By virtue of its powers under Section 5 of the Fair Competition Act, the Fair Trading Commission (FTC) initiated an investigation into certain sale and promotional practices of Desnoes & Geddes Limited (D&G).
The FTC terminated the investigation, following the conclusion of a Consent Agreement between D&G and the FTC in which D&G has given certain undertakings. The Consent Agreement is for settlement purposes only and does not constitute an admission by D&G that the Fair Competition Act or any other statute or law has been violated. Further, the FTC made no findings of fact or law. Neither did the FTC make any finding as to whether D&G's practices are in breach of the Fair Competition Act.
In the Consent Agreement, D&G has undertaken the following:
1. D&G shall not enter into or enforce any agreement with any customer to provide data relating to the sale of non-D&G brewed products.
2. D&G may request and/or obtain sales data, relating to volume only, for non-brewed alcoholic products; and shall request that such data be provided in an aggregated form or manner that prevents D&G from identifying the sales share of individual brands.
3. D&G shall not recommend the resale pricing of any non-D&G products.
4. With regard to agreements relating to sponsorship at events:- - D&G is entitled to agree with event promoters that D&G shall be the only alcoholic beverage promoted at sponsored events;
No agreements shall exceed three (3) years in duration, nor provide for an option to renew and/or rights of first refusal;
The required notice period for termination without cause in such agreements shall vary, depending on the amount of sponsorship contribution made, in accordance with agreed ranges;
Where D&G contributes J$50,000 or less annually in sponsorship towards an event, it shall not restrict the sales of any brewed alcoholic products.
5. With regard to promotional arrangements with outlets:- - D&G may execute exclusive promotional agreements with a limited number of outlets only, which number has been agreed with the FTC;
No exclusive promotional agreements with outlets shall have a duration of more than twelve (12) consecutive months. None of these agreements shall provide for an option to renew and/or rights of first refusal. All agreements may be terminated with a reasonable notice period, which period has been agreed with the FTC;
None of these exclusive promotional agreements shall restrict or limit non-D&G products from being normally displayed for sales purposes;
None of these exclusive promotional agreements shall restrict or limit the discounting of non-D&G products, when the discount is offered for a period of at least seven (7) consecutive days. Further, the effective communication of such discounting to customers shall be allowed, in according with minimum standards, which standards have been agreed with the FTC.
The FTC is satisfied that these undertakings will ensure compliance with the competition provisions of the FCA.
The Consent Agreement shall terminate on January 1, 2005 in anticipation of changes to the market structure when tariff barriers are reduced.
The terms and conditions of the Consent Agreement reflect the following principles of fair competition:
Practices and arrangements by enterprises should not foreclose the market to existing and potential competitors;
Arrangements that impose, directly or indirectly, sales exclusivity requirements may lead to such foreclosure.
Where exclusive arrangements lead to economic and/or technical benefits, they are permitted provided that the restrictions are necessary, and not any more restrictive than need be, for the achievement of these benefits. Such arrangements must not have, for example, excessively long contractual periods and must not impose onerous termination conditions such as requirements of long notice period for termination and rights to first refusal. Such conditions would make it more difficult for other players to compete for, and win, the rights to such exclusive arrangements.
There should be no attempt by any supplier to encourage customers to resell competing products, or any products from another supplier, at premium prices.
The Commission will, to the extent practicable, be guided by the terms of this Consent Agreement in applying the Fair Competition Act to other companies that are similarly placed in their respective markets.
The FTC wishes to acknowledge that D&G has fully co-operated in the process that has resulted in this Consent Agreement.
