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Provisions Of Competition Law In Fiji

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
11 Dec 2017 12:39
Provisions Of Competition Law In Fiji

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 classified as “Restrictive Trade Practices”.

Effects of Misuse of Market Power!

A corporation that has a substantial degree of power in a market must not misuse its market power to deter competiton, by substantially lessening competition in that market or in any other market in which the corporation supplies or acquires goods or services.

When corporation misuse its market power, the effects are adverse on the competition and the consumers. It is important to understand that, when corporations starts to misuse its market power, it is implied that the corporation has high degree of dominance in the market.

This then gives the corporating the ability to engage in anti-competitive conducts, such as abuse of dominance.

Abuses of Dominance and its Effects

Dominance by an corporation is judged by its power to operate independentely of competitibve forces or to disadvantage its competitors or consumers in its favour.

Abuse of dominance can also be collective, such as a cartel not allowing new entrants into the market.

It is not necessary that a single firm possess a high market share to abuse its dominance. However, consequences fro competition can be severe if the firm is dominant.

The abuse of dominance is broadly of two types, namely exploitative and exclusionary in nature.

This is further explaned hereafter.

1.Exploitative abuse – means exploiting customers by ingnoring the needs of customers and competitiors.

The various ways in which exploitative abuse could be exercised are:

Refusal to deal, such as denial of essential facilities;

Tying, bundling, forced line selling;

Predatory pricing;

Non-price predation;

Price discrimination;

Intellectual property rights abuses; and

Execessive pricing or price gouging.

2. Exclusionary Abuse – involves exclusion of competitiors. The way in which exclusionary abuse could be exercised is:

Exclusive dealing arrangements (distributors cannot sell another suppliers good or services).

For determining whether a specific undertaking is dominant, the geographical and product market is to be understood.

Geographical dimension includes the geographical area within which the competition takes place, while the producy market includes all such substitutes that the consumer would shift to, if the price of the relevant product where to increase.

Prohibited conducts

The following practices are forbidden for dominant corporation if they disproportionately exclude competitors from commercial opportunities, discriminate against trading partners or qualify as an exploitation of the latter.

1. Agreements fixing prices or other terms of sale, including in

international trading:

Price fixing involves any agreement among competitors to raise, fix or otherwise maintain the price for a good or service.

Corporation with dominance are the once usually engage in price fixing, which includes agreements to establish a minimum price, to eliminate discounts, or to adopt a standard formula for calculating prices, etc.

It also applies to situations where buyers collude in order to determine the maximum prices that they are prepared to pay for primary and intermediate products.

Price fixing applies not only to prices, but also to other terms of sale that affect prices to consumers, such as shipping fees, warranties, discount programmes, or financing rates.

Section 66 and 67 of FCCC calls for the prohibition of “agreements fixing prices.

Price fixing is among the most common forms of “hard core” cartel conduct and, is considered as a per se violation of FCCC Act 2010 in Fiji.

2.Collusive tendering:

Collusive tendering is the way that conspiring competitors may effectively raise prices where business contracts are awarded by means of soliciting competitive bids.

Essentially, it relates to a situation where competitors agree in advance who will win the

bid and at what price, undermining the very purpose of inviting tenders which is to procure goods or services on the most favourable prices and conditions.

Collusive tendering may take many forms.

Dominant player may dictate to competitors to agree to take turns being the winning bidder referred to as bid rotation.

Some competitors may agree to submit unacceptable bids to cover up a bid-rigging scheme. In other cases, competitors may simply agree to refrain from bidding or withdraw a submitted bid.

In addition to the bid submission or non-submission itself, a bid-rigging scheme must also have some way to compensate the apparent losers.

Such agreements may involve sub-contracting parts of the main contract to the losing bidders in exchange, or making payments to the other members of the cartel

FCCC’s Advice!

Businesses to avoid from engaging in any prohibited conducts including abuse of dominance through misuse of its monopoly market power.

Engaging in such prohibited conducts would distort the market and would severly affect the Fijian consumers.

It is imperative that business understand the benefits of healthy competition in the Fijian market. The existence of competition in Fijian market place would keep the businesses competing for consumers to purchase the good and services at a reasonable affordable prices.

Next Week: Further on Section 66 of FCCC Act 2010

For more information/details on Fijian Competition and Consumer Act 2010, visit our website on http://www.commcomm.gov.fj or join us on our Facebook page at https://www.facebook.com/commcomm.gov.fj

Feedback:  maraia.vula@fijisun.com.fj



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