Showing posts with label competition. Show all posts
Showing posts with label competition. Show all posts
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Supreme Court Decision on Water Monopoly in Batam

Tuesday, May 11, 2010

Quick Blogging.

The Supreme Court recently upholds KPPU (the Indonesian Competition Commission) condemning PT. Adhya Tirta Batam (ATB) for violating Article 17 of the Competition Law. The KPPU Decision reads:

  • PT. Adhya Tirta Batam is proven legally and convincingly violating Article 17 of Law Number 5 Year 1999 concerning Prohibition of Monopolistic Practices and Unfair Business Competition;
  • PT. Adhya Tirta Batam is not proven violating Article 19, point d of Law Number 5 Year 1999 concerning Prohibition of Monopolistic Practices and Unfair Business Competition;
  • PT. Adhya Tirta Batam is not proven violating Article 25 paragraph (1), point a of Law Number 5 Year 1999 concerning Prohibition of Monopolistic Practices and Unfair Business Competition;
  • PT. Adhya Tirta Batam should revoke the policy of disconnecting the new water meter connection;

Given my current workload, I am unable to provide analysis for this verdict. But this could be the first legal decision involving the abuse of dominant position in a natural monopoly environment. As such, this could set a benchmark for legal principles of economic regulation of water utilities in the future.

Read here for more news.


'Disruptive' Technology in Water Supply

Sunday, August 9, 2009

As I have written in the previous post, nanotech may be able to revolutionize drinking water provision. Recently at the 2009 TED, an engineer demonstrated a non chemical nano-filtration bottle that could change filthy water into drinking water in a matter of second. The cost of the bottle is still quite high, around 116-170 GBP depending on the volume (filtration of up to 4,000 to 6,000 litres).

However, with better manufacturing, the price of the filter may significantly decrease in the future. If employed in a larger scale, this technology may decentralize water treatment facility and open doors for competition in the water sector.

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End of natural monopoly in the water sector?

Michael Pritchard demonstrated his Lifesaver Bottle that can turn filthy water into drinkable water in a matter of second. The portable lifesaver filter is said to have 15 nanometer pores, small enough to filter viruses. The running cost to produce 25.000 litres of water through a Jerrycan equipped with Livesafer filter is 0.5 cents per day.

If the technology develops and applied to drinking water infrastructure, we may soon say goodbye to natural monopoly in the water sector. Treatment costs will go significantly low making any household eligible to build their own treatment facilities so long as water sources are available.

This could be a bad news for water companies of course :)

Regulations on water services will need to accommodate the possibilities for liberalising the water sector.

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“Obstruction of performance” under Article 86(2) of the EC Treaty and its application to the water sector

Thursday, January 15, 2009

My master thesis attempts to define "Obstruction of performance" under Article 86(2) of the EC Treaty and how this category can be applied to the water industry. The thesis argued that Obstruction of performance has to be narrowly interpreted and necessity/proportionality of the measure has to be taken into account in order to invoke "Services of General Economic Interest" (SGEI) justification under the EC Treaty. Comparing with electricity and gas sector, I conclude that specific situations in the water industry may justify its exclusion from general EC Competition rule. Scenarios where "obstruction" in the water industry occurs were explored.

Provision of water and sewerage services has traditionally lies upon the responsibilty of the state for ages. Internal market integration and liberalisation processes so far had always exclude water sector from its agenda. Even until today, there has been no sectoral regulation adopted by the EU concerning liberalisation of water and sewerage services. The Parliament in its Resolution makes clear of its position that it rejects water being put in a sectoral directive due to its regional characteristics, but calls for “…without going as far as liberalisation, for water supply to be ‘modernised' with economic principles in accordance with quality and environment standards and the needs of efficiency”.

However, the Comission had shown its interest in liberalising water and sewerage service. The annual turnover of the water sector in EU is estimated at 80 billion Euro, more than the turnover of the gas sector. The Commission has expressed concerns that horizontal and vertical restrictions from long term supply dealings “…may be harmful and contrary to EC law even where national law allows them”. In its internal market strategy for 2003-2006, water is listed as one of the area where” new action may be required”, by reviewing legal and administrative situation in the water and waste-water sector, which include an analysis of the competition aspects.

Download the full thesis here.

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Genes as essential facilities?

Sunday, September 16, 2007

I've been quite busy recently doing my university papers. But when I browsed the net just now, I discovered an interesting article which argues that genes might be regarded as an 'essential facilities'. So, I thought you might be interested. Here's an abstract:

With the IMS Health case before the ECJ, the essential facilities doctrine has taken centre stage in Europe. A recent report by the JFTC seems to suggest that Japan is serious about invoking this doctrine. However the parameters of this doctrine are far from settled. Antitrust authorities do not enough guidance on issues such as determining appropriate license fees for access, optimal number of licensees etc. In keeping with my focus on blocking and disease gene patents, I have dealt mainly with one aspect of this doctrine-namely the question of “essentiality”. Essentiality would in most cases help in a determination of ‘blocking’ i.e. if the facility is a non-essential one, then there can possibly be no blocking. However the converse need not always be true-i.e. if the facility is an essential one, but is widely licensed, then it is quite possible that there would be no blocking.
Read more here.

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Concession markets in Indonesia

Monday, September 10, 2007

Here's a link to an OECD article on the role of KPPU in supervising concession markets in Indonesia and other set of regulatory framework. This article only discusses the peripherals, but is nevertheless not bad as a start.

Download here.


Will nanotechnology reduces the 'natural monopoly' character in water industry?

Monday, August 20, 2007

The answer is likely to be yes, but if the question is how, maybe the its the engineers that should answer. What is relevant to be discussed is, "what is the legal implication"?

Most water industries are heavily regulated, because it is a natural monopoly (i.e. more seller means higher price, one seller is optimum price). I have red a research indicating that the scale of natural monopolies in the water industry varies. In the developed economy and high-tech countries, the scale of the natural monopoly reduces.

Thus, a reduction in the character of natural monopoly will allow more competitor to enter the market. For example, in water industry, more water supplier might be able to enter the common carriage through an economically feasible schemes. Regulators and network owners should not prevent them from entering these 'essential facilities' because it could amount to a violation of competition law.

This also implies that governments may need to adjust its regulatory mechanism.

But before we discuss this further, I'd like to hear from the engineers. In what way would nanotech makes water purification/treatment cheaper?

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Essential facilities doctrine and molecular manufacturing

Friday, March 2, 2007

This is just a quick, general and preliminary comment on the development of the doctrine of essential facilities. After reading some papers (some of them also available in the ssrn here), I have a feeling that both IP and Competition Lawyers are in favour of a more restrictive application of the "essential facilities" doctrine to intellectual property.

Essential facilities has been heaviliy criticized. Some lawyers considered that when there is a competition case involving IP, a new approach must be created as essential facilities deal primarily with tangible property.

My impression is, however, that these "new approaches" attempts to put a more strict treshold when competition law inetervenes intellectual property. I wonder if in the future, when molecular manufacturing is available -- a stricter approach would still be relevant. In my opinion, when more and more tangible goods are transformable into information, there will be more demand towards lowering the standards of IP protection.

It would be interesting to see how competition law doctrines operates in the age of molecular manufacturing. The tendency towards differentiating between competition law test applicable to tangible property and competition law test applicable to intangible property is something positive. However, the trends that everything is transformable into information these days must also be put into consideration. Raising the threshold of IP protection in a world where tangible goods are nothing but information may seriously jeoperdize the future economy.

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Competition law, appeal procedure

Monday, January 1, 2007

Procedure for filing an appeal on the Business Competition Supervisory Commission's (KPPU) Decision is regulated by a Supreme Court Regulation no. 1 year 2003, available here.