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THE FAIR COMPETITION

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					UNDERSTANDING
THE
FAIR
COMPETITION
ACT
                         UNDERSTANDING
                       THE FAIR COMPETITION
                                ACT

INTRODUCTION

Jamaican consumers and businesses are the most important persons targeted in the Fair
Competition Act. Under this Act, consumers are given more power than ever before in ensuring
that competition is fair and that they get the best deal when making purchases.

In return for this new power, consumers are expected to be vigilant and to look out for breaches of
the law.

The Fair Trading Commission, when established, will seek to educate the public about the Act. In
this way, consumers will be able to determine when they are wronged. They will be expected to
report these breaches to the Commission.

Many may find the Fair Competition Act puffing. We may wonder why, under the law, a business
or association cannot get together with other businesses to set prices. Or why dominant companies
should not be allowed to take certain actions.

After reading this booklet, you may find that you still have some unanswered questions. Please do
not hesitate to send these to us and we will try to answer them as quickly as possible.




Phillip F. Paulwell
Trade Administrator

The grade Board Ltd.
4 Winchester Road
Kingston 10
                                 UNDERSTANDING THE FAIR COMPETITION ACT




1. What is The Fair Competition Act?

The Fair Competition Act provides guidelines and sets standards relating to transactions within the
business community and also transactions between the business community and consumers.

2. What Does The Fair Competition Act Hope to Achieve?

The Act seeks to create an environment in which all businesses - large. medium and small - can
operate according to the same set of clearly defined rules and standards. In this sense it is like a
sport. This environment will also offer the consumer a measure of protection and support in terms
of efficiency and prices.

3.Why Is It Necessary?

Jamaica is presently developing along the lines of a market driven economy. If this strategy is to
work, free competition among businesses is essential. Instead of having an economy which is tightly
controlled by the state in areas such as prices and imports, we are working in what is known as a
free market system. Here businesses are free to operate as they wish, provided they observe certain
rules which are designed to help the economy grow. These rules are set out in the Fair Competition
Act.

This Act seeks to encourage unrestricted competition between businesses and with consumers. The
aim is to allow consumers to benefit from a greater choice of products and services, and low prices
in:the marketplace.

4.   What Areas of Business WW Fair Competition Affect?

The law seeks to prevent business practices which restrict competition. These are known as
restrictive business practices. The Act has a lot to say about how we should behave when we
produce or purchase goods and services.
                                UNDERSTANDING THE FAIR COMPETITION AC


5. What Is The Consumer's Role Under Fair Competition?

Consumers should try to understand the Fair Competition Act and how this can help them and
help the nation. The Fair Competition Act is supposed to improve efficiency. bring better prices
and a greater choice of goods. But it needs the interest of consumers to achieve these results.
Consumers must be vigilant and report breaches of the Act to the Fair Trading Commission.

The law provides for consumers to bring private rights of action to Court against businesses
which break the law by uncompetitive practices such as price faxing and misleading advertising.

For these provisions to work. consumers will have to be vigilant in detecting breaches which
affect them directly. They must therefore be knowledgeable about the Act and must be
prepared to furnish evidence to support their case.

6. What Are Some Uncompetitive Business Practices?

      (A)     Price Fixing

      This occurs, when two or more businesses agree together to control or fix; prices for
      goods and services they deal in. This is an artificial means of raising or lowering prices.
      When this happens, competition is lessened.

            Example: Three businesses which sell rice get together and agree to charge a
            higher price for the product. Ties uncompetitive, practice is known as price fixing.

      (b) Misrepresentation in Advertising

      This: occurs where a business. broadcasts or publishes mislead advertisements about a
      product or service.


      Example: A men’s clothing store advertised English handmade shoes. However, when I
      bought a pair and took it home, I noticed a “ made in Taiwan” label on the
                                    UNDERSTANDING THE FAIR COMPETITION ACT

              inside of one of the shoes. Is this an uncompetitive
              practice according to the Act?

       Yes. This uncompetitive practice is known as "misleading
       advertising." It occurs when claims that are false and
       misleading in a material respect are made about a product.

       (c)    Tied Selling

       This occurs when a supplier will not provide a customer with
       a certain article unless he or she buys a second product at
       the same time. We in Jamaica are familiar with this practice
       which we call `marrying'.
       (d)     Abuse of dominant position

       This occurs when an organization that controls a large
       percentage of a market uses this dominant position to lessen
       competition in the marketplace.
       It is against the law for a dominant organization to lower or
       raise prices in order to drive other traders out of business.
       This is known as predatory prising.                                                 e


, Example: One type of abuse of dominant position occurs when a dominant company uses its
strength to prevent a small or new company from trading: this lessens competition. (See Price
Fixing)

(e) Resale Price Maintenance (RPM)

This takes place when suppliers attempt to influence their distributors and retailers to charge a fixed
price. Suppliers may also try to prevent price reductions by agreement, threat or promise. This goes
against the Fair Competition Act.

Example: The suppliers of a certain brand of watch may arrange with the dealers and distributors
to sell their products at an artificially high price. 'this does not allow for competition and its benefits
to be passed on. These dealers and distributors, as well as retailers who would normally have been
able to pees on savings generated by, for example, reduced utility coats and so on, are therefore not
able to do so.
                                  UNDERSTANDING THE FAIR COMPETITION ACT

In a situation like this. competition becomes 'artificial' and unbalanced. and suppliers who are
breaking the law may take control of the market. They are manipulating the market to suit their
own ends. According to the Fair Competition Act, this is wrong. The Act says there must be no
collusion in pricing.

(f)Bid Rigging

This occurs when businesses agree that one or more of them will not submit bids in response to a
call for tenders; or when bids submitted have been previously arranged between parties.

Example: A company which is trying to get a contract makes an arrangement with another
company which is also trying to get the contract. Under this arrangement, if either company gets
the contract. this one would give a part of the business to the other. This lessens competition and is
done to ensure that both get some gain regardless of which one is awarded the contract. Again, this
is wrong and will not be allowed under the Act.

(g)Double Ticketing

This occurs when a supplier puts two different price tags on an article and tries to force the
consumer to purchase it at the higher price. According to the Act, the product should be sold at the
lowest price displayed.

7. Who Will Administer the Fair Competition Act?

The Act will be administered by an organization known as the "FairTradingCommission." This
organization will beheaded by an Executive Director.

8. What Powers Will the Fair Trading Commission Have?

The Executive Director and his staff will investigate all cases of unfair business practices brought
before him/her. They will make the proper investigations and seek to have such practices stopped.
A Fair Deal, Your Right By Law




          Written and Edited by
         Ideas & Images Co. Ltd.

              Published by
        The Trade Hoard Limited.
           Kingston . Jamaica

				
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