1.
What are the objectives of the Act?
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:
· Encourage competition in the conduct of trade and business
in Jamaica;
· Ensure that all legitimate business enterprises have an equal
opportunity to participate in the Jamaican economy;
· Provide consumers with better products and services, a wide
range of choices at the best possible prices.
2.
To whom does the Act apply?
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:-
· activities of trade unions involved in collective bargaining;
· activities required under international treaties;
· agreements relating to the use of any copyright, patents or
trademarks;
· activities by professional associations intended to develop
standards of competence necessary for the protection of the public;
and
· activities that are declared exempt by the Minister, subject
to affirmative resolution.
3.
What is the Act about?
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.
4.
When did the Act come into effect?
The Act
was passed by Parliament in March 1993.
5.
Which other jurisdictions also have fair competition legislation?
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.
6. Which body administers the Act?
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.
7. What are the powers of the Commission?
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.
8.
Can one appeal against the findings of the Fair Trading Commission?
Any individual
or business that is dissatisfied with a finding of the Commission may
appeal through the Courts within fifteen days of the finding.
9.
What makes a practice anti-competitive?
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:
· how widespread the practice is in the market;
· the existence of alternative channels through which competitors
may reach the consumers;
· the balance of market power between existing competitors; and
· the ease of entry into the market.
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")
10.
What is a dominant position in a market?
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.
12. Is it illegal for a supplier to charge
me a different price from that which he charges my competitor?
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.
13.
Is a supplier breaching the Act if it refuses to supply me?
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.
14.
Is it lawful for my competitor to sell goods below cost price?
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.
15.
Are discounts prohibited under the Act? 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.
16.
A shop opening nearby will be selling the same goods as I sell. Does
the Act prohibit this?
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.
17.
As trade barriers fall and Jamaican businesses are subject to greater
competition from imports, will the Act still be relevant?
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.
18.
Will the Act limit my ability as a Jamaican producer to compete effectively
with imports as trade barriers fall?
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.
19.
What are the responsibilities of consumers?
Consumers
are responsible for finding out what their rights are and exercising
those rights. They may protect their own interests by recognizing, collecting
evidence of, and reporting, any breaches of the Act to the Fair Trading
Commission. Not all matters fall under the Act. In such cases, consumers
should take their complaints to the Consumer Affairs Commission.
Most importantly, consumers should "vote with their feet":
they should not continue to support merchants who offer poor quality
products, charge high prices, fail to honour their obligations or provide
poor service. Instead, they should take their custom to merchants who
provide top quality products at competitive prices. Such action by consumers
is the best way to ensure the best outcome for consumers.
20. Will I get compensation if I complain
to the FTC?
If, after
receiving a complaint from an aggrieved consumer, the FTC finds strong
evidence that a merchant has breached the FCA, it will try to negotiate
between the two parties. This settlement may be monetary or non-monetary.
In the event that a settlement cannot be reached, the FTC will take
the case to court. Fines that are levied by the courts in cases brought
by the FTC will be paid to the government and not to the consumer (or
to the FTC). For the consumer to receive compensation through the court
system, he may exercise his private rights to action and take legal
action against the merchant under Section
48 of the FCA. The consumer may need to seek the assistance
of a private attorney to undertake this course of action.
21.
What is a warranty?
A warranty
is an undertaking given to a purchaser by a seller that a product is
reliable and free from defects. The seller further undertakes that he
will, without charge, repair or replace defective parts or replace the
entire product if the product turns out to be defective within a given
period. Certain specified conditions may have to be met before the warranty
is enforceable.
22.
How long is the warranty on a used or new vehicle?
Warranties
on vehicles are dependent on the Expressed Warranty
given to the consumer. Ministry Paper (19) set out by the Ministry of
Industry, Commerce and Technology stipulates that the warranty period
of a used vehicle should be 90 days (3 months) or 5500 km, depending
on which occurs first. Warranties on new cars, however, are for at least
a year, but may be more, depending on the dealer.
23.
What do I do if a manufacturer's warranty on an item states, for example,
1 year, and the merchant tries to give me a 3-month warranty instead?
Under the
Act, the manufacturer's warranty supercedes. Section
37 (4) of the Act states that where a representation on an article
offered for sale is made by a person outside of Jamaica, the representation
shall be deemed to be made by the person who imported the article. Therefore
if a manufacturer makes a representation in the warranty on an article,
it becomes the importer's duty to honour the manufacturer's warranty.
24.
How many times should a merchant be allowed to repair a product that
malfunctions before he has to provide a replacement?
Under the
Sale of Goods Act a merchant must provide a refund, or a replacement
when it is clear that the item cannot be repaired. However, the number
of times allowed for repairs before the item should be replaced is determined
on a case by case basis. It may be possible that the merchant might
have missed the real problem in attempting to repair the item on previous
attempts, but shows proof that he will be able to make the necessary
repairs to the satisfaction of the customer, if a further opportunity
to do so is allowed. Whether or not the merchant would be allowed to
make that attempt is based on the facts of each case.
25.
What Information should be included in a refund policy?
A refund
policy should include the following information:
· Length of time within which a claim for refund must be made;
· Whether refund will be in cash or credit notes;
· Whether a claim must be accompanied by a receipt or any other
proof of purchase;
· Whether any amounts will be deducted and why.
26.
Is "no refund" a legal policy?
The Law
relating to the Sale of Goods stipulates that all goods which are offered
for sale must be of a merchantable quality. This means that the quality
must be of an acceptable standard. If the consumer purchases goods that
fail to meet this standard, he is entitled, in certain circumstances,
to reject the goods and demand full refund. A merchant's refund policy
must therefore be established in accordance with the said Law, and any
Policy which states "No Refund" without more, is by its very
nature, in breach of the Sale of Goods Act.
27.
Why am I given a credit note and not cash when I return a defective
product? Is there any law regarding this?
28.
Should a customer be refunded if he wants to return a product that has
no genuine defects?
29.
If an item malfunctions three or more times, am I entitled to a refund
if I am no longer interested in buying from that store?
The Act
does not specify the form that a refund should take. As such, the answer
to all the questions above is determined solely by the refund policy
of the merchant at the store from which the item was bought. The decision
on what is deemed suitable for returns as well as the type of refund
to be given (for example. cash or credit note) is not specified by the
Act. Each individual merchant will have his own policy, which might
or might not be similar to another merchant's policy and it is this
policy which is applicable to purchases, returns and refunds. In accordance
to Section 37(1),
however, the merchant must make this information known to consumers.
A merchants refund policy should therefore be placed prominently in
the store, where consumers are able to access the information before
making his purchase.
30.
Why is it necessary to get a receipt when I buy a good or service?
For their
own protection, consumers should ensure they get a receipt. It is the
best and safest way by which a consumer can provide proof of purchase,
as well as date of purchase. Goods that can be bought in stores are
not usually exclusive to any particular store. Identical items can be
found in a number of stores. The consumer will therefore need to prove
that a particular item was bought in a particular store. Further, some
refund policies stipulate the amount of time within which the merchants
are willing to take products back. They will need to ascertain relevant
information from a receipt. It is important to have tangible proof,
rather than to have a battle about whether or not you did make your
purchase from a particular store on a particular date.
31.
What is the "as is where is" principle?
This principle
refers to the practice of selling items for which no refund or warranty
is provided. These items are usually faulty, defective or inferior,
and as such, are being sold in their present condition and usually at
discounted prices. Further, the seller is not expected to transport
such an item to the buyer; transporting the item is the buyer's responsibility.
That is, the item is sold "as is where is". The buyer is usually
made aware, and has a duty to make himself aware, of what defects exist,
and should be able to make a decision as to whether the reduced price
compensates for any deficiency which the item might have. A used car
dealer may, for example, offer a very old, defective car "as is
where is". The buyer will not receive a warranty, or be entitled
to return this vehicle.
32.
What does "caveat emptor" mean?
"Caveat
emptor" is a Latin expression, meaning "let the buyer beware".
It is the principle that fixes the buyer with a responsibility for assessing
the quality of a good before buying. The potential purchaser is being
warned that the good being purchased might not satisfy the terms of
the contract under which it is being purchased. Under this principle,
the purchaser is responsible for protecting himself in the transaction.
Smart consumers know their rights and enforce them. It remains in the
best interest of every consumer to learn the facts about his transaction
and ask questions if he is unsure about the merchants' policies or about
their own rights. Information is the best defence against purchasing
defective products or falling victim to fraudulent practices.
If your questions remain un-answered, please 
