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21 Jul 2009 16:35
Media reports on the speech by the outgoing chairperson of the Competition Tribunal, David Lewis, delivered to the Mail & Guardian/Neotel business breakfast event last week, have given the wrong impression that the competition authorities are precluded from dealing with anti-competitive conduct in the electronic communications sector. This is certainly not the case.
The issue relates more to uncertainty as opposed to outright exclusion of the competition authorities’ jurisdiction.
With the promulgation of the Competition Act No 89 of 1998 (Competition Act), ideally the Telecoms Act and other sector-specific pieces of legislation needed to be amended in order to avoid unnecessary duplication by the Competition Act, which is a law of general application giving competition authorities powers to conduct investigations, prosecute and impose penalties or remedies on offenders across the economy, the ICT sector included.
Without the necessary amendments, this meant that two separate pieces of legislation would regulate the same kind of conduct, a phenomenon known in regulatory policy circles as concurrent jurisdiction. Generally there is nothing wrong with concurrent jurisdiction; it is the manner of its management that, in the case of South Africa, has been a source of discomfort.
In 2002, Telkom took advantage of this gap to challenge an abuse-of-dominance charge brought in terms of the Competition Act. For as long as this legal challenge remained, it created doubt as to the reach of the Competition Act over ICT matters. In handing down its judgment in June 2008, six years down the line, the high court (the then-Transvaal Provincial Division) still left the jurisdiction question open, prompting the Competition Commission to issue a statement that it will continue with the 11 other cases under way involving the telecommunications sector.
It had been hoped that the promulgation of the Electronic Communications Act No 36 of 2005 (ECA) would solve this conundrum. However, in its attempt at providing clarity by confining Icasa to prescribing regulations that would prevent abuse of dominance in the sector, the so-called “ex ante regulation”, the ECA unfortunately introduced another complication by using a phrase pre-supposing that the Competition Act would be subjected to the ECA.
It could never have been the intention of the legislature that the ICT sector should not be subjected to general competition laws or that Icasa be given exclusive jurisdiction over the sector. A more plausible interpretation of the ECA takes a complementary jurisdiction approach, which says to the extent that something is not regulated ex ante by the ECA, the Competition Act would apply ex post.
That being the case, the full powers of the Competition Act can be exercised. Moreover, there has not been a legal challenge since the promulgation of the ECA on the same grounds as the 2002 Telkom case. Consequently, nothing stops the competition authorities from going after the litany of anti-competitive behaviour, including price-fixing and abuse of dominance, cited in the speech. As already indicated, there are cases involving the ICT sector currently under investigation by the Competition Commission. The sector has also previously formed part of the commission’s list of priority sectors. It is perhaps the fear of legal challenge that may keep the competition authorities from fully getting their teeth into the sector, more than anything else.
The issue of who is better placed to deal with the sector should not even arise, as it smacks of old-time turf wars that have only served to see the injustices perpetuated against consumers continue unabated. It is therefore a question not of who is better than the other, but rather of how both institutions can be complementary in regulating what is clearly a critical sector of the economy.
Whilst the Competition Act provides a full gauntlet of investigative apparel, the ECA is much broader when it comes to providing remedies best suited to the sector, including price controls. These competition remedies will soon be tested once the elongated process that needs to be followed is in place. Similarly, whilst the Competition Commission excels at conducting investigations, there are people at Icasa with more than 15 years’ experience dating back to the days of the IBA and Satra, whose technical expertise and sectoral knowledge cannot be matched. This is contrary to spurious media reports citing “high” staff turnover, which as a matter of fact, at a rate of about 11%, compares favourably to that of similar institutions, although there is room for improvement.
Furthermore, the Memorandum of Agreement between the two provides for the exchange of information and allows officials from either institution to appear in the proceedings of the other. Secondments could also provide the much-needed transfer of skills to either institution. Surely, the focus should be on these bigger issues than on some unsubstantiated innuendos.
To the extent, however, that there is still uncertainty on the question of jurisdiction, the Competition Amendment Bill contains a clause that clarifies the issue once and for all. It is this same piece of legislation that was fiercely and vehemently opposed by the competition authorities from its inception right through the parliamentary process, not least because it proposes jail sentences for executives found to have participated in cartel activity, and introduces a new offence called complex monopoly behaviour, something that should certainly find resonance in the ICT sector. The Bill has not been promulgated yet, and so the jurisdiction question remains, but that does not prevent the competition authorities getting “stuck into the telecommunications sector”.
Fungai Sibanda is a councillor at Icasa. He was involved with the drafting of the Competition Amendment Bill while at Department of Trade and Industry. He was previously head of policy and projects at the Competition Commission. He writes in his personal capacity.
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