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Granting of Authorisations PDF Print

Printed in the "Business Monday" newspaper on November 16th, 2009 

The Fair Competition (Application for Authorisation) Rules, 2009, S. I. 2009 No. 114 and the Fair Trading Commission (Fair Competition Authorisation Fees) Regulations, 2009, S. I. 2009 No. 115 were recently published in the Supplement to the Official Gazette No. 92 dated October 15th, 2009.

Under Part V of the Fair Competition Act CAP 326.C, the Fair Trading Commission is given the power to authorise any agreement between two or more businesses or any business practice of a firm that may breach the Act. Agreements and businesses practices can be referred to collectively as “conduct”.

An Authorisation under the Fair Competition Act may include the permission to undertake any otherwise anti-competitive conduct. Examples of this conduct may include competing enterprises seeking to jointly set fees or rates for their services, the purchase of plant and equipment or the formation of a joint venture that creates a restriction of competition or the elimination of competition under intellectual property agreements. These practices are in principle anti-competitive, but given their potential to improve competition, and their overall benefits to the economy, they may be viewed as worthwhile undertakings. To the extent that it can be demonstrated that they are beneficial, the Commission may agree to authorise them.

Where an application is filed with the Commission for the effecting of an authorisation, the Commission must conduct an investigation into the proposal before it can grant permission to the parties to proceed with the transaction (section 29 (3)) of the Fair Competition Act.

This process of public consultation and investigation required of the Commission is primarily aimed at determining the impact of the conduct on consumers, the particular market and the economy. Applying these criteria will require an outlay of resources on the part of the Commission regardless of the outcome, and it is to recoup such an outlay that an authorisation fee will be charged.

Section 29 (2) of the Act states that the Commission may grant an authorisation where it is satisfied that the agreement or practice is likely to promote a public benefit and is reasonable in the circumstances.

This section therefore requires the Commission to consider any public benefit and any public detriment that are likely to result from the conduct and to weigh these against each other. Only where there is a net public benefit will an authorisation be granted.

The term public benefit as defined in the legislation refers to anything of value to the community generally. It usually refers to those factors that contribute to the realisation of economic progress and efficiency. Some factors that might be regarded as public benefits include:

  • Promotion of competition
  • Expansion of employment
  • Improvement in the quality of products
  • Reduction in the price of products

Public detriment on the other hand refers to anything resulting in a negative effect on the community generally. It usually refers to factors that impair the ability of the public to achieve the goals of economic progress and efficiency. Business conduct that is likely to contravene the Act will almost always be anti-competitive to some extent. Some examples of public detriment include:

  • higher prices
  • lower quality products
  • constraints on effective competition
  • reduced efficiency

In most circumstances anti-competitive conduct will result in some detriment to consumer welfare. Clearly, where the likely harm to society from the conduct is large, the challenge to the applicants to show a net public benefit from the authorisation will be more difficult to satisfy than where there is minimal detriment.

The Review Process

The application will be given a very thorough review which will involve full public consultation where the general public is invited to give their views on the issue. The Commission will publish a notice in the Gazette and in at least one daily newspaper advising persons who have an interest in the matter to submit written comments. The Commission will give regard to such views, while conducting a thorough investigation and assessment of the matter.

Following the review process the Commission will make a written decision indicating whether:

  • the authorisation is granted unconditionally, or
  • the authorisation is granted subject to terms and conditions, or
  • the authorisation is denied.

The final decision of the Commission will be communicated to the general public and other stakeholders, including the reasons for the judgment given.

If you have any queries about authorisations, please contact the Commission at 421 2FTC.

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