Australian & Saudi Arabian React and Act Against Anti-Competitive Behavior in Telecommunication factor
The assessment: compare and contrast between
Australian and Saudi Arabian regimes in dealing with anti-competitive actions
in telecommunication sector.
Ø Introduction
A prosecution
in 388 BC, resulting from an incident in Greece, was the first trial that
confronted unfair trading activity resulting from the adoption of anti-trust
methods to affect the market balance by eliminating or destroying competitors.
This brought to the attention of the lawyers of that day the potential dangers inherent
in commercial conduct.[1] The Greek incident occurred when a group of
grain merchants stored goods for a while and spread rumours about an expected
shortage in grain supply, and also the probable chance of war. As a result, the
traders made an unreasonable profit arising from the increased selling price of
the grain due to the panic they created among the people. In consequence, the authorities arrested the
merchants for causing an imbalance in the market, together with other charges.
They were put on trial, and were found guilty as accused.[2]
It now appears
that it is, in fact, an advantage to have a competitive environment in almost
any market provided it is monitored and controlled by an authority. It is
helpful to have some rivalry, as it makes any commercial sector function better,
as pointed out by Richard R. Nelson and Sidney G. Winter, who state that ‘one
function of competition, in the structural sense of many firms, then would be
to make possible that diversity. Another function... is to reward and enhance
the choices that prove good in practice and to suppress the bad ones.’[3] However, there is a significant need for an
authority to regulate competition, and to guarantee that no anti-competitive
conduct arises to obstruct the natural rivalry, and thereby to provide an
attractive and healthy trading environment.
Rivalry between
companies in the telecommunication sector is almost always fierce, if one
considers the frequent transitions and the intensely complicated character of
this kind of market.[4] Therefore, it might be seen as unfair conduct
should one party act against its competitors by demanding that the authority
issue a restriction order in order to terminate their competitive conduct.
However, there must be a clear definition of those behaviours that are regarded
as being contrary to normal competitive activity, otherwise, unjust procedures
could be conducted that might cost telecommunication firms huge losses of money
through cancelling of activities that were really quite acceptable.[5]
Moreover, the reputation of a particular country’s market, as regards its
telecommunication segment, may suffer through its apparent failure to provide an
environment of ‘economic efficiency’ to potential future entrants into the
market.[6]
In Australia,
although there is a commission that administers telecommunication services together
with broadcasting, the Australian Communication and Media Authority (ACMA), the
Australian government has delegated the monitoring of competitive activities in
the telecommunication sector to the Australian Competition and Consumer
Commission (ACCC). The role of this commission is to regulate and promote
competition throughout Australian markets. However, in Saudi Arabia there is
only one commission, established in 2001, and this is the only authority
responsible for all issues in the telecommunications section, including
competition. This body is called the Communication and Information Technology
Commission (CITC).
Significant information
can be obtained by studying the competition regulation systems of both
Australia and Saudi. This information could
help to improve existing regimes and could point out weaknesses in their
current approach to the remedying of anti-trust behaviour. In this paper, through comparison and
contrast, I am going to focus on the remedies that both the Australian and
Saudi Arabian authorities have used in treating anti-competitive conduct.
However, it is important to notice that there is very little recorded history for
competition in the telecommunication sector, and due to a general failure to
publish legal cases in Saudi Arabia, there is a lack of reported lawsuits which
could guide this research.
v The Determination of Anti-Competitive Conduct
In order to
reach a reasonable conclusion about the means both regimes are adopting in
resolving anti-trust disputes, it is necessary to present how anti-competitive
conduct is defined by both Australia and Saudi Arabia. As result, I intended to start this paper
with a brief preface of each country’s view of competition and what constitutes
misconduct in this area. Furthermore, to
provide a broader understanding of the general similarities and differences, I
will compare and contrast their definitions in relation to market power,
restrictions upon domination, and exception orders.
Ø Australian
Attitude
The Australian
telecommunication regulations regarding competition are located in the Competition and Consumer Act, 2010 (Cth)
and found in two parts: the general rules of competition are located in part
IV, while the detection and deterrence
of anti-trust behaviours that a telecom firm might conduct, are found in
section XIB. The Australian Competition and Consumer Commission
(ACCC) was established to put part XIB into practice. This has made it a faster
and more efficient process, allowing Australia to avoid struggling with
situations that other countries, such as Saudi Arabia, are now doing. The number of telecom companies has increased
in both countries, which obviously has increased the burden on the relevant authority. However, the ACCC has the power to
investigate alleged misconduct, to make rulings, to issue competition notices, to
chastise firms for wrongdoing and to bring lawsuits against any party guilty of
misconduct.[7]
It appears that
the tool that is relied upon to fulfil the definition of anti-trust conduct is
a controversial issue in the Australian telecommunication industry, because it
includes two different approaches to determining what an anti-competitive act
is. First, as stated in section 151AJ of Part XIB of the Competition and Consumer Act 2010 (Cth), the behaviour of a service
provider is regarded as anti-competitive if it:
(b) either:
(i) takes advantage of that power in that, or any other, market with the effect,
or likely effect, of substantially lessening competition in that or any other telecommunications market; or
(ii) takes advantage of that power in
that or any other market, and engages in other conduct on one or more
occasions, with the combined effect, or likely combined effect, of
substantially lessening competition in that or any other telecommunications market.[8]
However, there
is another, more detailed, definition of anti-trust conduct given in section 46,
under Part IV. This provides another way of probing anti-rival behaviour and
states that:
‘a corporation
that has a substantial degree of power in a market shall not take advantage of
that power for the purpose of…’ excluding a competitor from getting into the
market, preventing or stopping rival activities, or destroying or lessening the
ability of a competitor.[9]
As a result of the
dual definition to be applied when figuring out what constitutes
anti-competitive conduct, there are considerable discussions in Australia,
about which approach should be used when investigating whether a particular
company has breached the competition rules through anti-trust conduct. Two systems must be chosen between in this context:
A test investigating ‘purpose’ under section 46 of Part IV, or the ‘effect or
likely effect’ of the behaviour as indicated in Part XIB.
The telecom
firms Talstra, Ericsson, R. S. Gilbert and the Institute of Public Affairs all called
for the abolishment of Part XIB.[10] However, other contributors suggested keeping
that part, while some of them preferred that it should be the one to be
employed.[11] The ACCC currently uses Part XIB only in the telecommunication
sector, when determining whether alleged anti-competitive conduct really is, or
not. The commission is required to issue a competition notice to the firm in
violation before going ahead with prosecution.[12] Therefore, the ACCC must apply the effect
test on the alleged misconduct, which the ACCC itself prefers rather than the purpose
test, because ‘in the absence of “smoking gun”, it is generally easier to prove
effect than intent, as a firm can obscure its intent’.[13] The
Commission is required to follow three distinct stages before issuing a
competition notice, which are; the Preliminary phase where they search for the cause
of the suspicion; the Investigation stage, and the Ruling, once they have found
credible reason.[14]
Ø Saudi Arabian
Attitude
In Saudi
Arabia, where the government regime is very different from that in Australia,
the law of competition is laid down in two legislative acts: A royal decree
creates the primary source of regulation, which is named the Telecom Act, and then
a ministerial order follows, that is named the Telecom Act Bylaws. Generic
rules mentioned in the Act are detailed in the Bylaws; therefore, my focus will
be on the Bylaws as I discuss the Saudi Arabian anti-trust law as it relates to
telecommunication. However, I will start with the duties of the Saudi
Communication and Information Technology Commission (CITC) in relation to competition
matters. The commission is responsible for improving competition rules so that
benefits are gained from it, and for providing a ‘transparent regulatory
framework’ in order to facilitate regulations in local markets, through making decisions
in disputes, through rivalry surveillance, by banning any anti-competitive
activities, by identifying ‘dominant’ parties, and by administering mergers,
and by resolving problems between competitive firms.[15]
Anti-competitive
conduct is defined under Article 31 of the Telecom Act Bylaws as ‘abuse of
dominance’. This would include: the failure to provide essential facilities to a
rival company within a reasonable period and on reasonable terms and conditions;
unjustified discrimination against competitors when providing any service; requesting
competitors to acquire things they do not need or asking for an unreasonable
price in exchange for providing services; being aggressive by acquiring
facilities with the intention of preventing other competitors from having them;
offering lower prices over the long term or establishing pricing standards
without the commission’s permission; ‘cross-subsidizing’ from one service to a
competitive one in such a way as to eliminate or affect other the parties; failure
to observe the interconnection obligations of a dominant service provider; or
any behaviour that relates to the pricing, refusal of service provision; the adoption
of unsuitable network specifications to negatively affect the other parties; failure
to provide certain information that is needed by the competitor; and misuse of the rival’s data acquired from
interconnection or other services.[16] The final provision of the Article gives
authority to the commission to judge any conduct that the CITC believes is
against competition rules, in accordance with Article 32.[17]
The dominant
party is defined in Article 30 as ‘every service
provider that earns forty per cent (40%) or more of the gross revenues in a
specific telecommunications market...’[18]
Nevertheless, the Article gives the right, under certain conditions, to the CITC
to classify any firm as a dominant provider even though they do not own
40% of the market.[19]
The commission must publish in its website the names of dominant firms and the
specific sector of the market in which they are active.[20]
In Article
32 another definition of anti-trust is provided, and this provides the regulations
that all competitors, both dominant and non-dominant, must comply with. These regulations state that:
No person shall engage
in a practice restricting or distorting competition in the telecommunications
markets, including the following:
a) arrangements
between two or more service providers that directly or indirectly fix the
prices or other terms or conditions of service in telecommunications markets;
b) arrangements
between two or more service providers that directly or indirectly determine
which person will win a contract or business opportunity in a
telecommunications market; and
c) arrangements
between two or more service providers to apportion share or allocate
telecommunications markets among themselves or other service providers. [21]
The commission,
as invalid, will regard any deals that violate these competition rules.
Ø Comparing and
Contrasting the Two Regimes
I.
Market Power definition
It appears that there are some differences between the
Australian and Saudi Arabian competition law in their definitions of market
power, which is a significant matter, as many provisions in the Competition act
are imposed upon dominants. In Saudi’s
telecommunication market any firm that has 40% or more of the general
industry’s revenue is, automatically, considered a dominant party.[22] However, the Commission may regard a firm as being
a controller, or not, due to other reasons that they might consider, and after making
a formal decision on the matter.[23]
Australia however, has a distinctly different system
in this regard, which could be regarded as more sophisticated than Saudi
Arabia’s. In section 151AH of the Competition and Consumer Act 2010 (Cth),
there are many provisions that create the criteria that contribute to the
identification of the market power, and therefore of the dominant parties.[24]
For instance, when they want to
determine who has the market power, they must also look at the rivals, or the expected rivals, and where the firm being
assessed obtains its services, supplies and products. Other aspects that might be assessed, in
order to define market power, would be a comparison between the competitors in
any current or potential agreements between them, in order to determine whether
any of the ongoing or proposed commitments favour a particular party or parties.[25]
As a result, more concentrated studies are needed before any particular firm is
considered to be dominant in the Australian telecommunication market.
In fact, in Australia, the method of using a certain
percentage to attribute to someone a market control privilege is assumed to be
inaccurate: There might be a substantial supplier behind the scenes, who supplies
all companies, including the one with the dominant percentage, and at the same
time he or she might own a major share in one or more of the uncontrolled firms
in the market, and therefore, this assumed merchant would potentially be able
to affect the dominant party in favour of some of the other competitors.
Consequently, it is helpful to consider the Australian criteria for dominance
in competition law, before determining who owns the market power.
II. Concentration on Dominants
From the
reviews of both Australia’s and Saudi’s competition rules, and specifically, in
defining anti-competitive conduct, it appears
that the dominant position in the telecom market, in both countries, is a restrictive
area that gives the firms many regulations to comply with, and results in a significant
degree of caution.
In fact, it appears
that the firm holding the privileged position of dominance among telecommunication
brands is required to allow space to their rivals by refraining from
manipulating prices, even though the company has the ability to decrease its
rates while keeping to the same quality or even an improved one. This restriction is reflected in section
151BTA of the Competition and Consumer
Act 2010 (Cth), which is entitled ‘tariff filling by Talstra’. It is well
known that Talstra holds the market power in the Australian telecom industry, and
therefore the legislators place greater burdens upon the firm.[26] This is very similar to provision (e) in
article 31 of Saudi’s Telecom Act Bylaws
2002, which says that ‘supplying
competitive services at prices below long run average incremental costs or such
other cost standard as is established by the Commission’ is considered to be an
anti-competitive action.[27]
III. Exception orders
The Commission in each country has the power to
exclude anti-competitive action by the accused, by giving permission to certain
companies regarding a reasonable request.
Australia’s Competition and
Consumer Act 2010 (Cth) stipulates, in section 151AS (1), that ‘A person may apply to the Commission for an order exempting specified
conduct of the person from the scope of section 151AJ’ (which deals with anti-competitive conduct). The order is
called an ‘exemption order’.[28]
The ACCC will grant such an exemption order
after certain criteria have been met. These are:
(a) both:
(i)
the conduct will result, or is likely to result, in a
benefit to the public;
and:
(ii) that benefit outweighs, or will outweigh, the detriment to the
public constituted by any lessening of competition that will result, or is likely to
result, from engaging in the conduct; or
Other than this,
no excuse will be accepted in relation to the violation of anti-competition
rules in the telecommunication section in Australia. However,
a firm that obtains an Exemption Order has the guarantee, as long as they
comply with the Order terms and conditions, that they will not be exposed to
sanctions for taking certain actions.
In Saudi Arabia, the authority, the Commission, has
the same power that enables it to evaluate certain anti-competitive conduct to
be not against the law. In Article 33, the Bylaws provide the CITC with the
ability to ‘issue a decision determining that a specific action or activity
listed in Article 31 or Article 32 of this Bylaw shall not be considered an
abuse of dominance, or an anti-competitive practice, as the case may be, under
specified circumstances’.[30]
Therefore, this authority can change the status of a certain behaviour from
being prohibited to being permissible, which constitutes a feature similar to that
which the Australian Commission has.
To sum up, the focus on restricting the dominant party,
together with the ability to exclude a particular conduct from the restrictions,
is very similar under both regimes.
Nevertheless, there are a number of differences between the Australian
and Saudi Arabian competition laws, which determine the decision as to what are
the criteria for domination, and the conditions that are imposed on informing
the public when receiving a request for an exception.
IV. Announcing Exemption
Requests
The Competition
and Consumer Act 2010 (Cth) requires the Australian Commission to inform the
public about any application sent to it for a particular firm to be excluded from
the anti-competition laws when it adopts a particular behaviour, and through
this exclusion to avoid being accused. Section
151AW says that ‘If the Commission receives an application for an exemption order, the Commission must publicise the receipt of
the application in such manner as it thinks fit’.[31] As a result, other competitors will be made aware,
and will have the opportunity to object to this request if they could be damaged
by such an order or, if they are doing the same thing, they too will be able to
request an exception.
However, there is no such obligation upon the Saudi
Commission to announce an exception request to the public. This might be one of the reasons why the CITC
has failed to protect the new entrants into the Saudi Arabian telecom market
who are experiencing so many losses, even though one of them, Zain, has been in
the market for more than three years.[32] Obviously, the older competitors already have
the resources and the high customer percentages; therefore, they know when they
require an exemption order and how to go about getting it. Conversely, the new
firms are unaware of the subject of the older rivals requested exemption, and whether it should concern them or not. The
resulting competition between two such parties is not fair, as one is running
its business so fast, while the other is so slow.
It appears that adopting transparency in the matter of
applicants’ submissions will ease the Commission’s work, as it will save time
by avoiding disputes by giving the opportunity to competitors to know the market
tendencies and to understand the behaviour of their rivals, and whether they
should be concerned.
v Treatment Methods for
Misconduct
It appears from the above review that every country
has its own special way of explaining the principles of competition law. As result, it is likely that each regime will
have different methods for curing the misuse of market power and dominance, and
in rectifying some market activities. In
fact, both the Australian and Saudi Arabian regimes make use of many common
remedies, such as monetary penalties and exemption permissions. On the other hand, there are a number of differences
between the two systems, which may result from their very different ruling
regimes, which are a monarchy in Saudi Arabia and a democracy in Australia.
These differences will be illustrated by a review of
each country’s remedies for anti-competitive conduct in the telecommunication
sector:
Ø
Australian Remedies
The ACCC has three types
of treatment at its disposal in the case of violation of competition rules by
one or more firms, these are: monetary fines, civil actions or an order of
injunction. All these remedies are indicated under Division 7 in the Competition and Consumer Act 2010 (Cth),
and are initiated by the Commission in the Federal Court.[33] It further states that the pecuniary
penalties may reach to $31 million if the violation continues for 21 days, and another
$3 million for every day that the contravention keeps going.[34]
However, the amount will be less in case of violations in record keeping, which
start from $50,000 and can reach $500,000 in certain circumstances.[35]
The Commission has
the power to bring an action to claim monetary fines, unless it is more than
six years since the claimed violation occurred.[36]
Nevertheless, not every contravention of a competition rule allows the ACCC to
institute a suit in relation to it, apart from those violations dealt with in
Part A of the competition notice.[37]
Finally, the last
method that Commission could adopt in dealing with a contravention of
competition rules, including anti-trust conduct, is to claim for an injunction.[38]
If the judge is satisfied with the reason the ACCC provides, the Federal Court
may grant an injunction order to the Commission in case of violation of
competition rule, or other contraventions. These will enable the Commission to
effectively stop the anti-competitive conduct. Because of the immediacy of the
results, an injunction is considered to be the most significant tool that the
ACCC has, as opposed to the imposing of small monetary penalties upon rich
companies, such as telecom firms, that probably make hundreds of millions in
revenue every year.
However, none of
these remedies can be applied unless a Part A competition notice has been issued
by the Commission in regard to the alleged misconduct. This step is required in
the application of almost every remedy provided for in the Competition and Consumer Act 2010 (Cth), it is therefore seen as an
accusing phase where evidence is needed to prove the charge.
Ø
Saudi Arabian’s
Remedies
Under Article 34 in
the Telecom Act Bylaws 2002, two
subsections, covering many provisions, set a number of treatments for
anti-competitive actions.[39]
In addition to the Australian remedies, the CITC can issue an order to a
certain party to cease or to modify, whatever behaviour the Commission believes
is an anti-trust practice.[40] However, the Commission may decide to refer such
anti-competitive conduct to the violation committee.[41] According to the Telecom Act of 2001, this Committee is constituted from the Council
of Ministry and comprises five members, at least one of whom is legal councillor,
and the Committee must follow the regulations specified in the Telecom Act Bylaws 2002.[42]
Furthermore, this committee has the authority to charge the accused party and
require a pecuniary fine of up to five million riyals (Saudi’s currency).[43]
The Bylaws also give
another option to the Commission in relation to anti-competitive conduct, and
this requires the involved parties to ‘meet to attempt to determine remedies to prevent or eliminate
continuation of such actions, activities or practices, and, if necessary
resolve any dispute pursuant to Chapter 6 of this Bylaw’.[44]
Chapter 6 in the Telecom Act Bylaws
2002 provides two remedies for a dispute between two or more parties in the telecommunication
market: compromise or compulsory resolution.[45]
Furthermore, the CITC can order the party committing
the anti-trust behaviour to publish an apology and confession for their
wrongful behaviour in one or more publications determining how many times and in
what form this must be.[46] The
Commission may also require the accused firm to provide frequent reports about
their services, therefore, enabling the authority to decide whether the anti-trust
action is still occurring or not, and to determine its effect on the market and
on other rivals.[47]
In cases where
the punished contravention is repeated, a special remedy is available: the CITC
is required by the Telecom Act Bylaws
2002 to ‘issue a further decision requiring the service provider to divest
itself of ownership of some lines of business, or to carry out those lines of
business in a separate company with separate books of account’.[48]
However, there are two terms have to be met before the issuing of such a decision,
the first of which is an advance notice to the accused party informing them
that they may exposed to this section of the Bylaws, and secondly the
Commission must be very sure that this decree is the only solution under the
circumstances.[49]
Ø Comparing and Contrasting the Two Systems
In order to establish a fruitful comparison between
the two regimes, I chose what I assumed to be the most significant features
that both systems have in common, or should have, or which need to be improved. In this section of the paper the appeal, the timeframe,
the penalties, the provision of evidence and the measurement of transparency
are the issues to be discussed.
I. Existence of Appeal
Neither system allows for appeal to the courts until
the penalties imposed on the guilty party have been paid: They have to pay
before going to the court or before asking for a decision to be reconsidered. In
Saudi Arabia, the Telecom Act 2001 states
that ‘The Commission's decisions can
be appealed to the Minister. If the Commission's decision is upheld by the
Minister, the concerned party has the right to appeal to the Grievance Dewan
(Court of Appeal) according to its Act.’[50] This
means that if the Minister of Communication and Information Technology does not
agree to the accused party’s right to appeal to the court, there will be no
other way in which the Commission’s decision can be reconsidered. It appears unfair that there is no available
access to the Court of Appeal for a second opinion; this becomes increasingly
important in cases where considerable sanction is involved, such as the publication
of the apology, or the activity being forced to cease.
In Australia,
although there is a Competition Tribunal that will review some of the Commission’s
decisions, the appeal process is still restricted by regulations. According to
section 151CI of the Competition and
Consumer Act 2010 (Cth), the Tribunal of Competition specializes in
reconsidering only rulings that involve exemption orders, public access to
tariff data and access to reports.[51]
However, the ACCC is concerned that ‘the effective absence of appeal adversely
affects procedural fairness and is a serious flaw in the current arrangement.’[52] In
consequence, it is thought that there is a lack of justice in the Commission’s
decisions, and this could impact on the attractiveness of the telecommunication
market, especially for current and future investors.
The solution
for both countries might be found in the Australian telecommunication’s
regulations, which exist in the Competition Tribunal: It appears that the advantages the market
could gain from expanding the competition tribunal’s duties to include appeals
for accused parties who have violated competition rules and especially
anti-competitive rules are significant.
Providing justice and decreasing the amount of time taken for a procedure,
are assumed to be the most substantial benefits. In fact, justice is the main
goal for most people, and, as John Rawls says, ‘Justice is the first virtue of
social institutions’. [53] As
a result, all regulators are assumed to aim for fairness for those who comply
with regulations.
II.
Timing and
Penalties
It appears that
time is extremely valuable for commercial corporates and for telecommunication
firms in particular. Nevertheless, the
procedures in both regimes still fall short of expectation, and in some cases
the parties wait for more than a year. Consequently, there are likely to be
financial losses and other disadvantages for persons involved in alleged
competition rule violation.
In Australia, a
Part A notice can take up to five months to be issued, which is too long for a market
such as telecom.[54]
As result, the alleged party may modify its behaviour before the notice is issued,
because of the long time taken to provide the accusing notice. However, even though there is a time limit on
every phase of the process of issuing Part A notices, there are still
difficulties with the non-compliance conduct of some parties in providing the
required information.[55] This disobedient conduct may result from the
weak penalty system that gives the Commission the right to charge only up to
$10,000 for such behaviour.[56]
Nevertheless,
the situation with regard to timing in Saudi Arabia is vague, resulting from a
lack of information on this matter. However, there is a similar concern about
the ineffectiveness of the penalty system due to the low amounts of the fines possible
in comparison with the ever increasing revenues of telecom corporations. In an article,
Saudi telecommunication expert, Abdulaziz Alkhadeer, described the failure to
protect new companies in the market as being due to the ‘fragile’ penalties that
the Commission adopts[57]. Both countries need to review their system of
fines and thereby create the environment of fair competition that they desire.
Both regimes are
likely to pay the price for their failures in this regard, as the number of
competitors and the complexity of the telecommunication sector steadily increase.
The Saudi Communication and Information Technology Commission is already
experiencing a growth in the number of dispute cases: In 2009 it was 1190
violation complaints that the Commission solved and this number had already increased
in 2010 to reach 1602 complaints.[58] In the ACCC annual report of 2009, the
telecommunication sector was sixth of the top ten industries receiving
complaints, with 1620 inquiries.[59]
However, this number has increased and in 2010-11 it reached 2178 complaints, between
the wired and other telecommunication operations together.[60] It
appears that there is an increase in anti-competitive activities in both
markets, and therefore there is a need to increase the size of the penalties
for misconduct, and to decrease the amount of time spent on the processing of
these complaints.
III. Evidentiary display
In the Australian Competition
and Consumer Act 2010 (Cth), the ACCC is not required to show evidence to
the accused party, therefore, the normal onus for proof is reversed here, which
means that the accused firm must accept accusations confirming the indictment. It
means that the Commission can send a Part A competition notice and not include
any proof of the indictment. It is indicated in section 151AKA (9) that ‘the
Commission is not required to observe any requirements of procedural fairness
in relation to the issue of a Part A competition notice’.[61] Moreover, a Part B competition notice itself
is prima facie evidence that needs no further supportive evidence.[62]
As a result, even without presenting all evidence, a Part B notice is an accomplished
fact that ‘facilitates parties taking private legal action to enforce the
competition ruling or to recover loss or damage arising from anti-competitive
conduct.’[63] This serves as an effective tool by which the
Commission saves time on procedures.
However, it is regarded as disadvantageous because of
the unfairness and the unjustified principles that these competition notices depend
on.[64] In its report, the Productivity Commission
recommended that ‘Part XIB of the TPA be amended so that a Part B competition
notice no longer constitutes prima facie evidence of the matters set out in the
notice.’[65] However,
this aspect is still far from perfect and needs further rectification to fulfil
the principles of fairness and justice. In fact, a suggestion may be taken from
the method adopted by the Saudi Arabian Commission, which is described in the
next paragraph.
The Saudi Arabia Telecom
Act Bylaws 2002 has a distinct procedure for dealing with complaints,
specifically as regards the display of evidence: At each step the Commission
must hear from the suspect party before accusing them or issuing orders against
them. In article 33, the CITC is required, when reaching a final ruling, to
comply with the provision that accused parties must have received an ‘advance
notice that such a decision was being considered’ and must be provided with ’an
opportunity to comment on the relevant issues’.[66] Furthermore, the Commission provides for the
option, in cases of complaint resolution, of giving an opportunity to the accused
party to meet with the damaged person in order to try to end the problematic
issue through compromise. Consequently,
it appears that a great effort is being made in Saudi Arabian Telecom law to
avoid reaching a point of accusation, as room is given for a suspected
party to give an opinion before a final decision is reached.
The Commission in both countries is advised to follow
normal methods of prosecution, which depend on the authority providing
reasonable evidence, and giving the suspected party the right to reply to the
charges, or to settle the issue, before it reaches the court. Another factor that
might support this approach is that the Commission, being in charge of the telecommunication
sector competition activities, is like a tribunal and therefore in this
situation should adopt usual legal procedures.
In speaking of the Australian situation, Warren Pengilley described the ACCC,
as being ‘effectively a court’, especially in the telecommunication sector.[67]
Consequently, the Commissions, in both Australia and Saudi Arabia, should run
their judging along the lines of the normal justice system, by providing the indicted
party with an opportunity to oppose the charges, as would happen in a normal
court.
IV. Degree of Transparency
It appears that the more transparent the practice the
clearer the environment can become for healthy competition. As the Productivity Commission said in their report, following
an inquiry into the telecommunication competition regulations, transparency ‘would
assist firms to understand what types of conduct may, or may not, be considered
anti-competitive by the ACCC.’[68] Greater transparency would increase the attractiveness
of the market, among other positive features.
In contrast, lack of transparency can result in unfair treatment with
duplicity of behaviour, as opposed to a remedy for same conduct.
In Australia,
it has been claimed that the Commission (ACCC) needs to be clearer about its
procedures for finding evidence against alleged culprits in anti-competitive
conduct cases, and in the investigation process that follows.[69] From
this, other firms in the market would learn whether behaviour, such as that
being investigated, is prohibited or not.
Clarity is particularly needed in relation to the Part XIB provisions,
as these are very general and may not apply to all parties. There is also a
need to decide whether to adopt the “effect
or may effect” test, as opposed to the ‘purpose’ test when determining whether a
particular conduct is in danger of resulting in an anti-trust action. Consequently, it has been recommended that the
ACCC should declare any process that they institute against suspected behaviours
and explain where the error lies so that other competitors can avoid it.
However, it
appears that the Commission is issuing annual reports, and that one of these
covers the telecommunication section: Telecommunications Competitive
Safeguards, and that this includes much information about the ACCC activities
and their procedures in dealing with anti-competitive conduct. Consequently, or so the ACCC claims, there is
no need for additional publications detailing the ways that the Commission has dealt
with anti-trust actions in the telecom
market.
However, the
Productivity Commission answered the above claim by saying that the ACCC needs to ‘include
a much greater range of information about activity under Part XIB in its annual
publication’.[70]
For example, these reports should contain data about advisory notices, appeals
and settlements that are reached by the Commission: This would give useful
information to the market so that other organisations could learn about the
status of certain behaviours, and thereby avoid them and save the authorities time
spent in chasing anti-trust actions.
Furthermore, the
Productivity Commission suggested that the Australian Competition and Consumer
Commission should publish guidelines explaining how the system of regulations
is applied; it also recommended that the ACCC utilize ‘public input’ to produce
such information.[71] The result would be to minimize the ambiguity
that can occur when laws are constructed that are less than realistic, or are
too rigid.
In Saudi
Arabia, where the country is ranked 50th in the world in the Corruption
Perception index of 2010, the Commission is trying hard to comply with its
mission.[72] In its website, CITC indicates that one of
their duties is to ‘Provide a fair, clear and transparent regulatory
environment to promote competition, and safeguard public interest and
stakeholder rights.’[73]
However, no details are provided about the decisions the Commission has issued,
and there is a lack of data about appeals submitted.
On the other hand,
it may be assumed that greater attention has been paid to a couple of significant
things and that these have affected transparency. For instance, the Commission is
concerned that the public should be consulted in ‘major decisions’. This can
only be an advantage in relation to the measurement of transparency.[74] Moreover, although the general attitude in
Saudi Arabia towards revealing government information purely for the sake of
public knowledge is obsolete, the CITC does appear to be heading against the
usual stream by providing data about their accomplishments and their future
goals and linking these to certain periods. All of that information is available
to the public. Consequently, the
Commission may be assumed to be on the right track, from the perspective of
transparency, even though more details are still required in their annual
report.
Ø Conclusion
It appears that
ever since the first trial of anti-competition conduct that occurred in Greece in
388 BC, competition between rival traders and service providers has continued
to challenge, and sometimes threaten, the market place.
On the other
hand, the value of rivalry is found in the variations in price and quality: Competitors
strive to provide good quality at low prices to attract customers. This formula works in any market provided it
has a fair and controlled competition atmosphere. It appears to be an advantage
for a trading field to have an administration that chastises anti-trust activities
by competitors, and issues regulations that provide guidelines for rivals to
comply with.
Among
telecommunication firms there are stiff competition activities, which require greater
attention to be paid by governments. The
telecom field changes and develops so
rapidly, that an authority would not be able to prevent misconduct between
competitors unless it adopts clear instructions that provide definitions for
market power, and who has it, and also provide explicit limits for the dominant
party. As a result, these rules and guidelines
will expose any ambiguity that might arise, involving anti-competitive conduct.
However, lack
of clarity in the legislation can result in a loss of revenue for the firms involved,
particularly if the commission due to the lack of clear guidelines makes wrongful
decisions. Although, governments have
the power to impose their rules even if they are rigid or unfair, they can cause
their countries considerable losses if they destroy their reputations for
having a healthy local market.
In Saudi
Arabia, the authority that administers the telecommunication sector is called the
Communication and Information Technology Commission, and this Commission monitors
and regulates rivalry. This commission
started to work in 2001 in order to deal with delays in allowing other
companies to enter the market. This positions the Commission as a young body in
the government.
However, in the
Australian market there are two authorities that share the control of the telecom
sector; one of them specializes only in competition issues, while the other takes
care of the rest of the communication issues.
These are the Australian Competition and Consumer Commission (ACCC) and the
Australian Communication and Media (ACMA).
It appears,
from differences in the way the telecom market and the competition in this
section are administered, that a comparison between the two systems, the Australian
and the Saudi Arabian, would lead to conclusions that may indicate both the
weakness and strengths both have. Therefore, this study aimed to make
suggestions that might help any commission in the telecommunication sector, or
maybe even in other fields, regarding a recommendation as to what pattern is
functional and fruitful in improving the prevention of anti-competition behaviours.
This research has
attempted to compare and contrast the remedies each regime, Saudi Arabian and
Australian, are using to deal with anti-competitive conduct in their
telecommunication markets. It is
recognized that there has been a dearth of case studies, which is due to the short
history of rivalry in this section in both countries. Furthermore, in Saudi Arabia, the governmental
norm is to be very reserved in revealing details about lawsuits or
disputes. In my opinion, the two
commissions are doing their best to regulate this extensive field and every
year, in their annual reports, there is a new or improved provision.
[1] Alex Bruce, Restrictive
Trade Practice Law (LexisNexis Butterworths, 2010) 1.4.
[2] Ibid.
[3] Richard R. Nelson and Sidney G. Winter, An Evolutionary Theory of Economic Change
(Belknap Press, 1982) 276.
[4] Explanatory Memorandum, Trade Practice Amendment (Telecommunications)
Bill 1996, 6.
[5] Productivity Commission, Telecommunication Competition Regulation, Inquiry Report No. 16
(2001) 154.
[6] The Independent Committee of Inquiry, National Competition Policy Review, Hilmer Report (1993) 6.
[7] Productivity Commission, Telecommunication Competition Regulation, Inquiry Report No. 16
(2001) 190.
[8] Competition and
Consumer Act 2010 (Cth) s 151AJ (2).
[9] Competition and
Consumer Act 2010 (Cth) s 46 (1).
[10] Productivity Commission, Telecommunication Competition Regulation, Inquiry Report No. 16
(2001) 152.
[11] Ibid.
[12] Competition and
Consumer Act 2010 (Cth) s 151AKA(1-2).
[13] Productivity Commission, Telecommunication Competition Regulation, Inquiry Report No. 16
(2001) 179.
[14] Ibid 194.
[15] Telecom Act Bylaws
(Kingdome of Saudi Arabia) Minister of Post, Telegraph and Telephone
Resolution, Act 11 of 27/072002, contained in page 35, art 29 on <http://www.citc.gov.sa/English/RulesandSystems/Bylaws/Documents/LA_005_%20E_Telecom%20Act%20Bylaws.pdf> .
[16] Ibid 37-38, art 31.
[17] Ibid.
[18] Ibid 35, 30.1.
[19] Ibid 36, 30.2.
[20] Ibid.
[21] Telecom Act
(Kingdom of Saudi Arabia) Council of Ministers Resolution, No. 74, 27/05/2001,
8, Ch6 (art 24) on <http://www.citc.gov.sa/English/RulesandSystems/CITCSyste/Documents/LA%20_001_E_%20Telecom%20Act%20English.pdf >.
[22] Ibid art 30 (30.1), 35.
[23] Ibid.
[25] Ibid sub-s 3.
[27] Telecom Act Bylaws
(Kingdome of Saudi Arabia) Minister of Post, Telegraph and Telephone
Resolution, Act 11 of 27/072002, contained in page 37, art 31(e) on <http://www.citc.gov.sa/English/RulesandSystems/Bylaws/Documents/LA_005_%20E_Telecom%20Act%20Bylaws.pdf> .
[29] Ibid s 151BC(1).
[30] Telecom Act Bylaws
(Kingdome of Saudi Arabia) Minister of Post, Telegraph and Telephone
Resolution, Act 11 of 27/072002, contained in page 39, art 33(33.3) on <http://www.citc.gov.sa/English/RulesandSystems/Bylaws/Documents/LA_005_%20E_Telecom%20Act%20Bylaws.pdf >.
[Communication Commission and Pushing
the Market Toward Monopoly] العربية [Alarabiya.net] (online), 6th
April 2011, on < http://www.alarabiya.net/views/2011/04/06/144402.html>.
[33] Ibid div 7.
[34] Ibid s 151BX(3)(a).
[35] Ibid s 151BX(4).
[36] Ibid s 151BY sub-ss (1)-(2).
[37] Ibid s 151BY(3).
[39] Telecom Act Bylaws
(Kingdome of Saudi Arabia) Minister of Post, Telegraph and Telephone
Resolution, Act 11 of 27/072002, contained in page 39, art 34 on <http://www.citc.gov.sa/English/RulesandSystems/Bylaws/Documents/LA_005_%20E_Telecom%20Act%20Bylaws.pdf>.
[40] Ibid art 34 s 1(a).
[41] Ibid s 1(b).
[42] Telecom Act (Kingdom of Saudi
Arabia) Council of Ministers Resolution, No. 74, 27/05/2001, 8, Ch 10 (art 38)
on http://www.citc.gov.sa/arabic/RulesandSystems/CITCSyste/Documents/LA_001_%20A_Telecom%20Act.pdf >[Anas Aldehishy trans].
[43] Ibid.
[44] Telecom Act Bylaws
(Kingdome of Saudi Arabia) Minister of Post, Telegraph and Telephone
Resolution, Act 11 of 27/072002, contained in page 39, art 34 s 1(c) on <http://www.citc.gov.sa/English/RulesandSystems/Bylaws/Documents/LA_005_%20E_Telecom%20Act%20Bylaws.pdf>.
[45] Ibid Ch 6 arts 45-46.
[46] Ibid art 34 s 1(d).
[47] Ibid sub-s (e).
[48] Ibid s 2.
[49] Ibid.
[50] Telecom Act (Kingdom
of Saudi Arabia) Council of Ministers Resolution, No.74, 27/05/2001, Ch 11 (art
39), 11 on http://www.citc.gov.sa/arabic/RulesandSystems/CITCSyste/Documents/LA_001_%20A_Telecom%20Act.pdf >[.
[52] Productivity
Commission, Telecommunication Competition
Regulation, Inquiry Report No. 16 (2001) 192.
[53] John Rawls, A Theory of Justice (Harvard
University Press, 1999) 3.
[54] Productivity
Commission, Telecommunication Competition
Regulation, Inquiry Report No. 16 (2001) 200.
[55] Ibid 201.
[56] Competition
and Consumer Act 2010 (Cth) s 155.
[57] Abdulaziz Alkhadeer, ‘هيئة الإتصالات
و تقنية
المعلومات’ [Communication Commission and
to achieve fair competition], العربية [Alarabiya.net] (online), 20th
April 2011, on <http://www.alarabiya.net/views/2011/04/20/146050.html>.
[58] Communication and Information Technology Commission, Annual Report (2010) <http://www.citc.gov.sa/English/MediaCenter/Annualreport/Documents/PR_REP_006E.pdf>.
[59] Australian Competition and Consumer Commission, Annual Report (2009-8) <http://www.accc.gov.au/content/item.phtml?itemId=953971&nodeId=1a60fa6da637796f420151eb85773f2d&fn=ACCC%20Annual%20Report%202009-10_WEB.pdf>.
[60] Australia Competition and Consumer Commission, Annual Report (2010-11) <http://www.accc.gov.au/content/item.phtml?itemId=1012352&nodeId=3648638631e30e3f1a5c89e3f33ff327&fn=ACCC%20Annual%20Report%202010-11.pdf>.
[62] Ibid s 151AN(1).
[63] Communication Law Centre and Alasdair Grant (ed), Australian Telecommunications Regulation:
The Communication Law Center Guide (UNSW press, 3rd ed, 2004)
174.
[64] Productivity Commission, Telecommunication Competition Regulation, Inquiry Report No. 16
(2001) 196.
[65] Ibid 196.
[66] Telecom Act Bylaws
(Kingdome of Saudi Arabia) Minister of Post, Telegraph and Telephone
Resolution, Act 11 of 27/072002, contained in page 39, art 33 s 2 on <http://www.citc.gov.sa/English/RulesandSystems/Bylaws/Documents/LA_005_%20E_Telecom%20Act%20Bylaws.pdf>.
[67] Peter Costello et al, 25
Years of Australian Competition Law (Butterworths, 2000) 204.
[68] Ibid 196.
[69] Productivity Commission, Telecommunication Competition Regulation, Inquiry Report No. 16
(2001) 197.
[70] Productivity Commission, Telecommunication Competition Regulation, Inquiry Report No. 16
(2001) 198.
[71] Ibid 197.
[72] Transparency International, Corruption Perceptions Index (2010) <http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results>.
[73] Communication and Information Technology Commission, Vision and Mission (2011) < http://www.citc.gov.sa/English/AboutUs/Pages/Visionandmission.aspx>.
[74] Communication and Information Technology Commission, Annual Report (2010) <http://www.citc.gov.sa/English/MediaCenter/Annualreport/Documents/PR_REP_006E.pdf>.
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