Volume 17, October-December 2016

REGULETTERA Quarterly Newsletter

Inside this Issue

�BlowWhistle�on CartelConduct ......................... 2

Facebook �Misled� onWhatsApp ....................... 5

Microsoft-LinkedInAcquisition Closes ........... 9

IrelandVows to Fight EU�sApple Tax Order ............ 12

�Digital SingleMarket�Strategy for Europe ......... 13

Tackle �Too Big to Fail�Banks........................... 15

Special Articles

Competition LawDevelopments in Africain 2016� Xolani Nyali ......................... 3

China Continues Resale PriceMaintenance Crack-Down� Adrian Emch ........................ 7

RegulatingCompetition theNigerianWay� Rotimi Fawole ....................14

Building a BetterWorld Bank,Not a Bigger One� Montek Singh Ahluwalia,Lawrence H. Summers andAndres Velasco ....................16

India�s Ease of Doing Bizisn�t Just About Permits

India has been lately focusing on issues relating to ease of doing business. Alot of Indian states are pushing reforms on taxes, environmental and labour

reforms, single-window online clearance and setting up of commercial courts.The idea is to ensure a competitivespirit among Indian states, eachtrying to lure the private sector.

However, most such reforms arefocused on ease of obtainingpermits, which, unfortunately,cannot be equated with the ease ofdoing business. Obtaining permitsis only one of the factors in doingbusiness, after which the �unease�of doing business often begins. Aspart of an ongoing project focusedon �EoDB among North Indianstates with the perspective of improving competitiveness�, our team hadundertaken a field visit to six North Indian states (Rajasthan, Haryana, UttarPradesh, Uttarakhand, Himachal Pradesh and Punjab).

Several Indian states, such as Uttarakhand, have implemented a concept of�deemed approval� under its single-window clearance mechanism. While thislaudable reform has helped the state move up the rankings, such �deemed�approval is not considered equivalent of �in-principle� approval by financialinstitutions, limiting the ability of small and medium enterprises to raise finance.Similarly, while the efforts of the Uttar Pradesh government to institutionalise adedicated body for providing approvals for setting up of business are worthappreciating and emulating, frequent transfers of key officials seems to haverendered this body dysfunctional.

Thus, the single-window clearance mechanism should not just be a meremirage which hides several windows behind one single window but should beimplemented in a manner which offers an actual one-stop shop for investors, asdone in Punjab. The Government of Punjab has established a separate institutionfor single-window clearance (Invest Punjab), by bringing on board staff fromvarious government departments under one roof and one command. Similarly,the ease of obtaining labour-related approvals does not ensure the availabilityof skilled and committed labour at all times.

The need to periodically review measures adopted by states is important togauge progress. However, it is essential to confront implementation bottlenecksto make real progress on the ease of doing business and improving overallcompetitiveness. Without addressing these, good policies carry the risk ofresulting in bad outcomes.

Ascertainment of challenges and designing strategy to address them requiresa bottom-up approach. This comprises consultation with key stakeholder groupsand involving them in problem identification and solution designing process.Looking at the other side of the aisle also helps in assessing if the governmentshave been merely enamoured by the rankings or have made sincere efforts toimprove the level of competitiveness and the EoDB.

The

Econom

icTimes

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MACRO ISSUESyoungest of its kind in the region andthus has a significant lack of practiceproviding guidance on howcompetition rules should beimplemented. Such uncertainties arecommon for any new legal system.

(ILO, 13.10.16)

Identify Anticompetitive BehaviourThe Competition Authority of

Kenya (CAK) has recently announcedthat a number of proposed amendmentsto the Competition Act are currentlypending before the NationalAssemblyfor consideration and approval.The proposed amendments are

generally aimed at increasing sanctionsand CAK�s authority to detect andprosecute anticompetitive behaviouras well as to ensure that parties providethe CAK with adequate and correctinformation to properly assess mergernotifications.Importantly, the amendments seek

to introduce a financial threshold forrespondents who are found to haveengaged in abuse of dominancepractices. (AA, 04.11.16)

Change of Merger Control RegimeAnewbill, passed onDecember o6,

2016 amendingAct LVII of 1996 on theProhibition ofUnfair Trading Practicesand Unfair Competition, is poised tosignificantly change the Hungarianmerger control regime, introducing theobligation to report amerger; increasedmerger control thresholds; possibility

to investigate mergers belowthresholds; and dawn raids in mergercases.The bill also introduces rules on the

enforcement of private damage claimsfor the breach of competition rules; anda fast-track review for non-problematicmergers. The amendments to theCompetition Act are expected to enterinto effect in January 2017.

(www.lexology.com, 08.12.16)

Merger Consent UpdatedTheCanadianCompetitionBureau

released a revised consent agreementtemplate for merger remedynegotiations. The release of theBureau�s updated template is timely asthe number of consent agreementsregistered with the CompetitionTribunal have rise significantly sincethe last templatewas published in 2007.In 2015 alone, six consent

agreements have been registered withthe Tribunal, compared to twoagreements thatwere registered in 2007.Since 2007, more than 30 consentagreements have been registered withTribunal, following remedynegotiations between the Bureau andthe merging parties.The intent of the consent agreement

template is to provide formal guidanceto the legal and business communitiesin respect of the Bureau�s expectationswhen negotiating measures to addresscompetitive issues likely to arise froma proposed merger.(www.competitionchronicle.com, 03.10.16)

Markets to Work BetterIt is the driest of issues but planned

new competition laws could benefitAustralian consumers. The so-called�effects test�will helpAustralia�s twomillion small businesses operatewithout feeling they operate in theshadow of big business.The Turnbull government has

introduced legislation to strengthencompetition rules that prevent firmswith substantial market powerengaging in conduct that harmscompetition.These amendments will make

markets work better for the benefit ofallAustralians and help to lift our long-term productivity growth.

(www.news.com.au, 01.12.16)

Aim to Consolidate LeadershipChile has amended its Competition

Law to �consolidate [its] leadership asa sophisticated agency in LatinAmerica.�The amendments include the

introduction of mandatory premergernotification and a two-phase mergercontrol system, required notification foracquisitions ofminority stakes, criminalpenalties for cartel involvement, anincrease in the maximum fine foranticompetitive conduct, and per seenforcement for interlocks betweencompetitors under certaincircumstances.The most important amendments

for parties� doing business inChile, andthose considering potentialtransactions in the country, are theintroduction of amandatory premergernotification to the National EconomicProsecutor and a two-phase mergercontrol system. (NLR, 07.12.16)

Competition Authority in OperationAfter three years of hiccups,Kosovo

Competition Authority members havebeen selected and are ready to assumetheir positions and begin work.The authority has not been

operational since 2013, and despiteinitial efforts members have only nowbeen appointed. Due to the lack of adecision-making body, no decisionshave been issued or investigationsconducted by the authority since 2013.The authority is one of the

�Blow Whistle� on Cartel Conduct

The Competition Commission of Singapore (CCS) announcedamendments to a number of its core guidelines, following a consultation

process in 2015. CCS has also confirmed the introduction of a new FastTrack Procedure, designed to giveparties an incentive to admitliability and settle competitioninvestigations quickly.

The amendments bring severalof the guidelines in line withexisting CCS practice, and insome cases, provide welcomeclarifications as to how CCS willapproach its enforcement andadministration of the Competition Act.

However, other amendments may have a �chilling effect� on thewillingness of multinational businesses to participate in CCS� leniencyprocess (which provides immunity or penalty discounts to businesses that�blow the whistle� on cartel conduct). (www.singaporelawwatch.sg, 01.11.16)

www.green4sea.com

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Competition Law Developments in Africa in 2016Xolani Nyali*

Public Interest in AfricaWhen SouthAfrica published its public interest guidelines in2016, it became clear that such guidelines were needed in allthe major competition law jurisdictions in Africa. Guidanceon public interest issues in mergers would create a degree ofcertainty for investors and allow merging parties to considerthese issues proactively, rather than beingmetwith a conditionimposed unexpectedly or unnecessarily.

The most acute public interest factor in South Africa hasbeen employment, where the protection of employment isparamount. Botswana, Kenya and Tanzania have focused onemployment issues when considering public interest inmergers and various jurisdictions have focused on protectinglocal procurement. More countries in Africa are expected toissue formal public interest guidelines in the coming years.

The East African Community Competition LawWith the East African Community (EAC) CompetitionAuthority having appointed five new commissioners in 2016,compliance with the regulations of this new regionalauthority will likely be required during 2017. In addition, theEAC member states that do not have competition laws inplace must now draft them, meaning that competition lawshould be implemented in an additional three countries in thenear future, Burundi, Rwanda and Uganda.

As four of the five EAC member states are also CommonMarket for Eastern and SouthernAfrica (COMESA)memberstates, it remains to be seen what mechanisms will be put inplace between the authority and COMESA to streamline thecontrol of merger activity in East Africa, which has been ahub for private sector investment in recent years.

MozambiqueMozambique�s Competition Authority was supposed tobecome operational in 2016 but it has been delayed. It isexpected to begin functioning in 2017. It is the only majorjurisdiction in Southern Africa that does not yet havededicated competition law.

The country is also the only Portuguese speaking jurisdictionin Southern Africa so it is doubtful that it will look to SouthAfrican competition law for interpretation. Due to languageand history, the regulator may look to Portugal or the EU tointerpret its law, which will introduce an interesting mix intocompetition jurisprudence in SouthernAfrica.

High Court of Kenya�s First Competition CaseThe High Court of Kenya handed down judgment on the firstcompetition case in Kenya, in the matter between MeaLimited and the Competition Authority of Kenya (CAK) in

* Senior Associate in the Competition Practice at Bowmans in Cape Town. Abridged from an article appeared in TheAfrican LawBusiness, on December 20, 2016

2016. The ruling confirmed the principle that dawn raids,provided they are based on a reasonable suspicion whichis supported by facts, are legal and no prior notice that asearch warrant is being sought is required to be given tothe company that is to be raided.

2016 DealsIn 2016, Bowmans advisedSABMiller in its highly complextransaction with the Coca-Cola Company (TCCC) andGutsche Family Investments (GFI), included advising onthe corporate, employment, tax and competition aspects.The transaction was approved unconditionally inBotswana, Namibia, COMESA andHonduras, and subjectto conditions in Kenya, Tanzania and South Africa. Afterthe approval in South Africa, the initial stage of thetransaction was completed on 2 July 2016.

SABMiller still intends to transfer to CCBA at a later stageits Swaziland soft drinks and those of its listed subsidiariesin Botswana and Zambia, subject to agreement with thosesubsidiaries and regulatory and shareholder approvals.The firm was also the South African and Rest of Africacounsel to SABMiller on its US$107bn combination withABinBev. This is by far the largest transaction in SouthAfrican corporate history and the fourth largest announceddeal in global M&A deal history to-date.

The firm represented NationwideAirlines against SouthAfrican Airways (SAA) in relation to ongoing abuse ofdominance conduct, in contravention of the CompetitionAct, resulting in a damages claim against SAA, which washeard before the South Gauteng High Court in 2016. Thenature of NationwideAirlines�claimwas the second of itskind to be brought in SouthAfrican law and the first to belitigated, setting a precedent within South AfricanCompetitionLaw.

This article looks at some of the competition lawissues making headlines in Africa in 2016 andhow they will impact competition law proceed-ings in 2017

www.businesstrum

pet.co

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�Every quarterback can throw a ball;every running back can run;

every receiver is fast; but that mentaltoughness that you talk abouttranslates into competitiveness�, saidTom Brady, Hall of Fame, AmericanFootball Quarterback. Sports can teacha lot, especially when the subject iscompetition.

The competition among nations toattract businesses, investments andgrowth, is getting tougher. Fromproviding goods and services globally,every country aspires to be morecompetitive than ever. There is cut-throat competition amongst SouthAsian countries. Bangladesh isstruggling to effectively adopt andimplement a competition law.Thus, thefocus should be more on setting thingsrightwithin the country and bementallytough, to not just run or run fast; butto run fast and for long.

It has beenmore than four years sinceBangladesh enacted the CompetitionAct. Before its enactment, theGovernment of Bangladesh constitutedthe Bangladesh CompetitionCommission (BCC), under theMinistryof Commerce in 2011. However, theCommission is yet to start itsfunctioning in full swing owing to lackof available resources, required for itsefficient functioning.

A Healthy Market Demands Effective Competition LawUdai S Mehta* and Rohit Singh**

* Deputy Executive Director, CUTS** Policy Analyst, CUTS� Abridged from an article appeared in The Financial Express, Bangladesh on November 15, 2016

Till date, the BCC does not have anoffice or a website and its existence hasbeen limited only on the papers. It is aglobal fact that competition facilitatesbetter growth and consumer welfare.With numerous examples of countriesadopting and effectively implementingCompetition Act, Bangladesh has anumber of examples to followwithin theregion (India and Pakistan) includingoutside the region. Thus, the need ofthe hour is to ensure effectiveenactment of the Competition Act, byempowering the Commission.

Bangladesh is often characterisedby low internal competition,

natural monopolies of state-ownedenterprises (SoEs) and weak privatesector. SoEs have complete control overrail transport, whereas privatecompanies compete freely in air androad transportation. The banking sectorhas also been dominated by state-owned banks but recently the privatesector has begun to show somepromise.

Because of their large number, the SoEsplay a critical role in generation ofemployment and revenues forBangladesh. However, having a largenumber of SoEs, in itself attractsanticompetitive behaviour. ForBangladesh, as can also be seen inIndia, many of the SoEs are incurring

massive losses which negatively affectthe government budget and revenues.

Despite the Bangladesh government�sparadigm shift towards privatisationand liberalisation in 1993,when74SoEswere sold out, markets of Bangladeshare far from being beset withanticompetitive practices, such ascartelisation, abuse of dominance,unfair price hikes, hoarding ofcommodities, which has resulted inendless suffering for consumers andimpacted the market dynamics andefficiency. However, with the advent ofprivate players in the market, sectorswhich were dominated by SoEs, haveseen enhanced competition, which inturn has resulted in reduction of costof services.

An example of this may be drawnfrom telecommunication services

in Bangladesh. Historically, thetelecommunication services weredominated by SOE, then BangladeshTelegraph and Telephone Board(BTTB), which was a monopoly. Withthe deregulation and technologicalinnovation, the mobile services haveseen a number of private playersentering the market and the BTTB�smarket share has gone downsubstantially. The prices for serviceshave also come down significantly andthe consumers have benefited fromenhanced competition.

Thus, it may be safely assumed thatweak competition law in a countrymayresult in opening opportunities for themalicious market players to indulge inanticompetitive practices. A healthymarket is the one which has fair andsufficient competition. These marketsin turn strengthen the economicbackbone of the country in terms ofquality and cost-effective goods andservices produces. This is what maybe referred as mental toughening of acountry in global competitiveness.

Bangladesh has ranked 106th inGlobal Competitiveness Index

among 138 countries in 2016-17,one notch above its position held

in 2015

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Telenor Risks Anti-Competitive FineNorway�s telecoms operatorTelenor

risks a 100mn fine for abuse of adominant market position, thecountry�s competition authoritywarned.Telenor, which is 54 percent owned

by the Norwegian state, is accused ofimpeding the entry of a third competingmobile network into the countrybetween 2010 and 2014.Norway is one of the few European

countries to have only two telecomsnetworks inTelenor andSweden�sTelia.TheAuthority�s Director Gjermund

Nese said the entry of a third networkis crucial to increasing competition and�guaranteeing a good supply of(mobile) services at the lowest pricepossible�. (www.thelocal.no, 23.11.16)

Tetra Pak Disappointed by PenaltyTetra Pak has spoken out about its

disappointment following a US$96mantitrust fine by China�s StateAdministration for Industry andCommerce (SAIC). The SAIC issuedthe penalty notice following aninvestigation in 2013 across 20provinces andmunicipalities.It found six affiliates of Tetra Pak

were abusing their market dominance,by bundling its packaging facilities andservices with materials, in China from2009-2013.Chris Huntley, Senior VP,

Communications,Tetra Pak, said Chinaintroduced its competition legislationin 2008 and it adjusted its businesspractices to ensure compliance.

(www.dairyreporter.com, 28.11.16)

Microsoft Target in Antitrust ProbeRussia�s competition authority had

opened an investigation againstMicrosoft Corp. over alleged abuse ofdominance for giving its own antivirussoftware an edge on competitors on itsWindows 10 operating system.When Microsoft switched over to

the latest version of Windows, it gavedevelopers only six days to adapt theirantivirus programmes to be compatible,the FederalAntimonopoly Service said.Previously, the company alloweddevelopers two months to make thenecessary changes, the agency said.

ABUSEOFDOMINANCE

MICRO ISSUESReducing that time period gives

Microsoft�s own Windows Defenderprogramme a leg up because it isactivated by default if other antivirusprogrammes are not installed, the FASsaid.The company said that Microsoft

is committed towork in full compliancewith Russian law. (ET, 10.11.16)

Google Fights Android ChargesGoogle has responded to the EC�s

renewed statement of objections,declaring its case against GoogleShopping to be �wrong on the facts,the law, and the economics� anddismissing it as just �the interests of asmall number of websites�.The seven-year case revolves

around the charge that the marketdominance of Google within search isbeing used to leverage its pricecomparison service to the detriment ofthird-party sites.Within its second 100-page

response to the EC, Google said thatits Shopping service, which appears asa tab within search results and withinadverts at the top of the page, wassimply the result of its push to presentuserswith useful information and directanswers to questions. (WSJ, 10.12.16)

Aspen Slammed for Market AbuseGlobal pharmaceutical firmAspen

has been fined 5mn by Italy�scompetition authorities for marketabuse.

Specifically it has been found thatit inflated the prices of anti-cancerdrugs by up to 1500 percent, sinceacquiring the right to commercialisethese drugs from GlaxoSmithKline(GSK).The products concerned are

chemotherapy drugs Alkeran,Leukeran, Purinethol and Tioguanine.Aspen acquired the rights tocommercialise these drugs, internallyreferred to as the �Cosmos� drugs, fromGSK in 2009. In the same deal, theUK-based firm acquired a 16 percent stakein Aspen, which it has subsequentlydivested of. (www.msn.com, 18.10.16)

Allegation against OLA DismissedThe Competition Commission of

India (CCI) dismissed allegations ofabuse of dominance by Ola Cabs andTaxi For Sure (together, ANITechnologies Pvt Ltd (ANI) forpredatory pricing.It was alleged thatANIwas driving

away competitors in the market forparatransit services in the NationalCapital Region by payingmoremoneyto drivers than it collected frompassengers.The CCI noted that in the two

relevant markets, ANI was not in adominant position, as there was stiffcompetition betweenANI and Uber inproviding radio taxi services in NewDelhi. Similarly, in relation to auto-rickshaw services,ANI�s market sharewas less than 20 percent in NewDelhi.

(ILO, 22.12.16)

Facebook �Misled� on WhatsApp

The European Commission (EC) has chargedFacebook with providing misleading

information during its takeover of the onlinemessaging serviceWhatsApp, opening thecompany to a possible fine of onepercent of its turnover.

Facebookbecomes the latest SiliconValley target of EU CompetitionCommissioner Margrethe Vestager,who has demanded Apple pay backUS$14bn in taxes to Ireland and hitGoogle with two market abuse investigations.

The issue regards a WhatsApp privacy policy change in August when itsaid itwould share someusers� phonenumberswith parent company Facebook,triggering investigations by a number of EU data protection authorities.

The Commission said Facebook had indicated in its notification of theplanned acquisition that it would be unable reliably to match the twocompanies� user accounts. (TH, 21.12.16)

www.indiaopines.com

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Foodcorp Asks for ReviewThe South African Competition

Tribunal has given the CompetitionCommissionuntil January31, to provideclarity on some of the charges broughtagainst one of four companies in thepelagic fish sector.The Commission, in its complaint,

alleged that Pioneer Fishing and localfood company Foodcorp had enteredinto at least three agreements between2002 and 2009, duringwhich they fixedthe price of pelagic fish to retailers andwholesalers, through the exchange ofsensitive information.Pioneer is also alleged to have

repeatedly put pressure on Foodcorpto increase its prices, besides otherthings. Foodcorp asked the Tribunalto order the Commission to amend itscomplaint referral to the tribunal, notingthat the present referral was �vague andembarrassing�.

(www.engineeringnews.co.za, 14.12.16)

Fines over Battery CartelThree businesses have been fined

a total of 166mn by the EU�scompetition regulator after itdetermined they participated in anillegal cartel in themarket for the supplyof rechargeable batteries found indevices such as laptops and mobilephones.The EC said Sony, Panasonic and

Sanyo, together with Samsung SDI,�coordinated prices and exchangedsensitive information on supplies of

rechargeable lithium-ion batteries� inbreach ofEUcompetition rules betweenFebruary 2004 andNovember 2007.The final fine served on Sony was

29,802,000. Panasonic was fined38,890,000 and Sanyo fined97,149,000. Samsung SDI was notfined at all as it disclosed the cartelarrangements to the Commission.

(www.out-law.com/, 14.12.16)

Banks Admit to Cartel ConductAustralia�s Federal Court fined

ANZ Bank and Macquarie Group,respectively, over �very serious�attempts by their traders to manipulatea key benchmark rate in Malaysia�sforeign exchangemarketsAccording to the Sydney Morning

Herald (SMH), Federal Court JusticeMichael Wigney set penalties in linewith those proposed by the competitionregulator and the banks, which arecooperating with investigators.The fines come after theAustralian

CompetitionandConsumerCommission(ACCC) initiated legal action againstthe two banks over private online chatroom conversations betweenSingapore-based traders back in 2011.(www.themalaymailonline.com, 15.12.16)

Twin Telecom Abuse ProbesItaly�s communications authority

(AGCOM)opened an investigation intoVivendi�s stake building in Mediaset,after the Italian TV broadcaster made acomplaint.AGCOM said it was looking into

the matter with regard to Italian anti-

trust regulations which preventcompanies from having an excessiveshare of the domestictelecommunications andmediamarkets.Frenchmedia giant Vivendi, which

isTelecom Italia�smain shareholder, hasrapidly built up its stake in Mediasetfrom 3 percent tomore than 25 percent.

(ET, 22.12.16)

Cash Handling Cos. Under FireThe Spanish Competition

Authority (CNMC) has fined two cashhandling companies 46.4mn over analleged conspiracy to fix prices andexchange sensitive businessinformation in the market for thetransportation and handling of funds.Prosegur Services Cash Spain,

Spain Loomis and two of theirexecutives were penalized over thebehavior, which took place over sevenyears. The companies� conduct hasallowed Prosegur and Loomis toeliminate competitive pressure betweenthem, preserve and maintain virtuallyunchanged their relative positions inthe market for an extended period oftime and has prevented the entry orexpansion of new competitors.TheCNMC said that the companies

had adopted several schemes toallocate the market between them.Employee emails detailed the extent ofthe companies� behaviour.

(www.law360.com, 17.11.16)

Five Pharmacy Chains SanctionedPeru�s National Institute for the

Defense of Competition and Protectionof Intellectual Property (Indecopi)announced a total of US$2.6mn in finesfor the Arcangel, Fasa, Inkafarma,Mifarma and Felicidad pharmacychains.The agency also required each

company to develop a trainingprogramme to teach employees aboutanticompetitive practices and theirlegal consequences.Indecopi said the five companies

accounted for 72 percent of Peru�spharmaceutical sales at the time ofcollusion between 2008 and 2009. Theagency estimates that consumers paidan average of five percent more for the21 pharmaceuticals and 15 nutritionalproducts than otherwise.

(www.perureports.com, 26.10.16)

MICRO ISSUES

PRICE FIXINGPRICE FIXINGPRICE FIXINGPRICE FIXINGPRICE FIXING

www.thestar.com

Model Agencies Fined for Price Collusion

Five of London�s leadingmodelling agencies andamajor

trade association have been finedmore than £1.5m for pricecollusion by the UK competitionwatchdog, the third time theindustry has faced a crackdown inEurope in the past three months.

The Competitions and MarketsAuthority had found the agencies� FM Models, Models 1, Premier, Storm and Viva � and the Association ofModel Agents colluded on setting prices for modelling services.

The CMA�s probe did not target the work of supermodels but insteadfocussed on models engaged in the lower to mid-end of the market, coveringfashionmagazine shoots that paya fewhundredpounds to advertising campaignswhere they can earn more than £10,000. (FT, 16.12.16)

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Case SummaryMedtronic was found to maintain adistribution system for cardiovascular,rehabilitation therapy and diabetesmedical devices in China, consistingof various tiers of distributors. NDRCheld that Medtronic had engaged inRPMpractices since 2014, including:� Setting resale prices: Medtronicwas found to set the resale pricesfor distributors at various tiers ofthe distribution system.

� Fixingprofitmargins: Itwas foundto fix theprofitmarginsof �platform�distributors reselling its productsto tier two distributors.

� Imposing minimum biddingprices: It was found to haveimposed �guiding� bidding prices inthe distribution agreements, anddistributors were required to seekMedtronic�s approval for anydeviation from those prices.

� Settingminimum resale prices tohospitals: It was found to imposeminimum prices for the resale ofproducts to hospitals.

Which Benchmark for RPM?There have been a number of RPMcases decided by NDRC, its localoffices and the Chinese courts in recentyears. However, there seems to be adivergence between the authority andthe courts in applyingArticle 14 of theAnti-Monopoly Law (AML), whichregulates RPM conduct.

TheMedtronic decision is somewhatmore elaborate on the anti-competitiveeffects of the RPM conduct, whencompared to NDRC�s past cases. Thedecision has a sub-heading referringto negative effects on competition andconsumer harm, and mentionsMedtronic�s leading market positionand high barriers to entry into therelevant markets.

One interpretation of this somewhatmore detailed discussion of NDRC�sunderlying reasoningwould be that the

authority�s position is converging with that of the courts � in particular, RPMwould only be problematic where the company in question has a significantdegree ofmarket power and there is not sufficient competition in themarketplace.However, at this point in time, it is far from certain whether this interpretationrepresents the true intention of NDRC.

Expanding the Scope of the Law?As noted, NDRC�s decision in the Medtronic case found the territorial andcustomer restrictions and the exclusive purchasing requirement to have increasedthe anti-competitive effects of theRPMconduct. As a result,Medtronic committedto terminating the territorial and customer restrictions (presumably for allproducts), and the exclusive purchasing requirement for those products where ithas market power. This is a very notable development.

As the law currently stands, it would seem that territorial and customer restrictionsand exclusive purchasing requirements are problematic only if the company inquestion has a dominant position. For non-dominant companies,Article 14 of theAML only explicitly prohibits RPM. That said, the provision also contains acatch-all clause allowing NDRC and the State Administration for Industry andCommerce (SAIC) to find other, not specified vertical agreements to be unlawful.

Now, the Medtronic decision may signal a shift in the law. Even though NDRCdid not find these additional restrictions to be illegal themselves, it found them toaggravate the competition problem and accepted Medtronic�s commitments inthat regard. Taking into account that NDRC published draft guidelines for theautomotive industry which also target certain types of territorial restrictions andexclusive purchasing requirements, a new trend to expand the scope of theAML�sapplication may arguably become visible.

ConclusionMost of all, theMedtronic decision is a strong reminder for companies that theyshould not engage in RPM conduct � at least until the benchmarks on whatdistinguishes anti-competitive from pro-competitive resale practices have beenclarified.

Beyond this simple lesson, the decision may becomemore important if it were toindicate a shift in the law � leading to an alignment betweenNDRC and the courtsas to the necessity of an effects analysis for RPM, and/or expanding the obligationson non-dominant companies not to impose territorial/customer restrictions andexclusive purchasing requirements.

China Continues Resale Price Maintenance Crack-DownAdrian Emch*

* Lawyer, Hogan Lovells International LLP ranked by Chambers Asia Pacific 2016. Abridged from an article that appeared inwww.kluwercompetitionlawblog.com on December 20, 2016

On December 05, 2016, theNational Development andReform Commission (NDRC) �one of the three Chineseantitrust authorities � issued itsdecision fining the local unit ofMedtronic, a US-listed medicaldevice maker, for resale pricemaintenance (RPM)

www.media.startribune.com

8No.4, 2016

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RESTRUCTURING

British-Qatar Airways Deepens TiesBritishAirways parent IAGSAand

its largest shareholder Qatar Airwaysagreed to set up a joint business thatwill see them code-share on flightslinking dozens of destinations whileoperating a joint timetable and sharingrevenue and costs on services betweenLondon and Doha.The deal will see British Airways

attach its code to Qatar flights beyondDoha to destinations in countriesincluding Pakistan, Ethiopia, Iraq andVietnam, with the Gulf carrier doinglikewise on the UK airline�s operationsto cities across the UK and continentalEurope.The companieswill also code-share

on their flights between Britain andQatar, including seven daily tripsbetween London and Doha, which willessentially become joint services.

(FT, 29.09.16)

RupertMurdoch Expands TV EmpireRupertMurdoch�s 21st Century Fox

sealed a US$14.8bn cash deal to takecontrol of pan-European pay-TV giantSky and create a global entertainmenttitan.TheMurdoch-controlled Fox group

said in a statement that it has reached aformal agreement to buy the 61-percentstake in Sky that it does not alreadyown.�It creates a global leader in content

creation and distribution, enhances oursports and entertainment scale, andgives us unique and leading direct-to-consumer capabilities andtechnologies. It adds the strength ofthe Sky brand to our portfolio,including the Fox,NationalGeographicand Star brands,� the statement added.

(TH, 16.12.16)

Green Light to ChemChina-SyngentaChemChina�s proposed US$43bn

acquisition of Syngenta will not bederailed by Australian competitionregulators, who have green-lighted thedeal saying it had no competitionconcerns.The ACCC had been scrutinising

the deal, the biggest ever foreigntakeover by a Chinese company, asChemChina owns a subsidiary,AdamaAgricultural Solutions (Adama), whichcompetes with Syngenta in Australiaas they both supply crop protectionproducts such as insecticides,herbicides, and fungicides.However, regulators found there

was no concerns, as ChemChinawouldstill face competition fromBayer,BASF,Monsanto, Dow and others.TheACCC found that ChemChina

would continue to face competition inthe supply of crop protection productsfrom a range of proprietary and genericsuppliers such as Bayer, BASF,Monsanto, Nufarm, Dow, DuPont, andFMC. (CPI, 11.12.16)

Sompo Snaps up EnduranceSompo Holdings, one of Japan�s

biggest insurers, is to acquire Bermuda-based rival Endurance SpecialtyHoldings for US$6.3bn, the latest in astring of overseas acquisitions byJapanese companies bolstered by theirstrong home currency.The Japanese insurer would pay

US$93 in cash for each Enduranceshare. Sompowould fund the deal withexcess cash on hand.The acquisition of the global

provider of property and casualtyinsurance and reinsurance is the latestsign that a growing number of Japanesecompanies are seeking to expand their

exposure to the US, where growthprospects are stronger than in theirhomemarket. (FT, 06.10.16)

Siemens Boosts Software BusinessSiemens sought to bulk up its

industrial software capabilitiesthrough a US$4.5bn deal to buyMentor Graphics, a US companyfocused on developing electroniccomponents quickly and cheaply.Mentor helps companies design

and manufacture circuit boards andsemiconductors with specialistsoftware, notably for the aerospace andautomobile industries.Siemens is best known as an

engineering conglomerate that buildspower systems but in the past decadeit has beefed up its capabilities toprepare for the so-called fourthindustrial revolution involving big dataand the internet of things. (FT, 15.11.16)

Bass Pro Captures Rival Cabela�sBass Pro Shops is to buy rival chain

Cabela�s in a US$5.5bn deal, includingdebt, that combines two of the biggestchains of hunting and fishing stores inthe US, and underscores the toughenvironment facing the US$46.6bnspecialist retailingmarket.The takeover, which values

Cabela�s equity at aboutUS$4.5bn,willmean the combined group becomes theUS�s second-largest sports goodsretailer by revenues.Analysts opine that the sporting

and outdoor goods retailers that aremost likely to survive are those thatoffer specialist products and servicesand can successfully integrate theirphysical outlets with online saleschannels. (FT, 10.10.16)

Airtel Announces Axiata Merger

Bharti Airtel has merged its unit in Bangladesh with Robi AxiataLtd., a unit of Axiata Group Berhad, a move which will form a

strong No. 2 mobile phone operator in what is a fiercely competitivemarket led by Telenor unit Grameenphone.

The merger is a part of Airtel�s initiative to restructure operationsin all markets where it trails one or more market leaders. The Indianmarket leader had entered Bangladesh by acquiring 70 percent stakein Warid Telecom in 2010, which it raised to 10 percent in 2013.

Prior to the merger, Airtel was the fourth largest in Bangladeshamong six operators, while Robi Axiata was ranked No. 2.

(ET, 16.11.16)

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9No.4, 2016

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RESTRUCTURINGNod to SIA-Lufthansa VentureThe Competition Commission of

Singapore (CCS) has given approval forthemerger of SingaporeAirlines (SIA)and the Lufthansa Group.The airlines have agreed tomaintain

and subsequently increase passengerseat capacity on the Singapore toFrankfurt and Singapore to Zurichroutes, and to carry aminimumnumberof Singapore passengers on theseroutes, the CCS said.The CCS had been concerned that

SIA and Lufthansa were the only twocarriers operating on these routes andthat their combined market shareexceeds 80 percent. However, thecommitments they have made addressthe competition concerns.In addition to SIA and Lufthansa,

the agreement includes SIA subsidiarySilkAir, and Lufthansa subsidiariesSWISS andAustrianAirlines.

(www.out-law.com/, 13.12.16)

Boosting Healthcare OperationsSwitzerland�s Lonza Group has

agreed to buyUS capsulemanufacturerCapsugel in a US$5.5bn deal that willboost the Basel-based company�shealthcare operations.The acquisition of Capsugel from

private equity groupKKRwill reinforceLonza�s position as the biggestsubcontractor of drug manufacturingin the world, giving control of theprocess from production of activeingredients to the making of capsulecasings and dosage. Capsugelmanufactured 200 billion capsules in2015.The combined healthcare business

will generate annual sales ofUS$3.2bn,well ahead of rivals Patheon andCatalent, Lonza said. The company alsoexpects about SFr30m a year in savingsfrom the deal, and an additionalSFr100m of savings in the longer term.

(FT, 16.12.16)

Deal to Create Gas GiantGerman industrial gases group

Linde and US suitor Praxair agreed anoutline for aUS$65bn-plusmerger,withthe combined company to be run outof the US by Praxair�s chief executive.The agreement comes after Praxair

provided new assurances to Linde over

jobs and corporate governance inGermany. As part of the agreement onkey aspects of the planned all-sharemerger, existing Linde and Praxairshareholders would each own about 50percent of the combined company.The merged group will target

US$1bn in cost savings, the twocompanies said in a joint statement,although some analysts said that figurelooked overly optimistic. (FT, 21.12.16)

GE-Baker to Create Oil BusinessGeneral Electric Co. is creating a

US$32bn oil business by combining itspetroleum-related operations withBaker Hughes Inc., betting on arebound for an industry mired by ahistoric slump in crude prices.The new company will be one of

the industry�s largest players, bringingtogether a portfolio of capabilitiesspanning oilfield services, equipmentmanufacturing and technology. GEwillown 62.5 percent of the merged entity,which will be publicly traded.The new entity will be capable of

providing end-to-end oilfieldequipment, technology and servicessolutions at scale. (Mint, 01.11.16)

Qualcomm Agreed to Buy NXPSmartphone chipmaker Qualcomm

Inc agreed to buyNXPSemiconductorsNV for about US$38bn in the biggest-ever deal in the semiconductorindustry, making it the leading supplierto the fast-growing automotive chipsmarket.The acquisition will also help

Qualcomm, which provides chips toAndroid smartphonemakers andAppleInc, reduce its dependence on a coolingsmartphonemarket.With the deal, Qualcomm is taking

a big bet on the so-called Internet ofThings, which enables everydayobjects such as fridges and cars tocommunicate with each other.

(Mint, 28.10.16)

BP to Acquire Fuel StationsBP has made its biggest

downstream acquisition since 2001,spending almost US$1.3bn on 527 fuelstations in Australia, in the latest of astring of deals announced by the oilgroup before the end of the year.

Microsoft-LinkedInAcquisition Closes

Microsoft Corp. closed itsroughly US$26bn deal to

buy professional-networking siteLinkedIn, cementing the largestacquisition in the tech giant�shistory.

The marriage of two firms is abet that the social network canreinvigorate Microsoft�s softwareofferings despite recent struggles byboth companies. The closure of thedeal was announced by MicrosoftChief Executive Satya Nadella in aLinkedIn post.

Nadella hopes the deal willopen new horizons for Microsoft�sOffice suite as well as LinkedIn,both of which have saturated theirmarkets, and bolster Microsoft�srevenue and competitive position.

(WSJ, 28.12.16)

The UK company is acquiring thepetrol stations with convenience storesfrom Woolworths, Australia�s largestgrocery chain, which has beenoverhauling its business following therapid rise of German discounterAldi inAustralia.The US$1.28bn deal, which

includes a further 16 sites that are underconstruction, is the latest of a numberof spending commitments announcedby BP in the past month, as it pursuesgrowth opportunities following yearsof retrenchment after the 2010Deepwater Horizon oil spill.

(FT, 29.12.16)

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10No.4, 2016

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RESTRUCTURING

The number of multibillion-dollardeals announced in recent weeks

is staggering by any measure,particularly in an election year, whenthe uncertainty tends to drive awaydeals.

TimeWarner�s & AT&T�s US$85.4bnproposed tie-up has dominated theheadlines as consumers latch on totales of media dominance, but inOctober alone, US$329bnworth of dealactivity in the US has been announced.Theworldwide number,US$483.1bn, isalso no slouch and the fifth highest onrecord.

Other gigantic deals include GeneralElectric�s combination of its oilbusiness with that of Baker Hughes,British American Tobacco�s US$47bntakeover offer for Reynolds Americanand Qualcomm�s US$38.5bn deal forNXP Semiconductors. One of thebiggest deals in 2016 is Bayer�sUS$56bn takeover of Monsanto.

Conventional wisdom is that thisactivity is all about cheap money.

Interest rates are at 400-year lows andthe world is awash with liquidity asinvestors try to find anything thatyields a decent rate. Capital markets areso well developed thatAT&T can seekto borrowUS$40bn to buyTimeWarnerwithout missing a step.

The challenge facing chief executivesis compounded by the changeswrought by technology. Companies,particularly in technology, media andtelecommunications, are racing to keepup and avoid being outmaneuvered.Microsoft�s US$26.2bn purchase ofLinkedIn can be viewed solely as adefensive play � keeping its globalreach on the internet.

* Professor of Law at the University of California, Berkeley Abridged from an article appeared in the Business Standard on November03, 2016

Blockbuster Deals in a Race toStay Ahead of the Competition

Steven Davidoff Solomon*

This trend has also been apparent inthe pharmaceutical and biotechnologydeal making of the past years ascompanies bought drugs instead ofdeveloping them.

And tech itself continues to producenew challengers and spur further

deal activity.The potential initial publicstock offering of Snap at very likely anextraordinary valuation will push othertech companies to go public, generatingmore money in the pockets of the techelite to make acquisitions.

In this new media world, there willprobably be four or five big providersof content, two of which will certainlybe Facebook and Google. AT&T ismaking its play to stay in that eliteleague through its proposedacquisition.

A cynic might see the AT&T dealand others getting ahead of any

changes to our inadequate antitrustlaws. In a low-growth economy, gettingbigger and squeezing out competitorsis a clear way to success.

Yet the monopolistic power play haschanged. In the case of AT&T, itsbusinesses do not overlap with thoseof Time Warner. This is a so-calledverticalmerger, which is harder to stop,and there is little history of thegovernment doing so.

ThomsonReuters reports there havebeen 615 deals year to date, down

from 967 in 2014, so the deals areconcentrated at the higher end. Thistrend is spurring the return of the oft-derided conglomerates that came aboutin the 1960s. As was the case then,instead of growth and survival, wemayjust end up with bloat.

At the moment, it is hard to findanything that can slow themerger train.Everything is going right. But it is inthese times that perhaps caution isnecessary. The merger market hasalways been cyclical. The current ismoving forward, but sentiment canchange.

If we have learned anything frommorethan 100 years of corporate mergers, itis that the lurking influences eventuallyemerge and the current trends drivingall of this merger activity are unlikelyto last. Let us hope it ends slowly andnot with a sudden burst.

But the result of all this merger activityis a broad push toward oligopoly,meaning industries are dominated byjust a few big players.

Take media and telecommunications.We are heading into a world that isfocused on video as people spend theirlives on their smartphones, at least fornow. The AT&T-Time Warnercombination is built on this premise asAT&T�s chief executive, Randall L.Stephenson, bets that the money intelecom is in content.

World-changing corporatetransactions just seem to keepcoming. It would not last,

however.

11No.4, 2016

EGULETTERR

INVESTMENT

After Losing to India in FDI,China Opens up Economy More

Saibal Dasgupta*

But what prompted Beijing to bite the bullet despiteresistance from state-owned enterprises (SoEs) is not

just slipping numbers of foreign direct investments. It isworried about US President-elect Donald Trump usingChina�s partially closed market as a reason to launchnegative trade actions. Chinese authorities are trying topre-empt adverse action from Trump, who has accusedChina of unfair investment practices resulting in the �theftofAmerican jobs�.

Trump�s antagonism for China might be an opportunity forattractingmore FDI in India, observers said. But a lot woulddepend on effects of the demonitisation decision on foreigninvestments. The China challenge is not any more than lastyear. CommerceministerGaoHucheng admitted onMondaythat foreign direct investments grew at a slower rate of 3.8percent in 2016 compared to growth of 6.4 percent seen in2015. Whether India will manage to retain the top slot thisyear remains to be seen.

�US-China commercial relations are in for a rough ride inthe coming months, as the Trump administration

aggressively pushes China to open its markets further toAmerican imports and investment and applies amore criticaleye to Chinese investments in the US,� Scott Kennedy,Deputy Director of Freeman Chair in China studies at theWashington-based Centre for Strategic and InternationalStudies said.

India surged ahead of China after its FDI inflows slipped 23percent toUS$56.6bn in 2015. �The big FDI story of the pastyear is India.After a long period of trailing behindChina, thesouth Asian country is now racing past its formidable rival.India was the highest ranked country by capital investmentin 2015, with US$63bn worth of FDI projects announced,�said Courtney Fingar, Head of Content with London-basedfDi Intelligencewhile releasing its 2016 report.

China�s National Development Reforms Commission saidthat the purpose of opening new doors for foreign investors

* Correspondent, Times of India. Abridged from an article appeared in the Times of India on December 31, 2016

are to �improve transparency of policy-making� and �letforeign capital play a positive role in China�s economicdevelopment, industry transformation, and reform andinnovation�. Chinese experts regard the decision as boldbecause of a terrible slowdown in the Chinese economy andthe worldwide trend of protectionism.

But China is aiming at bigger goalpost, analysts say. It istrying to persuade theWTO to grant China the coveted

status ofmarket economy. Beijing says it had been promisedby theWTO that it would automatically gain the status aftercompleting 15 years as a member. But the US is determinedto resist the move, and the EU is setting up its own hurdlesin China�s path.

An important question is whether the rule change is for real.Some analysts think it has no more than cosmetic valuebecause foreign players face a lot of difficulties on the ground.

�China has only superficially opened up more sectors toforeign investment. The broader environment is still highlyrestrictive, with wide swaths of the economy either off limitsto foreign investors or with ownership caps that requireforeign investors to engage in joint ventures with Chinesepartners,� Kennedy said.

Foreign businesses are unlikely to lap up the newopportunity thrown up by the latest market opening

measures. This is evident from surveys ofmember companiesconducted by theAmerican Chamber of Commerce in Chinaand European Chamber of Commerce.

Besides, Washington has already begun to resist Chineseinvestments and Beijing is getting ready to retaliate. USPresident Barack Obama recently blocked a Chinesecompany�s purchase of German chip-equipmentmanufacturerAixtron on national security grounds. The USTrade Representative also put an online shopping site ofChina�s Alibaba Group on a blacklist of �notoriousmarketplace� for selling counterfeit goods.

China, which in 2015 lost the top position as aninvestment destination to India, has now openedup more sectors for foreign investors to catch upin the race. It is offering a slice of tightlycontrolled segments like public transport andrailway equipment to foreign players besidescutting down the number of restrictions by a thirdfrom 93 to 62.

Times

ofIndia

12No.4, 2016

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CORPORATE ISSUES

The Big Four accounting firms arecurious beasts. On the surface,

PwC,Deloitte, EYandKPMGlook likefour distinct companies that togethercompletely dominate the global auditbusiness� and control a big chunk ofthe consulting market as well.

In reality, though, they are networks ofnational firms, legally distinct fromoneanother. That is partly because eachone has to comply with local rules andstandards, but it has also proved to bereputationally handy: if one far-flungbranch happened to get into trouble,the rest of the network could distanceitself from the problems.

But increasing globalisation is erodingthose distinctions. As investors andcompanies look abroad for growth,some of their investments haveinevitably gone bad, revealingproblematic accounting and,sometimes, shoddy auditing. That, inturn, has prompted regulators incountries that actively police theirdomestic markets to look abroad aswell.Andwhat they are finding has notgone down very well.

The US accounting watchdog finedDeloitte�s Brazilian arm a record $8mfor falsifying reports, altering

Big Four Auditors can no LongerHide Behind their Local Models

Brooke Masters*

Ireland Vows to Fight EU�s Apple Tax Order

The question now is how the Big Fourwill react to joined-up oversight andthe possibility that local problems cancreate regulatory issues half a worldaway.

Although there are legal barriers to fullconsolidation, it is not completely outof the question. In October, Deloitteannounced plans to combine itsmember firms in nine countries,including theUK,Switzerland,Beneluxand the Nordics, to create a singleNorthWest Europe office.At the time,the firm said it was responding todemand frommultinational companiesfor a coordinated approach to digitalstrategy and cyber security. But if themember firmscancombine towincross-border business, surely they can do itto protect themselves from reputationalrisk.

Deloitte says that its network �hasadopted policies and protocols to befollowedbyallmember firms inaneffortto establish a consistently high levelof quality, professional conduct andservice�. That is all very well. It seemsto me it would be a lot more efficientand responsible to actuallymanage thelocal offices instead.

* FT�s Companies Editor. The article appeared in The Financial Times, on December 10, 2016

The firms must work out how to react to increasingly joined-up oversight

Ireland will appeal the EU�s order to force it to collect a record 13bnin taxes from Apple, the Irish government said.The Irish Finance Department�s announcement comes nearly four

months after EU competition authorities hit Apple with the back-taxbill based on its longtime reporting of European-wide profits throughIreland. The country charges the American company only for sales on itsown territory at Europe-low rates that in turn have been greatly reducedby the controversial use of shell companies at home and abroad.

The ruling by the European Competition Commissioner MargretheVestager called onApple to pay Ireland the 13bn for gross underpaymentof tax on profits across the bloc from 2003 to 2014. Her report concludedthat the California-based Apple used two shell companies incorporatedin Ireland to permit Apple to report its Europe-wide profits at effective rates well under one percent. (TG, 19.12.16)

documents and providing falsetestimony during an investigation intothe audits of low-cost airlineGol LinhasAéreas Inteligentes.

The enforcement director of the PublicCompanyAccountingOversight Boarddescribed the case as the �most seriousmisconduct we�ve uncovered� sincethe regulatorwas set up in 2002.Deloittesaid the practices were �whollyunacceptable�. Separately, the PCAOBalso finedDeloitteMexicoUS$750,000for poor quality control policies.

Accountancy experts say the Deloittecases show how regulators are startingto catch up with the internationalfootprint of the Big Four.More than 50national accounting watchdogs nowbelong to the International Forum ofIndependent Audit Regulators, whichsets global standards and seeks to co-ordinate cross-border investigations.

�We have been building a system thataligns regulators with the realities ofglobalisation and these cases areexamples of that,� says RobertHodgkinson, an Executive Director ofthe Institute of CharteredAccountantsin England andWales. �The system hasresponded in a way that reinforces themessage that we have to do better.�

www.cartoonm

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13No.4, 2016

EGULETTERR

SECTORAL REGULATION

Improving Pharma IndustryThe Health Ministry, with the help

of the Malaysia CompetitionCommission (MyCC), has begunadministrative interventions to improvethe pharmaceutical industry.Salbiah Mohd Salleh, Deputy

Director, Pharmaceutical ServicesDivision said that the government wascommitted to making affordablemedicine accessible to Malaysians.However, Salleh acknowledged that

MyCC was �not happy with herdivision� for uploading a consumerprice guide on the Internet. The guidecontains prices of medicine as listedby suppliers. It serves as a benchmarkfor consumers to find out whether theyhave overpaid for a certain drug.

(TSO, 11.10.16)

Allowing for Private Taxi AccessMexico�s Federal Economic

Competition Commission says theregulatory framework should change toallow for increased market access fortaxi services operating at airports, afterthe enforcer fined Mexico City�sinternational airport in September forblocking new entrants.Uber, the transport company

celebrated the initiative presented bythe Federal Economic CompetitionCommission (Cofece) to allow publictaxis to provide their service in allairports in theMexican Republic.Uber said in a statement that

�actions like these promote the right tofreedom to choose quality mobilityoptions that are accessible andavailable at all times for all.�

(CPI, 21.11.16)

Airports for ConcessionThe NigerianMinister of State for

Aviation briefed the public and theindustry stakeholders of governmentplans to concession certain airports toprivate investors as part of the largerplans to privatize some publicenterprises.The government probably decided

on Concession and Privatisation orOutright Sale options because of thefailed commercialisation ofmost of thepublic sector services and enterprises.There were public enterprises that

were fully commercialised like theNLGand the refineries whichwere expectedto operate as profit-making commercialventures without any subsidies fromthe government.

(www.nigerianflightdeck.com, 10.11.16)

Spectrum Re-farming on theWayThe Taiwan Ministry of

Transportation and Communications(MoTC) and the NationalCommunications Commission (NCC)will finalise the spectrum re-farmingproposal for review and approval bythe Executive Yuan.The authorities are eyeing full

deployment of 5G infrastructure and

furthermobile andwireless application.Closer consultation is underway withthe incumbentmobile operators lookingfor harmonisation in the 2017 spectrumswap and transfer.The MoTC and NCC plan to

allocate between 920megahertz (MHz)and 928MHz as unlicensed bandsdedicated to the Internet of Things,and are considering dedicatingbetween 5,850MHz and 5,925MHz totelematics. (ILO, 05.10.16)

Wreck Removal under German LawThe Nairobi International

Convention on the Removal ofWrecksentered into force. One of the mainreasons for its establishment was thelack of authority of the coastal stateswithin the Exclusive Economic Zone(EEZ).This regulatory gap has now been

filled, but the consequence, particularlyfor Germany, is an intricate situationdue to the different legal frameworksbetween the regulations of theconvention applicable in the EEZ andthe national regulations applicable inthe territorial sea of Germany.Within the German EEZ, the

convention applies directly and hasprecedence over national law. Germanlegislation established the necessarymeasures to comply with theconvention, with German regulationsentering into force at the same time asthe convention. (ILO, 21.12.16)

�Digital Single Market� Strategy for Europe

The European Commission announced the final elements of its long-awaited �digital single market� strategy forEurope. The announcement includes two new proposed EU regulations as well as a European Commission

Communication:

� The first proposed EU regulationreleased is the new e-PrivacyRegulation, which is intended toreplace the existing e-PrivacyDirective and align requirementswith those found in the EUGeneral Data ProtectionRegulation (�GDPR�). As aregulation rather than a directive,the new e-Privacy Regulation willapply uniformly across EUMember States and will not be subject to implementinglegislation at the EU Member State level. As a substantivematter, the proposed e-Privacy Regulation.

� The second proposed EU regulation is focused on thehandling of personal data by EU institutions and bodies(and not the private sector), and will bring the data

protection requirements into linewith the obligations set forth in theEU GDPR.

The next step for the proposedEU regulations is for the EuropeanCouncil and the EuropeanParliament to reviewandamend thedrafts. The drafts that emerge fromthis process will enter the triloguephasewhere the EU institutions andMember States, acting through the

European Council, will seek to negotiate and agree onthe final text of the two regulations.

The European Commission has announced itsintention to finalise and adopt the two regulations beforethe EU GDPR becomes applicable on May 25, 2018.

(www.huntonprivacyblog.com, 10.01.17)

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14No.4, 2016

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SECTORAL REGULATION

Following the national outrage that ensued, the NCCissued another statement suspending the implementation

of the price floor. To everyone�s surprise, the MNOassociation kicked against the suspension.Apparently, therehad been a stakeholder�s meeting between the NCC and theoperators where some had complained about low prices theywere charging for data and the consensus was to introducethe floor.

Competition law, to attempt a simple definition, is the systemof rules and regulations put in place to ensure that businessesdo not adversely affect the market by their conduct. Itsultimate aim is protecting consumers from exploitation andmarket distortion and it encourages businesses to innovateto gain market share. It generally prohibits agreementsbetween competing firms to control prices.

Section 11 of the NCC�s competition regulations do so too.As such, the fact that all the operators got into a room todiscuss pricing is an issue of its own. That the NCC was inthe room with them and apparently sanctioned the newpricing arrangement is doubly puzzling.

Secondly, the NCC said it was introducing a price floor tolevel the playing field and enable smaller operators

compete.Without somemore detail from the NCC, this is anunusual intervention for a regulator to make. On the onehand, a regulator cannot allow existing operators introduceunnatural barriers of entry into the market. On the otherhowever, a regulator does not distort the market simply tofavour small operators. If existing operators, due to theefficiency and innovation that their longevity in the marketbrings, are able to price efficiently at a level beyond wherenew entrants can compete, it falls to the new entrants toseek further investment, not to the NCC to make the marketless efficient for their benefit.

Third, it is extremely rare for a competition regulator tomakefindings on pricing without robust supporting marketanalysis. The announcement (re)introducing a price floordid not say whether or not the current price for data waspredatory or otherwise. In its subsequent announcement,it compared the data prices currently offered by the 4majoroperators.� If it is theGlobacom price that has put the othersin a bind, what the NCC should be doing is to investigatewhether or not Globacom�s price is artificially low;whetheror not the laying of its submarine cables means it can nowprovide its service more cheaply than its competitors can.

The price floor intervention by the NCC, without more,will be a disincentive to innovation. Instead of

compelling every operator to look for the technology orother solution to make themmore competitive, everyone isassured of safety, regardless of efficiency, at the expenseof the consumer. Its proponents might argue that one waspreviously existence but this the question remains whetherit is right for one to exist in the first place. Furthermore,when one looks at the statistics on the NCC�s website,showingmarket share for data services between the 4GSMcompanies, for the period Nov 2015 to October 2016, it hasremained virtually flat � no party has either gained or lostsignificant market share. Why then, is the interventionnecessary?

�When consumers make choices about what products andservices to buy, they expect that the price has beendetermined freely on the basis of supply and demand, notby an agreement among competitors.� This quoteunderscores the point that market forces are generally whatshould determine prices and that consumer interest,regarding choice, is paramount.When our NCC says that itwants to prevent the distortion of the market by marketforces, it really does give pause for thought.

* Legal Practitioner with a career to date in Intellectual Property,Media andCorporate Law.Abridged from an article appeared inTheGuardian on December 13, 2016

Regulating Competition the Nigerian WayRotimi Fawole*

The history was made in Nigeria as CompetitionLaw principles were rewritten in thetelecommunications sector. The NigerianCommunications Commission directed theMobile Network Operators (MNOs) to reviewtheir data charges based on a new price floor,for a variety of reasons, including giving newmarket entrants a chance to compete and gainmarket share.

www.thelearnedfriends.com

15No.4, 2016

EGULETTERR

FINANCIAL SECTOR REGULATIONBank Act Amendments delayedThe proposed amendments to the

CanadianBankActwhichwould add aFinancial Consumer ProtectionFrameworkwill bewithdrawn fromBillC-29. Bill C-29 passed third reading intheHouse of Commons and is currentlybefore the Senate of Canada.The controversial aspect of

amendments provide that theprovisions of the Financial ConsumerProtection Framework are intended toset out a comprehensive and exclusiveregime that is paramount to anyconsumer protection law of a province.The Finance Minister will ask the

Financial ConsumerAgency of Canadato review the Framework to ensure thatit provides consumer protections thatare at least as strong as those availableunder provincial law. Following thisreview, the amendments will beintroduced as a new bill.

(ILO, 23.12.16)

Changes to Bankruptcy LawThe Malaysian Bankruptcy

(Amendment)Bill 2016 (Bill)was tabledin Parliament on November 21, 2016.TheBillwill rename theBankruptcyAct1967 to the Insolvency Act 1967 andwill have important implications, inparticular to financial institutions andcorporates whose loans/debts aresecured by personal guarantees, oncetheir amendments are incorporated inthe existing BankruptcyAct 1967 (Act)and are passed and in force.The Bill has yet been gazetted and

there has not been any indication as towhen it will come into force.Nonetheless, it would be prudent forfinancial institutions/corporates whorely on personal guarantees to keep thenew changes in mind.

(www.bakermckenzie.com, 22.11.16)

Virtual Currency RegulationVirtual currency trading value and

volume is soaring globally, butregulating virtual currencies and thosewho provide virtual currency exchangeservices is challenging.Exchangers operate at the interface

between the physical and the virtualvalue chains, exchanging virtualmoney,such as Bitcoin, into tangible, so-called�fiat�money, or vice versa.

Now, the Proceeds of Crime(MiscellaneousAmendments) (Jersey)Regulations 2016 (the Regulations)have brought exchangers within theambit of Jersey�s anti-moneylaundering legislation.The regulations also make virtual

currency exchange a supervisedbusiness and require Exchangers toregister with, and fall under thesupervision of, the Jersey FinancialServices Commission.

(www.ogier.com, 04.10.16)

Capped Bank Lending RatesWhen Kenyan President, Uhuru

Kenyatta, signed a law that cappedbank lending rates, he justified hisdecision by stating that Kenyans havelong been frustrated by the high costof credit that was prevalent in EastAfrica�s largest economy. His positionwas that banks ought to do more toensure that their customers benefit fromthe financial sector by reducing thecost of credit.The new law capped bank lending

rates at 4 percent above the centralbank�s benchmark rate � which iscurrently at 10 percent. The same lawalso capped deposit rates at 70 percentof the central bank�s rate.

Critics warned that the law wouldreduce the flow of credit to key sectorsof the economy, as well as threaten thecountry�s reputation as a regional free-market financial centre. But Kenyanshave largely welcomed the new law.

(www.financialnigeria.com, 08.11.16)

Deutsche Bank Agrees to US FineDeutsche Bank has announced a

�tentative deal�with theUSDepartmentof Justice in the US over the sale ofmortgage bonds ahead of the financialcrash.The bank had been put on notice in

October that US authorities wanted tohand down a penalty of as much asUS$14bn, which would have cleanedout its financial reserves and forced itto raise new money or seek agovernment bailout.It was seen as an existential crisis -

and the bank�s shares plummeted to arecord low below 0, around a tenth oftheir pre-crash peak.But bosses always said the fine

would be nomore than around half thatamount - and confirmed that bydisclosing a settlement of US$7.2bn,comprising of a US$3.1bn fine andUS$4.1bn to compensate consumers.

(www.theweek.co.uk, 23.12.16)

www.irishtim

es.com

Tackle �Too Big to Fail� Banks

Minneapolis Federal Reserve President Neel Kashkari unveiled a planto prevent future government bailouts by forcing the largest USbanks

to hold somuchcapital that theywouldprobably decide tobreak themselvesup.

Kashkari�s planwould also penaliselarge asset managers,with the idea that so-called �shadow banks�can create systemicrisks similar to that ofbig banks.

�We expect thatinstitutions whosesize doesn�t meaningfully benefit their customers will be forced to breakthemselves up,� the Minneapolis Fed said in a summary of its plan.

The plan, which would double the amount of loss-absorbing equitycapital for large US banks and impose a new tax on hedge funds and otherasset managers, is sure to face fierce opposition from Wall Street.

It may also be a tough sell for policymakers who have already imposedrules intended to eliminate the notion that some banks are �too big tofail�. (www.cnbc.com, 16.11.16)

www.worldfinance.com

16No.4, 2016

EGULETTERR

FINANCIAL SECTOR REGULATION

Building a Better World Bank, Not a Bigger OneMontek Singh Ahluwalia*Lawrence H. Summers**

Andres Velasco***

* Distinguished Visiting Professor Stern School of Business, New York University** Charles W. Eliot University Professor and President Emeritus, Harvard University*** Professor of Professional Practice in International Development, School of International and Public Affairs, Columbia University� Abridged from an article appeared in The Financial Times, on October 06, 2016

The world haschanged, but the

mandates andoperations of the

multilateraldevelopmentbanks (MDBs)have not kept

pace

Finance and developmentministers from around theworldwill considerwhetherthe World Bank needs more resources � a new infusion of capital to permit

more lending and new contributions from traditional rich-country donors to helpthe poorest countries.

But a biggerWorld Bank is not necessarily a better one, and any consideration ofnew money for it or for the regionally based multilateral development banksdemands a fundamental look at their mandates and operations in the face of newdevelopment challenges in today�s global landscape.

Helping the millions of refugees and people displaced by conflict in countriessuch as Syria and South Sudan is another major challenge requiring not justhumanitarian assistance but investments in their futures through education andjobs � the kind of work the MDBs have long supported in stable settings, buthave no simple way to finance for displaced populations.

MDBs are rare in combining impressive technical and fiduciary capabilitywith financial heft and international convening power. But history, habit

and staff skills have wedded them largely to the traditional and well-developedinstrument of the country-based loan, which for today�s climate and othertransnational problems is an inflexible and often inappropriate instrument.

We propose that ministers, including those representing the newborn AsianInfrastructure Investment Bank and New Development Bank, consider clearerfuturemandates for the different banks. The aimwould be to raisemore resources,but also to tap the assets and capital resources they already have in new waysand deploy themmore flexibly, undoing the rigid rules and institutional silos thatbog them down in the face of urgent needs.

We urge shareholding governments to give the World Bank specificinstructions to support research and deployment of new energy and health

technologies, to foster the nascent �green bond� market, and to issue loans andguarantees on terms that encourage borrowers to take on the upfront costs ofclimatemitigation.

Environmental sustainability should beat the heart of what the World Bankdoes in the future. Thismaywell requirea scaling up of resources, but theseshould be linked with strongerperformance under this new mandate.We also support an updated system ofgovernance at the World Bank;developing countries, which nowconstitute over half the global economy,should be adequately represented indecisions about financing andimplementing the sustainabilitypriority.

For the regional banks we see anincrease in their operations in

support of infrastructure as crucial.They have a key role in closing thetrillion-dollar financing gap betweencurrent investment levels and whatdeveloping countries need to build theframework for modern, diversifiedeconomies. The Paris climateagreement, now close to ratification byenough countries to become effective,envisages steering US$100bn a yeartoward �green� infrastructure projectsthat protect the planet, as well as theinvestments in education, agricultureandwater that bolster climate resiliencein developing countries.

Considerable ambition and freshthinking are required to equip themultilateral banks for this century�s newdevelopment challenges. We believeworld governments that control theMDB system are able to muster suchambition. Doing so will mark a criticalstep in safeguarding and furtherextending the benefits of developmentprogress in this century.

www.condesan.org

17No.4, 2016

EGULETTERR

OPINION

The latest regulation-driven attemptto gee up an apparently slothful

business sector is �open banking�. Thisis meant to improve the customer expe-rience by increasing transparency andhence competition. The aim is to makeit easier to switch banks, with, for ex-ample, mobile apps to alert customersto the best offers and accounts. Somehave talked breathlessly of theUberisation of banking.

There has been a degree of successwith energy groups subject to similartreatment� themarket share of theBigSix energy companies has fallen from97 percent five years ago to 85 percenttoday. It seems less than clear what ex-tra competition, even the trendy tech-nology-assisted variety, or �comptech�,can do to diminish obstinate customerinertia in high street banking.

With one-third of UK customers stick-ingwith their bank for 20 years ormore,many people are more faithful to theirbanks than to their partners. Could itbe that it is the wrong kind of competi-tion?

At bottom, the regulatory stance isbased on the standard economic

assumption that individuals are ratio-nal and self-interested. That being thecase, given the chance theywill choosean offer of something better or cheaper.That is the rationale behind �choice�,dear to politicians of all stripes.

But the choice that the economists�competition has given us is quite par-ticular. For example, many industriesthese are highly concentrated, evenoligopolistic.

For most normal people, a high streetwith the same chains of shops as any

Why Banking CompetitionPolicy Gives us the Wrong Choice

Simon Caulkin

Regulation-driven strategy makes us decide between near-identical options

� Award-winning Business Journalist. Abridged from an article appeared in The Financial Times on October 17, 2016

than when a computer schedules it; abank that knows their name and listensto their individual circumstances; andcustomer service that means what itsays. In short, they want to be treatedas humans rather than numbers ortransactions.

There are individual companies andservice providers flourishing do-

ing all these things. But they are belowthe radar, working in the niches left bythemonolithic, oligopolistic purveyorsof industrialised services sanctionedby the regulators. The danger is thatthe authorised oligopolists end upsqueezing out the good managementand real choice offered by the minor-ity.

Banking comptech is the answer to thewrong problem. Most consumers donot want a better means of switchingbetween faceless institutions that areall alike: theywant a bank (or energy ortelecom supplier) that they can trust todo its best for them over time � thatthey can have a relationship with. Inwhich case, why would they switch?

On the other side, long-term customer loyalty, reflected in repeat

buying andword-of-mouth recommen-dation, is an essential ingredient in thesuccess of outstanding companiessuch as Apple, Toyota andHandelsbanken. Managers of suchcompanies know that retaining cus-tomers through products and servicesthat reliablymake their lives easier, sup-ported by real customer service, issmarter and less costly than trying toshout above the hysterical din oftoday�s advertising to reach unenthu-siastic new ones. Are the smart appsof �open banking� going to help bringthis about? Don�t bank on it.

other is no real choice. Similarly, choos-ing between near-indistinguishablesuppliers of the same mediocre bank-ing, insurance or social care services isnot a choice that they recognise. Out-side economic textbooks, the idea thatpeople will spend their commute orlunch break on their smartphones ea-gerly looking up official databases andprice comparison sites to respond tooffers of new bank accounts or energytariffs is already a stretch. When thechoice is no choice it simply fails thecommonsense test.

Ina recent Financial Times article (TheAmerican consumer�s impotentrage), Edward Luce suggested that theunexpected bolshiness of US voters ispartly due to pent-up rage at beingtreated as second-class citizens eco-nomically as well as politically, deniedthe personal service and human inter-action now only available to thewealthy. Hemaywell be right.

The choice people really want is a doc-tor who can take the time to answer alltheir questions; a carer who comeswhen they want to have a bath rather

18No.4, 2016

EGULETTERR

SPECIAL ARTICLE

Call for a Multilateral Competition RegimePradeep S Mehta*

* Secretary General, CUTS International. Ujjwal Kumar of CUTS International contributed to this article. Abridged from an articleappeared in Live Mint, October 12, 2016

Four currentmultibillion-dollar dealsin the agriculture sector are ringingalarm bells around the world thetakeovers of Syngenta by ChemChinaand of Monsanto by Bayer; and themergers between Dow Chemical andDuPont, and between Potash andAgrium. Consequently, the globalagricultural inputmarketwill get furtherconcentrated, which in turnwould havean impact on the global food valuechain (GFVC). After �defence�, it is�food� that is the most importantconsideration for a nation�s security.Thus, the fact that control over GFVCis getting consolidated in fewer privatehands could pose serious securityconcerns. It is suggested that BRICS(Brazil, Russia, India, China, SouthAfrica) countries should tackle thisjointly through a coordinatedcompetition policy.

The core of competition lawenforcement is �economic analysis�,which in turn is guided by the�economic doctrine� followed by theenforcing country. While some willemphasize �efficiency� duringeconomic analysis, others may like toinclude the �public welfare� angle.

There may also be differenttreatment for different sectors. For

instance, farmers� margin gettingincreasingly squeezed between inputproviders and commodity buyers.Suchunevenbargainingpower inGFVCmight not come into the ambit of thecompetition lens from the �efficiency�and �optimal resource allocation� angles.On the contrary, such analysis mightfavour consolidation among �inputproviders� and �commodity buyers�.

It would not be easy for individual,particularly developing countries todeal with cross-border competitionconcerns. If approached individually,it is more likely that their economicanalyses would get influenced by the�economic doctrine� practiced by

to the ChemChina-Syngenta deal,China seems to have done the samefor Bayer-Monsanto.

The agenda on trade and competitionpolicy was introduced at the WTO in1996 as �new issues�, along withinvestment and transparency ingovernment procurement. To beginwith, it was a study approach, but laterit became a negotiating agenda. Thiswas opposed by the developing worldand finally all of them, other than tradefacilitation, were withdrawn from theWTO Doha Development Agenda in2004. Since then there has been a seachange in global economicarchitecture, following the two WTOministerialmeetings at Bali in 2013 andNairobi in 2015. With substantialexperience of trade and globalisationin the developingworld, the developingcountries should participateproactively in such negotiations sothat they can influence the contentsand ensure that they are balanced.

In any multilateral negotiation,contentious issues arise mainlybecause of two factors: aggressiveagenda of market access; and thedefensive agenda, which includesprotection of policy space to addressnational concerns. For example,inclusion of intellectual property rightsin the WTO acquis was the mostcontentious issue during the Uruguayround. This was finally settled whentrade and intellectual property rulesallowed policy space for nation statesto address their concerns, particularlywith respect to agriculture (seed) andhealth (pharmaceuticals).

Today finding common ground on theregulation of market distortions in thehighly sensitive sectors of food andagriculture through better andcooperative competition regimes, andmore so in the multilateral tradingsystem, is an imperative which we canignore at our ownperil.BRICScanofferamiddle path and introduce it atWTO.

Control over the globalfood value chain is getting

consolidated in fewerprivate hands, posing

serious security concerns

powerful, rich countries. Therefore,affected countries, especiallydeveloping country blocks such asBRICS should come together to dealwith global competition concerns.

Fortunately, there have been somepositive developments on this

front. Competition authorities fromBRICS countries have signed acooperation agreement and patentauthorities are having separatemeetings. In addition, there is a BRICSFood Working Group to developsuitable strategies.Asuitable approachfor BRICS nations could be to firsthave a plurilateral competition policyamong them and then open it for otherlike-minded countries to join thearrangement.

Albeit, as China�s own state enterprise,ChemChina, is acquiring Syngenta, itwould like a facilitative approach andmay like to �exploit the global market�in future. Though China has said thatit is acquiring Syngenta to improvedomestic agriculture productivity, itmay be interesting to note here thatwhile the US has given a green signal

Mint

19No.4, 2016

EGULETTERR

* Nordic and Baltic Correspondent at the Financial Times. Abridged from an article appeared in The Financial Times, onNovember 27, 2016

Backlash Grows over Swedish Private Sectorrunning Public Services

Richard Milne*

Think of Sweden and an image of a generous welfarestate with a large public sector financed by high taxes

often comes to mind.

Perhaps less stereotypical is the idea of large number ofprivate companies running public services. But Sweden isalso the European leader in private, profitmaking companiesrunning schools, hospitals and care homes.

That has made this supposed paragon of equality a huntingground for dozens of listed and private equity-backedcompanies who are participating in a two-decades-longexperiment. But there are warning signs of a growingbacklash in Sweden against the groundbreaking reforms.

Agovernment report could suggest a cap on profits forprivate companies that run public services, according

to widespread leaks in local media.

Under one estimate commissioned for the report, Swedishcompanies operating in the public sector made up toSKr20bn in excess profits between 2005 and 2013 based ona 10 per cent weighted average cost of capital.

The report, commissioned by the centre-left governmentand led by a controversial former Social Democrat mayor ofMalmo, Ilmar Reepalu, comes against the backdrop ofgeneral unease in Sweden at the idea of private companiesmaking a profit for providing public services. More thanhalf of Swedes support curbs on profits, according to arecent large survey of public opinion.

And the so-calledReepalu report will not just be read locally.Many policymakers across Europe are fascinated by theSwedish model. Just how far should companies be allowedto go to make profits from public services?

Internationella Engelska Skolan is one of the biggestcompanies behind Sweden�s free schools, which are state-funded but privately run. It has more than 21,000 studentsenrolled in 30 schools this academic year and has beenrunning academic institutions since 1993 with a focus ondiscipline and learning English.

But at the same time as IES has been successfully growing,the wider Swedish educational model has been under heavyscrutiny. Under the so-called Pisa tests, which compare richcountries� education systems, Sweden has suffered themostrapid decline in learning between 2000 and 2012 of anycountry.

SPECIAL ARTICLE

Controversy rages over who is to blame. Those on the leftblame deregulation of education, pointing to a number ofscandals including the bankruptcy of one big provider, JBEducation, a private equity-backed company.

The private companies in turn say they are doing wellbut that public schools are poorly run and performing

far less well. They argue there is a fundamental differencebetween the way public and private providers run schools.Public schools are encouraged to spend their entire budgetotherwise they lose it while private providers prioritiseefficiency. Ralph Riber, Chief Executive of InternationellaEngelska Skolan, says the answer is not a profit cap but alook at the performance of all schools. �The question shouldbe: are you delivering?� he adds.

The biggest worry for government contractors is not abouta possible profit curb, per se. The leftwing government�sweak position in parliamentmeans such ameasure is unlikelyto pass. But Swedish companies are deeply concerned abouta number of what they deem anti-business proposals, suchas a plan to impose quotas to ensure a certain percentage offemale directors in boardrooms.

Under this model, companies, workers and politicianshave worked together whether they were left or

rightwing. The decision to allow private companies to runpublic services was due as much to previous leftwinggovernments wanting to give freedom of choice toeverybody as those on the right seeking to make thingsmore efficient.

As Riber says of private sector involvement: �Sweden is farahead of other countries. Is it an anomaly to be quashed oris it the way forward?

Role of profitmaking companies in schools,hospitals and care homes under scrutiny

Published by CUTS Centre for Competition, Investment & Economic Regulation (CUTS CCIER)D-217, Bhaskar Marg, Bani Park, Jaipur 302016, India

Ph: +91.141.2282821, Fax: +91.141.2282485, Email: c-cier@cuts.org, Website: www.cuts-ccier.orgPrinted by: Jaipur Printers P. Ltd., M.I. Road, Jaipur 302001, India.

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Publication

Economiquity

The October-December 2016 issue of Economiquity carries an article entitled, �1914Revisited: Open World Order is Breaking Apart� which states that great shock came in

1914, with the outbreak of World War I, and it ended an extraordinary four-decade period ofrising migration and trade. But that era provides clear parallels to the globalisation boom thatgained momentum in the 1980s and stalled during the financial crisis of 2008. Todayglobalisation is once again in retreat. Populists are on the march, as evidenced by Donald J.Trump�s stunning victory.

A special article by Shyam Saran opines that in the next decade, how US-China relationsunfold will shape the external environment for countries like India. Much will depend onhow China perceives the Trump presidency.

Another special article by Gita Gopinath states that Indian Prime Minister Narendra Modi�s �demonetisation�intervention affected 85 per cent of the money in circulation in India. It was an unprecedented move, whether in Indiaor almost anywhere else, and it is by far Modi�s boldest policy intervention to date.

This newsletter can be accessed at: www.economiquity.org/

Investment Policy Monitor

UNCTAD has just released a special issue of its Investment Policy Monitor exploring investment laws aroundthe world.

For many countries investments laws are a core policy instrument to promote and regulate investment. Togetherwith international investment agreements (IIAs), they constitute the basic legal framework for cross-border investmentin many countries. Often, these laws and IIAs contain similar provisions.

UNCTAD research finds that at least 108 countries have an investment law as a core instrument to governinvestment, almost all of which are either a developing country or an economy in transition. Even though investmentlaws generally share the same objectives, their content and overall approaches differ significantly.

Key findings from this study include:� Most investment laws have investment promotion as their main objective, while only a few also deal with

investment facilitation.� Sustainable development is an explicit goal only in a small minority of them.� Investment laws tend to show an imbalance between the coverage of investor rights and obligations.� Investment laws often cover the same issues as IIAs and more than half of the laws provide access to

international arbitration.The importance of investment laws calls for a deeper analysis of their content and their coherence with other

investment-related policies and international investment treaties.The Special Issue of the Investment Policy Monitor ca be accessed at:http://unctad.org/en/PublicationsLibrary/webdiaepcb2016d5_en.pdf