Single Economy (9)

At the national level, individuals or firms may take complaints to the National Commission. A complainant would generally be required to make the complaint in writing, providing full identification details, and a brief description of the practice that is deemed to be anti-competitive. If there are any documents to support the complaint, these should also be submitted. The National Competition Authority would also require the complainnant to provide information on all individuals or companies or organisations which are directly affected by the anti-competitive practice, and as much detail as it can provide on the relevant product or geographic market.

An enterprise that is aggrieved by the findings of the National Competition Authority can appeal to a Judge in Chambers. The Judge may confirm, modify or reverse the Commission's findings or any part thereof, or direct the Commission to reconsider its decision, generally or in part.

According to the Revised Treaty, only Member States or COTED can make a request of the Commission to undertake an investigation. Individuals or firms must take their complaints to their governments which in turn will submit a request to the CARICOM Commission to investigate, if there is sufficient reason to believe that anti-competititve conduct has taken place that prejudices trade and prevents, restricts or distorts competition in the territory of the requesting Member State.

COTED can also request of the CARICOM Commission that it investigates a case, where it has sufficient reason to believe that cross-border anti-competitive conduct has taken place in the Single Market.

Requests for initiating an investigation must be in writing and must contain sufficient information to allow the CARICOM Commission to make a preliminary assessment on whether an investigation is justified. If so, then the Commission shall consult with the interested parties and determine whether it or the national authority has jurisdiction.

Once it is decided that an investigation shall be conducted, it must be completed within 120 days from receipt of the request for investigation. Where circumstances warrant, this time period may be extended. This provides legal certainty to businesses which can be adversely affected by the undue lingering of investigations.

Once the Commission conducts the enquiry, it will notify the parties of its decision to apply remedies or sanctions and apply a 30 day time limit on compliance by the relevant parties. If the parties fail to comply in the time specified, the Commission may apply to the Court for an order.

The Commission can also request that a national competition authority undertake an investigation where it believes that an enterprise is engaged in anti-competitive conduct that limits or distorts competition in the Single Market.

Where the CARICOM Comission is dissatisfied with the result of the investigation, it may undertake its own preliminary examination, and where findings show that an investigation is merited, it may consult with the national Commission as to who has jurisdiction. If there is a difference in opinion, COTED shall decide.

If a Member State is dissatisfied with the CARICOM Commission's ruling, it may apply to the Caribbean Court of justice (CCJ) for review of the decision. The CCJ is the Final Court of appeal in respect of the decisions of the Commission.

Monday, 15 November 2010 23:10

Member State Obligations

Written by Administrator

Member States are required to ensure that all anticompetitive agreements are null and void within its jurisdiction, except those benefitting from exclusions or exemptions. to meet this obligation, member states are required to :

  • Enact competition laws consistent and compliant with the rules of competition and provide penalties for anti-competitive business conduct
  • Enact legislation to ensure that determination of the CARICOM Commission are enforceable in their future jurisdictions.
  • Establish and maintain institutional arrangements and administrative procedures to enforce competition laws by establishing and maintaining national competition authorities for the purpose of facilitating the implementation of the rules of competition
  • Take effective measures to ensure access by nationals of other Member States to competent enforcement authorities including the courts on an equitable, transparent and non-discriminatory basis
  • Provide for the dissemination of relevant information to facilitate consumer choice.
Each Member State shall require its National Competition Authority to:
  • Cooperate with the CARICOM Commission in achieving compliance with the rules of competition
  • Investigate any allegations of anti-competitive business conduct referred to the authority by the Commission or another Member State
  • Cooperate with other national competition authorities in the detection and prevention of anticompetitive business conduct and the exchange of information relating to such conduct, giving due regard to the need to maintain confidentiality of commercially sensitive information that was provided on a confidential basis.
It is important to note that national competition laws can be enforced only in national jurisdictions and so national competition commissions will deal only with anticompetitive conduct which takes place in a national economy and which affects consumers in the domestic market.

Monday, 15 November 2010 23:20

Our Single Economy

Written by Administrator



Monetary policy coordination

Financial policy harmonisation

Capital market integration

Fiscal policy coordination and harmonisation

Investment and incentives policy harmonisation

Sectoral policy harmonisation re-industry, agriculture, tourism, transport and other services

Monday, 15 November 2010 22:48

Enforcing the Revised Treaty

Written by Administrator

Article 171 of the Revised Treaty established the CARICOM Competition Commission with responsibility for applying the rules of competition to cross border anti-competittive business conduct and conduct that has border effect in the Single Market.

The CARICOM Commission will also promote and protect competition in the Community and co-ordinate the implementation of CARICOM Competition Policy. This Commission is also required to provide support to Member states in implementation of their obligations, including protecting consumer welfare, facilitating the exchange of relevant information and expertise, and developing and disseminating information about competition and consumer protection policies.

It is mandated to monitor, investigate, detect, make determinations and take any appropRiate action to inhibit and penalize enterprises whose business conduct prejudices trade or prevents, restricts or distorts competition within the CSME. In conducting investigations, the Commission may require any person to give evidence, submit documents, and it may take any such action as may be necessary to advance the investigation.

On the basis of the findings of the investigation, the Commission may

  • determine whether business conduct contravened the rules of competition
  • apply remedies or sanctions, including ordering the termination or nullification of agreements, conducts or activities prohibited by the law
  • issue "cease and desist" orders
  • impose fines
  • order payment of compensation to persons affected by the anti-competitive conduct.

There are instances where collaboration among competitors merits special consideration. the Revised Treaty provides that an enterprise shall not be deemed as exhibiting anti-competitive business conduxt, if:

  1. The activity contributes to production or distribution of goods or services, or improves efficiency. E.g. by facilitating technological development through a combined research and development effort or collaboration which can improve information dissemination.
  2. The activity is indispensable to the improvement of production or distribution of goods or services, or technical economic progress
  3. The collaboration does not result in the elimination of competition in respect of a substantial part of the market for the goods or services concerned.
The Treaty further provides for exclusions and exemptions for:
  1. Associations of Employees
  2. Collective Bargaining Arrangements
  3. Professional Associations
  4. Specific Sectors or Enterprises or Groups of Enterprises
  5. Approved Exemptions for Individual Member States
  6. The De Minimis Rule
Associations of Employees
Employees may cooperate and coordinate their activities for their own reasonable protection as employess
Collective Bargaining Arrangements
Collective Bargaining may be undertaken for the expressed purpose of fixing terms and conditions for employment
Professional Associations
The CARICOM Competition Commission may exempt activities of professional associations designed to develop and enforce professional standards of competence reasonably necessary for the protection of the public.
Specific Sectors or Enterprises or Groups of Enterprises
The Council for Trade & economic Development has the authority b to exclude or suspend from the compliance with the competition rules specific sectors, enterprises or groups of enterprises. This on the basis on public interest or for development considerations.
Approved Exemptions for Individual Member States
A member state may request and be granted an exemption to the competition rules.
The De Minimis Rule
Anti-Competititve conduct or activities which have only a minimal impact on the Community Market may also be exempted.

The following anti-competitive conducts are prohibited under Chapter 8 of the Revised Treaty of Chaguaramas.

  • Fixing of Purchase or Selling Prices, Directly or Indirectly
At the international level, very damaging cartels are formed, such as the Lysine Cartel which operated from 1992- 95, fixing prices on feed additives for poultry and swine. The membership included some of the world's most significant lysine producers. Production facilities were located in the US, France, Hungary, indonesia, Italy, Japan, Korea, Mexico and Thailand. Over its lifespan, the cartel raised prices of US$1.4 billion in global sales, overcharging by 100% and gaining rents of some US$140 million. Every person in CARICOM who eats poultry and pork paid more for the products as a result of this cartel. One of the conspirators was Archer Daniel Midland (ADM) which has flour mills in Jamaica, Belize, Barbados and Grenada.
  • Restricting Competition by Arranging Not to Compete Against Each Other in Markets, or to Restrict Supply of Sources.
The free flow of goods and services within the CSME could be compromised, for example if producers of pharmaceuticals were to agree not to compete in each other's home markets. So for instance, producers in St. Lucia would not compete in Jamaica and vice versa, resulting in higher prices being charged in the market.
  • Limiting or Controlling Production, Markets, Investment or Technical Development
When firms allocate output quotas amongst themselves, they create scarcity and cause price increases. Limiting investment or technical development could have a dampening effect on production of goods and services, or could inhibit efficiency creating changes, leading to higher prices due to inefficiency and scarcity. For instance, intellectual property holders may deliberately obtain a patent in a developing country so as to bar entry to competitors, thus limiting the extent of investment or technology transfer.
  • Bid Rigging (or Conspiring to Affect Tenders Submitte in Response to a Request for a Bid)
When collusion occurs between the entities submitting tenders, the result is winning bids that are above the level that would prevail in the absence of collusion . For example, in an instance where the market price may have beeen US$100,000, for four conspire to allow one to submit a bid of US$150,000 while the others submit higher bids. In doing so, the body inviting the tenders pays a significantly higher cost, while the winner would have receive rents of US$50,000. The colluding firms then take turns submitting the "winning" bids.
  • Exclusionary Vertical Restrictions (or Restricting the Activities of Those Lower in the Production Chain)
Vertical Relationships are defined as the interactions existing between persons operating at various points of the production chain. An example of a Exclusionary Vertical Restriction, would be a dominant firm seeking to prevent its distributors from carrying a competitors product. The firm may attempt to do so in order to avoid have to lower its price or raise its quality in response to competitive offerings.
Mittal SA, an South African steel company with a subsidiary in Trinidad and tOBAGO (ISPAT), was manipulating the supply of flat steel products on the domestic market in order to reduce the supply so that the price could remain at a pre-determined level. In order to so do, the firm sold to key merchants as a reduced price on the condition that the steel had to be used for certain purposes and could not be offered for resale. In September of 2007, Mittal SA was fined US$95.9 million and ordered to discontinue its non-competitive practices.
  • Conferring a Competitive Advantage to One Party Over Another byTreating Parties Engaged in Similar Commercial Transactions Unequally
Price differentiation is only allowed on the basis of quantity, quality and other similar trading conditions, not to different customers or categories of customer. Firms are not allowed to give a subsidiary a better price than it gives to a rival of its subsidiary. An example of this would be the case of BRC in Barbados who were found in breach of the Fair Trading Competition Act, for engaging in price discrimination and price maintenance. BRC cooperated with the Commission to become compliant.
  • Inclusion of Additional Obligations Not Connected to the Substantive Contractual or Sale Transaction
Examples include banks making it compulsory to purchase an additional product as a condition of getting a loan or a firm getting rid of excessive stock buy tying the purchase or one product to another.
  • Restricting the Access of a Competitor to an Infrastructure or Network Essential to Conduct to the Competitor for Their Business
Case 1: The owner(s) of telecommunication networks and infrastructures are obligated to allow competitors (e.g internet and mobile providers) to use their networks, as these are essential for competitors to conduct business.
Case 2: The owner of a dock and ferry service was ordered to give a potential competitors in the ferry business access to the dock at prevailing market price. As it was ruled that the cost of building another dock was both wasteful and prohibitive.
  • Predatory Pricing
Some firms have attempted to price their goods or services with the intention of harming or crippling the competition. As such a firms may resort to selling a product beneath cost price in order to drive a competitor out of the market or even to prevent competition from entering the market.
  • Restrictive practices.
A company may attempt to impose unfair purchase or selling prices that bears no relation to the good's actual economic value. This is done in order to maintain profits that are appreciably higher than what would prevail in a competitive market.
Examples of an unfair price would be when large supermarket chains dictate the price of goods in exchange for shelf space or when large tour operators refuse to include a hotel in their listings unless a very low rate is given to their customers.
  • Any Business Conduct that Exploits customers and/or Suppliers.
Competition law aims to protect competition not competitors and therefore maintain competitive markets. National Competition Authorities are therefore afforded the ability to discipline firms that engage in exploitative practices.
Saturday, 13 November 2010 19:25

CARICOM Competitive Policy

Written by Administrator

The CARICOM Competition policy has as its objective to promote and maintain competition and enhance economic efficiency in production, trade and commerce. To ensure that action by enterprises does not reduce the benefits to be derived from the CSME, the CARICOM Competition Policy prohibits anti-competitive business conduct which prevents, restricts or distorts competition. This policy also promotes and protects consumer welfare.

Competition Law discourages conducts which undermines competition and is therefor one of the key measures needed to support the proper functioning of markets. Two of pillars of competittion law are prohibitions against:

  • Anti-Competittive Agreements:

These are agreements between two or more competitors which have the intention or the effect of limiting competition amongst themselves in order to gain higher profits.

  • Abuse of a Dominant Market Position

A firm is dominant in a market when its power far exceeds that of its rivals, and it can set prices without taking into account how competitors would react. In some jurisdictions, for instance, a firm is considered dominant if it possesses at least 40% of the market for a particular product. Public-owned monopolies are also subject to the Community competition rules, according to article 31 of the Revised Treaty of Chaguaramas.

Chapter 8 does not address the issue of regulating mergers in the region. The Regulation of Mergers being the third pillar of competition law. However, CARICOM is in process of developing a policy on merger control regulation.

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