recommendations can form a basis on which the government can frame competition laws aimed at promoting the overall economic environment.