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1 Competition Law and Policy Workshop March 30-31, 2011 Savannah Hotel.

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Presentation on theme: "1 Competition Law and Policy Workshop March 30-31, 2011 Savannah Hotel."— Presentation transcript:

1 1 Competition Law and Policy Workshop March 30-31, 2011 Savannah Hotel

2 Is Com-Com guilty of any type of anti- competitive conduct and if so what is it and how was that determined? 2

3 3 Step 1: Identify the relevant market in which an abuse of a dominant position is suspected. Step 2: Determine whether a company has sufficient control of that market to constitute a dominant position. Step 3: Identify the conduct that may harm competition. Step 4: Assess the conducts overall competitive effects.

4 Step 1: Establishing the relevant market(s): A market will usually be defined by the products supplied (relevant product), the area of competition between the relevant firms (geographic dimension), and the nature of the economic activity being undertaken (functional dimension) In this case it would be necessary to define two markets Where the company has market power, and Which is affected by the practice 4

5 Step 1: Establishing the relevant market (continued) Product: Look for substitutes – what will consumers substitute for these sugars; possibly perform SSNIP test Look at both demand side and supply side substitutability BROWN and GRANULATED SUGAR Geographic: Where is the product sold Would consumers easily switch to buy this sugar directly from the US BARBADOS Market Functional: Looks at whether retail, wholesale, distribution, manufacture/production etc. 5

6 Step 1: Establishing the relevant market (continued) Relevant Market is: The production of brown and granulated sugars in Barbados Market which is affected or harmed by the conduct is: The transportation/distribution of wholesale brown and granulated sugar 6

7 Step 2: Establishing whether the company has a dominant market position Check market share: Look at local sales of Com-Com and local imports. From this you will get total consumption and then what percentage of this is Com-Coms local sales 93% average over a 4-year period 7

8 Step 2: Establishing whether the company has a dominant market position (continued) Check barriers to entry: Look for governmental, economies of scale, financial barriers, etc Imported sugar faces high import duties Due to economies of scale it is not profitable to open another sugar factory Start-up costs for a sugar factory are very high 8

9 Step 3: Identify the conduct that has the potential to harm competition Under Section 16 (3) (g) of the FCA it holds that an enterprise is abusing its dominant position if it engages in exclusive dealing, market restriction or tied selling TIED SELLING occurs when a seller of product A and B requires all purchasers of A (the tying product) to also buy product B (the tied product). 9

10 Step 4: Assess the competitive effects Com-Com was found to have abused its dominant position by forcibly tying the delivery of sugar to the manufacture of that sugar. It was therefore found to be in breach of Section 16 (3) (g) of the FCA The Commission directed Com-Com to grant the option to those distributors who wished to make alternative delivery arrangements the opportunity to do so i.e. they did not have to accept Com-Coms delivery put could self- deliver. 10

11 Step 4: Assess the competitive effects (continued) It was understood by the Commission that Com-Coms directive was a rational response aimed at improving their productivity (Section 16 (4)), however, the manner in which the practice was instituted (without proper consultation from the affected parties) constituted an abuse of their dominant position Some distributors had stated that they had adjusted to the Com-Coms new delivery system Therefore, benefits to the decision included: Reduced distribution costs and lower prices Avenues now available to self deliver Retail pricing of sugar became more competitive 11

12 Competition Law and Policy workshop March 30-31, 2011 Fair trading Commission Good hope Green Hill St. Michael 12


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