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Development Account Projects

Strengthening capacities in developing countries for the effective enforcement of competition law to minimize constraints to economic productivity

Background:

Given the fact that efficiency, innovation and technological improvements are facilitated by a high level of competition, effective competition law enforcement can be an important factor in boosting productivity performance. It is thus important for all countries to evaluate the effectiveness of their competition policy-enforcement framework.

The needs in this area have been recognized on several occasions in recent years by the UNCTAD Intergovernmental Group of Experts on Competition Law and Policy, which recommended at its sixth session in 2004 that UNCTAD undertake voluntary and ad hoc peer reviews of national competition authorities. This recommendation was affirmed at the Fifth United Nations Conference to Review All Aspects of the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices in 2005 and the Accra Accord of 2008. The project builds on the experience of UNCTAD peer reviews in Jamaica, Kenya, Costa Rica, Tunisia, and the West African Economic and Monetary Union. UNCTAD peer reviews provide an important means for countries to benchmark their performance to international best practices. The interactive peer review method promotes knowledge-sharing between the authorities at regional and international levels and also enhances informal cooperation networks. Notable features of the UNCTAD peer review are an atmosphere that is not interrogative or hostile and the strong element of South-South cooperation.

The countries that are tentatively identified for the biennium 2010-2011 are El Salvador, Indonesia, South Africa and Thailand. The peer reviews will be conducted in collaboration with the competition authorities in each country. The peer reviews will identify major procedural, administrative and legislative changes that might be necessary for the optimum functioning of the competition authority and the law. They will give insights into country-specific constraints, including political economic problems which have a bearing on the legitimacy of the competition law. On the basis of the findings and recommendations of the peer reviews, a comprehensive project proposal for further capacity-building will be prepared to assist the competition authority in soliciting earmarked funding from the government and other sources.

Objective:

To strengthen the capacity of national authorities to effectively enforce competition law and thereby promote the development of dynamic enterprises.

Expected accomplishments:

  • Comprehensive assessment of strengths and weaknesses of competition enforcement institutions and procedures
  • Enhanced capacity of competition authorities and policymakers to address enforcement weaknesses and improve stakeholder awareness

Implementation status:

Since the start of the project, UNCTAD Voluntary Peer Reviews of Competition Law and Policy ("Peer Reviews") have been carried out in the following countries: Armenia (2010), Serbia (2011), tripartite Peer Review of Tanzania, Zambia and Zimbabwe (2012), Mongolia (2012), Nicaragua (2013), Pakistan (2013), Seychelles (2013) and Ukraine (2013). In addition, specific follow-up measures to the Peer Reviews of Armenia, Indonesia, Kenya, Mongolia, Serbia, Tanzania, Zambia and Zimbabwe were implemented in 2010, 2011 and 2012. The present report covers the activities undertaken in the year 2012.

The above-mentioned Peer Reviews have had an impact at different levels. Firstly, the impact was achieved at the national level of each peer reviewed country. The recommendations of the Peer Reviews were translated into government policies: Privatization of the Telecom in Serbia; the establishment of an autonomous public procurement agency in Mongolia; Armenia’s becoming a party to the WTO plurilateral Agreement on Government Procurement (September 2011); Kenya’s adoption of the new competition law (2010) and establishment of an autonomous competition authority (Competition Authority of Kenya), which replaced the Monopolies and Prices Commission.
The Tripartite Peer Review of Tanzania, Zambia and Zimbabwe was designed to go beyond the national level and strengthen cooperation both between these three countries and at the regional level with possible spill-over effects to SADC and COMESA, particularly between countries with overlapping membership of these two regional organizations. The Tripartite Peer Review recommendations were discussed at the SADC Technical Advisory meeting and recommended as best practices for other SADC members. As a result, Seychelles applied for a Peer Review in 2012. Increased interest by other development partners to co-finance or otherwise support the Peer Review processes constitutes a further dimension of the impact achieved by the Peer Reviews.

A clear indicator of success of Peer Reviews is the ability to attract additional funding from bilateral donors to undertake more peer reviews. To be more specific, the Swiss government (SECO) and the German development agency, GIZ, provided funding for two additional peer reviews as well as a follow-up on the implementation of the peer review recommendations. The high quality and the analytical approach of Peer Reviews raised wide interest among development partners, which use them as needs assessment for future technical assistance. The voluntary Peer Reviews have become an appreciated feature of UNCTAD work and the UNCTAD XIII Ministerial Conference held in Doha in April 2012 recommended that UNCTAD introduce the Peer Review in other areas of work.

The success of the Peer Reviews is also reflected by the increased number of requests for Peer Reviews received by UNCTAD since 2011. The Peer Reviews are recognized as a first step in needs assessment and are therefore an important process in improving competition law enforcement as well as putting in place necessary public reforms.