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Action said needed on barriers to competition in Jamaica

Published:Friday | June 26, 2015 | 12:00 AMMcPherse Thompson

The success of the Jamaica's multibillion-dollar logistics hub initiative depends on a well-functioning logistics services market, but there are also barriers to competition that need to be removed.

That is according to Graciela Miralles, economist and competition specialist at the World Bank, who said that market competition is essential to spur entrepreneurship and innovation and, in turn, raising productivity.

However, noting that stubbornly low productivity growth in Latin America and the Caribbean makes increasing market competition a priority for the region, Miralles pointed out that in Jamaica, existing trucking operators participate in the licensing process of new operators not consistent with best practice, adding that discriminatory licensing rules and procedures harm effective competition.

Current provision explicitly requires the licensing authority to take into consideration the opinion of existing operators with respect to entry, she told participants at a forum on entrepreneurship and innovation at the third Caribbean Growth Forum organised by the World Bank in St Lucia last week.

Miralles said additional provision in Jamaican law gives explicit discretion to grant or refuse licences to new trucking operators. In that regard, she suggested that the advocacy tools of the competition authority be strengthened to tackle anti- competitive regulations, as indicated in the Jamaica Foundations for Competitiveness and Growth, which aims to improve the investment climate, mobilise private sector investment for job creation and support training and financing of small and medium-size enterprises.

Miralles also said that in Jamaica, business associations such as the Pharmacy Council can, with discretion, prevent registration and therefore operation of new retail outlets.

"Regulations inhibit a level playing field among pharmacies to the detriment of the access to affordable medicines," she said.

Out-dated legal frameworks for retail outlets generate business uncertainty and risk of discriminatory enforcement, she said, noting that in some cases shop business hours are very restricted, opening on Saturdays until 1 p.m. and conduct no business on Sunday.

Miralles said the same law also prohibits women from working after 10 p.m., although she mentioned that only recently parliament approved a policy on flexible work arrangements that considers all seven days of the week possible working days.

Antitrust enforcement has improved, she said, "but there is significant room for improvement in the Caribbean."

Even Latin American and Caribbean countries where competition laws have been enacted more than 10 years ago score low in effectiveness of anti-monopoly policy and extent of market dominance, Miralles said.

In the Caribbean, 11 countries, including Antigua, The Bahamas, Belize, Dominica, Grenada and Haiti have no competition law in place, and regional competition framework has not been fully implemented.

In Trinidad and Tobago and the Dominican Republic, there are broad exclusions of the applicability of competition law and competition laws do not include merger rules in Jamaica and Guyana, she said.

Jamaica's Fair Trading Commission reported earlier this year that in November 2014, pursuant to Section 17 of the Fair Competition Act, it commenced an investigation into the likely competitive effect of the proposal by Cable & Wireless Communications PLC, parent company of LIME, to acquire 100 per cent ownership and control of Columbus International Inc., parent company of Flow.

However, the FTC discontinued its investigation based on a judgment by the Court of Appeal in December 2014.

The Court held that while the FTC has jurisdiction over telecommunications matters and all agreements that are or are likely to be anti-competitive, it did not have such jurisdiction over agreements relating to the transfer of a telecommunication licence, where such transfer has been approved by the relevant Minister pursuant to the Telecommunications Act.

The FTC said it has applied to the Court of Appeal for conditional leave to appeal the decision before the Privy Council.

"The FTC is committed to fulfilling its mandate to maintain, encourage and promote competition in Jamaica for the benefit of businesses and consumers," it said.

As it relates to barrier to entrepreneurship in network sectors in Jamaica, Miralles pointed out, for example, that before operating on a new domestic or international route, airlines must solicit official approval for air fares for passengers as well as cargo transport.

She saw as barriers to entry in services in Jamaica reforms in 2012 which introduced continuing legal professional development requirements for any lawyer to keep the professional licence - the practicing certificate.

Several licensing requirements, including good character, also allow for discriminatory treatment, Miralles said, noting that lawyers in Jamaica have 10 exclusive or shared exclusive rights above the average in Latin America and the Caribbean.

mcpherse.thompson@gleanerjm.com