New Delhi, Nov 21 (KNN) Effective competition in markets has to be created and enforced through public policy or else, private barriers may simply substitute governmental barriers to trade and prevent improvements in social welfare, Prime Minister Manmohan Singh said today.


Addressing the BRICS International Competition Conference, the Prime Minister said "But fair and effective competition in markets is easier said than done. It has to be created and enforced through public policy. Otherwise, private barriers may simply substitute governmental barriers to trade and prevent improvements in social welfare.”


He said that there is an increasing need to recognize the complementarities between competition law enforcement and liberalization of markets for procurement. Public procurement, more specifically, is a substantial slice of State spending in most emerging economies.

"Elimination of unnecessary restrictions and better tender design can therefore, enhance possibilities for effective competition, thereby making bid rigging more difficult. As a result, competitive procurement markets can help save valuable fiscal resources and release funds for development," he added.

Further he also said that the state-owned companies or PSEs (Public Sector Enterprises) may have long enjoyed captive markets, he said the government's ownership in such entities does not mean that these enterprises should be shielded from competition.

Singh said that exposure of public sector companies to competition is a crucial issue.

State owned or public sector enterprises, by virtue of their ownership, have been shielded from competition and have long enjoyed captive markets. A crucial issue is the exposure of these firms to increased competition.

The government may own a public sector firm and exercise the normal rights of ownership. But this does not mean that it should shelter the firm from competition as well, he said.

"Unfortunately, government ownership inevitably brings with it a bureaucratic style of decision-making and the end result is that the enterprise cannot compete in a market populated by equals. The solution lies in giving public sector firms greater functional autonomy and freeing them from bureaucratic control, and not in tolerating a slip in their competitiveness and then shielding them from competition," he added.

 
The theme of this year's conference is 'Competition Enforcement in BRICS Countries: Issues and Challenges'. (KNN/SD)