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Way Forward for FCCC Economic Regulation

Way Forward for FCCC Economic Regulation
September 05
11:00 2017

The Fijian Competition and Consumer Commission (FCCC) has an important role in encouraging competition in the Fijian economy.

Not all markets are competitive, particularly in the case of industries that display aspects of natural monopoly.

In such cases, FCCC’s role is to ensure economic regulation exists and ensure that monopolies and near monopolies do not overcharge or cheat on the quality of service provided to customers.

At the same time, it must ensure that the firms are getting a reasonable return on their assets and are operating efficiently.

The Economic Regulation department of the FCCC is responsible for regulating prices to approximative competitive market prices for industries engaged in the supply of electricity, water, sewage, post, broadcasting, telecommunications, ports, civil aviation or any other industries that is declared subsequently.

Under the FCCC Act 2010, the following objectives apply in relation to regulated industries and access regimes:

(a) to promote effective competition in the interests of consumers;

(b) to facilitate an approximate balance between efficiency and environmental and social considerations; and

(c) to ensure non-discriminatory access to monopoly and near monopoly infrastructure or services.

Since the FCCC’s establishment, the FCCC has improved processes around the practice of regulating firms, however recognises that the demands on regulatory regimes are more complex than in the past in view of changing market situations.

The FCCC is focused on delivering better regulation and has set in place a Five Year Strategic Plan (2017-2022) to achieve its key Strategic Goals.

The aim of regulation is to approximate competitive outcomes in markets where competition is not effective.

As a way forward for the next five years, FCCC is embarking on reviewing its regulations, including price control to ensure that they are applied where competition is not effective and efficient outcomes can be achieved without imposing excessive administrative or compliance cost.

As the FCCC develops, FCCC in the long run will not solely look into price regulation but also technical regulation. Some of the work to be undertaken are-

1. Market studies on regulated and unregulated markets;

2. Consider options of power delegation;

3. Consider amongst regulated industries for reform of price/quality regulation;

4. Engage external consultant to carry out review of the major regulated industries;

5. Consider alternative regulatory models;

6. Effective engagement with stakeholders and government agencies.

The FCCC strives to identify efficient costs and set appropriate asset bases to ensure that regulated businesses are able to achieve an appropriate return on their investment as well as the Fijian consumers are being charged fair prices.

In order to improve the way the FCCC undertakes its regulatory function, it will be also looking to identify economic regulatory models for industries where the FCCC currently acts as a regulator to explore possible alternatives in the next five years.

FCCC notes that no single model will be appropriate for all industries but some clear regulatory principles and processes will provide certainty for regulated businesses.

Implementing these principles will also ensure that consumers are able to purchase goods and services at efficient prices and at appropriate quality standards.

FCCC’s Advice

FCCC’s aim is to improve the design and operation of regulatory regimes over time and ultimately improve regulatory outcomes. It is also envisaging a major change in its public image as an effective competition regulator and would play a leading role in the promotion of competition in the Pacific. FCCC seeks co-operation from relevant stakeholder and members of public to ensure that businesses reap equitable returns of their investments and consumers enjoy access to quality goods and services at affordable prices.

Next Week: Provisions of Competition Law in Fiji.

SOURCE: FIJIAN COMPETITION AND CONSUMER COMMISSION

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