1 GREETINGS TO PARTICIPANTS AT THE NATIONAL TRAINING WORKSHOP ON COMPETITION POLICY AND LAW ACCRA, GHANA 27 – 28 APRIL

2 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

3 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

4 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

5 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.

6 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

7 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

8 DIFFERENCES COMPETITION LAW  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  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

9 DIFFERENCES (CONTD) COMPETITION LAW  COMPETITION AUTHORITY PROHIBITS ACTIVITIES LIKE PRICE FIXING, BID RIGGING ETC (NEGATIVE)  IT STRESSES WHAT MARKET AGENTS SHOULD NOT DO SECTORAL REGULATOR  SECTORAL REGULATOR DOES NOT PROHIBIT ACTIVITIES BUT PRESCRIBE THEM (POSITIVE)  IT STRESSES WHAT MARKET AGENTS SHOULD DO

10 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)

11 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.)

12 SECTORAL REGULATOR HAS PRIMACY SECTORAL REGULATION ACTS TO BE EXEMPT FROM COMPETITION LAW 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

13 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

14 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

15 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

16 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

17 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 PROCEDURES FOR CONCURRENT JURISDICTION 2.PROMOTE COOPERATION BETWEEN THE SECTORAL REGULATOR AND COMPETITION AUTHORITY 3. PROVIDE FOR EXCHANGE OF INFORMATION AND PROTECTION OF CONFIDENTIAL INFORMATION

18 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

19 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

20 THANK YOU FOR YOUR KIND ATTENTION