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Regulating Monopolies, FCCC Explains Need To Regulate Against Anti-Corruption

FCCC ensures that there is healthy competition in the Fijian market so that no business can take unfair advantage of another due to their size or pre-established position.
03 Feb 2020 13:24
Regulating Monopolies, FCCC Explains Need To Regulate Against Anti-Corruption
Fijian Competition and Consumer Commission chief executive officer Joel Abraham.

Most of you may be aware of the role of that Fijian Competition and Consumer Commission (FCCC) plays in the protection of rights of Fijian consumers by clamping down on anti-consumer conduct by traders.

However, that is not the only role of FCCC.

As seen in the name, they are also the only regulator of competition in Fiji.

What does that mean?

FCCC ensures that there is healthy competition in the Fijian market so that no business can take unfair advantage of another due to their size or pre-established position.

So why is competition important for consumers?

It benefits consumers by keeping prices low and the quality and choice of goods and services high.

Without competition, businesses can decide to collaborate and artificially inflate prices or, if one business is powerful enough, they can squash other businesses and fix prices at whatever rate they want – to the detriment of Fijians.

Competition is not only important for consumers but for Fijian businesses as well because it means that you can operate your business with an eye to serving your customers without worrying about being unfairly undercut.

This reassurance ultimately benefits all Fijians.

FCCC plays a big part in regulating the affairs of companies, particularly in the case of monopolies.

This is very important for a country like Fiji, as our economy, relative to larger countries, is not subject to market forces in the same way and cannot ensure competition without independent regulation.

A monopoly is when a company that provides a product or service has zero, or close to zero, competition in providing that particular product or service.

As monopoly companies are able to enjoy being a provider with little to no competition, they can set their prices absurdly high and expect their customers to pay them – after all, what’s the alternative?

There is no other competition

When a company becomes large, influential and powerful then the competition becomes next to meaningless.

Look at Microsoft in the software and technology industry and Google as the world’s most popular search engine.

These companies are so big and commonly used that they hardly have to worry about competing.

Who even uses Yahoo to search on the internet anymore? We Google everything!

Explaining monopolies

Monopolies can also be formed when companies start to control the market and set their own prices because no significant competition exists to oppose them.

This domination over the market can lead to abuse and unfair trade practices.

This is the most likely cause for a monopoly in Fiji.

It is illegal under the FCCC Act for two parties or monopolistic companies to engage in anti-competitive conduct.

This means they cannot take advantage of their power and ruin competition for others.

Price fixing includes agreements by these companies to charge consumers a specific price for a good or service and sometimes this illegal process is referred to as cartel-like behaviour.

A cartel is formed when these monopolistic companies agree to act together for an anti-competitive purpose instead of competing against each other.

Price fixing harms competition, which means that when goods and services become more expensive, consumers end up with fewer choices.

Consumers sake

For the benefit of all Fijian consumers, FCCC promotes competition, fair trading, and regulation of prices in markets where competition is lessened or limited.

FCCC also regulates market situations which at times include national infrastructure.

A good example of this is the issue that FCCC had to resolve with FINTEL, a prominent internet service provider in the country.

Late last year, FINTEL changed the cost of a single 10-gigabyte line to a massive $256,000 per month.

The company was able to charge these rates due to their monopolistic position, and this was a huge risk to the consumer rights of Fijians.

FCCC stepped in and quickly rectified the situation, significantly reducing the rate down to $40,000 a month.

This cost was still too high, so after further review, it was dropped down to $640 a month.

These savings can be seen in reduced costs of data plans, as well as how Fijian ISPs did not pass on the cost of the data levy.

As mentioned before, the size of Fiji means that we cannot avoid certain service providers being monopolies.

In such cases, FCCC often acts as an independent regulator to ensure that vital services are provided to Fijians without having to pay exorbitant rates.

Energy Fiji Limited (EFL) and Water Authority of Fiji (WAF) provide electricity and water to Fijians respectively, and both are the only provider of their particular service in the country.

However, neither has increased its prices to ridiculously high levels and have remained affordable to almost all Fijians.

Abuse of status

This is because of regulations FCCC has placed upon both companies, ensuring that they do not abuse their monopolistic status and continue to serve all Fijians in an efficient, ethical and affordable manner.

Audits, inspections and investigating complaints all allow FCCC to carry out its mandate.

This is exactly why FCCC’s role as a competition regulator is so important.

It is not just that their authority enables them to protect Fijian consumers from issues such as these – they are the only regulator of competition in the country.

With constant vigilance and support from Fijians, it will ensure that no company is able to abuse its position as a monopolistic power and abuse the consumer rights of the people.

The competitive process only works when two competitors set prices honestly and independently.

Employee awareness

Companies should make sure that their staff are familiar with the requirements of the FCCC Act.

They should think carefully about who they might be competing with and not agree to discounts or any price-related matters with their competitors unless it is a specific sub-contract.

If you own a business or company, a quick word of advice- do not exchange pricing information with your competitors.

If you are approached by another business to discuss pricing, allocating customers, bids for contracts or restricting outputs you should raise an objection straight away.

And remember, if you come across instances of anti-competitive conduct, contact the Fijian Competition and Consumer Commission, the only regulator of competition in Fiji

Feedback: maraia.vula@fijisun.com.fj

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