Key Learning and Recommendations from the Project
Charles Ackah and Dela Tsikata
University of Ghana
Institute of Statistical Social and Economic Research (ISSER)
Outline of presentation
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Introduction
Key lessons
Conclusions and policy recommendations
Introduction
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Despite differences, developing countries are generally characterised by
lower degrees of market competition than their industrialised country
counterparts.
Interest in promoting competition in developing countries has increased over
the past decade.
The interest has particularly resulted from the failures of economic reforms
in the 1980s, that overly relied on trade liberalisation to promote
One general conclusion was that trade liberalisation did not do the whole
job – it did not guarantee by itself a desirable level of competition in an
economy.
The idea that trade liberalisation would improve domestic competition has
led to a reassessment that indicates that success in trade and liberalisation
is itself dependent on establishing a competitive domestic market
environment.
Introduction
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Until relatively recently, Competition Policy and the formulation of
competition laws had received very little attention from
developing country governments because of lack of resources and
the apathy of civil society and other key stakeholders.
However, in this present era of increased globalisation, consumers
and CSOs have gradually started to understand the implications
of a competitive market both for economic gains and consumer
welfare.
In spite of this increased awareness, there are widespread cases
of anti-competitive behaviour in the market right from government
procurement processes through to utility services provision.
Introduction
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ISSER was selected to partner CUTS to undertake this project on
competition in Ghana, primarily to conduct an in-depth study of
the bottlenecks in the system which prevents firms from
competing efficiently.
The first step in this process was the compilation of a preliminary
country paper on the current state of competition in Ghana, and
later a Country Research Report on the state of competition in
Ghana.
A National Reference Group (NRG) was formed to offer us the
opportunity to create an awareness of competition issues and to
find ways in which we can promote a competition culture at a
much higher level.
Key Lessons
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What is needed is a sound competition regime in
Ghana that drives firms to become more efficient
and also ensures the best possible utilisation of
available resources. The rewards are that the
consumer has a greater choice of products at lower
prices.
Consumer
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Protection Policy
Ghana lacks a comprehensive consumer protection law.
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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:
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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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Progress towards a Competition Act
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The Government is in the process of developing a Bill on
competition law.
Two 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 understand background work is underway to bring the third
bill before cabinet?
The key question: Why has it been so difficult to put a
Competition Act into law?
Sectoral Policies
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Energy
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Water
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Telecom
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Financial Services
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.
The Energy Commission is in charge of technical standards and licensing of electricity
utilities.
The Public Utilities Regulatory Commission (PURC) is responsible for competition
regulation and quality of service monitoring.
There has been no significant privatisation programme to date.
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.
Competition and Sector Regulation
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Interviews were conducted with key stakeholders in select sectors.
Some key findings were:
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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 licenses.
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 anticompetitive practices but not all are equipped with provisions for punishing
such behaviour.
Anti-competitive
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practices – some evidence
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 and financial institutions are in
collusion in setting prices and rates.
False advertisement e.g. unfair practices are prevalent in the
pharmaceuticals industry, particularly with regards to herbal
medicines.
Trademark violation e.g. music and video industry but also the
Chinese accused by players in the textile & clothing sector.
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PERCEPTIONS REGARDING COMPETITION CONCERNS
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Assessment of Level of Competition
Assessment of Enforcement Issues
Competition Culture and Public Awareness
Assessment of Level of Competition
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
Moderately
Not at all
Total
51.0
39.7
9.3
100
Assessment of competition in key sectors, 2009
Sectors characterized by monopolies
Perception of most frequent anti-competitive practices
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
14
13
10
10
9
6
6
5
2
2
Majority of respondents
(58%) have quite frequently
encountered anti-competitive
practices
ASSESSMENT OF ENFORCEMENT ISSUES
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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 anticompetitive practices such as exclusive dealing and price discrimination come
tops in the list.
COMPETITION CULTURE AND PUBLIC AWARENESS
Awareness on competition issues among key groups
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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
Role of Media
How competition issues are perceived to be reported
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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
Some Key Conclusions
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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.
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.
There is also the need for more advocacies on the negative effects of anticompetitive practices on the economy and especially on consumer welfare.
Conclusion
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(Perception survey)
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 anticompetitive practices on the economy and especially on consumer welfare.
Conclusion (Overall)
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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 anti-competitive 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.
CONCLUSION and RECOMMENDATIONS
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A number of possible instances of anti-competitive practices were found
in a range of sectors including, inter alia, beverages, cement, cargo
handling and the utilities.
In all these cases the ill-effects on consumers consisted of having to pay
higher prices and accept lower quality than would have been the case
with more (and fairer) competition.
The prevalence of anti-competitive practices can be ascribed to lack of
adequate governmental regulation and civil society action.
Government has, for the most part, been lax in preventing the
establishment of monopolies and taking stringent action when any
unfair practices are revealed.
Civil society organisations, for their part, do not seem to have placed
high priority on tackling competition concerns and pushing for consumer
protection.
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The first step in addressing competition concerns in Ghana will be
the passing the pending Competition Bill into law.
Following this should be the establishment of a well-resourced and
legally empowered Competition Authority.
The fact that the new Minister of Trade and Industry seems quite
keen on pushing for the Bill’s passage is very encouraging.
Efforts must be sustained to make sure that other pressing concerns
of Government do not push this issue to the backburner.
A key part of this process will be impressing on the public the
benefits that will come from competition reform and the losses they
will continue to make if the status quo is maintained.
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Results from our perception survey suggest that this will involve
not only educating the public but also educating the media to
identify abuses and produce well-thought-out stories that
accurately detail the ills of the situation.
Overall, this project has been eye-opening and the
comprehensive results should be crucial in pushing forward the
agenda of competition reform.
It is now left to advocacy to convince the policymakers and the
public that reform is desirable and will bring benefits to all.
THANK YOU FOR YOUR ATTENTION