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Outline
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Consumer Protection Policy
Progress towards a Competition Act
Sectoral Policies
Competition and Sector Regulation
Existing Anti-Competitive Practices & Distortions
◦ Some Evidence and Suspicions
Perceptions regarding competition concerns
Competition Issues in the Agriculture Sector
Consumer Protection Policy
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Ghana lacks a comprehensive consumer protection law.
◦ There is no centralized consumer protection law
and/or policy in Ghana.
◦ What exists currently is a group of public institutions
mandated to oversee specific aspects of consumer
protection.
 These institutions included:
 Ghana Standards Board (GSB)
 Food and Drugs Board (FDB)
 Public Utilities Regulatory Commission (PURC)
 National Communications Authority (NCA)
 Environmental Protection Agency (EPA).
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The Government is in the process of developing a Bill on
competition law.
Three draft Bills have been prepared before; the Trade
Practices Draft Bill, drafted in 1993 and the Draft
Competition and Fair Trade Practices Bill in 2004, all
which could not be developed into an Act of Parliament.
We do not know what happened to the third one?
The key question: Why has it been so difficult to put a
Competition Act into law?
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Energy
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Water
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Telecom
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Financial Services
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Energy
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Ghana's energy sector is dominated by state-owned enterprises.
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Transmission and distribution of electricity are under state monopoly.
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Although Ghana is a net exporter of electrical energy in most years, low
water levels at the Volta dam frequently lead to supply shortages and
electricity cuts.
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The Energy Commission is in charge of technical standards and licensing
of electricity utilities.
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The Public Utilities Regulatory Commission (PURC) is responsible for
competition regulation and quality of service monitoring.
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There has been no significant privatisation programme to date.
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A previous government subsidy of electricity has been drastically slashed
in the past year with consequent increases in electricity tariffs by more
than 100 percent.
Water
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There are only 350,000 domestic connections for the roughly seven million
people in Ghana with access to drinking water.
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A high % of urban consumers depend on water tankers for their drinking
water supply.
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The sector is regulated by the PURC whose key tasks include:
◦ protecting the interest of consumers and providers of utility services
◦ promoting fair competition among public utilities
◦ receiving and investigating complaints and settling disputes between consumers
and the public utility
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Ghana Water Company Limited (GWCL) is responsible for the production
of potable water in Ghana
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Aqua Vitens Rand Limited (a joint Dutch and South African company) is
responsible for the distribution and management of GWCL.
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Aqua Vitens has recently come under fire due to the acute water
shortage in the Accra-Tema areas and other parts of the country.
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Ghana led the way in telecommunications liberalization and deregulation
in Africa when it privatized Ghana Telecom in 1996.
Although there is still significant scope for improvement, Ghana has
made huge progress in telecommunications services over the past
decade or so.
Mobile phone subscriptions continue to dominate total subscriptions,
rising by over 70% from 2,655,000 in 2005 to 4,678,505 in 2006 and
further increasing by 63% to 7,604,053 in 2007 and by 49% to
11,302,647 in 2008.
There are 4 major networks dominating the mobile phone industry.
The NCA is the regulatory body in charge of the telecom sector and its
main objectives amongst others include:
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promotion of fair competition among persons engaged in the
provision of communication services
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Financial Services Sector
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The past few years have seen a phenomenal growth in the Ghanaian
banking sector (currently there are 24 licensed banks & 127 rural
banks and numerous NBFIs).
The overall regulatory body is the Bank of Ghana (BoG) and one of
its key roles is ensuring that there is fair competition among banks
in Ghana.
Competition in the banking sector is becoming increasingly stiff,
particularly with the recent entry of a number of Nigerian banks
such as Guaranty Trust Bank, Zenith Bank and United Bank for
Africa.
Not surprisingly, the degree of market concentration, as measured
by assets of the top five banks, has fallen steadily – from 77.6% in
March 2000 to less than 55% in 2008 (Stanley, 2008).
This is much lower than in South Africa, where the top five banks
have a concentration ratio of more than 80% but is higher than the
SSA average.
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Financial Services Sector
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However, there are several reasons to question the extent to
which banks actually compete.
Bank concentration appears to be moderate by regional
standards, the dominant state owned bank (GCB) enjoys a
substantial market power, with 20 percent of total deposits
and 44 percent of total branches—a situation that may
influence price setting among banks and distort competition.
Profitability indicators suggest that, despite high overhead
costs (7 percent to average assets but substantially higher
than the SSA of 5.7%) and sizable provisioning, Ghanaian
banks’ pretax returns on assets and equity are among the
highest in SSA—a situation that reflects very wide interest
margins (Buchs & Mathisen, 2005).
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Interviews were conducted with key stakeholders in select
sectors. Some key findings were:
Although these institutions were independent by law from the
related ministry, they were not independent in the nomination
of their chief executives; the President was the one who
appointed (and dismissed) the chief executive in most cases.
Only a few of the regulatory agencies were financially
independent (most notably the NCA) and most were funded
through government subvention. The agencies noted that
there was ample room for political interference in major
decisions, such as the awarding of licences.
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With regard to the level of competition in the sectors, there
was variation. In some sectors, like utilities, there was little
competition with some monopolies being present; in sectors
like communications, however, there was significant
competition.
The regulatory agencies generally have a policy of no
tolerance of anti-competitive practices but not all are
equipped with provisions for punishing such behaviour.
Key Result: Sector regulators also empowered to administer
competition in their sectors and to deal with anti-competitive
practices but not all are equipped with provisions for
punishing such behaviour.
Anti-competitive practices – some evidence
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Ghana does not have legislation on anti-competitive practices
although a bill has been under consideration for several years.
The Ministry of Trade, Industry, Private Sector Development and
President's Special Initiatives (PSIs) however oversees all trade
dealings and practises including unfair trade practises.
Price –fixing & Excessive pricing e.g. Ghacem, the major player in
the industry, has long been suspected of price-fixing.
Collusion e.g. suspicion that firms involved in the food sector
whether as sellers or manufacturers are in collusion over recent
price rises.
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Cartels e.g. dominance of some firms in the sale of rough
diamonds.
False advertisement e.g. unfair practice is prevalent in the
pharmaceuticals industry, particularly with regards to herbal
medicines.
Trademark violation e.g. music and video industry but also
Chinese accused by players in the textile & clothing sector
Anti-competitive practices – some evidence
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There are reports of a failed attempt at a take over of CAL Bank bringing
to the fore, the effect of sections 34 and 35 of the Banking Act, 2004 (Act
673) (See Lawfields Business Law Bulletin, 2006).
The Central Bank is empowered to give prior approval of an intended
acquisition or disposal of ‘significant shares’ in a licensed bank, i.e. 10%
or more of the capital or voting rights of a bank, or a level of
shareholding which makes it possible to exercise a significant influence
over the management of the bank.
The BoG must be notified of the impending transaction within 3 months
of the intended transaction, and its prior approval must be obtained, with
the objective of preserving sound and prudent management of banks.
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Anti-competitive practices – some evidence
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In the particular matter, the First City Monument Bank (FCM) of Nigeria
sought to acquire the shares of the IFC and Prince Al Waleed (16.7% &
10.8%) respectively) in CAL Bank whose shares had been trading on the
GSE since 2004.
Since FCM had previously acquired 8.2% of CAL Bank shares, acquisition
of the additional shares would have resulted in it becoming the single
largest shareholder in CAL Bank.
The regulator, BoG, chose to exercise its discretion to disapprove the
intended purchase.
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Assessment of Level of Competition
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Assessment of Enforcement Issues
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Competition Culture and Public Awareness
Assessment of level of competition
among companies
%
High
30.8
Moderate
51.8
Low
Nil
Total
Impact of competition on consumers
16.4
1.0
100
Highly
51.0
Moderately
Not at all
Total
39.7
9.3
100
Anti-competitive practices
Price fixing
Price discrimination
Entry barrier
Exclusive dealing
Bid rigging
Market sharing
Tied selling
Predatory pricing
Resale price maintenance
Concerted refusal to deal
Anti-competitive M&A
%
25
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13
10
10
9
6
6
5
2
2
Majority of respondents
(58%) have quite
frequently encountered
anti-competitive
practices
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Majority (58%) had no knowledge of rules or laws to check anti-competitive
behaviour.
Majority (63%) had no knowledge of agencies put in place to administer such
rules or laws.
On enforcement issues, again the majority (64%) do not know if any action is
taken in instances where the rules are violated.
41% of respondents are of the view that no actions are taken because the
laws are not enforced whilst others attribute this to agencies not having
enough clout to punish offenders.
Others believe that corruption and the influence of strong lobbies make
taking action less appealing for agencies.
On issues regarding state owned monopolies, majority (89%) acknowledged
their existence and were of the opinion that these institutions indulged in
anti- competitive practices such as exclusive dealing and price discrimination
come tops in the list.
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Generally, majority of
respondents (82%) perceive
that competition issues are
not well understood in
Ghana.
The main reason being the
lack of publicity on
competition issues and lack
of political will.
Nonetheless, awareness of
competition issues is
perceived to be high among
businesses and low among
consumers
Fig 4: Awareness on competition issues among
key groups
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Assuming they encounter any anticompetitive practice, 36 percent of
respondents agreed to report such
cases to the media houses, and 24
percent would inform local authorities
or traditional leaders.
Competition issues are not reported
because there is no institutional
framework to handle such issues.
Others believe that the media are more
interested in sensational news items
and therefore are less likely to report
them.
Journalist may lack the training needed
to appreciate competition issues,
however business correspondents are
sometimes able to highlight some
anti-competitive practices
Fig 5: How competition issues are perceived
to be reported
Some Key Conclusions
(Perception survey)
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There is a perceived severe lack of awareness of competition
issues and regulations in Ghana.
There is a general perception that there is a lack of publicity
on competition issues and lack of political will to have
competition laws established.
Competition issues not regularly reported in the media, and
the level of awareness of competition issues by journalists not
perceived to be high.
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There is no price competition among LBCs with
respect to the price they pay to the farmers. Why?
Why are LBCs unable to export directly to the
international market in competition with Cocobod
and dilute its monopoly?
Due to absence of weight standards, loaders in the
informal sector have emerged who are extremely
powerful in weight disputes, getting high fees as
commission. Is this for the best?
Conclusion (Perception survey)
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In conclusion, respondents are of the opinion that the government
should play a key role in ensuring the setting up a Competition
Authority to protect consumers and producers.
Also regulators need to be fully equipped to enforce laws and
legislation which they are charged with.
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There is also the need for more advocacies on the negative effects of
anti-competitive practices on the economy and especially on
consumer welfare.
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Market concentration enhances the power of multinational
corporations to dictate their terms, compounding the difficulties of
commodity-reliant developing countries.
There is at least circumstantial evidence to indicate that anticompetitive trade practices are on the increase related to market
concentration and increased buyer power among the TNCs.
Given the situation, policy must play a role in ensuring that levels of
market concentration in local and international markets need to be
tackled to ensure that the MNCs cannot abuse their market power
and extract unfair profits.
Competition law in Ghana could play an important role in tackling
some abuses of market power, especially by domestic intermediaries
or domestic subsidiaries of MNCs and ultimately protecting
consumers.
Thank You!
For further information or clarification please contact us by email.
Dr. Charles Ackah (cackah@isser.ug.edu.gh)
Ama Pokuaa Fenny (amafenny@yahoo.co.uk)
Dela Tsikata (delkwa@yahoo.com)