Training workshop Regulatory practices

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Training workshop Regulatory practices

• Regulation and Competition 
• Thierno Mohamadou Baba LY
• ART SENEGAL
• thierno.ly_at_art.sn

Praia Decembre 12 16, 2005
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Table of contentsI. From monopoly to
competitionII. RegulationIII. Anticompetitive
practicesIV. Community law (WAEMU) vs national
competition laws V. Jurisprudence
Training workshop Regulatory practices
UITU/EC Capacity Building Project on regulation
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Training workshop Regulatory practices

• From monoopoly to compettion
• At the beginning prevailed monopoly
• At the beginning and everywhere in the world the
  telecommunications activities were an area
  destined for monopoly (theory of natural
  monopoly ).
• Rationale the state is the unique stakeholder
  that can make the necessary investments in order
  to set up a national telecommunications
  infrastructure accesible to all citizens.
• In the states, the monopoly held by the private
  operator ATT commonly know under the name of
  Mama Bell.
• The situation was the same in Europe, with the
  historic operators Deutsche Telekom (germany),
  France Télécom (France), British Telecom (UK),
  Telecom Italia (Italia), etc.

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Training workshop Regulatory practices

• From monopoly to competition
• The questioning of monopoly stated first in the
  United Sates in the eighties.
• It then extended itself to Europe (4 green books
  from 1987 to 1995).
• In France the telecommunication activities were
  open to competition only since January 1998.
• This movement was progressively followed during
  the same period by the African countries

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Training workshop Regulatory practices

• I. From monopoly to competition
• The case of Senegal
• 1985  Restructuing of the telecommunications
  sector (separation of the postal from the
  télécommunications services) 
• Creation of the national telephone company
• (SONATEL).
• 1999 
• Opening of the SONATEL capital in to allow her
  adapt herself to a more and more competitive
  environment
• Deregulation of some segments of the
  telecommunications markets that led to the
  granting of a second licence to SENTEL in 1998.

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Training workshop Regulatory practices

• I. Du monopole à la concurrence
• 2001  Passing of a new telecommunications code
  through law n 2001of décembre 15 14, 2001.The
  ART was also created by the said code and started
  its activities in March 2002.
• July 2004 The government of Senegal informs
  SONATEL of the end of the end of his mono on the
  fixed telephone, data transmission and
  international access segments

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Training workshop Regulatory practices

• II. Regulation
• It is an anglo saxon term that consists in
  organizing the opening to competition of netorks
  and services formerly provided by compenies (more
  often public companies) in the framework of
  monopolies regulatd by the state.
• regulated
• It results from the necessiy to organise the
  coexistence in the same sector both a general
  interest mission and some activities in a
  situation of competition, to allow new
  stakeholders to enter the market putting in them
  in the conditions that can allow them develop
  their activities while protecting them against
  the potential abuse of the historic operator
  dominant position.

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Training workshop Regulatory practices

• II. Regulation
• Regulation does not mean control
• Regulation should notbe mixed with the
  enforcement of competition law
• The regulator must be independant

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Training workshop Regulatory practices

• II. Regulation
• Regulation should not be mixed up with
  control
• The enforcement of laws and decrees falls under
  the jurisdiction off the legislative and
  executive powers.
• However, the regulation authorities are involved
  in the drafting of the legislative and regulatory
  laws (in some countries, getting the viewpoint of
  the regulation authorities is compulsory in
  Senegal, the ART is evne endwed with some
  initiative power).
• It is necessary to point out that the majority of
  operators recognize their have a limited
  regulatory power.

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Training workshop Regulatory practices

• II. La Regulation
• Regulation should not be mixed up with the
  enforcement of competition laws
• When the sates endow themselves with a
  legislation and a competition policy, their
  intervention has the main objectives of
  correcting the malfunctions of the market,
  fighting against the abuse of power and to
  improving the economic efficiency .
• The monitoring of competition being prior to the
  regulation of telecommunications, in general the
  structures in charge of of competition are older
  than the telecommunication regulation
  authorities those structure are in principle
  the ones that should have a good knowledge of
  competition practices.

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Training workshop Regulatory practices

• II. Regulation
• Regulation should not be mixed up with the
  enforcement of competition laws
• Consequently some countries have both an
  organisation in wharge of managing comeppetition
  and specicifc organisation in charge of
  regulation telecommunications
• When two or more authorities are exixtent, it is
  necessary to clearlt delimit the ri respective
  authorities and their cooperations modalities in
  order to avoid inconsistencies and conflist of
  competence.

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Training workshop Regulatory practices

• II. Regulation
• Regulation should not be mixed up with the
  enforcement of competition laws
• In Senegal the legislator tried t make a clear
  distinction between the ART National Committee in
  charge of competition and the ART.
• Indeed, according to article 5 of the
  telecommunication code , in case of
  anticompetitive practices in the
  telecommunication sector and notwithstanding
  article 9 of law n 94-63 of august 22 1994, the
  operators refer to the ART regarding these
  practices. The ART makes a decision on the
  reality of these anticompetitive praactices after
  having consulted all the concerned economic
  stakeholders. The ART decision can be contested
  in front of the french council of state .

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Training workshop Regulatory practices

• II. Regulation
• Regulation should not be mixed up with the
  enforcement of competition laws
• In France the competition Council exercices
  repressive action against anticompetitive
  practices and intervenes by herself or at the
  request of the plaintiff, once competition is
  unfair on a maarket whatevere the concerned
  activity of the perator be it , private or
  public. She is endowed with an allocation
  competence.

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Training workshop Regulatory practices

• II. Regulation
• Regulation should not be mixed up with the
  enforcement of competition laws
• ARCEP is obliged to refer matters to the
  Competition Council for all cases that fall under
  its jurisdiction.
• As regards interconnection disputes, the
  resolution of which ART was given special
  competence, the legal unit is garanted by the
  private nature off interconnection contracts as
  well as by the institution of the court of appeal
  of Paris as an appeal body for the decision taken
  by the ART.
• The law introduces the obligation to consult
  mutually the two independant authorities.

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Training workshop Regulatory practices

• II. Regulation
• The regulator must be independant
• The independance of the regulation body cannot be
  effective without the following elemens
• The separatuion of regulatory with operational
  functions
• The delegation of general powers to a specialised
  body in charge of arbitrating regulation
  disputes in the general interest
• The lack of political pressure
• Equitable and transparent procedures
• The endowment with special financial ressources,
  preferably independant from the state budget

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Training workshop Regulatory practices

• III. Anticompetitive practices
• Collective practices
• They are essentially expressed under the form of
  tacit or illegal agreements ie any actions,
  conventions, caltitions, formal or tacit
  agreements under whatever form or for any reason
  that aims or that can prevent, restrict or create
  unfair competittion particularly those that
• Are an obstacle to the reduction of cost, selling
  or reselling prices
• Enabling the false increase or decrease of prices
  
• Hindering technical progress
• Limiting the exercise of free competition.

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Training workshop Regulatory practices

• III. Anticompetitive practices
• Individual practices
• Abuse of dominance
• Abuse of economic dependency
• Refusal to sell or provide services
• Applying discriminatory sales conditions
• Offers and price levels abnormally low (sale at a
  loss).

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Training workshop Regulatory practices

• III. Anticompetitive practices
• The most common anticompatitive practices in the
  telecomunication sector are as follows
• The abuse of dominant position blatantly
  displayed particularly in the following case
• The refusal to provide to competitors the core
  installations or the use of delaying tactics
• Providing competitors with services or
  installations at highly expensive prices or at
  discriminatory condictions.
• Using the ousting price and/the cross sibsidizing
  of services open to competition with earnings
  drawn from sevices where competition is lesser.
• Unbundling of services aiming at providing to the
  dominant company an exclusive advantage on the
  subscriber market or obliging a competitor to but
  services or installations that she does not
  really need.

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Training workshop Regulatory practices

• III. Anticompetitive practices
• The most common anticompetitive practices in the
  telecommunication sector
• Mergers and acquisitions
• They can be subdivided into 3 categories
• Horizontal mergers, take place when companies in
  competition or can be competitors have similar
  positions in the production chain
• Vertcal mergers, take place beywen companies with
  different positions in the production chain
  (manufacturers and sellers for instance exemple)
  
• The other mergers, such as those taking place
  between companies that d not have any
  relationship or between conglomerates whose types
  of activities are different.

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Training workshop Regulatory practices

• III. Anticompetitive practices
• For furter details on competition in the
  telecommunication sector consult the book
• Manual on the regulation of telecommunications
  
• Module 5
• Policy on competition
• Edited by
• Hank Intven
• Mc Carthy Tétrault

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Training workshop Regulatory practices

• IV. Community law/national laws
• The community competition law is essentially made
  of three texts
• Order n2/2002/CM/UEMOA on anticompetitive
  practices 
• Order n3/2002/CM/UEMOA on the procedures
  applicable to agreement and abuse of dominant
  position  
• and guideline n 02/2002/CM/WAEMU.
• (See WAEMU site www.uemoa.int )

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Training workshop Regulatory practices

• IV. Community law /national laws
• Directive N n 02/2002/CM/WAEMU that sets the
  respective roles
• The Commision is exclusively competent in one
  hand to make the prelimnary inquiry of the cases
  and on the other hand to take the decisions or
  measures provided for by the orders.
• The national structures managing competition
  ensure a general inqquiry mission, on the basis
  of national initiative or at the formal request
  of the Commission, in accordance with the powers
  and inquiry procedures provided for by the
  community and national laws. For this reason,
  they carry out a permanent activity that consists
  in monitoring the market in order to identify the
  malfunctioning relating to anticompetitive
  practices.

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Training workshop Regulatory practices

• IV. Community law /national laws
• We could consider a new distribution of roles
• The WAEMU commission could be competent in the
  first instance to settle on matters regarding
  transboundary anticompetitive practices, i.e.
  those attributable to member states or that are
  likely to have some consequences on the exchanges
  between member states she could be competent to
  settle at appeal level of the decisions taken in
  the first instance by national competition
  structures for disputes opposing national
  companies
• The national structures could be recognised the
  inquiry arbitration an sanction power for
  anticompetitive practices occuring within the
  their national states that are likely to be sent
  to the WAEMU appellate court.

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Training workshop Regulatory practices

• V. Legal case
• Decision of the French Competition Board dated
  December 1, 2005 Agreement on the mobile
  telephony market
• First type of anticompetitive practice
• Exchange of strategic information on the new
  subcribers and cancellations.
• Indeed,, the three mobile telephone operators
  have been exchanging from 1997 to 2003 precise
  and confidential figures concerning the new
  subscribers they sold during the previous month,
  as well as the number of customers who have
  cancelled their subscription.

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Training workshop Regulatory practices

• V. Law case
• Decision of the competition council (France)
  dated December 2005 agreement on the mobile
  telephony market
• The competition council imposes sanctions as high
  as 534 millions euros on Orange France, SFR and
  Bouygues.
• It has highlighted two types of agreement
  practices that have hindered fair competition on
  the market, revealed by a survey conducted
  following auto referral of the case to the
  Council on August 28, 2001 and also a referral to
  the UFC What to decide of february 22, 2002.
• The total amount of the sanctions imposed is as
  high as 534 millions d'euros
• Orange France 256 millions euros SFR 220
  millions euros
• Bouygues Télécom 58 millions euros

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Training workshop Regulatory practices

• V. Case law
• Decision of the French competiton Board dated
  December 1, 2005 agreement on the mobile
  telephony market (cont)
• Second type of anticompetitive practice
• The existence of a common agreement signed
  between 2000 et 2002 between the three operators
  concerning the stabilization of the their market
  share around commonly defined objectives.
• This dialogue resulted in a relative stability in
  the medium term of the shares of the three
  operators in the area of the sales to new
  subscribers.
• (See the Board on competition site
  www.conseil-concurrence.fr)

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Training workshop Regulatory practices

• THANK YOU FOR YOUR ATTENTION

ITU/EC Capacity Building Project on regulation
for ECOWAS countries