10 May 2014

What is PSDI doing in Competition policy in the Cook Islands?

The Cook Islands has a very narrow economic base. Often, there is only a single supplier of goods and services (e.g., of shipping services between the Cook Islands and New Zealand), even when the market is capable of supporting several competing suppliers. Concentration of ownership, especially in wholesale and retail trade, is another concern.

Given the size of the population and the technical characteristics of production, supply of many services tends to be a natural monopoly and it is, therefore, hard to directly introduce competition. For example, the major power utility company provides 90% of power supply in the Cook Islands. Telecom Cook Islands (TCI) has also been the sole provider of telephony services in the country. However, concern that outside competitors might enter the market caused TCI to slash the cost of overseas calls by half and increase the range of services it offered. Despite this, there have been many complaints regarding the high price and low speed of internet services as well as TCI’s business practices.
Significant uncertainty surrounds the implementation of competition law in the Cook Islands. It has no stand-alone competition law and has made significant use of price controls, which are often antithetical to effective competition policy. PSDI has provided assistance in the analysis of competition issues in the Cook Islands and, in the future, will help with developing a coherent competition framework.