By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Super Value’s owner says The Bahamas has “the most competitive food distribution industry in the world” as he pushed back against the Prime Minister’s assertion that lack of choice is fuelling the high cost of living.

Rupert Roberts told Tribune Business that increasing the number of food stores, especially in New Providence, will over-saturate the market and result in the “failure” of smaller operators that “are barely making it now” leading to job losses.

Speaking out after Philip Davis KC, in his national address last week, blamed “a lack of competition” in unidentified industries for high prices and a post-COVID cost of living crisis that continues to squeeze middle and low income Bahamian families, he argued: “Speaking for the food industry, I think The Bahamas - and Nassau in particular - is the most competitive food industry in the world.

“It’s not that there’s no competition. It’s very, very competitive, so I don’t agree with that one.... If you put in any more stores, the existing stores will only lose money. The ‘Mom and Pop’ and smaller stores can barely make it now. You divide that up among a greater number of stores and you’ll start having failures.

“I noticed the Golden Gates supermarket next to Super Value in Golden Gates, they recently went out of business. I knew them to be there for 50 years, and they’ve gone out of business. You add any more competition, and you’ll just wipe out medium and ‘Mom and Pop’ stores.”

The food retail distribution industry, besides large chains such as 13-store Super Value, BISX-listed AML Foods and the Budget neighbourhood food stores, also includes numerous medium and small ‘Mom and Pop’ standalone outlets. However, Mr Davis, in an address in which he unveiled a 50 percent slash in the VAT rate on most food items to 5 percent, argued prices are being kept high by insufficient competition.

“One of the biggest reasons for the high cost of living in The Bahamas is a lack of competition. When competition is weak, or if companies have a monopoly in a certain market, businesses can charge whatever they like. When there’s competition, customers have more choices. They have more choices about where to shop and what to buy,” the Prime Minister said.

“Competitors can offer cheaper prices to entice customers, and businesses soon realise that the way to succeed is by becoming more competitive. In order to strengthen competition, we will shortly be engaging in a consultative period prior to introducing legislation to prohibit anti-competitive practices.

“By promoting competition, the legislation will seek to enhance consumer welfare and protection through lower prices, remove unfair trading practices, and secure better products and services and a wide range of choice at the best possible prices.” No monopoly, or industry lacking sufficient competition, was identified in the Prime Minister’s speech.

Mr Davis, though, returned to the same theme during his address to PLP supporters on Majority Rule Day. “We must dismantle the barriers that hold back economic empowerment for so many Bahamians. This is not about politics; it’s about justice, it’s about opportunity,” he said.

“It’s about saying once and for all the old ways that favour monopolies, protect privilege and stifle competition cannot continue. We must recognise the urgency of this moment. We cannot wait another tear, another decade to address these issues.” The Prime Minister added that his government must continue to “challenge the status quo” and produce “a more fair, competitive” economy in which all Bahamians can thrive.

The international side of the Bahamian economy, by virtue of catering to millions of tourists and overseas clients, has multiple operators competing for a sizeable client base. But the relatively small size of the domestic Bahamian market, estimated at around 400,000 citizens and residents, means that in some sectors there are only sufficient consumers to support a small number of competing firms.

A prime example of the consolidation this has triggered is the Bahamian life and health insurance industry, which has shrunk from around eight to nine underwriters at the turn of the 21st century to a sector dominated by Colina and Family Guardian. Other remaining operators include BAF Financial and CG Atlantic, which is primarily focused on health insurance, pensions and property and casualty insurance.

Meanwhile, Mr Roberts, while emphasising that he did not wish to “throw cold water” on the proposal, told Tribune Business that the app unveiled by Mr Davis to help Bahamian shoppers find “the best prices” for food and, eventually, other consumer goods was unnecessary and will likely represent a further cost for taxpayers.

“The people that are shopping, they are deciding if they are getting the best deal, the best prices,” he said. “An app is not going to tell the consumer anything. The consumer has already figured that out, and they are shopping where they think they will get the best deals.

“That [the app] will only be an expense to the consumer, and they have already figured that out - where to shop, who has got the best prices, and they are shopping there now. An app will only be an added cost to administer and that taxpayers have to pay for.

“But they say they’re going to do it, and we’ll see if it does any good. I’m not going to throw cold water on the idea. Any help we can give the customer, they deserve it.” Mr Davis, in his national address, revealed that the ‘Price Comparison App’ will be launched in the 2025 first quarter and be focused initially on food costs.

“In order to help Bahamians shop around to find the best prices, we are also launching a new ‘Price Comparison App’ to help consumers easily compare prices between retailers,” the Prime Minister added. “The app will initially focus on the food sector, but is planned to extend across a number of sectors.

“On the current timetable, we expect to have the app up and running by the end of the first quarter of 2025. When people have more information, they can make the choices that suit them best. And when people have more choices, they can in turn make decisions that are right for them and their families.”

Observers have long argued that the relatively small size of the Bahamian domestic market makes some industries susceptible to domination by a small number of close-knit companies, whose principals all know each other, hence the need for competition or antitrust-type legislation.

Competition legislation, designed to protect consumers from monopolies, price fixing and other unfair trading practices, is far from a new concept in The Bahamas. Draft Bills have been in existence from afar back as 2007 and the Christie administration, and the failure to bring such legislation into law has left The Bahamas non-compliant with one of its obligations under the Economic Partnership Agreement (EPA) with Europe.

One source, familiar with the near two decades of work that has gone into crafting competition legislation, told this newspaper that successive administrations have been reluctant to place a Bill on Parliament’s agenda for fear of the impact on political supporters who own businesses that enjoy a monopoly or oligopoly-type market situation.

“It was part of the approach many moons ago. Draft legislation and a framework has already been developed for competition policy. Those are things successive governments could have done over the years and have not seen fit to do it,” the source said.

“There was broad-based agreement on what needed to be done. A lot of work went into it and nothing got done. This is nothing new.” They added that competition laws “absolutely make sense for the interests of the country”, but voiced scepticism that anything will actually happen.

The proposed legislation was revised as recently as the Minnis administration as part of its subsequently aborted bid to take The Bahamas into full World Trade Organisation (WTO) membership. The Bahamas Fair Competition Bill 2018 proposed the creation of a Fair Trading Commission to act as the Bahamas’ competition watchdog.

Its role would have been to protect Bahamians by guarding against abuses and distortionary practices from rogue businesses that undermine consumer welfare. 

“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 said.

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.”