Emanuel Barbosa, President of the Competition Authority: “Consumers should pay for what they consume and not for the inefficiencies of companies”

Emanuel Barbosa, presidente da Autoridade da Concorrência

The Competition Authority, the AdC, was established by Decree-Law no. 21/2022, of June 10, which also approved its statutes. It is a legal person governed by public law, with the nature of an independent administrative entity, enjoying organic, functional, and technical independence.

The AdC’s primary mission is to ensure the application of the rules for the promotion and defense of competition, with the aim of achieving the efficient functioning of markets, the excellent allocation of resources, and the interests of consumers. The PCA has broad regulatory, supervisory, and sanctioning powers applicable to public and private companies in all sectors of commerce, industry, and services. In particular, the PCA is responsible for investigating and deciding on sanctioning procedures regarding practices that restrict competition (such as cartel-type agreements or abuses of a dominant position) and approving or prohibiting mergers subject to prior notification. In September of the same year, Emanuel Barbosa, a former MpD MP, was appointed president of the agency. He gave Expresso das Ilhas his first interview since taking office.

It’s the youngest of the regulatory agencies, is it still in the growing pains phase?

Yes, but with a track record that has made us proud. We knew what we were getting into and we were aware that the start-up phase of an institution like AdC is very complex and almost always accompanied by many difficulties, as well as challenges that require a lot of inspiration and perspiration.

The response to the difficulties has been a lot of work, a lot of dedication, a lot of proactivity, a lot of planning and adopting the right strategies, a risk mitigation plan, art, ingenuity, and assertiveness and this is the formula we have found to get the train back on track, overcome the force of friction and start rolling. With more or less pain, the great satisfaction is that we are building something that we hope will be embraced by the Cape Verdean people and that the government will remain firm and convinced of its importance for companies, the economy, the state, and consumers. Our Activities Plan for the 2023 economic year, which was drawn up in good time, with a lot of professionalism and with an institutional vision of projecting the PCA so that it would gain, ab initio,  notoriety, and respectability both at national and international level. It will certainly have positive effects on people’s lives.

When you took office, you spoke of the need to create a culture of competition between economic agents and consumers in Cape Verde. Why hasn’t this culture existed yet? And how do you hope to create it?

Yes, in fact, I made that reference because I believe that the state and economic agents need to permanently, consistently, and proactively adopt a culture of competition so that their decisions and choices always include the promotion of merit, innovation, and efficiency. Establishing such a culture means ensuring that the advantages and benefits of healthy competition are understood, first by the state and then by citizens and companies. On the other hand, they need to be aware of the disadvantages and harms of violating the legal rules of competition, and how to act when they detect a breach of these rules. The PCA is responsible for naturalizing compliance with competition rules and instilling this culture in companies so that compliance with competition laws occurs proactively on the part of companies, i.e. through internal compliance instruments. This naturalization involves several subsidiary and complementary dimensions of action and, obviously, one of these is advocacy for the proper awareness of stakeholders. In this regard, we must inform you that, in partnership with the ECOWAS Regional Competition Authority (ARCC), we have carried out two awareness-raising actions in such a short period of time, which have served to raise awareness of the existence of the ARCC and the PCA and to disseminate their respective powers and competences and how restrictive competition practices can be denounced.

Despite being recent, have there already been measures to combat anti-competitive practices in the market? Which ones do you consider to be priorities?

Still, let’s say that it’s too early to design and implement substantive measures. Furthermore, any measure must be the result of market studies so that the PCA’s actions can be scientifically supported, and credible and create an environment that allows it to establish a relationship of trust with its stakeholders. Even so, we have already had and are having some interventions, namely, by motu proprio, we analyzed the merger of the companies in the Cabo Verde Telecom group, which culminated in our “no objection” and allowed the company, a few days ago, to close this operation with the seal of approval of the AdC, which we believe is a guarantee of respect for the rules of competition. Also, following the presentation of a stake by a national company, we carried out a competition assessment which resulted in the decision to open a process to monitor and analyze the possible existence of a joint purchasing agreement in a very sensitive sector. We are also in the process of carrying out a competition assessment of two other complaints. And finally, we have a request for collaboration from the ECOWAS Regional Competition Authority (ARCC) which, following a complaint lodged by a national businessman, asked for our cooperation. We responded promptly and are conducting the interrogations and gathering additional information to produce a final report that will be sent to the ARCC. So you can see that there is demand and we are preparing to respond to all requests and not disappoint those who seek our services.

How does the Competition Authority assess market concentration and what are the criteria for approving or disapproving company mergers and acquisitions?

When analyzing mergers and acquisitions, we seek to ensure, prima facie, that markets function efficiently. Essentially, we assess whether certain operations are not prone to the creation of anti-competitive practices. For example, if they do not lead to the abuse of a dominant position, in which competition is distorted or suppressed, harming competition, companies, and consumers. The assessment is carried out on the basis of objective criteria that derive from the law and are scaled to the national market. In some key sectors of our economy, monopolistic and oligopolistic market structures do indeed prevail, which means that the PCA has to pay extra attention to avoid, for example, what is known as “imposition or exploitation practices”, which subject consumers to monopolistic conditions and prices that are much worse than competitive prices. Of course, we cannot fail to take into account the small size and other specificities of our market profile, which can lead to what is known as a natural monopoly.

How does the Competition Authority monitor the conduct of companies to ensure continued competition in the market?

Being vigilant about what happens in the market. We are working on creating the technical and logistical capacity that will enable us to monitor the market closely and permanently in the future so that we can quickly detect possible cases of collusive practices such as cartels and horizontal agreements, No-Poach (non-contracting agreements), Hub-and-spoke (agreement on the price of indirect sales to the public), vertical agreements, etc. We will hire and train human resources, as well as acquire specialized software for this purpose. We will invest in carrying out market research and we will also raise awareness of the importance of reporting restrictive practices, to this end, we will create various channels and mechanisms for this purpose and we will encourage the practice of reporting through the implementation of a Leniency Program.

How does the Competition Authority promote awareness of antitrust laws and encourage healthy competition between companies?

Above all, through advocacy and awareness-raising sessions with all stakeholders, in order to make them aware of the benefits of healthy competition and what they can do in the event of non-compliance, for example by denouncing situations identified as restrictive vertical and horizontal practices. In this endeavor, we hope to rely particularly on the collaboration of the media and academia as a way of investing in the next generations of public decision-makers, entrepreneurs, and consumers, both business and consumer associations. All those affected by competition policy will be involved in this awareness-raising process.

What are the challenges faced by the Competition Authority in detecting anti-competitive practices in specific sectors, such as telecommunications, energy, or food?

The PCA will only rule on the existence of practices that distort or distort the functioning of the markets, both in the sectors mentioned in your question and in others, when it has concrete elements to do so. This attitude stems from the PCA’s increased responsibilities, which call for prudence and great responsibility. Therefore, common sense only advises us to say that we are creating the conditions for the PCA to be able to respond promptly, assertively, and competently to the challenges it faces in an increasingly complex market, in order to fulfill in a qualified manner the mission that is reserved for it in the Cape Verdean legal system and so that it can be a relentless guardian of the public good, which is Competition, and position itself as an institution that promotes the country’s economic development. To this end, we will use all our legal prerogatives, especially our inspection and sanctioning powers. Perceptions may exist, and we have some perceptions of what may be happening in some sectors of the economy, but they will have to be confirmed with evidence so that the PCA can give credibility to its actions here we must remember that the PCA’s decisions can always be appealed to the courts, which implies serious work on our part, otherwise we will be deconstructed and discredited in the judicial sphere and in the eyes of Cape Verdean society. We must take care of our reputation!

What are the policies and programs already implemented by the Competition Authority to stimulate the entry of new companies into the market and guarantee the diversity of competitors?

The PCA must assess whether there are barriers to the entry of new companies, particularly in specific sectors that are fundamental to national economic activity in order to stimulate competitiveness in the market and improve choice for consumers and companies. This assessment usually involves an in-depth analysis of certain laws to assess whether the legislation itself does not constitute a barrier to companies entering the market. But it also almost always involves carrying out surveys and market studies. If there are situations that constitute unnecessary barriers to the entry of new companies, this can give rise, for example, to the production of recommendations to collaboratively help the public decision-maker implement the best policies in this regard. However, some resources are needed, namely time, and it’s worth remembering that the PCA has existed, de jure, for some time, but it only actually began operating at the end of December 2022, i.e. it has been in existence for approximately six months.

How do you expect competition policy to influence the innovation environment in the Cape Verdean economy?

There is a central issue here that the PCA will be attentive to, and will certainly act to defend consumer rights under the terms of the law and within the framework of its statutes. Companies cannot have a passive attitude towards their inefficiencies and losses because they have naturalized that they can comfortably and forever pass on the results of their inefficiencies to end consumers because they operate in sectors whose market structure is similar to that of an oligopoly or a monopoly. This is not sustainable and must not continue! Consumers must pay strictly for what they consume and not for the inefficiencies of companies and, perhaps, the poor performance of their managers. Otherwise, we’ll be artificially keeping companies on the market that don’t add value to our economy.

Competition policy must act as one of the essential pillars for increasing the competitiveness of our economy. Therefore, in order to adapt and remain in this highly competitive environment, companies will have to increase their productivity, respond more quickly to market needs, better meet consumer ambitions, supply goods in line with demand, achieve an efficient allocation of their resources, work on creating innovative products and services and all of this will, of course, lead to the constant need to pursue innovation and research. We need to encourage our companies to think outside the box and be disruptive. They must establish partnerships with the academic world to promote research, namely through collaborative research for the development of new products, new processes, and new technologies, and to gather valuable insights from academic researchers.

How can competition policy balance the protection of consumer interests with the promotion of innovation and economic growth?

Before answering your question, allow me to clarify that the PCA’s competence in this matter is not only indirect, through competition policies, but also direct and derives from the law in which it is stated that the PCA is responsible for the adequate promotion and defense of services of general interest and the protection of consumer rights and interests, as we believe this is important. To answer your question, we should point out that when companies compete in a market, respecting the rules of competition, they tend to offer better products and services to satisfy customers, which implies constant innovation and optimization of internal processes and procedures. We are talking about the pursuit of efficiency, which necessarily leads to innovation, at the risk of falling behind and disappearing from the market. This competitive reality results in significant benefits for consumers, such as higher quality, lower prices, and more choice. But it also reflects on economic growth. By encouraging innovation, we are boosting economic growth, since when companies strive to gain an advantage over their competitors they invest in research and development (R&D) to create exclusive, high-value solutions that almost always generate externalities in other sectors of the economy and without forgetting that technological advancement stimulates increased productivity, facilitating new industries and job opportunities. On the other hand, it makes companies better prepared to compete in the global market, facilitating the internationalization of national companies and our economy. In conclusion, competition is fundamental both for consumers and for companies. It stimulates economic growth, encourages innovation, increases the efficiency of companies, and tends to keep prices within limits that are considered fair, forcing the market to offer better products and services.

How does the Competition Authority interact with other regulatory bodies to promote joint action to protect competition?

Firstly, we must stress that collaboration between the PCA and regulators is a legal requirement. Regulatory authorities, whether sectoral or multisectoral, are obliged by law to respond promptly to requests from the PCA, providing it with the necessary collaboration or information for the proper performance of its duties. These authorities are also bound by the duty to immediately notify the PCA of any practices restricting competition of which they become aware in the performance of their duties. However, on the PCA’s part, we want the relationship with the regulatory authorities to go beyond the legal dimension and shape effective relations of cooperation and institutional collaboration to build a competition and regulatory ecosystem that is a catalyst for the internationalization of Cape Verdean companies, for the creation of value in our economy and for the sustainable development of the country.

It was with this in mind that, since the PCA’s Board of Directors took office, we have held a series of bilateral meetings with various regulatory agencies.

We believe that we can create a favorable environment for promoting joint action in the protection of competition, respecting the competencies and attributions of each one, with the regulatory agencies taking on a predominantly prospective analysis and imposition of obligations ex-ante, leaving the PCA, which acts across all sectors of the economy, to act ex-post in defense of the public good – Competition.

What are the prospects for the future of the Competition Authority’s activities and what are the main challenges to be faced in order to guarantee fair and efficient competition in the market?

Well, from the answers to the other questions, I think that as far as the prospects for action are concerned, all that remains is for us to add that we intend to carry out strong educational work to raise awareness, upstream, aimed at society in general, but with a special focus on certain segments such as businesspeople, lawyers, magistrates, academic researchers, etc. The aim is for the PCA to be perceived as a partner and not as a “policeman”. If we achieve this, it will be an important sign that we are fulfilling our role well, that the message is getting through, and that we are being well-understood by the stakeholders. As far as the challenges are concerned, taking into account all the homework we are doing in terms of planning, producing management instruments, establishing a cooperative relationship with international counterpart institutions, integrating into international competition networks, appropriating international best practices, etc., we expect that the biggest one to be faced will be mobilizing the financial resources needed to materialize the PCA with the desired and deserved capacities and dignity. We believe we will succeed.

Text originally published in the print edition of Expresso das Ilhas nº 1133 of August 16, 2023.