Competition Market Study of Tunisia's Retail Banking Sector

Annex A. Competition assessment methodology

This annex describes the methodology used in the competition assessment.

Stage 1: Mapping the sectors and identifying regulations

The objective of Stage 1 of the project was to identify and collate sector-relevant laws and regulations. To identify relevant regulatory provisions, research was carried out using the Qanouni online legal database and a list of relevant legislation available on the website of the Banque Centrale de Tunisie (BCT). This research was complemented by input received from the BCT.

Over the course of the project, the lists of legislation were refined, as additional legislation was either discovered by the team or issued by authorities, while other pieces of legislation initially identified were found not to be relevant to the sector or no longer in force. The refined research identified 68 pieces of legislation applicable to the banking sector that were analysed within the scope of the project.

Another important objective of the first stage, which continued for the entire duration of the project, was the establishment of contact with market participants via authorities, industry associations and private stakeholders active in the sector. The OECD team met with government and private stakeholders both virtually and, when the sanitary situation brought about by the COVID‑19 pandemic allowed, in person. Interviews with market participants contributed to a better understanding of how the segments under investigation work in practice and informed discussions of potential barriers deriving from legislation.

Stage 2: Screening of legislation and the selection of provisions for further analysis

During the second stage of the project, the main work stream was screening legislation to identify potentially restrictive provisions, as well as providing an economic overview of the relevant market segments. The legislation collated during Stage 1 was analysed using the framework provided by the OECD Competition Assessment Toolkit (OECD, 2019[1]). This toolkit provides a general methodology for identifying unnecessary obstacles in laws and regulations and developing alternative, less restrictive policies that still achieve government objectives.

One of the main components of the toolkit is a competition assessment checklist that asks a series of simple questions to screen laws and regulations with the potential to restrain competition unnecessarily (see Box A.1). Based on the toolkit’s methodology, the OECD compiled a list of all the provisions that were affirmative in relation to any issue on the checklist. Authorities were given several opportunities to comment. The final list consisted of 61 provisions with the potential to restrict competition. The OECD also prepared an extensive economic overview of the sector and refined it during later stages, covering industry trends and key indicators, such as output, employment and prices, including comparisons with other Middle Eastern and North African countries and OECD member countries where relevant.

Box A.1. The OECD Competition Assessment Toolkit

Further competition assessment should be conducted if a piece of legislation is affirmative on any of the following counts:

A) Limits the number or range of suppliers

This is likely to be the case if the legislation:

1. grants a supplier exclusive rights to provide goods or services

2. establishes a licence, permit or authorisation process as a requirement of operation

3. limits the ability of some types of suppliers to provide a good or service

4. significantly raises the cost of entry or exit by a supplier creates a geographical barrier to the ability of companies to supply goods, services or labour, or invest capital

B) Limits the ability of suppliers to compete

This is likely to be the case if the legislation:

1. limits sellers’ ability to set the prices of goods or services

2. limits the freedom of suppliers to advertise or market their goods or services

3. sets standards for product quality that provide an advantage to some suppliers over others or that are above the level that certain well-informed customers would choose significantly raises the costs of production for some suppliers relative to others, especially by treating incumbents differently from new entrants.

C) Reduces the incentive of suppliers to compete

This may be the case if the legislation:

1. creates a self-regulatory or co-regulatory regime

2. requires or encourages information on supplier outputs, prices, sales or costs to be published

exempts the activity of a particular industry or group of suppliers from the operation of general competition law

D) Limits the choices and information available to customers

This may be the case if the legislation:

1. limits the ability of consumers to decide from whom they purchase

2. reduces the mobility of customers between suppliers of goods or services by increasing the explicit or implicit costs of changing suppliers

3. fundamentally changes the information required by buyers to make purchasing decisions effectively.

Source: OECD (2019[1]), OECD Competition Assessment Toolkit, https://www.oecd.org/competition/assessment-toolkit.htm.

Stage 3: In-depth assessment of the harm to competition

The provisions carried forward to Stage 3 were investigated in order to assess whether they could result in harm to competition. In parallel, the team researched the policy objectives of the selected provisions through discussions with relevant authorities and by studying academic literature. The in-depth analysis of harm to competition was carried out qualitatively and involved a variety of tools, including economic analysis and comparisons with similar regulations in other jurisdictions. All provisions were analysed, relying on guidance provided by the OECD’s Competition Assessment Toolkit. Exchanges with government experts and market participants complemented the analysis by providing crucial information on the implementation process and effects of the provisions. In Stage 3, several potential barriers were eliminated from the analysis because the team concluded that the provisions did not harm competition. At the end of Stage 3, 61 barriers remained that were deemed potentially harmful to competition.

Stages 4 and 5: Formulation of recommendations and final report

Building on the results of Stage 3, the OECD team developed recommendations for provisions found to restrict competition and to tackle the drivers of the poor outcomes identified. For this process, the team relied on international experience wherever available. The team also quantified where possible the benefits for consumers arising from the implementation of the recommendations. To do this, the standard OECD methodology for quantifying consumer benefits was used.

References

[1] OECD (2019), OECD Competition Assessment Toolkit, https://www.oecd.org/competition/assessment-toolkit.htm.