Final Report - World Trade Organization

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The conflicts between sector specific regulators and competition authorities are more common. In Pakistan, for example, regulatory authorities for several utilities (telecom, natural gas, power etc.) have been set up. These authorities work independently. They may seek advice from the competition authority but are not legally bound to do so. The situation appears to be similar in Kenya and Sri Lanka. The case of Tanzania is interesting as the sector specific regulation was initially under the purview of the competition authority. Subsequently, some sector specific regulatory authorities were created. The conflicts between competition authority and Tanzania Communication Commission (TCC) became obvious when the former filed a complaint against the latter for permitting dominance of two cell phone companies (Mobile and Tritel) in the country. The TCC subsequently permitted other cell phone providers e.g. Vodafone to provide service in the country. The government is now creating two multi-sector regulatory agencies: one to regulate utilities (electricity, telecom, electronic broadcasting, natural gas and postal services) and the other to regulate the transport sector. The new legislation is expected to provide clear guidelines regarding the division of responsibilities between the competition authority and the sector specific regulators. Apparently, the Competition Tribunal will also act as the final appellate body for the multi-sector regulatory agencies. Thus, Tanzania seems to have recognised the potential overlaps between sector specific regulation and competition law. However, it is not entirely clear how the harmonisation of competition policy within the East African Community will affect the division of labour envisaged by them. 202 The situation in South Africa is somewhat different, as they have ‘privatised’ utilities and infrastructure services through ‘strategic equity partners’ who bring in technical and management expertise along with capital. In some cases, limited time monopoly (telecom, fixed line) has been provided. The fixed line operator can also provide value-added services and compete with private operators. Since the fixed line operator owns the network, private operators providing value added services have often complained about access to the network. Along with these privatisation efforts, sector specific regulatory authorities have also been set up in South Africa. For example, matters relating to telecom are now covered by the Independent Communications Authority of South Africa (ICASA). The problems faced in Tanzania and South Africa can arise in other countries as well. Since the sector specific regulatory bodies are often responsible for defining ‘entry conditions’, their actions directly affect the nature of competition after entry has taken place. Consequently, the conflicts between sector specific regulators and competition authorities are expected to arise. There are no clear solutions to this problem but an explicit recognition of the issue is a good starting point. One can then work towards a remedy. The South African example is very instructive in this regard. The South African government recognises the fact that the overlapping jurisdictions between competition authorities and regulatory bodies will create problems, as firms will take their cases to the forum they believe to be most favourable. Therefore, it is stipulated that the Competition Act will not apply to ‘acts subject to or authorized by public regulation’. But firms used this provision to argue in the High Court that the Competition Act did not apply to the agricultural and banking sectors, as there are a series of other acts regulating the practices of these sectors. 203 As a result, the stipulation was removed from the Act. The South African Competition Act provides for consultations to avoid situations of conflict between competition authority and regulatory agencies. A Regulator’s Forum is being established to implement this provision. Under this provision, the Commission is responsible to ‘negotiate agreements with any regulatory authority to coordinate and harmonize the exercise of jurisdiction over competition matters within the relevant industry or sector’. It seems that 202 The Tanzania paper also gives the impression that the East African Community may also harmonise sector specific regulation. 203 Interestingly, in the case of a proposed merger between two of the four national retail banks, the courts ruled that jurisdiction lay with the Minister of Finance. The Competition Tribunal, therefore, could not decide on the merger. The Competition Commission prepared a report for the Minister of Finance opposing the merger on grounds of likely reduction in competition. The Minister followed the Commission’s advice and disallowed the merger. 62 w Pulling Up Our Socks
all 7-Up countries can learn from this experience. In addition, the Tanzanian experience should also be looked at more closely. 204 In India, as far as the relationship between the CA and other statutory authorities is concerned, in general, and utility regulators, there is no clarity. But the regulatory laws do not have provisions to deal with anti-competitive practices and hence competition issues maybe kept outside the purview of the regulators. So far there has been no conflict between the CA and the regulators, probably because the CA has not been very proactive or it did not have adequate legal power. For example, recently there was a big merger in the telecom sector which has raised competition concerns. The sectoral regulators did not look at the issue from competition angle. But the CA also did not intervene as it did not have the legal mandate and there was no question of conflict. However, in future, the CA is likely to have the mandate to review mergers and hence, chances of conflict with the regulators cannot be ruled out unless the relationship is clearly established. In the United Kingdom there are five sectoral regulators (at the moment three have merged because of convergence) and each can enforce the UK Competition Act, 1998, in the sector under its purview concurrent with the Office of Fair <strong>Trade</strong> (OFT). To ensure consistency between the OFT and the sectoral regulators a ‘concurrency working party’ has been set up. The arrangement aims to prevent both forum shopping as well as ‘double jeopardy’. At the same time, the staff of all authorities have a common training programme. 204 The Chief Executive of the Competition Agency in Zambia sits on the Boards of sector specific regulatory authorities. This representative is expected to address competition related issues as and when they arise. We do not have enough information to analyse if this process works well and minimises the overlaps between the two authorities. More details will be useful for all the 7-Up countries. The report of the Zambia NRG meeting held on November 22, 2001 indicates that cooperation between sectoral authorities and the competition agency is mandatory in the country. No details of this co-operation are readily available. Pulling Up Our Socks w 63
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PULLING UP OUR SOCKS - A STUDY OF C
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PULLING UP OUR SOCKS -A Study of Co
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C O N T E N T S LIST OF TABLES.....
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List of Tables Table 1: Socio-Econo
Page 9 and 10:
Foreword Since the second part of t
Page 11 and 12: Preface The title of this research
Page 13 and 14: Executive Summary Introduction Tran
Page 15 and 16: Table A: Human Resources in the Com
Page 17 and 18: Chapter-1 Introduction: The 7-Up Pr
Page 19 and 20: Chapter-2 Socio-Economic Context of
Page 21 and 22: Table 2: Industrial Structure India
Page 23 and 24: countries, state-owned enterprises
Page 25 and 26: Chapter-3 Background and Objectives
Page 27 and 28: In Kenya, most transactions in the
Page 29 and 30: In India, engineering services, ele
Page 31 and 32: promulgated in 1988 had ‘control
Page 33 and 34: Chapter-4 Scope and Coverage 66 4.1
Page 35 and 36: Sri Lanka’s Fair Trading Commissi
Page 37 and 38: competition law doesn’t frown so
Page 39 and 40: dominance’ investigations, focusi
Page 41 and 42: takes over or merges with ‘x’ t
Page 43 and 44: a state’s exercise of governmenta
Page 45 and 46: Table 4: Practice specific exemptio
Page 47 and 48: Table 5: Enterprise specific exempt
Page 49 and 50: The approach of the South African a
Page 51 and 52: Chapter-5 The Competition Authoriti
Page 53 and 54: This bundling of powers is increasi
Page 55 and 56: The methods of analysing the static
Page 57 and 58: Table 8: Facilities Country India K
Page 59 and 60: Commission in handling cases. It al
Page 61: Further, the competition authoritie
Page 65 and 66: Chapter-6 Competition Authorities:
Page 67 and 68: In a globalising world it may be a
Page 69 and 70: It can well be expected that when t
Page 71 and 72: CAs are not aware of many of the in
Page 73 and 74: Chapter-7 Competition Issues with I
Page 75 and 76: Box 1: International Cartels - The
Page 77 and 78: administrative fine not exceeding t
Page 79 and 80: corporations: GE and Honeywell, bec
Page 81 and 82: Box 3: The Cola Saga in India The c
Page 83 and 84: to the removal of quantitative rest
Page 85 and 86: Chapter-8 Conclusions and Recommend
Page 87 and 88: acking of the government or lacks t
Page 89 and 90: ones is their general lack of funds
Page 91 and 92: 2. International donors could finan
Page 93 and 94: hands of a few families, Pakistan
Page 95 and 96: Annexure-1: The Acts Country Year A
Page 97 and 98: COUNTRY PARTNERS 1. India National
Page 99 and 100: Annexure Table 2a: Coverage of Enti
Page 101 and 102: Annexure Table 3a: Monopolisation,
Page 103 and 104: Annexure Table 3b: Restrictive Trad
Page 105 and 106: Annexure Table 3c: Mergers & Acquis
Page 107 and 108: Annexure Table 3d: Unfair Trade Pra
Page 109 and 110: Annexure Table 4b: Status, Power an
Page 111 and 112: Annexure Table 4c: Sanctions and Re
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Annexure-4 SURVEY QUESTIONNAIRE Com
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16. How many Members (Governing Com
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26. What is the system of evaluatio
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38. What powers and functions does
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52. If yes, what are the criteria f
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58. Status of pending (from the dat
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65. Time taken for completion of ad
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75. What are the obstacles that the
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94. (a) If any, which are the secto
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Annexure-5 What the Stakeholders Th
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This is particularly true in the ca
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Advocacy The NRGs also felt that it
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Frederic Jenny, Chairman of the WTO
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insignificant market share prior to
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CUTS Centre for Competition, Invest
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