CONSUMER JOURNAL Vol 6 2010-2011 ISSN 0331 - 6327 © Consumer Protectionin Electronic Commerce Professor Felicia Monye © Recent Amendments to Package Labelling Legislation in India: Impact on Consumer Welfare Professor Sri Ram Khanna and Dr Sevita Hanspal ® Consumer Protection and Claims Settlement in Insurance Contracts in Nigeria Okiche E. L. (Mrs) © Legal Framework for the Protection of Consumers’ Rights and Quality of Service: Nigerian Telecommunications in Focus Ariyoosu, Dauda Adeyemi © The Consumer and the Benefits of Competition Law in Nigerian Sectoral Economic Reforms 0. B. Akinola, Esq. © Re-Positioning Telecommunications Service Providers for World Class Service Delivery to Nigerian Consumers Dr. henna Chukwwe © Tipson Consumer Protection Professor Felicia Monye Edited by Felicia MonyeCONSUMER JOURNAL Vol. 6, 2010-2011 Edited by Professor Felicia Monye Faculty of Law, University of Nigeria Enugu Campus National President, Consumer Awareness Organisation, Enugu, Nigeria A Publication of Consumer Awareness Organisation No. 6 Plot 1123 ECA Moneke Crescent, Corridor Layout, Off Maryland Estate, EnuguEDITORIAL BOARD Professor Mrs. Felicia Nwanne Monye, (Editor-in-Chief) Professor of Law, Faculty of Law, University of Nigeria, Enugu Campus; National President, Consumer Awareness Organisation Hon. Justice C. C. Nweze Justice of the Court of Appeal Professor C. K. Agomo Faculty of Law University of Lagos Benedict Bakwaph Kanyip (Associate Professor), Judge, National Industrial Court, Lagos Barrister P.N. Ejimofor Law Librarian, University of Nigeria, Enugu Campus D.N. Asomugha Department of Banking and Finance. * University of Nigeria, Enugu CampusADVISORY BOARD Professor I. E. Sagay Senior Advocate of Nigeria, Legal Practitioner and Consultant, Lagos Professor Iain Ramsay Professor of law, Osgoode Hall Law School, York University, Canada. Professor E. Azinge (SAN) Nigerian Institute of Advanced Legal Studies, Abuja Professor M. O. U. Gasiokwu Dean, Faculty of Law, Delta State University Oleh Campus Oby Nwankwo (Mrs,) CIRDDOC Nigeria, Enugu Barrister Chris Aghanwa Legal Practitioner, Enugu.iv TABLE OF CONTENTS Editorial Board . Advisory Boar Editorial...... Articles Consumer Protection in Electronic Commerce Professor Felicia Monye Recent Amendments to Package Labelling Legislation in India: Impact on Consumer Welfare Professor Sri Ram Khanna and Dr Savita Hanspal Consumer Protection and Claims Settlement in Insurance Contracts in Nigeria Okiche E. L. (Mrs.) Legal Framework for the Protection of Consumers" Rights and Quality of Service: Nigerian Telecommunications in Focus Ariyoosu, Dauda Adeyemi The Consumer and the Benefits of Competition Law in Nigerian Sectoral Economic Reforms O. B. Akinola, Esq. Re-Positioning Telecommunications Service Providers for World Class Service Delivery. to Nigerian Consumers Dr. Ikenna Chukwu Tips on Consumer Protection d Professor Felicia N. Monye Appendices Appendix 1: Standards Organisation of Nigeria (SON) Appendix 2: Consumer Protection Council (CPC) Appendix 3: ° National Agency for Food and Drug stration and Control (NAFDAC} rian Communications Commission (NCC) Notes to Contributors Appendix 4: iit iv vi 29 57 80 103 117 129 132 145103 THE CONSUMER AND THE BENEFITS OF COMPETITION LAW IN THE NIGERIAN SECTORAL ECONOMIC REFORMS By 0..B. Akinola, Esq,” 1 Introduction The consumer is at the receiving end of the law against monopoly in any sector of any economy. In the same vein, antitrust laws are statutes which promote competition among market forces and players in an economy. In essence, competition is part of life, both for individuals and corporate personalities. When healthy, it stimulates growth. On the contrary, it could be counter-productive, Antitrust Laws are otherwise known as Competition Law in various jurisdictions. Free and open economy benefits consumers by ensuring lower prices, new and better products and services. Competition Law, therefore, seeks to ensure that competitors do mot agree to fix prices, rig bids or allocate consumers by dictating prices to them. In the absence of Competition Law in any jurisdiction as well as the necessary legal and institutional framework to protect competition in the economy, high prices ~ will result when competitors agree to fix prices, such prices will defeat the essence of any economic reform’ and the governed (consumers) on whom the,reforms are targeted will lose out in ~ the end, ° 2. The Concept of Antitrust Law At various times and in different jurisdictions, monopoly as an economic concept had thrived. After the civil war, the United States of America decided to promote the concept of free ~ competition by adopting a hands-off policy. During this time, “the nation was growing rapidly and fast becoming one of the Major industrial nations in the world. No one industry was large enough to drive off all its competitors from the field. However, greater growths led to the greater concentration in particular : LLB (Hons), LLM, B.L Lecturer Nigerian Law School, Augustine Nnamani : Campus, Agbani, Enugu, Enugu State, E-mail: akinobukky@ yahoo.caConsumer Journal Vol. 6, 2010-2011 102 Observed that the absence of base stations in a vicinity means that subscribers cannot be connected, and that underscores the need for installations for mobile connectivity. It is humbly submitted that whatever the arguments and regulatory overlaps, the codes, rules and regulations guiding the Operations of telecommunications services should be sustainable and environmental friendly. Both the NCC and NESREA should work out harmonised policies to ensure that all interests are accommodated for a hitch-free and safe delivery of quality telecommunications services. This can also be done by reaching a compromise and entering into a memorandum of understanding just as the Consumer Protection Council and NCC did. All concerned regulatory bodies should recognise ‘the need for collaboration in the discharge of their functions as they affect consumer. Protection in the telecommunications sector. ; pe Ibid, See Patrick Osadebamwen Telecoms Revolution and Em Sustainability’ summit Newspaper (Nigeria 21 July 2010) 20.Consumer Journal Vol. 6, 2010-2011 104 industries and the basis of free competition began to be undermined. For instance, the railroads developed at the end of the nineteenth century. The rails now link nations. Hence, shipping and the railways were the major means of commerce and transportation thus creating a bloc in which if you are not a player, you are automatically made to trade within the shores of your country. There was therefore the concentration of power in some few hands in the rail and shipping industries which were the determinants of who gets what, when and how. Monopoly became the order of the day and the law of business organisation at that time required separate Acts of the Legislature to form each corporation which was to have limited liability status. The Board of trustees managed these corporations and the trust acted as the agent of the corporation. Therefore, it obtained the same rights as the corporation without complying with the legal requirement for obtaining this immunity. The executive and judicial arms of state governments began attacking the trust form as an illegal deviation of the corporate form, finding the trusts illegally obtained limited liability. But as each state acted individually, there was no uniform approach, Concurrently, the state legislatures began modifying the laws of business organisations to avoid antitrust structures. For instance, the State of New Jersey in the United States of America was one of the first states to substantially liberalise its laws, requiring simple compliance with a statutory procedure to obtain the right of a corporation. The trusts continued unabated, and the abuses and excesses which had been rampant increased rather than diminished. Hence, states’ attempts to restrict these trust ivities became ineffective and ultimately federal action became the only feasible alternative. It was the public outcry against the above practices that led the enactment by the United States Congress of the Shermaf Act 1890 which appeared to be the final weapon necessary @ break up the conspiring trusts. *‘The Consumer and the Benefits of Competition Lew 105 ‘nthe Nigerian Sectoral Econornte ‘Reforms to curb anticompetitive Practices Which include abuse of dominant market positions, resale price maintenance, conspiratory price fixing and bid rice: Mention but a few. Antitrust lews also ensure there ts les governmental interferer he economy because the economy ought to be regulated by the Zorocs 8 Of demand which the consumer is terminens, Tt must be pointed out titrust laws do not prevent certain &S competitors cooperat ing clopmental projects which bene: Oint rese the consurier and dey Antitrust law further interstate commerce, Prohibit faise starem, obstruction of j Sovernment agencies, perjury, Og Conspiracies to defraud government or her Kvenue, hoarding of good: ang consp’ tothe detriment of the nation Ory cartel agreements dint mations 3 The Consumer and Competition Law enact Ng & Competition statute the legistature Ought to adopi 2 Public Policy towards preserving an, Promoting Competition as the Most efficient means of allocating soc: "sources. It is Benerally acceptable that a free economy Promotes the public good because goods and services must Stand the acid test of competition, 't essence, firms that acquire monopoly Ket have defeated the competition j, moting competitive market structures, It “arly that competition law does not outi Power in a given law's objective of Must be pointed out ‘a monopolies butConsumer Journal Vol. 6, 2010-2011 106 seeks to check abuse of same to dictate the economic fortunes of a sector of the economy, Competition law becomes relevant when two or more business entities conspire to monopolise a relevant market. This Conspiracy may also be in the form of restraint of trade in an unreasonable way. There is therefore the need to Prove the existence of a conspiracy, the relevant (specific) market, the specific intent to acquire monopoly power and the overt action in furtherance of conspiracy. Competition law does not therefore foreclose mergers, take- overs and acquisitions but they must be equitably regulated not to culminate in an unnecessary monopoly. In the same vein, there is the need for authorisations with Tespect to contracts, arrangements and restrictive practices lessening competition. Researchers have come to terms with the fact that bid rigging and price fixing cause much harm to the economy because one of the priorities of antitrust law is the criminal prosecution of these activities. In recent years, juries in the United States have been investigating possible violations with respect to fax papers, display materials, bread and many more products and services, The justice department has also recently been investigating and Prosecuting bid rigging in connection with Defence Department and other government procurements. In a more specific investigation’, the Antitrust Division’s criminal cases against milk and diary products uncovered evidence that diary companies have been conspiring since at least the early 1980s to rig bids to supply milk and other diary products to public school districts and other public institutions in several states. To buttress the above fact, the State of Florida Antitrust Division has filed 133 milk bid rigging cases involving 80 corporations and 84 individuals. Criminal fines totaling more than $59.8 million have been imposed on corporations and individuals and an additional 29 individuals have been sentenced to jail. *http:www feurope. antitrusvsite/org visited on 04/05/2006The Consumer and the Benefits of Competition Law 107 in the Nigerian Sectoral Economic Reforms In the Nigerian context, competition law has become very relevant in this Century due to the liberalisation and privatisation policies of the Federal Government amidst other economic reforms. Economic power had to be clivested from the _ hands of a few in the society because it discourages thrift and depresses energy. Hence, due to public lack of awareness and apathy which weaken antitrust enforcement, there is a snail speed attitude towards the Nigerian antitrust regime despite our | flamboyant economic reforms. , 4. Economic Reforms and the Reality of a Competition i Law Regime in Nigeria | In the past, almost all the major sectors of the Nigerian economy “were controlled and regulated by the major government agencies. These agencies are usually created by an Act of the National Assembly or military Decrees which require amendments before any other competitor can be allowed into * such sector. For instance the Power Sector was solely managed by the National Electtic Power Authority (NEPA), the telecommunication sector by the Nigerian Telecommunications (NITEL), the oil and gas Sector by the Nigerian National | Petroleum Company (NNPC), the Nigerian Gas Company | (NGC), the rail sector by the Nigerian Railway Corporation | (NCR), only to mention but a few. | Apart from deep blown corruption which enmeshed “wll these " government monopolies the absence of competition gave them a jae like status as they did what they liked. Hence, the opening of the major sectors of the economy to private initiatives has | drastically put these agencies on their toes to a certain extent in { the Fourth Republic, jThe introduction of Global Satellite Mobile System of {Communication (GSM) operators in the Telecommunications ‘Sector has created far above 100,000 self employed persons. {With the bidding for licence through the Bureau of Public “Enterprises (BPE) and the Nigerian Communications “Commission (NCC) gave birth to private operators such as the ‘MIN Nigeria, Celtel, Globacom Limited, Etisalat, ete. TheConsumer Journal Vol. 6, 2010-2011 108 monopolistic tendencies of MTN Nigeria was checked when it asserted in 2003 that the Per Second Billing (PSB) tariff in Nigeria was impossible until the year 2007, upon obtaining licence, Globacom another private Operator started off with the said per second billing (PSB) tariff thus forcing all other players to adjust their tariff mode and rate. Consumers thus became the better for the thriving competition witnessed in that sector, Hence, the unilateral price fixing by MTN Nigeria was checked by the competitors without government interference. Thereafter, consumers started enjoying various value-added services in the sector due to competition. Conversely, the liberalisation of the power sector is yet to bring about any meaningful change because there is no other major competitor apart from the Power Holding Com pany of Nigeria (PHCN). The Nigerian Electricity Regulatory Commission (NERC) is trying to address the dominant market Position of the Power Holding Company of Nigeria. In the aviation sector, there is still a’ very long way to go. Although some level of competition is being witnessed in the sector but a lot still has to be done through the use of antitrust Jaw to whittle down the monopolistic tendencies of the Airline operators, In the same vein, the Nigerian Electricity Regulatory Commission by virtue of section 76 of the Power Sector Reform Act 2005 is empowered to regulate the tariff methodology of the Operators in the power sector. The Commission has adopted three basic principles. in the determination of an appropriate methodology. These principles require that a regulatory methodology produces outcomes that are fair and involves the lowest possible costs and encourages investment in electricity generation that is simple, transparent and avoids excessive regulatory costs. on? Recently, the Nigerian Electricity Regulatory Commission announced to Nigerians and would be investors that its majot target was the generation of about 80,000 megawatts of , * For further details about the Commission: See www nereng.org.The Consumer and the Benefits of Competition Law 109 in the Nigerian Sectoral Economic: Reforms electricity to ensure the stability of power in the country.’ This feat it is submitted would still be an aspiration in the air without the enactment of a competition law. The ma tjor reason is because anticompetitive behaviour such as predatory Pricing might frustrate the whole process, Predatory Pricing simply means that the dominant fir.a simply charges very low Prices for the period Of time necessary to force out competitors Upon the exit of the competitors, the dominant firm is able to charge a monopolist Price and rover whatever losses it may have incurred in the Period of its predatory pricing* The recent loss of mo African Satellite Television Broadcast firm who has in times Past held exclusive right to broadcast English Premier League (EPL) to all viewers in Nigeria is a POsitive step towards Opening up the Sports Sector to competitors so as to encourage growth in the sport industry ‘The Direct Satellite Television (DSTV) recently lost the bid for the exclu: ight to a Nigerian Company, Entertainment Highway. Hence, Multi-Choice lost the bid Process to Entertainment Highway and this has put paid to the former’s dominance of the industry in Nigeria as far as the broadcast of {he famous English Premiership Football League is concerned. These football matches can now be aired on Hi Sports Channels, and Hi TV Platform. The Federal Government of Nigeria had in August 2006 moved to end the monopolistic/exclucive right of DSTV on EPL when the National Broadcasting Commission initiated discussions with the FA Premier League To ensure the Maas, Of this move, the National Broadcasting Commission QNBC) had to set up a “Broadcast Territory” for the acquisition of FA Premier League Rights.$ SS {THE GUARDIAN Newspapers of Tuesday, uly 3, 2007 at page 3 Article by Edo Ukpong. Chairman Competition Law Committee Section of Business Law (SBL) of the N igerian Bar Association, THE GUARDIAN, Tuesday July 24, 2007, Page 80 THE GUARDIAN ‘Tuesday June 6, 2006 in a ranne -: Law as a terneay in 3Consumer Journal Vol. 6, 2010-2011 10 As far as these sectoral reforms are concemed, the enactment of competition legislation would be a timeous act on the part of the National Assembly. According to the Executive Secretary of the Rules Watch: +» For our policy makers to continue to ignore this law is a dangerous invitation to a Perpetual state of economic non. recovery. ‘To embrace it detoxifies the system and opens it up to healthy rivalry for the private Sector’Players with all the attendant goodies... Practitioners services. In the same vein, Mr. Bunmi Oni® asserts that the recent Consolidation in the banking industry is Yet to have the scale to Compete as it will take advantage of the Twenty-Five Billion Naira barrier to entry of new banks. He asserts further that competition policy and legislation must embrace both ‘ Ibid { ‘The Urgent Need for Antirust Laws in Nigeria” wiw.nass.ng.com Sommer Managing Director Cadbury Nigeria Pie and Chairman National Steering Committee on Competition and Arivnet ReformsConsumer Journal Vol, 6, 2010-2011 112 e protect consumers and tax payers. d. promote a balanced development of the National economy. e. prohibit restrictive contracts and business practices that lessen competition regulate the abyse of dominant positions of market power and anticompetitive business 09 establish the Federal Competition Commission (FCC) for the effective implementation and enforcement of the law and other matters connected therewi It is apposite to note that Nigeria is already on the voyage of the legal framework for competition law. What is rather worrisome is the slow pace of passage or a near abandonment of this very vital law since September, 2002 when the dra Bill was presented before both legislative Houses of the National Assembly. Furthermore, the ten parts the Bill illuminate the various concepts and principles embedded in competition law across Jurisdictions such as the U.S.A. and the UK to mention but few. The paris are arranged as follows: Part I: The Federal Competition Con Part Ii:General Provisions Contracts, Arrangements and Restrictive Pract Substantially Lessening Competition Abuse of Dominant Position of Market Power Mergers, Takeovers and Acquisitions Regulation of Prices eS, Part Vil: Authorisations, Clearances and Exemptions Part Vii: Provisions relating to Regulated Ladustries Part IX: Enforcement, Remedies, and Appeals. Part X: Miscellaneous Provisions; and Schedule,The Consumer and the Benefits of Competition Law 113 in the Nigerian Sectoral Economic Reforms The Bill deals extensively on laws relating to restraint of trade, Sperations of companies .and business namely intellectual Property rights as an exemption and other transactions not Part IIT of the Bill prohibits and itemises some arrangements which substantially lessen competition in a market to include - i) Testriction of output or production; ii) allocation of a territory or division of the marker; ii) involvement in collusive tendering; or ¥) denial of access to markets in general and to a factor of Production or raw material in particular.!! Another major principle of Competition Law for which Provision is made in the FCC Bill”? is the Prevention of abuse of bulldozing smaller companies and competitors. Other acts or Practices highlighted in the Bill"? as constituting abuse of dominant market position include: a restricting the entry of any person into that market; b. restricting the entry of any person in competition with the dominant firm into any other marker; ©. preventing or deterring any person from engaging in competitive conduct in that market, or d. eliminating any person from that market. See ese | Section 17 of the FCB 2002 ty Sub-Section 4 of Sc 18 of the FCC Bill 2002 fp Sections 25 —28 of the FCC Bill 2002 © Sectior 26 of the FCC Bitl 2002i i Consumer Journat Vol. 6, 2010-2011 14 The Bill states further that no person shall engage in the practice of resale price maintenance, '4 As regards, mergers, takeovers and acquisitions, no person shall acquire assets of a business or shares of a company or any of the company’s undertakings, if as a result of the acquisition; that person or another person associated or affiliated with that person will likely strengthen abuse of dominant market position.” Another unique provision of the Bill is that section 61 vests jurisdiction to hear and determine violations of the Bill in the Federal High Court.'* The Enforcement of the Bill is vested in the Federal Competition Commission (FCC) which is created to be a body corporate, The powers and functions of the FCC are well detailed in the Bill."” 6. Observations This work deals on a branch of law which is already a grown field across major parts of the globe starting with the operation of the common law: Jurisdictions such as the European Union have since entered into Treaty’ provisions to strengthen inter State commerce and economic development of member nations. The United States of America has a series of enactments in this Tespect a8 well as the United Kingdom, Canada, Germany to mention but a few.!? ——_ Sub-Section (1) of Se 26 of FCC Section 22 Supra Part ix Supra Ibid. An is Aticle 85 ofthe European Economic Community EEC Treaty USA. enacts the Sherman 1890, the Dayton Act 1914, The Federal Trade GUmmission Act 1914, The Rotinson-Patrean Act 1936, U.K Operates thrcosh Re Common law doctrines of Restraint of wade, Fair Trading Act 1973, See Restrictive Trade Practices Act 1976, The Resale practices Act 1976 ard te Competition Act 1980; The Canadian Competition Act 1994; The Genrwe Act 1999 (as amended)The Consumer and the Benefits of Competition Law 15 in the Nigerian Sectoral Economie Reforms Furthermore, some African countries have since enacted their Competition laws e.g. South Africa”, Ghana, Zambia and Kenya but Nigeria is yet to do so. Another unique observation is that cases of price discrimination, hoarding, price-fixing, bid rigging, predetory pricing, conspiratory pricing, etc are rarely reported in Nigeria to relevant agencies but all these practices are prevalent in our economic life. It should be noted that the liberalisation of some sectors such as the oil and gas remains a myth without a competition law regime because both co-exist in real economic indices There is therefore the need for an enforcement body through the passage of the Federal Competition Commission Bill, 2002. 7. Recommendations Firstly, it is strongly recommended. that the-National Assembly should expedite action on the passage of the Competition Bill. Secondly, the Federal Competition Commission should be empowered to prosecute criminal violations of the Competition Law as it obtains in the Economic and Financial Crimes Commission (EFCC) and other governmental agencies that enjoy both investigative and prosecutorial powers. An amendment is therefore recommended to section 63 of the Foo Bill 2002. . Thirdly, persons who know or suspect that competitors, Suppliers or employers are violating the Competition Law should be encouraged to report to the Commission. The existence and functions of the Commission should be Publicised to create awareness. Furthermore, due to the extent of damage bid rigging, price ' fixing and conspiratory price fixing have done to the Nigerian pe Competition Act 1998 operates in South Africa, See also www.global ‘ompetitionforum org/Africa.himConsumer Journal Vol. 6, 2010-2011 116 economy, criminal conspiracies should be checked through the establishment of internal checks and control in Tenders and Bids to avoid bid In addition, there ought to be criminal responsibility on the part of employees for complicity, when such employees conspire with their employers to indulge in anticompetitive practices. The Houses of Assembly of various States should put in place the necessary machinery to enact their own Competition Law based on their local resources and peculiarities. 8. Conclusion Sectoral reforms of some Federal agencies have been undertaken without a competition regime in place. Many jurisdictions aforementioned enacted their competition laws before liberalising their various economies. It, therefore, amounts to placing the cart before the horse for the Nigerian government to embark on liberalisation devoid of a Competition Law. The danger of a-reform that transfers public sector monopoly to private sector monopoly cannot. be overemphasised. ae