Regardless of the stage of development of their telecommunications market and regulation, the most significant lesson that developing countries may draw from some developed countries is that the objective of competition policy is to foster the expansion of the market, the availability of new technologies, and the accessibility of low-cost quality services to the public.
The small number of players in a market, and the lack of technical, human and financial resources may not make it feasible for developing countries to engage in dramatic legislative change (i.e., from sector-specific to general competition rules). A report issued by the International Competition Network (ICN)1 evaluated the effectiveness of competition advocacy in regulated sectors (including telecommunications) and draws several important lessons in this respect:2
- Regulatory agencies should be aware of the importance of competition. To the extent there is both a competition authority and a regulatory agency, the latter should endeavour to consult with the former in developing and proposing new regulations in order to achieve pro-competitive policies.
- An “open and active dialogue” should be maintained between competition authorities and sector regulators. This may include (i) requiring competition authorities to opine on proposed telecommunications regulations or telecommunications regulators to be consulted prior to the issuance of general competition guidelines that may affect the sector; (ii) participation of competition authorities in meetings with the regulator and the incumbent telecommunications operator in order to “promote competition values;” or (iii) the ability of competition authorities to “advise regulators on market definitions.”
- Having the competition authority adopt “formal procedures,” which may include (i) the development of formal memoranda on cooperation between the competition authority and the telecommunications regulator; and (ii) implementation of telecommunications regulation that provides the competition authority with decision-making power on competition matters.
- Using the media as a means to enable the competition authority to explain “its views and arguments within the framework of advocacy activities to the wider public.”
- Ensuring an adequate level of technical expertise that may include (i) exchanging “high quality of information” between the competition authority and the telecommunications regulation; and (ii) developing “technical know-how” with the competition authority so that competition principles can be effectively transferred to the telecommunications sector.
- Having a “forward looking” approach, which involves developing sound strategies to “anticipate and address” potential competition problems and deal with them before they negatively impact the market (This is the goal sought by the market analysis under the EU NRF discussed above).
- Adopting a “legalistic approach,” which may include (i) incorporating formal rules governing the relationship between the competition authority and the telecommunications regulator to ensure that the “recommendations and opinions made by the competition agency are provided at the early states of the regulated sector reform” (see Box 3-6 for example of Brazil’s legalistic approach); (ii) developing a code of conduct that seeks to improve the relationship among industry participants; and (iii) establishing conditions regarding the protection and exchange of confidential information.
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Box 3-6: Example of Implementation of a Legalistic Approach Memorandum of Understanding – Brazil |
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The Brazilian System of Defense of Competition (SBDC), comprised of the Administrative Council of Economic Defense (CADE), the Secretariat of Economic Law (SDE), and the Secretariat for Economic Monitoring (SEAE), is responsible for ensuring the protection of competition in Brazil. CADE has entered into several competition promotion agreements with sector-specific regulatory agencies in order to institutionalize cooperation among them in competition and antitrust matters (this would be an example of the “formal procedures” approach).3 However, General Telecommunications Law contains specific provisions governing the interplay between the telecommunications regulator, Anatel, and CADE and establishing the hierarchy of competition law with respect to the telecommunications sector, as follows:
- General competition rules (i.e., “rules for the protection to the economic framework”) are applicable to the telecommunications sector, to the extent that they do not conflict with the telecommunications law (Article 7 of the General Telecommunications Law);
- Any act among telecommunications service providers that seeks any form of economic concentration is subject to the controls, procedures and conditions set forth in the general competition law and will be submitted for consideration by CADE.
- Anatel has the ability to supervise, control and prevent activities that harm the economy, unless such activities fall within the purview of CADE.
Under this structure, Anatel’s duties are similar to those of the SDE, which initiates administrative proceedings and issues determinations on mergers to be approved by CADE.5 |
ENDNOTES
1 ICN is an international body that provides competition authorities with an informal venue to address practical competition concerns. It is a project-oriented initiative and does not exercise any rulemaking functions. Information available at http://www.internationalcompetitionnetwork.org/index.php/en/about-icn.
2 See generally ICN, Competition Advocacy in Regulated Sectors: Examples of Success, April 2004 [hereinafter Competition Advocacy Report], available at http://www.internationalcompetitionnetwork.org/capacitybuild_sg4_seoul.pdf. This report was prepared as a result of the work of the Capacity Building & Competition Policy Implementation Working Group of the ICN that reviewed responses to questionnaires submitted by more than 33 member countries. The objective of their work was to “compile a compendium of successful case studies and discern common patterns or strategies” focusing on “regulated sectors in developing and transitioning economies.” According the report, competition advocacy “refers to those activities conducted by a competition authority related to the promotion of a competitive economic environment by means of non-enforcement mechanisms, manly through its relationship with other governmental entities and by increasing public awareness of the benefits of competition.” (ICN Competition Advocacy Report, citing to the ICN’s Advocacy Working Group: “ICN 2002 Advocacy Study”).
3 OECD Global Forum on Competition 2005, Contribution from Brazil, 12 January 2005, DAF/COMP/GF/WD(2005)14, at par. 8.
4 LEI Nº 9.472, sobre a organização dos serviços de telecomunicações, a criação e funcionamento de um órgão regulador e outros aspectos institucionais [Law No. 9.472 on the organization of telecommunications services, the creation and determination of the institutional functions of the regulatory agency and other matters (Telecommunications Law)] (Brazil) 16 July 1997, Articles 7 and 19.XIX.
5 OECD Global Forum on Competition 2005, Contribution from Brazil, 12 January 2005, DAF/COMP/GF/WD(2005)14, at par. 22.