Implementation And Enforcement Of Domestic Competition Laws

Author:Damien Geradin
Profession:Professor of Law at the University of Liège and Director of the Global Competion Centre

Implementation and Enforcement in the Candidate Countries. Implementation and Enforcement in Israel. Implementation and Enforcement in the Maghreb Countries. Resource austerity. Inability to attract sufficient expertise. Weak professional associations and consumer groups. Deficient judicial systems. Inadequate powers. Strong opposition to reforms. Insufficient access to business data. Boxes.


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Evaluating the quality of implementation and enforcement in the Mediterranean Partners (MPs) is no easy task. The decisions adopted by the competition authorities of the MPs are generally not published, and many of these authorities are not bound to produce annual reports accessible to the public. The analysis that follows is thus based on data gathered from European Commission reports and from the specialized literature.

Implementation and Enforcement in the Candidate Countries

Competition law enforcement appears reasonably satisfactory in Turkey, Malta, and Cyprus. For instance, in 2000, the Turkish Competition Authority adopted 262 decisions relating to anticompetitive agreements and abuses of a dominant position, 101 decisions relating to mergers and acquisitions, and 23 decisions granting exemptions or negative clearances (Mumcu and Zengibonuz 2002). During 2001, Malta's Office of Fair Competition adopted 21 decisions (10 on restrictive agreements, 9 on abuses of a dominant position, and 2 on mergers). 157 The level of enforcement of competition rules was more modest in Cyprus than in the two prior countries in 2001, but it seems that Cyprus enhanced its capacity of control in 2002. 158

No final conclusion can, however, be drawn from these figures, since the nature of the decisions (inadmissibility, exemption, or sanction), and their respective proportion must also be considered to evaluate the effectiveness of the competition law regimes. What is encouraging is that these authorities have ruled on some major cases. Such cases are important as they contribute to raise the profile of the authorities and allow them to intervene in major sectors of the economy. For instance, the OECD's 2001 competition policy country report for Turkey indicates that the Turkish Competition Authority decided cases in a variety of key economic sectors, including energy, telecommunications, vehicle distribution, consumer finance and banking services (OECD 2002a).

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The recent ruling made by the Turkish Competition Authority in the mobile telephone sector is a good case to show the importance of certain decisions taken. In May 2003, the Turkish Competition Authority imposed administrative fines on Turkcell and Telsim amounting to 1 percent of their net sales for the year 2001, for abusing their dominant position in the telecommunications market by refusing to comply with their obligation to make roaming agreements with Aria, the third leading Turkish mobile operator. Aria, the GSM operator owned by IS Bank and Telecom Italia Mobile (IS-TIM), had filed a complaint with the Competition Authority on the grounds that Turkcell and Telsim did not execute a national roaming agreement with Aria and thus abused their dominant position in the market. The Competition Authority ruled that Turk- cell and Telsim were in a dominant position in the telecommunications market and their rejection of executing a national roaming agreement with IS-TIM was not based on objective grounds and constituted an abuse of a dominant position. The amount of the fine on both operators was nearly TL 30 trillion (US$21.5 million). This penalty amount was the highest fine imposed by the Competition Authority since its creation in 1997.
Source: Turkish Competition Authority, available at
Implementation and Enforcement in Israel

The 2001 annual report of the Israeli Antitrust Authority (IAA) shows a relatively high degree of enforcement activity. 159 The IAA was involved in 19 civil litigation procedures before the Antitrust Tribunal. 160 It also initiated a range of criminal cases where record fines were imposed on the participants of a cartel in the insurance sector and record imprisonment terms of up to nine months in jail for floor tile cartel members. 161 During 2001, the IAA also examined a hundred and sixty merger notifications among which 83 percent were approved, 15 percent were approved with conditions, and 2 percent were blocked. 162 Finally, the IAA played an important role in promoting pro-competitive reforms in a variety of fields, such as, for instance, telecommunications, and natural gases.

Implementation and Enforcement in the Maghreb Countries

The analysis of the implementation and enforcement of competition rules in the Maghreb countries is of considerable interest for two main reasons. First, unlike the candidate MPs, the Maghreb countries have not received substantial financial and technical assistance from the EC in the area of competition law. The degree of enforcement of competition law in these countries largely reflects what they have been able to achieve on their own. Second, absent significant support from the EC, the enforcement performance of these countries is likely to reflect what other countries that have recently adopted or been planning to adopt a competition law probably will be able to achieve (Jordan and Egypt, for example). As the Moroccan competition authority is not yet operative, and there is only limited data on Algeria, the analysis that follows focuses on the Tunisian case. 163

During its first ten years of activity (1992-2001), the Tunisia Competition Council was seized 40 times by the various organizations that are entitled to take cases to the Council (see Table 8.2).

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The Jerusalem District Court (i.e. the court having jurisdiction for criminal antitrust proceedings) convicted two insurance companies that took part in a cartel that included the leading insurance companies in Israel. The companies had agreed to coordinate rates, restrict and coordinate discounts, coordinate reduction of policy components and insurance liability and allocated markets in the automobile and housing insurance branches. The action was initiated in 1997, concerning arrangements performed in 1991-1993. Six companies and their directors were convicted within plea bargains in 1997. Two remaining companies that did not reach such arrangement were convicted in December 2001. The sentence given at the beginning of 2002 imposed record fines of 12 Million NIS (New Israeli Shekels, equal to US$2.73 Million) and 9.5 Million NIS (US$2.16 Million) for the companies, as well as individual imprisonment (to be served as public work) and fines for the directors. The Court observed that it refrained from handing down harsher punishment (actual prison terms for the directors involved) due to the fact that at the time the violations took place the Antitrust Law was not sufficiently enforced (the enforcement level changed substantially after the Israeli Antitrust Authority was established in 1994).
Sources: Annual Report on Competition Policy of the Israeli Antitrust Authority, 2001 and OECD, Competition Law and Policy, 2001-2002 Annual Reports.


Sector Actions Taken for the Promotion of Competition in 2001
Credit and Banking The IAA was involved in the legislative proceedings of the Credit Report Act, which is designed to provide for the gathering of information on the credit history of private borrowers and for the establishment of credit data agencies. The IAA believed that the provision of such information and data is essential for the improvement of competition for households over financial services. The banking and credit market in Israel is indeed very concentrated in the household segment. In addition, the inaccessibility of information on credit risks plays as high barriers to entry. IAA representatives therefore presented their views before the government and the parliamentary committees that prepared the law.
Communications The IAA presented its position towards the Ministry of Communications (which is entrusted with the regulation of interconnection charges) on interconnection charges between cellular networks regarding the need to establish a maximum rate lower than that currently charged. The IAA recommended a significant decrease in the regulated interconnection price, due to concern of mobile termination rates being substantially in excess of their cost. The IAA was involved in the drafting of the 2001 legislation amending the Communication Law. It presented before parliamentary committees its position on the competition aspects of telecommunications issues, such as the opening communications networks for use of competitors (unbundling of the local loop and other access arrangements), revoking exclusive concessions, cross ownership limitations of infrastructure owners in content providers, and licensing policy.
Energy The IAA was involved

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