New challenges for the ICCC in antitrust enforcement
The past year has been an exciting year for the ICCC in the area of antitrust law enforcement, as there have been newa challenges that the ICCC has faced. These challenges have brought about the growth of the ICCC in the area of antitrust law enforcement, as officers have continued to develop in their understanding of antitrust law principles and in their ability to find new and improved ways of assessing difficult cases.
It has come to the ICCC’s attention that there are a large number of exclusive arrangements existing in major industries in Papua New Guinea. Some industries within Papua New Guinea have large firms dominating the market and they are using exclusive agreements to hold onto their customer base/market share. This has shown that more work is required to advocate and inform businesses about the antitrust laws that prohibit such agreements, which have the purpose, or likely effect, of substantially lessening competition in a market.
Code-share authorisation applications for the ICCC
Papua New Guinea’s national airline carrier, Air Niugini, has submitted applications for a renewal of authorisation for current code-share arrangements with Solomon Airlines of the Solomon Islands and Air Vanuatu of Vanuatu. Air Niugini has also submitted a separate application for authorisation regarding a proposed new code-share arrangement that it endeavours to enter into with Fiji Airways of Fiji. For all these code-share agreements, Air Niugini will be operating the plane while its partners will be marketing seats in competition with Air Niugini.
Because of the anticompetitive nature of the code-share arrangements, Air Niugini applied to the ICCC for authorisation before they begin their code-share operations. The ICCC has commenced inviting comments and submissions from industry stakeholders and the general public who may have an interest in the applications. Once comments and submissions are received, the ICCC will assess these and issue a draft determination for further public consultation. Additional comments on the draft determination will be assessed before a final determination is made. The final determination will spell out the ICCC’s decision on whether or not to grant authorisation.
Exclusive dealing becoming widespread
The ICCC has identified that exclusive agreements are prevalent among big businesses in different markets in Papua New Guinea because most markets are highly concentrated, with usually one or two major firms supplying goods or services. They do that to lock in on-sellers with exclusive agreements. These exclusive agreements come in various forms where the supplier or wholesaler may demand prominence for shelf space, or insist that a competitor’s product should not to be sold at the same shop or a threshold amount of supplies be sourced from it. The incentives offered by suppliers are such as rebates for purchasing a certain volume of supplies or giving price discounts, among others.
It is understood that not all exclusive agreements are anticompetitive. Each exclusive agreement or circumstances of each case needs to be assessed on its own to ascertain the purpose and the effect of the agreement in question in a market. In some cases, the courts have ruled that it is acceptable for a new entrant in the market to enter into exclusive agreements for purposes of gaining customers or market share in order to become competitive. However, once a firm is established, it should not rely on long-term exclusive agreements to the detriment of another new entry.
Antitrust laws in Papua New Guinea prohibit parties from entering into agreements that have the purpose or likely effect of substantially lessening competition in a market. If parties are of the view that an exclusive agreement is likely to result in more public benefits that will outweigh any anticompetitive concerns that the ICCC may have, then the parties should apply for authorisation. Authorisation is a statutory process conducted publicly in consultation with relevant stakeholders, including the parties who are proposing to enter into the potentially anticompetitive agreement. If an authorisation is granted, then the parties can proceed with the agreement which would have otherwise been anticompetitive. More importantly, the grant of authorisation provides immunity to the parties involved in the anticompetitive agreement from third-party prosecution under the ICCC Act, if the parties had proceeded to enter into the potentially anticompetitive agreement without seeking an authorisation from the ICCC.
For matters that have come before the ICCC, parties have either amended the potentially anticompetitive provisions in the agreements or applied for authorisation. These administrative actions are preferred compared to court proceedings after the ICCC conducts investigation and reaches the conclusion that the agreement has, or is likely to have, anticompetitive effects. That being said, the ICCC is not hesitant in instituting court proceedings in the interest of protecting the competitive process and consumer welfare.
Antitrust guidelines for the ICCC
The ICCC has been working on finalising guidelines that will inform the general public of key processes to assist and enhance its antitrust enforcement efforts. These guidelines include merger review guidelines, confidentiality guidelines and leniency guidelines. The ICCC has completed these guidelines and anticipates to release these for public use in early 2018.
Once published and disseminated widely, the ICCC is confident that market participants would be better informed of certain processes under the ICCC Act with regard to the antitrust laws that the ICCC enforces. With market participants being better informed as more information on specific aspects of Papua New Guinea’s antitrust laws are being disseminated through these guidelines, it is expected that compliance from market participants would increase and that this would in turn enhance the ICCC’s enforcement efforts over time.
Looking into the future of the ICCC
The ICCC recognises that there will be more new challenges ahead as it aims to continue increasing its enforcement efforts, especially for restrictive trade practices such as exclusive contracts which seem to be prevalent in various markets in Papua New Guinea. However, through the continued dedication of our staff and senior management, we remain confident that we will be able to deal with these new challenges and enforce our antitrust laws effectively to ensure that markets are competitive within key industries, to generate economic growth and development for Papua New Guinea.