CHALLENGES FACED AS A YOUNG COMPETITION AGENCY BY DR BILLY MANOKA, PhD – COMMISSIONER & CEO INDEPENDENT CONSUMER AND COMPETITION COMMISSION OF PAPUA NEW GUINEA AEWG Panel BOS 4

OUTLINE Background  ICCC  ICCC Act Major Challenges  Market structure  Lack of competition culture  Anti-competition regulation and State protection  Voluntary merger notification  Lack of international cooperation  Cartels detection  Capacity constraint Way forward

BACKGROUND – ICCC Act The Independent Consumer and Competition Commission Act, 2002 (“ICCC Act”) is the primary legislation that stipulates the competition rules. PNG adopted its competition law from Australia and New Zealand. The ICCC Act also covers areas of consumer protection and economic regulation. The ICCC Act is currently under review after more than 12 years of operation.

Independent Consumer and Competition Commission (“ICCC”) is the only national body that has responsibility for enforcing the ICCC Act. Staff ceiling is 79 (inclusive of three Commissioners and support staff). The competition branch has a staff ceiling of 13 which 11 are technical officers (10 economists and a lawyer). Annual budget of ICCC for 2015 is about 13.1 million PGK (which is about 6.5 million AUD). BACKGROUND – ICCC

CHALLENGES – Market structure Many key industries within PNG markets are highly concentrated and dominated by large and well resourced multinational firms. They are mostly vertically integrated. Some are protected under State agreements; e.g. Napa Napa Project Agreement. Government legislations and regulations also impede competition or create ‘uneven playing field’ in certain industries.

CHALLENGES – Lack of competition culture Since the inception of competition law in PNG, lack of compliance from businesses has been a major challenge. This was identified and a compliance program is being developed for businesses. Through this program ICCC is seeking compliance from the businesses.

CHALLENGES –Anti-competition regulation and State protection Another major challenges is the anti-competition Government regulation and State protection. Some areas have been identified and relevant State agencies were informed for their appropriate actions. Some regulatory functions given to SOEs have not been used in a pro-competitive way. For instance, it is noted that competition has not been a criteria in assessing and issuing of licences for stevedoring and pilotage for marine pilots. As a result, as noted above, stevedoring is a highly concentrated industry only one major play in almost all domicile ports. ICCC has been constantly arguing with relevant authorities and it has made some progress in the licensing of marine pilots. However, little has been achieve in stevedoring.

CHALLENGES - Voluntary merger notification Voluntary notification for mergers and acquisitions under the current regime is another challenge. With the limited resources, it is often challenging to take enforcement actions on consummated acquisitions, especially the complex acquisitions in highly concentrated industries. Even with litigation, it is time consuming in PNG. One enforcement case on a share acquisition is currently stagnant for over three years in the judicial system at an interlocutory level. The ICCC Act is currently under review and this is one of the areas marked for a change from voluntary to mandatory.

CHALLENGES – Cartel detection There have been reports of possible cartel conduct between corporations in some markets however it is difficult to identify cartels without a leniency policy. ICCC has plans of introducing a leniency program that would assist in identifying cartel operations in PNG. Since cartels are illegal, they are highly secretive and evidence of their existence is not easy to find. A leniency program would encourage giving of information and evidence of cartels.

CHALLENGES – Lack of international cooperation ICCC Act defines market as “…a market in the whole of Papua New Guinea …” When investigating anti-competitive conduct involving businesses outside of PNG, ICCC needs to work together with other jurisdictions concerned. Seeking collaborations with competition authorities in other jurisdiction is a major challenge for the ICCC. Maybe ICCC needs to have MOUs or bilateral agreements with sister competition authorities to collaborate in any cross-boarder issues.

CHALLENGES - Capacity constraint Another challenge for the ICCC is the institutional capacity constraints in terms of lack of expert officers and inadequate funding. ICCC cannot take on more complex enforcement actions because of capacity constraint. Staff movements in ICCC is also frequent which results loss of expert officers.

CONSUMER PROTECTION It has been a challenging but also exciting experience for the ICCC in terms of its overall work. In the consumer protection area, most of its current rules in the ICCC Act are generic. Despite that, the ICCC has successfully addressed many consumer issues and will continue to do so. Some areas such as product safety has been noted for major changes and improvements in the current ICCC Act review.

WAY FORWARD The ICCC has developed a compliance program to seek compliance from businesses; With the State protection and anti-competitive regulation, appropriate agencies have been consulted and hoping they would do the appropriate changes. With other challenges, the ICCC would like to address them in the current ICCC Act review.

Thank you.