2015-2016 COMPETITION ADVOCACY CONTEST: WINNERS AND HONORABLE MENTIONS
Theme 1: Competition Advocacy in fast growing and innovative markets
The Federal Economic Competition Commission (COFECE) issued an opinion recommending that local governments formally recognize the services provided by Transportation Network Companies (TNCs), such as Uber and Cabify, and avoid imposing regulations that would restrict their ability to compete. Mexico City’s Department of Transportation relied on COFECE’s opinion to become the first local government in Latin America to issue a specific regulation allowing TNCs to operate fully. Furthermore, spillover effects were substantial with other local governments following Mexico City’s lead.
Building on the results of both advocacy and enforcement instruments, the Competition and Tariff Commission worked with the Telecommunications Regulator and the Central Bank of Zimbabwe to address regulatory barriers in the telecommunications sector in order to ensure financial inclusion. This initiative resulted in a significant reduction in mobile money transfer transaction costs, thereby increasing access to mobile payment systems in rural and remote areas.
Brazil (Honorable Mention)
The Council for Economic Defense (CADE) issued two studies concluding that ridesharing applications can result in several benefits for consumers—these platforms have the potential to serve as a substitute for private cars for one group of consumers, and as a substitute for taxis for another group. Since releasing these studies, local governments, such as the executive government of the city of São Paulo, have been consulting with CADE on the regulation of ridesharing platforms and the market for individual passenger transportation services.
Malawi (Honorable Mention)
Upon learning that the Bankers Association of Malawi (BAM) was refusing to deal with a credit reference bureau, the Competition and Fair Trading Commission mobilized public support using the media as well as engaged the Reserve Bank of Malawi to successfully advocate for an amendment to the Credit Reference Act. The Commission’s intervention in the credit referencing market is expected to result in a reduction in interest rates for borrowers, which in turn is expected to improve access to credit.
USA (Honorable Mention)
Through a series of advocacy instruments (workshops, blogs, opinions and letters) targeted to both legislators and regulators, the US Federal Trade Commission (FTC) significantly increased awareness of the competitive dynamics of markets characterized by disruptive innovation. Advocacy initiatives focused on the sharing economy (internet peer-to-peer platforms), new forms of competition (such as ridesharing platforms) in the marketplace for local motor vehicle transportation services and automobile distribution. As a result, some states issued laws and regulations more conducive to the development of competition.
Theme 2: Advocating competition in key domestic markets to maximize the benefits of trade
Through a targeted market study, the French Competition Authority (FCA) proposed several measures to deregulate domestic inter-regional coach transportation services which were subject to exceedingly restrictive regulations that impeded the development of well-functioning markets. By proposing practical recommendations that the Government could use as ready-to-implement reform, the FCA was able to persuade policy-makers in a key structural reform (the “Macron Law”) that opened the transport sector to competition. Within one month of the new law coming into effect, 700 direct jobs were created and 75, mostly medium-sized, cities were connected by coach service.
To resolve a complaint from small-scale saw millers that the Zambia Forestry and Forest Industries Corporation (ZAFFICO) had only renewed licenses for large saw-milling firms, the Competition and Consumer Protection Commission (CCPC) recommended that ZAFFICO come up with a competitive process of allocating soft wood licenses for both existing and potential saw mill applicants. This measure prevented foreclosure of the market to potential entrants. The resulting entry of 500 small-scale saw millers created an estimated 5,000 direct jobs.
Kenya (Honorable Mention)
In response to a complaint that incumbents were jointly restricting its entry into the tea market by opposing the entrant’s request to be granted a license by the Tea Board of Kenya (TBK), the Competition Authority of Kenya provided an opinion to the TBK indicating that the tea market was contestable and that more investors could therefore be licensed. As a result, a new specialty tea processor was able to establish a tea factory, and it exported around 10 tons of made tea to firms in Japan and China in the first year of operation.
Kuwait (Honorable Mention)
To address the increasing prices of local fish products as well as the seemingly disorganized and anticompetitive way in which local fish markets were run, the Competition Protection Authority (CPA) produced a detailed analysis of current fish market auctions and presented recommendations for improving them to the Ministry of Commerce and Industry. This advocacy initiative shows how new competition authorities can start building support and promoting relevant competition reforms even with limited staff.
Pakistan (Honorable Mention)
To address the ongoing privatization of the power sector in general, and alleged unfair practices in the bidding process by the buyers of power sector equipment in particular, the Competition Commission of Pakistan invited all stakeholders—buyers and sellers—involved in the process of procurement of electrical equipment to participate in an open hearing. Taking into account the feedback received, the Commission issued a public opinion recommending enhancements to the procurement process, which were adopted by the Water and Power Development Authority.
Theme 3: Embedding competition principles in public and industrial policies through advocacy
The Lithuanian Competition Council (KT) undertook a comprehensive, targeted advocacy campaign involving stakeholder engagement as well as media outreach to address municipalities’ repeated breaching of competition rules. While the KT had the right to investigate anticompetitive decisions by public bodies, the competition law did not provide effective legal remedies. The KT targeted its advocacy efforts on municipal regulation of waste management services and this led to discussion on how to increase the quality of its regulation through a competition lens. Moreover, municipal clerks and government representatives in counties started reporting competition infringements.
In a global first, the National Institute for the Defense of Competition and Intellectual Property (INDECOPI) made possible the elimination of bureaucratic barriers to competition on an unprecedentedly massive scale by incentivizing local authorities to voluntarily identify and eliminate such barriers. While INDECOPI has had the power to sanction public entities and officials in specific cases, it realized the pressing need for more widespread results. As a result of INDECOPI’s efforts, 45 state agencies eliminated 978 barriers that affect competition dynamics in telecommunications, construction, and the installation of infrastructure for the provision of public supply services. These reforms have significant spillover effects on the development of local markets across the economy and complement current reforms that are strengthening competition enforcement.
Both winning stories in this category highlight strategies that combine both enforcement law and advocacy instruments in order to maximize results as well as the importance of focusing on government interventions and actions of government officials in local and subnational markets.
Poland (Honorable Mention)
To eliminate barriers to competition in the market for funeral services stemming from restrictive and distortionary conduct by municipal-level cemetery administrators, the Polish Office of Competition and Consumer Protection published and made publicly available a guide targeted at cemetery administrators. This guide explained compliance with the law and competition principles in simple terms. Following this “informal intervention” and administrators’ voluntary actions, consumers in previously restricted markets now have access to lower-priced funeral services offered by a larger number of competitors.
Sweden (Honorable Mention)
In order to embed competition principles in public and industrial policies through a greater knowledge and understanding of the competition rules, the Swedish Competition Authority (SCA) created a set of interactive guidance tools to help market actors determine whether conduct may be permitted or prohibited by the rules. The tools cover public procurement, trade associations, and competitive neutrality, and are intended to ensure that publicly owned companies do not distort competition, given their significant and increasing presence in Swedish markets.
Theme 4: Catalyzing competition reforms through citizen and civil society engagement
The Commission for Defense and Promotion of Competition (CDPC) undertook advocacy efforts to engage the Honduran Pharmacists Association and ultimately eliminate a “minimum distance” restriction that prevented the establishment of a new pharmacy within 250 meters of an existing pharmacy. Using its advocacy resources effectively, the CDPC was able to achieve a deregulation of one key market in professional services—a task that has proved highly challenging even for mature agencies. As a result, there has been a significant removal of restrictions on access and ownership in the retail pharmaceutical market, triggering a greater flow of investments in critical areas, such as hospital and health centers, where competition has and could be increased.
Hong Kong (Winner)
To explain the benefits and main provisions of Hong Kong’s Competition Ordinance, the Competition Commission of Hong Kong broadcasted a ten-episode prime time television program entitled “Compete with Integrity,” starring renowned Hong Kong actors. To maximize its impact, a radio program series and nationwide exhibition followed. According to survey results, 64.3% of respondents found that the program increased their understanding of the Competition Ordinance. Moreover, as a result of the campaign, the number of weekly hits to the Commission’s website increased by more than threefold. Companies and business associations also requested seminars and workshops on the Competition Ordinance, and some adjusted their business practices to comply with the law.
Hungary (Honorable Mention)
To foster effective anti-cartel enforcement, the Hungarian Competition Authority (GVH) created an online system, “Cartel Chat,” through which interested persons may obtain information about hardcore cartels, the leniency policy of the GVH, and the informant award scheme available under Hungarian competition law. Cartel Chat is designed to ensure that individuals and undertakings that have information about cartels can share their knowledge with employees of the GVH’s Cartel Detection Section, or else request information, anonymously and without fear of negative consequences.
Japan (Honorable Mention)
As part of its competition advocacy efforts, officials from the Japan Fair Trade Commission (JFTC) visited junior and senior high schools and universities to deliver special lectures the “The AMA Class.” Named after the abbreviation for Japan’s Antimonopoly Law, the class covered market economy mechanisms and the role of competition policy. According to survey results, 91% of the students "understood" or "mostly understood" the lectures. The lectures are intended to introduce competition principles at an early stage to future stakeholders in the Japanese economy.