A large number of countries have urged the adoption of 5th December as World Competition Day, in order to popularise the need for developing countries to attach greater attention to the process of competition reforms as a key public policy issue. The process of competition reforms not only benefits consumers but also producers and the economy in general.
The linkage is often not understood by policymakers — hence organisations like CUTS (Consumer Unity and Trust Society) have been leading the campaign for promoting competition globally.
One of the highlights of this campaign is for the United Nations to declare 5th December as World Competition Day — a CUTS campaign that has now been supported by nearly 25 countries from all around the world.
A number of countries have already started observing 5th December as World Competition Day. The purpose of this article is to explain to ordinary Ghanaians the importance of competition in their daily lives — so that a groundswell can be developed that leads to the adoption of a national competition regime in Ghana, which has been a pending reform action in the country for a while.
What is Competition and why is it needed?
By definition, competition law promotes competition in markets and curbs anti-competitive conduct by firms. In a fair and competitive market there are large numbers of sellers and buyers, variety of quality goods and services for consumers, and free entry and exit for firms. In every market, producers aim is to maximise profit whilst consumers also want to maximise utility. Market competition thus encourages production of goods and services that are desired by consumers, making sure of the most cost-effective use of available resources. Thus, consumers get the best possible choice of goods and services at the lowest possible price.
In a fair market, firms compete with each other ‘on merit’ to win consumers and increase their share of the market. Competitive markets provide incentives for firms to produce quality goods and services at low prices — thereby improving on productivity and in turn boosting an industry, the sector and finally the economy.
One can relate to this from a case in Ghana — pertaining to Ghana Telecom and its cellular network called OneTouch. When it was introduced in early 2000, Ghana Telecom controlled the supply of the SIM cards. The SIM cards were sold on the black market for more than 600% of the official price. It was alleged that officials in the company were selling the cards through the backdoor. Spacefon, another cell network provider took advantage of the market and expanded its capacity. By the time Ghana Telecom reacted to the new entrant, Spacefon had already taken a large share of the market.
A large number of countries in the world including developing countries from Africa (Zambia, Malawi, Zimbabwe, Botswana, South Africa, Kenya, and our neighbours like The Gambia, Burkina Faso, Mali, etc.) have put in place a competition law and an agency to implement the act. However, in spite of having made a few attempts, Ghana has not been able to adopt a Competition Law. The effect of the absence of a competition law is often intangible, but is explained here through the following illustrations.
Ghana Telecom and Vodafone Ghana
It started when it was called Ghana Telecom. In the late 90’s and early 2000’s, the then-Ghana Telecom dominated the telephony market in the country. Whenever a subscriber wanted to dial any cell phone number through Ghana Telecom’s fixed land-line, the chances of getting through to the other party was fairly minimal. Ghana Telecom was simply restricting the number of calls routing through its platform to other competitors — Spacefon and Mobitel.
Fifteen years down the line, Vodafone which took over from Ghana Telecom seems to have maintained the same posture. As a company with a monopoly in fixed landline and broadband Internet in the country, Vodafone has been alleged to be exploiting its monopoly to the disadvantage of other competitors and consumers. Several cases have come to the fore when Vodafone Ghana has declined to provide a fixed telephone line to a subscriber without him/her applying for a broadband as well. This is a classic case of ‘tied selling’, and it is prohibited under all competition laws. The question is whether the company could have resorted to such actions if Ghana had a Competition Agency implementing a competition law. Further, Vodafone Ghana has placed a cap on data usage on its broadband facility even on its ‘unlimited plans’ — this is not a common practice across the world.
Antrak-Citylink duopoly on domestic air travel
Antrak and Citylink airlines hitherto had dominated the domestic airline industry, especially Accra-Kumasi, with Antrak taking a monopoly over the Accra-Tamale route. Fares on these routes were prohibitively expensive, to the extent that domestic air travel was seen to be the preserve of the upper-class. However, things changed from 2011 when Starbow and Fly 540 entered the market. These two companies injected competition into the industry and their presence started bringing the fares down. Back in 2009, the average price of a Accra-Kumasi flight was about GH¢180. When Starbow and Fly 540 came, they began by charging as low as GH¢35 and still made profits. The dominant firms soon realised that if they did not follow competitive pricing strategy they could be crowded out from business — so they started to allow market forces to determine the price.
Ghana botched attempts to have competition law and policy
Ghana’s attempt to align business and trade to international best practices resulted in the passing of the Protection Against Unfair Competition Act, 2000 (Act 589), which had a lacklustre approach to addressing competition. It has had another draft readied in 2008 — but that too was a non-starter. Ghana is now in the process of putting in place a Competition Policy that will subsequently lay out the ground for a national competition law.
The Ministry responsible for Competition Policy and Law — i.e. the Ministry of Trade and Industry (MOTI) — needs to realise the importance of a Competition Law and convince other policymakers of its benefits.
Ghana seem to have waited too long to have the ‘most perfect’ piece of competition legislation, while ordinary consumers and even the economy seem to have suffered as a result of various market practices that could have been dealt with if the country had an operational legal framework for the same.
Let us all urge in our own capacity on 5th December — World Competition Day — for Ghana to have a national competition regime without any further delay…
The writer is a Centre Coordinator for CUTS Accra.
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