Printed in the Business Monday Newspaper on April 30th, 2012
As the Economic Partnership Agreement (EPA) between the CARIFORUM States and the European Community begins to come into operation, businesses on both sides are seeking ways in which to take advantage of the increased access to each other’s domestic markets. As this process begins to take effect it is important that local businesses are aware of the fact that they are likely to encounter some anti-competitive challenges when entering such markets and they should also be aware of the process for recourse available to them to counter these challenges.
The first objective of the EPA is “the reduction and eventual
eradication of poverty through the establishment of a trade
partnership”. This overall objective at once links the attainment of
increased standards of living for the populations of CARIFORUM and to a
lesser extent, Europe, to the fortunes of free, open and fair trade
across their markets. The parties recognise that in so far as the
businesses from both sides are given the opportunity to access new and
greater demand in each other’s markets and they are able to access that
demand unhindered, their performances will improve and consequently also
the welfare of the citizens under the agreement. Most critical
therefore to the success of the agreement is free and undistorted
competition in the trade relations between them.
The parties however also recognise that the attainment of these
objectives can quickly be frustrated by anti-competitive businesses
practices which have the potential to distort the proper functioning of
markets and generally undermine the benefits of trade liberalisation. In
view of this the parties therefore declare within the agreement that
anti-competitive practices are incompatible with the proper functioning
of the agreement if they restrict trade between the parties.
The EPA seeks to address these anti-competitive concerns by requiring
that, the Parties and the Signatory CARIFORUM States, within five years
of the entry into force of the Agreement, put in place laws for
addressing restrictions on competition within their jurisdiction. It
also requires them to establish the relevant competition authorities
that would administer the competition law.
The Agreement goes further in seeking to give effect to the elimination
of anti-competitive conduct, by allowing for the competition authorities
to inform the each other of their willingness to cooperate with respect
to enforcement activity and to exchange information related to the
anti-competitive activity taking place within the other party’s
Each authority can also inform the other authorities of any enforcement
proceeding it is carrying on which would require the prohibition of
conduct in the other party’s territory.
For example, where an enterprise from Europe is engaging in an
anti-competitive practice in the EC, but which is having a harmful
effect in a CARIFORUM territory, the CARICOM Competition Commission
(CCC) as the competition authority representing CARICOM under the
agreement has the right to communicate what information it has on the
matter to the EC (i.e. the competition authority for the European
Community). In addition where the remedy to the anti-competitive conduct
requires a prohibition of conduct in the European Community (EC), the
agreement provides for the communication of such information to the EC.
In spite of the excellent objectives embedded in the agreement it would
be naïve to expect that competing businesses in the EC will simply
welcome competitors from CARIFORUM countries into their markets and be
ready to share their rewards. It is more likely that local businesses
will encounter aggressive competition from their EC counterparts and in
some cases they will encounter anti-competitive practices designed to
restrict the entry, or deter them from engaging in competitive conduct.
Such tactics may manifest themselves in practices such as exclusive
dealing, or excessive, unreasonable, and discriminatory prices. For
- Prices set higher for local suppliers by an EC competitor where the EC
competitor also supplies an input to their cost.
- Unfair terms of contract influenced by an EC competitor or its
affiliate which make delivery or quality requirements harder to meet.
- Restricted access to markets because the incumbent suppliers have
recently introduced exclusive contracts to foreclose the new
These are just some of the anti-competitive strategies used by the
competitors or their affiliates to frustrate the regional competitors
and retain control over their domestic markets.
It is extremely important that local businesses be aware of the
strategies that may be used. It is necessary that they recognise such
strategies when they are confronted with them and be aware that the
agreement has provided for such strategies to be eliminated. If the
offending business is situated in the EC them the rules of cooperation
as mentioned above can be implemented. Businesses faced with
anti-competitive restrictive practices should communicate their concerns
to the Barbados Fair Trading Commission which will communicate the same
to the CCC, CARICOM’s party under the agreement. As a party to the
agreement the CCC can seek cooperation under the EPA.
CARICOM businesses must be prepared to compete and to compete
aggressively, through innovation, specialisation, flexibility and hard
work, but they must also be aware of the anti-competitive tactics that
they may have to confront and be fully aware of how to identify and
respond to such challenges.