Wednesday, July 11, 2018
By NEIL HARTNELL
Tribune Business Editor
Updated Bahamian competition legislation is designed to prevent the regulator from becoming a "lame duck" by setting out in extensive detail how it conducts investigations.
KL Menns, the government's Brussels-based competition law adviser, in a footnote to the draft Bahamas Fair Competition Bill 2018 said he had deliberately written the legislation this way to guard against attorneys using "procedural hurdles" to stall or thwart investigations of corporate anti-competitive practices.
He added that his experience had shown this resulted in competition law failing to achieve its stated objectives, especially in developing nations where regulatory bodies typically lacked the necessary financial and human resources, plus relevant experience in dealing with the subject matter.
"It has been the experience of the consultant that new (young) competition authorities in the developing world that have relatively low financial resources to implement a law, attract suitably qualified human resources and to undertake extensive knowledge transfer and training required of its competition agency staff and judiciary, require a more detailed/expansive rules framework to curb procedural mistakes that can lead to a nullification of a decision of the competition authority or the court," Mr Menns wrote.
"It is the practice of legal practitioners in the developing world to hinder the development of competition law practice through the use of procedural hurdles and challenges to bad legal procedure (or 'ultra vires' actions on the part of the competition authority) to thwart the substantive conclusion of a case.
"This practice has led to failure to achieve the goals of competition law in several developing countries. Indeed, some procedural challenges owing to lack of understanding of competition law enforcement procedure in common law countries has led to competition authorities becoming 'lame duck' institutions."
Mr Menns cited one case from Jamaica to illustrate his point, and added: "To curb those challenges, which can be costly, and to answer to the ever-present challenge of lack of financial resources to properly hire qualified persons or to train staff, the consultant has included detailed rules to guide every step of the case initiation, investigation and resolution/decision-making process."
The Government issued the updated Bahamas Fair Competition Bill 2018 for wide release late last week, following a series of late June workshops in its contents. The release also came after Michael Maura, the Chamber of Commerce's chairman, expressed concern to this newspaper about the contents of the original 2007 draft legislation when it was sent to him.
It is unclear why Mr Maura only received the 2007 draft, but the Ministry of Financial Services, Trade and Industry and Immigration said those concerns have been overtaken by the new Bill. It revealed that Mr Menns, a competition lawyer, had been hired in late 2017 to draft the latest version following an assessment of existing Bahamian law, policies and industries.
The Ministry added that the legislation was needed for the Bahamas' accession to full World Trade Organisation (WTO) membership, and also to fulfill its obligations under the Economic Partnership Agreement (EPA) signed with the European Union (EU) in 2008. Feedback is being requested by August 3 this year.'
The Bill, which proposes the creation of a Fair Trading Commission to act as the Bahamas' competition watchdog, is designed to protect Bahamians by guarding against abuses and distortionary practices from rogue businesses that undermine consumer welfare.
It is typically intended to prevent, and punish, practices such as collusion by firms that results in price-fixing or restricting the availability of particular products and services. Abuse of a dominant market position, and mergers and acquisitions that may be against the public interest, are also covered by this legislation.
"Examples of the types of agreements that restrict or distort trade typically include: Price fixing agreements, production quota agreements, geographic market divisions, bid-rigging agreements, tied selling and collective arrangements among suppliers to directly or indirectly fix the resale price of a good or service," the Bill's footnotes state.
Mergers/acquisitions that result in the combined entity obtaining "at least 40 per cent share of any market, or such other amount of the market as the Minister, acting in consultation with the Commission, may prescribe" is one of the criteria that will result in the deal being referred to the Fair Trading Commission for further scrutiny, according to the Bill.
The legislation, according to the footnotes, will also apply to foreign mergers and acquisitions that affect the supply of goods into the Bahamas. "The conduct of multinational corporations--where those corporations sell goods in or into the Bahamas, is covered under this Act," the footnotes state.
"For example, if GLAXO-SMITH KLINE is merging with a North American company, and that company sells pharmaceuticals, for example, in or into the Bahamas, then that merger may be subject to the merger review and control procedures under this Act."
The Ministry added in its statement: "Competition law and policy is an essential element of markets working efficiently. It seeks to promote competitiveness and brings important benefits to consumers by encouraging efficiency of firms, enterprise, innovation, and a widening of choice; enabling consumers to purchase better quality products and lower prices; and creating opportunities for small and medium-sized businesses to grow.
"These benefits are achieved through the enactment of three main rules, namely a rule prohibiting abusive market conduct by a single dominant player in the market; a rule prohibiting anti-competitive agreements which restrict trade in the market; and a rule requiring that mergers that can lead to a reduction of competition in the market be subject to review and resolution by the competition authority."