GREETINGS
TO
PARTICIPANTS
AT THE
NATIONAL TRAINING WORKSHOP
ON
COMPETITION POLICY AND LAW
ACCRA, GHANA
27 – 28 APRIL 2010
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COMPETITION LAW AND SECTOR REGULATION
Dr. S. CHAKRAVARTHY
(Profession : Civil Servant)
Formerly, Member, Monopolies and Restrictive Trade Practices
Commission, Member, High Level Committee on Competition
Policy and Law And Member of Committee for Drafting the Law.
Presently, Adviser/Consultant
Competition Policy and Law
HYDERABAD, INDIA
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COMPETITION LAW
• GHANA COMPETITION LAW INTER ALIA
SEEKS TO MAINTAIN AND PROMOTE FAIR
AND FREE COMPETITION IN THE MARKET
• IT ALSO SEEKS TO PROTECT THE
WELFARE AND INTERESTS OF CONSUMERS
• THE LAW APPLIES NOT ONLY TO PRIVATE
ENTERPRISES BUT ALSO TO GOVERNMENT
DEPARTMENTS AND PUBLIC ENTERPRISES
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SECTORAL REGULATORS
• GHANA HAS STATUTES GOVERNING
CERTAIN SPECIFIC SECTORS LIKE
TELECOM AND ELECTRICITY
• NATURAL
MONOPOLIES
ARE
GENERALLY IN THE PUBLIC SECTOR,
EITHER WHOLLY OWNED BY THE
GOVERNMENT OR PARTIALLY OWNED
WITH A MAJORITY STAKE
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RECENT DEVELOPMENTS
• COMPETITION LAWS ALL OVER THE
WORLD HAVE IMPACTED DOMINANT FIRMS
AND NATURAL MONOPOLIES
• BY AND LARGE, COMPETITION LAWS ARE
APPLIED IN COMPETITIVE SECTORS AND
SECTORAL LAWS IN THE NATURAL
MONOPOLIES SECTORS
• FOR INSTANCE, SECTORAL LAWS GOVERN
TELECOM AND ELECTRICITY SECTORS,
HITHERTO THE MONOPOLY OF THE
GOVERNMENT,
WHICH
HAVE
NOW
ENTERED THE COMPETITIVE SECTOR.
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TELECOM AND ELECTRICITY
• IN ELECTRICITY SECTOR GENERATION AND RETAIL ARE NOW
COMPETITIVE AND SUBJECT TO COMPETITION LAW
• TRANSMISSION AND DISTRIBUTION CONTINUE AS NATURAL
MONOPOLY, REQUIRING REGULATION
• IN TELECOM SECTOR THE LAST SEGMENT - CONNECTION TO
THE CONSUMER IS NO LONGER A NATURAL MONOPOLY WIRELESS ON THE LOCAL LOOP, FIBRE OPTIC, INTERNET,
CABLE, CABLE TELEVISION, CELLULAR AND SATELLITE
• THUS THE SECTORAL REGULATOR’S ROLE IS TO FACILITATE
COMPETITION - ENTRY TO THE COMPETITIVE PARTS OF THE
SECTOR RETAINING THE NATURAL MONOPOLY COMPONENT
ABSENT COMPETITION
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BLOOD PRESSURE IN TELECOM
AND ELECTRICITY SECTORS
• IN BOTH THESE SECTORS ACCESS TO ESSENTIAL
FACILITIES AND INTERCONNECTION FOR THIRD
PARTIES IS CRITICAL
• SECTORAL LAW SEEKS TO ENSURE FREE AND NON
– DISCRIMINATORY ACCESS TO SUCH FACILITIES
• IN
SOME
REGIMES
LIKE
NEW
ZEALAND,
COMPETITION
LAW
PROHIBITS
MISUSE
OF
DOMINANT POSITION OR BEHAVIOUR
• BATTLE FOR PRIMACY BETWEEN SECTORAL LAW
AND COMPETITION LAW INCREASES THE BP IN THE
TWO SECTORS
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DIFFERENCES
COMPETITION LAW
SECTORAL REGULATOR
 COMPETITION
AUTHORITY
ASSESSES LAWFULNESS OF
CONDUCT
 IT
HAS
POWER
TO
PROSCRIBE CONDUCT
 PRIVATE PARTIES PLAY A BIG
ROLE
BY
BRINGING
IN
COMPETITION ISSUES BEFORE
THE
AUTHORITY
FOR
MODIFYING CONDUCT
 INVESTIGATION
AND
PROCUTION ARE SEPARATE
 REQUIRES HIGH BURDEN OF
PROOF
 SECTORAL REGULATOR HAS
DISCRETIONARY POWERS EX
ANTE
 IT HAS POWER TO SET
PRICES, STANDARDS ETC
 PRIVATE PARTIES PLAY AN
USEFUL ROLE ASSISTING THE
REGULATOR IN EX ANTE
DECISIONS
 REGULATOR
CONDUCTS
HEARINGS AND ADJUDICATES
ON THEIR OUTCOME
 REQUIRES LOGIC RATHER
THAN PROOF FOR MAKING
DECISIONS EX ANTE
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DIFFERENCES (CONTD)
COMPETITION LAW
SECTORAL REGULATOR
 COMPETITION
AUTHORITY
PROHIBITS ACTIVITIES LIKE
PRICE FIXING, BID RIGGING
ETC (NEGATIVE)
 SECTORAL
REGULATOR
DOES
NOT
PROHIBIT
ACTIVITIES BUT PRESCRIBE
THEM (POSITIVE)
 IT STRESSES WHAT MARKET
AGENTS SHOULD NOT DO
 IT STRESSES WHAT MARKET
AGENTS SHOULD DO
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COMPETITION AND SECTORAL REGULATORS
– CAN THEY SHAKE HANDS?
 OVER THE YEARS, THE TWO REGULATORS HAVE
BECOME INSTITUTIONS WITH LIMITED FORMAL
RELATIONSHIP
 IN MOST COUNTRIES THEY COHABIT WITH
TENSION
 THE PROBLEM IS WHICH REGULATOR HAS
PRIMACY
 THIS LEADS TO UNNECESSARY LITIGATION
 CONSEQUENTLY COURTS NEED TO INTERVENE.
FOR INSTANCE, IN SOUTH AFRICA THE COURT
RULED THAT COMPETITION REGULATOR HAS
JURISDICTION OVER BANK MERGERS THOUGH
THERE IS A CENTRAL BANK (SECTORAL
REGULATOR)
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YES, WE CAN MAKE THEM
SHAKE HANDS
ALLOWING
PRIMACY
TO
SECTORAL
REGULATOR ON COMPETITION ISSUES IN
THE REGULATED SECTOR OR
REQUIRING SECTORAL REGULATOR TO
REFER
COMPETITION
ISSUES
TO
COMPETITION AUTHORITY
ALLOWING CONCURRENT JURISDICTION
OR REQUIRING CONSULTATION
CREATING A SINGLE AGENCY FOR
COMPETITION
AND
SECTORAL
REGULATION (EXAMPLE: AUSTRALIA, NEW
ZEALAND, BARBADOS ETC.)
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SECTORAL REGULATOR HAS
PRIMACY
• SECTORAL REGULATION ACTS TO
EXEMPT FROM COMPETITION LAW
BE
• ALL REGULATED INDUSTRY WILL ARGUE
THAT THEY ARE NOT WITHIN THE AMBIT OF
COMPETITION LAW
• THIS WILL IMPLY INCONSISTENCY IN
DECISIONS OF DIFFERENT SECTORAL
REGULATORS ON COMPETITION MATTERS
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COMPETITION LAW HAS
PRIMACY
• SECTORAL
REGULATORS
REFER
COMPETITION MATTERS TO COMPETITION
AUTHORITY
• THIS WILL ENSURE CONSISTENCY OF
DECISIONS IN COMPETITION MATTERS
ACROSS ALL INDUSTRY
• THIS WILL ENSURE THAT THE EXPERTS IN
COMPETITION MATTERS HAVE THE FINAL
SAY
• BUT IN THIS ARRANGEMENT THERE COULD
BE DELAYS BECAUSE OF REFERRALS
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CONCURRENT JURISDICTION
• BOTH
COMPETITION
AUTHORITY
AND
SECTORAL
REGULATOR HAVE JURISDICTION IN COMPETITION MATTERS
• POSSIBLY DIFFERENT AGENCIES MAY INTERPRET RULES
DIFFERENTLY
• CONCURRENCY MAY LEAD TO DUPLICATION
• THIS THEREFORE REQUIRES A CONSULTATIVE MECHANISM
• A PROBLEM IS THAT COMPETITION AUTHORITY’S NORMS
MAY NOT BE SUITABLE FOR SECTOR – SPECIFIC INDUSTRIES
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SINGLE AGENCY
 ONLY
ONE
AGENCY
DEALS
WITH
COMPETITION MATTERS AND SECTORAL
REGULATION
 COMPETITION LAW MAY BE TOO GENERAL
FOR SECTOR SPECIFIC INDUSTRY
 CONSEQUENTLY COURT INTERVENTION
AND JUDICIAL PRECEDENTS ARE NEEDED
 THIS MEANS DELAYS AND EXPENSE
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GHANA BILL
• SECTION 76 OF THE BILL ENJOINS THE
SECTORAL REGULATOR TO NEGOTIATE AN
AGREEMENT WITH THE COMPETITION AND
FAIR TRADE PRACTICES COMMISSION TO
COORDINATE
AND
HARMONISE
ITS
EXERCISE
OF
JURISDICTION
OVER
COMPETITION MATTERS WITHIN THE
SECTOR SPECIFIC INDUSTRY
• THIS
IS
TO
ENSURE
CONSISTENT
APPLICATION OF THE COMPETITION LAW
OF GHANA
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IMPLICATIONS
• SECTORAL
REGULATOR
HAS
TO
EXERCISE
ITS
JURISDICTION IN TERMS OF THE AGREEMENT NEGOTIATED
WITH THE COMPETITION AND FAIR TRADE PRACTICES
COMMISSION
• THE AGREEMENT MUST
1.
IDENTIFY
AND
ESTABLISH
CONCURRENT JURISDICTION
PROCEDURES
FOR
2.
PROMOTE COOPERATION BETWEEN THE SECTORAL
REGULATOR AND COMPETITION AUTHORITY
3.
PROVIDE FOR EXCHANGE OF INFORMATION AND
PROTECTION OF CONFIDENTIAL INFORMATION
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SUGGESTION
• GHANA
GOVERNMENT
AND
STAKEHOLDERS NEED TO CONSIDER THE
IMPLICATIONS OF SECTION 76 OF THE BILL
TO ENSURE THAT IT IS IN CONSONANCE
WITH ITS NEEDS AND ETHOS
• COORDINATION,
CONSULTATION
AND
HARMONISATION ARE THE FULCRUM OF
SECTION 76 AND APPEAR TO BE
APPROPRIATE
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PARTING WORDS
• REGULATION SHOULD NOT BE SEEN AS AN
INTRUSION BUT NECESSARY TO
LIMIT
MONOPOLY POWER AND TO PROMOTE
CONDITIONS FOR EFFECTIVE COMPETITION
• SECTORAL
REGULATION
AND
COMPETITION LAW NEED TO BE VIEWED AS
NOT HOSTILE TO EACH OTHER
• THEY ARE COMPLEMENTARY TO EACH
OTHER
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THANK YOU
FOR YOUR
KIND
ATTENTION
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