STATE OWNED ENTERPRISES: ARE THEY GOOD OR BAD FOR COMPETITION

Slides:



Advertisements
Similar presentations
Gender Perspectives in Introduction to Competition Policy Gender Module #6 ITU Workshops on Sustainability in Telecommunication Through Gender & Social.
Advertisements

Perspectives on Regulation in Transport in BiH Presentation at Conference on Regulatory Governance and Network Industries Richard Westler, Secretary General,
GAMBIA COMPETITION COMMISSION GAMBIA COMPETITION COMMISSION Levelling the Field for Development BY : EXECUTIVE SECRETARY 5 TH JUNE 2013.
BRIEF ON THE COMPETITION LAW OF BOTSWANA by Thula Kaira - CEO Presentation to the Civil Aviation Authority of Botswana Gaborone, 15 August 2012.
COMPETITION POLICY AND ECONOMIC DEVELOPMENT PRESENTATION AT CUTS-ARC CAPACITY BUILDING WORKSHOP, LUSAKA 7 TH MARCH, 2011 BY SAJEEV NAIR, COMPETITION POLICY.
TUME YA USHINDANI 1 IMPLEMENTATION OF COMPETITION POLICY AND LAW AND ITS BENEFITS IN TANZANIA 13 th FEBRUARY, 2013 By Fair Competition Commission (FCC)
GAMBIA COMPETITION COMMISSION GAMBIA COMPETITION COMMISSION Levelling the Field for Development SIXTH ANNUAL AFRICAN CONSUMER PROTECTION DIALOQUE CONFERENCE.
Some basic observations
HNC/HND Unit Competition Policy.  To explore the role of market legislation and regulation in the UK. In particular the role of the Competition.
Brief overview of Consumer protection and Competition highlights in Namibia The Fifth Annual African Dialogue Consumer Protection Conference Livingstone,
+ PROJECT BACKGROUND: KENYA THE NEED FOR CONSUMER PARTICIPATION IN THE REFORMS PROCESS OF THE ELECTRICTY SUB-SECTOR Susanne Rabisch, CUTS Nairobi.
Governmental Opportunities and Constraints
“Equal and open access to the market in terms of economic integration and increased competition ” Astana Forum, 24 May 2013 Presented by Hassan Qaqaya,
Regulatory Transparency and Interaction with the Government Dr. Konstantin Petrov Head of Section, Policy and Regulation.
Market Dominance. Definition – Market Dominance Firms that have a high market share. Market share can be measured by the share of sales or customers in.
STRUCTURE AND FUNCTIONS OF COMPETITION AGENCIES. GENERAL STRUCTURE OF CA CAs differ in size, structure and complexity The structure depicts power distribution.
Public Policy towards Private Enterprise
EUROPEAN COMPETITION POLICY
Introductory course on Competition and Regulation Pál Belényesi University of Verona October 2006.
Experience on Competition Law from Botswana Monnane M. Monnane Research Fellow.
Competition Issues in Agricultural Marketing and Procurement in India Jyoti Gujral- IDFC Piyush Joshi & Anuradha R.V.- CLARUS LAW ASSOCIATES February 16,
 “Market power” is the power of company to control the market for its product.  The law does allow for market monopolies when a patent is issued. During.
MARKET STRUCTURE Perfect competition MonopolyOligopoly.
Regulation of Mergers & Acquisitions Presentation by Magdeline Gabaraane GICC 14 th March
July 26 th, 2005 Competition Policy and Law in Cambodia 1 By Nuth Monyrath EIC Legal Researcher.
Introduction to Competition Policy & Law
Competition policy in healthcare (market) Trudi Makhaya 1.
UNCTAD The interface between competition policy, trade, investment and development Geneva, 23 July 2007 Abuse of Market Power Presentation by: Ursula Ferrari.
2 2 nd CUTS-CIRC International Conference REVIEWING THE GLOBAL EXPERIENCE ON ECONOMIC REGULATION – A forward looking perspective Session VII - Interface.
INVESTIGATION AND ENFORCEMENT Presentation by Duncan T. Morotsi 15 th March
1 Economic Analysis in Competition Law – A Lawyer’s Perspective A. Douglas Melamed March 23, 2009.
Transport A competitive port system for a competitive Europe Assoporti General Assembly Rome, 22 July 2015 Dimitrios Theologitis, Head of Unit "Ports &
1 Introduction to Competition Policy and Law National Training Workshop on Competition Policy and Law Gaborone, Botswana: 25 – 27 July 2007 Presenter:
COMPETION POLICY AND ECONOMIC DEVELOPMENT “The Case of Botswana” Monnane Research Fellow Botswana Institute for Development Policy Analysis (BIDPA)
Private Sector Development Competition and Anti Monopoly The World Bank Mission February-March, 2004.
Capacity Building within CARIFORUM on Competition Policy David Miller – Executive Director May 5, 2016 Promoting competitive markets FAIR TRADING COMMISSION.
Economic Systems Chapter 2 Section 4 Modern Economies.
EXTERNAL INFLUENCES These are factors that the business can not control (External constraints) PESTEL Analysis is a part of the external analysis that.
Government intervention and competition policy 3.
PHILIPPINE COMPETITION ACT
PRESENTATION AT THE OECD NATIONAL WORKSHOP ON FIGHTING BID-RIGGING IN PUBLIC PROCUREMENT PRESENTATION BY DUNCAN T. MOROTSI DIRECTOR LEGAL AND ENFORCEMENT.
Types of Business Structures
European Union Law Week 10.
Competition and Monopolies
IGE Conference Challenges in the design of merger control regime Magdeline Gabaraane Director, Mergers and Monopolies Geneva 5 – 7 July, 2017.
Chapter 2: Section 4 Vocabulary
Accountability and Communication Presentation by Gideon Gobusamang Nkala Director: Communications and Advocacy.
EU Competition Rules for Technology Transfer Agreements
FIGHTING ANTICOMPETITIVE BUSINESS PRACTICES IN THE MALAWI SUGAR INDUSTRY 2nd ANNUAL COMPETITION AND ECONOMIC REGULATION (ACER) WEEK SOUTHERN AFRICA LIVINGSTONE,
Chapter 2 Section 4 Modern Economies
Presentation to the Sherpa on cooperation
Business in the Global Economy
Challenges to Competition Reforms in Africa
Introduction to Competition Policy & Law
Achieving the Internal Gas Market The view of gas suppliers
SOL Review Questions Civics & Economics #
OECD - Introduction It is an organisation of those countries which describe themselves as Democratic and have Market economy. Its HQ is in Paris, France.
Monopoly A firm is considered a monopoly if . . .
The FCA and its Competition Agenda
Market Structures One of the most important functions of government is to ensure competition in a free market.
Chapter 2 Section 4 Mixed Economies.
Chapter 13 IMPLEMENTING STRATEGY IN COMPANIES THAT COMPETE ACROSS INDUSTRIES AND COUNTRIES 2010 Cengage Learning. All Rights Reserved. May not be copied,
Competition Policy and Law in Cambodia
Legal Aspects Of Corporate Business
Free Market systems, competition & supply and Demand concepts
National Competition Conference Public Interest Consideration in Competition Analysis Magdeline Gabaraane Director, Mergers and Monopolies Selebi -
The Competition Assessment Framework (The CAF)
Competition law.
The strategic plans of the Competition Commission
Competition Policy: Definition and Scope
Presentation transcript:

STATE OWNED ENTERPRISES: ARE THEY GOOD OR BAD FOR COMPETITION STATE OWNED ENTERPRISES: ARE THEY GOOD OR BAD FOR COMPETITION? A presentation made at the National Competition Symposium By Gideon Gobusamang Nkala 10th April 2019

Presentation Outline 1. Introduction 2. Statutory Monopolies 3. Competition and State Monopolies 4. Are State Monopolies Anti-Competitive Conclusions

What is a state owned enterprise? ”Any enterprise with state ownership, a distinct legal form (separate from public administration) and having sales and revenue.’’ World Bank ‘’These are companies or entities that are owned by government’’.

It is an entity that executes a Government mandate. It offers a specific product/service. Often the offered service or product is at a regulated price. The entity can be run by Government or be independent. Key Features of a SOE:

Rationale for SOE’s Key public policy reasons: Ensuring security of supply. Ensuring Universal access Providing basic services to a wider population Avoiding costs of duplicating expensive distribution network (sunk costs) e.g water, railway etc.

Broad Competition Policy Objectives in Botswana Enhance Economic Efficiency. Promote Consumer Welfare and to Support Economic Growth and Diversification. Prevent and Redress Anti-Competitive Practices in Botswana Economy and remove unnecessary Constraints in the Market.

Competition Policy Thrusts in other Jurisdictions Maintain and Encourage Competition: Canada and New Zealand. Public Interest: United Kingdom. Consumer Welfare and Economic Efficiency: United States. Market Integration and Prevention of Dominance: European Union. Economic Efficiency: Most Developing Economies.

Benefits of Competition Competition leads to substantial reductions in consumer prices Competition provides greater choice for consumers Competition fosters investment that leads to better quality products Please briefly explain the difference between competition and competitiveness here.

Can Competition Law and SOE’s Co-exist? Statutory Monopolies(SOE) The primary function of competition law is to prevent restrictive business practices (mainly private). To prevent public policies that impede competition. To ensure fairness and predictability in the market. Confer exemptions from competition law’s reach The exemptions might result in inefficiency, inability to innovate and lack of choice. SOEs are generally immune from competition law while private firms fall under scrutiny of Competition Law.

Competition Law and State Monopolies in Botswana Competition regulation does not apply to state monopolies. It only applies when these entities trade in a market open for participation by other enterprises. “State” will only be held accountable or be regulated for competition issues to the extent that it engages in trade in any market that is open for participation by other enterprises.

Examples of SOE’s in Botswana WUC BPC BMC BTC (fixed line) Botswana Railways

General Complaints about SOE’s in Botswana Excessive pricing relative to private firms. Extending monopoly to ancillary activities or adjacent market. Arbitrary procurement determinations. Raising barriers to entry, particularly in ancillary markets. Because of immunity there is an incentive to engage in anti-competitive practices.

Are SOE’s Inherently Anti-Competitive? Across the world competition agencies allow some form of exemptions. There are instances where certain exemptions advance the objectives of competition policy e.g consumer welfare, innovation, R&D etc. Exemptions advance the socio-economic policy of government Efficiency may not be the sole Government policy consideration e.g. public interest or public welfare.

How has the CA Intervened in SOE’s Cases SOE’s that are engaged in commercial activities Meet thresholds of the law, market participants and compete in a defined market GABCON (Gaborone Container Terminal) a Joint Venture between Botswana Railways and Transnet t/a Spoornet engaged in unilateral conduct, foreclose Truck & Haulier Companies at downstream market BCL and Norilsk nickel merger in the mining of Cooper and Nickel Agency intervened to control the merger and to redress the conduct of SOE Jurisdiction conferred as SOE’s met thresholds as defined in Act Prosecution to full extent of the law

Case Studies Cont’d Botswana Power Corporation Formation of Tender for Electrical Works and Consulting skewed towards one company BPC not market participant BUT decision it made played a big role in influencing competition in relevant market Analytically and with reference to the law, challenge to place the conduct within confines of the enabling legislation for purposes of prosecution Engaged BPC on the overall holistic approach of removing this barrier BPC changed its strategy and reformulated its Tender Botswana Meat Commission Decision to sell its by product Tallow exclusively to one company Marginalised some players out of the market Raw material used in manufacturing soap Engaging the SOE instead of prosecuting to full extent of law

Conclusions The role of Government in markets has an impact on the function of competition. The role could hinder or promote market competition. Re - evaluation of the exceptions Lifting the express and total immunity availed to Statutory Monopolies. Competition Law does not override Government’s priorities.

Thank you for your audience Plot 28, Matsitama Road, Main mall Tel:+267 393 4278 Fax:+267 312 1013 Email: gideon.nkala@competitionauthority.co.bw Website: www.competitionauthority.co.bw Facebook: Competition Authority Botswana Twitter:@CompetitionBots

Q & A