Competition Law and Policy
The Fair Trading Act, No13 of 2006
1. Competition Policy
The Fair Trading Act (called Competition or Anti-Trust Law in some countries) is intended to eliminate or curtail business practices which hinder or prevent firms from competing freely with each other, thus providing consumers with greater choice of products at lower prices. The Act does not apply to:- collective bargaining; agreements regarding copyright and professional associations; companies that fall under the purview of the Telecommunications Authority Act 2001 and the Securities Industry Act 1995; any other business or activity declared by the Minister by Order subject to affirmative resolution of Parliament.
The Fair Trading Act provides for the establishment of a Fair Trading Commission, to promote and maintain fair competition in the economy and for related matters. An effective Fair Trading Act is essential to the realization of the benefits that can flow from the liberalization of international trade and foreign investment.
The Act addresses:-
Mergers, acquisitions or take-over which substantially reduce competition or reduce access to a market.
Abuse of market power by firms which are dominant in the market.
Collusive arrangements, agreements or undertakings between a number of firms to limit competition between themselves or to deter other firms from entering the market.
The Fair Trading Act forms part of a programme of domestic legislation that follows from commitments by Trinidad and Tobago, encompassed in The Revised (CARICOM) Treaty of Chaguramas and the Agreement establishing the WTO. The Act interfaces with a wide range of policies (Trade, Industrial, Regional Development, Intellectual property, Privatization) and Regulations such as the issuing of licences for trades and professions.
Status of the Act
The Law was passed in August 2006.
In April 2007, the following parts were proclaimed:-
Part 4 ‘Constitution of the (Fair Trading) Commission’.
Part 5 ‘Staff of the Commission and Related Matters’.
Part 6 ‘Finance Report and Audit’.
The Fair Trading Commission is being established.
Effects of the Act on Business Practices
The Act presents one more reason for firms to maintain accurate records of their operations. Accurate records are essential in support of complaints to the Fair Trading Commission or in mounting a defense against such a complaint. Charges of anti-competitive behaviour are not to be taken lightly. The Commission, for the purposes of discharging its functions, may make application to the High Court for the determination of a contravention of the Act. Obstructing or impeding the activities of the Fair Trading Commission may, on summary conviction, result in fines and custodial sentences.
The Fair Trading Commission may initiate its own investigation of suspected anti-competitive behaviour. It however remains the responsibility of business persons to bring such behaviour(s) to the attention of the Commission.
The Act will affect a firm’s choice of directors in two ways.
- Inter-locking directorships.
- Disqualification, by the Commission, of persons from becoming directors.
Areas of Interest to Service Providers
Information and Communication Technologies emerge, again, as an important part of the framework needed to establish Trinidad and Tobago as a network-based economy, able to operate in truly global markets. In this situation however, economic activity and potentially anti-competitive behaviour, becomes more difficult to regulate in the different geographical markets and jurisdictions.
The TTCSI notes that essential layers of the new ICT infrastructure are either still under bottle-neck control or threatening to fall under such control, e.g., access to ‘top level’ connectivity on the ‘inter-net’ has become divided into two groups of providers:- leading ‘backbone’ providers and ‘others’ who pay access charges to them. Parts of the ‘top-level’ connectivity could soon be dominated by enterprises who may then abuse their dominant position. The recent ruling by the European Court, against Microsoft, accusations against Apple (accused of variations in pricing between markets) and concerns about Google, suggest that ICT consumers in Trinidad and Tobago need to be alert to developments and to bring these concerns to the attention of the regulatory agencies.
2. Fair Trading Commission
Service providers must be vigilant and ensure that the adjudicating authority (Fair Trading Commission), when it is established, has the human, financial and technical resources to assess each case in a timely manner. Small, developing economies, with few industries and few firms in each industry, cannot afford to be too ‘broad brush’ and general in our approach.
3. Special Cases
The Act seems, Part 1 3(1)(i), to allow special treatment and possibly ‘Efficiency Defenses’ in specific cases e.g.,:-
- Co-operatives, acting co-operatively
- Declining industries ( to allow competitors within a declining industry to co-operate in managing their withdrawal from the industry).
- Agreement between competitors on product standards or to form a joint venture to develop a new product.
- Two multi-product competitors agree to specialize production with each supplying the needs of the other.
After the establishment of the Fair Trading Commission, members are urged to ascertain, from the Commission, general information with respect to their rights and obligations under the Act and to bring to the attention of the Commissioners, any suspected anti-competitive activity.
The Ministry of Trade and Industry is in the process of establishing the Fair Trading Commission. Member Associations who wish to review the Fair Trading Act, No 13 of 2006, may visit the TTCSI web site www.ttcsi.org