Competition law silent on mergers, acquisitions

Digicel-Claro Jamaica deal spurs debate on loophole

Mark Titus, Business Writer

While there is no provision in Jamaica's competition law to deal with mergers and acquisitions, the Fair Trading Commission (FTC) can still take action on companies found to be abusing their position of dominance, according to Phillip Paulwell, the Opposition spokesman on energy and the communications sector.

The issue was raised in the context of the pending acquisition of Claro Jamaica by rival Digicel Group, which is expected to give the Irish company a tighter lock on the market.

When the law was contemplated, "consideration was more for the behaviour of the business rather than monitoring and regulating mergers and acquisitions or monopolies," said Paulwell, who at one time was executive director of the FTC.

"What we tried to do is to see when they behaved badly, and that is why you will find elaborate provisions dealing with dominance and the abuse of that dominance, and that is where the FTC's strength comes in."

Paulwell was speaking at a panel discussion on the state of the telecommunications industry at the University of Technology (UTech) in St Andrew last Thursday.

The forum assessed issues relating to spectrum management, telecommunications policy, fair trade and the economy, and the likely impact on competition in the industry arising from the proposed merger of Claro Jamaica and Digicel Jamaica.

Paulwell - a former government minister who oversaw portfolios relating to industry and commerce, technology and energy - was responding to claims by fellow panellist and UTech lecturer Darron Thomas that the FTC was "without teeth" and "spineless".

Paulwell acknowledged that "the absence of a merger policy in the act now rules the commission ineffective", but he said the fair-trade watchdog has authority under Section 17 of the Fair Competition Act, which says "an act of lessening competition can be ruled on by the FTC".

But the former FTC boss himself admitted that the same competition law creates a "laundry list of activities, which restricts the application of Section 17".

"When we opened telecoms," he said, referencing the liberalisation of the sector, "I recognised that we did not cover the issue of mergers and acquisitions in the Fair Competition Act and that is the reason why the minister has this quite awesome responsibility now to look at it and to approve the assignment of licences."

The panel discussion occurred a day after Daryl Vaz, the minister with responsibility for information, said he was seeking guidance from the Office of Utilities Regulation (OUR) and the FTC on the proposed merger.

Deborah Newland, an attorney-at-law and panellist, was of the view that the new telecoms policy, completed from 2006 but was just tabled in Parliament last week, was a move in the right direction.

"The new policy deals with the issues of merger, number portability; the very issue of spectrum is addressed," said Newland.

"All we now need to do is push it ahead to put in place a legal framework for all these things that we have been discussing to become a reality."

number portability the answer

Donville Hastings, consumer advisor at the OUR, said that in a less competitive mobile-telephone market, number portability is the answer for the protection of consumers because with two players - Digicel and LIME - "remaining customers can easily switch."

"You, as the consumers, must understand that you are the most powerful stakeholders in the telecoms market," he said. "You can decide who becomes the major company."

However, Dianne Edwards, former director of legal affairs at the Spectrum Management Authority, cautioned the participants that care must be taken that the rights of companies to do business are not trampled on.

"The reason we have these companies here is to do business and they are going to do what's best for themselves," she said. "What regulatory bodies do is to try and do a balancing act between the customer and the business."

An environment that enables business, she said, is also one that provides opportunity for job creation.

mark.titus@gleanerjm.com