The Fijian Competition and Consumer Commission (“FCCC”) has been established  under Section 7 of the Fijian  Competition and Consumer Commission Act 2010 (“FCCC Act 2010”). The provisions of Competition and Consumer Law in Fiji are covered under Part 3, 4, 6, 7, 8 and 9 of the FCCC Act 2010.

Part 6 of FCCC Act 2010 :-

The Fijian Competition and Consumer Commission deals with all the competition matters under Part six (6) of FCCC Act 2010. The Part six (6) of FCCC Act is know as “Restrictive Trade Practices”. This part of the Act out line the provisions which are clarssified as “Restrictive Trade Practices”.

Section 66: – Misuse of Market Power!

Market power is defined as the ability of a firm to raise prices above the supplycost without rivals taking away customers in due time, supply cost being the minimum cost an efficient firm would incur in producing the product. It is a ability of a firm to influence or manipulate the price of an item in the market by manipulating the level of demand and supply, or raise and maintain prices above the level that would prevail under competition.

A large market share may well be evidence of market power, but the ease with which competitiors would be able to enter the market must also be considered. It is only when for some reason it is not rational or possible for new entrants to participate in the market that a firm can have market power.

Another indicator pf market power is vertical integration, but its presence does not necessarily mean that market pwer exists.

A firm possesses market power when it can behave persistently in a manner different from the behaviour that a competitive market would enforce on a firm facing otherwise similar cost and demand conditions.

Market power is concerned with power which enables a corporation to behave independently of competition, and of competitive forces in a relevant market. The primary consideration in determining market power must be taken to be whether there are barriers to entry into the relevant market. To what  extent is it rational or possible for new entrants to enter the market.

The following are the major factors to be taken into account in identifying market power:

nThe ability of a firm to raise prices above the supply cost (the minimum cost an efficient firm would incur in producing the products) without rivals taking away customers in due time;

nThe extent to which the firms conduct in the market is constrained by that of competitors or potential competitors;

nThe market share of the firm, although this alone is not generally determinative of market power;

nThe existence of vertical integration, although this alone is not generally determinative of market power; and

nThe extent to which it is rational or possible for new entrants to enter the market – the extent of barriers to entry.

There will be a wide variety of circumstances which may bear on the question of whether a corporation has a substantial degree of power in a market – some arising from within the market and some extraneous.

In any event, while market share may be evidence of market power, it does not conclusively establish the existence of  market power, because the market share may be a short run phenomenon.

Abuse of Market Power!

The size of a business, even one that dominates a particular market, is not, of itself, a cause for concern. Businesses may need to become large to achieve lower production costs or to compete against foreign and domestic competitors. However, when a dominant company exploits its market power in a way that hurts competition in the marketplace, FCCC Act 2010 comes into play.

The abuse of dominant position may apply when all of the following criteria are met:

nThe dominant firm or firms have market power — that is the ability to set prices above competitive levels.

nThe dominant firm or firms engage in anti competitive acts — business practices that are intended to reduce competition. These practices include: buying up a competitor’s customers or suppliers; using “fighting brands” (discount brands) to discipline or keep out competitors; cutting off essential supplies to rival companies; using long-term contracts to stop customers from changing suppliers; and overstepping authority granted by intellectual property rights such as trade-marks and patents.

nThe anti competitive acts have substantially lessened competition, or are likely to do so. This can happen when anti competitive acts eliminate a rival or prevent such things as a rival’s entry into a market, potential competition, product innovation and lower prices.

What is Market!

In identifying the relevant market, it must be borne in mind that the objective is to discover the degree of the defendants market power. Defining the market and evaluating the degree of power in that market are part of the same process, and it is for the sake of simplicity of analysis that the two are separated. After identifying the appropriate product level it is necessary to describe accurately the parameters of the market in which the defendants product competes.

When does Company Breach Section 66!

Section 66 of FCCC Act 2010 will be breached when a  company:-

Have a substantial degree of power in a market; and

Take advantage of that power;

For the purpose of;

Eliminating or substantially damaging a competitor;

Preventing the entry of a competitor; or

Deterring or preventing competitive conduct.

These are the elements of Section 66 which needs to be established under FCCC Act 2010 before considering any case of Misuse of Market Power.

The Misuse of market power may have a lot of substantial effects to the Fijian Market. Numerous Monopoly organizations or market giants that dominate in the production of a particular good or service may use this to their advantage in trying to eliminate their smaller counterparts. The elimination of competitors may be through lowering their prices to an extent that other competitors cannot compete without incurring losses to their  business. This act is known as “predatory pricing”.

FCCC’s Advice!

FCCC aims to ensure that competition is promoted in the market and simultaneously ensures that both consumer interests as well as businesses returns are well balanced. It also works to see the overall fair treatment of not only consumers but small businesses as well, who compete against other larger businesses in the market.

FCCC generally sees to the overall balance of the Fijian Market where the household and business sectors are kept satisfied with  fair treatment for consumers and equitable returns for businesses.FCCC understands that competition is imperative in the Fijian Market inorder to uphold the balance between consumers and businesses. The mere existence of competition in any market keeps businesses competing for consumers to purchase more of there products. A direct effect of this is seen in the decrease in prices and well treatment of consumers.

Next Week: Further on Section 66 of FCCC Act 2010