Contents of module
- Competition
- Introduction
- Terminology
- Basic Principles
- Competition Requirements
- Competition Laws
- The Regulator’s Role
- Complaints
- Mergers, Acquisitions and Investments
- Miscellaneous Issues
- Appendix I
- Appendix II
- eLearning main Index
Section 5: Competition Laws
Overall
It has been stated previously in this module that competition will not develop just because the community wants it. This is particularly so in an industry such as telecoms with its monopolistic history and the existence of powerful vested interests.
Consequently, if a country is serious about introducing competition it must establish the legal infrastructure for this to happen. This section is concerned with the laws necessary to promote competition.
Pro-Competition Legislation
Many countries have already introduced pro-competition legislation, and others are in the process of doing so. Such laws typically have the following characteristics:
- contain minimal exemptions or exceptions by sector or operation (whether government or private, domestic or foreign-owned, or natural or other monopolies;
- prohibit specific business conduct only where this is clearly harmful to economic efficiency and economic welfare;
- provide for clear accountabilities;
- serve public not private interests;
- serve total economic welfare and not just the welfare of certain individuals or organisations;
- are alert to potential misuse of enforcement procedures;
- serve to encourage self-enforcement;
- are independent of inappropriate government influence;
- adhere to the principle of non-discrimination as between domestic and foreign suppliers;
- enable both foreign and domestic complainants to refer complaints to the relevant authorities;
- provide appropriate administrative and/or investigatory mechanisms, including formal appeal procedures; and
- provide for the protection of confidential business information.
Practice in Selected Countries
There is no single rule or practice indicating whether or not it is better to combine general competition laws covering the overall markets and specific competition laws, such as those focusing on telecoms sector.
In some countries, such as the UK and Germany, there are general competition laws such as the Fair Trading Act and the Competition Act, under which telecom regulators can invoke a range of powers. Some argue that these powers are not sufficient in themselves to tackle an industry such as telecoms.
Under the UK competition law, until recently there was no effective system of penalties or retrospective sanctions in the event that the behaviour of a dominant player does indeed turn out to be have been anti-competitive and damaging to competitors or consumers. This has now been rectified.
The Republic of Korea has the Fair Trade Act which aims at encouraging fair and free competition through stimulating creative business activities and protecting consumers as well as promoting a balanced development of the national economy.
In Hong Kong, there is no such a general competition law although certain competition rules and conditions were adopted in the Telecommunications (Amendment) Bill 1999.
In Singapore, too, there is no specific pro-competition legislation, but pressure for some to be introduced is growing.
Case Study
In the Hong Kong situation, there is currently no general pro-competition law. Some efforts are being made to introduce such a law, but so far without success. The government’s view is that sector-specific regulators should ensure competition in their individual segments of the industry, as and where it is needed.
In the absence of such a law, the responsibility for ensuring competition in the telecoms industry falls to OFTA.
Further Reading
One of the most recent pieces of pro-competition legislation was passed in the UK under the title The Competition Act 1998.
Also, the New Zealand situation is of interest. Among all the developed economies, it stood out as having no pro-competition legislation specific to telecoms. Since telecom liberalisation began in that country, the government had maintained that a general competition law covering all industries was sufficient.
Considerable opposition to that view had grown over the years, and a new government elected at the end of 1999 decided to review the situation. Its report has now been published, and is available on the relevant Ministry’s website.