Did Government err by tendering?
Over a year ago, when the talk of privatization of the BNTC.L first surfaced, few persons seemed interested. I recall engaging Mr Dennis Johnson on air and Mr Denis Kellman joined the conversation, albeit for a short while.
That a Barbados Labour Party (BLP) administration handled the Mobil affair as they did almost twenty years ago, would suggest that the administration had a great understanding or respect for Fair Competition and Competition Rules.
Permit me to say from the outset that, legally, there is nothing wrong if a company (ab initio) finds itself in a dominant position as may be the case with either SOL or Rubis.
If, however, either company uses its dominance advantageously, that is illegal. In fact, one of the companies may very well be in such a position but neither has seemingly detected it nor the consumer nor even the FTC Dominance could arise from as simple a fact as the number of outlets one has vis a vis the other as well as the superior geographical locations one has over the other.
Should such be the case? I regard this as a nascent occurrence relative to two newly born local companies. Hence, a matter of taking the hand dealt. However, it is a different ball-game for one of a duopoly ultimately to occupy a position of dominance, because of a process (fair or otherwise) by a third party, especially if Government is the third party.
It is in the latter context in which I address the situation (BNTCL privatization) at hand. That there are only two companies involved, may tend to suggest that there is much room for manoeuvring without the other feeling disadvantaged, or without the public detecting (by sight) or feeling (in the pocket) a shift in the fairness equilibrium.
The question gives up what constitutes anti-competitive behaviour. Such a question came to the fore many years ago, in the United States of America, after the civil war, as large industrial entities (and trusts) emerged, swallowing up smaller companies and thus, defacto creating positions of dominance. The common law at the time was insufficient to deal with such a corporate malignancy.
In 1890, the Sherman Act was passed to deal with such burgeoning behaviour. Twenty-four years later, yet another Act, the Clayton Act was added to the legal arsenal to support the 1890 legislation. As if this were insufficient legal weaponry to deal with the environment, yet another tier of legislation some 22 years hence (1936), was added by way of the Robinson-Patman Act. To date, all three pieces of legislation are used to adjudicate such matters.
From a distance, it may not be unreasonable to conclude that the European Union (EU) borrowed very heavily from the evolved US jurisprudence when they, the EU morphed their EU Competition Laws. Furthermore, a cursory inspection of our own Revised Treaty of Chaguaramas (RTC) alongside its EU counterpart legislation, reveals that the former has been lifted without disturbance from the latter. As the saying goes, why try to reinvent the wheel?
Article 177 (2) of the RTC provides a definition for competitive behaviour. This section speaks (inter alia) to the limitation or control of product markets.
· The application of unequal conditions to equivalent transactions.
· Subjecting contracts to additional obligations unrelated to the subject matter of contract.
· Unauthorised denial of access to networks or essential infrastructure use.
Having considered the [Article 177 (2)] of the RTC, it would be uncomfortably difficult for both species to coexist under the same roof with one being the landlord and the other the tenant.
The very nature of the business smacks of a certain degree of secrecy and confidentiality as it relates to viz scientific treatment and possibly certain physical factors which may afford quality enhancement of the product.
My recommendations for a happily-live-after situation for all would be for
a) Government to get out of the dealings altogether, save for the role of regulator.
b) That a bidding process be done internationally to select finder/s and importer/s of petroleum products, without significantly disrupting any CARICOM arrangement that may currently exist. Such is the case with pharmaceutical companies who supply the Barbados National Drug Service (BNDS).
c) That the supplier/finder cannot be a wholesaler or distributor in the local market.
d)That local investors (not players in the petro industry be afforded an opportunity to own by way of shareholding the physical plant.
e) That either or both current dealers be allowed to set up their own state of the art oil terminal if so desired for quality enhancement and whatever else may go with the products.
i. The outcome of such recommendations, by a tendering process would lead to a fierce competition, redounding to the consumers benefit as is the case with BNDS drug prices.
ii. The sourcing and supply of far superior grades of gasoline and diesel commensurate with the high-quality vehicles on our roadways.
iii. The Government would not have to look for one red cent to purchase a drop of fuel i.e. foreign exchange saved.
What a relief!
(David Gill is a biochemist-medicinal chemist and a graduate of law from the University of Wolverhampton)