For Businesses

The Fair Trading Commission’s Guideline for Reviewing Mergers, Acquisitions and Joint Ventures explain the internal process used by the Staff when reviewing Mergers, Acquisitions, and Joint Ventures.  The Guidelines define the transactions that are examinable under Section 17 of the Fair Competition Act; describe the internal process undertaken, including the estimated time for completing the review; and describe the critical issues that are examined when the FTC conducts such reviews.

Guideline to Reviewing Mergers, Acquisitions and Joint Ventures.

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.

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.

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:

  • 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”)

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