27 June 2016

Op-ed: Consumer Protection and Competition Review needed for a fairer PNG

By Andrew Simpson, PSDI Competition Expert and Coordinator of the Consumer and Competition Framework Review Team. This article was originally published in The National on 27 June, 2016.

For 14 years now, through its regulatory, price oversight, and competition law functions, the Independent Consumer and Competition Commission has worked to protect the interests of consumers and businesses in PNG.

The business environment and consumers’ expectations have changed, however, since the ICCC was established by an Act of Parliament in 2002. The business environment is more complex, dynamic, and diverse. Consumers have gained access to more products and services from more producers and suppliers. The government recently initiated a broad review of the consumer protection and competition promotion framework to ensure the law can protect consumers from unfair dealing and enable businesses to enter new markets and grow.

The Consumer and Competition Framework Review was initiated by the Department of Treasury and supported by the Pacific Private Sector Development Initiative, an Asian Development Bank (ADB) program with funding from the Australian and New Zealand governments. For over a year the team has been meeting with consumers and business people to understand their needs and concerns. Once consultations are complete and all inputs considered, the review team will provide a set of recommendations to the Government for a modernized ICCC that responds better to the needs of individuals and the economy.

An emphasis on women as consumers and business owners is central to the review. Although women comprise a large share of consumers and a growing number of business owners, the current framework will not meet their needs and circumstances. Unless women are aware of the consumer protection and competition laws and able to rely on them, those laws will not effectively protect their interests and promote economic growth for all.

The ICCC has multiple roles affecting PNG consumers and businesses. It is responsible for product safety, price control, regulation of four state owned enterprises (SOEs), and enforcement of competition laws. The review seeks to balance the outcomes of these interconnected responsibilities. Fair treatment of consumers and small businesses is an important goal, but the legal framework must also promote economic growth and investment without imposing excessive costs on public finances or private firms.

The ICCC enforces product safety standards and certifies the accuracy of scales used by traders. These standards are critical to ensuring consumers are not exposed to unsafe products and get what they have paid for. If consumers do not have confidence in the goods they buy and the traders who sell them, they will spend less and economic growth will suffer. As PNG’s consumer protection laws are less comprehensive than those of many countries, the review is considering whether additional protections are required. These may include a ban on “misleading or deceptive” conduct in commerce, such as charging high prices at the checkout than advertised in-store, or altering a second-hand good to hide its faults.

The Commission monitors prices charged for rice, flour, and sugar, and oversees price controls for fuels, PMV, taxi fares, and water and sewerage services. It thereby reflects the government’s desire to safeguard consumers from unduly high prices for these essential goods and services. At the same time, the ICCC recognizes that prices should reflect supply and demand. The review is examining whether price monitoring and control operate effectively in these markets.

SOEs that provide ports, electricity, postal and third-party motor vehicle insurance services are regulated under agreements negotiated with the Commission every five years. Businesses and consumers alike rely on these services, and their cost, quality, and reliability are matters of widespread concern. The regulation that governs SOEs—and the obligations and expectations the government places on SOEs and their managers—shapes their charges and the services they provide. For this reason, the review is exploring SOEs’ incentives and opportunities for promoting their efficient operation.

Importantly, the Commission also enforces PNG’s competition laws, which aim to ensure that businesses compete on a level playing field. Anti-competitive conduct by firms, such as price-fixing, bid-rigging, or driving smaller rivals out of markets, ultimately increases prices for consumers and reduces new investment.

Competition laws that are clearly worded, widely known, and effectively enforced are essential to preventing such behaviour. The review is considering how the existing competition laws—and enforcement of them—can be improved. The review is also considering whether competition laws can be expressed more clearly, whether the ICCC has enough resources, and whether enforcement powers and processes are effective As the SOEs are large businesses, the review is also considering how they can compete on an equal basis with private firms.

This review will help create a fairer PNG and an economy that works better for businesses and citizens alike. We can meet this challenge by considering the views of all parts of society, as well as the needs of the economy.

The review team is currently seeking comments from businesses and members of the in PNG public on all issues regarding consumer protection and competition in PNG. For more information and the three issues papers visit www.CCFReview.info