This study and investigation of the petroleum industry, with particular focus on gasoline retailing, was carried out in response to a Ministerial Directive (Appendix A) issued by the Minister of Commerce, Science and Technology to the FTC pursuant to Sections 5(1)(b) and 9 of the FCA.
The Directive required the FTC to conduct the necessary market research and investigation in order to prepare and later implement a Code of Conduct to govern the relationship between petroleum marketing companies and retailers. In particular, the Directive required the FTC to put in place a Code to regulate the vertical arrangements within the industry, consonant with the provisions of the FCA.
It was mandated by Cabinet that the focus of the Code be the protection of the Jamaican consumers. This was interpreted to mean that the ultimate outcome of the Code is to ensure the lowest possible gasoline prices and the widest possible choice of retail outlets for consumers. The objective of the Code therefore is to maximize consumer welfare subject to retailers’ viability. In other words, the Code should provide for the viability of retailers while at the same time ensure the lowest possible prices and the widest choices for consumers, having regard to the provisions of the FCA.
The FCA does not regulate prices per se. Instead it seeks to ensure that the market conditions necessary for a competitive environment are in place. A competitive market will guarantee that the lowest possible prices and the widest choices are provided by the most efficient suppliers.
The study and investigation were carried out to address the issues raised in the Directive.