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1. |
Comment
Part 1 (3) – The
regulations applies to all Licensees, and any other provider of
communications services in Nigeria. In addition to compliance with these
Regulations, Licensees remain subject to any conditions regarding
anti-competitive conduct set out in their licence.
The operator commented
that it has been in compliance with the provisions of the its License,
the Nigerian Communications Act, 2003 with respect to these provisions,
as evidenced by the fact that the operator has never been sanctioned for
any act capable of lessening competition or anti-competitive activities.
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Response
The Commission
commends the operator and requests that they continue to abide by their
license Conditions and all other relevant laws in the industry.
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2. |
Comment
Part 1 (2) (c), Part 11
(6) (a) and Section 92 (1) of the Act
For the purposes of
determining dominant licensees in the respective markets, there is need
for clear delineation of the respective markets. The operator is of the
opinion that clear delineation will create regulatory certainty and
transparency.
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Response
Regulation 20 and the
procedural provisions of Schedule 1 identify the intended methodology
for determining particular markets. These markets will be determined in
specific proceedings and on the basis of specific circumstances. It is
only in the context of specific circumstances that relevant markets can
be determined.
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3. |
Comment
There was a comment
that there is a contradiction in the definition of when a Licensee is in
Dominant position in the draft regulations and the Telecommunications
Networks interconnections regulations & therefore should be streamlined
with the draft Federal Competition Commission Bill which specifies 40%.
There is need for consistency in the development of policies and
regulations for the industry.
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Response
The Commission notes
the need to ensure consistency and we would harmonize both the
Telecommunications Networks Interconnections regulations which is
currently under review and the draft Competition Regulations before
finalizing the regulations.
While we note the need
to be guided by the draft FCC Bill which specifies 40%, it is
instructive to note that as a draft bill it is yet to be finalized and
may or may not be passed into law.
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4. |
Comment
There was a comment
that regulation 22 is in contradiction with regulation 21 and should be
expunged.
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Response
Regulations 21 & 22
are not contradictory. Regulation 22 is only applicable where two or
more licensees act jointly or collectively irrespective of common
ownership. International best practice is to provide for regulatory
interventions in situations of joint dominance as well as individual
operator dominance.
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5. |
Comment
The 30 day period
stipulated in the draft regulations within to the requesting party is very short and therefore not
feasible. The period should be extended in accordance with the
Telecommunications Network Interconnection Regulations.
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Response
While we generally
note the need to harmonize to avoid contradictory periods, it is
pertinent to note that the 30 day period referred to in regulation 9 (a)
presumes that there are no circumstances that justify or excuse the
failure to supply interconnection services and opening language of
Regulation 9 generally. Sub-section (a) should be read together with the
opening language in Regulation 9 which implies that if the parties are
reasonable in trying to conclude an interconnection agreement or other
provisioning terms, the Commission will not find that failure to supply
within 30 days was contrary to Regulation 9 (a).
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6. |
Comment
The 60 day
notification period for mergers and acquisitions under regulation 29,
Part IV is too long and capable of discouraging/diverting foreign direct
investments.
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Response
We are of the opinion
that 60 days advance notification is not unreasonable or impracticable
in the change of ownership transactions, as Commission may need more
time to review the impact of the proposed mergers and acquisitions on
the industry. The Commission will however consider and put in place an
expedited approval option where a transaction needs to be concluded in
an exceptionally short period of time.
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7. |
Comment
Section 1(6) of the
Draft FCC Bill stipulates that this Act shall be binding and applicable
to every body corporate or other agency of the Federal Govt, State Govt
or any Local Govt in so far as such corporation or other agency engages
in trade or commercial activity. By virtue of this portion of the FCC
Bill, it would appear that the FCC Bill when enacted would be binding on
the Commission.
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Response
The FCC Bill has not
been passed into law and even if it was passed, the Commission does not
engage in trade or commercial activity that would be subject to that
section.
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8. |
Comment
Section 8 (1) of the
SEC Act states that “notwithstanding anything to the contrary contained
in any other enactment, every merger, acquisition or combination between
or among companies shall be subject to the prior review and approval of
the SEC, S. 8 (4) states that nothing in this section shall apply to
transactions duly consummated pursuant to authority given by any federal
Government owned agency under any statutory provision vesting such power
in such agency.
This clearly vests the responsibility of approving any merger or
acquisition in the telecoms sector in the SEC as the
Communications Act, 2003 does not vest powers in the NCC to
approve mergers and acquisitions.
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Response
Regulatory requirement of compliance with the Act or Regulations
of two different bodies does not constitute an inconsistency.
But notifications and approvals are consistent with, and
necessary to the effective exercise of the Commission’s
regulatory powers under the Nigerian Communications Act, 2003.
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9. |
Comment
There was a comment
that in the event that the Commission is not able to resolve any
competition related issue, dispute or complaint there should be provided
in the regulations, a clear path for escalation of the matter to the
Federal High Court.
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Response
This has been taken
care of in schedule 1, paragraph 4 (d) (iv).
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10. |
Comment
There was a comment
that the Commission reserves the right to examine whether there is a
degree of interference with competition that results in some form of
“identifiable injury” to competitors or consumers under Regulation 7.
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Response
Regulation 7 specifies
with clarity that substantial lessening will be interpreted by the
Commission as requiring some identifiable injury to competitors or
consumers.
Regulation 8 gives
elucidation of factors relevant to licensee behaviour. What actually
constitutes identifiable injury will be established on the basis of
particular circumstances and in the course of particular proceedings
under the regulations.
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11. |
Comment
An operator commented
that it is commendable that the “de minimis” rule will be applied in
Regulations 8 (a) with respect to establishing the degree to which
competition is substantially lessened, an objective standard/criteria
will serve to bring much certainty in establishing the fine line between
the ‘trivial’ and the ‘substantial”
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Response
The Commission is of
the opinion that the regulations provide a sufficiently clear indication
of standards and criteria to be applied. Further elucidation will be
possible in the circumstances of particular complaints or proceedings;
and the procedural requirements of Schedule 1 will ensure that any
affected licensee has full opportunity to understand and respond to any
potential findings of conduct that is alleged to result in substantial
lessening of competition
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12. |
Comment
It was commented that
Regulation 9 (e) appears to penalize every valid and legal acquisition
of any scarce facilities and resources including numbering, frequency
spectrum and rights of way.
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Response
The regulations
provide guidance to the Commission and licensee regarding the types of
conduct that may be found to constitute substantial lessening of
competition. Acquisition of scarce resources per se which are necessary
for operators’ operations is not objectionable, rather Regulation 9(e)
deems conduct such as the pre-emptive acquisition of scarce resources to
be anti-competitive. It is the element of the pre-emption that is
objectionable.
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13. |
Comment
There was a comment
that Regulation 9 (f) is not clear to whom the communication services
are being provided and the ambit of the prices referred to. The import
of the provisions would appear to impose a price floor which the
Commission has expressly refrained from imposing on the retail market.
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Response
It is broadly accepted
economic principle that pricing goods or services below long run average
incremental costs is a strong sign of predatory pricing. The comment is
correct in assessing that regulation 9 (f) is directed against the
anti-competitive practice of predatory pricing. The Commission,
consistent with its consultative process may consult with stakeholders
before adopting any other cost standard pursuant to regulation 9 (f).
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14. |
Comment
The operator requested
that the Commission should insert a new regulation 9 (i) which provides
as follows: “withholding monies due on obligatory facilities and access
provided and services rendered”. This provision will apply where an
operator withholds the payment of a debt owed to another operator
thereby limiting the ability of the creditor-operator from carrying out
its operations as a result of lack of funds.
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Response
The procedure for
resolving such issues is contained in the Guidelines for the Procedure
for granting Approval to Disconnect Telecommunications Operators.
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15. |
Comment
The cost of providing
specific licensed services and the requisite scope of operations should
be included as criteria for determining market circumstances and
criteria when considering the issue of dominance
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Response
The special operating
circumstances referred to apply to all licensees and do not, in our
opinion, materially change the assessment of market dominance. Licensees
are to be encouraged and recognized for the investments they make in the
sector and the positive contributions they make to Nigerian society. But
we see no need to change the criteria of dominance or methodology
anticipated in the regulations to reflect these circumstances.
We also emphasize that
the Commission does not take the position that dominance in itself is
objectionable, it is only when dominance leads to anti-competitive
conduct that the Commission would exercise its regulatory power to
address the anti-competitive conduct.
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16. |
Comment
There was a comment
that reference to competing licensees appear ambiguous as it is not
clear whether this term is restricted to licensees within an identified
relevant market or all licensees e.g. would fixed network operators be
considered to be competing licensees to mobile operators or would CDMA
operators be considered competing licensees to GSM operators given the
divergence in license obligations and technical/geographic operations.
This divergence also exists within the context of the UASL regime.
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Response
Regulation 20 and
Schedule 1 describes the methodology and procedures to be applied in
identifying markets and evaluating dominance in identified
telecommunications markets.
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17. |
Comment
There was a comment
that no indication has been given with respect to the period of time
during which the listed market circumstances criteria exist or persist.
The essence of dominance must be established over a definitive period of
time.
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Response
Dominance will be
assessed in particular circumstances, which will include time elements.
Dominance does not have to persist for any particular period of time to
merit regulatory consideration. Dominance designations should, however
be re-examined from time to time and withdrawn where circumstances no
longer support a finding of dominance.
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18. |
Comment
There was a comment
that the regulatory controls and interventions often have the effect of
preventing market entry, curtailing price increments/changes and other
commercial conduct. The extent to which this distorts the clear
evaluation of market forces of supply and demand should be duly
reflected particularly with reference to regulations 19 (d), (e), 20 (b)
and (c).
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Response
We are of the opinion
that the regulation does not need the suggested changes. Regulation 19
and 20 describe a methodology for evaluating dominance in particular
telecommunications market. Commercial conduct can be affected by
regulatory intervention, but the regulations being commented on address
identification of market dominance, not conduct of a dominant licensee.
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19. |
Comment
There was a comment to
the effect that a relevant communications market must have some degree
of stability and maturity.
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Response
This is similar to the
comments regarding the need for a time duration as an element of finding
dominance in particular markets. Telecommunications markets are
increasingly characterized by rapid changes. The intention is that the
regulations remain sufficiently flexible to permit their effective
application as circumstances change and develop; and this applies to
both the initial exercise of authority by the Commission and the need to
update and reconsider exercises of authority from time to time.
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20. |
Comment
Operator was of the
opinion that a market share of over 40% is low, particularly where there
are several licensees, many of whom will be competing in the respective
relevant markets.
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Response
A 40% standard is a
common and recommended measure in economic principle in presumption of
dominance and has been adopted in a number of jurisdictions. The 40% is
a presumption that can be rebutted in particular circumstances.
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21. |
Comment
Operator requested for
a clarification under Regulation 22, as to what would amount to “acting
jointly or collectively”
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Response
It is our opinion that
the existing language of the regulation is clear in its anticipation of
some form of deliberate and coordinated behaviour
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22. |
Comment
There was comment that
in assessing whether any conduct constitutes substantial lessening of
competition under Part 11 regulation 6(d) the Commission is expected to
emphasize “the impact of the conduct on consumers, including the
availability and pricing of products and service.
Rather than merely
monitoring conducts, ex post facto, the Commission should adopt an ex
ante position that prevents the launching of products by operators when
there is clear evidence that the operator cannot sustain the
availability of the product to the consumers’ satisfaction.
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Response
The recommendation is
noted. Regulations 6, 7, 8 and 9 provide a guide on conducts deemed to
be substantial lessening of competition. The Commission will not
micro-manage the affairs of the operators but will prefer ex-post
assessment.
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23. |
Comment
There was a comment
that Part 111 14 (a) – (f) should be strengthened to introduce
microeconomic analytic measures in assessing the state of prices in the
market in order for the Commission to apply moral suasion to force
operators to transfer the benefits of economies of scale inherent in
their operations to reduce prices.
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Response
It is our opinion that
there has not been any failure of tariff regulation by the Commission
pursuant to Section 108 to 111 of the Nigerian Communications Act, 2003.
We believe that the Commission tariff regulation powers under the Act
are sufficient to protect the consumers’ welfare.
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24. |
Comment
There was a comment on
Part IV, Regulation 2, to the effect that at this stage of the
development in the Nigerian market, ‘40% of the total gross revenue of
all licensees in that market” as a measure of dominant position is high
given the level of profits, it should be reduced to 35%.
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Response
The Commission has
received various comments that the percentage should either be higher or
reduced to 35%. We reinstate that 40% is consistent with international
best practice.
The presumption of
dominance in regulation 21 is not dependent on profitability.
Profitability can result from a number of factors, including efficient
operations and economies of scale
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25. |
Comment
There was a comment
that the Commission should redraft the provisions of regulations which
provides as follows “without prejudice to any anti-competition conduct
set out in their license
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Response
Noted. The regulations
will be finalized in consistent with proper legal drafting procedure.
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26. |
Comment
Regulation 7 should be
completely rearranged.
The definition of
“trivial or de minimis” degree of interference should be included in the
regulation
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Response
Noted. The regulations
will be finalized consistent with proper legal drafting procedure.
On the definition ‘de
minis’ level of interference, it is to be interpreted in particular
circumstances.
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27. |
Comment
There was a question
as to when licensees are required to submit agreement under Regulation 9
to the Commission for review. Is it 30/60 days after its initial draft,
or is it before or after execution?
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Response
Regulation 9 is
flexible to permit the Commission to intervene and to review any
anti-competitive agreements at any time
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28. |
Comment
What constitutes
dominant position should be given a wider perspective
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Response
We are of the opinion
that the standard and criteria of dominance in regulation 19 adequately
covers all issues
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29. |
Comment
There is need for
Commission to retain experts in specialized field for dispute resolution
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Response
In addition to
developing expertise in-house the Commission has employed the services
of independent panel of Neutrals for dispute resolutions throughout the
country to ensure that there is an effective dispute resolution
mechanism in the Nigerian telecommunications industry
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30. |
Comment
There was a comment
that the word “may” should be substituted with “shall” because “shall”
is mandatory in Regulation 27.
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Response
Noted. Consistent with
standard drafting practice, the Commission will use appropriate legal
drafting phrases to give effect to the intentions of the regulations
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31. |
Comment
There was a comment
that Regulation 26 should not be under Part V which deals with “abuse of
dominance” and gives the impression that it is only operators in
dominant position that can abuse dominance, since smaller operators also
carry out anti-competitive activities against other smaller operators.
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Response
Noted. The necessary amendment will be made
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