Workshop. The Competition Policy in Cambodia

Transcription

1 Workshop On The Competition Policy in Cambodia by Nuth Monyrath, EIC Legal Researcher Competition Policy in Cambodia 1

2 The Competition Policy and Legislation in Cambodia I. Introduction II. III. IV. Market structure and competition Sectoral policy Consumer policy V. Anticompetitive practices VI. VII. Perspectives on competition policy The way forward Competition Policy in Cambodia 2

3 I. Introduction 1. Importance of competition in the economic policy regime 1. Free market vs. fair market 2. Protect social welfare of consumers and economic efficiency 3. Encourage R&D and innovation 4. Ensure efficient allocation of resources and poverty reduction 2. Base of competition policy 1. Constitution 2. Government policy 3. Commitment in the WTO deal for membership Competition Policy in Cambodia 3

4 List of State-Owned Enterprises (as of March 2003) Ministry in charge Ministry of Agriculture, Forestry, and Fisheries Ministry of Public Works and Transport Municipality of Phnom Penh Ministry of Industry, Mines and Energy Ministry of Economy and Finance Ministry of Commerce Joint-venture enterprises (51%: State shares) Ministry of Posts and Telecommunications 7 rubber plantation companies Sihanouk Ville Port Phnom Penh Port Kampuchea Shipping Agency and Broker (KAMSAB) Laboratory of Construction Royal Railway of Cambodia Neak Loeung Ferry Prek Kdam Ferry Phnom Penh Water Supply Electricity of Cambodia (EDC) Rural Development Bank Foreign Trade Bank Green Trade Company Cambodia Pharmaceutical Enterprises Camintel Company Name of enterprise Competition Policy in Cambodia 4

5 II. Market structure and competition Barriers to entry and competition Quantitative restrictions Certain laws and regulations place restriction (electricity, telecom) Complicated business registration Lack of transparency and accountability (procurement and licensing) Weak institution and governance (IPs, counterfeit goods, taxes) Practice of unfair competition: Conspire to limit access to markets/suppliers Receive subsidies Violate IPRs Avoid labor taxes/regulations Competition Policy in Cambodia 5

6 III. Sectoral policies Electricity Electricity in Cambodia: low capacity of power generation and electrical grid, limited access, very high costs Electricity policy is stipulated in electricity law: To protect consumer right (reliable and adequate power supply, reasonable cost; promote private ownership and competition) Transmission license is reserved for the EDC Licensing system seems to contradict with the intent of the law Competition Policy in Cambodia 6

7 III. Sectoral policies Telecommunications Information and communication technology in Cambodia: lowest level in South East Asia, limited access and high costs Telecom policy: promote open, fair and competitive market MPTC: body to issue license to operators on the basis of necessity for development network, infrastructure, expected coverage and consumer interest No clear legal provision governing licensing procedures MPTC is both regulator and operators Competition Policy in Cambodia 7

8 III. Sectoral policies Banking Absence of regulations and procedures limits the scope of competition (E.g. merger and acquisition, business diversification) Consumer reliability vs. lower interest rate: minimum capital requirement of US$13 million, 10% of capital for guarantee, and 8% reserve requirement Competition Policy in Cambodia 8

9 IV. Consumer policy Laws for consumer protection (1) 1. Roots for consumer protection The 1993 Constitution UN Guidelines for consumer protection: Competition Policy in Cambodia 9

10 IV. Consumer policy Laws for consumer protection (2) 2. Quality and safety of products and services Law on the management of quality and safety of products and services Indication of ingredients, composition, user guideline, manufacturing date, expiration date (in Khmer) prior to commercialization Product could harm consumer health or safety: prior authorization from competent authority for the first commercialization Prohibition of deceitful, misleading or false commercial advert Prakas No. 335 (MoC): expiry date to be fixed on food products Prakas No. 329 (MoC): bans products without appropriate trademark or label Prakas No. 963 (MIME): register products with MIME for proper product labeling (national standards, to prevent product counterfeiting) Competition Policy in Cambodia 10

11 IV. Consumer policy Laws for consumer protection (3) 3. Law concerning marks, trade names, and act of unfair competition Acts of unfair competition are: Create confusion with the establishment of goods/services False allegation in the course of trade (goods, services of a competitor) Indication or allegation (nature, process, quantity, characteristics, suitability, etc.) to mislead the public Trademark is protected if registered, except for wellknown marks Competition Policy in Cambodia 11

12 IV. Consumer policy Administrations Ministry of Commerce (Camcontrol) MEF (Custom Department) MIME Inspection and Industrial Standards Department Metrology Department Competition Policy in Cambodia 12

13 IV. Consumer policy Prevalent consumer concerns Weak enforcement of consumer protection laws and regulations Lack of human and financial resources Limited consumer awareness about safe and quality products Enjoyment of consumer rights vs. poverty Competition Policy in Cambodia 13

14 V. Anticompetitive practices Horizontal restrictive trade practices/cartels Collective price fixing Market allocation Output restriction Bid-ridding or collusive tendering Vertical restrictive trade practices Tied-selling Exclusive dealing Refusal to deal Discriminatory dealing Predatory pricing Competition Policy in Cambodia 14

15 VI. Perspective on competition policy Methodology and summarized outcomes Methodology: Perception survey (consumers, businessmen and policymakers) Respondents were in Phnom Penh and selected on the basis of their educations Competition Policy in Cambodia 15

16 VI. Perspective on competition policy Survey outcomes 1. Extent of anti-competitive practices Anti-competitive practice prevail in Cambodian markets (82% ) Rank of anti-competitive: raising barrier to entry, collective price fixing, price discrimination, collusive tendering and tied selling Sectors plagued by anticompetitive practices: petroleum, telecommunication, public utility, garment Don't know 42% 2. Awareness about competition related laws No 34% Yes 24% Competition related laws: electricity law, fishery law, law on trade mark and unfair competition, investment law, IP laws The existing rules and regulations are not enough to protect consumers and they favor competition law (85%) Competition Policy in Cambodia 16

17 VI. Perspective on competition policy Survey outcomes 3. Necessity for a comprehensive competition legislation Competition legislation should be enacted (98%) Objectives of the competition law: business efficiency and consumer welfare (94%); other 69% say it should focus on other socio-economic objectives 4. Scope of competition law Should the competition act cover all types of enterprises and activities? 100% 80% 60% 40% Don't know No Yes 20% 0% Consumers Businessmen Policymakers Competition Policy in Cambodia 17

18 VI. Perspective on competition policy Survey outcomes 4. Scope of competition law Exclusion: SMEs (55%); Export-oriented enterprises (13%); SOEs (32%) Violation of the competition act is permissible for reason of technological advancement, protection of SMEs, disadvantaged groups (80%) 66% of respondents: jurisdiction over anti-competitive practices that occur abroad but impact on Cambodia s markets 5. Competition authority Form of Competition Authority to be established Don t know Ombudsman Authority under a relevant Ministry Autonomous Competition Authority Consumers Businessmen Policymakers Competition Policy in Cambodia 18

19 VI. Perspective on competition policy Survey outcomes 5. Competition authority Powers of Competition Authority Policymakers Businessmen Consumers Investigative and adjudicative power vested in the court Investigative and adjudicative power vested in separate authority Investigative and adjudicative Competition authority should deal with both anti-competitive practices and consumer protection (92%) Competition related issues should be given to specialized agency (40%); specialized agency and competition authority (42%) Competition authority should take part in advocacy and publicity (96%) through means of consultative committee (70%) Competition Policy in Cambodia 19

20 VI. Perspective on competition policy Survey outcomes 6. Implementation of the competition act Dominant firms breed efficiency is not an offense (96%) but they need to be monitored to prevent abuse of market power Mergers and acquisitions (M&As) should be subject to review if there is adverse effect on competition (98%) M&As should be reviewed if they exceed certain amount of money (50%) M&As are acceptable if they are for national interests (ability to compete internationally and increase competitiveness of the economy (50%) Competition act should have provisions for leniency clause and whistle-blower protection (88%) Competition Policy in Cambodia 20

21 VII. Way forward Appropriate competition policy and legislation are needed to guide the open markets To tackle competition abuses require proper sectoral policies, competent competition authority, effective and efficient and independent judiciary Attention should be made to different sectoral policies (viz. electricity and telecom) to ensure the economic and social welfare Capacity buildings to different groups of stakeholders (policymakers, judges, prosecutors, lawyers, businessmen, consumers, civil society, academia/media, etc.) Good governance, transparency and accountable institutions contribute a lot to fair competition in the markets Competition Policy in Cambodia 21