The Italian Competition Authority, on behalf of the International Competition Network (ICN), and the World Bank Group (WBG) are pleased to announce the winners of the 2018-2019 Competition Advocacy Contest.
By showcasing success stories of effective competition advocacy, the contest aims to raise awareness of the key role played by competition agencies, government entities and non-governmental organizations in promoting competition. Furthermore, the awarded competition advocacy interventions contribute to generate knowledge on successful tools to foster competition in markets. Awarded authorities will be invited to present their stories at the Advocacy Group Session during the ICN Annual Conference in Colombia and contribute to peer-to-peer learning.
The awarded cases were selected among 33 applications submitted by both government authorities and non-governmental organizations from 25 jurisdictions around the world, divided in the following themes:
- Theme 1: Understanding the effects of competition policy on poverty and inequality in both developing and developed countries
- Theme 2: Promoting competition as a tool to the fight against corruption and for an equal playing field among public and private players
- Theme 3: Engaging with public and private stakeholders to better grasp competition challenges posed by fast changing market dynamics
- Theme 4: Promoting competitive digital infrastructure, digital platforms and digital finance
The winners and honorable mentions of the 2018-2019 Competition Advocacy Contest were selected by the following panel (in alphabetical order):
- Christine Zhenwei Qiang, Practice Manager, Investment and Competition Unit, Macroeconomics, Trade and Investment Global Practice, World Bank Group
- Eleanor M. Fox, Walter J. Derenberg Professor of Trade Regulation, New York University School of Law
- Mariana Tavares de Araujo, Senior Partner, Levy & Salomão Advogados
- Tania Begazo, Global Lead, Markets and Competition Policy, Macroeconomics, Trade and Investment Global Practice, World Bank Group
Awards were decided based on the information provided by the participants in their submissions.
THE 2018-2019 COMPETITION ADVOCACY CONTEST: WINNERS AND HONORABLE MENTIONS
Theme 1: Understanding the effects of competition policy on poverty and inequality in both developing and developed countries
The awarded authorities in this category were able to use competition advocacy tools to (i) benefit less well-off households by dismantling cartels affecting the bread value chain, one of the main food products in the consumer basket of the poor, as well as (ii) tackle inequality by stopping restrictive hiring practices for service providers and raising awareness about their negative impact.
The Competition and Consumer Protection Commission of Zambia led a sub-national awareness campaign to reduce cartel activity along the flour and bread value chain. After prosecuting and sanctioning bakeries for fixing prices up to 23% above competitive levels, the Commission decided to invest in public campaigns to inform the population about the costs of anticompetitive behavior and the benefits of using the leniency program. As a result, several additional cartels among bakeries and flour mills that affected almost 2 million people in several municipalities were identified and dismantled. Price reductions allowed buyers to save up to US$90 thousand per day in the acquisition of bread, a key product in the consumer basket of the poor.
Japan (Honorable Mention)
The Japan Fair Trade Commission established a study group on competition and human resources to produce policy research and recommendations for the sector, which has suffered from labor shortages. The group found several restrictive regulations and anticompetitive behaviors of market players, such as employers jointly determining salary rates, rules restricting the capacity of employees to switch jobs as well as potentially anticompetitive hiring practices. After publishing a report, the Commission held face to face meetings all over the country to disseminate findings. This effort spurred voluntary pro-competition changes that benefitted service providers in certain markets and it is expected to trigger more changes across industries. The establishment of less restrictive employment contracts will improve the employment conditions of service providers and promote greater equality among them.
Theme 2: Promoting competition as a tool to the fight against corruption and for an equal playing field among public and private players
Winners in this category where capable to reduce the room for corruption by boosting the role of competition in markets with significant commercial presence of the government. Authorities in this category were able to promote competition on the merits by leveling the playing field between public and private competitors as well as to increase transparency, reporting mechanisms and contestability in public procurement, reducing the incentives for corruption and reinforcing the role of effective competition.
The Competition Council of Latvia conducted a market study that identified several sources of lack of competitive neutrality in the provision of vehicle inspections, a mandatory service affecting more than 700 thousand individual and corporate car owners in the country. A State-Owned Enterprise (SOE) was not only the main provider as a shareholder of other four players but also the regulator for service supervision and accreditation of independent entrants. Additionally, the regulation assigned territorial exclusivity for each market player, forbid vehicle repair shops to offer the services, and granted preference for the SOE in case of new entry. As a result of the Council’s advocacy, the Ministry of Transports agreed to realign the role played by the SOE in the market by phasing out its commercial role by 2023, focusing its mandate on regulatory capacities in order to promote entry and foster competition. One step towards reducing costs for consumers that pay one of the highest inspection prices in Europe.
The National Institute for the Defense of Free Competition and the Protection of Intellectual Property (Indecopi) led a study that shaped a pro-competition reform of public procurement regulation in Peru. After mapping key anticompetitive rules that reduced the efficiency of public procurement, Indecopi promoted a broad consultation process to validate findings and produce a viable reform package. In less than a year, a new legislation was issued covering several of Indecopi’s recommendations, including that (i) public entities cannot disclose reference prices until the winner is announced, (ii) public entities must inform to Indecopi rather than to suspected companies about a possible anticompetitive conduct, (iii) entities found responsible for anticompetitive conducts by Indecopi are unqualified to contract with the State, and (iv) participants in the tender process must provide an affidavit of its independent offer. Improving competition in this sector impacts more than 11% of the country’s GDP and more than half of the government’s spending.
Theme 3. Engaging with public and private stakeholders to better grasp competition challenges posed by fast changing market dynamics
The awarded authorities in this category proactively promote activities to generate knowledge and spur wide public debate around the challenges posed by the digital economy to traditional antitrust regulation, case law and enforcement. Earlier initiatives have already been able to reap concrete results on both regulatory reform and policy implementation while larger and more structured fora are being set around the globe.
The German Competition Authority has implemented one of the first advocacy initiatives dedicated to study the impacts of digital economy on competition dynamics and antitrust enforcement. As early as 2015, it established a “Think Tank” to discuss the latest research and case law on digital platforms and network industries that delivered several concrete outcomes. In 2016, two research papers were published to disseminate initial results and spur a debate that led, in 2017, to amendments to the German Competition Law accounting for the digital economy challenges identified by the authority’s initiative. Since then, the Authority has published a new series of papers under the title “Competition and Consumer Protection in the Digital Economy”, available online, which contains articles on current issues of competition policy in the digital world that has influenced the debate overseas.
European Union (Honorable Mention)
The European Commission launched in 2018 a broad initiative to understand how the Commission can best serve consumers and law-abiding businesses in the context of fast technological developments and new business models. The initiative invited stakeholders to provide insights on how to best deal with data and artificial intelligence, market power of digital platforms, and how competition policy can best promote innovation. The initiative created several channels of communication such as public consultation process, a top-level conference, and an expert report. Even though it is too early to assess impact, over one hundred contributions were received, the conference received more than 1,100 people subscriptions and many more followed the debates online. Discussions are expected to influence enforcement and regulatory reform at both the European Union and the member states’ levels.
Theme 4: Promoting competitive digital infrastructure, digital platforms and digital finance
Awarded authorities in this category were able to foster the digital economy by promoting competition at various levels of the value chain. At the infrastructure and enabling technology level, Russia was able to reduce costs of mobile services and internet connection by reforming restrictive roaming regulations and advocating against anticompetitive behavior of dominant players. At the final service level, both Mexico and Portugal showcased how the combination of technical capacity, effective stakeholder engagement and alignment with the country’s political agenda is able to produce key regulatory reforms to open financial markets to entry of smaller, innovative players that are expected to reshape the competition dynamics in the sector.
The Federal Antimonopoly Service of Russia (FAS) conducted an advocacy initiative to map and tackle restrictive regulations and anticompetitive behavior regarding roaming services in the country. Based on its findings, the FAS engaged with both public and private stakeholders to (i) promote adequate regulation for interconnection between operators regarding national roaming charges, as well as (ii) to dissuade firms to abuse dominant positions by charging roaming fees from its own subscribers from different regions – including notifying players about a potential illegal conduct or even initiating enforcement cases. As a result, market players voluntarily changed their national roaming practices and dropped prices dramatically: between 2017 and 2018, fees for SMS reduced up to 2.5 times, for voice services up to 5 times, and for internet access up to 10 times. In December 2018, the Federal Law № 527-FZ amending the Federal Law on Communications was issued building on key FAS recommendations.
In 2017, the Federal Economic Competition Commission (COFECE) provided key recommendations that shaped one of the first draft legislations in the world regulating financial services provided by “FinTechs” – small, technology-intensive firms often focused on less explored or new financial market segments. On March 2018, the Senate of Mexico issued the law including several of COFECE’s recommendations, including to establish rules clarifying data ownership and access, to guarantee non-discriminatory provision of services by larger financial intuitions to FinTechs, to remove restrictive infrastructure or technology standards that could prevent entry, as well as to leave the scope of their activities open for markets and services yet to be created. The new legislation represents a lower regulatory burden for new and smaller players to enter and compete in a market that is already the second largest FinTech ecosystem in the region, with more than 330 firms.
Portugal (Honorable Mention)
After benchmarking relevant international experiences and consulting with sector regulators, market players, and associations, the Portuguese Competition Authority (AdC) issued a discussion paper that identified several regulatory restrictions that favored incumbent firms and harmed smaller, technology-intensive entrants. Based on its findings, the AdC played a key role in the Parliament during Portugal’s implementation of the European Second Payment Services Directive. By aligning its advocacy efforts with the country’s political agenda, AdC was able to use its technical capacity to effectively shape regulatory reform. At the same time, the knowledge acquired during the study will inform antitrust enforcement in a sector where innovative entrants may play a key role in promoting choice and service access to consumers, notably SMEs and start-ups, in a market characterized by high concentration and low contestability.