Papua New Guinea: Independent Consumer and Competition Commission

The ICCC’s renewed focus on antitrust enforcement

The past year has offered many challenges to the ICCC in the area of antitrust law enforcement. However, these challenges have also offered the ICCC opportunities to build on its experience and enhance its regulatory role throughout Papua New Guinea (PNG).

Although antitrust law enforcement is fairly new in PNG, the ICCC, being the primary competition regulator, has definitely matured over the past 12 years. Processes that have been embedded in antitrust law enforcement have been refined with officers now being more experienced in the operations of key industries in PNG and how competition law can be administered in these industries, especially within specific markets.

We have recently welcomed back two competition law graduates from Melbourne University, Ms Grace Misina and Mr Emmanuel Auru. They both graduated with master’s degrees in competition and consumer law and are the first Papua New Guineans to hold specialist degrees in competition law. We hope this will spur more staff to gain such specialist training in antitrust law enforcement and the ICCC will continue to support staff through such training programmes and career development opportunities.

Authorisations: code-shares and the LNG market

The ICCC has granted authorisation for two code-shares, including a variation to a code-share determination in 2016. Air Niugini (PNG’s national flag carrier) and Qantas (Australia’s largest airline) have sought to continue their code-share arrangements through major routes between PNG and Australia.

There have, however, been changes to their code-share arrangements, with Air Niugini and Qantas opting to code-share on a free-sale basis. Qantas has also unilaterally decided to provide independent services on the Port Moresby/Brisbane route, the route with the most traffic volumes (passenger and freight) and has, therefore, attracted the most interest from airliners, with Virgin Australia also providing independent services on the same route.

There has also been interesting developments in our liquefied natural gas (LNG) market, with interest being shown by international developers. The recent acquisition of InterOil Corporation Limited’s interests in the ‘Papua LNG project’ by Exxon Mobil, an American multinational company, raised concerns for the ICCC. Exxon Mobil already has majority interests in, and is the operator of PNG’s first LNG gas project.

We were concerned with Exxon Mobil’s influence in two of the largest LNG projects in PNG. Since gas from these projects is expected to be supplied into gas turbines to generate electricity for residents in PNG, Exxon Mobil’s influence of the gas supply could limit competition between the two projects when supplying the local PNG market. Although Total, a French multinational, is the operator for the Papua LNG project, Exxon Mobil will still have majority shareholdings and could possibly wield great influence over the pricing and supply of gas into domestic markets
in PNG.

Oil Search Limited, which, like Exxon Mobil, owns interests in both the PNG LNG and Papua LNG projects, has publicly called for the two gas projects to be integrated. Oil Search has argued that if both projects were integrated, capital costs for the new Papua LNG project would be reduced by US$3 billion, and the construction time would be fast-tracked by 12 months.1

The ICCC has informed Exxon Mobil that its acquisition may raise competition concerns and that it should apply for authorisation so that the competition effects of the proposed acquisition and actual and potential public benefits can be properly weighed and assessed by the ICCC (including those potential benefits of integration, mentioned by Oil Search).

Antitrust guidelines for the ICCC

The ICCC has been working on guidelines to assist in enhancing our antitrust enforcement efforts, including merger review guidelines, abuse of market power guidelines, confidentiality guidelines, and leniency and immunity guidelines.

Merger review guidelines are aimed at providing market participants a guide on how we assess mergers or acquisitions and whether or not there has been a substantial lessening of competition from the merger or acquisition. The guidelines will also set out the processes undertaken by the ICCC when it considers applications for clearance or authorisation. These guidelines will aid market participants in identifying and understanding the different merger review processes there are and the steps the ICCC takes to analyse and review each application in line with the ICCC Act.

Abuse of market power guidelines, which the ICCC will release, will set out the steps and processes used by ICCC in assessing the conduct of a firm that has substantial market power and uses it for an anticompetitive purpose. The guidelines will set out some of the factors considered by the ICCC that are relevant in determining whether a firm has substantial market power and whether its behaviour is potentially anticompetitive.

The ICCC also has developed a confidentiality guideline, which once released, will set out the processes parties will be required to follow when submitting a request for confidentiality. The confidentiality guideline will explain the ICCC’s legal obligation in handling confidential information, the process for submitting confidential information and how the ICCC will deal with any confidential information submitted. It is hoped that this guideline will provide certainty to market participants who intend to make confidential submissions with regards to an ICCC investigation or inquiry, that there is indeed a process which is followed when handling confidential information. This should provide a greater degree of assurance and confidence between market participants and the ICCC (which is essential for a young competition authority) that confidential information submitted will be assessed and handled appropriately and in a professional manner.

As part of the leniency programme that the ICCC is looking to release by December 2017, we are developing a leniency and immunity guideline that will be disseminated to market participants. This guideline should give clarity to possible leniency applicants about the requirements that need to be satisfied in order for leniency to be granted against cartel prosecution, what is expected of intending applicants and what they will receive from the ICCC.

When consulting with competition agencies from other nations about their leniency programmes and the necessary factors that enabled them to have a successful programme, they mentioned ‘clarity in your leniency programme’ as one of the essential factors. That is why this guideline has been produced to ensure we have a leniency programme that is workable upon its release. The ICCC is optimistic of this outcome and fully understands that the success of the leniency programme will take time.

With the release of these guidelines, market participants would be better informed of the market conduct rules provisions of the ICCC Act, which set out our antitrust laws. With market participants being better informed as more information is being disseminated into the market on specific aspects of our antitrust laws, compliance from market participants should increase, and this will enhance the ICCC’s enforcement efforts over time.

Consumer and competition framework review

The consumer and competition framework of PNG, which includes the ICCC Act and the roles and functions of the ICCC itself, is being subjected to its first major review. This review was initiated by the Markets and Policy Division of PNG’s Treasury Department in 2016.

Dr Andrew Simpson is leading the review team that comprises of distinguished competition experts including Dr Rhonda Smith (professor of competition law at Melbourne University), to review the consumer and competition framework in PNG. Several issues papers were released in March 2016 for comments by stakeholders. Based on comments received, the review team is in the process of compiling a draft report (as this article goes to press) for further comments by stakeholders, together with a set of recommendations to the PNG government regarding our consumer and competition framework. Among other recommendations that the ICCC expects the review team to propose, the ICCC expects there to be suggestions for a change in our merger control regime from voluntary to mandatory to combat compliance issues that we have with our current merger control regime, and the development of a national competition policy for PNG.

ICCC’s continued participation in international forums

Continued participation in international forums such as the International Competition Network, OECD and APEC has greatly benefited the ICCC. Knowledge-sharing and capacity-building activities provided through these international forums have aided the ICCC in fulfilling its aims of continued enhancement of its antitrust enforcement processes and up-skilling of staff.

With PNG due to host its first APEC meeting in 2018, continued participation by the ICCC in competition policy and law forums within APEC has been a priority. Consistent participation is expected to ensure that come 2018, competition policy priorities and tasks, in line with the vision of the PNG government and APEC, are met and achieved.

Looking into the future of the ICCC

Looking towards the future, the ICCC recognises that there will be challenges ahead, as it aims to enhance enforcement efforts. However, through continued dedication by staff and senior management, it aims to continue developing the necessary skills and experiences needed to be an effective competition agency.

The ICCC is also looking at finalising international regulatory cooperation frameworks for use in collaboration with international competition regulators in investigations or market inquiries, should the need arise. A recent report issued by the World Bank has revealed that, as a result of globalisation and the convergence of global markets, cartels are now operating across multiple jurisdictions. This has brought about a real need for international regulatory cooperation among competition agencies to jointly address cross-border issues.

The ICCC hopes that with its renewed focus on antitrust enforcement it will continue to build trust among market participants in PNG and lift its profile among local government agencies and international competition regulators. The ICCC envisions it being more efficient and effective in regulatory functions in the future and aims to further promote more competition, economic growth and prosperity throughout PNG.

Notes

  1. 20 May 2016, Mr Peter Botten phone interview with Bloomberg.com – www.bloomberg.com/news/videos/2016-05-20/why-oil-search-is-buying-interoil-for-2-2-billion.

 

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