The Act was established to ensure that the benefits of the competition process in Jamaica are unhindered by anti-competitive activity. The objectives of the Act are to:
The Act applies to all persons and businesses operating in Jamaica with, some exceptions. The following are some of the groupings that fall outside of the Act:-
It could be said that the Act is to businesses what rules are to sports. The aim in any sport is to win and to be the champion. To ensure that the best wins, there are rules to ensure fair play. Runners in a race have to start at the same time and run the same distance; athletes are not allowed to take steroids; foul play is forbidden in all sports; and team sports have the same number of players on each side.
Similarly, the aim in business is to be better than the competitors; win large market shares; and make the highest profits possible. The best businesses survive while inefficient ones die. The Act ensures fair play among businesses as they fiercely compete against one another. "Foul play" such as anti-competitive and abusive behaviour is not allowed.
The Act was passed by Parliament in March 1993.
Many other jurisdictions also have fair competition legislation. Examples include the European Economic Community (EEC) and their member countries such as the United Kingdom, Germany, France, Ireland and Italy; the United States, Chile, Canada, Australia, New Zealand, Mexico, Costa Rica and South Africa.
The Fair Trading Commission administers the Act. The Commission consists of up to five Commissioners, who are appointed by the Minister of Industry, Commerce and Technology, and staff who are headed by the Executive Director. The staff consists of lawyers, economists, research officers, complaints officers and administrative and support staff.
The Commission has the power to carry out investigations in relation to the conduct of business in Jamaica to determine if any enterprise is engaging in practices that are in contravention of the Act. Such investigations may be self-initiated by the Commission or be carried out following a complaint. The Commission has the power to obtain any information that it considers necessary for the purposes of the investigation. All investigations are carried out by the staff of the Commission.
In addition, the Commissioners have the power to summon and examine witnesses; to call for and examine documents; and to administer oaths. Where they find that an arrangement has contravened Sections 17, 20 or 33 of the Act, they may prohibit the arrangement. For prohibitions under Sections 20 and 33, they may also direct the enterprise concerned to take steps that are necessary to overcome any anti-competitive effects resulting from the arrangement.
The Commission can also 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.
Any individual or business that is dissatisfied with a finding of the Commission may appeal through the Courts within fifteen days of the finding.
An anti-competitive practice is any practice that prevents businesses from competing fairly and fiercely with each other. They come in various forms. Agreements that foreclose channels of distribution and markets from competitors and raise competitors' costs relative to one's own, such that competition is lessened in the market, are anti-competitive. Agreements between potential competitors not to compete are also anti-competitive. Examples here include bid rigging and cartels. In both, potential competitors co-ordinate their efforts such that they act as if they were one enterprise and do not compete against each other.
Whether or not a practice is anti-competitive depends on the likely effect on competition in the market. It is therefore highly case specific, as the effect on competition depends not only on the specific nature of the practice but also on other factors such as:
As a general guideline, if an enterprise has only a small share of the market, it would be highly unlikely that any of its practices could effect a lessening of competition so as to be considered anti-competitive. On the other hand, enterprises with large market shares are likely to have high market power and consequently would have greater ability to effect anti-competitive behaviour. (link to sections under "Prohibitions under FCA")
For the purposes of the Act, an enterprise holds a dominant position in a market if, by itself or together with an interconnected company, it occupies such a position of economic strength as will enable it to operate in the market without effective constraints from its competitors or potential competitors.
For an enterprise to be dominant, it would normally have a large share of the market, in absolute as well as relative terms; and the market would be characterized by high entry barriers. In other words, both existing and potential competition would be weak. Being dominant is, in itself, not a breach of the Act; only the abuse of a dominant position is.
Examples of abusive behavior include excessive pricing, predatory pricing, refusal to supply, restricting access to essential facilities, discrimination against some customers without an objective justification, exclusive dealing and tied selling.
Not necessarily. Different prices may simply reflect variations in the costs of supplying different customers (higher transport costs for example) or may reflect discounts for bulk purchases. Price discrimination may, however, be an infringement of the Sections 17 or 20 of the Act where there is evidence that the prices charged are excessive or are used to lessen competition substantially (e.g. because they are predatory or are designed to foreclose markets). Of course, in these circumstances it would have to be proved that the practice is having or is likely to have the effect of substantial lessening of competition. In the case of Section 20, the supplier must be shown to hold a dominant market position.
The Act does not prevent a supplier from choosing with whom it wishes to do business. However, where the supplier is in a dominant position, it may be breaching Section 20 of the Act if it refuses to supply certain customers without objective justification.
The fact that an activity is being run at a loss is not in itself an infringement of the Act: the key question is whether there is any anti-competitive effect. In the case of dominant undertakings, Section 20 of the Act may be breached if, for example, the undertaking embarks on a pricing strategy whereby it deliberately incurs losses in order to eliminate a competitor so as to be able to charge excessive prices in the future. This is also known as predatory pricing. Note that, for Section 20 of the Act to be breached, the supplier must be shown to hold a dominant market position.
Discounts are a form of price competition and are generally to be encouraged. They often reflect the lower costs of supplying certain customers or groups of customers. They may, however, be prohibited under Sections 17 and 20 if they are anti-competitive - e.g. loyalty discounts which are conditional on the customer buying all or most of its supplies from the supplier. Of course, in these circumstances it would have to be proved that the practice is having or is likely to have the effect of substantial lessening of competition. In the case of Section 20, the supplier must be shown to hold a dominant market position.
No. The introduction of competition is to be welcomed as it encourages businesses to gain an advantage over their rivals and win more business by providing more attractive terms to customers and/or developing better products.
The objective of the Act is to ensure that all businesses, Jamaican- or foreign-owned, producing domestically or overseas, face a level playing field. This means two things. First, the Act will ensure that trade barriers are not replaced by non-tariff barriers, for example anti-competitive practices, such that the benefits of a liberalized economy do not flow to the consumers. Second, with increased competition from imports, Jamaican businesses may use the Act to prevent foreign suppliers from employing anti-competitive tactics themselves.
The relevance of the Act in an increasingly globalized economy is no different from its relevance in recently liberalized industries within Jamaica. Consider the example of the telecommunications industry in Jamaica. Even though the industry was recently liberalized and the previous monopolist is subject to intense competition from the new entrants, the Act is still relevant. It is necessary for ensuring that the previous monopolist abuses its dominance in the market and acts in an anti-competitive manner that limits the new entrants' abilities to compete effectively. The benefits of safeguards against anti-competitive practices are clear in this example - lower prices, better service and a wide range of products. Trade liberalization is similar to the liberalization of any one sector within the Jamaican economy. The benefits to the consumers of ensuring fair competition are significant in both circumstances. The Act will therefore continue to be relevant.
You will be affected by the Act only if you have any anti-competitive practices in place. There are many ways in which you can compete effectively with foreign suppliers - or other domestic suppliers - that are not anti-competitive. The Act will not restrict your undertaking such practices; on the contrary, it encourages.
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