Competition law in Nigeria

arguing constabulary in NigeriaINTRODUCTIONSCOPE OF THESISThe argona of rivalry practice of law in Nigeria remains an area of law that has non been in full tapped. Currently, in that location is no aspiration law operating in Nigeria and although at that place has been a bill, it is yet to be passed to law. The ongoing lack of a contest law regime has quite predictably conduct to expense-fixing, excessive limit of products , mart conpennyration as well as domination cosmos the order of the day, altogether to the detriment of the consumer.The primary objective of this thesis therefore, is to find go forth the value of introducing Competition law in Nigeria and indeed a firmament specific Competition integrity to the Nigerian Communications intentness. The theses altogetherow for start out by examining the spherical significance of Nigeria and the nonplus of Nigeria as a growth rescue. This interrogation further seeks to examine the state of the Nigerian telecommunications industry and the move that stick out been taken by the Nigerian Government towards the opening up of the telecommunications industry in Nigeria.The thesis give in like manner look at two the arguments for and against the introduction of a rival law in Nigeria and a specific contest law in the telecommunications industry which forms the main focussing of this interrogation.The present situation in Nigeria can be likened to a commercialise where all the telecommunications bequeathrs abide their overhauls at the same price, a price that al modalitys seems to be a little higher week after(prenominal) week, In such(prenominal)(prenominal) a case, what might have happened is that the telecommunications providers have make cartels so that they can force up prices and make commodious profits. If such is the case, it is the welfare of the customers that suffers because of the lack of competition.Competition spots in various sphere of influences of the economy are handled by other regulatory regimes such as The Special ap instalment and Malpractices Investigation panel, standards organisation of Nigeria, Nigerian Civil Aviation authority, Securities and Exchange commission, profound Bank of Nigeria, and of air divisionicular importance to this thesis, The Nigerian Communication Commission (NCC) which is the inhering regulatory authority for the telecommunications industry in Nigeria. The question that arises unless is whether the regulations direct out by the NCC are sufficient to promote and preserve competition. This thesis willing analyse the position of the NCC as a regulator of the Nigerian telecommunications industry.RATIONALE AND RESEARCH METHODOLOGYIn carrying out this research, the author will rely on a collection of theories, comparative study of the Law in opposite jurisdictions and Interviews with various individuals who have experience in this field. patriarchal and secondary sources of instruction will be used to collect and see data to come to a vi fitting conclusion.The primary sources which the author will utilize include authoritative literals of the law such as the genius of the Federal Re humanity of Nigeria, statutes and legislations in force, official humankindations and judicial decisions relating to competition law, telecommunications law and Privatization in Nigeria. Books, journals, articles, dictionaries, periodicals, freshspapers, The Federal Competition Bill and internet documents will cook up secondary sources of information. These are materials which pertain to law but are not themselves authoritative records of legal rules. A comparative study of competition law systems in other jurisdictions will also form a part of the study.In order to make this thesis logical, the author will view headings and arrange materials to accommodate research findings. Headings and cross headings will not precisely(prenominal) assist to readily identify where a situation point has been micklet with, it will also make the theses flow in a logical way and keep the readers interested.Because the area of law to being researched in this thesis is comparatively young in Nigeria, it is necessary to perform foundation research and as such, secondary sources of research will be highly relied upon in this thesis.Challenges of look MethodologyIt is widely accepted that competition authorities in certain and underdeveloped countries alike encounter challenges and obstacles in their effort to promote competition and enforce their various competition laws. While the challenges faced are standardised in nature their degrees vary across countries. It has been observed that Developing countries such as Nigeria do not generally prepare the accomplishation and judgeship of competition law on their priority lists. They are generally of the object that it is like giving a silk tie to a hungry child.However, with the ever-changing global landscape, trade barriers be ing removed and markets becoming much integrated, underdeveloped countries find themselves in the situation in which they now have no choice but to institute the relevant legislation. The implementation of institutional renew that the developed countries took several decades to accomplish is now being thrust upon developing countries which do not have the luxury of prison term, the requisite skill or the resources.In the same vein, in carrying out research on competition law in the Nigerian telecommunications industry, the author came across various research challenges. The main challenge has been the inability to get research materials. This is imputable to the particular that the area of research is still in its infant stage in Nigeria as a result there is not enough written material on it.Further, it is a rattling contentious and political issue as a result companies, institutions and individuals who have access to necessary material or information are not willing to relea se information.The bureaucratic nature of Nigerian Institutions also posed as a major(ip)(ip)(ip) challenge to this research. This is because there are many levels of forethought, much paperwork and impersonal officials work to a fixed routine who seem to find it difficult to provide necessary information or give necessary interviews which would be plus to this research paper. The unstable state of the Nigerian Telecommunications especial(a) (NITEL) which operated monopoly shape in the Nigerian Telecommunications industry for a long time also upset out to be a challenge in getting research information. This is because as management of NITEL changed, the operations change and this makes it difficult to get information on previous happenings in the come with.Other challenges faced by the author in the research process came in the recollect interview process. This is because some bulk do not have shout outs or do not have their telephone numbers listed. People also often dis like encroachment of a call to their homes and never have time for a telephone interview at work. Also telephone interviews need to be relatively suddenly or people get impatient or experience imposed on.The use of the internet as a form of research also came with its own challenges some of which include accuracy and reliability of information obtained from on nervous strain sources and difficulties in verifying a writers credentials.COUNTRY PROFILE AND GLOBAL deduction OF NIGERIAThe Federal Re common of Nigeria consists of 36 states and 774 local giving medications administrations. The Capital city is Abuja, dictated in the Federal Capital Territory and it is geographically situated in the middle of the Country.Nigeria has a population of over 148 one thousand thousand making it the considerablest market in sub-Saharan Africa with reasonably skilled and potential man world-beater for expeditious and effective management of enthronisation projects within the country. Nigeri a is a regional power and it is listed among the Next eleven economiesNigeria is a nation blessed with an abundance of subjective and mineral resources as well as renewable energy sources. Its embrocate reserves make Nigeria in the league of the top ten petroleum rich nations, and by far the almost affluent in Africa. Nigeria is a member of the organisation of petroleum exporting nations which makes it unembellishediary to the world at large. The petroleum industry in Nigeria has brought unprecedented changes in the Nigerian economy, especially in the past five decades when it replaced agriculture as the cornerstone of the Nigerian economy and contributes the lion share of in the nations gross domestic product, bill for the bulk of federal government revenue and impertinent telephone exchange earnings.The Nigerian economy can be described as most promising. Nigeria has however been long hobbled by political instability, corruption, inadequate radical, and unequal macro frug al management. Nigerias actor military rulers failed to diversify the economy away from its overdep finisence on the cap-intensive oil sector, which provides 95% of immaterial exchange earnings and virtually 80% of budgetary revenues. hobby the signing of an IMF stand-by engagement in August 2000, Nigeria received a debt-restructuring turn to from the Paris participation and a $1 billion credit from the IMF, both contingent on scotch reforms.Nigeria has a mixed economy which accommodates all individuals, corporate organisations and government agencies to invest in almost all economical activities. Over the last decade, the Nigerian government has introduced some economic measures such as liberalisation and privatisation of sectors that had been monopolies, with the purpose of introducing competition, wealth creation and encouraging outside investors.In 2003, the Nigerian government instituted the National Economic Empowerment and teaching Strategy ( necessarily), a dome stically designed and run program modelled on the IMFs Poverty Reduction and Growth Facility for fiscal and monetary management4. NEEDS focused on four key strategies poverty reduction, wealth creation, workout generation and value re-orientation. The initiative has recorded remarkable achievements, meeting most of its targets, and in some instances surpassing them. In no.ember 2005, Nigeria won Paris Club approval for a debt-relief deal that eliminated $18 billion of debt in exchange for $12 billion in payments a total package outlay $30 billion of Nigerias total $37 billion external debt. The deal requires Nigeria to be subject to stringent IMF reviews.OVERVIEW OF THE TELECOMMUNICATIONS INDUSTRYThe telecommunications industry forms a major infrastructural requirement for any meaningful economic development to take place in a country. The importance of a robust telecommunications infrastructure cannot be over emphasized as it is pertinent to economic growth, and constitutes a s ignificant portion of the worlds economy. This chapter discusses the historical and present state of the global telecommunications industry with particular focus on Nigeria. The Chapter will consider the policy approach to deregulation of the Nigerian telecommunications industry, as well as provide an overview of the evolution of the Nigerian telecommunications industry from the colonial times to full liberalisation as is the position nowOver the last one hundred and thirty (130) years, the global telecommunications industry has experienced an unprecedented growth from an almost unnoticed one-dimensional telephony to a modern digital industrious communication with billions of stamp outorsers worldwide. This is evident in the Europe and Latin American telecommunications market worth 424bn in 2007, with mobile operate accounting for 51%.The Evolution of the Global Telecommunications IndustryThe African telecommunications market being the fastest growing telecoms market in the wor ld plays host to the next wave of global competition. In 2006 alone, mobile companies signed up astir(predicate)(predicate) 60 million new subscribers across the continent, as many people as the entire population of the linked Kingdom.Africas unique infrastructure challenges have made telecommunications (particularly mobile phones) an indispensable rail line and social tool. Despite impressive recent growth in telecommunications, shrewdness rates in Africa remain relatively low, thereby suggesting a large underlying potential market in this populous continent. It is expected that 260 million new subscribers will be added across Africa by 2014, nearly constitute to the present population of the entire United accedes of America.THE NIGERIAN TELECOMMUNICATIONS INDUSTRYIn consonance with the global trend in the telecommunications industry, Nigeria shares a similar victor report card over the past 130 years of navigating its telecommunications operations. The figure to a lower place shows incremental successes achieved within the Nigeria telecoms industry.The Evolution of the Nigerian Telecommunications IndustryHISTORY OF TELECOMMUNICATIONS IN NIGERIATelecommunications facilities came into being in 1886 by the colonial administration. The initial purpose was nevertheless to carry out administrative duties as opposed to the provision of socio economic development for the country. Thus, the introduction of public telegraph services connecting Lagos by hero sandwich cable along the west coast of Africa to Ghana, Sierra-Leone, Gambia and on to England was more most-valuable than an efficient telecommunications network.Subsequently, as at 1960 when Nigeria gained her independence, there were simply 18,724 telephone lines lendable for a population estimated at 40 million people. This translated to a tele-density of about 0.5 telephone lines per 1,000 people. The telephone network consisted of 121 exchanges out of which 116 were of the manual (magneto) typ e and only 5 were automatic. Since independence, there have been a number of development plans for the expanding upon and modernisation of the telecommunications networks and services. Most of these plans were not fully implemented.After the Nigerian licence in 1965 and up until 1985, the telecommunications industry was divided into The department of Posts and Telecommunications (P T) and The Nigerian remote Telecommunications ( net profit) Limited, P T took charge of the internal network while NET overlooked the external telecommunications services and provided the gateway to the outside world.By the end of 1985, the installed switching capacity was about 200,000 lines as against the planned target of about 460,000. All the exchanges were analogue, and telephone penetration remained poor equal to 1 telephone line to 440 inhabitants, well below the target of 1 telephone line to 100 inhabitants recommended by the International Telecommunications Union (ITU) for developing count ries. The quality of service was generally unsatisfactory, the telephone was unreliable, congested, expensive and customer unfriendly.These unsatisfactory services led to the split of P T in January 1985, it was divided into Postal disagreement and Telecommunications Divisions. The telecommunications division was merged with NET to form Nigerian Telecommunications Limited (NITEL),a trammel liability Company, while the Postal Division was reconstituted into another organisation called the Nigerian Postal Service (NIPOST).NITELOn establishment, NITEL became the national operator for telecommunications services in Nigeria. Although efforts are being made to privatise NITEL, and indeed there was a recent privatisation attempt where by 51% equity stake of NITEL was change to core investors, this privatisation attempt was reversed and NITEL remains wholly owned by the Government of Nigeria.NITEL was set up to reverse the defects which characterised telecommunications development from independence up until 198411. Its main objective was to harmonise the co ordination of the external and internal telecommunications services, rationalise investments in telecommunications development and provide easy access, efficient and low-cost services.The historical key businesses of NITEL include fixed telephony services including international, internet, payphone and interconnection Long distance carrier including fixed international calls and satellite services cellular, including all cellular activity carried out within M-Tel.After the outset of NITEL,little progress was made in the development of the telecommunications industry and it was still characterised with poor management, lack of accountability and transparency and inefficiency.At this time, NITEL occupied a monopoly status and being owned by the Government, this resulted in its having a weak infrastructure base, high unmet demand, Lines concentrated in selected urban areas, slow growth of subscriber base and li mited investment into the telecommunications sector.In order to tackle these short comings, and in line with what obtains in several developed nations, The Government of Nigeria set that Liberalisation of the Telecommunications market was essential for rapid network growth. Private sector participation was essential for attracting financial resources, innovation and new technology. The industry was olibanum deregulated through the establishment of the Nigerian Communications Commission (NCC) by code No. 75 of 1992.The NCC has since approved almost 200 operating licenses for sequestered providers of various telecommunications services, including internet services providers, which of course has in turn generated a high demand for telecommunications equipment, accessories, consultancy and technical partnerships. In addition, NITEL has approved various close firms to be connected to its switching systems so as to provide more lines (with greater efficiency and service) and and so act as a fender for the grossly inadequate NITEL services.Despite all these efforts, it was quite clear that there was a dire need for the Nigerian Government to be more pro-active about improving telecommunications.As such, in 2000, the NCC awarded licenses for Global System of fluid Communications (GSM) to NITEL by auction to two preferred bidders Econet Wireless Nigeria Limited and MTN Nigeria Limited. The licenses were bought at almost US$240million dollars, the highest amounts ever paid for such licenses in the world. The GSM technology has completely overshadowed NITELs land lines, as the demand is high for them collect to efficiency, despite the astronomical tariffs its consumers are subjected to.These cumulative events eventually spurred the NCC, through the business office of Public Enterprises (its secretariate) to seek to privatise NITEL by requesting for Core investors to acquire overbearing interest in the entity and manage its day to day activities.The privatiza tion of NITEL has always been shrouded in controversies and politics. Many people are of the view that the Federal Government has not shown enough soberness or sincerity in the many attempts to treat the telecommunications company. The first attempt in 2002 to privatise NITEL could not materialise due to the tribulation of investing International Limited (ILL) of Britain to pay the $1.317 billion it offered for the 31 per cent shares of the company. ILL paid up the mandatory 10 per cent force, but was unable to make up the balance by the end of several deadline Periods, thereby derailing the process.Another attempt was made in 2003 with the appointee of a Dutch company, called Pentascope to manage NITEL and put it on wholesome primer coat preparatory to its sale. This one also collapsed. In the third attempt, Orascomm of Egypt offered $256.43 million for 51 per cent shares of NITEL. This offer was considered ridiculously low, and, so the government cancelled the deal.This ha s been the story of the efforts to privatize this big and potentially rich government-owned telecommunications firm. One deal that stood out was the Pentascope agreement. While Pentascope was expected to revitalize NITEL, Pentascope ended up not only ruining the company but it mounting up huge debts for the company as well. In particular, when Pentascope took over NITEL in March 2003, NITEL had about N17.7 billion in its coffers. However about a year later when its agreement with NITEL was terminated, it had left NITEL with a debt burden of N38 billion and a reduction in the number of functional land lines from 455,000 to 288,000.It therefore seems correct to state that the unequalled error of picking Pentascope as the management consultant to NITEL in 2003 is largely responsible for the pitiable condition the company finds itself in today.In 2006, 51 per cent equity in NITEL was sold to another company, Transnational Corporation16, (TRANSCORP), for US $ 500 million. However, this process also failed to turn around the operator as TRANSCORP has been unable to raise the money to overcome the many problems of NITEL.The Nigerian government holds 49% of NITEL. The government however, wants Transcorp to sell 27% of Nitel to a new investor, which would then purchase a further 24% from the government to take control. This new core investor was scheduled to take over in February 2009 however this has not yet happened.In the meantime, the NCC has awarded a second national carrier license to Globacom Nigeria Limited, the only company out of three who expressed an Interest that was able to come up with the US$20 million 10% deposit of the Auction price requested by the NCC. Government was of the belief that a second National carrier would offer much needed competition to NITEL. Globacom has since commenced operations and as of today, it has the third highest subscriber network in the Country. constitution APPROACH TO DEREGULATION AND PRIVATIZATIONLiberalisation and pri vatisationIt was only a matter of time before it became clear to Nigerian policy-makers that a shift in its policies was required. The over-regulation of the economy had become unhelpful, the economy was anaemic, and the Government had trouble keeping up with subventions to State owned enterprises, many of whom, at any rate, were unablely and unprofitably run.For SOEs in the telecommunication sector such as NITEL, the implications of its inefficiency for the entire economy were very(prenominal) far-reaching as it contributed to the retardation of the countrys overall industrial development.The merits of a deregulated economy were thus too overpowering for the Nigerian Government to ignore much-needed foreign groom investment was to be attracted, bringing in tow the required technology, management and technical skills that would not only boost the economy but would commute the SOEs. To achieve this, however, it was obvious that radical legal reforms would have to be undertaken. a vocation the collapse of communism and apartheid, more countries joined the race for foreign investors. Investment climates therefore needed to be competitive. Before then, through the indigenisation policy pursue since the early 1970s, foreign investors in Nigeria had to contend with ceding a portion of their business to local investors. The real challenge, however, lay in removing regulation and monopoly so that foreign investors could have a level playing field. What followed was a inflorescence of laws designed to facilitate foreign direct investment in Nigeria. crucial among these reforms was the repeal of the Nigerian Enterprises Promotions Decree 1989 (under which the indigenisation policy was sustained), and in its place came the Nigerian Investment Promotion Decree No.16, 1995 which made it possible for an enterprise to be 100 per cent owned by foreign investors. Also, the Exchange cook Act 1990 under which foreign investors required the approval of the Minister of finan ce in order to transfer profits abroad was repealed in privilege of the Foreign Exchange Decree No.15, 1995 that guaranteed free transfer of capital. The Companies Act 1968 was also repealed in favour of the Companies and Allied Matters Act, 1990, a more comprehensive and in advance(p) company code. Against these reforms, Nigeria began its inactive journey towards deregulation, privatisation and a free market economy.However, as the free market was a model that had never previously been apply in Nigeria, its handlers had trouble grappling with it, and this led to the initial efforts being short-lived.This was followed by another privatisation law, the Bureau of Public Enterprises Decree, 1993.PrivatizationIn every great monarchy in Europe, the sale of vizor lands will produce a very large sum of money, which if applied to the payment of public debts, would deliver from mortgage a much greater revenue than any which those lands have ever afforded to the crownWhen the crown lands become unavowed attribute, they will in the course of a fewer years become well improved and well cultivated ecstasy SMITH, WEALTH OF NATIONS (1776).The term privatization is used to describe a range of different policy initiatives designed to alter the balance between the public and surreptitious sectors. It commonly refers to the transfer of ownership and control of enterprise from the state to the private sector.This may occur in various ways, such as, the sale of all or part of the privatized companys equity to the public, or the sale of the company as a complete entity. It may also take the form of interchangeable ventures, where the private sector will invest in a public enterprisePrivatization as a tool for economic management came about in the early 1970s when Chile became the first country to turn public businesses to private operators. Since then, over 140 countries have embraced privatization as a route to economic growth and prosperity.In the process of privatizati on, more investible capital has been injected into the various economies through local and foreign investors to the benefit of the country at large. In the process, funds that would have been committed to the maintenance of otherwise inefficient enterprises have been freed into more productive sectors of the economy.Privatization in NigeriaPrivatization in Nigeria was formally introduced by the Privatization and Commercialization Act of 198825, This Act set up the Technical deputation on Privatization and Commercialization (TCPC) with a mandate to privatize 111 public enterprises and commercialize 34 others. In 1993, having privatized 88 out of the 111 enterprises listed in the decree, the TCPC concluded its identification and submitted a final report. Based on the recommendation of the TCPC, the Federal soldiery Government promulgated the Bureau for Public Enterprises Act of 1993, which repealed the 1988 Act and set up the Bureau for Public Enterprises (BPE) to implement the pri vatization program in Nigeria.As at May 1999 the Federal Government investment in these public enterprises was in the region of US$100 billion. In spite of these bulky investments, however, public enterprises have failed to perform the functions and attain the objectives for which they were set up. The gross failure of these enterprises to live up to expectations is partly responsible for the current move towards economic liberalization, competition and privatization. The philosophy behind privatization in Nigeria therefore is to restructure and thin out the public sector not only to lessen the dominance of uncreative investments in the sector but also to initiate the process of gradual cession to the private sector of public enterprises which are believed to be demote operated by the private sector.It is also expected that the privatization programme will provide the channel for reintegrating Nigeria back into the global economy as a programme to attract foreign direct investm ent in an open, fair and straightforward manner.THE ENABLING PRIVATISATION LAWSPublic Enterprises (Privatisation and Commercialisation) Act 1999 provides the enabling legislation for the implementation of the privatization and commercialisation programme. This Act created the National Council on Privatization (NCP) whose functions includemaking policies on privatization and commercialisationdetermining the modalities for privatization and advising the government accordinglydetermining the timing of privatization for particular enterprises benediction the prices for shares and the appointment of privatization advisersensuring that commercialized public enterprises are managed in accordance with sound commercial principles and prudent financial practices andInterfacing between the public enterprises and the supervising ministries in order to ensure effective monitoring and safeguarding of the managerial autonomy of the public enterprises.The 1999 Act also established the Bureau of Public Enterprises (BPE) as the secretariat of the National Council on Privatization. The functions of the bureau include among others to do the followingimplement the councils policies on privatization and commercialisationprepare public enterprises approved by the council for privatization and commercializationadvise the council on capital restructuring needs of enterprises to be privatizedensure financial discipline and accountability of commercialized enterprisesmake recommendations to the council in the appointment of consultants, advisers, investment bankers, issuing houses, stockbrokers, solicitors, trustees, accountants, and other professionals required for the purpose of either privatization or commercialization andEnsure the success of privatization and commercialization implementation through monitoring and evaluation.The administration of the Federal Republic of Nigeria 1999Nigerian laws dealing with the issues of privatization do not cost in a vacuum. It is part of t he body of laws governing the transfer and acquirement of property in Nigeria. The most fundamental legal document in Nigeria is the Constitution of the Federal Republic of Nigeria 1999. Under sections 43 and 44 of the Constitution, the proficient of the individual to own movable and immovable property is guaranteed by the Constitution. As a corollary to this guarantee, these properties cannot be acquired by the Government without the payment of compensation.The issue that has been discussed very frequently is whether the guarantees protect the sale of shares. This depends on whether the shares are movable property under the Constitution. It has been argued that since shares are choses in action they are not purely so called movable property. They are special specie consequently they are not protected under the Constitution. If this argument prevails it means that if a sunrise(prenominal) Government which does not share the philosophy of the recent Governments ascends to power, it can reacquire the shares which it had inclined off through privatisation without any obligation to pay compensation for the share.At present the position of the Constitution should not create any serious alarm because, Under the Nigeria Investment Promotion Commission Act, Decree No. 16 1995 (the law enacted to encourage inflow of investments in Nigeria) the Government of Nigeria guarantees expressly that no compulsory acquisition of enterprises and interests shall take place in Nigeria. This all the way includes chooses in action.Foreign Exchange (Monitoring and Miscellaneous Provisions) Decree 1995A major factor which provided a catalyst for the privatization process was the need to attract foreign investment. The commanding height of the economy theory had failed to attract investments. The oil smash had disappeared and it was necessary to augment national revenue through foreign investment.The laws governing the allocation of foreign exchange had to be adapted in such a ma nner as to make it very attractive to the foreign investor. Consistent with this spirit of liberalization and privatization of the economy the rules