Competitive Changes in Competition
There is a story about a man who gave advice to his brother who was just starting a small business of his own. His first piece advice was to never compete with the prime minister’s company or he would end up homeless. Second, he told him he should gather information about the companies owned by the prime minister’s wife and children. Third, he should know more about the companies owned by the prime minister’s friends before going ahead with anything. And then, if there is any space left for him he could start his business. Indeed, the government is too involved in the marketplace and is allowing a network of corruption to materialise by misleading citizens with its vague regulations and ordinances.
“Good companies and quality products come only through competition”, said D. Enkhbat, a member of Parliament. “Even sport masters are born as a result of it. Thus, tackling any kind of conspiracy by supporting fair competition in both business and sports would lead to development”. It is a good sign that Mongolia has an independent agency that regulates fair competition and enforces its Law on Fair Competition. However, regulations on fair competition have never been enforced to the fullest extent and monitoring is week.
Fair competition guides development while enhancing a nation’s economy and improving competitiveness.
Together Consumers Can Protect Their Rights
An organisation is needed to monitor and regulate fair competition. It must be a strong institution that cooperates with police and court officials. The consumer protection organisation, initiated by citizens, should represent civil society. In Mongolia the Fair Competition Organisation is overloaded. It is stretched thin with too many responsibilities, from regulating fair competition among enterprises, protecting consumer rights and enforcing the Law on Advertisements and Tenders.
Looking at its structure and its staff of just over 40 personnel, the organisation does not seem to have the capacity to achieve everything it is tasked with. Theoretically, the policy and responsibilities of the organisation are bigger and broader than any other organisation. But its staff, too, is confused by vague laws and thus make ineffective decisions. In the early 90s, the National Committee for Consumer Protection (NCCP) was established. Unfortunately, the committee has never had a voice that could reach the national stage to protect the rights of consumers. In Japan, for example, it has an organisation with over 600 rural offices across the country to accept consumers’ complaints. It gathers all the complaints in a database and makes analyses for further resolution. Australia has its Fair Trade Law, which focuses on protecting consumers’ rights in addition to securing fair competition and a sustainable economy.
During the Competition Policy and Regulations sub-session of the Fostering Inclusive Economic Growth Through Legal Reform forum, many participants criticised the fact that the NCCP is in sleep mode.
“Businessmen raise product prices overnight after hearing rumours about cash distribution or fuel price increases”, said L. Dashdorj, advisor to the president. Last December fuel prices rose by up to MNT 260, which created havoc for many citizens. But while fuel prices have dropped, other commodity prices that increased along with fuel have not fallen despite today’s cheaper fuel prices. Instead prices continue to rise. In addition to those consumer protection organisations, there is the City Consumer Protection Association. Unfortunately, it remains silent.
Recovering Competition
There was much criticism at the economic forum that there is no mechanism to direct the legal responsibilities. Companies will try to profit as much as they can by utilising loopholes in the law. Any entities profiting well from a cartel are subject to a heavy fine and could be charged with a crime.
Chile, a country with an economy that can be compared to Mongolia, has done much to improve its regulation of competition within the last 10 years. The country established an independent competition court and raised its monetary penalties. It also revised its law for criminal procedures while fortifying its monitoring and punishment abilities. In addition, Chile established a non-government organisation called the Office Against Economic Crimes.
“Chile has the same development as Mongolia, so it would be a suitable model for Mongolia to take from its experience on competition”, said Fernando Bertoli, director of Chemonics International and technical and management advisor to the USAID-funded Business Plus Initiative. The international advisor to another project funded by USAID, the Economic Policy Reform and Competitiveness project, Pablo Garcia, gave speeches to the Fair Competition and Consumer Protection in 2010. These are few example of how an international organisation willing to help Mongolia can improve competitiveness for the nation.
However, the government and state authorities remain silent. Foreigners have shared their experiences and taught what should be done. There would be nothing to do if Mongolia had the strongest competitiveness in the world already. Meanwhile, businessmen benefit from their cartel agreements.
Strangling Competitiveness
Policy maker Enkhbat said competitiveness is a call for fair competition goals that create equal participation in business for all citizens and eliminate obstacles. According to him, it is the most important part of the concept to give citizens on economic freedom. However, Mongolia doesn’t have the proper environment for robust competition.
Presidential advisor Dashdorj said the conflicting laws on competition include too many incomprehensible articles. A third of the law mainly directs fair competition, introduces status-oriented activities for consumer protection organisations, and manoeuvres regulations that would otherwise contradict one another. However, the law has left out important issues such as consumer protection and supportive actions towards small- medium enterprises and businessmen.
“The law did not include any suggestions from the private sector and it did not correspond with the domestic market. A third of the law was taken directly from the Russian Competition Law”, said the head of Civil Law Department of the National University of Mongolia’s law school, B. Temuulen.
Temuulen noted that in order to bring competitiveness to the business sector, the government needs to improve its economic legal environment and its economic policies. The Law on Competition would be more suitable to the legal environment for business if it was based on a civil administrative law. Doing so would create regulations that would allow for market participation.
The most common problems in business are administrative issues allowing cartels to continue operating unchecked. If the sector is not reformed as soon as possible, it could end up rotting out. Talk about economic growth, development and business innovations would be useless. The country would be steeped in corruption from the inside out, while citizens would groan from their poverty.
Strong organisations that can identify whether companies are operating as a cartel must be established. Such a mechanism would instil healthier competition. It is crucial that Parliament revise the Law on Competitiveness for the national economy and the development of business.
“Good companies and quality products come only through competition”, said D. Enkhbat, a member of Parliament. “Even sport masters are born as a result of it. Thus, tackling any kind of conspiracy by supporting fair competition in both business and sports would lead to development”. It is a good sign that Mongolia has an independent agency that regulates fair competition and enforces its Law on Fair Competition. However, regulations on fair competition have never been enforced to the fullest extent and monitoring is week.
Fair competition guides development while enhancing a nation’s economy and improving competitiveness.
Together Consumers Can Protect Their Rights
An organisation is needed to monitor and regulate fair competition. It must be a strong institution that cooperates with police and court officials. The consumer protection organisation, initiated by citizens, should represent civil society. In Mongolia the Fair Competition Organisation is overloaded. It is stretched thin with too many responsibilities, from regulating fair competition among enterprises, protecting consumer rights and enforcing the Law on Advertisements and Tenders.
Looking at its structure and its staff of just over 40 personnel, the organisation does not seem to have the capacity to achieve everything it is tasked with. Theoretically, the policy and responsibilities of the organisation are bigger and broader than any other organisation. But its staff, too, is confused by vague laws and thus make ineffective decisions. In the early 90s, the National Committee for Consumer Protection (NCCP) was established. Unfortunately, the committee has never had a voice that could reach the national stage to protect the rights of consumers. In Japan, for example, it has an organisation with over 600 rural offices across the country to accept consumers’ complaints. It gathers all the complaints in a database and makes analyses for further resolution. Australia has its Fair Trade Law, which focuses on protecting consumers’ rights in addition to securing fair competition and a sustainable economy.
During the Competition Policy and Regulations sub-session of the Fostering Inclusive Economic Growth Through Legal Reform forum, many participants criticised the fact that the NCCP is in sleep mode.
“Businessmen raise product prices overnight after hearing rumours about cash distribution or fuel price increases”, said L. Dashdorj, advisor to the president. Last December fuel prices rose by up to MNT 260, which created havoc for many citizens. But while fuel prices have dropped, other commodity prices that increased along with fuel have not fallen despite today’s cheaper fuel prices. Instead prices continue to rise. In addition to those consumer protection organisations, there is the City Consumer Protection Association. Unfortunately, it remains silent.
Recovering Competition
There was much criticism at the economic forum that there is no mechanism to direct the legal responsibilities. Companies will try to profit as much as they can by utilising loopholes in the law. Any entities profiting well from a cartel are subject to a heavy fine and could be charged with a crime.
Chile, a country with an economy that can be compared to Mongolia, has done much to improve its regulation of competition within the last 10 years. The country established an independent competition court and raised its monetary penalties. It also revised its law for criminal procedures while fortifying its monitoring and punishment abilities. In addition, Chile established a non-government organisation called the Office Against Economic Crimes.
“Chile has the same development as Mongolia, so it would be a suitable model for Mongolia to take from its experience on competition”, said Fernando Bertoli, director of Chemonics International and technical and management advisor to the USAID-funded Business Plus Initiative. The international advisor to another project funded by USAID, the Economic Policy Reform and Competitiveness project, Pablo Garcia, gave speeches to the Fair Competition and Consumer Protection in 2010. These are few example of how an international organisation willing to help Mongolia can improve competitiveness for the nation.
However, the government and state authorities remain silent. Foreigners have shared their experiences and taught what should be done. There would be nothing to do if Mongolia had the strongest competitiveness in the world already. Meanwhile, businessmen benefit from their cartel agreements.
Strangling Competitiveness
Policy maker Enkhbat said competitiveness is a call for fair competition goals that create equal participation in business for all citizens and eliminate obstacles. According to him, it is the most important part of the concept to give citizens on economic freedom. However, Mongolia doesn’t have the proper environment for robust competition.
Presidential advisor Dashdorj said the conflicting laws on competition include too many incomprehensible articles. A third of the law mainly directs fair competition, introduces status-oriented activities for consumer protection organisations, and manoeuvres regulations that would otherwise contradict one another. However, the law has left out important issues such as consumer protection and supportive actions towards small- medium enterprises and businessmen.
“The law did not include any suggestions from the private sector and it did not correspond with the domestic market. A third of the law was taken directly from the Russian Competition Law”, said the head of Civil Law Department of the National University of Mongolia’s law school, B. Temuulen.
Temuulen noted that in order to bring competitiveness to the business sector, the government needs to improve its economic legal environment and its economic policies. The Law on Competition would be more suitable to the legal environment for business if it was based on a civil administrative law. Doing so would create regulations that would allow for market participation.
The most common problems in business are administrative issues allowing cartels to continue operating unchecked. If the sector is not reformed as soon as possible, it could end up rotting out. Talk about economic growth, development and business innovations would be useless. The country would be steeped in corruption from the inside out, while citizens would groan from their poverty.
Strong organisations that can identify whether companies are operating as a cartel must be established. Such a mechanism would instil healthier competition. It is crucial that Parliament revise the Law on Competitiveness for the national economy and the development of business.
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