FTC developing merger review framework
The Fair Trading Commission (FTC) is in the process of creating a formal merger review framework through which various issues are to be addressed before a merger takes place.
Senior FTC Legal Counsel Dr Delroy Beckford told JIS News that the process will entail legislative amendments; sensitising key sector stakeholders, and conducting ongoing consultations with the existing regulators.
“So the FTC will look closely at the issues, conduct interviews with the parties and make [the] best efforts to ensure that consumers are not affected when an acquisition or merger takes place,” Beckford said.
He noted that the Commission has engaged a consultant to assist with drafting the necessary provisions that will inform the amendments to be instituted, in order to fine-tune the framework to deal with mergers and pre-merging notification provisions.
“So before this decision, regulators would have taken the view that they are in complete control of their particular sector and that the FTC would not get involved. So we have engaged stakeholders in the regulatory arena to inform them of this decision and the implications,” the Senior Legal Counsel pointed out.
Additionally, he said the FTC is conducting seminars on the implications and the way forward regarding harmonisation of the legislation with what obtains in the CARICOM framework.
The FTC’s Executive Director, David Miller, who elaborated on the necessity for the review framework, pointed out that while Section 17 of the Fair Competition Act articulates agreements that lessen competition, there is no structured pre-notification system in place for the Commission to examine and make recommendations before a merger takes place.
“Right now, firms can go ahead and merge and if we hear about it, we speak with them and try to insert ourselves to have these conditions included. But with a structured pre-notification regime, the law says we (FTC) have to be advised before, we have to look at it (the conditions) and then have discussions with the merging parties,” Mr. Miller explained.
He added that, “when entities go ahead and merge and there are issues with consumers, the process of addressing this is very long and arduous through the courts… the FTC may even end up taking these issues to the Privy Council, which takes several years; so the process is very long and drawn out and sometimes benefits are not properly addressed”.
Miller informed that with the new regime, which it is hoped will be in place within a year, the entire process will take three months, from the point when the parties notify the Commission, to the FTC having discussions and delivering a decision.
“The whole framework requires a complete set of provisions to be inserted into the legislation. A consultant has already drafted those provisions, and at some point within the next six months, we will be having discussions with the Chief Parliamentary Counsel to draft the legislation, the provisions and to properly fit it into the Fair Competition Act,” Miller added.
Meanwhile, Beckford has urged the principals of entities considering mergers to be mindful of what now is and will obtain.