Page 51 - ITU-T Focus Group Digital Financial Services – Recommendations

ITU-T Focus Group Digital Financial Services
Recommendations

Title of recommendation Strengthening competition law through institutions
Working Group Technology, Innovation and Competition

Workstream Competition
Audience for recommendation Member States and regulators in the DFS ecosystem

As DFS market(s) are prone to market concentration and potential anticompetitive practices due to the intrin-
sic market characteristics of financial services and telecoms, governments and regulators in nations wishing
to enable DFS should make competition law a policy priority. In this respect, they should strengthen relevant
institutions.

• DFS market(s) implicate at least two industries – financial services and telecommunications - whose
characteristics (significant fixed costs and sunk investments, economies of scale and scope, essential
facilities and bottlenecks of network industries) make the sector more prone to market concentration
and potential anticompetitive practices such exclusionary and/or cartelistic behaviour. 1

• Given these specific market attributes, Member States should strengthen the application of competition
law to the DFS ecosystem, by strengthening existing institutions themselves and their enforcement. To
strengthen the competition institutional capacity, there are several principles that have been distilled
from best practice, which governments and regulators may wish to consider:
– The passage of a national competition law, if none currently exists. A separate framework for
competition matters, rather than piece-meal sectorial legislation, ensures that there is a homogenized
treatment of competition issues across all industries, which benefits players in cross-industry markets
such as DFS.
– Ensuring national competition regulation does not provide for any exclusions for specific sectors or
state entities. This prevents the discriminatory and/or privileged treatment such entities operating
in market sectors.
– Where resources are available, the creation of a separate national competition authority, with a
clear demarcation of jurisdictional competence between the competition authority and other sector-
specific regulators in its founding legislation.
– Where a competition authority exists, rendering the competition authority as an independent
administrative body. Substantial autonomy for the regulator ensures effective implementation of
competition law in DFS.
– Appointment of the competition authority members by parliament or a national assembly to further
ensure independence of the regulator.
– Ensure that the competition authority is free from any government veto, though this does not exclude
the possibility that the authority’s decisions may be appealed to higher bodies, or within the legal
system.

1 The World Bank Group (2016) ibid

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