Eye on the law

Middle East countries are helping create a level playing field for operators, but care needs to be taken when navigating the region's disparate rules and regulations, explains Agne Makauskaite.

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By  Agne Makauskaite Published  December 23, 2008

Middle East countries are helping create a level playing field for operators, but care needs to be taken when navigating the region's disparate rules and regulations, explains Agne Makauskaite.

Licensing of telecoms activities, a move towards privatisation of the incumbent operators and the introduction of competition and regulatory rules have been recognised as important developments in the MENA telecoms market during the past decade.

The next stage of this development has resulted in the introduction of general competition - or antitrust - law and policy rules in some of the region's jurisdictions.

All of the existing competition laws in the MENA countries establish a prohibition on restrictive horizontal agreements. For example cartels, collusion or similar practices are the most evident, harmful and widely prosecuted infringements of the competition rules around the world.

While still in its infancy, these rules will evolve in the future and it is important for the companies that are established in - or still aiming to break into these markets - to be aware of the fact that these laws exist.

Currently, eight out of 18 countries analysed in this article have implemented competition rules in MENA: Algeria, Egypt, Jordan, Morocco, Qatar, Saudi Arabia, Tunisia and Yemen.

These legal provisions mainly follow the EC competition law models. Draft competition laws have been prepared and are currently under consideration in Bahrain, Iran, Kuwait, Lebanon, Libya, Palestine, Syria and UAE.

Furthermore, some of the region's countries, including Bahrain and Oman, have equivalent provisions in their telecoms laws and licenses. In some jurisdictions, telecoms regulatory authorities and competition authorities have dual jurisdiction to implement provisions of the competition law in the telecoms sector, for example, Morocco, Jordan and Saudi Arabia.

Fair play

The telecoms sector, as a network economy and often being of a somewhat monopolistic nature, is susceptive to anticompetitive behaviour. Most often such practices would include:

• Unjust discrimination - discriminating against other operators within access agreements

• Service bundling and tying - forcing users or competitors to buy service bundles (in the case of users - if they cannot be replicated by the competitors)

• Anticompetitive cross subsidies - subsidising competitive services with revenues from monopoly or regulated ones

• Refusal to supply - a refusal to deal with existing/potential competitors when providing infrastructure or specifications when sharing infrastructure or when interconnecting;

• Cartels or other anticompetitive agreements - entering into exclusivity, boycott agreements, setting up prices or sharing territories.

• Vertical price (margin) squeezing - harming competitors by charging high wholesale prices compared to retail prices

• Predatory pricing - pricing below cost in order to drive competitors out of the markets.

Restrictive agreements

All of the existing competition laws in the MENA countries establish a prohibition on restrictive horizontal agreements. For example cartels, collusion or similar practices are the most evident, harmful and widely prosecuted infringements of the competition rules around the world.

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