News

OfReg has issued redrafted rules on penalties for breach of anti-competitive practices law, responding to concerns by business stakeholders. The draft rules are now out for a second consultation and, when implemented, will deter anti-competitive practices in the utilities, fuel and ICT sectors, and protect consumers from high prices, poor quality and a lack of innovation.

The Office has now set out in detail the six stages that it will follow in determining penalties for breaches of the law, providing the clarity on the methodology that was requested by licensees following the initial consultation last year.

In determining penalties, in the first instance OfReg will consider the severity of the breach and the likelihood that the breach would cause harm to competition and to consumers. Adjustments will then be made in the subsequent five stages to account for relevant factors such as the duration of the breach, any aggravating or mitigating factors, deterrence, proportionality, and to account for any leniency agreements that a Party may have entered into with the Office. The maximum penalty than can be imposed for breach of anti-competitive practices law is set at $3 million.

The legislation and penalties regime ensure that the public can have confidence that there is fair competition in the sectors under OfReg’s regulatory remit.

Anti-competitive practices include abuse of dominant market position, price fixing, limiting the production of a good to artificially manipulate price, bid rigging and colluding to divide markets. These practices are harmful to consumers who pay a higher price for goods and services that are of lower quality. Anti-competitive practices also inhibit innovation which is vital to the development of efficiency and quality.

Commenting on the redrafted rules, Deputy CEO and Executive Director of ICT Mr Alee Fa’amoe said:
 

“OfReg has listened to calls for greater clarity on the methodology that the Office will use in calculating penalties for breach of anti-competitive practices and these redrafted rules address the concerns of licensees.

Penalties are an essential tool in deterring anti-competitive conduct in the sectors regulated by the Office. Consumers benefit from fair competition in markets which leads to lower prices, improved quality and investment in innovation as licensees compete for the consumers’ business. The law also protects business which suffer the consequences of attempts by their competitors to distort, restrict or prevent competition.”