OECD kpcdb

1. Competition Law

 

The Independent Consumer and Competition Commission Act, 2002 (“the ICCC Act”) was passed by the Parliament in 2002 and came into effect in April 2003. 

 

The ICCC Act has three primary objectives under Section 5(1), which are: (a) to enhance the welfare of the people of Papua New Guinea (PNG) through the promotion of competition, fair trading and the protection of consumers' interests; (b) to promote economic efficiency in industry structure, investment and conduct; and (c) to protect the long term interests of the people of PNG with regard to the price, quality and reliability of significant goods and services.

 

The ICCC Act prohibits certain conduct or practices that substantially lessen competition, price fixing, taking advantage of market power, resale price maintenance, and business acquisition. In addition, the ICCC Act covers consumer protection, fair trading and regulation of goods and services.

 

The competition functions of the ICCC are provided under Part VI of the ICCC Act. The ICCC Act contains similarities to the Australian Competition and Consumer Act 2010 Cth (formerly Australian Trade Practices Act 1974) and the New Zealand Commerce Act 1986, with main differences relating to price control provisions and the regulatory contracts for State Owned utility monopolies. 

 

PNG follows the common law tradition.

 

General exclusion: There is no sector excluded or exempted from the application of Part VI of the ICCC Act. Section 48 of the ICCC Act provides that Part VI of the ICCC Act also applies to State-owned enterprises who engage in commercial activities in competition with private firms.

 

Extra-territorial application: Part VI of the ICCC Act is also applicable to conduct engaged outside PNG which directly affects competition and consumers in PNG’s domestic markets. The ICCC Act’s merger control provisions are also applicable to foreign mergers.

 

2. Independent Consumer and Competition Commission

 

The Independent Consumer and Competition Commission (“ICCC”) is the only competition authority in PNG that is responsible for enforcing the ICCC Act. It is an independent statutory body in terms of its decision making and enforcement actions (Section 23). 

Subject to Section 25 (public finances management) and Part VIII (inquiries), the ICCC is not subject to direction or control by the Minister or any other person in the performance of its functions. 

 

The ICCC does not impose fines and sanctions for infringement of the ICCC Act. The ICCC only investigates competition cases and institutes proceedings in the National Court (“the Court”). The Court decides both on liability and on sanctions. Thus, there exists a pure judicial competition law regime in PNG.

 

The ICCC performs a number of functions, inter alia to be responsible for functions relating to price regulation, licensing, industry regulation and other matters conferred by the ICCC Act or any other Acts.

 

Organisational structure of ICCC: The ICCC, whose headquarters is located in the nation’s capital of Port Moresby, has 79 employees including non-technical officers as of 2016. There are four (4) regional offices of which three (3) are based outside of Port Moresby. They are Momase Region in Lae, New Guinea Islands Region in Kokopo and Highlands Region in Goroka. 

 

There are four (4) main divisions responsible for carrying out the four (4) core functions of the ICCC which are: enforcement of competition rules, protection of consumers’ interests, price regulation, administering regulatory contracts and pricing orders for regulated entities.

 

For 2016, the total annual budget of the ICCC was PGK 12,121,415M (approximately USD 3,139,446). Out of this, the Government’s appropriation was PGK 9,587,225M (approximately USD 2,483,091) and its internal revenue was PGK 2,534,190M (approximately USD 656, 355). The ICCC makes annual budget submissions to the Government through the Department of Treasury. 

 

Sections 8 and 9 of the ICCC Act provide that the board of the ICCC consists of one full-time Commissioner/Chairman (who is also the Chief Executive Officer) and two Associate Commissioners, who are on part-time engagement. One Associate Commissioner has to be a non-resident with international expertise in economic regulatory regime. The Commissioners are appointed by the head of State in accordance with the advice of the ICCC Appointments Committee consisting of the Prime Minister, the Leader of the Opposition, the Treasury Minister, and the Governor of the Central Bank. Appointments are for five (5) year term and appointees are eligible for re-appointments. The Commissioner or an Associate Commissioner may be removed from office only by the Court on application of the Minister for Treasury (and after seeking advice of the National Executive Council), if one of a set number of circumstances as provided under Sections 15 or 16 of the ICCC Act are met (e.g. misconduct).

 

The ICCC reports to the Government on an annual basis (through the Minister for Treasury) on the projects undertaken and cases investigated. It also submits its annual plans and proposed budgets to seek funding from the Government through the Department of Treasury. 

 

Other regulators with competition powers: The National Information and Communication Authority (NICTA) has responsibility over ex ante regulation. However, the ICCC still has power to investigate anti-competitive conduct and or arrangements of the ICT firms. Besides NICTA, no other regulator has such competition powers. 

 

Competition advocacy: The ICCC has conducted at least one market or sector research in PNG in at least every five years and making recommendations for structural or policy reforms. 

 

The Government through the Department of Treasury or other relevant Departments can request the ICCC to undertake market studies into various industries and markets to assist Government with evidence-based policy options (Section 123). One such example is the review of the housing and real estate industry. The ICCC and the Government are now looking at regulating this industry.

 

When a market study identifies obstacles or restrictions to competition caused by an existing public policy, the study includes opinions and recommendations to the government to remove or reduce such obstacles or restrictions. However, the Government is not required to act on the ICCC’s recommendations. 

 

International co operation: The ICCC is yet to sign any international co operation agreement or MoU with other competition authorities for assistance on competition and consumer issues.

 

3. Investigation

 

Initiation of investigation: The ICCC may initiate investigation after receiving complaints and it also has powers to initiate its own investigations or enquiries where it believes a certain player’s conduct raises suspicions about anti-competitive practices.

 

Powers of investigation: The ICCC can compel firms under investigation for possible antitrust infringements to provide information. Sections 127, 128 and 129 of the ICCC Act respectively provide for summoning witnesses, obtaining information generally, and entry and search. 

 

Section 127 (1) states that the ICCC or an officer authorised in writing by the ICCC may-

 

• summon witnesses; and
• take evidence on oath; and
• require the production of documents, books and papers;

 

Section 128 (1) stipulates that the ICCC or an officer authorised in writing for the purposes by the ICCC may require a person-

 

• to furnish such information as the ICCC or authorised officer, as the case may be, requires; or
• to answer any question put to him, where the ICCC reasonably believes the information or answer will assist in connection with the performance of the ICCC’s functions.

 

Section 129 (1) provides that an officer of the ICCC authorised in writing for the purpose by the ICCC may, under warrant, enter/search, inspect any documents, books and papers, and inspect and take samples of any stocks of any goods.

 

Failure to comply with investigation: Under Sections 127 (3), 128 (4), and 129 (7), a person who fails, without lawful excuse, to appear in obedience to the summons, to furnish the information, to answer the question, or prevents or attempts to prevent any entry and search on any premises, is guilty of an offence. Such offences are considered as summary offences of which the maximum penalty is PGK50, 000.00 (USD 1, 295) or imprisonment for a term not exceeding six (6) months.  

 

Procedural fairness: The ICCC provides the party/parties under investigation for antitrust infringements with opportunities to consult with the ICCC with regard to significant legal, factual or procedural issues during the course of the investigation. The parties also have the right to be heard and present evidence in defence in court before the imposition of any sanctions or remedies for having committed an antitrust infringement. This right is not provided in the ICCC Act. However, we have an adversarial court system that allows for parties to defend themselves on liability and penalty.

 

Confidentiality: The ICCC has a duty not to disclose confidential information without the consent of the person who provided the information. Where information submitted has been designated as confidential, the ICCC may disclose it if it considers that the disclosure is in the public interest. 

 

4. Remedies and sanctions 

 

As mentioned above in Section 1, PNG has an adversarial system. This means that, whilst the ICCC undertakes the investigation, it must bring the cases (that raise serious competition concerns) before the National Court for adjudication. 

 

The maximum level of fines that may be imposed by the Court are set out under Section 87(2): PGK10M (approximately USD 2.793M) for corporation; and PGK500, 000 (approximately USD 139,650) for individual. Under Section 88, the infringing company should not indemnify a director, employee or agent regarding the liability to pay the pecuniary penalty or costs in defending or settling any proceedings relating to that liability. 

 

The Court may, under Section 90, order directors to be excluded from management of a company for a period of up to 5 years for restrictive trade practices, among other penalties. The ICCC is yet to institute proceedings for restrictive trade practices in its 14 years of operation.

 

The Court may also order divestiture of assets or shares for business acquisitions, among other penalties. 

 

Finally, the ICCC may obtain an injunction restraining a person from engaging in conduct that constitutes or would constitute a breach of the Act. The ICCC has also not applied for an injunction as yet in its 14 years of operation.

 

Since the establishment of the ICCC and the operation of the ICCC Act, the ICCC has only instituted one competition law case so far and that was in 2012. The case is still pending in the National Court for five (5) years now for a decision on an interlocutory application by the defendant. The substantive matter is yet to be heard. 

 

5. Appeal

 

A decision made by the National Court upon a proceeding initiated by the ICCC may be appealed to the Supreme Court of PNG, in accordance with the Courts procedure.

 

6. Private enforcement 

 

Private parties can take private legal action against a company for potential or breach of the competition law.  

Damages claims: Section 94 stipulates that a person is liable in damages for any loss or damage caused by that person engaging in conduct that constitutes a contravention of Section 50 (Contracts, Arrangements or Understandings Substantially Lessening Competition Prohibited), 51 (Covenants Substantially Lessening Competition Prohibited), 58 (Taking Advantage of Market Power) or any other market conduct rules. Section 97 prescribes that a person is liable in damages for any loss caused by him engaging in conduct that constitutes a contravention of Section 69 (Certain Acquisitions Prohibited).

 

Injunction claims: Under Section 93, the Court may grant an injunction restraining a person from engaging in conduct that constitutes a contravention of Section 50 and 51 (anti-competitive agreements), 58 (abuse of dominance) or any other market conduct rules. Section 96 stipulates that the Court may, by order, grant an injunction restraining any person from engaging in conduct that constitutes a contravention of Section 69 (merger control).