Competition law is not another level of regulation and it should be viewed as the custodian of a competitive economy, supervising market structures and consumer interests and allowing interventions only in those markets where unfair practices exist.
This is according to Minister within the Ministry of Finance Jennifer Webster, who was speaking at the opening of a workshop by the Private Sector Commission.
She said that the Competition and Fair Trading Act of 2006 is aimed at addressing two main issues: abuse of dominant positions, and anti-competitive agreements.
“Importantly, the law does not disallow monopolies, oligopolies or firms with a dominant position. What it disallows is an abuse of a strong position in a marketplace, an agreement between companies solely aimed at unfairly constraining the growth of competitors and hence the development of the market,” she said.
The Minister added that such legislation is generally executed by competition commissions and that at the CARICOM level, the Revised Treaty of Chaguaramas, which established the Caricom Single Market and Economy, created the Caricom Competition Commission and placed obligations on its member states to establish national competition commissions.
“In Guyana, the Competition and Fair Trading Act established the Competition Commission, which will become the Competition and Consumer Affairs Commission upon the enactment of the Consumer Affairs Bill. This Commission commenced business at the end of 2009; and through its commissioners has already begun to contribute to the Guyanese economy,” she said.
The Minister added that the Commission has already begun to review a number of complaints received over the past year.
“Our Government remains committed to supporting and investing in the Competition Commission. We have secured $150 million grant in funding from the Caribbean Aid for Trade and Regional Integration Trust Fund and $36 million in financing for the support of the Competitiveness Programme to build the Commission’s capacity, so that it can meet its obligations under the law in an effective manner that promotes the development of the Guyanese economy,” the Minister said.
She said too that very shortly, in the National Assembly, a very comprehensive Consumer Affairs bill will be tabled in order to enhance the work of the Commission and to provide consumer protection to the populace at large in the marketplace.
“We need to remain focused to ensure that our comparative advantage is transformed into a competitive advantage. Such competitive advantages emerge through having domestic and regional firms compete freely with one another,” Webster said.
She said competition is critical to drive firms’ efficiency, build firms’ capacity and technical knowledge, encourage innovation and investment, reward successful entrepreneurship and stimulate better quality goods and services for all consumers.
“These, in turn, will drive export competitiveness and economic growth in Guyana while ensuring that the driver of the economy, the consumer, is happy and able to have his or her preferences. When consumers play an active role in the market, trade increases and so does the economic development of our country,” the Minister said.
She added that an infringement on the free market in the form of oligopolies and monopolies, collusion or abuse of dominant positions constrains the expression of consumer preferences and therefore distorts trade and hinders development. “Consumers ultimately are placed at a disadvantage through higher prices, lower standards or poor quality of service,” she said. The Minister said potential new entrants to the market are also affected by anti-competitive practices and a lack of fair competition.
She said such new entrants could range from the sole entrepreneur to a small business or firms competing in other markets both regionally and extra regionally. “When new entrants are prevented from entering a market there is a negative impact in that fewer jobs are created in the economy as a whole. In addition, lack of competition causes innovation to be withheld and competitiveness to be lost, and export opportunities to be diminished,” she said.
The Minister said that similar concerns drove the European Commission to use competition law to conduct detailed investigations into companies such as Microsoft and drove the British competition commission to investigate the British Airport Authority. “This has been the driver behind the introduction of competition law in most countries in the world. Such legislation also promotes equal opportunities for smaller entrepreneurs. With free entree, smaller entrepreneurs or those that lack network connections have a better chance of undertaking productive activities and this is what lies at the centre of economic development,” she said.
Webster said studies have shown that the benefits of competition do not depend on having a large number of firms. “To obtain the benefits of competition commission, some degree of competition is required. Moreover, it is not just market structure. It is also the threat of entry either by firm or by product that determines the degree of competition in the domestic market, and hence the degree of capacity building and innovation, product improvement and investment,” she said.
The Minister said competition policy and the enforcement of competition law need to adequately capture this balance. “The objective of competition law is not to ensure that every market is perfectly competitive, but rather its objective is to assess markets with the aim of being able to ensure that there exists the right degree of fair competition within that market,” she said.
Speaking on behalf of the organizers of the event, Chairman of the Georgetown Chamber of Commerce and Industry Chandradat Chintamani said that while the completion legislation has been in place since 2006, many persons in the private sector are unaware of this.
“So we have decided today, through the Private Sector Commission, to put together this workshop that explains what the regulations are and how we can work together to build the entities that we have in Guyana. The last thing we want is to go behind companies with a stick saying ‘you need to comply’…we want to work with them, to build their capacity,” he said.
“We want to see a modern and open business environment where we would have investment from other parts of the world coming to Guyana,” he said.