WORLD TRADE
ORGANIZATIONWT/WGTCP/W/138
11 October 1999
(99-4253)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM THE REPUBLIC OF SOUTH AFRICA
The following communication, dated 10 September 1999, was received from the Permanent
Mission of the Republic of South Africa with the request that it be circulated to Members.
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A. INTRODUCTORY REMARKS
1. The Republic of South Africa wishes to draw attention to the new Competition Act (Act
No. 89 of 1998) that came into effect on 1 September 1999.  The Maintenance and Promotion of
Competition Act (Act No. 96 of 1979) was repealed and on 31 August 1999 the Competition Board
ceased to exist.
2. The new Competition Act provides for the establishment of three institutions for the
administration of the Act, namely the Compet ition Commission, the Competition Tribunal and the
Competition Appeal Court.
3. The Competition Commission and the Competition Tribunal commenced operations on
1 September 1999.
4. The Competition Act has extensive application, covering horizontal and vertical restrictive
practices, mergers and acquisitions as well as abuses of dominance.
5. Details can be found on the Competition Commission's website ( http://www.compcom.co.za )
or obtained by contacting the Competition Commission directly:  Tel. +27 (12) 482 90 01 and
Fax +27 (12) 482 90 03.
B. PREPARATIONS FOR THE THIRD MINISTERIAL CONFERENCE TO BE HELD IN SEATTLE ,
NOVEMBER 1999
1. The Republic of South Africa would like to advocate the contribution made to the WGTCP by
Zimbabwe on behalf of the WTO African Group (WT/WGTCP/W/126, dated 31 May 1999).  This
contribution stated that:
"…the strengths and weaknesses of multilateral rules need further study and analysis.  The
group is determined to join in this analysis a nd to work with and seek the assistance of all
organisations in this area, including UNCTAD and the World Bank, in determining the
dividends and added value that would accrue to Members, if any, from multilateral rules on
competition law and policy";  andWT/WGTCP/W/138
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"International cooperation, including but not limited to technical cooperation, has an
important role to play in helping developing c ountries to meet these ch allenges.  Flexibility is
the key in designing laws and policies that address anti-competitive practices that threaten
development without preventing firms from achieving beneficial economies of scale and other
efficiencies".
2. Further, recognizing the challenges that developing countries face in developing and
administering national competition laws and the plethora of issues due for multilateral negotiation in
the WTO, South Africa proposes a thorough pre-negotiating educative process.
3. In this process the following notions should be recognized:
(a) Globalization processes are leading to increasingly international or multi-market
effects of Restrictive Business Practices.
(b) Private barriers to the gains from trade and investment liberalization remain as public
barriers are eroded.  Liberalization of trade and investment are therefore necessary
but not sufficient conditions for market contestability.
(c) Developing countries suffer from the restrictive business practices of, inter alia ,
multinationals and foreign companies in general.
(d) Curbing of these practices is hampered by differences in substantive measures
contained in country-specific competition laws and could be improved by
cooperation, including information-sharing, and possibly by harmonization ofcompetition laws or multilateral competition rules.  This area requires further
research with specific reference made to the developmental dimension.
(e) In particular, it should be recognized that competition laws in developing countries
are part of a specific policy framework, often including explicit public interest
considerations.
(f) The implications of universal competition standards for developing countries must
therefore be the subject of thorough research before negotiations on multilateral
competition rules can commence.
(g) The developmental dimension should be taken into explicit consideration.
4. Developing countries are part of the world trade system and have embraced the rules-based
WTO.  In this respect, the following should be noted:
(a) It is recognized that the analytical demands placed on developing countries regarding
the preparations of the next Round of negotiations are huge.  However, exempting
ourselves at this stage from certain subjects of the next Round would imply
acceptance of some rules, but not of others and suggest free-riding on the disciplines
imposed on other countries.  This clearly defies the purpose of a rules-based tradingsystem.  The debate is therefore no longer one of whether or not it is politically and
economically opportune to participate in the debate on competition rules.  The main
issue lies in defining how South Africa and the developing countries in general will
participate.
(b) Concretely, certain pre-negotiating conditions should be established.WT/WGTCP/W/138
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(i) The first condition should address the realization that developing countries
have not had the same opportunity to prepare for multilateral competition
negotiations.  Developing countries are therefore not in a level playing field
and cannot be expected to present a well-researched position.  In particular,
the African Group of the WTO calls for further analysis of the strengths andweaknesses of multilateral rules, and urges UNCTAD and the World Bank to
assist.  This technical assistance should venture beyond the traditional
support to competition agencies in terms of development of competition laws
and their enforcement, and include scrupulous assessment of the expected
outcomes and the implications for developing countries of multilateral
competition rules.
(ii) A necessary condition for negotiating multilateral rules should therefore be
the conclusion of a thorough educative process for developing countries for
which an adequate amount of time should be allowed.  In order to truly "level
the playing field", developing countries should initiate a process of in-depth
technical assistance prior to the intensive negotiations.
(iii) This process should take explicit consideration of the developmental
dimension and the competition challenges that are unique to developing
countries.  The multilateral institutions (such as UNCTAD and the WTO)
involved will therefore have to redefine their roles and find new and
improved ways of assisting in the preparation for these negotiations, for
example by hosting fora and concentrating on capacity building.  Only oncethis condition has been met will developing countries be able to enter the
negotiations as equals.  The Seattle Mini sterial should therefore initiate the
process of negotiations on multilateral competition rules yet specify the
consideration given to developing countries in order to allow for meaningful
participation of developing countries.  The Seattle negotiating mandateshould include explicit mention of the study of the development dimension
and of the initial educative process.
(iv) Secondly, special and differential treatment for developing countries should
be guaranteed.  Developing country-specific concerns should be awarded a
prominent place on the agenda.  This process can only be successful if the
first condition has been met successfully and developing countries have
received support in the derivation of proposals, in particular in derivingproposals that do justice to the development dimension, for instance by
incorporating elements of asymmetry.
5. This process should lead to an informed position on many of the issues relevant to multilateral
rules, such as:
(a) The format:  should the agreement include binding rules or be limited to a framework
agreement?
(b) The requirements:  should competition laws be harmonized or should countries be
committed to the mere adoption and enforcement of domestic competition laws?
(c) The inclusion of WTO principles, or the definition of competition-specific principles.(d) Positive comity.WT/WGTCP/W/138
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(e) Enforcement and sanctions of this agreement.
(f) The developmental dimension, inter alia :
(i) Special and differential treatment for developing countries and countries in 
transition.
(ii) The scope for flexible approaches to substantive criteria in competition laws 
of developing countries.
(iii) Application of the principle of progressivity in the agreement.
(iv) The economic rationale behind export cartels of developing countries.
(v) Extended implementation and transition periods for developing countries.(vi) Cooperation agreements.(vii) Flexible application of MFN and national treatment principles for specific 
industrial policies of developing countries.
(viii) Consideration for the limited capacity of developing countries in 
enforcement.
6. The following sequencing of this process is proposed:
(a) The pre-negotiating educative process should allow for substantial further research
and be projected to span up to two years.  The role of UNCTAD and the WTO in this
process should be defined during this period.  Furthermore, in this pre-negotiating
phase, resources should be made available to developing countries to assist them in
the derivation of positions and to ensure meaningful participation of these countries
in the formal negotiations.
(b) The Government remains committed to the initiation of conditional negotiations at
the Seattle Ministerial Conference;  however the formal negotiations are to start only
upon completion of the aforementioned educative process.
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