WORLD TRADE
ORGANIZATIONWT/WGTCP/W/187
29 May 2002
(02-2942)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM EGYPT
The following is the final text of a paper received from the Permanent Mission of Egypt
which was circulated as an advance copy for the Working Group's meeting of 22-23 April 2002.
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Item (A): Support for progressive reinforcement of competition institutions in
developing countries through capacity building as contained in
paragraph 25 of the Doha Ministerial Declaration;
Item (B): Technical assistance and capacity building, as called for by paragraph 24
of the Doha Ministerial Declaration.
I. INTRODUCTION
Paragraph 25 of the Doha Declaration lays out the work program, established by Ministers,
for the Working Group on the Interaction between Trade and Competition Policy (WGTCP) in the
run-up to the 5th Ministerial Conference in 2003.  The Doha Declaration mandates the WGTCP, to
focus among other things, on the clarification of:  modalities of support for the progressive
reinforcement of competition institutions in developing countries through capacity building, while
ensuring that appropriate flexibility be provided to address the needs of developing and least-developing countries.  Reinforcement of competition institutions in developing countries through
capacity building should respond to the developing countries' long-term concerns.  The scope of the
assistance could range from drafting a competition law through the establishment of competent
authorities and training of their staff, up to the implementation and enforcement of such law.  It
should be noted that developing countries are at different stages in the development of domesticcompetition legislation;  therefore realistically capacity building needs differ from one developing
country to another and, therefore, a one-size-fits-all approach is not appropriate, if the aim is to
deliver a concrete outcome that would benefit the whole range of developed and developing country
members alike.
We envisage that capacity-building programs  would be conducted with the view that
competition authorities are established, then are able to deal with all the anti-competitive practices of
international, as well as of national dimensions.  This would therefore, require - beforehand -
conducting a "needs assessment" for each country, so that the Working Group is in a position to know
from where to start and how to deliver.
Capacity building activities in developing countr ies should aim at reinforcing the competition
authorities for the better application of national le gislation to bring them up to the level to benefit
from international cooperation to combat the restrictive business practices that would go against their
economic development objectives.WT/WGTCP/W/187
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II. MAIN PROBLEMS FACING DEVELOPING COUNTRIES IN THE FIELD OF
COMPETITION POLICY AND LAW:
Developing countries are faced by various problems among which are the following:
First is the problem of drafting local legislation.  Many countries - particularly the developing
and the least developed among them - do not have the experience or the qualified personnel that have
the skills necessary to enable them to draft national competition legislation.
A second set of problems has to do with the establishment of the competition authority that
would shoulder the implementation and enforcemen t of the local competition legislation.  This
includes scarcity of resources and the difficulty to develop and maintain the necessary expertise, aswell as the lack of the necessary infrastructure (financial, physical etc.) to function in an effective
manner.
Third is the problem of the high costs associ ated with the implementation/enforcement of a
domestic competition law.  Many countries prefer not to enact competition legislation, just because itscosts of implementation are much higher than its economic benefits.
Fourth is the lack of competition advocacy and culture.  Stakeholders such as consumer
organizations, private sectors, media and other relevant groups, who are not familiar with the notion
and the benefits of the proper implementation of the national competition legislation would,unavoidably, exert domestic political pressures in or der to prevent the enactment of the competition
legislation within their homeland.
III. PROPOSED CAPACITY BUILDING ACTIVITIES TO ADDRESS THE
INSTITUTIONAL DEVELOPMENT NEEDS OF DEVELOPING COUNTRIES:
Having outlined some of the main problems that developing countries face in the field of
drafting and implementing their national competi tion legislation, the following is an attempt to
highlight the possible means for the progressive reinforcement of competition institutions in
developing countries.  This section is divided into two sub-sections; the first draws from the
previously prescribed problems, while the second spotlights capacity building needs with respect to
the main elements of competition law.  As mentioned earlier in this paper, it should be noted that this
is not meant to be a one size fits all proposal.
1. Capacity building to address the problems facing developing countries:
1 (a) : in the field of drafting national competition legislation:
Developing countries could seek capacity building activities that would end up having the
skilled staff and personnel who are able to draft their country’s national competition legislation.
Technical advice, training, assistance and cooperation from international organizations and countries
that have mature, experienced competition authorities are good instruments to use in this regard.  This
in addition to:  the exchange of copies of national competition legislation; the provision of technicaland legal assistance and advice with respect to the identification of the statutory structure and major
elements that should be included in the legislation,  including administrative, criminal and civil actions
and penalties; identification of the administrative and judicial fora of legal actions; and procedures for
information exchange.WT/WGTCP/W/187
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1 (b) : in the field of establishing the competition authority:
Countries with mature competition authorities can assist developing countries by:  providing
for training, scholarships for advanced studies for the staff of the developing country’s newly
established authority; securing sufficient budgetary support for the ongoing work of the establishedbody; equipping the national authority with the most up-to-date machinery (computers, faxes);
constructing an easily searchable database of competition related materials.  The aim should be to
ensure that the competition authority is staffed and managed by competent personnel, and that it
acquires the appropriate infrastructure.
1 (c ) :  in the field of the high costs of implementing the competition law :
Means should be explored to ensure that the benefits of implementing a national competition
law are much higher that the costs associated with such implementation.  In this regard, it should be
stressed that competition law:
 • Will not benefit certain groups of the economy to the detriment of others.
 • Aims at maximizing the welfare of both the consumers and the producers.
 • Contributes to achieving the optimal allocation of resources.
1(d) : in the field of competition culture and advocacy:
Competition institutions in developing countries should have the responsibility of educating
the relevant stakeholders about the benefits and drawbacks of a national competition legislation.  In
this regard, capacity-building activities should raise the competition authorities ability to:
 • Consult with the relevant groups of stakeholders.
 • Conduct training and educational programs within universities and other relevant
governmental and private institutions.
 • Establish a consultancy center which mandate is to provide advice and expertise and training
courses to the businessmen, lawyers and judges.  This center could also be a think tank thatgovernments use while investigating anti-competitive cases.
 • Produce information materials for public dissemination.
2. Capacity building with respect to th e main elements of competition law:
Developing country Members may seek assistance and institutional capacity building with
respect to the enforcement of their national competition legislation.  Basically, competition legislationaddresses three main elements covering most of the anti-competitive practices which – in themselves
– could form basis for a structured, progressive capacity building activities.  The following are the
main areas of institutional capacity building needs in that regard:
- Horizontal Arrangements:  Programs should help developing countries’ institutions to combat the
detrimental effects of implicit and explicit agreements through building their capacities to be able
to:
 • Mobilize resources to detect, investigate and prosecute cartel agreements that are international
in scope.WT/WGTCP/W/187
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 • Minimize the scope for tacit collusion through economic policies that facilitate competitive
entry into market.
- Abuses of dominant position are considered to be anti-competitive and would act to the detriment
of developing countries economies. It would therefore be appropriate that developing countries’
institutions are able to assess:
 • Whether the firm(s) involved has sufficient ma rket power to engage in predatory conduct.
 • Whether there is a clear pattern involving multiple instances of abuse or just an isolated
instance.
 • Whether there are plausible alternative explanations of the conduct involved that suggest it
may have served a legitimate business purpose.
- Mergers: Developing countries institutions may seek assistance and capacity building that would
allow them to:
 • Evaluate mergers and assess whether a proposed transaction would substantially increase the
ability to exercise market power.
 • Evaluate the efficiency effects flowing from the merger to the extent that this is permitted
under the relevant national laws and examine the factors that would create market power
including the degree of market concentration, existence of barriers to entry, lack of substitutes
for the product under examination, reduce quality or lack of innovation.
As a general provision, two principles should be considered in the course of providing support
for the progressive reinforcement of competition institutions in developing countries through capacity
building.  First:  flexibility in the sense that a "one size fits all approach" is not appropriate since each
country should have the chance to choose how to apply a competition regime in a way that reflects its
economic situation and achieves its development objectives.  Second:  progressivity by allowing
developing countries to undertake a phased approach to the discussion, introduction and
implementation of competition legislation.
IV. CAPACITY BUILDING FOR EFFECTIVE IMPLEMENTATION OF
COMPETITION POLICY
In the 1996 Ministerial Conference held in Singapore, Ministers decided to set up a working
group to look more generally at the relationship between trade and competition policy.  Yet at thattime, the Ministers had made it clear that the working group's tasks are analytical and exploratory, and
that any discussions cannot develop into negotiations without a clear consensus decision.
Five years later, Ministers have mandated the WGTCP to focus its further work on the
clarification of specific issues with respect to the interaction between trade and competition policy.Paragraph 24 of the Doha Declaration recognizes the importance of technical assistance and capacity
building needs of developing and least developed countries "so that they may better evaluate the
implications of closer multilateral cooperation for their development policies and objectives, and
human and institutional development".  Moreover, paragraph 24 names certain elements of those
needs - without limiting them - such as "policy analysis and development" in which technicalassistance and capacity building could be sought.WT/WGTCP/W/187
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The Need for Technical Assistance and Capacity Building
Based on the wording of paragraph 24 of the Doha Declaration, one can conceive that
technical assistance and building the capacity of Member states are prerequisites that may lead to a
consensus on the adoption and effective implementation of a multilateral framework of cooperation inthe field of competition policy.
Defining Capacity Building
The issue of capacity building is crucial for any developing or least-developed country.  It
goes hand in hand with economic reform programs.  Thus, the most important task confronting the
governments in such countries is to set up administrative systems that are able to translate the policiesadopted into social programs suited to the needs of  a modern economy.  Accordingly, it is of a great
importance to reach a definition of capacity building in order to have a more general view of all its
aspects.
Capacity building may be defined as "the ability to perform appropriate tasks effectively,
efficiently and sustainably".  This would require strengthening the targeted human resources in
particular institutions and providing those institutions with the means whereby these resources can be
marshaled and sustained effectively to perform planning, policy formulation, and implementation
tasks on any priority topic.
In the light of the above definition, capacity building encompasses two main elements:
building human capacity and analytical skills on the one hand, and building institutional capacity on
the other.  Human capacity has to do with personnel who carry out the enforcement of any adopted
policy.  Hence, any increase in the capacity of the individual in the civil service context should
contribute to the increase of the capacity of the institution to which he is attached.  Building humancapacity may be achieved through:  clear and accurate job description, special education systems
relevant to the job description, internal and external training programs, and professional deepening of
skills.  On the other hand, the building of institutional capacity can be sustained through obtaining
adequate office resources, designing the procedures  that describe how the institution will function
internally and with external bodies, creating an institutional memory that contains relevant laws,
regulations, organizational data, policy statements, and operational protocols.
With regard to competition legislation, policy makers in emerging economies face several
common difficulties with respect to formulating a competition policy and introducing a competition
law.  Enforcement issues represent the main diff iculty in introducing competition law as it is
counterproductive to introduce a sophisticated piece of legislation that is difficult or impossible to
implement by the existing competition agency.
Establishing an efficient competition agency is considered an integral part of introducing
competition policy.  It is this agency which conducts investigations into suspected competition
violations, issues rulings, assesses penalties, monitors the market and studies prevailing conditions in
the search for price irregularities.  It also advises the government on the sale of state-ownedenterprises, and on the overall soundness of the competition environment.  Given its pivotal role, the
establishment of an efficient agency is imperative if competition law is to be introduced, as it is the
enforcement policy that will determine the practical impact of the legislation.
To do all these, a competition agency must enjoy:  (i) a transparent, independent and impartial
administrative structure;  (ii) qualified staff that include managers, technical staff, lawyers and others
who will be engaged in the daily activities of the agency;  and (iii) adequate resources to attract
qualified staff and to ward off corruption.WT/WGTCP/W/187
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The above elements represent some of the prerequisites for the establishment of a competition
agency.
Competition Policy and Capacity Building Needs of Egypt
Like many other developing countries, Egypt has undergone a comprehensive Economic
Reform and Structural Adjustment Program since 1991.  This reform program has been supported by
a stand-by arrangement from the IMF and a structural adjustment loan from the World Bank, in
addition to the bilateral debt forgiveness/debt service relief of the Paris Club.  The primary objective
of the reform program is summarized by the IMF (1991) as: "to create, over the medium term, a
decentralized market-based, outward-oriented economy where private sector’s activity will be
encouraged by a free, competitive, and stable environment with autonomy from governmentintervention".  In this view, the adoption of a national competition law is considered one of the
essential requirements to put the reform program into action.
In fact, Egypt has not until now enacted a competition law.  It has never had comprehensive
competition legislation, although various provisions in different legislation address basic anti-competitive behavior.  However, there is a draft under discussion.
The draft law has a provision for the establishment of a Competition Commission and
specifies its structure, staff requirements and authority.  It also outlines the rights and proceedings of
the Competition Commission to apply the law, including penalties and legal sanctions.  One shouldbear in mind, however, that providing in the law for the establishment of a Competition Commission
does not mean that it will function efficiently and effectively.  Therefore, Egypt is in need for
technical assistance and capacity building with respec t to all the elements outlined in section one of
this paper.  Special focus should be on training the staff, specialists, and expertise who would carry
out the enforcement of the law, as well for supplying the Competition Commission with all the officefacilities and equipment required for its proper functioning.
V. CONCLUSION
National competition laws are important for developing countries to promote their
development objectives since the anti-competitive practices that affect them are being engaged in on a
global scale.  However, policy makers in these countries face several difficulties in respect offormulating a competition policy and establishing an effective enforcement mechanism.  Thus, a key
objective of any proposed framework would be to ensure that developing and in particular least-
developed countries receive enhanced and better-coordinated assistance in regard to capacity building
in this area.  It would be of a great help if assistance with capacity building can be provided on
country-by-country basis in order to ensure that it meets the real needs of individual countries.
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