Public Awareness : 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!

It is desirable for firms with market power to compete vigorously. It is equally clear, however, that it is important to achieve a balance between allowing firms with market power to compete vigorously and protecting the competitive process from anticompetitive conducts.

A corporation that has a substantial degree of power in a market must not Misuse its Market Power to deter competition, 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

Abuses of dominance are anti-competitive conducts which can only be committed by “dominant” companies.

As a rule of thumb, companies can be deemed to hold a dominant position if they have a share of the market of more than 40 percent. (NOTE: company size is of no importance for the existence of a dominant position.

Even small SMEs can very well be dominant within the meaning of competition law). Other factors to assess dominance include the ease for other companies to enter the market and the presence of entry barriers; the existence of countervailing buyer power; the extent to which the company is present at several levels of the supply chain (vertical integration).

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

ν Tying and Bundling: “Tying” means requiring a customer to buy an additional product as a condition to buying the primary product. An example would be to sell a car (tying product) only under the condition that the customer accepts to have his car inspected once a year by the seller (tied product/service).

“Bundling” refers to the practice of selling two separate products together, for instance the bundled selling of a copy machine and the copy paper it uses as a package.

For dominant companies it is illegal to use tying or bundling as a commercial feature. Tying and bundling by a dominant company can lead to foreclosure effects, i.e. the exclusion of equally efficient competitors.

ν Refusal to supply: Refusals to supply or threats of refusals to supply by dominant companies is forbidden under the competition laws and FCCC Act 2010.

Typically, competition problems arise when the customer – to whom supply is refused – also is a rival to the dominant company. Certain other practices such as delaying tactics in supplying, giving unfair trading conditions or charging excessive prices are examples of refusal to supply.

ν Predatory pricing: Predatory pricing exists where a dominant company lowers its price for a sufficiently long time and thereby deliberately incurs losses in the short run in order to weaken the competitive position of its competitor (or preventing new competitors from entering the market).

Pricing is not predatory just because the lower price means incurring losses in the short run.

This may be justified in order to enter a market or to make more customers familiar with the product, but it is illegal to deliberately accepting short run losses with the intention to recoup such losses by eliminating competition.

ν Price discrimination: Price discrimination is generally understood as the practice by a dominant company to charge different prices to different buyers for the same product or services, when this cannot be justified by a difference cost for supplying the product.

This concept covers many different practices whose objectives and effects on competition significantly differ (examples of this are discounts and rebates, selective price cuts, discriminatory input prices set by vertically-integrated companies, etc.).

In order to avoid a charge of price discrimination, dominant firms must ensure that their pricing policies and decisions as well as their promotional plans are in compliant with FCCC Act 2010.

ν Excessive pricing: In many jurisdictions, disproportionately aggressive pricing is considered an abuse of dominance. Because customers cannot easily switch to an alternative source of supply, the dominant firm can raise price to enhance profits.

The setting of excessive charges or the provision of poor quality services by a business holding a dominant position can therefore be prohibited.

FCCC’s Advice!

Businesses to ensure that competition continues to exits in the market place. Having efficient competition will ensure that the benefits of the competition is passed down to the consumers.

It is imperative to understand the benefits of competition in the Fijian market. Because respecting competition rules is fundamental for healthy, well-functioning market.

The mere existence of competition in any market place would keep the businesses competing for consumers to purchase more of there products and services, at a reasonable prices.

A direct effect of this is seen in the decrease in prices and well treatment of consumers.

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