Dr. Babatunde Irukera, Executive Vice-Chairman/Chief Executive Officer of the Federal Competition and Consumer Protection Commission, FCCPC, unearths potential dangers, effects on customers for competitors in airlines business to conspire, agree, or arrange to coordinate in a manner that changes prices
Its been a little over a week that Nigeria was greeted by what appeared to be a rather bold statement by at least one member of the Airline Operators Association about a fare increase to a base N50,000 on all sectors of operation within Nigeria.
An increase in fare by itself, and ordinarily is not necessarily a violation of law, subject to civil aviation regulatory requirements. What is inappropriate, and potentially dangerous, is for competitors to conspire, agree, or arrange to coordinate in a manner that changes prices, in this case fares. The reason is simple. It distorts the market. A deregulated and free market is one where the government or other authorities allow market forces to determine price. Essentially, it is a product of negotiation in the marketplace. However, while private actors in advocating for a true free market, in its truest terms, it is important to recognize that the actions or conduct of operators is as much a factor, perhaps, even more so in whether is market is truly free, and undistorted.
The FCCPC immediately deployed its regulatory tools to gather information, understand the landscape and state of play better, and consider the factual accuracy of the information publicly, and virulently distributed. Although this was daunting, (as is many times the case with our work) considering the strongly held views, vested interests, nature of industry and critical stakeholders, as well as a history of conflict in interpreting applicable laws with respect to the jurisdictional limitations of different legitimate intervenors.
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Regardless, the dominant philosophy within the FCCPC is to strengthen the institution, and ensure markets recognize that the regulator and consumers demand accountability, and the regulator has the desire, will and courage to enforce the law, even against vested interests. This is a crucial component of promoting good order and governance, because only then will players consider and modify their behavior and conduct based on their desires not to become subject to the regulatory process, penalties or consequences where applicable- the proverbial “if you do anyhow, you will see anyhow”.
The FCCPC, though excoriated for what many considered unresponsive was actually gathering and reviewing intelligence, evidence, details. Cartels and similar criminal conduct are perhaps the most challenging regulatory investigations. To secure a conviction or arrive at a penalty, knowledge or outcome are actually less than half of what is required. Evidence is key! To the extent that the combination of details constitute any evidentiary value, they must almost unequivocally demonstrate that any other interpretation or conclusion is not just questionable, but actually implausible or improbable.
We have gathered some facts, but we have not (and may not) be sufficiently satisfied that the combination of occurrences, inferences, circumstances, context and exchanges make anything but a collusion and price-fixing implausible or improbable. A fair and transparent conclusion necessarily involves a painstaking investigation. We have started, and are continuing.
With what the FCCPC now knows, we believe there is sufficient probable cause to proceed further, apprise consumers and issue certain interim and preservatory orders. One of such is to ensure continuing a free market operation devoid of distortion.
As such, the FCCPC entered an order, essentially ensuring that; in the event any domestic airline has taken any steps in furtherance of prohibited conduct, such actions should be reversed. Does this constitute an order that airlines revert to a previous or certain fare? In a manner of speaking, no. But in another manner of speaking, it very well may be. That determination must be made individually by each airline. Any change in fare that is not a result or product of the subject of investigation (alleged collusion) is not implicated. Such change is not considered a fruit of statutory infringement. However, where the contrary is the case, the answer is in the absolute affirmative.
Some might ask what the difference is? A collusion investigation is not about changes in prices, it is about the underlying conduct that resulted in the change, and whether it was transparent and in compliance with competition law and principles. Ultimately, a successfully investigation that concludes there was collusion should also disclose who did what, and when. The penalties associated with that are stiff, and failure to take advantage of the interim order to cease and desist will be an aggravating factor in considering where on the spectrum that penalty lands. On the contrary, for an airline that recognizes that its conduct may have been in violation of law, and retraces its step, that will be a mitigating factor in assessing a penalty.
This is where we are, and what we have done. Fixing our society is as much about the baby steps, as it is about the giant strides. Ultimately, every step counts. What matters most is that we are taking steps. That’s what we are trying to do, even in the face of resistance from the market, other collaborators or regulators, and even more particularly, the consumers themselves who interestingly criticize us more for the work we do than those subject to our oversight.
We took this job, we must, and will do it. It will end one of a few ways:
1. Tenure expiration.
2. Sacking because the employer’s objectives no longer aligns with ours.
3. Quitting because our conviction no longer comports with their direction.
4. Natural causes over which we have no control.
Babatunde Irukera is the Executive Vice-Chairman/Chief Executive Officer of the Federal Competition and Consumer Protection Commission, FCCPC (formerly Consumer Protection Council)
