Change is Underway: Building a Competition Regime in the ECCU

 by Nicole Garraway-OECS Commission

Competition defines the act or process of rivalry whereby sellers pursue the same goals, in an effort to attract sales, gain market share, and garner profits by offering the best practicable combination of price, quality, and service delivery. Competition is therefore regarded as an integral piece of the economic growth puzzle, as it facilitates the efficient operation of markets, fosters innovation, generates fairness, creates wealth and induces productivity and growth.

However, small island developing nations, like those of the OECS, are often deemed highly susceptible to anti-competitive practices, which can be attributed to several factors. The asymmetry of information can be attributed principally to the segmentation of markets, formation of cartels and creation of local monopolies, thus reducing efficiency. In addition, an absence of enterprise culture further contributes to the proliferation of monopolies and creation of inefficiencies, thus retarding growth – particularly of Micro-, Small & Medium Sized Enterprises (MSMEs).

While anti-competitive conduct by firms represents the end product of little to no competition culture, the cause often lies in ill-suited policies, and weak legislative and regulatory arrangements. Accordingly, it is clear that the two main pillars of any competition regime are policy and law. Competition policy addresses the regulation of economic activities by governments, while competition law speaks to issues of controlling cartelization, preventing anti-competitive mergers, and proscribing the abuse of dominance, inter alia.

At a CARICOM level, Member States take their policy directions from Chapter 8 of the Revised Treaty of Chaguaramas. This chapter sets out the overarching principles and objectives of competition policy, namely, the “promotion and maintenance of competition, and the enhancement of efficiency in production, trade and commerce; the prohibition of anti-competitive conduct that prevents, distorts or restricts competition, or constitutes the abuse of a dominant position in the market.

The CARICOM Competition Commission (CCC), as established by Article 171 of the Revised Treaty of Chaguaramas, is empowered to undertake its roles and functions pursuant to Articles 173 and 174 of the Revised Treaty. Succinctly put, the CCC applies the rules of competition in respect of anti-competitive cross-border business conduct; promotes and protects competition in the Community; coordinates the implementation of the Community competition policy; and performs any other function conferred on it by any competent body of the Community.

OECS Protocol Member States, as CARICOM Member States, are also guided by Chapter 8 provisions of the Revised Treaty of Chaguaramas. However, given that OECS Protocol Member States are also wedded to the Revised Treaty of Basseterre and its Protocol, the general principles and objectives of the Economic Union must also be taken into consideration in developing a competition regime that reflects and responds to the realities of OECS economies. This is particularly so, given that the Eastern Caribbean Economic Union is regarded as one single economic and domestic space. Some work has already commenced in mapping out a competition regime for the OECS. Change is underway.

The Eastern Caribbean Telecommunications Authority (ECTEL), which was established in 2000, essentially serves as a multi-state telecommunications regulator  responsible for regulating the telecommunications sector in five OECS Member States. One of their most recent initiatives has been a review and revision of the Telecommunications Act, resulting in the development of the Electronic Communications Bill. This new instrument is wider in scope and coverage when compared with the Telecommunications Act. It covers electronic communications, creates a liberalized and non-discriminatory electronic communications sector and enables a robust competitive environment featuring fairness, transparency and accountability. It is anticipated that through this new legislative instrument there will be increased efficiency in production, distribution and enhanced innovation, given that it directly tackles issues of anti-competitive conduct and promotes competition within the sector.

The OECS Commission is also working with OECS Protocol Member States, the CARICOM Secretariat and the CARICOM Competition Commission to address competition issues across all sectors. Thus far, a draft Competition Bill has been developed, with ongoing revisions to strengthen its scope, coverage and applicability. The Commission is also leading efforts to establish an institutional framework for the implementation of competition policy in the Eastern Caribbean Economic Union. To this end, several initiatives have been executed to strengthen human resource capabilities across the region in the area of competition. Additional activities will be rolled out within the next three to 12 months.

Keep informed and remain abreast of developments in the competition policy and law regime in your Member State. Look out for Part 2 – “Advocacy to Action: Strengthening Competition Policy and Law Regimes in the Eastern Caribbean Economic Union”.