Revised Model Bill on Competition

Summary

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Explanatory memorandum to the model bill on competition. Introduction. The draft model law. The long title. Part I. Preliminary. Clause 2. Interpretation. Clause 3. Objects. Clause 4. Application. Part II. The competition commission. Clause 5. Establishment of Commission. Clause 9. Functions and duties of Commission. Clause 10. Delegation of powers. Clause 11. Appointment of Executive Director and other employees. Part III. Financial provisions, accounts and annual report. Clauses 12 to 16. Funds of Commission, Power to levy fees, Loans and Financial penalties, Financial Year and annual estimates, Accounts and audits. Clause 17. Annual report. Part IV. Anti competitive agreements and abuse of dominant postion. Clause 18. Anti-competitive agreements. Clause 19. Dominant position. Clause 20. Identification of relevant market. Clause 21. Abuse of dominant position. Part V. Mergers and acquisitions. Clauses 22 and 23. Mergers prohibited and Substantial lessening of competition. Part VI. Authorisations and exemptions. Clause 24. Grant of authorisation. Clause 25. Effect of authorisation. Clause 26. Revocation of authorisation. Clause 27. Register of authorisations. Clause 28. Block Exemptions. Part VII. Consumer protection. Clauses 29 and 30. Unfair practice and Consumer transactions. Part VIII. Investigation and hearing. Clause 31. Complaints and requests. Clause 32. Discontinuance of investigation or inquiry. Clause 33. Interim measures. Clauses 34 to 38. Examination of witnesses, Immunity and privileges, Witnesses refusing to comply, Procedures for hearing, Power to prohibit disclosure of information, documents and evidence. Clause 39. Power of entry and search. Part IX. Enforcement. Clause 40. Enforcement of decisions of the Commission. Part X. Appeals. Part XI. Miscellaneous. Clause 45. Regulations. Clause 46. Guidelines. Clause 47. Acts of employee or agent. Clause 48. Protection from personal liability. Clause 49. Confidentiality. Annex I. Competition law (A view from the Pacific). 1.0 Introduction. 2.0 Why is there a need to have competition law in pacific island countries?. a) Common Law Insufficient. b) Changing Economy. c) Competition Enhances Investment. d) Innovation and Technology. e) Human Resource Development. f) Public Benefit. g) Public Sector Reforms. h) Assist in Implementation of Regional and International Trade Related Treaties and Instruments. 3.0 What does the bill contain?. a) Abuse of Dominant Positions. b) Restrictive Trade Agreements. c) Mergers. 4.0 Promotion of competition in small and medium enterprises. 5.0 Establishment of a commission. 6.0 Consumer protection. 7.0 Conclusion. Competition law (A View from the Caribbean). (1) Main Principles of the Bill. (2) How the main principles of the Bill have been applied in selected states in the Caribbean region. Jamaica. St Vincent and the Grenadines. The Bahamas. Belize. St Kitts and Nevis. St Lucia. (3) How the main principles of the Draft Model Bill might be modified. The competition act arrangment of sections. Model law on competition. Part I. Preliminary. Short title. Interpretation. Objects of Act. Application of Act. Part II. The competition commission. Establishment of Commission. Common seal. Independence of Commission. Constitution of Commission. Functions and duties of Commission. Delegation of powers. Appointment of Executive Director and other employees. Part III. Financial provisions, accounts and annual report. Funds of Commission. Power to levy fees. Loans and financial penalties. Financial year and annual estimates. Accounts and audit. Annual report. Part IV. Anti-competitive agreements and abuse of dominant position. Anti-competitive agreements. Dominant position. Identification of relevant market. Abuse of dominant position. Part V. Mergers and acquisitions. Mergers prohibited. Substantial lessening of competition. Part VI. Authorisations and exemptions. Grant of authorisation. Effect of authorisation. Revocation of authorisation. Register of authorisations. Block exemptions. Part VII. Consumer protection. Unfair practice. Consumer transaction. Part VIII. Investigation and hearing. Complaints and requests. Investigation discontinued. Interim measures. Examination of witnesses. Immunity and privileges. Witness refusing to comply. Procedures for hearing. Power to prohibit disclosure of information, documents and evidence. Power of entry and search. Part IX. Enforcement. Enforcement of decisions of Commission. Enforcement by court. Rights of private action. Part X. Appeals. Appeals. Effect of appeal on direction. Part XI. Miscella neous. Regulations. Guidelines. Acts of employee or agent. Protection from personal liability. Confidentiality. First schedule. Section 4. Excluded matters. Second schedule. Section 8(2). Constitution and conduct of the business of the commission. Third schedule. Section 29(2). Unfair practices. Fourth schedule. Section 30. Excluded transactions. Annex II.

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Revised Model Bill on Competition

Explanatory memorandum to the model bill on competition

Introduction

1. At their Meeting in Durban in 1999 Commonwealth Heads of Government (CHOGM) emphasised the importance of a robust competition atmosphere in a global economy. CHOGM requested the Secretariat to explore ways and means to promote consensus on international trade which includes competition law. The main objective of competition policy and law is to preserve and promote competition as a means of ensuring the efficient allocation of resources in an economy. This should result in lower prices and adequate supplies for consumers and, it is hoped, faster growth and a more equitable distribution of income. By lowering barriers to the entry of new firms into an industry, competition policy helps to create an enabling environment for entrepreneurial development, an essential prerequisite for a vibrant economy (OECD and Khemani 1998).

2. As Law Ministers will recall, in response to this request, the Legal and Constitutional Affairs Division (LCAD) of the Secretariat developed a model bill and submitted the same to the Commonwealth Law Ministers Meeting (LMM) in St Vincent and the Grenadines in 2002. After careful consideration, the LMM instructed LCAD to revise the (2002) model bill to take into account the needs of small and vulnerable sectors of the economy that have been systematically disenfranchised from meaningful competition activities.

3. In light of this directive the (2002) model bill was referred for initial redraft, an exercise which was undertaken and finalised in September 2003. The Law Development Section (LDS) of LCAD then distributed copies of the Bill to Law Ministers for their comments. Expert Groups were then convened in each region of the Commonwealth to seek views on the possibility of further amendment to the Bill where necessary.

4. The first of the Expert Group Meetings took place from 10-14 May 2004, in Singapore. The countries represented were India, Malaysia, Maldives, Mauritius, Seychelles, Singapore and Sri Lanka.

5. The LDS conducted its Pacific meeting from 8-12 November, in Apia, Samoa. The countries represented were Cook Islands, Fiji, Kiribati, Papua New Guinea, Samoa, Tonga and Tuvalu.

6. The third of these series of Expert Group Meetings was held in Nassau, the Bahamas from 13-17 December. Representatives at that meeting hailed from the Bahamas, Belize, CARICOM, Jamaica, St Kitts and Nevis, St Lucia and St Vincent and the Grenadines.

7. The fourth regional session was held in Seychelles from 4-8 April, for the African region. With representatives from most of Commonwealth Africa, that meeting brought delegates from Botswana, Cameroon, The Gambia, Ghana, Kenya, Lesotho, Malawi, Mauritius, Namibia, Seychelles, Sierra Leone, South Africa, Swaziland, Uganda and Zambia. The meeting also benefited from the input of the Special Advisory Services Division(SASD) as well as delegates from the Secretariats of the Common Market for Eastern and Southern Africa (COMESA), Economic Community for West African States (ECOWAS) and the UN Conference on Trade and Development (UNCTAD).

8. The redraft of the Model Bill presented to Law Ministers is therefore the culmination of the composite thoughts of these regional experts. In a Final Expert Group Meeting on the Competition Bill, which took place at the Commonwealth Secretariat, Marlborough House, from 25-29 July, the Bill was fine tuned by a blend of experts culled from the series of regional meetings.

9. Submitted as Annex I is the rationale from some of the regional experts for a robust Competition Bill, particularly in small developing economies.

10. Submitted as Annex II is a chart representing the Investigation and Hearing Procedure contemplated by the Model Bill.

The draft model law

The long title

11. The long title sets out the scope of the Bill, namely to promote, maintain and encourage competition, to prohibit anti-competitive activities and unfair practices, to establish a Competition Commission, to promote the interests and welfare of consumers and for matters connected therewith and incidental thereto.

Part I. Preliminary

Clause 2. Interpretation

12. Sub-clause (1) contains the definitions of terms used in the Bill:

"acquire" is defined in wide terms in relation to goods and services and includes in relation to goods a right or interest by way of a purchase, lease, gift, contest, exchange, hire, hire purchase, and in relation to services the acceptance of the rendering of services;

"agreement" means an agreement between enterprises, irrespective of the form in which it is made (would include arrangement or understanding) and whether or not it is intended to be legally enforceable;

"business" includes activities which are all encompassing as it includes all commercial or economic activities relating to goods or services but such activities must...

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