Competition authorities can handle telecoms cases
July 24, 2009
By Fungai Sibanda
The media reports on the speech delivered to the Mail & Guardian/Neotel Business Breakfast event last week by the outgoing chairman of the Competition Tribunal, David Lewis, 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.
The uncertainty emanated from the now-repealed Telecommunications Act (Telecoms Act), number 103 of 1996, which gave the Independent Communications Authority of SA (Icasa) powers to investigate and pronounce on "uncompetitive actions", including matters of discrimination and preferential treatment.
With the promulgation of the Competition Act in 1998, ideally the Telecoms Act and other sector-specific legislation needed to be amended 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 information and communication technology (ICT) sector included.
Without the necessary amendments, this meant that two separate pieces of legislation regulated 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 last year, six years down the line, the High Court (the then Transvaal Provincial Division) left the jurisdiction question open, prompting the Competition Commission to issue a statement that it would continue with the 11 other cases under way involving the telecoms sector. It had been hoped that the promulgation of the Electronic Communications Act(ECA) in 2005, 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 presupposing that the Competition Act would be subject to the ECA.
It could never have been the intention of the legislature that the ICT sector should not be subject 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 (before the event) by the ECA, the Competition Act would apply ex post (after the event).
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 anticompetitive 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 allow the injustices perpetuated against consumers to 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.
While 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 remedies will soon be tested once the elongated process that must be followed is in place.
Similarly, while the Competition Commission excels at investigations, there are people at Icasa with more than 15 years experience dating back to the days of the Independent Broadcasting Authority and the SA Telecommunications Regulatory Authority, whose technical expertise and sectoral knowledge cannot be matched.
This is contrary to spurious media reports citing "high" staff turnover, which, at a rate of about 11 percent compares favourably to 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 rather 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 from getting "stuck into the telecoms sector".
Fungai Sibanda is a councillor at Icasa. He was involved with the drafting of the Competition Amendment Bill while at the 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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