The Trinidad and Tobago Chamber of Industry and Commerce hosted a Zoom session last September titled “Fair Trade 101: T&T’s Fair Competition Policy Explained” in order to sensitise our members regarding the earlier operationalisation of the Fair Trading Act.
The feature speakers included Fanta Punch (M Hamel-Smith & Company); Patricio Torres (Nestle—Anglo Dutch Caribbean); Michelle Phillips (Jamaica Fair Trading Commission); Ronald Ramkissoon & Bevan Narinesingh (T&T Fair Trading Commission); and Marc Jones (Caricom Competition Commission). Today’s article utilises some information from that session and is presented for the benefit of the wider business community and other public stakeholders.
On February 10, 2020, the remaining substantive provisions of the Fair Trading Act; Parts I, III, VII, VIII and IX were proclaimed and came into operation in Trinidad and Tobago. The Fair Trading Act creates an institutional framework for the enforcement of competition policy and deals with many major issues including: the abuse of monopoly power or market dominance; anti-competitive agreements; anti-competitive mergers and relevant enforcement measures.
Why is competition important?
We know that competition policy is imperative for consumers as it provides for better prices and quality of products, creates more choices to suit a plethora of consumer preferences, provides a platform for greater innovation and enhances international trade. However, when fair competition exists, both the consumer and businesses win.
The primary objective for all businesses is to make a return on their investment by providing valuable solutions to its customers. As multiple business owners operate within an industry, they face competition with each other which shifts the objective from solely profit making to producing the best product or service out of the lot. Truth is, fair competition forces all businesses to put forward their best in everything that they do. Becoming creative and evolving is imperative as companies are continually driven to improve the quality of their output, to be more efficient than their rivals, reduce their costs, and innovate. Additionally, fair competition encourages the development of new businesses which generates employment for society.
For businesses, implementing an internal competition compliance policy engenders consumer’s trust in their business and protects a company’s reputation. It shows the company’s belief in their ability to succeed in a functioning competitive market in which they are capable to attract new customers and stay at the forefront of their industry and push the limits of innovation. Furthermore, competition provides benefits to the economy, improves resource allocation, productivity and efficiency, fosters economic growth and increases the ability to compete at the global level.
T&T’s fair-trading legislation: What’s included and what’s not
In order to maintain a competitive and market friendly environment, the government introduced anti-competitive legislation, that is, “The Fair Trading Act”. Under anti-competitive agreements or practices, the law covers horizontal (same market level) and vertical (different market levels) agreements, cartels and other anti-competitive behaviour. Cartel behaviour that is prohibited under the Act include: price fixing agreements, market sharing, bid rigging, and restrictions on production quotas.
Another major issue covered by the Act is abuse of monopoly power or by undertakings in a position of economic strength or dominance. Market dominance is inferred based on 40 per cent or above in market share within an industry. Abusing market power include actions such as restricting the entry of other entities into the market, excessive pricing, predatory pricing, exclusive dealing and tied-selling. The Act also prohibits anti-competitive mergers, take-overs and joint ventures.
With the legislation now fully proclaimed, the Trinidad and Tobago Fair Trading Commission (TTFTC) will now be able to act upon the concerns that have been identified with regard to anti-competitive process over the last few years.
There are however certain sectors where the Act does not apply including: securities industry, telecommunications, banking industry, intellectual property, professional associations/collective bargaining situations, and activities expressly authorised or required under any treaty or agreement to which Trinidad and Tobago is a party.
The Act also allowed for a transitional amnesty i.e. an enterprise who was party to or engaged in an anti-competitive agreement or practice had to notify the Commission within one month of the Act coming into force of the details of the anti-competitive agreement or practice.
T&T’s Fair-Trading Commission
Established in 2006, the TTFTC’s objectives are to: “Prevent anti-competitive conduct thereby ensuring competition and efficiency while at the same time complementing other policies that promote competition; Maintain free and fair competition in business; and take action against abuse of dominance, restraint of trade and unfair or deceptive trade practices”.
Notably, the TTFTC has the power to carry out investigations in connection with matters falling within the provisions of the Act, summon and examine witnesses, to call for, require the production of and examine documents in connection with an investigation, and to direct an enterprise to take such steps as are necessary and reasonable to overcome the effects of abuse of dominance in a relevant market.
The TTFTC can take to Court any business or individual who has been found guilty of anti-competitive practice and has failed to take corrective measures, after being instructed by the Commissioners.
Why the enforcement of competition is good for business?
Appropriate competition legislation is essential for the efficient functioning of a modern free market economy. Barriers to competition such as abuse of monopoly power, anti-competitive mergers and anti-competitive agreements have deleterious effects on the growth of industry and are a deterrent to investment. Having an effective competition law framework in place is expected to enhance the investment climate, safeguard the liberalisation process and promote an enabling environment for sustainable growth and development. An effective competition regime is even more important during a period of economic slowdown as it can help further the path towards future recovery by promoting efficiency.
Tips for businesses
Companies should consider the following tips to compete safely in their respective industries: avoid behaviour such as sharing or dividing markets/bid rigging or discussing tenders or price-fixing; and do not neglect competition compliance. Problematic conduct may not be investigated immediately but could come to light later on so avoid engaging in conduct that remains prohibited. Conversely, do continue to deal fairly with your customers and suppliers and ensure that you and them are complying with the law.
Preserving the reputation of your organisation is critical!
This article was prepared for the T&T Chamber by Leeooi-Oneika Howard, trade analyst in the Trade and Business Development Unit.