¦ First I’ll ask you about your visit to Mauritius.

I’m here at the invitation of the Competition Commission of Mauritius. The aim is to sensitize stakeholders, consumers and the business community to what the competition commission of Mauritius does, the procedures, the enforcement of competition law and so forth.

¦ You have had working sessions with the CCM here, haven’t you?

Yes. I was supposed to talk to local businessmen on the themes of competition and development and also the CCM staff about the challenges in the practice and enforcement of competition law.

¦ So when you talked to the business community about the benefits of competition how did they react? Did they see the benefits or did they see it as something that limits the way they’d like to do business?

Traditional competition law is a relatively recent phenomenon in Mauritius. It’s just been two years. However, from the discussion that followed and the questions asked, one wouldn’t believe that this is a tradition only two years old. It is also a positive indication that people understand competition and are actively engaging and intervening.

¦ Is it consumers or just businesses that are intervening?

Consumers too. In fact, we had good interventions from consumer representatives. Just having representatives of consumer associations attend shows how consumers expect a lot from this competition process.

¦ But these are people who have worked in consumer organizations. What about the ordinary consumers? Are they interested in the competition laws?

Yes. Because competition at its heart is about consumer welfare. It brings prosperity.

¦ How does it bring prosperity?

It brings prosperity in that people can buy goods and services at a competitive price and have a wider choice in the market. The quality of the goods improves. And it’s not just goods but also services. Even in terms of jobs, it creates good quality jobs since it is competitive quality companies in the market that create those jobs.

¦ But what’s in it for the big players?

Big players shouldn’t be condemned. Being big is not an offence even you would want to remain the biggest newspaper on the island. Competition law is not there to condemn big businesses but to make sure that this dominant position is not abused.

¦ What are the ways of abusing such a position?

It depends on which business you are talking about. There can be price fixing, exclusive dealerships, manipulating the output on the market to increase prices. Say you are the sole distributor of Coca Cola in the country. You can create an artificial shortage of it to raise market prices. Or fertilizer or any other product. Other forms of abuse are colluding with others, small or big players, so that you can manipulate distribution channels and so on. We want to put a really level-playing field where both big and small businesses can survive so there are no practices from large multinationals to prevent small players from operating in the market.

¦ What kind of malpractices have you detected here?

That is for the competition authority here to determine. In an economy like this and in many other economies in the SADC and COMESA region, we have the problem of single firms dominating certain sectors of the economy. So as a competition authority, we focus on those firms to encourage fair trading to prevent abuse of the consumer and to make sure that they are not frustrating competition.

¦ What kind of cooperation is there between the countries of the SADC and COMESA as far as competition law is concerned?

We are in the process of creating structures at the regional level for the sole purpose of coordinating and cooperating in the enforcement of competition law, exchange of information and staff training. We also want to cooperate in investigations. All those things are being put in place. We have the SADC declaration which has been in existence for a number of years now and the COMESA declaration. Both declarations aim at harmonizing national competition laws and boosting cooperation for this purpose in the region.

¦ You spoke earlier of how the nature of jobs improves with competition. Could you explain exactly how that happens?

You see, where you have a competitive market, companies and firms cannot afford to produce average and below average goods and services. They have to be innovative. They must then employ the best and most educated. When educated employees are sought after for employment, the demand for an educated workforce increases and the education system starts producing graduates for industry instead of employees for mass production. For example, if Mauritius was a leader in IT, you’d find the best IT students on the market here. Mauritius excels in the hospitality industry - I come from Zambia and the best restaurant in Lusaka is run by a Mauritian. They are known. So they have an advantage in that. Once you have trained and educated people in the private sector, they are able to compete and create quality jobs.

¦ Talking about the hospitality industry, do you think there is fair competition in the hospitality sector?

It depends what market we are looking at. The way I see the Mauritian market is that it’s mostly geared towards the international tourist market. When you look at competition in the international tourist market, Mauritius is doing well in competing with destinations like Seychelles, Kenya and Zambia.

¦ You are talking about external competition?

Yes. You have to define competition in a given market. We call that the relevant market.

¦ What about the various players competing for that market within Mauritius?

We can say that sometimes the barriers are excessively high to enter that competition. It is difficult to access capital to build resorts and hotels and it’s difficult to mobilize local resources. You would need foreign investment. When you build a hotel you have to keep in mind what kind of client you are expecting. At that level you would have to identify a market niche.

¦ The complaint that we get from hotels is that they spend a lot of money promoting Mauritius abroad but when the tourists come here, they stay in bungalows. Do you think that that is within the realm of the competition commission?

Yes, if that is the case we have to find out why. The hotels have to respond to the consumer. When a tourist arrives with a backpack and a bottle of water you have to know how to respond to that kind of demand. That’s the difference between a market and a command economy. In a market economy, competition is dictated by the demand of the consumer. If the consumer tomorrow decides that he doesn’t want to stay in a 5- star hotel, that’s just how the market functions. You will then see a lot of bungalows along the shore because that’s where the money will be. If the big hotels are surviving, that means that there is still a demand for them. They have convinced the shareholders that they are going to get their money back.

¦ Is competition about saying to the shareholders “Keep quiet because you are getting enough,” even if somebody else is getting a share of what they should be getting?

That’s where competition stops. Competition means that everybody is trying hard to outdo their neighbour. You can see this in the hotel sector: everyone is bringing improvements and new products are coming out as a result.

¦ What about prices? Can you lower your price as much as you like?

As long as it is not predatory pricing.

¦ Where does a bargain stop and predatory pricing begin?

Predatory pricing means we are in business, I lower my prices for six months to lure away your customers. So for six months, you are not going to have any customers and then you fall down and I put my prices back up.

¦ If I lower my prices, how do you know for how long that is going to be and whether it qualifies as predatory  pricing?

That’s the work of the Competition Authority.

¦ How do they go about it?

They do your costing and they say, “Look, for you to produce something, if we do a straight costing, it is US$20. Now you are selling this product at US$10. Who is subsidizing the US$10?

¦ My answer would be, “I am offering promotional prices.”

But you can’t do business at a loss.

¦ For any length of time?

Unless you have bad intentions, you can’t run a business at a loss. If you run a US$10 for three months so that your competitor fails to run his business, that’s a crime under the Competition Act.

¦ Who decides how much profit I should make? If my competitors are making 50% profit and I decide to make 10%. Is that a crime?

No, that is not a crime, because that is called price competition. Where there is no competition, the profit margin can range from 10% to 25%. Where there is competition, you can’t make more than about 5 %.

¦ What about sales, surely some goods are sold below cost price?

Yes, but it is not predatory pricing in that they are getting rid of their stock. Instead of throwing it away, they are getting something out of it.

¦ This applies only to old stock?

Yes. If it’s winter, would you buy a summer dress? Rather than the shop throwing it away, they encourage you to buy it by offering it at half price. They know no one is going to buy it next year.

¦ But does the Competition Commission go around checking the accounts of each company?

The system relies on complaints. The people who understand that market are those who make complaints to the Competition Commission. The Competition Commission of Mauritius (CCM) introduced a very good innovation which was launched yesterday: you don’t need to go to the CCM to file a complaint. You can just do it via their website.

¦ Anonymously?

Yes. Anonymously. In SADC and COMESA, Mauritius is the first.

¦ But they must get hundreds of complaints, then.

Yes, complaints should be never-ending. There should be complaints as it is good for competition. It means that competition is growing and it makes the competition authority work even more effectively. Because once you investigate a complaint, word goes around to other business people and sends the right message.

¦ But a lot of this stuff must be difficult to prove, mustn’t it?

It is. The competition people are specially trained to bust cartels. If you have three or four bakeries fixing the price of bread, for example, there is the lenience programme, which calls one member of the cartel to tell on his friends so he is not prosecuted.

¦ And if no one wants to talk, you’ll never know?

By the time we approach a cartel, we already have information. You know, there is no honour among thieves. If one of these thieves hears that the commission is investigating the cartel, he will come to give information if he can get a pardon.

¦ Sounds like the methods used by the police.

Yes, cartel is a crime. In most countries, it draws a prison sentence.

¦ You seem to be impressed with the work achieved by our Competition Commission.

Yes, very impressed. I am impressed by the ground it has covered and they have been here for barely two years. Honestly, I can rate it among the top five competition authorities in the SADC and Comesa area.

¦ Really? And what do you attribute that to?

Firstly to the system they have put into place. It has allowed them to reach people at large. Also, when we talked to the business community,we realised that the competition culture is developing very quickly.

¦ What problems is competition facing elsewhere?

The problem with competition is that it is like a plant. And like every plant you need to water it.

¦ What do you water it with?

Resources. You need to give resources to the competition authority to make sure that it can carry out its enforcement duties. Once it has resources, it becomes a baby plant. You have to continue watering it. And there should be real political will to support its work.

¦ Is there enough political will in Mauritius, according to you?

It is there. You have a longterm advisor heading your competition commission. That shows the seriousness of government on this issue. Mauritius is a complex economy. You need experienced people to manage the economy. So the government has got someone who knows the job. You’ve got people who understand it. I think that’s where the economy is getting the best benefits. We hope the government puts persons – not a person but persons – to understudy. So when the time comes for Mauritians to take over, they are equipped to do so. For the past two years, Mauritius has shown that it is contributing to the region and demonstrating that the only way a Mauritian firm can be competitive is for it to shine bright at the international level and be competitive.

Touria PRAYAG
(l’express Weekly, Friday 2 November)

Touria PRAYAG