CONSUMER MARKET REGULATION IN SMALL STATES: A CASE STUDY OF THE LOGICAL AND INSTITUTIONAL INTERFACE BETWEEN CONSUMER PROTECTION AND COMPETITION LAWS IN JAMAICA
MICHELLE C. GODDARD
A Dissertation Submitted to the Faculty of Graduate Studies in partial fulfilment of the requirements for the degree of Doctor of Philosophy
Graduate Program in Law Osgoode Hall Law School, York University, Toronto, Ontario
NOVEMBER 2011 Library and Archives Bibliotheque et Canada Archives Canada
Published Heritage Direction du Branch Patrimoine de I'edition
395 Wellington Street 395, rue Wellington Ottawa ON K1A0N4 Ottawa ON K1A 0N4 Canada Canada Your file Votre reference ISBN: 978-0-494-88663-2
Our file Notre reference ISBN: 978-0-494-88663-2
NOTICE: AVIS: The author has granted a non L'auteur a accorde une licence non exclusive exclusive license allowing Library and permettant a la Bibliotheque et Archives Archives Canada to reproduce, Canada de reproduire, publier, archiver, publish, archive, preserve, conserve, sauvegarder, conserver, transmettre au public communicate to the public by par telecommunication ou par I'lnternet, preter, telecommunication or on the Internet, distribuer et vendre des theses partout dans le loan, distrbute and sell theses monde, a des fins commerciales ou autres, sur worldwide, for commercial or non support microforme, papier, electronique et/ou commercial purposes, in microform, autres formats. paper, electronic and/or any other formats.
The author retains copyright L'auteur conserve la propriete du droit d'auteur ownership and moral rights in this et des droits moraux qui protege cette these. Ni thesis. Neither the thesis nor la these ni des extraits substantiels de celle-ci substantial extracts from it may be ne doivent etre imprimes ou autrement printed or otherwise reproduced reproduits sans son autorisation. without the author's permission.
In compliance with the Canadian Conformement a la loi canadienne sur la Privacy Act some supporting forms protection de la vie privee, quelques may have been removed from this formulaires secondaires ont ete enleves de thesis. cette these.
While these forms may be included Bien que ces formulaires aient inclus dans in the document page count, their la pagination, il n'y aura aucun contenu removal does not represent any loss manquant. of content from the thesis. Canada ABSTRACT
This dissertation was motivated by an interest in small state market regulation nurtured through enforcement experience which led to an appreciation of the necessity of crafting policy and enforcement solutions to meet the specific needs of small developing states. The analytical framework for the research was based on a law and development perspective on regulation. The dissertation examined small state consumer market regulation through a case study investigation of the logical and institutional interface between the consumer protection and competition laws enforced by the Jamaica Fair
Trading Commission.
The research sought to explore the impact of small state characteristics on the theory and practice of integrated enforcement of consumer protection and competition laws. The shared economic, social and political characteristics of small states influence their regulatory environment. These characteristics include colonial legacies, pervasiveness of government, small population size, close-knit social relationships, lack of economic scale, high market concentration levels, open economies, dependence on external markets, vulnerability to external factors and financial and human resource constraints on institutional capacity. Although size has implications for the design of the substantive legal rules this is not always reflected in the literature on the complementarities of consumer protection and competition laws. Whilst the complementarities have been premised on the common goal of consumer welfare conceptualised as consumer choice, it is argued in the dissertation that the normative foundations of small state regulation must go beyond this and promote equitable consumer interests within a development-oriented framework.
The study found that the trajectory of law reform and consumer market regulation in small states is significantly influenced by external pressures from international and bilateral donor institutions as well as epistemic communities which contributes to the use of transplanted rather than tailored legal reforms. It identified the primary internal dynamic influencing the effectiveness of small state regulation as the overall lack of regulatory capacity evidenced in underfunded agencies and a limited pool of skilled regulatory staff. However the major finding of the case study was that regulatory capacity is not necessarily strengthened by the creation of a multi-function agency and that functional integration of consumer protection and competition law can dilute the focus and effectiveness of a small state agency.
v DEDICATION
This dissertation is dedicated to my daughter,
Hannah Ayomide,
my inspiration and my joy. ACKNOWLEDGMENTS
This dissertation would not have been possible without the intellectual guidance of my supervisor, Professor Iain Ramsay. I would like to thank him for his encouragement and insightful comments over the period of my study as well as for continuing to supervise my research after his move to England. I would also like to thank the other members of my supervisory committee Professor Toni Williams and Professor
Mary Condon for their helpful suggestions and for serving on my dissertation committee.
I am grateful to all of the interviewees in Jamaica, who by convention have remained anonymous, but who took time from their busy schedules to meet with me thereby immeasurably enriching the study.
To my parents and my brother I owe a debt of gratitude for their love and steadfast support during this long odyssey and for their constant unfailing encouragement. My mother's calming presence, not to mention her skills in entertaining and caring for my daughter during our visits, always renewed my energy and spirit. I remain, as always, eternally obliged to my father who read, re-read and discussed with me the countless drafts of the dissertation with typical analytical precision, a careful eye to detail and his mastery of clarity in writing.
And finally, I would like to thank my husband and my daughter. My daughter for putting it all into perspective and for the constant smiles and endless laughter that only a bright-eyed toddler can bring but most of all my husband, for his unwavering belief in me, his tolerance and support and for giving me the time and space to pursue this lengthy endeavour.
vii Table of Contents Abstract iv Dedication vi Acknowledgments vii List of Figures and Tables xiii Glossary of Acronyms and Abbreviations xiv
Chapter 1: Introduction: Overview of the Research Problem and Methodology 1 1.1 Scope of the dissertation and the research question(s): Is there is a logical and institutional interplay between consumer protection and competition laws in small states? 2 1.1.1 Research questions and sub-questions 8 1.1.2 Objectives of the research and the relevance of the dissertation contribution 9 1.2 Analytical framework based on a law and development perspective on regulation 12 1.2.1 Development as a process: Links between law, legal reform and economic and social development 13 1.2.2 The logical interplay: Consumer and competition law as regulatory instruments 23 1.2.3. The institutional interplay: Compliance and enforcement strategies and styles of consumer and competition agencies 27 1.3 Socio- legal research methodology 35 1.3.1 Case study approach 37 1.3.2 Characteristics of the subject matter and the enquirer 39 1.3.3 Limitations of the research 39 1.4. Structure of dissertation and summary of chapters 40
Chapter 2: Two Sides of a Coin: Theoretical Perspectives on the Interplay between Consumer Protection and Competition Laws 42 2.1 Consideration of consumer interests in competition and consumer protection - Does consumer welfare provide a unifying goal? 43 2.1.1 Consumer welfare goal in competition law focuses on economic efficiency but may also consider public interest concerns 45
viii 2.1.2 Diffuse legislative goals reflected in different consumer welfare standards 49 2.1.3 Consumer welfare goal in consumer law encompasses wider economic and non-economic interests 54 2.2 One side of the coin: Perspectives from antitrust and competition lawyers 55 2.2.1 Option-oriented consumer sovereignty 56 2.2.2 Consumer problems are micro-competition problems 61 2.2.3 Consumer and competition problems as dissimilar market problems 63 2.3 Looking at it from the other side of the coin: Perspectives from consumer lawyers 64 2.3.1 Competition law is necessary but not sufficient for consumer protection 65 2.3.2 Inherent tensions between consumer and competition law 67 2.4 Both Sides of the Coin: Maximising the logical and institutional interplay 68 2.4.1 Enhancing complementarities through economic insights 69 2.4.2 "Joined- up" balancing approach 71
Conclusion - Links between the theoretical literature and the dissertation research 75
Chapter 3: Size Matters: Normative Foundations of Consumer Protection and Competition Laws in Small States 80 3.1 Small States: Definitions and context of size 82 3.1.1 Definitional issues 83 3.1.2. A regulatory definition of size 87
3.2 Theoretical rationales for market interventions and small state markets 89 3.2.1 Economic rationale for intervention in markets - The market failure thesis 92 3.2.2 Social rationales for intervention in markets - Distributive justice, rights and paternalism 111 3.2.3 The contest between the competing values and rationales for market intervention 122 3.3 Regulatory goals and the case for consumer and competition regulation 126 3.3.1 Balancing efficiency and fairness in a development oriented goal 128 3.3.2 Benefits of consumer market regulation in small developing states 132 3.4 Principles for legal and institutional framework tailored to size and development 136 3.4.1 Consumer protection 137
ix 3.4.2 Competition law 140 3.4.3 Private and public enforcement 148 3.4.4. Regulatory agency design and scope 151 Conclusion 155
Chapter 4: Transforming to a Market-Driven Economy: Analytical History of the Development of the Legal Framework for Regulation of Consumer Markets in Jamaica 157 4.1. Politics, law and economic development in a small developing state - Jamaica in context 158 4.1.1 Political institutions and process 159 4.1.2 Legal system and institutions 162 4.1.3 Socio-economic conditions 165
4.2 Historical overview of the legal regulation and structure of the Jamaican consumer market (1800 -1990) 168 4.2.1 Early colonial mechanisms of market control 169 4.2.2 Trade policies and price controls 171 4.2.3. Concentrated market structure 176 4.2.4 Impact of the consumer movement 178 4.2.5 Legal framework prior to reform 179
4.3. Law reform process for competition and consumer law and policy (1990 - 1993) 182 4.3.1 Ideological policy shifts 183 4.3.2 Balancing inputs from domestic insiders and international outsiders 185 4.3.3 The Green Paper on Fair Competition 188 4.3.4 The competition debate and the role of interest groups and the public. ..190 4.3.5 Legal transplants and tailoring of the Fair Competition Act 196 4.3.6 Consumer welfare goal 202
Conclusion 205
Chapter 5: A Rhetorical Interplay between Consumer and Competition Law Enforcement: The Jamaica Fair Trading Commission in Action from 1993 to 2004 208 5.1 The public interest and the evolution of the Fair Trading Commission 210 5.1.1 The FCA, the FTC and theories of regulatory origin 211
x 5.1.2 Life cycle first phase - Crusading and spirited approach (1993 to 2000) 220 5.1.3 Life cycle second phase - Gradual agency stagnation (2001 to 2004) ... 231 5.2 Analysis of the regulatory enforcement styles and strategies of the Fair Trading Commission 236 5.2.1 Moving beyond dispute settlement to regulatory enforcement 237 5.2.2 FTC use of deterrence strategies - Incapacitation and legal proceedings 240 5.2.3 FTC use of compliance strategies - Negotiation, advocacy and education 245 5.2.4 Measurement of regulatory activity and effectiveness 252 5.3 Private Enforcement and the Fair Competition Act 255 Conclusion 259
Chapter 6: Promoting Consumer Interests in a Small State: The Fair Trading Commission's Approach from 1993 to 2004 262 6.1 Conflict between the statutory definition of consumer and approach of the FTC 264 6.2. Consumer interests in consumer law enforcement under the Fair Competition Act 266 6.3 Balancing economic efficiencies and consumer benefits in anti-competitive conduct investigations 270 6.3.1 Unilateral conduct -Abuse of dominance and consumer harm 271 6.3.2 Collusive conduct - Anti-competitive agreements and efficiency defences 276 6.4. Authorisations and the public benefit test 285 6.4.1 Authorisation guidelines and the meaning of public benefit and detriment 285 6.4.2 Public benefits recognised in FTC authorisation decisions and reports . 288 Conclusion 289
Chapter 7: Regulatory Intersections: The Fair Trading Commission and the Consumer Affairs Commission from 2005 to 2009 293 7.1 Consumer policy making and law reform (1990 to 2005) 294 7.1.1 The impact of market-oriented influences on nature and sequencing of law reform 295 7.1.2 Social rationales and regulatory goals in new reforms 296 7.2 Legal and institutional framework of the Consumer Protection Act 300
xi 7.2.1. Regulatory enforcement and the Consumer Affairs Commission 300 7.2.2 Overview critique of regulatory techniques in Act 305 7.2.3 Statutory overlap of regulatory offences on unfair trade practices 311 7.3 FTC Life cycle third phase - Reviving vigour and strengthened regulatory capacity (2005-2009) 316 7.3.1 Institutional separation of consumer and competition law enforcement 316 7.3.2 Organisational changes within the FTC 319 7.3.3 "Joined-up" strategic enforcement through market studies and consumer- focused competition law 321 Conclusion 328
Chapter 8: Conclusion: Summary of the Findings and Contribution 331 8.1 Summary of findings and contribution 332 8.2 Implications of the research findings for policy and practice - Possible lessons 340 8.3 Final remarks and avenues for future research work on market regulation in small states 345
Appendix A: Research Methods 348 Appendix B: FTC Consent Agreements and Out-of Court Settlements (1993 - 2009) 356 Appendix C: FTC Macro-Investigations, Economic and Industry Studies and Market Studies (2005 - 2009) 360 Bibliography 365
xii LIST OF FIGURES AND TABLES
Figures
1. Example of an enforcement pyramid adapted from Ayres and Braithwaite (1992)....31
Tables
1. Legislative source of the substantive prohibitions in the Fair Competition Act.... 197
2. Breakdown of the FTC budget and working hours between consumer and competition enforcement and administration activities, 1999 to 2004 (in per cent)..235
3. Fair Trading Commission enforcement pyramid 239
4. Pecuniary penalties ordered by the court for contravention of section 37 of the Fair Competition Act, 1993 to 2004 244
5. Cases received, investigated and resolved by the FTC, 1997 to 2004 252
6. Consumer Affairs Commission enforcement pyramid 301
7. Cases received, investigated and resolved by the FTC, 2005 - 2009 324
xiii GLOSSARY OF ACRONYMS & ABBREVIATIONS
ACCC Australian Competition and Consumer Commission
CARICOM Caribbean Community
CCJ Caribbean Court of Justice
CSME Caribbean Single Market and Economy
CAC Consumer Affairs Commission
FTC Fair Trading Commission
GDP Gross Domestic Product
HDI Human Development Indicator
IDB Inter-American Development Bank
ICN International Competition Network
IMF International Monetary Fund
JLP Jamaica Labour Party
NCL National Consumers League
PNP People's National Party
PSOJ Private Sector Organisation of Jamaica
xiv OECD Organisation for Economic Development and Co-operation
OFT United Kingdom Office of Fair Trading
OUR Office of Utilities Regulation
UNCTAD United Nations Conference on Trade and Development
USAID United States Agency for International Development
WTO World Trade Organisation
XV CHAPTER 1
Consumer policy and competition policy are logically and institutionally intertwined. Sir John Vickers, Former Chairman, Office of Fair Trading (2004)'
INTRODUCTION: OVERVIEW OF THE RESEARCH PROBLEM
Exploration of the logical and institutional links between consumer protection and competition law has developed as a significant research theme for both the academic and policy communities. The complementarities between the areas and the strategies for maximising the synergies and minimising the tensions that may arise in the interplay has been extensively canvassed and discussed. However the research theme has not been addressed in the specific context of the challenges and peculiarities of small developing states. This dissertation aims to complement the existing body of literature with a case study on consumer market regulation in Jamaica.
The features of small states vary from those of large states in a manner that impacts on and is relevant to understanding their regulatory practices and institutions.
Regulation of consumer markets in small developing states is complicated by the economic and social characteristics of their small size including small population size, lack of economic scale, high market concentration levels and constraints on institutional and regulatory capacity. The approach to the definition of a small state in the dissertation therefore incorporates these characteristics to include those states with populations of less
1 John Vickers, "Economics for Consumer Policy" (Keynes Lecture in Economics) (2004) 125 Proceedings of the British Academy 287 ["Vickers 2004"].
1 than 3 million that are developmentally challenged and fall below the minimum size
needed to operate a full set of regulatory policies and institutions.
This introductory chapter provides the background to the research problem
addressed by the dissertation. The first section sets out the scope of the dissertation and
the research questions that were posed to examine the problem. The next section discusses the regulatory theoretical framework that was used to frame the research. This is followed by the rationale for the socio-legal methodological approach employed in the research. The chapter concludes with an outline of the structure of the dissertation.
1.1 Scope of the dissertation and the research questionfs): Is there is a logical and institutional interplay between consumer protection and competition law in small developing states?
Consumer policy is seen as a logical complement and counterpart to competition policy as an instrument to promote consumer interests. Competition policy seeks to create perfectly competitive markets that are assumed to work for the benefit of consumers by ensuring that consumers have a choice of suppliers whilst consumer policy works in tandem to ensure that consumers can make a rational choice amongst these options. As an instrument of competition policy, competition law focuses on ensuring that the structure of the market is conducive to promoting competitiveness through provisions controlling both the structure and conduct of the market ensuring that businesses respond
2 The consideration and discussion of the definitional issues of size is set out in detail in Chapter 3 of the dissertation.
2 to consumer demands and implement innovations in products and services. However, the free operation of markets will often work to the disadvantage of consumers due to market failures and inequality in bargaining power between consumers and suppliers. Consumer policy is therefore a primary instrument for ensuring that the benefits of a market economy accrue to consumers through protection of the economic interests of consumers and the entrenchment of safeguards for the quality, safety and fitness of goods and services.
Consumer and competition laws regulate the market economy through different measures. The subject matter of consumer law is extensive and underpinned by a variety of rationales in different jurisdictions. In common law jurisdictions consumer law has developed primarily through extensive statutory controls. The core coverage addresses information failures and inequalities in consumer power through prohibitions on misleading and deceptive conduct such as in advertising and other marketing measures; contractual terms of sale of goods and services including unfair contract terms, and product safety. Public and private laws provide for mixed enforcement and access to both individual and collective redress. Additionally specific industry sectors such as consumer credit, national standards, metrology, product liability, e-commerce and standards for safety and quality of food may all be considered to fall within the ambit of consumer protection. The dissertation research focuses on the public regulatory measures and institutions for consumer law. Competition law focuses on the supply side of the market seeking to promote competitive outcomes by prohibitions on abuse of dominance or monopoly market power, prohibitions on anti-competitive horizontal and vertical
3 practices and control of mergers that significantly lessen competition. Private law remedies are an important aspect of competition law in some countries but similarly to consumer law the dissertation is primarily concerned with the public ordering role of competition laws.
In most jurisdictions consumer and competition law were traditionally treated as separate and distinct with different histories, guiding philosophies and institutional and enforcement mechanisms.3 They were not viewed as mutually reinforcing and at the institutional level enforcement by separate agencies or even within an "integrated" agency was un-coordinated and little or no attempt made to harness the synergies.4 In large jurisdictions such as the United States the split was carried through to a distinction between Bar Associations and legal specialities. This was evidenced also in law school teaching, professional curriculums and academic journals which all maintained a clear separation between the areas. In a contemporaneous work on the provisions of the United
Kingdom Fair Trading Act, 1973, which included legal rules to address both areas, James
Cunningham opined that consumer protection and competition law were only "remotely related".5 There has clearly been a swing of the pendulum as the current academic orthodoxy accepts that the areas are intertwined and focuses instead on the optimum level of interaction and dependence between them.
3 For discussion see Spencer Waller, "In search of economic justice: considering competition and consumer protection law" (2005) 36 Loy. U. Chicago L. J. 631 at 632 ["Waller 2005"]. 4 In the US enforcement responsibilities for both areas were placed in the Federal Trade Commission which was established in 1914 with gradual increase in consumer protection enforcement responsibilities from 1938. 5 James P Cunningham, The Fair Trading Act 1973 (London: Sweet and Maxwell, 1974) at 423.
4 Small and large states have therefore sought to maximise the linkages between consumer and competition law by placing the administration and enforcement of consumer and competition laws in a single agency. These include agencies such as the
Fair Trading Commission in Barbados, the Community Competition Commission in the
Caribbean Community (CARICOM), the Office of Fair Trading (OFT) in the United
Kingdom, the Federal Trade Commission in the United States, the New Zealand
Commerce Commission and the Australian Competition and Consumer Commission
(ACCC) which all demonstrate different levels of integration and allocation of enforcement responsibilities.6
The research interest in examining the interplay between consumer and competition law in small states was influenced by the increasing emphasis placed by international institutions on the role of competitive markets and competition law and policy in promoting consumer interests. Although consumer law is still recognised as a necessary supplement to competition law, primarily to remedy information failures, there is a danger that the influence of these agencies on regulatory frameworks in small developing countries will lead to the boundaries of consumer law being re-drawn to reduce the level of state involvement in the market and adversely affecting consumer interests.
The story of the growth of competition laws in small developing states is tied to the story of law and development and the emergence of the "Washington consensus"
6 A notable exemption to this integrated approach is seen in the European Union where there are separate directorates for consumer policy and competition policy and the post of Consumer Liaison Officer was created in 2003 to provide more links between the Directorates.
5 emphasising economic liberalisation, deregulation and prudent macro-economic policies as the vehicle for growth. The development of these laws is very much intertwined with the international pressures exerted by donor agencies and epistemic communities in "rule of law" and "good governance" agendas.
During the 1990s there was a phenomenal growth of competition regimes which coincided with the global push for legal reform and institutions to propel the growth of developing states.7 Research has indicated that 27 developing countries were included in the 38 countries that enacted competition laws in the 1990s.8 This growth can be explained in part by the fact that institutions such as the International Monetary Fund
(IMF) and the World Bank often made the adoption of these laws and policies pre conditions for aid and loan packages as part of structural adjustment programmes.
Domestic laws have also been developed in response to regional initiatives and the consideration of a multilateral framework for competition rules advocated by the World
Trade Organisation (WTO) and the United Nations Conference on Trade and
Development (UNCTAD). Partially as a response to this international co-operation and
7 See generally on this Michael J. Trebilcock & Ronald J. Daniels, Rule of Law Reform and Development: Charting the Fragile Path of Progress (Cheltenham: Edward Elgar Publishing Limited, 2008) [Trebilcock & Daniels 2008} at 2 noting the development assistance provided for law reform projects during this period. Simon J Evenett, "Link between development and competition law in developing countries", Commissioned by UK Department for International Development, Case Studies for the World Development Report 2005: Investment Climate, Growth and Poverty, (October 2003). Online: University of Gallen www.alexandria.unisg.ch/EXPORT/DL/22249.pdf; also see on the growth of competition law regimes CUTS Centre for Competition, Investment and Economic Regulation, "The Role of International Co-operation in Building an Effective Competition Regime" CUTS Newsletter 6/2003 at 1. Online: CUTS- C-CIER
6 "codification" of best principles for competition enforcement intensified.9 This is typified by the development and growing strength of networks of agencies and officials such as the International Competition Network (ICN) and the Global and Regional Competition
Forums held under the auspices of the Organisation for Economic Development and Co operation (OECD) which both started in 2001. Since 2003 competition forums have also been organised under the auspices of the Inter-American Development Bank (IDB).
UNCTAD meetings also provide a community for discussion of competition law issues from a development perspective. These international influences have in various ways affected both the growth and content of small state competition laws. The International
Consumer Protection and Enforcement Network (ICPEN) and OECD Consumer Policy
Committee play a similar role in consumer protection area although there has been relatively less co-ordination between large and small states in those groupings.
The dissertation research examines the extent to which the linkage between consumer and competition law is reflected in the regulatory framework of small developing states, through a case study on the Jamaican experience. In 1993 during the period of increasing proliferation of competition agencies Jamaica enacted a Fair
Competition Act containing consumer and competition law provisions to be enforced by a
9 See generally on the growth of epistemic communities Imelda Maher, "Competition Law in the International Domain: Networks as a New Form of Governance" (2002)29:1 J. Law & Soc. 111 ["Maher 2002"]; Daniel D. Sokol, "Monopolists Without Borders: The Institutional Challenge of International Antitrust in a Global Gilded Age" (2007) 4 Berkeley Bus. L.J. 41; also see political diffusion theories discussed in David Levi-Faur, "The global diffusion of regulatory capitalism" (2005) 12 Annals of the American Academy of Political and Social Sciences, 598 ["Levi-Faur 2005"]; John Braithwaite & Peter Drahos, Global Business Regulation (Cambridge: Cambridge University Press, 2000) on regulatory webs of globalization at 550 to 557 and categorisation of the role of these communities as "webs of dialogue" concluding that dialogue webs are more important than the "webs of coercion".. See further on this David J. Gerber "Comparative Antitrust Law" 1193 at 1196 in Mathias Reimann & Reinhard Zimmermann eds. The Oxford Handbook of Comparative Law, (Oxford: Oxford University Press, 2006).
7 Fair Trading Commission. This legislation was followed in 2005 by a Consumer
Protection Act that placed greater emphasis on direct consumer rights and remedies and was administered and enforced by a Consumer Affairs Commission. Through the case study the dissertation aims to investigate whether there should be a logical and institutional interplay in the regulatory framework for consumer and competition law and policy in small developing states.
1.1.1 Research questions and sub-questions
The main research questions that were posed to investigate the research problem sought to address specific small state concerns as reflected in the Jamaican environment namely:
(1) Should there be a logical and institutional interplay between consumer protection
and competition laws in small developing states?
(2) What are the values underlying the economic and non-economic rationales for
consumer market regulation? What are the specific goals that consumer protection
and competition laws should pursue in small developing states?
(3) Do consumer protection and competition laws in small states lend themselves to a
integrated institutional enforcement approach?
(4) What internal and external dynamics of small states impact on the underlying
rationales for market regulation and the interplay between consumer and
competition law? How is this demonstrated in Jamaica?
8 (5) Why did policy makers in Jamaica initially use competition law as the primary
legal instrument for safeguarding consumer welfare?
(6) Why was a new legal framework for consumer protection introduced in 2005?
(7) How successful has the integrated agency the Fair Trading Commission been in
using its instruments to meet its regulatory goals particularly as a tool to promote
"consumer welfare" and protect the "consumer interest"?
1.1.2 Objectives of the research and the relevance of the dissertation contribution
The primary objectives of the research were two-fold. Firstly, to add to the
existing knowledge and regulatory scholarship on consumer and competition law and
secondly, to ensure that the peculiar issues of small developing states are recognised in
both the academic and policy research. Research on the development issues in regulation
has been informed by a variety of theoretical perspectives including administrative law,
regulatory capitalism, law and development and regulation and rights.10 As a result of this
there has been some noteworthy research particularly on the impact of development
issues in regulation and competition policy.11 Research by legal scholars on competition
10 See for example on regulatory capitalism "Levi-Faur 2005" supra note 9 and David Levi-Faur "Regulatory Capitalism and the Reassertion of the Public Interest" (2009) 27:3 Politics and Society 181; for regulation and rights perspective see Bronwen Morgan & Frank Trentman eds., (2006) 29:4 Special Issue of Journal of Consumer Policy on The Politics of Necessity. 11 A significant amount of research has been undertaken by scholars in the Centre for Regulation and Competition (CRC) which has carried out empirical research within a greater political focus. See for example Paul Cook & Sarah Mosedale, eds. Regulation, Markets and Poverty (Manchester: Edward Elgar Press, 2007), Paul Cook et al eds. Leading Issues in Competition, Regulation and Development (Edward Elgar Publishing, 2004) [Cook et al Leading Issues 2004]\ Martin Minogue & Ledivina Carino, eds. Regulatory Governance in Developing Countries (Manchester: Edward Elgar Press, 2006); also note Jacinta Jordana and David Levi-Faur have carried out research on regulation in the Latin American context
9 law in emerging countries is also developing as an important theme.12 Empirical• work on competition policy in "small economies" has addressed competition policy in both developed and developing states.13 However despite the overall growth in the volume of work on developing and emerging countries there has been limited exploration in the academic literature on the links and institutional interface between consumer and competition law and policy in small developing states. Research has centred on the experiences of large developed countries such as United Kingdom, United States
Australia and those in the European Community.14 Accordingly the dissertation research seeks to make a contribution to the literature on development-oriented small state approaches to regulation.
A fuller understanding of the impact of state size on consumer and competition law and policy will assist in determining the optimum legal and institutional frameworks for consumer market regulation. This will aid in the design and application of regulatory
from political perspectives in The Politics of Regulation: Institutions and Regulatory Reforms for the Age of Governance (CRC Series Edward Elgar, 2004) ["Jordana & Faur 2004"]. 12 See for instance William E. Kovacic, "Designing and Implementing Competition and Consumer Protection Reforms in Transitional Economies: Perspectives from Mongolia, Nepal, Ukraine, and Zimbabwe" (1995) 44:4 De Paul L. Rev. 119; William E. Kovacic, "Institutional Foundations for Economic Legal Reform in Transition Economies: The Case of Competition Policy and Antitrust Enforcement" (2001 - 2002) 77 Chi. Kent L. Rev. 265; Michal Gal, "The Ecology of Antitrust: Preconditions for Antitrust Enforcement in Developing Countries" in Competition, Competitiveness and Development: Lessons from Developing Countries Philip Brusick et al eds. (UNCTAD, Geneva: 2004); Sheth Manisha, "Formulating Antitrust Policy in Emerging Economies" (1997) 86 Georgetown L. J. 451; Ignacio De Leon, "The Role of Competition Policy in the Promotion of Competitiveness and Development in Latin America" (2000) 23(4) World Competition 115. 13 Michal S. Gal, Competition Policy for Small Market Economies (Cambridge: Harvard University Press, 2003) [Michal Gal 2003] which uses case studies of Australia, Canada and Israel and Taimoon Stewart, An Empirical Examination of Competition Issues in Selected Caricom Countries: Towards Policy Formulation (Sir Arthur Lewis Institute of Social and Economic Studies, 2004) [Taimoon Stewart 2004], 14 See for example Katalin J. Cseres, Competition law and Consumer Protection (The Hague: Kluwer Law International, 2005) [Cseres 2005], Louise Sylvan, "Activating Competition: the Consumer - Competition Interface" (2004) 12:2 Austl. Comp. & Cons. L. J. 191 ["Sylvan 2004"].
10 regimes that effectively promote consumer interests and overall development levels in
small developing states. Accordingly the research aims to:-
• Contribute to the discourse on the role of law and legal institutions in
development;
• Expand the current research findings on the interplay between consumer and
competition law;
• Supplement the limited knowledge of enforcement of consumer and competition
law in small states;
• Examine and analyse the effectiveness of the consumer and competition law
framework in Jamaica; and
• Utilising insights from the case study produce suggestions for an enforcement
approach that facilitates consideration of the effective interplay of consumer and
competition law in small states.
The dissertation contribution is relevant and distinctive on several grounds. Firstly, it seeks to use a different analytical framework to that previously deployed. The study uses a regulatory approach in contradistinction to economic analysis of the law as the preferred methodology for comparison of these areas. A regulatory approach offers a different analytical standpoint that examines the effectiveness rather than the efficiency of the legal framework and in so doing incorporates greater consideration of equity in assessing the overall success of the framework in meeting community objectives.
Secondly, the research focuses on the under-researched problems of small developed states and the links between law, legal institutions and development. Thirdly, although
11 there has been some useful doctrinal work on the Fair Competition Act of Jamaica there has not been a detailed study of the Act and the interplay of consumer and competition policy in a manner that addresses both the instruments and agencies involved in consumer market regulation.15 Some of the prior commentaries on the Fair Competition
Act were undertaken by persons involved in the developmental process and mainly sought to provide a detailed exposition of statutory provisions and operation in practice.16
In contrast the dissertation research examines the efficacy of both the substantive legal rules and the enforcement institutions.
1.2. Analytical framework based on a law and development perspective on regulation
The dissertation examines the regulation of consumer markets within the framework of law and development. As noted by Scott Newton law and development draws in a wide catchment of analytical approaches by "self-identified" law and
15 Compare doctrinal studies by Alan Ransom, "The Fair Competition Act, 1993 (Jamaica) - Analysis and Comment - Part I" (1994) 4 Carib. Law Rev. 110; Alan Ransom 'The Fair Competition Act, 1993 (Jamaica) - Analysis and Comment - Part II" (1994) 4 Carib. L. Rev. 290; Andrew D. Burgess, "The Jamaica Fair Competition Act 1993 and Consumer Protection from False and Misleading Advertising: A Legal and Economic Analysis", (2001) 11:2 Carib. L. Rev. 341["Burgess 2001"]; Marlene Malahoo, "Competition Law in Emerging Economies: The Jamaican Experience", Occasional Paper No. 3 (London: Centre of European Law, Kings College, 2000) ["Malahoo 2000"]. 16 Derrick McKoy "Antitrust Law in Jamaica." (1995) 5 J. Transnat'l L. & Pol'y 183 ["McKoy 1995"],; Philip Paulwell, "Legislating for Fair Competition: A Comparison of some Provisions of Jamaica and United States Legislation" (1994) 5Carib. L. & Bus. 50; Allan Wood, "Competition Legislation and the Legal Profession: Developments in Jamaica" (1995) 5 Carib. L. & Bus. 56.
12 development scholars.17 The dissertation research aims to contribute to this diffuse field of intellectual inquiry and discourse. This section sets out the analytical framework for the dissertation research and outlines the main theoretical strands that influenced the approach to examination of the research problem. The role of legal development assistance in the law reform agenda and the conceptualisation of the competition and consumer protection laws as instrumental or as reforms in themselves are important themes in the research. The section therefore starts by providing context through discussion of the literature on the nature of the relationship between law and development and the use of legal transplants as a method of law reform. It then considers how consumer and competition law are conceptualised as regulatory instruments under a general rubric of consumer market regulation. The last section provides an overview of the enforcement and compliance theory which is used to examine the efficacy of the institutional framework in the case study.
1.2.1 Development as a process: Links between law, legal reform and economic and social development
The role of law in facilitating development has been the central focus of the academic community known as the law and development movement. This movement has had its
1 ft peaks and wanes with different theoretical influences throughout the various phases.
17 Scott Newton, "The Dialectics of Law and Development" in David M Trubek & Alvaro Santos eds. The New Law and Economic Development: A Critical Appraisal (New York: Cambridge University Press, 2006) 174 at 177 ["Newton 2006"]. 18 The phases or "moments" are mapped eloquently in "Newton 2006" ibid.
13 The original movement which began in North America in the 1960s was based on
American traditions and focused on improving legal education and the legal profession in recipient states. It was closely tied to law reform assistance programmes of aid agencies and foundations and reached an early peak in the 1970s but subsequently declined due to doubts about the ability of law to foster development and an assertion of the importance of context in law reform.19
A critical period for law and development, characterised by Newton as the
"Revivalist Moment", occurred in the 1990s when the movement reflected the ascendancy of the "Washington Consensus", neo-liberalism and market-led development.
This was also the period during which a competition law was developed in Jamaica.
During this time law and development came to be considered as part of the "good governance" and "rule of law" programmes of international lending agencies.Of) This approach appeared rooted in the formalist Weberian perspective that tied economic development to the existence of rules for individual entitlements that facilitate economic activity such as contract and property law. Newton argues that law and development is now moving to a different period, a "Post Moment", which is a post Washington consensus that has tempered the elevation of efficiency and formalism during the earlier
who identifies five periods of donor legal reform Colonial legal development (up to the 1960S), the Inaugural Moment (1960-74), the Critical Moment (1974 - 1986), the Revivalist Moment (1988 - 1998) and the Post Moment (1998 - date). 19 See David M. Trubek & Marc Galanter "Scholars in Self-Estrangement: Some Reflections on the Crisis in Law and Development Studies in the United States" (1974) 4 Wis. L. Rev. 1062. 20 David M. Trubek, "The 'Rule of Law' in development assistance: past, present, and future" in David M Trubek & Alvaro Santos eds. The New Law and Economic Development: A Critical Appraisal (New York: Cambridge University Press, 2006) at 78; See also David Kennedy, "Laws and Developments" in John Hatchard & Amanda Perry-Kessaris, Law and Development: Facing Complexity in the 21s' Century (London: Cavendish Publishing Limited, 2003). period whilst reasserting the importance of context and culture in implementing changes
91 and the recognition that one size does not fit all.
Legal Origins
As part of the shifts in law and development the existence of a link between the
"quality" of institutions and the level of development has been widely accepted.22
Econometric studies, reliant on concepts of new institutional economics have been pivotal in the examination of the links between law and legal institutions and economic development. The basis for this recent approach is the influential legal origins research stream based on work by Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert Vishny ("LLSV"). The LLSV school of thought, based on work in law and finance, used regression analysis of securities laws in 49 countries to demonstrate that investor protection was weaker in countries with legal systems drawn from civil law systems than those derived from English common law. They concluded that the higher level of protection of investors in common law countries was related to increased financial development which led to the suggestion that there was a link between a country's legal family and the level of economic development.
2'"Newton 2006" supra note 17 at 19. 22 References to institutions in this literature are based on institutional and neo-institutional economics and particularly the work of Nobel prize winners John R. Commons and Douglas North so that "institutions" refers not to agencies or organisations but to rules including both legal rules and social norms. This dissertation uses the terms institutions, organisations and agencies interchangeably save in references to neo-institutionalist literature. 23 Rafael La Porta et al, "Law and Finance" (1998) 106 J. Pol. Econ 1113 although note that common law origins thesis was first raised by the authors in "Legal Determinants of Finance" (1997) 52 J. Fin. 1131; also see later work Rafael La Porta, Florencio Lopez-de-Silanes & Andrei Shleifer, "The Economic Consequences of Legal Origins" (2008) 46:2 J. Econ. Lit. 285.
15 Although the LLSV research has generated substantial debate it has also been extensively critiqued.24 A particular critique is that in fact many civil law developing countries have had superior economic growth in contrast to some common law developing countries with poor economic growth. The results have also been critiqued on the basis of the indicators and data used in the empirical regressions.26 Kenneth Dam notes the difficulties in the cross country regressions and finds that they do not accurately reflect the historical development of the law, the operation of the legal systems and the allocation of government power.27 He contends that the governance approach supported by the World Bank, which utilised a larger database, is a somewhat more persuasive rule of law measurement 28 It has also been noted that the elements of investor protection utilised in the LLSV data for minority shareholders and creditors included protections that corporate lawyers may consider inconsequential.29 Differences in disciplinary
24 See Poonam Puri, "Legal Origins, Investor Protection, and Canada" (2010) 6:1 CLPE Research Paper Series, Online: CLPE http://www.comparativeresearch.net/papers.jsp?pubyear=2010(Accessed 20 January, 2011) for a summary of the critiques on the basis of methodology, coding, context and alternative explanations. 25 Kenneth Dam, The Law-Growth Nexus: The Rule of Law and Economic Development (Brookings Institution Press, 2006) [Dam 2006] at 5; John C. Coffee Jr., "Law and the Market: The Impact of Enforcement" (2007) 156:2 Univ. Penn L. Rev. 230 at 248 ["Coffee 2007"]. 26 Ibid. Dam 2006 at 34 and 41. 27 Ibid, at 32. 28 See the World Bank Doing Business reports, online: World Bank
16 approaches are also evident in the critiques with levels of scepticism demonstrated by comparative lawyers on the utility of the numerical approach to this issue.30
The LLS V legal origins work led to the belief that the "rule of law" conceptualised as
"legal institutions" was a critical factor in fostering economic development.31 However, as concluded by Anthony Ogus in his review of the empirical studies on the links between legal and institutional variables and economic growth, the studies do not provide clear-cut results.32 Ogus accepts that legal infrastructure and the "rule of law" are important particularly those characteristics such as the existence of property rights, contractual rights, the level of stability and judicial independence whilst noting that other mechanisms such as informal processes can be significant in contributing to economic growth.33 Trebilcock and Daniels conclude on their review of the empirical evidence that whilst there is consensus that rules/institutions are an important determinant of economic development the precise content of optimal institutional arrangements is not clear cut being dependent on contextual factors such as history, culture and political traditions.34
A general critique of the LLSV work on the basis of contextual factors is made in an interesting empirical study undertaken by Berkowitz, Pistor and Richard. The authors argue that the manner of the "transplant" of a former law or legal system is more
30 Matthias M. Siems, "Legal Origins: Reconciling Law and Finance and Comparative Law" (2007) 52 Mc Gill L.J.55. 31 See Thomas Carothers, ed. Promoting the Rule of Law Abroad: In Search of Knowledge (Brookings, 2006) for collection of essays exploring the various meanings attributed to "rule of law"; also see Kenneth Davis & Michael J. Trebilcock, "The Relationship between Law and Development: Optimists versus Skeptics" (2008) 56 Am. J. Comp. L. 895 at 913["Davis & Trebilcock 2008"] for an account of diversities in meaning of rule of law. 32Anthony Ogus, "Towards Appropriate Institutional Arrangements for Regulation in Less Developed Countries" (2005) Centre on Regulation and Competition, Working Paper Series Paper No. 119 at 3 ["Ogus 2005"]. 33 Ibid, at 5. 34 Trebilcock & Daniels 2008, supra note 7 at 12.
17 important in determining the effectiveness of legal institutions than the legal origin.35 The
study suggested that where an imported law in a transplant country was not adapted or
the population was not already familiar with the basic principles there was a transplant effect i.e. "the mismatch between pre existing conditions and institutions and transplanted
law, which weakens the effectiveness of the imported legal order."36
The limitations of the LLSV approach in small open economies, has been
addressed in two recent articles. In a case study on the disparity in the economic
development of Jamaica and Barbados the authors noted that although both jurisdictions
were bequeathed a similar colonial legacy on property rights and legal family, the
trajectory of growth has differed significantly.37 They discounted "colonial origins, legal
origins, geography or some other exogenous feature of their economies" suggesting that
"... the macro-economic decisions of governments can exert just as much influence on the
trajectory of the economy as the institutional framework within which such choices take
place."38 Daniels, Trebilcock and Carson in their examination of the colonial experiences
of eight former British controlled territories including Barbados and Jamaica have
critiqued this conclusion on the basis that the authors "... overlooked the significance of
the institutional framework in determining how such policy choices are developed and
35 Daniel Berkowitz, Katharina Pistor & Jean-Francois Richard "The Transplant Effect" (2003) 51 Am. J. Comp. L. 164. 36 Ibid, at 171; in this context it is likely Jamaica would be considered a receptive transplant as the colonial settlers who enforced the laws on the subjugated dispossessed population were familiar with the transplanted codes. 37 Peter B. Henry & Conrad Miller, "Institutions vs. Policies: A Tale of Two Islands", (2009) 99:2 American Econ. Rev. 261 at 265. 38 Ibid, at 266.
18 made."39 They suggest that colonial experience rather than initial conditions at the time of
transplant affected modern rule of law outcomes arguing that "...the nurture of such legal
institutions during the colonial period, particularly with respect to the degree which it
encouraged such structures to respond to the changing needs of the populace, was
influential in creating the conditions that support modern commitments to legality".40
These various studies point to a multiplicity of factors for the success of a legal
regime. In light of this it appears that there is a need to view the relationship between
legal and economic development as a "a highly iterative process of action and strategic
reaction."41 The focus should be on how legal systems change rather than the "origins
and formal characteristics" type of research that assumes that a particular legal system
unequivocally equals success 42
Legal Transplants and Culture
Legal transplantation, involves the "... borrowing or importing of legislative models, concepts, approaches or even statutory language from another jurisdiction typically via
the offices of experts in the borrowed law."43 The modelling of new laws in this manner
is a widely used method of legal development and law reform in small developing countries. This practice raises two key questions, firstly, why are legal models or
39 Ronald J. Daniels, Michael J. Trebilcock & Lindsay D. Carson "Legacy of Empire: The Common Law Inheritance and Commitments to Legality in Former British Colonies" (2011) 59:1 A.J. Comp. Law 111 ["Daniels, Trebilcock & Carson 2011"] 40 Ibid, at 174. 41 Curtis J. Milhaupt & Katharina Pistor, Law & Capitalism (University of Chicago Press, 2008) at 21[Milhaupt & Pistor 2008], 42 Ibid, at 219. 43 Scott Newton, "Post-Communist Legal Reform: The Elision of the Political" in John Hatchard & Amanda Perry-Kessaris eds., Law and Development: Facing complexity in the 21" Century (Cavendish Publishing Limited: London, 2003) at 161.
19 transplants commonly used in small states and secondly, whether these transplanted legal models are likely to be effective in promoting the regulatory goals.
There are several underlying reasons for the prevalence of transplanted legal models in small states. Firstly, the long history of colonisation including the imposition or "reception" of laws ensured that these states were often passive recipients of a large
body of law that is still on their statute books.44 Although formal political independence
has freed these states to develop indigenous legal principles and laws they have historically looked to precedents from other countries for models of law development.
Secondly, the use of existing legal models is seen as providing a cost-effective method for the development of new legislation and a partial solution to the lack of legal capacity.
Small states are adversely affected by an overall shortage of legal draftspersons. In these circumstances modelling laws (particularly in developing fields) on precedents from other jurisdictions can be beneficial as draftspersons can use these existing models to craft solutions to the legal issue. However as the optimum use of existing models requires comparative legal studies and the application of domestic expertise to select the best model to amend, the process can be less ineffective in states hampered by the inability of legal draftspersons inexperienced in specific technical areas, to adequately adapt the legislation to national needs. Thirdly, the international donor and epistemic communities have contributed to the use of legal transplants. Transplants have been encouraged by the legal reform projects of international institutions and the growth of epistemic communities has aided ongoing diffusion and transfer of commercial laws.
44 See further Rose Marie Antoine, Commonwealth Caribbean: Law and Legal Systems 2nd ed. (London: Routledge-Cavendish, 2008) [Antoine 2008].
20 Finally, from the law and economics perspective, legal transplants are seen as aiding the development of efficient legal institutions due to the lower transaction costs involved in
their use. Kevin Davis opines that small jurisdictions should be attracted to transplants in
light of the desirability of minimising investment in creating rules.45 He adds that it
minimises the significant fixed costs of law-making such as communication and
analytical costs. However as Michele Graziadei notes it is simplistic and unrealistic to
think that rules and institutions are diffused globally due simply to efficiency concerns.46
It is clear that transplants are widely used but the critical issue that remains is
whether legal transplantation is effective. A review of the literature by comparative law
scholars reveals divergent positions on the efficacy of transplants as a method of legal development47 Approaches include "transferists" who maintain that borrowing laws
under certain conditions can be successful and "culturists" who contend that laws have effect only if the environments are similar and that furthermore in the process of transplantation the law itself is transformed. These contrasting perspectives are reflected
in the work of theorists such as Alan Watson the key proponent of transplants and critical commentators such as Ann Seidman and Robert Seidman.
Alan Watson contends that legal transplants are a preferred remedy for legal development.48 In developing his thesis in later work he has provided a more nuanced
45 Kevin E. Davis, "Law Making in Small Jurisdictions" 56:3 (2006) U.T.L.J. 151["Davis 2006"]. 46 Michele Graziadei "Comparative Law as the Study of Transplants and Receptions" in Mathias Reimann & Reinhard Zimmermann eds., The Oxford Handbook of Comparative Law,(Oxford: Oxford University Press, 2006) 441 ["Graziadei 2006"] at 459. 47 For an overview see "Graziadei 2006" ibid. 48See for example some of writings in Alan Watson, Legal Transplants: An approach to Comparative Law (Athens, GA: University of Georgia Press,2d ed 1993) [Watson 7993]; Alan Watson, "Comparative Law and Legal Change" (1978) 37 Cambridge L. J. 313 ["Watson 1978"].
21 analysis stressing the complexity of transplants theory and the importance of cultural and social norms in their success.49 In contrast "culturists" such as the Seidmans' firmly contend that there is a "law of non-transferability of law" as the effect of the law depends not only on the provisions of the law but also on the environment.50 In short culturists contend that "law as a culturally determined construct" cannot be transplanted unless the culture of the originator and the recipient state are similar.51 Similarly, Pierre Legrand strongly critiques Watson's optimistic thesis on transplants and argues that the law is socially determined as the interpretation of legal rules is "a function of the interpreter's epistemological assumptions, which are themselves historically and culturally conditioned."52 His view is that transplants will only work if the environments are similar. Otto-Kahn Freud stresses that effective transplantation and reception requires knowledge of the social and foremost the political context.53
The main lesson to be drawn from these contrasting perspectives in the literature is the recognition that consumer and competition laws should be tailored and adapted to local circumstances.54 The context for law reform is critical in determining the success of
49 See discussion of Alan Watson's work in William Ewald, "Comparative Jurisprudence: The Logic of Legal Transplants" (1995) 43 Am. J. Comp. L. 489 and analysis of the different theoretical bases and variations in intensity with which Watson seeks to refute arguments of the culturists. 50 Ann Seidman & Robert Seidman, State and Law in the Development Process: Problem-solving and Institutional Change in the Third World (London: St. Martin's Press, 1994) [Seidman 1994] at 44; note importance of culture initially suggested by Montsequieu 1977 Spirit of Laws. 51 See discussion in Michal Gal, "The Cut and Paste of Article 82 of the EC Treaty in Israel: Conditions for a Successful Transplant" (2007) 9 Euro. J. law Ref. 467 at 484 ["Gal 2007"] 52 Pierre Legrand, 'The impossibility of legal transplants" (1997) 4 M.J.E.C.L. Ill at 114. 53 O. Kahn-Freund, "On Uses and Misuses of Comparative Law"(1974) 37 Mod. L. Rev. 1 at 27 54 See discussion of transplants in the competition law context in "Gal 2007" supra note 51 concluding that "law can play an important role in constituting culture, if it fits well with the existing ideology and is not culturally invasive" also see preliminary discussion of transplants in the consumer law context in N Van Cuong, "The Nature of Consumer Law Reforms in Developing and Transitional Countries: A Brief Literature Review" (May 17, 2010). Available at SSRN: http://ssrn.com/abstract= 1609523.
22 the measures. Legal reform will not be successful in a policy vacuum and there must be a supporting policy environment. Competition and consumer law are only two of the instruments that can be used by policymakers seeking to use law to encourage economic growth and overall social development. This dissertation does not address the larger question as to their ranking or priority in the mix of regulatory measures that can be used by small developing states. Indeed reform of consumer market regulation may be relegated behind more pressing national concerns that are perceived to have a more direct impact on social welfare.55 The dissertation research is based on an assumption that a link can be established between consumer and competition law and the overall regulatory objectives of small developing states. It therefore seeks to engage in a dialogue on the most effective manner in which the instruments and agencies of consumer and competition regulation can work towards achieving this goal.
122 The Logical Interplay: Consumer and competition law as regulatory instruments
A regulatory perspective facilitates the examination of the appropriate goals of competition and consumer law and the "logical" interplay between them. A regulatory perspective on law goes further than the doctrinal or black-letter law approach that
55 See Sothi S. Rachagan, "Protection against Unfair Trade Practices in Malaysia - Law, Enforcement and Redress in a Developing Country" 15 (1992) J. Cons. Pol'y 255["Rachagan 1992"] and his view on the need of consumer interest groups to recast debate on consumer policy to make it more directly relevant to social concerns of citizens.
23 focuses purely on the "coherence" and "content" of the laws.56 This approach "builds
upon a dominant strand of regulatory scholarship that views law as an instrument used by
Cf the state to achieve the community's chosen collective goals." It sees consumer and competition law as policy instruments rather than as autonomous self-contained systems and allows the use of socio-legal methods and methodology to study law in its social context.
An important preliminary step is the placement of consumer and competition law
within the regulatory context. The definitions of regulation are varied, often discipline specific, reflecting different methodologies and assumptions and influenced by
perspectives including economics, politics and sociology, of which law is only one.58
Martin Minogue notes that there are "alternative" and "contested" definitions.59 The most
useful definition appears to be that deployed by Julia Black whose incisive exploration of
the academic approaches leads to a definition of regulation as:
.. .the sustained and focused attempt to alter the behaviour of others according to defined standards or purposes with the intention of producing a broadly identified outcome or outcomes, which may involve mechanisms of standard setting, information-gathering and behaviour modification.60
This definition notably incorporates de-centred conceptualisations of regulation
56 Christine Parker, "Introduction" in Christine Parker et al eds., Regulating Law (Oxford: Oxford University Press, 2004) at 3. 57 Bronwen Morgan & Karen Yeung, Introduction to Regulation and Law: Text and Materials (Cambridge: Cambridge University Press, 2007) at 4 [Morgan & Yeung 2007]. 58 See for example discussions of definitions in Robert Baldwin & Martin Cave, Understanding Regulation: Theory, Strategy and Practice (Oxford: Oxford University Press,1999) at 2 [Baldwin & Cave 1999]-, Jacint Jordana & David Levi Faur, The Politics of Regulation: Institutions and Regulatory Reforms for the Age of Governance (CRC Series Edward Elgar, 2004) at 3. 59 Martin Minogue, "Apples and oranges: problems in the analysis of comparative regulatory governance" (2005) 45 Quart. Rev. Econ. & Fin.195 at 200. 60 Julia Black, "Critical reflections on regulation" (2002) 27 Austl. J. Leg. Phil.l at 26.
24 that include intentional activity of both public and private players. The essential elements are that the activity is designed to produce an identified outcome through mechanisms such as standards-setting, compliance monitoring processes and standards enforcement.
The primary limitation of the definition is the failure to specifically incorporate a public interest test similar to that used by Philip Selznick who referenced "activities valued to a community."61 However the "intentionality" requirement is likely to sweep this up covering the correction of market failures as well as other intended outcomes such as social justice. Black's definition of "regulation" is adopted in the dissertation as it facilitates the inclusion and consideration of both consumer and competition law as regulatory instruments. Both of these areas of the law are of an instrumental nature in setting standards with the intention to influence behaviour in the consumer market in a manner that enhances "consumer welfare". However the dissertation research is focused on the role of public players and excludes regulatory activity of non-state actors.
Conceptually consumer law can easily be examined from a regulatory perspective.62
As Iain Ramsay notes
Consumer law is an instrumental form of law, organised around achieving the goals of efficient and fair consumer markets ... it is best conceptualised as the regulation of consumer markets and includes analysis of the relative role of public, private and self-regulatory techniques, the study of agency discretion and the problems of ensuring effective and accountable rulemaking, standard-setting and enforcement.63
61 Philip Selznick "Focussing organizational research on regulation" in Roger G. Noll ed,, Regulatory Policy and the Social Sciences (Berkeley: The University of California Press. 1985) at 363. 62 For example of this approach to consumer law see Colin Scott & Julia Black, Cranston's Consumers and the Law 3d ed. (London: Butterworths, 2000) [Cranston's Scott & Black 2000]. 63 Iain Ramsay, "Consumer Law, Regulatory Capitalism and the 'New Learning' in Regulation"(2006) 28:9 Sydney L. Rev. 9 ["Ramsay 2006"].
25 The tools of consumer law fit within both the "traditional" envisioning of regulation and
the use of command and control techniques as well embracing softer measures such as disclosure and self-regulation.
In contrast, although modern competition law is considered as a regulatory
instrument, earlier scholars placed competition law outside the regulatory spectrum.64
Competition law was seen as a counterpoint to economic regulation that focused on price controls in utility sectors. Conceptualising competition law as regulation is easier in the context of the current legal approaches that emphasise the role of competition law as a
public ordering instrumental technique acting as a constraint on corporate power rather
than as a private law ordering of transactions between individuals.65 The public law
approach is evident in the predominance in modern competition law of administrative
institutional structures and direct agency remedies such as imposition of fines and orders
for divestment. These primarily rely on public enforcement mechanisms and afford competition measures a high degree of intervention in and control of markets. Imelda
Maher notes that competition law falls within Black's definition of regulation as it
"attempts to control, order, and influence business conduct." 66
Competition and consumer law are utilised as instruments to achieve regulatory goals subsumed under the overall rhetoric of "consumer welfare". The implications of the
64 See earlier work by scholars with alternative views including George J. Stigler "The Theory of Economic Regulation" in The Citizen and the State: Essays on Regulation, (Chicago: University of Chicago Press, 1975) atl83 ["Stigler 1971"], Stephen G. Breyer, Regulation and its Reform (Cambridge: Harvard University Press, 1982) [Breyer 1982] at 156; Anthony I. Ogus, Regulation: Legal Form and Economic Theory (Oxford: Oxford University Press, 1994) [Og(« 1994] at 30. 65 Imelda Maher "Regulating Competition" in Christine Parker et al eds., Regulating Law (Oxford: Oxford University Press, 2004) at 189. 66 ibid, at 187.
26 consumer welfare goal and the level of commonality in the consumer interests under consumer and competition law is an important recurring theme in the dissertation research and it is examined in the case study. Its treatment is also foreshadowed in the discussion on the theoretical perspectives and normative goals in consumer and competition law in Chapters 2 and 3 of the dissertation. The term "consumer market regulation" is used throughout the dissertation to encompass the legal instruments of both consumer protection and competition law.
123 The Institutional Interplay: Compliance and enforcement strategies and styles of consumer and competition agencies
This section introduces research on enforcement strategies as the dissertation seeks to use this regulatory enforcement theory to examine the efficacy of the institutional arrangements in the case study. A primary distinction can be made between enforcement models based on deterrence and punishment and those based on informal
fn methods of securing adherence or compliance to the law. Keith Hawkins distinguishes between them by characterising deterrent sanctioning as "a concern for the application of punishment for breaking a rule and doing harm" and compliance as concerned with
"securing conformity to a rule or standard when confronted with a problem.68 He opines that the strategy adopted is reflected in the regulatory style of the agency contrasting
67 Eugene Bardach & Robert A. Kagan, Going by the Book: The Problem of Regulatory Unreasonableness (Philadelphia Temple University Press 1982) ["Bardach & Kagan 1982"]; Bridget M. Hutter, Compliance, Regulation and Environment (Oxford: Clarendon, 1997) ["Hutter 199T']. 68 Keith Hawkins, Environment and Enforcement Regulation and the Social Definition of Pollution, (Oxford: University Press, 1984) [Hawkins 1984],
27 between a short adversarial style that is characteristic of a sanctioning approach and a
longer more discursive incremental approach with compliance strategies.
Effective use of deterrence strategies, which are characterised by reliance on
prosecutions and reduced regulatory discretion, may be seen as advantageous particularly
in a small state context. Eugene Bardach and Robert Kagan opined that reliance on a
strict enforcement strategy would lead to the reduction of risks and greater compliance by
business through changes in their internal culture.69 Strict enforcement is also considered
to lead to consistency of enforcement and greater fairness in the process as the penalty for
contravention is transparently fair.70 In the small state environment of close business ties
and absence of a competition culture this strategy can provide clear unambiguous signals
to business. It can also be used as a counter to the possibility of increased capture and
corruption of small state regulatory officials. However despite the clear advantages it seems that the strict deterrence approach would be unlikely to provide an optimal enforcement framework for a small state agency. Reducing regulatory discretion provides
insufficient flexibility for the agency to be both responsive and effective in the discharge of its mandate and increases the costs of regulation.71 It is important that deterrent strategies be combined with compliance strategies which allow regulators to "seek to
prevent a harm rather than punish an evil"."70
69 Bardach & Kagan 1982, supra note 67. 70 Peter Cartwright, Consumer Protection and the Criminal Law: Law, theory and policy in the UK (Cambridge: Cambridge University Press, 2001 [Cartwright Consumer Protection 2001] at 217. 71 See discussion on costs of criminal prosecution and limited efficacy of regulatory penalty approach in a developed country contest in U.K., Regulatory: Justice: Making Sanctions Effective - Final Report by Richard Macrory (London: Her Majesty's Stationery Office, 2006) [Macrory Review], online: BERR http://www.berr.gov.uk/files/file44593.pdf. at 23 (Accessed 10 January 2011). 72 Hawkins 1984, supra note 68 at 4.
28 Christine Parker's considerable body of literature on the regulatory enforcement of the ACCC and her comprehensive empirical agency studies provide important lessons on the value of a compliance strategy.73 Parker argues that enforceable undertakings which are a cornerstone of a compliance approach are useful as tools of "restorative justice" going beyond the ambit of court orders in "identifying, correcting and preventing the original breach and its underlying causes."74 She also points out that they are better suited to making companies internalise compliance and become more accountable than court remedies. The caveat is that they are most effective when used by a "strong litigator" and should be used in tandem with other remedies. Furthermore she suggests that simple deterrence does not strengthen an individual firm's commitment to compliance as it does not deal with perceptions of the morality of the conduct. Moral commitment is important both in ensuring there is sustained compliance commitment and in weakening efforts by regulated firms to use political leverage to affect the regulatory regime.75 Her body of research stresses the importance of compliance mechanisms in changing the business climate and encouraging businesses to internalise compliance.
The wealth of theoretical work reflects the vigorous debate on the comparative advantages of deterrent and compliance approaches. Both of these strategies can be
73 See Christine Parker, "Restorative Justice in Business Regulation? The Australian Competition and Consumer Commission's Use of Enforceable Undertakings" (2004) 67:2 Mod. L. Rev. 209 ["Parker 2004"]; Christine Parker, "The "Compliance" Trap: The Moral Message in Responsive Regulatory Enforcement" (2006) 40:3 Law & Society Rev. 591 ["Parker 2006"] Christine Parker & V L Nielsen, "How Much Does It Hurt? How Australian Businesses Think About the Costs and Gains of Compliance with the Trade Practices Ac" (2008) 32 Melbourne University Law Review, 554;]; Christine Parker & V L Nielsen, 'The ACCC Enforcement and Compliance Project: Explanation of Project and Methodology". Accessed 11 January 2011.] Available from URL: http://www. cartel .Iaw.unimelb.edu.au/go/related-projects/the-australian-competition-and-consumercommission- enforcement-and-compliance-project.. 74"Parker 2004" ibid, at 211. 75 "Parker 2006" supra note 73 at 592.
29 considered as part of the model of responsive regulation, developed by Ian Ayres and
John Braithwaite, as a new flexible enforcement approach to tailor enforcement more closely to individual situations,76 This work aimed to "transcend the deregulatory debate" and the different models of regulatory theory that had developed to explain the reasons for regulatory compliance and non-compliance by firms. It is based on empirical evidence, economic and political modelling and game theory and is applicable to both enforcement against individual firms and industry behaviour. A large and growing research strand has developed on the basis of this initial research forming what can loosely be called an "Australian school of regulation" that mixes theoretical and empirical studies to provide principles for informing design of regulatory agencies and instruments.77 This model of responsive regulation provides a useful lens for analysis of agency enforcement. A central component of responsive regulation is the use of escalating forms of intervention illustrated through an enforcement pyramid which provides hierarchies of sanctions and regulatory strategies. At the base of the pyramid are the compliance strategies of education and dialogue or persuasion moving on to varying levels of deterrence including civil remedies, pecuniary penalties and finally at the apex of the pyramid license revocation or banning orders. Figure 1 is an example of an enforcement pyramid adapted from Ayres and Braithwaite model.
76 Ian Ayres & John Braithwaite, Responsive Regulation (Oxford: Oxford University Press, 1992) [Ayres & Braithwaite 1992]-, John Braithwaite, Responsive Regulation and Restorative Justice (Oxford: OUP, 2002). 77 See for example research by Christine Parker, Neil Gunningham and Keith Hawkins.
30 Serious Criminal and Civil Proceedings, Banning Orders
Pecuniary Criminal and Civil Penalties
Remedial Civil Law Remedies
Warning Letters
Negotiation and Settlement
Persuasion and Education
Figure 1: Enforcement pyramid - Example of an enforcement pyramid adapted from Ay res and Braithwaite (1992) at 35.
The majority of the regulation is expected to be at the base of the pyramid as a key plank of the approach is that regulatees are less likely to defect from co-operation when faced with an enforcement pyramid as opposed to only one deterrence option.78 The regulator will be expected to use "tit-for-tat" enforcement depending on the attitude of the regulatee.
The value of responsive regulation is that it provides flexibility within a formal framework and is seen as likely to increase commitment to compliance. However there
78 Ayres & Braithwaite 1992, supra note 76 at 36.
31 are important and valid critiques of responsive regulation. For instance Karen Yeung who maintains that as it is linked primarily to the attitude of the firm rather than the severity of the offence responsive regulation neglects constitutional values. 70 This has implications of fairness and proportionality of enforcement action. Vibeke Nielsen and Christine
Parker have suggested that there is often little evidence of tit for tat responsiveness and that although it does affect business behaviour it does not affect attitudes whist restorative justice appears more likely to affect attitudes.80 Robert Baldwin and Julia
Black in documenting the weaknesses of the approach argue that responsiveness may be affected by the fact that de-escalation is not always feasible or possible and this is likely to affect the relationship between the firm and regulator.81 Importantly they point out that overall regulatory culture, environment and competitive pressures often need to be taken into account in determining the likely behavioural response of regulatee.82 Additionally the technique works best in situations where there is a single regulator and not multiple
0-3 offices sharing functions.
The responsive regulation principles have been extremely influential and as a result have been explicitly adopted and utilised by policy-makers and regulatory theorists.84
Baldwin and Black's "really responsive regulation" pushes the boundaries of its
79 Karen Yeung, Securing Compliance: A Principled Approach (Oxford: Hart Publishing, 2004). 80 Vibeke Lehmann Nielsen & Christine Parker, "Testing responsive regulation in regulatory enforcement" (2009) 3 Regulation & Governance 376 at 395[Nielsen & Parker 2009"] 81 Robert Baldwin & Julia Black, "Really Responsive Regulation"(2008)71.i Mod. L. Rev. 59 at 63 ["Baldwin & Black 2008"]. 82 Ibid, at 62. 83 Ibid, at 63. 84 For application of responsiveness in the context of Canadian securities regulation see Mary Condon "Administrative and Criminal Enforcement of Ontario Securities Law" (2006) 32 Queen's L. J. 6; also see the development of "smart regulation" in Neil Gunningham & P Grabosky, Smart Regulation (Oxford: Clarendon Press,1998) which explicitly builds on responsiveness and employs an instrument pyramid that includes multiple instruments and parties.
32 application as a practical tool for regulators. The authors suggest there is a need to be
responsive to five factors:
to the firms own operating and cognitive frameworks (their 'attitudinal settings'); to the broader institutional environment of the regulatory regime; to the different logics of regulatory tools and strategies; to the regime's own performance, and finally to changes in each of these elements.85
Really responsive regulation provides a complex matrix approach to the detection of
issues and use of regulatory strategies. Although the approach is comprehensive it is
likely to prove too complex for the development of workable administrative rules and further to be implemented by a fledgling or under-resourced regulator in a small developing country. However it does provide a useful approach to examining systems
which use different instruments and accepts the difficulty of combining logics with
different cultures, values and assumptions.
The responsive regulation model has been used and critiqued mainly in relation to
its use in developed countries. There are few empirical or theoretical studies analysing its application to small or developing state regulatory enforcement.86 However tailoring the responsive regulation pyramid approach to small state enforcement means that solutions must be found to the issues of limited resources and regulatory capacity. There must be a credible threat of enforcement as responsiveness requires the existence of a "big stick" for enforcement. Adopting this approach does not therefore absolve the state of the
85"Baldwin & Black 2008", supra note 81 at 61. 86 For exception to this general proposition see John Braithwaite, "Responsive Regulation and Developing Economies" (2006) 34:5 World Development 884 ["Braithwaite 2006"] and Indianna Deborah Minto, Incumbent Response to Telecommunications Reform: The Cases of Jamaica and Ireland, 1998 - 2007 (PhD. Thesis, London School of Economics and Political Science, 2008) [unpublished] [Minto 2008] who uses responsiveness theory to examine the role of incumbents in telecommunications reforms. She concludes there is a need to draw in all actors to cope with the limited capacity. responsibility to adequately resource the institution. The relative weakness of interest groups may also pose a problem to the effectiveness of the tripartism elements of
responsive regulation in smaller jurisdictions. Recognising the constraints of responsive
regulation as a tool in developing states Braithwaite identified the greater vulnerability of
regulatory officials to corruption, the limited capacity of non-governmental organisations
and the overall lack of state capacity to facilitate responsiveness.87 These characteristics•
make it difficult to apply in practice. In response he suggested the use of two possible
approaches to meet this namely an adaptation of network branching and the legislated use
of bounty hunting by whistle blowers. These proposals emphasise the role of non
governmental organisations and pressure groups and are not explored further in the dissertation which focuses on the use by state agencies of the enforcement pyramid rather than the development of a regulatory society.
The choice of the enforcement techniques and institutional design is an important
theme in the dissertation. The dissertation research does not provide an empirical account
of the complexities of small state agency responsiveness but uses the enforcement
pyramid to facilitate analysis of the effectiveness of consumer and competition law tools.
The relationship between consumer and competition law has driven the proliferation of integrated enforcement agencies. This institutional integration has been achieved through
varied models and approaches to the division of enforcement roles and responsibilities.
87 Ibid, at 889.
34 The desirability of functional integration in a small state context is explored further in
Chapter 3 of the dissertation.88
13. Socio-legal research methodology
This methodology section seeks to explain the parameters and limitations of the
OQ socio-legal approach utilised in the dissertation research. Legal research has traditionally focused on doctrinal expository research, the analysis and examination of statutes, case law and other legal instruments in order to predict the likely outcome of a legal dispute. This kind of legal research will often be undertaken in a positivist approach that accepts that the legal rules can be discovered rather than seeking to provide an all-embracing theoretical explanation.
Legal theorists have adopted other theoretical frameworks and contexts within which to place their work such as economic analysis, critical legal theory and feminist approaches to the law. Economic analysis of law, which seeks to distinguish itself from traditional legal reasoning and to provide a different approach to the analysis of legal problems utilising the traditional tools of the economist rather than the traditional tools of lawyers, is the primary methodology that has been used by academics to analyse consumer and competition policy. Research on competition law generally explicitly adopts a law and economics framework in light of the centrality of the role that economic
88 See section 3.4.5 of the dissertation. 89 A full exposition of the research methods deployed in dissertation research is set out in Appendix A - Research Methods.
35 analysis plays in the development and analysis of principles in this area. In this respect
the analysis is focused on the efficiency of the measures as opposed to the fairness and
reasonableness.90 Scholars on consumer law may also utilise law and economics
approach such as Michael Trebilcock but more often adopt a wider perspective that falls
more directly in a socio-legal school. In this regard it is important to discuss the reasons for the adoption of the regulatory perspective in the research as it informs both the
theoretical framework and the methodological approach.
An examination of the tensions and complementarities between the areas of competition law and consumer law in small developing states must draw on findings from social policy, development studies and economics to contextualise the discussion.
The study of regulation is inherently an inter-disciplinary area referencing perspectives from theorists in political science, economics, social sciences as well as law. Utilising a
regulatory approach incorporates the assumptions within that literature that address both
economic and social reasoning. An adjacent line of inquiry is the distinction between regulation and legal reasoning. One primary distinction is "the instrumental rationality" of regulation as opposed to the consideration of common law precedents in seeking to ensure there is a fit and the principles are coherent. This has been put as the regulator
being essentially interested in the question as "which rules work best".91
The core of the research is an in-depth investigation into the manner in which the regulatory framework in Jamaica addressed the issue of the interplay of consumer and
90 Contrast the approach of Katalin J. Cseres whose explicit rationale for identifying the borderlines of the areas is to help avoid legislating inefficient rules in Cseres 2005,supra note 14 at 2. 91 See Dimity Kingsford Smith, '"What is Regulation? A Reply to Julia Black" (2002) 27 Austl. J. Leg. Phil 37 at 39.
36 competition law and policy. Doctrinal legal research addressing the details of the
provisions and their coherence including judicial interpretation is the foundation of the
analysis. However the research builds on this and goes beyond a description of the legal
framework to set it within the broader context. In doing so it moves beyond the
boundaries of formal legal analysis to encompass policy concerns and the process for formulation and implementation of the policy tools. In this critique both the effectiveness and underlying values of the regulatory process are analysed. The case study examines
the legislation and the enforcement agencies and incorporates consideration of the wider
policy community and its impact on the public policy process.
13.1 Case Study Approach
The case study approach is an immensely useful tool in studying regulatory approaches. In a 1971 text Schramm described the purpose of a case study "... it tries to illuminate a decision or set of decisions: why they were taken, how they were
Q>J implemented, and with what result." In social sciences however case studies are often regarded as a weak form of research due to perceived issues with lack of rigour,
QT objectivity and the lack of quantitative research. However utilising this approach allows a holistic focus on the inter-relationships within the case and gives depth to a study.
Together with the use of multiple research methods and multiple sources it provides a
92 W. Schramm, "Notes on case studies of instructional media projects". (Working Paper for the Academy for Educational Development, Washington D.C. December 1971) cited in Robert K. Yin, Case Study Research: Design and Methods A*1 ed. (Sage Publications, 2009) at 17. 93 Robert K. Yin, Case Study Research: Design and Methods,4th ed. (Sage Publications, 2009) at 14 [Yin 2009).
37 rich analysis of the issues. It is important to point out that the approach is to consider the specific research problem within the case and not to consider all the associated issues with the case study. The case study approach facilitates detailed knowledge about the experience in Jamaica to be applied and used to illustrate more general principles. It is accepted however that questions can legitimately be raised regarding the applicability of the findings of this study to greater generalisations such as to other small states and this
will be addressed in the conclusions. It was anticipated that the case study would provide
a useful bridge to a more representative approach to exploring small states issues.
Jamaica was chosen as it was an early adopter and small state leader in the new focus on regulatory reforms. Further the introduction of the legislation was aided by donor assistance and tied to distinct shifts in political ideology which facilitated analysis of the public policy context for decision-making. The period of time since enactment of the legislation also provided a sufficiently long period to assess the existing values against the history of the legislation. This was coupled with general availability of documentary records and access to personnel involved. This facilitated triangulation in the research through the use of multiple sources of evidence for testing and corroboration.94 Elite interviews were conducted to supplement the archival records and provide first person accounts of the policy story.
'"ibid, at 114.
38 132 Characteristics of the subject matter and the enquirer
The impact (if any) of the researcher's former role as a regulator in the Caribbean
and the issue of bias that this may have raised on perspective was considered. On balance
it was considered to be advantageous as being a Caribbean national conducting research
and conversant with procedures and cultures meant that the researcher was able to utilise
contacts. Possible disadvantages such as the perception that the work may be widely circulated locally did not prove to be disincentive to participation by participants in the study.95
13 J Limitations of the research
The breadth of the areas of consumer and competition law and policy meant that
in-depth or comprehensive treatment could not be afforded to all the important measures and actors that comprise the matrix for policy in this area. The research design was targeted at an examination of the legal provisions of consumer and competition policy together with a critique of the primary enforcement institution. The most important limitation lies in the fact that the current study has only examined the experience of one small state. In light of this, caution must be applied, as the findings might not be transferable to small states with different colonial legacy and historical and cultural
95 Helen Leslie & Donovan Storey, "Practical Issues" in Regina Scheyvens & Donovan Storey eds., Development Fieldwork: A Practical Guide (London: Sage Publications, 2003) at 82.
39 background. It may be that the findings are likely to be of greater relevance to other small
states in the Caribbean who share similar characteristics and heritage to Jamaica.
1.4. Structure of dissertation and summary of chapters
In focusing a legally-tinted lens on the regulatory regime in Jamaica the dissertation
reviews the evolving theoretical and public policy debates on the rationales and efficacy
of regulation, explores the respective roles and limitations of consumer and competition
law as regulatory instruments and uses a case study of the Fair Trading Commission to examine the potential tensions and complementarities in the institutional and enforcement aspects of the regime. The distinctive context of law and public policy in developing countries particularly the effect and efficacy of transplanted legal regimes and the role of legal development assistance in the law reform agenda is an important layer in consideration of the interplay between the instruments.
The dissertation provides both a normative, what ought to be, and a descriptive, what is, analysis of small state regulation. Chapter 2 provides a review of theoretical literature in this area of research. This is followed in Chapter 3 by a normative analysis setting out the appropriate goals and content of consumer market regulation in small developing states. Having discussed the theoretical and normative foundations of consumer and competition law and the interplay between the two these chapters are followed by the results of the applied research. Chapters 4,5,6 and 7 are the core case study chapters and tell the story of the regulatory origins and enforcement practice of the Jamaica Fair
40 Trading Commission, its enforcement of the consumer and competition law provisions in the Fair Competition Act and its success in maximising consumer interests. The chapters also explore the continuing role of donor assistance and the link between law reform and development. The links between the theoretical and applied findings, the implications of the research and the general applicability to small states are set out in the concluding
Chapter 8.
41 CHAPTER 2
Competition and consumer protection laws are intimately related, two sides of the same coin of consumer sovereignty and hence economic justice - Spencer Waller (2005) 96
TWO SIDES OF A COIN: THEORETICAL PERSPECTIVES ON THE
INTERPLAY OF CONSUMER PROTECTION AND COMPETITION LAWS
The dynamics of the interplay between consumer law and competition law is a
relatively recent focus of the academic literature.97 The dominant paradigm in the
literature is one which bases the interface between consumer protection and competition
law on the possibilities that it offers for facilitation of consumer choice and the
maximisation of consumer sovereignty. A distinguishing feature of the literature is that
the interplay studies appear to be most firmly rooted within the antitrust and competition
law perspective. Competition lawyers are providing an alternative framework for the
enforcement of competition law and in a sense annexing consumer policy as another tool
for achieving market efficiency goals. Building on this body of literature these scholars
have increasingly explored how competition law, particularly in the European Union, has
QQ served the consumer interest. The predominance of the law and economics framework
can be linked to the embedding of economics with competition law and the new
96 "Waller 2005" supra note 3. 97 For early comment in the context of English law which treated the areas as distinct see Dennis Swann, Competition and Consumer Protection (Penguin Books, 1979) at Chapter 8. 98 See for example Philip Marsden & Peter Whelan "Consumer Detriment and its Application in EC and UK Competition Law", (2006) 27:10 E.C.L.R. 569; Giorgio Monti, "The Revision of the Consumer Acquis from a Competition Law Perspective" (2007) 3 Euro .Rev. Contr. L 295.
42 envisioning of consumer policy in this paradigm. Although there has also been some
doctrinal analysis on the interplay from consumer law scholars and commentary in
consumer law journals the topic appears to have been more warmly embraced by
competition law specialists.
This chapter seeks to examine the body of academic literature in order to analyse the
approaches taken by previous scholars, highlight the methodologies and draw out some
of the findings and conclusions. The first section of the chapter outlines the approaches to
consumer welfare suggesting that the general term masks a more limited commonality in
the purpose and goals of these laws. The chapter then addresses the divergent approaches
of competition and consumer law scholars to the analysis of the links. The chapter
concludes with an assessment of the solutions that have been proffered to maximise the
synergies. The exploration of the findings from the academic literature in this Chapter
provides a foundation for development of the thesis and highlights the research gap that
the dissertation research seeks to fill.
2.1 Consideration of consumer interests in competition and consumer law - Does consumer welfare provide a unifying goal?
The complementarities of consumer and competition law lend themselves to enforcement in a manner that promotes the interest of consumers. However a tension exists in the different meanings accorded to "consumer". There is no standard definition of "consumer" in consumer statutes and it may encompass small businesses or the
43 activities of individuals acting as citizens thus incorporating the delivery of public services. However the core of the statutory coverage in consumer protection is generally directed at individuals purchasing or using goods or services in a private capacity for their own use or consumption." On the other hand competition laws generally seek to
promote consumer welfare through consideration of the impact of competition law
enforcement on intermediate sellers as well as on the final or end-user consumers. In the
EC whilst the term "consumer" is not defined in the competition provisions of the Treaty of Rome a definition has been developed (through Commission decisions).100 The application of the Treaty of Rome on the benefits accruing to consumers is therefore interpreted broadly to include persons acquiring at any stage of the distribution process.
This tension in the definition of the "consumer" is also evident in the interpretation of the consumer interest goal. In the competition law literature this is cloaked under the term "consumer welfare" which hides the diversity in meanings and applications. A total welfare or economic efficiency consumer welfare approach ignores direct consumer interests implicitly assuming that consumers will benefit from the competitive process. Other consumer welfare approaches either take into account the immediate and short-term interests of consumers, placing these above overall social interests or subordinate the immediate interests of consumers to the economic welfare of
99 For an overview of this with respect to developing countries see Sothi Rachagan, "Development and Consumer Law" in Geraint Howells, Iain Ramsay & Thomas Wilhelmsson eds. Handbook of Research on International Consumer Law (Cheltenham, UK: Edward Elgar Publishing Limited, 2010) at 50 - 56. 100 See further generally Richard Whish, Competition Law (Oxford University Press, 2009 6th ed.) [Whish 2009] at 156; Eugene Buttigieg, Competition Law: Safeguarding the Consumer Interest. A Comparative Analysis of US Antitrust Law and EC Competition Law (Kluwer Law International, The Netherlands, 2009) at 73 [Buttigieg 2009] at 129 citing Bayer/Gist-Brocades [1976] OJ L30/13,19 and Kabel und Metallwerk Neumeyer/Luchaire OJ [1975] L 222/34,1975] 2 CMLR D40, see also European Commission, Guidelines on the application of Article 81(3) of the Treaty, OJ [20004]C 101/97 at para 84 [1975] 2 CMLR D40
44 society as a whole on a longer term perspective. In contrast there has been a more limited
academic debate by consumer lawyers as to the meaning and shared understanding of
consumer welfare in consumer law. It is largely taken as a given that direct benefits will
accrue to the consumer as a result of the introduction of consumer laws. The terminology
also differs with the promotion of "consumer interest" rather than "consumer welfare"
being considered the ultimate goal of consumer law. This section examines the
theoretical underpinnings of consumer welfare goals of competition law before
proceeding to a discussion of the different types of welfare standards utilised by
regulators.
2.1.1 Consumer welfare goal in competition law focuses on economic efficiency but
may also consider public interest concerns
The precise meaning ascribed to the "consumer welfare" goal differs across
jurisdictions in line with the express statutory objectives and the consumer welfare
standard adopted in practice by enforcement institutions. For example the objectives of
US antitrust law are often expressed as the promotion of consumer welfare but in the
American context the term has been used primarily to cover efficiency goals. In contrast in the European Community consumer welfare as a primary underlying goal of competition law has been held to cover public interest considerations such as the fundamental community goal of market integration.101
101 See discussions in Cseres 2005, supra note 14 at 241 - 255.
45 Consumer welfare is used as a synonym for economic efficiency by adherents of the Chicago School of antitrust. Robert Bork, a leading antitrust practitioner and advocate of the Chicago School was the pre-eminent proponent of a pure economic efficiency test as the goal of antitrust law.102 According to Bork "[t]he only legitimate goal of American antitrust law is the maximisation of consumer welfare."103 Bork equates consumer welfare with allocative efficiency which is achieved when society's scarce resources are allocated to produce the goods and services that are most desired by consumers. This measure of efficiency focuses on increasing aggregate social welfare and ignores the distribution of wealth in society.
Refuting distributional arguments, proponents of this school of thought have sought to refute any notion that there is a re-distributive element to antitrust law and contend that other public policies such as tax policy are more appropriate for this purpose.104 It is also advanced that consumers always benefit as producers are also consumers. Generally in most industries, the opposite position will be more reflective of reality.105 Indeed Bork notes that some consumers may be richer than producers.106
However this will only occur in limited circumstances where producers or manufacturers produce goods for a more affluent consumer. Antitrust law is viewed as an inappropriate
vehicle for re-distribution as there is no criteria by which to make the "trade -off'
102 Robert H. Bork, "Legislative Intent and the Policy of the Sherman Act" (1966) 9 J. L. & Econ.7 ["Bork 1966"]. 103 Robert H. Bork, The Antitrust Paradox: A Policy at War with Itself, (Toronto: Maxwell Macmillan Canada, 1978,1993 reprint). 104 For neo-classical economic thinking on redistribution generally see O.E. Williamson, "Economies as an Antitrust Defense: The Welfare Trade-offs" (1968) 58 Amer. Econ. Rev. 18. 105 Rex Adhar, "Consumers, Redistribution of Income and the Purpose of Competition Law". (2002) 23(7) E.C.L.R 341 at 346 ["Adhar 2002"]. 105 "Bork 1966", supra note 102 at 110.
46 decision between producers and consumers. However by refusing to do they are in fact entrenching the existing distribution pattern.
On the other hand Elzinga argues that the inclusion of equitable objectives in the consumer welfare goal need not necessarily be viewed as being in conflict with efficiency objectives.107 Elzinga contends that a diverse array of equitable objectives such as re distribution of income, promotion of small business enterprises, promotion of the liberty of the entrepreneur and neutral treatment of minorities may be indirectly promoted by "a direct attack on inefficient, anti-competitive market structures and practices" and still be compatible with efficiency.108 He argues that whilst efficiency must remain the cornerstone of antitrust analysis this does not preclude consideration of equitable goals where there is no need to make a trade-off.
The legitimacy of the inclusion of non-efficiency considerations in consumer
welfare has been comprehensively explored in the context of American antitrust
legislation. Robert Lande analyses the legislative history of American antitrust legislation and argues that on a legislative interpretation of the Sherman Act the goals were clearly related to wealth transfers and wider considerations than the economic efficiency basis of
Bork's thesis. Lande sought to show that Congress' primary concern was with protecting consumers from paying more as a result of anticompetitive activity and argued that the antitrust laws were intended to be, and are best viewed as, a type of consumer protection statute. As posited by Lande the distributive goal is "the goal of preventing unfair
107 Kenneth G. Elzinga, "The Goals of Antitrust: Other than Competition and Efficiency, What Else Counts?" 125 (1976) U. Pa. L. Rev. 1191 ["Elzinga 1976"]. 108 Ibid, at 1202.
47 acquisitions of consumers' wealth by firms with market power." 109 Scherer charting the
contributions of early economists to this debate also maintains that "efficiency goals"
were not at the forefront of the concerns of the economists or legislators in the process of
enacting American antitrust laws.110 Scherer contends that legislators were concerned
with efficiency in a broader sense. He argues that rather than allocative efficiency they
were more concerned with "fairness" and "wealth distribution of monopoly power". He
points to a broad swathe of economic opinion drawing ethical judgments on the link
between anti-competitive behaviour and abuse such as unfairly elevated prices and
inequitable income distribution.111 An earlier "exhaustive" study by Hans Thorelli
concluded that there was no single thread in the Act and by implication social concerns
could not be excluded from the American antitrust debate.112
Non-efficiency considerations have also been considered as a legitimate goal for
competition policy in other jurisdictions. The European Community initially used a wide
consumer welfare approach that took into account wider macro-economic factors and
goals such as market integration, economic equity, social cohesion, employment, regional
109 Robert H. Lande, "Wealth Transfers as the Original and Primary Concern of Antitrust: The Efficiency Interpretation Challenged" (1982) 34 Hastings L. J. 65 at 70 ["Lande 1982"]. 110 F.M. Scherer "Efficiency, Fairness and the Early Contributions of Economists to the Antitrust Debate", (1990) 29 Washburn Law Journal 243. 11' Ibid, at 254. 112 Hans Thorelli, Federal Antitrust Statutes (1955) cited in "Elzinga 1976" supra note 112; See also articles by Eleanor Fox and Herbert Hovenkamp who attribute distributive goals to the antitrust legislation such as Herbert Hovenkamp, "Distributive Justice and the Antitrust laws" (1982) 51 Geo. Wash. L. Rev. 1 at 17 to 19; Herbert Hovenkamp, "Antitrust Policy after Chicago" (1985) 84 Mich. L.R. 213; Eleanor M. Fox, "Consumer Beware Chicago" (1985) 84 Mich. L.R. 1714; Eleanor M. Fox & L.A. Sullivan, "Antitrust- Retrospective and Prospective: Where are we coming from? Where are we going? (1987) 62 N.Y.U. L. Rev. 936; Eleanor M. Fox, "The Modernisation of Antitrust: A New Equilibrium" (1981) 66 Cornell L. Rev. 1140.
48 economic development, international competitiveness.113 However modernisation of the
European competition regime and the issuance of new guidelines on Article 81 (anti competitive agreements and practices) has indicated a new Commission focus on the narrower economic efficiency approach. In the New Zealand context Adhar argues that
"vigorous competition policy operates to advance both efficiency and distributive goals simultaneously" i.e. it "harmonises the goals of efficiency and egalitarian income distribution."114 He accepts that competition law will not be the primary tool for promoting redistribution but notes that it is a useful by-product of the competitive process and should not be ignored.115 Non-OECD countries now appear more likely to incorporate wider multiple goals in their consumer welfare objectives and competition law whilst not being the primary tool can be seen as part of the policy mix for achieving non-efficiency objectives.116 The balancing of these objectives is reflected in regulatory practice in the consumer welfare standard used by the regulator.
2.1.2 Legislative Goals translated to Consumer Welfare Standards
In order to fulfil the consumer interest legislative objective enforcement agencies must adopt a precise consumer welfare standard to be used as a benchmark in agency
113 Buttigieg 2009 supra note 100; these wider objectives reflect the general objectives of the EC Treaty particularly "high level of employment.... economic and social cohesion and solidarity" at article 2, and strengthening of economic and social cohesion and consumer protection at 3(j) and 3 (s) 114 "Adhar 2002", supra note 105 at 345. 115 Ibid, at 348. 116 See for example a discussion of the public interest goal in South African competition law in Vani Chetty, "The place of public interest in South Africa's competition legislation: some implications for international antitrust convergence"(Paper presented to the American Bar Association's Section of Antitrust Law 53rd Spring Meeting, Washington, DC, March 2005) online: American Bar Association http://www.abanet.org/antitrust/at-committees/at-ic/pdf/spring/05/aba-paper.pdf.
49 investigations and determinations. The consumer welfare standard, which is primarily
used to measure efficiencies, is important in competition law enforcement in all types of investigations. In merger cases it is important in the assessment of efficiency claims and the pass-on rates to consumers; in investigations into collusive and unilateral behaviour it is used in the assessment of the nature of consumer harm caused by the anti-competitive practice and in the consideration of efficiency defences raised by businesses; and in authorisations it is used for the assessment of efficiency claims to justify approval of otherwise anti-competitive conduct.117 Although a consumer welfare standard is not generally used in the investigation of consumer law cases, considerations of the nature of the consumer interest or harm are made by agencies in assessing their priorities for consumer protection enforcement. Cases with higher levels of consumer harm and loss of 1 I R consumer welfare are likely to be prioritised for investigation.
The precise consumer welfare standard adopted by a regulator in seeking to fulfil its legislative objectives provides a yardstick for measurement of its approach to consumer interests. Theorists have identified four main consumer welfare standards namely the total surplus standard also known as" total welfare standard", the "price standard", the consumer surplus standard also known as "true consumer welfare standard" and the "balancing weights standard". 119 The existence of consumer or
117 Katalin Cseres, "The Controversies of the Consumer Welfare Standard" (2007)3:2 Competition Law Review 121 ["Cseres 2007"]. 118 See section 7.3.3. on the Fair Trdaing Commission's approach to case selection post 2005 with their introduction of case selection criteria; also note OFT Annual Plans detailing priorities and consumer protection enforcement principles. 19 Additional two standards less commonly used by regulators include the Hillsdown standard and other weighted surplus standards; see A. Everett & T. Ross (2002), "The Treatment of Efficiencies in Merger Review: An International Comparison", University of British Columbia and Delta Economics Group
50 producer surplus is used in these standards to assess the efficiency of the market.
Consumer surplus (the difference between the amount actually paid and the amount the consumer would be willing to pay) and producer surplus (the difference between price and incremental costs of goods) added together determine efficiency i.e. where there is no other way to organise so as to increase the total of this surplus.
The "total welfare standard" considers the total surplus of both consumer and producer surplus. No weight is placed on transfers from consumers to producers as the standard is not concerned with distributional effects. It considers only efficiency effects.
The "price standard" focuses on increases in prices and a Pareto improvement in welfare i.e. efficiencies must lead to benefits to both producers and consumers.
The "true consumer welfare standard" is based on the price standard but also allows for non-price factors to be considered in the consumer surplus such as improved quality of goods. This standard therefore gives weight to consumers interests but also considers non-price effects and the distributional effects. It has been argued that in practice regulators may experience difficulties with the diversity of competing consumer interests that it may be trying to protect in distributive considerations and also with the level of evidence needed to determine consumer preferences.120 The purist approach to a true consumer welfare standard would require efficiency gains and other benefits to be disregarded unless the firms could demonstrate the passing on of immediate savings to
Inc., (2002) mimeo cited in John Fallon, "ACCC's Authorisation Decisions: Interpretation of Public Benefit" 12:4 (2005) Agenda, 335 at 336; see also M. Duhamel & P.G. Townley, "An effective and enforceable alternative to the consumer surplus standard" (2003) 26(1) World Competition 3 ["Duhamel & Townley 2003"]. 120 Giorgio Monti, EC Competition Law (New York: Cambridge University Press, 2007) at 85.
51 consumers of the goods and services.121 Rex Adhar notes this approach would affect the fact that innovation might require higher prices in the short-term to lead to long-term benefits. Increasingly the preference seems to be for the long-term "deferred" or "long- term consumer interest" approach which temporarily places greater emphasis on the
100 national interest than the immediate consumer interests. This approach is attractive as although prioritising short term consumer interests may intuitively appear to maximise consumer interests, attention must be paid to the effect that this will have on business incentives to innovate and become more efficient ultimately benefiting consumers. Both
New Zealand and the European Union (EU) have expressly moved toward greater consideration of long term impacts.123 The EU appears to accept that in giving consideration to long term interests the authority can seek to offset a slight present price increase with benefits to future consumers that will result from innovation with the caveat that the greater the time lag for the demonstration of innovative efficiencies the greater should be the efficiency in order to compensate for initial losses suffered by the consumer.124 Eugene Buttigieg advocates for a variation on the long term true consumer
1 7S welfare standard described as "consumer well-being". This consumer welfare standard addresses price, service, quality and choice.1 Ofs Buttigieg argues that the standard should be sensitive to income distribution effects detrimental to consumers. Although his
121 "Adhar 2002" supra note 105 at 350. 122 "Adhar 2002", supra note 105 at 351. 123 The purpose section 1A of the Commerce Amendment Act 2001 incorporated a long-term approach to consumer welfare as the express purpose of the Act is "to promote competition in markets for the long-term benefit of consumers within New Zealand". 124 EU Guidelines on the Application of Art. 81(3) at paras. 87 & 88 125 Buttigieg 2009, supra note 100. 126 Ibid, at 1.
52 approach is based on a prohibition on collaboration, conduct and transactions that lead to an increase in price he adds a qualification to the standard so that
"where, one, the agreement or practice leads to a negative wealth transfer (reduction in consumer surplus) but also generates substantial productive or innovative efficiencies that would increase total social wealth (increase in total surplus) and two, these efficiencies cannot be realised in any other way nor in any way that is less harmful to immediate consumer interests and, three competition is not substantially eliminated, antitrust should allow that activity for the sake of the perceived long-term consumer benefits" 127
Finally, consumer welfare can also be measured by a "balancing weights standard" which assigns relative weights to each of the losses to consumers and the gains to sellers and shareholders.128 The process involves calculating the ratio of gains and losses and assessing whether there is an excess premium. The advantage of this approach is that it is seen as being able to consider severe distributional impacts. However a difficulty arises as efficiencies are easier to measure mathematically than equities. The re-balancing weights standard has been a contested issue in Canadian competition law with the Competition Tribunal expressing concerns about the assessment of competing social interests and the level of subjectivity implicit in the trade-off analysis for mergers.129
Buttigieg 2009, supra note 100 at 46. 128 See further "Duhamel & Townley 2003", supra note 119 at 11. 129 See Canada (Commissioner of Competition) v. Superior Propane Inc. and ICG Propane Inc., 2001 F.C.A. 104; Canada (Commissioner of Competition) v Superior Propane Inc (2000), 7 C.P.R. (4th) 385 (Comp.Trib.).
53 2.13 Consumer welfare in consumer law encompasses wider economic and non- economic interests
The common goal of consumer welfare has divergent meanings in the context of competition and consumer protection laws and does not necessarily provide a strong unifying goal for integrated consumer market regulation. Consumer interests are diffuse and consideration of consumer welfare in consumer law is wider than in competition law because the consumer has other interests than economic interests (price, quality, choice).
Consumer concerns such as getting good quality for a reasonable price, health and safety and protection against unfair practices are not easily accounted for in the standard competition consumer welfare test.130 The goals of consumer law are often expressed in terms other than consumer welfare and fairness as well as efficiency are perceived as key goals.131 Howells notes that the bases for consumer protection can range from promoting competition, through to achieving individual justice, and broad and narrow conceptions
i "vy of social justice. As Rachagan strongly notes ".... consumers are not only concerned with price, choice and quality. More critical to them are issues of employment, sustained development and equity."133 The consumer law conception of consumer welfare is therefore more widely targeted at both economic and non-economic interests.
130 Jules Stuyck, "EC Competition Law After Modernisation - More than ever in the interests of consumers" (2005) J.Cons. Pol'y 1. 131 "Ramsay 2006" supra note 63 at 9. 132 Geraint Howells, "Contract Law: The Challenge for the Critical Consumer Lawyer" in Thomas Wilhelmsson, ed. Perspectives of Critical Contract Law (Aldershot: Dartmouth, 1993) 327 at 335 to 345. 133 Sothi Rachagan, "Competition Policy and Law in the Consumer and Development Interest" (UNCTAD, 2003) online. IACL< http://www.iaclaw.org/Research_papers/Rachagan.pdf > Accessed 1 July 2009.
54 The interplay between the areas is logically sustained primarily where the common definition of the interests to be protected is based on the narrow economic perspective. However the objectives of regulation in small developing states should be cognizant of the general socio-economic profile of these states accordingly encompass and embrace access to consumption and equality in distribution. Use of this different objective impacts on the form of consumer protection and competition laws and on the contours of the consumer interest/consumer welfare standard in small developing states.
These issues are developed in Chapter 3 which specifically focuses on small state regulation. The following sections in this chapter sketch the arguments made by both competition and consumer law scholars on the tensions and synergies between consumer protection and competition law and examines the dominant paradigm of consumer choice.
2.2 One side of the coin: Perspectives from antitrust and competition lawyers
Consideration of the logical and institutional interplay between competition and consumer law generally starts from the simple premise that competition policy creates a competitive market to facilitate consumer choice and consumer policy ensures that this consumer choice can be exercised effectively and on an informed basis. Hobbs sees the informed consumer as standing on the common ground between the goals of competition law "maintenance of an efficient, innovative, competitive economy" and the goals of consumer protection "avoidance of consumer deception or ignorance concerning the
55 material features of products or terms of sale".134 Consumer policy is on this basis an integral counterpart to competition policy in a lightly regulated consumer market that seeks to maximise consumer sovereignty.
2.2.1 Option-oriented consumer sovereignty
The "unifying theory" or "overarching unity" for Neil Averitt and Robert Lande in their approach to the interrelationship between competition and consumer protection law is the primacy of consumer sovereignty or choice.135 Consumer sovereignty requires the availability of choices for consumers to formulate their preferences and decide on choices. In their prescription, consumer sovereignty is:
... the state of affairs that prevails or should prevail in a modern free- market economy. It is the set of societal arrangements that causes that economy to act primarily in response to the aggregate signals of consumer demand, rather than in response to government directives or the preferences of individual businesses.136 The authors argue that the goal of consumer protection law should be to ensure that consumers can make rational choices through prohibition of deceptive practices and overt coercion.137 Averitt and Lande contend that consumer sovereignty is embodied in
American case law in both consumer protection and antitrust. Focusing on the areas within the jurisdiction of the US Federal Trade Commission the authors sketch how consumer options are affected by violations of antitrust and consumer protection
134 Caswell O.Hobbs "Antitrust and Consumer Protection: Exploring the Common Ground" (2005) 72 Antitrust L.J. 1153 at 1156. 135 Neil W. Averitt & Robert H. Lande, "Consumer Sovereignty: A Unified Theory of Antitrust and Consumer Protection Law" (1997) 65 Antitrust L. J. 713 ["Averitt & Lande 1997"]. 136 Ibid, at 715. m Ibid, at 717.
56 legislation. The authors note that price-fixing and predatory pricing affect the price options of competitive markets; anti-competitive mergers reduce options for prices, product quality and product variety; resale price maintenance limits consumer's choice on prices to the manufacturer's prices and misinformation on key elements of the product and/or the guarantees prevents the exercise of choice. The authors use the consumer choice model to explore the manner in which antitrust laws can be used to affect the consumer problem i.e. enhance choice among options citing practices such as tied-selling
1 ^8 and horizontal restraints that increase search costs. A complementary argument by the authors is that consumer protection remedies can be used to create new options (in addition to the standard goal of increasing the amount and accuracy of information).
In subsequent analysis Professor Lande developed the concept of a "choice- centred antitrust policy" arguing that it will "support and lead to a more efficient market, the lowest prices, the best product quality and variety, the highest level of consumer surplus, and all the other benefits of a competitive economy."139 Lande seeks to demonstrate that the theory of consumer choice is embodied in the statutes and legal framework of American antitrust. He argues that the consumer choice theory is best able to explain, and with increasing explicitness, the existing body of decisional antitrust case law. Lande stresses that the consumer choice theory suggests that non-price competition should become a higher priority for antitrust enforcement and identifies the communications media as one specific sector in which diversity and non-price competition are particularly important. Professor Lande argues that the law is evolving in
138 Ibid, at 741 139 Robert Lande, "Consumer Choice as the Ultimate Goal of Antitrust" (2001) 62 U. Pitt. L. R. 503 at 504.
57 this direction and uses the key Microsoft antitrust case to support his position in that it was argued as a case of consumer choice and not price competition.140
Waller's analysis is consistent with that of the discourse on consumer choice.
Lande's consumer choice paradigm is extended with concrete examples of the manner in which consumer choice can help anchor antitrust decision-making by both the agencies and the courts.141 Professor Waller shares Professor Lande's fundamental point that price theory alone is an inadequate tool to make all antitrust decisions concluding that consumer choice is one of the most appealing value choices to guide policymakers in legal rules to regulate the economy in light-handed manner.
Timothy Muris also takes starting point of consumer choice and widens this out from the experience of the US Federal Trade Commission to look at in the context of international co-operation in consumer protection regulation of marketing.142 It is interesting to note that the complementarities on consumer choice are acknowledged even by those with different theoretical positions such as Muris who, in following a Chicago school approach, looks at antitrust and consumer welfare from a narrower economic efficiency perspective than Lande.143
140 United States v. Microsoft Corp., 84 F. Supp 2d. 9 (D..D.C. 1999) and 84 F. Supp 2d 30 (D.D.D. 2000) cited ibid, at 511. 141 Spencer Waller, "Antitrust as Consumer Choice: Comments on the New Paradigm" (2001) 62 U. Pitt. L.R.535. 142 T J. Muris, 'The Interface of Competition and Consumer Protection" (Address to Fordham Corporate Law Institute's 29th Annual Conference on International Antitrust Law and Policy, October 2002) online: Federal Trade Commission http://www.ftc.gov/speeches/muris/021031fordham.pdf ["Muris 2002"]; also see similar perspective from another US Federal Trade Commission Commissioner T.B. Leary, "Competition Law and Consumer Protection Law: Two Wings of the Same House", (2005) 72 Antitrust L. J. 1147. 143 Lande's central thesis on wealth transfers and American antitrust laws seeks to demonstrate that the goals of American antitrust are wider than economic efficiency and that prevention of unfair wealth transfers from consumers to producers as a result of anti-competitive behaviour is a feature of antitrust law.
58 The consumer choice model provides a neat theoretical framework within which
to place and analyse linkages between consumer and competition law. It also has
practical strengths in providing credible bases for the integrated enforcement of the
legislation by the US Federal Trade Commission particularly with respect to antitrust
cases and merger analysis. The North American scholars supporting this approach link
their thesis to selected cases that demonstrate that the issue of consumer choice and
maximising options is at the centre of enforcement strategy. However the discourse on the consumer choice theory focuses on the enforcement of antitrust law within a
particular North American paradigm. This consumer choice discourse is strongly associated with neo-liberalism and its views. The emergence of this issue as a key research area for competition law scholars coincided with the development of neo- liberalism and the greater interest in research on the contours of regulation and the state.
The neo-liberal market reforms advocated privatisation and de-regulation as preferable state strategies. The reform agenda was predicated on low levels of market regulation and a consequential focus on the economic interests of the consumer. As described by David
Harvey at its basic level neo-liberalism seeks to promote human welfare by
... liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets and free trade...state interventions in markets (once created) must be kept to a ibare minimum.• • 144
It is important to note that underlying the consumer choice approach is a particular notion of the state and the markets emphasising responses to consumer demand signals rather than government rule and regulations. The consumer sovereignty theory
144 David Harvey, A Brief History of Neoliberalism, (New York: Oxford University Press, 2005) at 2.
59 poses challenges for individuals, their vulnerability and the effect of advertising on their behaviour. Advertising is considered to be a market fixer and facilitator as the increased production of consumer goods is driven by consumer preferences. Averitt and Lande distinguish between subliminal and associational advertising arguing that the later type of advertising does not prevent consumers from exercising their critical facilities and in that respect should not be deplored.145 The notion of consumer sovereignty has been critiqued by scholars and indeed Galbraith replaces it with the notion of producer sovereignty.146
The critique of consumer sovereignty by Galbraith acknowledges that consumer preferences are often artificially contrived by producers and their advertising messages.
The primacy of consumer sovereignty in the face of modern advertising techniques has also been questioned by other commentators who query the extent to which "advertising affects the rationality of ordinary decision-making, moulding consumer preferences and undermining consumer sovereignty."147
The primary weakness of the consumer choice approach is the complete disregard of the effects of bounded rationality. It sets out a political viewpoint that represents a value choice minimising the role of the state in setting the framework for policy and relying on informed consumers to exercise rights on their own behalf. Consumer sovereignty does not work where consumers have difficulties making choices and switching between goods and services. The switching literature assists in identifying situations in which consumer sovereignty will not work as well. The theory lacks
145 "Averitt & Lande 1997" supra note 135 at 749. 146 John Kenneth Galbraith, Affluent Society (Boston. Mass: Houghton Mifflin, 1984). 147 Iain Ramsay, Rationales for Intervention in the Consumer Marketplace Occasional Paper (Office of Fair Trading, London, 1984) [Ramsay 1984]
60 specificity in practical operation as it needs to encompass greater appreciation of
behavioural economics to assist in determining choice.
2.22 Consumer problems are micro-competition problems
Professor Vickers, in a perceptive speech delivered to the British Academy explored the underlying analytical connections between consumer and competition policy from an economics perspective that examined consumer problems (information failures)
148 as micro-competition problems. In setting out his analytical framework Professor
Vickers noted that product market competition is pro-consumer as rivalry among suppliers to serve customers well is good for customers. Suppliers who serve customers best will prosper and those that serve them poorly will not. Commercial incentives that encourage suppliers to meet consumer needs also lead to "efficiency, productivity and innovation." 149 Consumers need to be reasonably well informed about the choices before them and as this depends partly on the effectiveness of consumer policy both policies are complementary.
The article is premised on the common goal of facilitating consumer choice.
Professor Vickers goes further to provide a more detailed economic framework and model for analysing consumer problems and reconceptualising them as competition problems in order to build on the synergies. His theoretical framework and the literature utilised in building the arguments are the seminal articles on the economics of
148 "Vickers 2004" supra note 1. 149 Ibid, at 291.
61 information. He makes a cursory reference to the Muris US Federal Trade Commission
approach recognising the importance of international co-operation but not does not
explicitly address or recognise any similarity with the work of Averitt and Lande.
Similarly to Lande and Averitt, Vickers indicates the effect of fraud and deception on consumer's decision-making noting however that there is a point beyond which compelling disclosure would be counterproductive.150
Vickers views the interplay as characterised by "general complementarities and
occasional tensions". This approach whilst providing limited caveats stresses the overall synergies between the policies.151 Consumer measures can be characterised in light of the
problems they are designed to address such as duress and undue pressure and information
problems prior and after purchase. This can also raise competition issues of
market/monopoly power as well as lock-in/tie-ins where high switching costs tie
consumers to suppliers. Addressing the information problems of consumers and treating the information failures of consumers as a competition issue Vickers narrows the interplay to that of information. His argument does not seek to build a grand overarching theory that covers consumer problems premised on issues such as consumer rights. His approach would lead to similar economic standards being applied in both areas which may increase consistency in decision-making. It is still debatable as to whether this is sufficient to effectively promote the consumer interest.
150 Ibid, at 292. 151 Ibid, at 293.
62 2.23 Consumer and competition problems are dissimilar market problems
Fernando Gomez also adopts a law and economics perspective to explore the relationship between European Union consumer protection and competition laws.
Similarly to Averitt and Lande he distinguishes between internal and external market failures in the justification of consumer protection and competition law measures.152
However unlike scholars such as Averitt, Lande and Waller who view the policies as two sides of the same consumer sovereignty coin, Gomez's perspective does not revolve around consumer sovereignty. Using the coin analogy his analysis is based on two different coins (perhaps even in different currencies) and accordingly he argues that there is a limited intersection between consumer and competition law in a meaningful sense.
Gomez suggests that there is a significant divergence between the economic problems that the rules for consumer protection and competition are intended to address.
Consumer protection should be used for market failures particularly information failures of imperfect information and information asymmetry between consumers and producers.
On the other hand competition law should be used for inefficiencies and market failures that occur from monopolistic market structures and collusive and exclusionary practices.
He acknowledges the bounded rationality of consumers and sees consumer law as the primary forum for dealing with this.
152 Fernando Gomez Pomar, "EC Consumer Protection Law and EC Competition Law: How related are they? A law and economics perspective", (InDret 2003 Working Paper No. 113), online: INDRET http://www.indret.eom/pdf/l 13_en.pdf. ["Gomez 2003"].
63 The overall thrust of the article is that the chasm between the disciplines does not
always lend itself to building a bridge between the two areas. Acknowledging that there
are circumstances in which the areas can be jointly considered the author focuses on the
dissimilar nature of the economic rationales and problems that the respective areas focus
on. Gomez issues a strong caution against a unifying approach in this area stressing "the
need to keep a distinct approach for each of these fields of the law" whilst accepting and advocating that competitive gains be weighted in the design and enforcement of consumer protection law.153
23 Looking at it from the other side of the coin: Perspectives of consumer lawyers
The interplay between competition and consumer law has also been addressed by consumer law scholars.154 Some scholars such as Jules Stuyck see competition law as the cornerstone of consumer law.155 This approach is echoed in Geraint Howells and Stephen
Weatherill's assertion that "competition policy is (part of) consumer policy".156 However the overwhelming preponderance of analysis by competition lawyers suggests that overall consumer law scholars may be less persuaded of the importance of links between the
153 Ibid, at 17. 154 See for example discussions in consumer law textbooks such as Cranston's Scott & Black 2000, supra note 45 particularly Chapter 1; Geraint Howells & Stephen Weatherill, Consumer Protection Law 2nd ed. (Markets and the Law) (Dartmouth Publishing, 2005) [Howells & Weatherill 2005] particularly Chapterl2. l55Jules Stuyck "EC Competition Law after Modernisation: More than Ever in the Interests of Consumers" (2005) 28 J. Cons. Pol'y. 1 at 30. 156 Howells & Weatherill 2005 supra note 154 at 572.
64 policies. This section examines the approach of consumer law scholars to the interplay with competition law.
23.1 Competition law is necessary but not sufficient for consumer protection
Weatherill's thesis is that "competition policy is a form of consumer protection" in that competition laws form a vital part of consumer protection framework. He adds that effective consumer policy must do more than rely on competition policy i.e.
"competition law is necessary but not sufficient in shaping an effective system of regulation of the market devoted to the consumer interest."157
Weatherill's analysis is from a consumer law perspective utilising EC case law and legislative instruments to demonstrate that competition law is used to cure markets in
1 SR the interests of consumers. He argues that Article 81 of the EC Treaty benefits consumers as part of the "machinery" framework for an integrated market which deals with anti-competitive practice. However he accepts that whilst consumer interest
"underlies the law" it does not make it explicit as intervention is targeted at the competitive process which is expected to ultimately benefit the consumer.159
Weatherill cautions against overemphasis by consumer lawyers on competition law and notes some elements of market failure require more than competition law
157 Stephen Weatherill "The links between competition policy and consumer protection" in Geraint Howells et al eds. The Yearbook of Consumer Law 2007 (Ashgate Publishing, 2007) at 187. 158 Ibid, at 190. 159 Ibid, at 196.
65 solutions.160 Nicola Howell and Therese Wilson have explored this in the Australian context arguing that consumer protection is necessary not merely for market failure but also for "competition failure" where competitive markets fail consumers.161 Competitive
markets often prove disadvantageous for vulnerable and marginalised consumers as
traders are generally disinterested in their preferences as they are not seen as profitable. 162
The authors demonstrate failings through an examination of the consumer credit market in Australia and its impact on low-income consumers.
These approaches to the interplay place the debate in an appropriate context.
Consumer law is more than competition law because the consumer has other interests than getting good quality for a reasonable price such as health and safety and protection against unfair practices such as misleading advertising or marketing coercion.
Examination of the interplay must begin from the fundamental starting point that competition law can only form part (albeit important) part of the discourse on the contours of consumer policy. Moreover consumer protection law has a critical role to play where competition policy itself fails. There are also inherent tensions between consumer and competition law in the level of information disclosure which is examined in the following section.
160 Ibid, at 200. 161 Nicola Howell & Therese Wilson, "The Limits of Competition: Reasserting a Role for Consumer Protection and Fair Trading Regulation in Competitive Markets" in Deborah Parry et al eds. The Yearbook of Consumer Law 2009 - Markets and the Law (Ashgate Publishing, 2009) at 147. 162 Ibid, at 157.
66 23.2 Inherent tensions between consumer and competition law
Seeking to widen the conceptual boundaries of consumer law James Tunney starts
from the premise that competition law is one of the "most logically contiguous domains" for consumer law.163 Tunney argues that a narrow concept of consumer law is inappropriate in the emerging economic order as consumers are concerned in varying degrees with the totality of the picture of consumption. Acknowledging a logical link
between the two as consumer welfare is the primary goal of competition law, the article focuses on what Tunney considers as a primary tension between disclosure of information in consumer and competition law contexts.
To a consumer lawyer the assumption is that the more extensive the commercial information available and the greater the transparency of transactions, the stronger the position of the consumer (based on the rectification of the asymmetry of information between consumer and producer). This can be contrasted with competition law provisions where there is a strong emphasis on keeping competitors separate and preventing exchanges of information.164 Tunney notes that often to a competition lawyer, the more extensive the commercial information available and the greater the transparency of transactions, the weaker the position of the consumer. This is evidenced in offences like price-fixing where opportunity is a key factor and consumer price lists have been used to facilitate price-fixing. Transparency of markets is therefore used as a
163 James Tunney, "The Neglected Tension between disclosure of information in consumer and competition law contexts" (2002) 25 J. Cons. Pol'y 329. 164 Ibid, at 340.
67 negative factor in competition law discourse but as a positive factor in consumer law discourse. In some circumstances a consumer protection policy might demand transparency whilst a competition law regime might condemn it. For example Tunney argues that whilst in "quality theory" it might be desirable to have very close relationships with other firms so that exact specifications necessary to promote quality are communicated and fixing prices as part of a "just in time" system might be desirable in allowing the firm to concentrate on quality this could offend competition law.
Tunney concludes with the suggestion that greater examination of the discourse may lead to pressure "on competition lawyers to ensure that they inform themselves a little more of consumer law discourse".165 It would seem that this clarion call has been taken up by competition lawyers although the recommended self-examination by consumer lawyers has been less self-evident.
2.4 Both Sides of the Coin: Maximising the logical and institutional interplay
Institutional integration of consumer protection and competition law enforcement has been widely advocated. The integrated model has several advantages in providing a co-ordinated approach to remedies, facilitating the study of markets and allowing a focus on the economics of both supply and demand.166 It is clear that similar remedies may be applied to both areas and experience in one area may lead to effective application in another. Muris cites the example of experiences of the Federal Trade Commission in
165 Ibid, at 343. 166 "Muris 2002" supra note 142.
68 restitution and disgorgement applied to the competition field from consumer
protection.167 Advocates of an integrated agency also cite the greater use of economics in investigations which allows consumer protection issues to be informed by economic efficiency. Research on behavioural economics is addressing the balance and being utilised in maximising integrated approaches.168 Greater economic analysis has been proffered as providing a solution for striking the balance between the two policy areas and these solutions are explored further in the following sections.
2.4.1 Enhanced complementarities through economic analysis
In a comprehensive monograph on consumer and competition law in the
European Union Katalin Cseres seeks to assess whether competition law is an effective tool to protect consumers. Cseres provides a useful case study of Hungary in addition to the survey of EU institutions, instruments, case law and decisions.169 The work starts by acknowledging that competition law and consumer protection are "mutually reinforcing disciplines".170 The common goal is well functioning, competitive markets that promote consumer welfare. Both are aimed at correction of market failures utilising approaches from different angles. Competition law focusing on the process of competition between firms and the correction of structural problems and consumer law being primarily concerned with individual market transactions. Cseres concurs with Vickers approach of
167 Ibid, at 7. 168 "Syjvan 2004" supra note 14; "Muris 2002" supra note 142 at 5. 169 Cseres 2005 supra note 14 at 325. 170 Cseres 2005 ibid, at 1. characterising consumer problems as micro-competition problems such as consumer entering a contract with unfair contract terms being subject to the exploitation of market power.
The tensions between the areas are also highlighted in the work.171 Cseres recognises that competition law is not specifically oriented towards improvement of consumers non-economic interests and competition serves wider policy purposes than just direct consumer protection. Economic arguments may lead to outcomes that are not always acceptable to consumers evidenced in the high switching costs in telecommunications markets and deregulation of energy markets. Pro-consumer measures can also have contrary effects on competition such as the adoption of mandatory health and safety standards and stricter warranty and liability rules.
Cseres concludes that competition law is not enough to protect consumers as there are information problems such as information asymmetry and switching costs that competition law does not acknowledge. She also accepts that there are special consumer protection issues such as health and safety that competition law does not acknowledge.
Cseres suggests that some of these tensions are due to the "Chicago trap" namely that there are different interpretations of the notion of the consumer within competition law and consumer protection and different interpretations of consumer welfare. Consumer law protects the final end user consumer whilst competition addresses intermediate consumers of the product such as manufacturers or retailers.172
1/1 Ibid,at 327. 172 Ibid, at 332.
70 Cseres points to the inconsistency in the goals and values of competition law and consumer protection and proffers some solutions aimed at maximising the interplay which include recognising that the policy concerns should be with the end-user consumers and stresses the need for a clear and broader understanding of the "consumer welfare" standard and the "Chicago trap".173 Greater economic analysis particularly in consumer protection is proffered as being critical to "provide the rational test for identifying consumer and competition problems and help to avoid drawing up conflicting policy measures."174 Drawing on earlier work of Ulf Benitez, Cseres also looks to the development of a new area of "market law" to exploit the synergies between consumer protection and competition particularly in the context of European Union in which she contends there has not been true interaction.175
2.4.2 "Joined- up" balancing approach
The "joined-up approach" proposed by Louise Sylvan, an academic and a former regulator with the integrated Australian competition and consumer agency, is based on the fundamental contention that the economy would benefit from a firmer reconnection between competition policy and consumer protection policy.176 The re-connection is important because the key strategy of enhancing competition, i.e. facilitating entry into
173 Ibid, at 332. 174 Ibid, at 335. 175 Ibid, at 414. 176 "Sylvan 2004" supra note 14. Aptly the research is published in one of the view academic journals that explicitly seeks to address both competition and consumer law journals (primarily from an Australian perspective).
71 markets thus increasing consumer choice, does not inevitably lead to improved conditions for the exercise of choice and can have unintended contrary effects on other important social objectives.
Sylvan proposes a preliminary framework for an integrated analysis. The model employed consists of a diagram depicting competition outcomes on the vertical axis and consumer outcomes on the horizontal axis. The model is divided into four quadrants and allows the regulator to compare the current state of a market with the expected state after intervention. Sylvan suggests that regulatory interventions should fall into one of three classifications namely competition-enhancing rules, rules to minimise harm in the provision of goods and services and rules to protect consumers from inappropriate behaviour of traders. 177The model is used to classify interventions and determine the extent to which intervention in a particular market should be a priority. Market snapshots can then be taken at different points in the regulatory intervention.
Whilst the Sylvan paper provides a useful framework for analysing the interface the limitations of its use as a model for use by regulators have been explored by Tustin and Smith.178 The authors conclude that the integrated approach will prove more useful if used as a relative rather than an absolute tool cautioning that it must be used with a temporal aspect and an explicit welfare standard to the required trade-off used by the regulator. Tustin and Smith suggest that the time frame over which the model is used is critical. They argue that it is most appropriate to allow markets time to adjust to actions
177 Ibid, at 194. 178 Jeremy Tustin & Rhonda L. Smith, "Joined-up Consumer Protection and Competition Policy: Some Comments" (2005) 12:3 Austl. Comp. & Cons. L. J. 305. taken, and thus it is important that the second comparative "snapshot" is not taken too
soon after the regulator takes its chosen action. In advocating a long-term approach they
stress that regulators should avoid rejecting decisions which may lead to a short term
deterioration in competition and/or consumer outcomes but which then enable the market
to assume a more desirable position given time. The authors acknowledge that as
improvements in either competition or consumer protection can have adverse consequences for each other it is important to be clear about the standard being used in
making the trade-off. It is suggested that conflict between the policies should be resolved
by reference to the impact on "total welfare" which would consider impact on both
producers and consumers equally.
Although the state of competition policy and consumer protection cannot be adequately plotted making the trade-off between competition policy and consumer
protection explicit, even if only conceptually, will improve decision-making by creating a greater awareness of the inter-relationship. As noted by Tustin and Smith as the model calls for a consideration of competition policy outcomes in consumer protection cases. In some instances regulators will be encouraged to allow anti-competitive conduct because of its consumer protection benefits (whereas the legislation may preclude this approach).
Shortcomings of the model are that it does not provide any assistance to the regulator in identifying potential actions or in designing remedies to suit the circumstances of a particular market and that it cannot tell the regulator whether further improvement is possible.
73 This discussion highlights the fundamental importance of the choice to be made by regulators in respect of the choice of welfare standard. An explicit statement as to the manner in which the trade-off is to be made will assist in mapping the boundaries between consumer protection and competition regulation. The value of the Sylvan model lies in its utilisation as a conceptual tool rather than an empirical tool.179
Using Sylvan's conceptual foundation for the interface Paula Rebstock provides a case study of the approach of the New Zealand Commerce Commission in the electricity sector.180 The article details the interventions of the agency aimed at facilitating consumer switching in the market. Breaches of the consumer law were of particular importance as the newly deregulated electricity market would work only if consumers were able to exercise choice by being provided with accurate information. Consumer switching costs can assist firms in acquiring greater market power and contribute to a lack of differentiation in the products on the market. Rebstock suggests that it could be useful to recognise that in some circumstances there may be a trade-off between promoting competition and efficiency and the latter may be best enhanced by following the less competitive course such as clearances for anti-competitive conduct
(authorisations). In some markets, such as network industries, competition may not be a practical policy goal and the effectiveness of market outcomes will depend on the nature of the industry-specific regulation imposed.181 The New Zealand case study raises a pivotal point in the consideration of consumer protection and competition. The studies
179 Ibid. 180 Paula Rebstock, "The Consumer - Competition Interface in New Zealand: A Response to Sylvan." (2005) 13:1 Austl. Comp. & Cons. L. J. ["Rebstock 2005"]. 181 Ibid.
74 on switching costs and the insights of behavioural economics on consumer attitudes
provide the most useful launching point for an examination of the ways in which effective competition policy can still fail to serve the consumer interest. 182
Sylvan's pivotal contribution has been to change the focus to the way in which consumers can "activate" competition rather than on what competition does for consumers. This theme in her work has been developed further in policy research
particularly through OECD discussions and studies exploring demand side economics.183
The OECD has also developed and advocated a "toolkit" on the design of demand side
policies that integrates a "cost-benefit" approach.184 However the toolkit also advocates resource intensive approach to assessments of multiple indicators for consumer detriment that may not always be suitable for use by small developing state consumer agencies.
Conclusion - Links between the theoretical literature and the dissertation research
The strength of the interface between consumer and competition law is dependent on consistency between the definition of the consumer and the type of interests both of
182 See further for an economic discussion on switching costs in Michael Waterson, "The Role of Consumers in Competition and Competition Policy" (2003) 21 Int'l. J. Indus. Org.129. 183 See OECD. Roundtable on Demand-Side Economics for Consumer Policy (2006), online: OECD www.oecd.org/dataoecd/31/46/36581073.pdf (Accessed 27 March 2011); OECD. "Roundtable on Economics for Consumer Policy - Summary Report" (2007), online: OECD http://www.oecd.Org/dataoecd/5/38/39015963.pdf; OECD. Global Forum on Competition. "Background Note - The Interface Between Competition and Consumer Policies"(2008) Online: OECD http://www.oecd.org/dataoecd/25/28/39890230.pdf (Accessed 11 January 2011). 184 OECD.'Toolkit - Consumer Protection and Empowerment: Building a Toolkit for Policy Makers; Competition Assessment Toolkit (2010) online: OECD http://www.oecd- ilibrary.org/governance/consumer-policy-toolkit_9789264079663-en. Accessed 11 January 2011 ["OECD Consumer Toolkit"]
75 the instruments seek to protect or promote. Integration of consumer protection and competition law is predicated on an explicit economic approach that asserts that consumer choice is the ultimate objective of these regulatory policies and views consumers as confident and information-seeking. This viewpoint is more easily accommodated within liberal or producerist legal order.
Comparative law scholar James Whitman provides an illuminating examination of
I QC the implications of "consumerist" or "producerist" approaches to commercial law. He suggests that competition and consumer law from a consumerist standpoint, which is in line with the American tradition, will favour the economic interests of consumers namely low prices and choice. In contrast a producerist perspective on the law, more commonly associated with continental European countries, will prioritise the interests of competitors. Whitman argues that the key issue in the underlying values system is the choice as to which citizen identity one is seeking to protect, that of producer or that of consumer. The choice of model is important as in a consumerist system, greater weight will be given to the economic interests of consumers. This may lead to tensions with other areas of consumer protection such as consumer safety legislation which inevitably
1 Q~J limits consumer choice. However in considering the position of consumers in small developing states the approach of the consumerist or liberal model of law may be a poor fit due to social and economic conditions and the historically greater levels of intervention in the economy.
185 James Q. Whitman, "Consumerism versus Producerism: On the Global Menace of "Consumerism" and the Mission of Comparative Law" (2006) Yale Law School, Yale Law School Faculty Scholarship Series, Paper 6, online: Yale Law School < http://digitalcommons.law.yale.edu/fss_papers/> ["Whitman 2006"] 186 Ibid, at 7. 187 Ibid, at 27
76 Although the theoretical literature recognises the synergies between consumer and competition law it also acknowledges the clear tensions and limits to the interplay between the domains. In addition to competition failure, where the market structure does not serve the interests of consumers, there can also be tensions where the effects of consumer law work against the creation of competitive markets. Muris reminds that some consumer protection measures can create barriers to entry.188 In his analysis he draws on the example of comparative advertising which could be treated as unfair or unethical on a consumer protection basis but may be an important tool for new firms to enter markets and for existing firms to introduce new products. Similarly, Vickers in discussing the economics of consumer protection, notes that laws against misleading advertising which help protect the competitive process can have a contrary effect where there are bans such as those on advertising by professionals which can be competition-blunting.189
Regulation of markets is generally viewed as a technical exercise, due in part to the level of expertise required to make decisions on the technical economic rules applied in enforcement of the legislation. However the competition or consumer protection regulator is required to make value judgements as in order to maximise the interplay between the instruments. There needs to be explicit recognition by the regulator of both the type of consumer interests that the agency is seeking to protect and the trade-off that is being made in balancing interests. The choice of consumer welfare standard by a regulator determines the nature of the consumer interest that it will protect. The implications of the choice of the standard in small developing states is considered in
188 "Muris 2002", supra note 142. 189 "Vickers 2004", supra note 1.
77 Chapter 7 which looks at the interpretation of consumer welfare by the Jamaican competition authority.
The new influential paradigm is that consideration of behavioural economics and decision-making must be brought to bear on consumer policy and that making this allowance will maximise the interface. Although this is useful it should be recognised that this interface is based on conceptualising them as instruments of economic policy.
Accordingly it is premised on economic efficiency and the primacy of the market. The difficulty with this conception is that consumer policy (and at times competition policy) is also social policy. The focus on maximising the interplay can lead, particularly in developing countries, to insufficient attention to basic consumer interests such as access to and safety of goods. Even in developed countries research in a comparative report on consumer policy regimes indicated that the main concerns from a consumer perspective were safety of goods and services in addition to issues with the purchase of services where asymmetric information existed with the supplier and competency of service providers.190 Theorists may argue that safety can be achieved partly by businesses competing for consumer business but this does not obviate the need for minimum consumer safety standards to be set out.
The dissertation research seeks to build on the existing body of literature and to fill a research gap by utilising an alternative perspective to the predominant welfare economics approach that measures the efficacy of the regulatory measures by economic efficiency and also focuses on consumer sovereignty as the common goal of integrated
190 UK Department of Trade and Industry, "Comparative Report on Consumer Policy Regimes" (October 2003) at 9, online: BIS www.bis.gov.uk/files/file34673.pdf.
78 enforcement. Additionally research in this area has been driven by a singular vision of the
informed "affluent" consumer and the empowerment rather than protection of consumer
In line with this approach the case studies that have been conducted have tended to be confined to countries in the European Union and large developed countries such as
United States and Australia. The approaches and synergies in smaller jurisdictions have not been explored save for the short New Zealand case study on the implications of switching costs in the electricity sector.191 The dissertation research seeks to extend consideration of the interface by considering the efficacy of the interplay in the peculiar conditions in small developing states and providing a detailed qualitative case study on enforcement of consumer and competition law by a small state integrated agency. The following chapter builds on the theoretical foundations in this chapter by looking at the normative goals in the design of consumer and competition law in small states and the adaptation of these laws and institutions to small state conditions.
191 "Rebstock 2005"supra note 180.
79 CHAPTER 3
...size matters ...the size of a country and, its internal market plays a big role in law and development. - D. Daniel Sokol (2010)192
SIZE MATTERS: NORMATIVE FOUNDATIONS OF CONSUMER
PROTECTION AND COMPETITION LAWS IN SMALL STATES
As previously noted the logical interplay between consumer protection and competition law is most effectively based on the common goal of "consumer welfare".
This goal is often narrowly conceived as the promotion of pure economic efficiency and consumer choice. In this construct competition law ensures there is a competitive marketplace and consumer law ensures that informed consumers can transact confidently in the market. The dissertation argues that regulatory goals and rationales in small developing states should be premised on social values that are wider than this narrow approach to consumer welfare. This is not intended to suggest that there is no logical interplay between consumer protection and competition law. Indeed there is a dual need.
Firstly, to explore the synergies between the policies on the basis of a development- oriented consumer welfare goal and secondly, to create mechanisms that enhance logical and institutional synergies between the two instruments in small states hampered by regulatory capacity.
The examination of the impact of size on the regulation of consumer markets relies on literature from a variety of disciplines including anthropology, political science,
192 D. Daniel Sokol, "Law and Development - The Way Forward or Just Stuck in the Same Place" (2010) 104 Nw, U. L.Rev.Colloquy 237 at 242.
80 economics, development administration, public administration and international relations.
The pitfalls with this inter-disciplinary approach include the researcher making "unlike comparisons" as the disciplines have their own in-built assumptions however the lack of a comprehensive legal or regulatory literature on small size necessitates the adoption of the cross-disciplinary approach. In considering this literature this chapter seeks to offer a perspective on the dynamics of consumer and competition law in small developing states exploring the manner in which size affects the design and interplay of these instruments and creates or magnifies tensions not necessarily apparent in larger states. Although the
"regulatory culture" of small states may at times be dissimilar, as national styles including institutions and state traditions have a significant impact on regulation, there is likely to be a significant degree of coherence in light of their common political, economic and social characteristics.193 These similarities and shared characteristics which should allow general lessons to be drawn for consumer market regulation are discussed in this chapter.
This Chapter seeks to identify, clarify and discuss the guiding principles for the goals and content of consumer market regulation in small states. The first section of the
Chapter discusses the definition of "small states" used in the dissertation and the reasons for the focus on states rather than economies. This is followed by an examination of the theoretical economic and social rationales for intervention in markets focusing on those that are more likely to be used in a small developing country context. This section is
193 See discussion of national regulatory traditions in David Vogel, National Styles of Regulation: Environmental Policy in Great Britain and the United States (Cornell University Press, Ithaca NY., 1986); J.J. Richardson ed., Policy Styles in Western Europe (London: Allen and Unwin, 1982).
81 followed by an examination of the goals and benefits of market regulation and suggestions on the tailoring of the legal and institutional framework for consumer and competition laws to meet small states needs. The importance of the normative discussion is that it assists in providing insights on the values and interests that are embedded in policy decisions. Critical analysis is important in ensuring that policy-makers are clear as to the goals and values that they are seeking to achieve in regulatory policies and laws.
3.1 Small States: Definitions and context of size
The differences of smaller states have been explored in the context of both their vulnerabilities and their economic scale. Studies focused on the vulnerability of small states include policy literature sponsored and published by international institutions such as the United Nations, the World Bank and the Commonwealth Secretariat addressing economic and environmental vulnerabilities in the international environment.194
Vulnerability issues are not central to the examination of regulatory issues although they
194 For example see World Bank, "World Bank Small States: Meeting Challenges in the Global Economy", Report of the Commonwealth Secretariat / World Bank Joint Task Force on Small States, (April 2000) at (ii), online: Commonwealth Secretariat, 82 are important as they are likely to affect the overall wealth and growth of a state.195 There is also a link between a stable macro-economic climate and regulatory "success" as it is seen as being tied to certainty in decision-making and capacity for implementation.196 Environmental vulnerability can also provide a de-stabilising effect on economies and mitigate against effective implementation of policy measures. In the regulatory context the issue of economic scale and the impact of this on social, political, administrative and legal structures is pivotal and is the focus of this chapter. A preliminary definitional issue is to forge a common understanding of small size. This definitional approach should not be taken as indicative that small states and their issues are uniform but seeks to draw out several areas of commonality. 3.1.1 Definitional issues A number of categorisations for the size of jurisdictions have been proffered in academic and policy research. Measurements of size by population or land area as well as composite measures of the population, gross national income and land area have all been suggested. 197 Research has looked at the issue of size from different angles 195 Economic vulnerabilities refers to factors such as a narrow resource base, limited diversification and lack of control over external events in foreign markets. Environmental vulnerabilities include propensity of natural disasters such as hurricanes and susceptibility to environmental change. These are increased because the small land size means natural disasters are likely to affect a larger proportion of the country. 196 Martin Minogue & Paul Cook /'Regulating for development" Insights 49 ID2(Institute of Development Studies, University of Sussex, 2003) cited in Martin Minogue, "Apples and Oranges" : Problems in the analysis of comparative regulatory governance" 45 (2005) Quart. Rev. Econ. Fin. 195 at 209 [ "Minogue & Cook 2003"]. 197 See for example the following composite measures used in small state research: population, land area and total income in Andrew S. Downes "On the Statistical Measurement of Smallness: A Principal Component Measure of Country Size" (1988) 37:3 Soc. & Econ. Stud. 7; population size of less than ten 83 encompassing both "small states" and "small economies". International relations research has concentrated on statehood and political environments and power imbalances.198 However it would appear that the terms "economies" and "states" can in some instances be used interchangeably. The term "small states" and its underlying acceptance of political sovereignty is used in the dissertation in preference to "small economies". This is in light of the focus of the research on state regulation that is the laws enacted by governments to control consumer markets and the public agencies utilised to administer and enforce the laws. The use of the term also excludes consideration of larger states that may have small economies within their borders. The most popular and simplest measurement for size appears to be population as population thresholds reflect the number of consumers and the labour force market and are generally correlated with territory size and Gross Domestic Product (GDP).199 The cut-off point for population size used by empirical researchers has varied significantly and there has been some inconsistency in the application of thresholds.200 Kuznets used a population of ten million or less.201 This figure was also used by Streeten in his research on the peculiar characteristics of size.202 However population sizes of 5 million or less million and usable land area of less than 10 to 20,000 square miles in William G. Demas, The Economics of Development in Small Countries with Special Reference to the Caribbean (Montreal: McGill University, 1965) at 22; population, area and total gross national product in Bimal Jalan, "Classification of Economies by Size" in Bimal Jalan ed. Problems and Policies in Small Economies (Commonwealth Secretariat: Croom Helm, 1982) at 39["Jalan 1982"]; review of composite measures and approaches in Tom Crowards, "Defining the category of small states." (2002) 14:2 J. Int'l. Dev. 143 ["Crowards 2002"]. 198 Peter J. Katzenstein, Small States in World Markets: Industrial Policy in Europe (Cornell University Press, 1988). 199 "Crowards 2002" supra note 197 at 143. 200 "Jalan 1982" supra note 197 at 39 to 47. 201 Simon Kuznets, "Economic Growth of Small Nations" in E.A.G Robinson ed., Economic Consequences of the Size of Nations (London: Macmillan & Co. Ltd, 1963) at 14. 202 Paul Streeten, "The Special Problems of Small Countries" (1993) 21:2 World Dev. 197. 84 have been suggested and used by Collier and Dollar as well as Brautigam and Woolcock in their more recent work on size and trade issues.203 Winters and Martins also used a figure of 4 million or less.204 In contrast the threshold utilised by the Commonwealth Secretariat/World Bank Small States Forum covers countries with a population threshold of less than 1.5 million.205 Recent World Bank sponsored studies used 2 million possibly in line with increased population growth of these states.206 The arbitrary cut-off point or variations in size definitions must be borne in mind in comparing findings from the empirical studies. Population size is influential but as has been recognised in previous studies this criteria moves along a continuum. However a threshold of up to 3 million in line with the Commonwealth/World Bank approach would appear to be a suitable 203 Paul Collier & David Dollar, "Aid, Risk and the Special Concerns of Small States" (Development Research Group, World Bank, 1999). Online: World Bank 85 threshold as this population size reflects the regulatory difficulties caused by limited human resources and scarce public administration capacity. A "small economy" approach that avoids population size measurements has been applied in trade and competition policy analysis. 907 A small economy has been defined by Michal Gal for competition policy purposes as "an independent sovereign economy that can support only a small number of competitors in most of its industries". This focuses on market conduct and performance and the economic structure measurements that are important in defining markets such as high concentration levels, high barriers to entry and the operation of companies in the markets at below minimum efficient scale.208 The primary criticism of the definition utilised by Gal is that it encompasses a wide range of countries. It includes countries in various stages of development incorporating developed countries such as New Zealand, Ireland, Singapore, Israel as well as large countries with small economies within their internal political boundaries such as China and Indonesia. It also covers those countries with absolutely small population size such as Malta as well as those with dispersed markets such as Australia and Canada. As has been noted the conditions in these states are not likely to warrant similar policy solutions.209 An alternative definition proffered by Taimoon Stewart focuses on developing countries and places the lack of resources at the centre of size defining a small economy as one 207 Also used in trade studies for example see WTO approach in its Committee on Trade and Development which recognised small economies at paragraph 35 of the Doha Ministerial Declaration of 14 November 2001 and subsequently in 2004 with a working definition based on a world trade share of global merchandise of 0.16%; also see Michael A. Davenport, "A study of alternative special and differential arrangements for small states" in Roman Grynberg ed., WTO at the Margins: small states and the multilateral trading system (Cambridge University Press, 2007) at 366 where he uses "a share of world trade" setting a threshold of 0.02% of overall merchandise trade and incorporating 42 states. 208 Michal Gal 2003, supra note 13 at 1. 209 Rajan Dhanjee, "The Tailoring of Competition Policy to Caribbean Circumstances: Some Suggestions" (2004) 9:3 Caribbean Dialogue 13 ["Dhanjee 2004"]. 86 ... .in which there are limited human, financial and natural resources with small size of markets limiting the number of business actors, scale production, and development options, and in which retention of capital is restricted by insertion into the global product value chain, leading to economic vulnerability.210 A recognition of the reduced regulatory capacity implicit in Stewart's definition is echoed in a New Zealand policy paper that proposed a definition that took greater account of institutional capacity defining small economies as "those economies that are approaching the minimum size needed to operate a full set of regulatory and competition policies and institutions" which would include states such as Singapore, Hong Kong and Iceland whilst placing "micro-states" of the Caribbean within a different category.211 These alternative definitional approaches are compelling as they explicitly take account of the difficulties of implementing regulatory policies at reduced scales and implicitly account for the limited human and financial resources in small states. 3.12. A regulatory definition of size It is difficult to disentangle issues of size from those of development and regulatory issues in developing countries must be considered in this context. As Lee notes in his historical treatment of Ireland "problems of scale [are] blended with levels of 210 Taimoon Stewart 2004, supra note 13 at 53. 21 i Rory McLeod, Competition Policy in Small Economies: issues arising for New Zealand, (Ministry of Economic Development: Wellington, 2003), mimeo cited in Lewis Evans & Patrick Hughes, Competition Policy in Small Open Distant Economies: Some Lessons from the Economic Literature, (New Zealand Treasury Working Paper 03/31,2003), online: New Zealand Treasury http://www.treasury.govt.nz/publications/research-policy/wp/2003/03-3l/twp03-31 .pdf [Evans & Hughes 2003] 87 development".212 The special "development challenges" of small states have been identified as remoteness and isolation, income volatility, openness, limited diversification in production and exports, susceptibility to natural disasters and environmental change, poverty and higher uneven wealth distribution, and limited institutional capacity. The peculiarities of small developing states as opposed to large developing states include the inability to achieve economies of scale lending itself to greater market concentration, a limited level of non-tradeable services in the private sector and greater participation by the public sector in the market and limited human resource skills.214 These challenges are reflected in the economic profile of the case study country Jamaica. The level of economic development can therefore adversely impact the regulatory environment particularly the level of capacity of regulatory agencies and the institutional development of the judicial system. Although some of the same policy considerations may be applicable to developed small states the concern in the dissertation research is focused on those states that are both small and developing. It is important to utilise a definition that is relevant and purposeful for regulatory purposes. The relevance of size for regulatory purposes is centred on small population and market size as well as the limited resources and regulatory capacity. Accordingly the definition of small states used in the dissertation includes those states with populations of less than 3 million that are developmentally challenged and fall below the minimum size 212 J.J. Lee, Ireland 1912-1985: Politics and Society (Cambridge: Cambridge University Press, 1989). {Lee 1989] at 628. 213 See World Bank Small States 2000 , supra note 194 at pp 5 - 17; these conclusions re-affirmed in the 2008 study Briguglio, Persaud & Stern 2008, supra note 206. 214 Satish Chand, "Development Challenges for the Small Open Economies of the Commonwealth" in Lino Briguglio & Eliawony J. Kisanga eds. Economic Vulnerability and Resilience of Small States (Islands and Small States Institute of the University of Malta and the Commonwealth Secretariat, 2004). 88 needed to operate a full set of regulatory policies and institutions. Characteristics which are likely to be identified in states within the definitional groups are linked to their political, economic and social environment. These include colonial legacies, pervasiveness of government, small population size, close-knit social relationships, lack of economic scale, high market concentration levels, open economies, dependence on external markets and vulnerability to external factors and financial and human resource constraints on institutional capacity. The dissertation research considers the implications of size for both small and micro states.215 It is important to recognise that these countries fall within a continuum and there is no precise cut-off point. Similarly there may be differences in applying policy solutions to microstates. Recognition of the commonalities of issues of size and development rather than a definition of size is the key. 32 Applicability of theoretical rationales for market interventions to small state markets The efficient operation of the market is premised on a critical role for the State in the creation and maintenance of private law. As Allan Hutchinson states "[wjithout a State willing or able to define and protect property rights, enforce contracts and prevent involuntary transactions, maintain a circulating medium, and 215 A sub-category of micro states has been identified in several studies including in the World Bank Small States 2000, supra note 194 which defines 'micro-states' as those with populations of less than 50 000: L Alan Winters & Pedro Martins, 'When Comparative Advantage Is Not Enough: Business Costs in Small Remote Economies' (2004) 3 World Trade Review 347 at 360 use 12 000 as the cut-off for the smallest 'micro-economies' group and approximately 200 000 for the 'very small' group; "Crowards 2002", supra note 197 at 145 suggests a 5 million population threshold for 'micro' states. curtail monopoly and anti-competitive behaviour, there is no market in any real or meaningful sense."216 Limitations on the private law of contract and tort and their inability to protect the consumer have been widely discussed.217 Accordingly in addition to private law measures public regulatory policies through consumer and competition laws are required to address the failures on the "demand-side" side (consumer driven) and "supply side" (producer driven) of the market. Rationales for regulation, seek to explain why regulatory measures are introduced by the State. Although theoretical rationales provide an important lens through which to examine the introduction of consumer and competition law they are not necessarily reflected or evidenced in practical policy application. 01 8 There has been increasing convergence of the substantive content of both modern consumer and competition laws especially in developed countries regardless of the express formal justifications for introduction of the measures. As competitive markets are assumed to work well for consumers the theoretical work has centred on the market failure thesis that justifies intervention in those specific instances where the market does not work. Structural failures, information failures, public goods and externalities are the standard types of market failure used to rationalise regulatory intervention in markets. The existence of market failures under this thesis does 216 Allan C Hutchinson, "Life After Shopping: From Consumers to Citizens" in Iain Ramsay ed., Consumer Law in the Global Economy: National and International Dimensions (Aldershot, Hants: Ashgate/Dartmouth, 1997) 25 at 31. 217 Cartwright Consumer Protection 2001, supra note 70 at 8; Howells & Weatherill 2005, supra note 154 at 11 to 14. 218 Geraint Howells, Iain Ramsay & Thomas Wilhelmsson, "Consumer law in its international dimension" in Geraint Howells, Iain Ramsay & Thomas Wilhelmsson eds. Handbook of Research on International Consumer Law (Cheltenham, UK: Edward Elgar Publishing Limited, 2010) [Handbook of Research on International Consumer Law] at 13. 90 not in of itself justify intervention as it is considered that the costs of government failure may be worse than market failure. Regulation is only justified where it improves on the market solution. A cost-benefit analysis is always required to justify intervention on this basis and ensure that it will make the market operate more efficiently. Although market failure is the dominant rationale for market intervention there are other reasons for intervention.219 Tony Prosser has consistently sought to broaden the regulatory debate arguing for the legitimate recognition of the inclusion of the "social."990 In a recent work he develops this further by examining the work of several regulatory bodies in the United Kingdom whose establishment was not linked to market failures or attempts to replicate market outcomes. These bodies encompass a diversity of social roles through promoting human rights, social solidarity and social inclusion.991 Social rationales, which seek to remedy the outcome rather than address the causes of market failure, take greater account of social justice concerns and this dissertation argues that they are particularly relevant in small state environments. This section explores these competing rationales for the introduction and adoption of regulatory measures recognising the legitimacy of both the economic and social bases for market interventions. 219 The dominance of the market failure approach is demonstrated in Breyer 1982, supra note 64 at 32 where in addition to market failure Breyer also referenced unequal bargaining power, rationalisation, moral hazard, paternalism and scarcity as "other rationales for regulation'. See also Ogus 1994, supra note 64 at 19 to 20 where Ogus focuses on market failure but also references distributive justice, paternalism and community values as "non-economic" justifications. 220Tony Prosser, "Regulation and Social Solidarity" (2006) 33:3 J. L. & Soc. 364 at 369, ["Prosser 2006"]. 221 Tony Prosser, The Regulatory Enterprise: Government, Regulation, and Legitimacy (Oxford: Oxford University Press, 2010) at 3. 91 3.2.1 Economic Rationale for Intervention in Markets - The "Market Failure Thesis"222 A competitive market is assumed to deliver the efficient amount of goods and service required by consumers as measured by the level of "allocative efficiency" achieved when society's scarce resources are allocated to produce the goods and services that are most desired by consumers. In a theoretical construct it is assumed that consumers send signals to producers about the goods that they desire and producers respond to this, competing amongst themselves to produce the goods for consumers and ensuring that society's resources are not wasted. In this construct consumer demand drives supply. In conditions of perfect competition:- i. there are numerous buyers and sellers in the market who act independently and do not control the market through their behaviour; ii. there are no barriers to entry or exit from the market and persons can establish or cease business without new firms incurring high costs; iii. buyers and sellers have perfect information about the products on the market; iv. the products are homogenous and buyers will make decisions on the pricing of goods; and 222 Terminology borrowed from Harry McVea, "Financial Services Regulation under the Financial Services Authority: A Reassertion of the Market Failure Thesis" (2005) 64 Cambridge L. J. 413 ["McVea 2005"]. 92 v. the costs of producing the goods are borne by the producer, the costs of consuming the product are borne by the consumer and there are no transaction costs.1T\ This scenario of "perfect competition" is assumed to be the best model for the market. The consumer's perception of the utility of goods and services which could be produced determines what is actually produced. The price which consumers are willing to pay for different goods and services dictates supply. The market is perceived as self-directing, moving automatically to a point of equilibrium where society's resources and welfare is maximised. Welfare economists contend that a policy regime which interferes with these consumer preferences and choice is likely to result in a misallocation of resources and that the operation of the market in this manner means that an unregulated market is the optimal choice. In the construct of perfect competition the consumer controls the market and the market responds to the consumer. Actual market conditions, in all states, stand in stark contradiction to the theoretical model of perfect competition. These failures are amplified in small states where empirical studies have demonstrated that there is greater and more pronounced market failure particularly as regards concentrated market structures.224 Market failure 223 See exposition set out in Frederic M. Scherer & David Ross, Industrial Market Structure and Performance, 3rd ed. (Boston, Mass: Houghton Mifflin, 1990) [Scherer & Ross 1990] at 17 to 18; Roger Van den Bergh & Peter D. Camesaca, European Competition Law and Economics: A Comparative Perspective, 2nd ed. (Thomson, Sweet & Maxwell, 2006) at 19 [Van den Bergh & Camesaca 2006], 224 See overview of empirical work in this area in this area citing studies from Israel, Australia and Canada in Michal Gal 2003 supra note 13 at 18 - 28 for example Richard E. Caves, "Scale, Openness, and Productivity in Manufacturing Industries in the Australian Economy: A View from the North" eds. Richard E. Caves and Lawrence B Krause (Sydney: George Allen & Unwin, 1984) cited in Michal Gal 2003, infra at 3; See also findings in Taimoon Stewart 2004, supra note 13 in her case study of market failures in the small and micro states of the Caribbean; also see J. Kaminarides, L. Briguglio, H.N. Hoogendonk eds., The Economic Development of Small Countries: Problems, Strategies and Policies 93 therefore provides, in line with large states, a valid rationale for regulatory intervention in small states. Market failure in small states is greater due in large measure to the economic •yy c effects of the limitations on market size. This leads to a small number of competing firms and a lack of operating scales. The lack of scale is a major contributing factor to market failures in small jurisdictions as it impacts adversely on the levels of market concentration and barriers to entry. In discussing economies of scale, economists refer to a minimum efficient scale necessary for plant operation which is smallest quantity/unit of output that a firm can produce that will lead to profitability, the lowest point on long run average total cost scale. In small states costs cannot be spread over a large range of output and scale economies, which exist if the average cost falls as outputs expand, will generally not be realised.227 In addition to supporting only a small number of firms in most industries firms will struggle to get minimum efficient scale in their domestic market and lack the necessary economies of scale in order to compete in the global liberalised market. This also makes it less likely that firms will invest in research and development and innovation. In small states the need for firms to produce at a level (Netherlands: Eburon Publishers, 1989) [Kaminarides et al]; early influential research to be found in E.A.G Robinson , ed., Economic Consequences of the Size of Nations. (London: Macmillan & Co. Ltd, 1963) [Robinson 1963]. 225 See R.E. Caves, M.E. Porter, A.M. Spence, J.T. Scott, Competition in the Open Economy - A Model Applied to Canada (Cambridge, MA: Harvard University Press, 1980) note however the study is on a large small economy of Canada. 226 Dennis W. Carlton & Jeffrey M. Perloff, Modern Industrial Organisation 4th ed. (Boston: Pearson/Addison Wesley 2005) at 41 [Carlton & Perloff2005}. 227 Ibid, at 39 note however that for some industries and/or products will be easier to achieve MES see further discussion at footnote 229. 228 For a general discussion on economies of scale see Scherer & Ross 1990, supra note 223 at 97 to 146. 94 that meets minimum costs can lead to producers competing for the entire market rather than the right to compete with the market. Scale economies lead to high entry barriers which aid in the creation of concentrated market structures. Artificial barriers to entry are created through Government barriers such as restrictive licensing arrangements as well as through private agreements between importers and distributors. These barriers pose difficulties to other firms seeking to enter market, limit intra-brand competition and may result in the monopolisation of import channels. Geographic characteristics of island states may also exacerbate the limited scale economies and adversely increase the barriers to entry. Remoteness, distance and dispersion of resources, products and persons are contributing geographic factors.231 Structural market failures - Monopolistic and oligopolistic market structures Monopolistic market structures are problematic as a monopolist can influence the market outcomes, prices and quantity of products by their actions i.e. by affecting the demand function through which the firm acts as a price taker from consumers. In monopoly markets the monopolist, in order to sell additional units, will generally need to reduce the price and therefore lose revenue that would have been gained from selling at higher prices. The price is higher, output is lower and there are transfers of wealth from 229 See "Taimoon Stewart, "Is Flexibility Needed When Designing Competition Law? A View from the Caribbean" (2004) 38:4 J. World Trade 725 ["Stewart 2004"] making the point on the reluctance of brand manufacturer to deal with several small importers in small states preferring to rely on exclusive agreements. 230 For research on the impact of geographical features such as insularity, remoteness, archipelagos and mountainous terrain see "Armstrong & Read 2006", supra note 203. 231 Roman Grynberg, "A Theory of Trade and Development of Small Vulnerable States" Roman Grynberg ed., WTO at the Margins: Small States and the Multilateral Trading System (Cambridge: Cambridge University Press, 2006) at 14. 95 consumers to producers. Monopolies can extract monopoly rents by selling a smaller amount of goods at higher prices. Classic economic theory concludes that as this leads to monopolists taking a portion of what would otherwise be consumer surplus and there is also a lowering of the overall welfare of society. This leads to an inefficient allocation of resources. Regulation of monopolies is countenanced in order to avoid inefficiencies and waste and move costs of the firm to incremental costs.232 Oligopolistic markets, dominated by a few players, are also viewed as a failure of the market. As defined by Goyder an oligopoly is a market in which some degree of competition remains but there are only a handful of competitive undertakings (not less than two and probably not more than eight) and the nature of the rivalry between them is substantially affected by this fact.2 3 Strategic behaviour by players, taking into account and anticipating the pricing of the other firms, is considered to be the predominant feature of an oligopolistic market. A distinction is made in the literature between "non-cooperative" oligopoly markets where firms operate unilaterally and firms do not co-operate and "cooperative" oligopoly markets where the firms explicitly or implicitly collude.234 Accordingly there are myriad economic models of oligopolistic models based on different assumptions.235 Interdependent behaviour is a characteristic of small markets and Taimoon Stewart has 232 Van den Bergh & Cameseca, supra note 223 at 23 to 27. 233 D.G. Goyder, EC Competition Law, 4th ed. (Oxford: Oxford University Press, 2003) [Goyder, EC Competition] at 112 234 Michael J. Trebilcock et al, The Law and Economics of Canadian Competition Policy, (Toronto: University of Toronto Press, 2002) [Trebilcock et al Canadian Competition Policy 2002] at 63. 235 See generally Carlton & Perloff2005, supra note 226 discussing models of contestability etc 96 documented follow the leader behaviour in the banking sector in several Caribbean small states.236 Natural monopolies and high degrees of industrial concentration lead to monopolistic and oligopolistic markets in small states. Early empirical research by Frederic Scherer and others showed a link between size and structural market failure demonstrating that industrial concentration in manufacturing tends to increase as the population decreases and that small economies are characterised by high industrial concentration levels and few firm oligopoly. This finding has been supported by more recent case studies. For example, there is limited competition in the infrastructure industries in Jamaica (outside of the telecommunications sector) with no competition for retail of electricity or provision of water and sanitation services. A recent study found serious concentrations in the import, distribution and retail sectors of small economies which was attributable both to minimum economic scale as well as to historical ethnicity factors.239 However it should also be noted that concentration levels are not necessarily uniform and may vary across industries, with reduced concentration in some industries requiring lower scale economies such as retailing and personal services, and conversely greater concentration levels in those sectors with high sunk costs.240 236 "Stewart 2004" supra note 229 at 742. 237 Frederic M. Scherer et al, The Economics of Multi-plant Operation: An International Comparisons Study (Cambridge, Mass.: Harvard University Press, 1975). 238 See case study demonstrating that New Zealand manufacturing industries are comparatively more concentrated Ravi Ratnayake, Trade and the Environment: a New Zealand Perspective" (1999) cited in "Evans & Hughes 2003" supra note 211 at 2. 239 See "Stewart 2004" supra note 229 at 743. 240 See data presented by Michal Gal 2003, supra note 13 at 20 derived from studies by Scherer et al Multiplant operation and Michael Shefer, Calcalat Taasiya (Industrial Organisation) (Tel Aviv: The Open University, 1992). 97 The monopolistic and oligopolistic market structures in small states provide a primary rationale for regulatory intervention through competition law instruments. Competition law addresses structural market failures through the prohibition of anti-competitive conduct, both unilateral and collusive, and other agreements and practices that lead to higher consumer prices, market restrictions and create barriers to entry. Competition law may place greater restrictions on the activities of monopolies or dominant companies to ensure for example that a dominant company does not artificially limit its production of goods in order to increase the prices charged to consumers. Information failures - Imperfect and asymmetric information Information failures in markets occur through imperfect consumer information on the price, quality, terms of trade or other salient characteristics of products and through information asymmetry where consumers possess less information than suppliers. Economists have identified the economic incentives both on suppliers to disseminate information on their products and on consumers to search for the product information.241 By utilising search information consumers can determine the appropriate product choice for themselves and provide suppliers with an incentive to compete to supply to consumers the goods they want.242 Suppliers have an incentive to disclose information that is likely to lead to increased profits. They are therefore most likely to 241 See Howard Beales, Richard Craswell & Steven C. Salop, "The Efficient Regulation of Consumer Information" (1981) 24 J.L. & Econ. 491 ["Beales, Craswell & Salop, 1981"] which provides a useful overview of the economic theory of market information problems. 242 Ibid, at 492 & 502; "Ramsay Rationales 1984 supra note 167 at 25. 243 Cartwright Consumer Protection 2001 supra note 70 at 21 for structure of argument. 98 supply information on the price of the products and other easily and objectively identifiable characteristics.244 Information failures occur as these incentives on both suppliers and consumers are not always effective and do not lead to the provision of perfect information. Although consumers have incentives to search for information they are constrained by the costs of making accurate price comparisons and determining the quality of goods. There are also significant "transaction costs" incurred by consumers in searching for information. These costs relate to persons diagnosing their needs, ensuring that the product will meet their needs, searching for information and processing information.245 The costs also include bargaining and decision costs and monitoring and enforcement costs which will have a significant impact on the level of search and accordingly the point at which consumers will complete the price information search. Consumers are therefore likely to make decisions on imperfect information as it is in the rational consumer's interests to be optimally rather than completely informed.246 The severity of the information problem differs with respect to different categories of goods. Information failures are greatest for "credence" goods which are goods whose characteristics the consumer cannot verify even after purchase until a long future date such as financial 244 London Economics, Consumer Detriment under Conditions of Imperfect Information, (OFT Research Paper 11,1997) at 38 cited in Cartwright Consumer Protection 2001 ibid, at 21. 245 "Ramsay Rationales 1984" supra note 167 at 26. 246 T. Wein "Consumer Information Problems - Causes and Consequences" in S. Grundman, W. Kerber and S. Weatherill ed., Party Autonomy and the role of information in the internal market. (Berlin:De Gruyter, 2001) at 81 ["Wein 2001"]. 99 services and legal services.247 "Experience" goods, those where the characteristics cannot be determined until after purchase are also problematic particularly for high value, non-repeat transactions where a consumer switch of suppliers will have little effect. Information problems are least for "search "goods whose characteristics can be ascertained by the consumer prior to purchase. However, in modern markets the complexity of products causes informational difficulties and observational information on search goods obtained through direct examination of products together with product labelling or manufacturer information provided with the goods is increasingly less valuable and of limited utility. The economic incentives do not therefore ensure that consumers are adequately informed. Similarly, despite the economic incentives to do so firms may not always provide perfect information to consumers. The cost or complexity in supplying the information may be a prohibitive factor. Traders may not wish to provide unfavourable information or may supply it in an "opaque" manner.248Also the imperfect information of consumers may be exploited by firms with market power. If there are high costs to consumers obtaining information then in essence the supplier will be exercising market power as there is no pressure to increase quality or provide lower prices. In these circumstances firms can utilise their market power to charge higher prices. 249 The relationship between imperfect information, search costs and price dispersion means that policies aimed at 247 See discussion of categories of goods in Gillian K. Hadfield, Robert Howse & Michael J. Trebilcock, "Information-Based Principles for Rethinking Consumer Protection Policy" (1998) 21 J. Cons. Pol'y 131 ["Hadfield et al 1998"] at 142. 248 Cartwright Consumer Protection 2001 supra note 70 at 23. 249 Stephen Salop, "The Noisy Monopolist; Imperfect Information, Price Dispersion and Price Discrimination" (1977) 44 Rev. Econ. Stud. 393 cited in "Beales, Craswell & Salop, 1981" supra note 241 at 508. 100 reducing consumer's search costs can reduce the market powers of firms and ability to charge higher/monopoly prices. Consumer policies may seek to focus on ensuring that a significant proportion of consumers are better informed in light of the "market- perfecting" effect that occurs where an increase in the percentage of informed consumers increases the level of effective competition in the market. Information asymmetry between consumers and suppliers, where one party has information that the other party does not have, can also lead to market failures. The risk of consumers not having information prior to purchase is that they will end up with low quality goods or "lemons". This problem of adverse selection is a particular problem with experience or credence goods. In a seminal paper George Akerlof explored the relationship between quality and limited information in relation to the market for "lemons" automobiles finding that the quality of goods may be lowered where consumers cannot easily observe it. The existence of poor quality goods in the market affects consumers perception of the average quality of goods and lowers the price that consumers are willing to pay. Recognition of these information problems has significantly influenced consumer regulation and information failures has emerged as the primary rationale for the nci introduction of new consumer protection measures. However these information market failures are only seen as a justification for regulation where the market itself cannot provide a solution. Economists have contended that countervailing market forces 250 George A. Akerlof, "The Market for "lemons": Quality Uncertainty and the Market Mechanism" (1970) 84 Quarterly J. Econ. 488. 251 Geraint Howells, "The Potential and Limits of Consumer Empowerment by Information" (2005) 32 J. L. & Soc.349 ["Howells 2005"]; also see "Hadfield et al 1998", supra note 247; Stephen Weatherill, "The role of the informed consumer in European Community" (1994) 2 Cons. L. J. 49. 101 of screening and signalling may address informational problems. Screening (by the uninformed consumer) can mitigate consumer information problems where uninformed consumers use knowledgeable services or persons such as insurance brokers or estate agents. On the other hand signals (by the informed supplier) may also be used to convey quality for example, through branding and consumer warranties which with high advertising expenditure may serve to provide to consumers a credible signal of product value. Other market signals such as sales effort, product labels, quality standards certification and reputation of sellers will also provide information about market qualities.254 It is important to note that signalling will only work if the sellers are supplying high quality goods and other attributes that may dilute the value of signalling is that market competition for signalling may lead to overinvestment in the signal.255 Consumer policy in all jurisdictions has therefore been targeted at remedying information problems.256 The impact of the peculiarities of information failures in developing countries has been explored by Hans Thorelli. He noted, in early research on consumer policy in less developed countries, that consumers in these countries often engage in intensive information searches particularly in those countries where standards for goods are lax and there is the potential for adulteration of loose food products.257 Thorelli argued that consumers in developing countries operated in a "high uncertainty, 252 See overview of signalling and screening literature in Joseph E. Stiglitz, "The Contributions of the Economics of Information to Twentieth Century Economics" 115:4 (2000) Quarterly Journal of Economics 1441. 253 Philip Nelson, "Information and Consumer Behaviour" (1970) 78 J. Pol. Econ. 311. 254 Ibid. 255 "Wein 200\"supra note 246 at 85. 256 "Hadfield et al 1998", supra note 247 at 134. 257 Hans B. Thorelli, "Consumer Policy for the Third World" (1981) 3 J. Cons. Pol'y 197 ["Thorelli 1981"] at 198. 102 high risk market environment" and that the incidence of fraud and misrepresentation appeared to be greater than in developed countries. These specific findings on the impact of development should be seen as reinforcement of the validity of information failures rationales and the utility of measures such as prohibitions on fraudulent and misleading conduct, mandatory information disclosure, minimum information standards and product bans. Information failures and bounded rationality Although information failure under the market failure thesis is predicated on the rational consumers this fundamental cornerstone has been severely weakened in light of the insights from the work of behavioural economics. This empirical research demonstrates that rationality is a severely flawed understanding of the manner in which consumers really behave towards information. In light of this market failure results not merely from information failures but from the predictable behavioural biases of consumers. The "new economic orthodoxy" accepts the bounded rationality of individuals i.e. that the short cuts that are taken encompass cognitive errors as well as the limits of information, limited computational skills and flawed memories. The different 258 Ibid, at 200. 259 Pioneering work in this area Herbert Simon "A Behavioral Model of Rational Choice" in Herbert Simon, Models of Man, Social and Rational: Mathematical Essays on Rational Human Behavior in a Social Setting. (New York: Wiley, 1957) and later see Amos Tversky & Daniel Kahneman "Judgment under uncertainty: Heuristics and Biases" (1974) Science 185. Work developed further through prospect theory detailed in Amos Tversky & Daniel Kahneman "The framing of decisions and the psychology of choice" 211:4481 (1981) Science 453. 260 The literature on systemic biases is of more recent vintage than the mere recognition of bounded rationality see further on these Donald C. Langevoort, "Behavioral Theories of Judgment and Decision Making in Legal Scholarship: A Literature Review" (1998) 51 Vand. L.Rev. 1499 at 1503 in which he provides a literature review of behavioural economics in legal research grouping the theories into work on 103 underlying assumptions of behavioural economics also makes allowance for non self- regarding and inconsistent or non-stable time preferences of individuals. J Primary strategies and biases that have been identified as affecting the responses of consumers include the use of heuristics or short-cuts in decision-making, over-confidence and self- serving biases, hyperbolic discounting, hindsight and status quo bias. The context for decision-making is also important and anchoring and framing effects demonstrate this. Behavioural economics is therefore particularly relevant in assessing consumer responses to the complexity of choice, the uncertainty of choice and decision making with a Oft) "present bias". The presentation of information and the default setting and framing of the information became pivotal tools for tailoring information strategies. High levels of poverty and inequality means that the impact of poverty on the behaviour of consumers is of particular import as behavioural biases may impact more heavily on poorer than wealthier consumers and lead to worse outcomes.263 Additional obstacles are faced by poorer consumers as the behavioural tools available to wealthier consumers that mitigate behavioural biases not made available to poorer consumers. These include tools to change defaults and establish commitment devices such as status quo/loss aversion biases and framing effects; anchoring and adjustment; illusory correlations and causation biases; biases in risk perception, hindsight bias, context bias, intertemporal bias and egocentric biases; also see Russell B. Korobkin & Thomas S. Ulen, "Law and Behavioral Science: Removing the Rationality Assumption from Law and Economics" (2000) 88 Calif. L. Rev. 1053 also provide a useful categorisation. 261 J.S. Gans "Protecting consumers by protecting competition: Does behavioural economics support this contention?" (2005) Austl. Comp. & Cons. L. Journal ["Gans 2005"]. 262 See OECD Consumer Policy Toolkit supra note 184 at 42 to 45. 263 Research in this area has concentrated on financial choices however see generally Avner Offer, The Challenge of Affluence: Self-Control and Weil-Being in the United States and Britain Since 1950 (Oxford: Oxford University Press, 2006) at 39- 74 [Offer 2006], 104 automatic deposits, direct debits and no fee offers.264 Some of the hurdles to be overcome are the concentration of the poor in hourly paid, temporary jobs where employers are less likely to deposit into their accounts meaning that may have to use more expensive cheque cashing systems. Accordingly in order to ensure that a large segment of a poor population is aided by regulatory initiatives policy makers will need to do more as the impact of even in absolute terms small monetary amounts may be greater than larger amounts to a richer person. In applying the insights of behavioural economics to small developing countries the possibility of cultural or learned differences such as differences between countries in levels of co-operation and effects on framing and risk aversion may also need to be taken into account.266 Behavioural economics has fundamentally re-shaped the manner in which regulatory strategies are tailored leading to new approaches to regulation of consumer markets.267 Sunstein and Thaler's "libertarian paternalism" allows policy-makers to guide an individual's choices in welfare-promoting directions whilst protecting autonomy and freedom of choice. The influential approach of "nudging" relies on policymakers 'yfx o as "choice architects". The research challenge of the application of behavioural 264 Marianne Betrand, Sendhil Mullainathan & Eldar Shafir, "A Behavioral Economics View of Poverty" (2004) 94:2 Am. Econ. Rev. 419 ["Betrand, Mullainathan & Shafir 2004"]. 265 Ibid, at 421. 266 Studies on impact of cultural preferences include Justin D. Levinson & Raping Peng, "Valuing Cultural Differences in Behavioural Economics" 4:1(2007) ICFAI J. Beh. Fin. 32 ("Levinson & Peng 2007") and their discussion on the impact of cultural background on economic decision making which showed differences in approach to framing; also see Joseph Henrich et al, "In search of homo economicus: Behavioral experiments in 15 small-scale societies" (2001) 91:2 Am. Econ. Rev.73. 267 "Howells 2005" supra note 251. 268 Cass R. Sunstein & Richard H Thaler, Libertarian Paternalism is not an Oxymoron" (2003) 70 Univ. Chic. L. Rev. 1159 ["Sunstein & Thaler 2003"]. 269 Richard H. Thaler & Cass R. Sunstein, Nudge: Improving Decisions about Health, Wealth and Happiness (New Haven & London: Yale University Press, 2008). 105 economics to regulation was also taken up by Colin Camerer et al who provide a framework of "asymmetric paternalism" which seeks to assess the costs and benefits of an intervention approving those that "creates large benefits for those who make errors, while imposing little or no harm on those who are fully rational."970 The concept appears to mesh both individualistic and collective values. In proposing this solution of "asymmetric paternalism" the authors are particularly concerned at the uncertainty on the level of mistakes persons make and the possibility of imposing heavy pressures on rational persons as well as an inherent caution in embracing a developing field.271 The costs to be considered include not only implementation costs of the regulation but also the impact on firms and ensuring that it provides overall economic efficiency.272 Policy techniques on default rules, the provision or reframing of information, cooling-off periods, limiting consumer choices can be justified on asymmetrical paternalism as these impose little or no cost on informed and sophisticated consumers. Asymmetrical paternalism approach has a more explicit cost benefit analysis than the Sunstein & Thaler paternalism approach. Problems generated by asymmetric paternalism include its inability to provide definitive lines on cost-benefit analysis such as effect of this on future policy decisions, the difficulty on the optimum of the cost- benefit function or the difficulty in drawing boundaries and question as to existence of private incentives for the supply of paternalistic interventions.273 270 Colin Camerer et al, "Regulation for Conservatives: Behavioral Economics and the Case for 'Asymmetric Paternalism' (2003) 151 U. Pa. L. Rev. 1211 at 1212. ["Camerer et al Asymmetric Paternalism 2003"]. 211 Ibid, at 1214. 272 Ibid, at 1220. 271 Ibid, at 1251. 106 Critiques of these approaches have been similar to that of traditional paternalism focusing on who makes the choice which is generally a small class of decision-makers who will essentially decide which is best.274 It should be noted that Sunstein and Thaler advocate citizens deciding. The new paternalism is also critiqued on the grounds that policy-makers also suffer from behavioural biases incorporating public choice arguments on elected officials.275 Other critics cite occurrent and dispositional autonomy maintaining that individuals learn from our mistakes and furthermore the discipline focuses on long term rather than short term interests.276 Negative externalities and public goods Externalities and public goods provide economic rationales for consumer protection measures. Externalities arise where the costs (or benefits) of a transaction fall not on the parties to a transaction but on an external third party.277 In these circumstances the price of the good does not reflect the true costs to society of producing that good.278 As the decision makers do not bear all of the costs or reap all of the benefits of the transaction it results in over or under allocation of resources. Environmental externalities such as pollution are often cited as the classic example of externalities. As noted by Cordina these are likely to be greater in small states with small land areas, 274 Chris Field, "Having One's Cake and Eating It Too - An Analysis of Behavioural Economics from a Consumer Policy Perspective" in Behavioural Economics and Public Policy - Roundtable Proceedings (Australian Government Productivity Commission, 2007) at 91, online: Australian Productivity Commission http://www.pc.gov.au/ data/assets/pdf_file/0005/79250/behavioural-economics.pdf; see also critique in Glen Whitman "Against the New Paternalism: Intemalities and the Economics of Self-Control" (2006) 563 Policy. Analysis, online: Cato Institute http://www.cato.org/pubs/pas/pa563.pdf ["Glen Whitman 2006"] 275Stephen J. Choi & A.C. Pritchard, "Behavioral Economics and the SEC" (2003) 56:1 Stan. L. Rev. 1 ["Choi & Pritchard 2006"]. 276 "Glen Whitman 2006" supra note 274. 277 A.C. Pigou, The Economics of Welfare , 4th ed. (MacMillan, London: 1932) at 183. 278 See further critique in Breyer 1982, supra note 64 at 23 to 24. 107 multiple competing uses and high density of both population and economic activity.279 In the consumer protection context externalities such as telemarketing and spam demonstrate a similar effect. Public goods benefit all individuals, regardless as to whether or not they have contributed to ensuring that they are provided. In contrast, for private goods, the consumption of the good is exclusive to the purchaser and the supplier of the good can, at a low cost, identify the persons benefiting from the consumption of the good and so charge a price to each of them. Consumers are "free riders" of public goods in that they will benefit from the goods regardless as to whether or not they paid for them. Market failure occurs as these goods are unlikely to be supplied by the private sector or by a competitive market as it is difficult to exclude the non-consuming benefits and therefore difficult to generate revenues that will justify incurring the costs of production and distribution of the goods. The public good argument provides a basis for public intervention in markets to provide public education to consumers. There is likely to be an undersupply of information as after it is generated, information can be distributed at low marginal cost and buyers can then free-ride on this information by selling on to others. These market failures are "inherent in information provisions".281 The preferred remedy for neo classical economists is through the provision of information so that consumers can protect their own interests by exercising their preference and Government intervention 279 Gordon Cordina, "Economic Resilience and Market Efficiency in Small States" in Lino Briguglio et al eds. Small States and the Pillars of Economic Resilience (Islands and Small States Institute of the University of Malta and the Commonwealth Secretariat, 2008) ["Cordina 2008"] at 137. 280 "qecd Consumer Policy Toolkit" supra note 184 at 40. 281 "Beales, Craswell & Salop 1981" supra note 241 at 502. 108 can be used to ensure adequate information is provided to consumers. The creation of public institutional mechanisms and collective actions on behalf of consumers may also be justified on public goods grounds as individuals who are harmed by market conduct may rationally decide not to pursue an individual case. Public consumer and competition agencies can be seen as providing enforcement as a public good that benefits the collective interest and maintains consumer confidence in circumstances where the market •JO*} is likely to inadequately provide for enforcement. Cost-benefit analysis of market failure The existence of structural and informational market failures, externalities and public goods are insufficient, of themselves, for intervention in the market. Under the market-failure thesis the situation must always be subject to a cost-benefit review that seeks to ensure that the benefits of introducing regulation exceed any costs that are likely to be incurred. Benefits of regulation can include efficiency improvements both static and dynamic and increased consumer welfare. The costs to be weighed include not only direct agency enforcement costs but also other compliance costs that are generally hidden.283 Regulatory risk, the level of uncertainty in regulatory environment, also introduces costs as investors will seek higher level of compensation/return which leads to a higher cost of capital. In developed states this cost-benefit calculation has been re-designed in public policy through the development of regulatory impact assessments in risk regulation 282 See discussion of contradictory argument made by LLSV advocating primacy of private enforcement supra note 421. 283 "Ramsay Rationales 1984", supra note 167. 109 9RA which has become a pervasive feature of regulation in developed countries. For example the Hampton report in the United Kingdom made regulatory impact assessments mandatory as an important element of the risk regulation approach.285 The balancing of costs and benefits is inherently difficult and there is a danger in reducing it to a quantification exercise. In a leading monograph on the rationales for intervention in markets Iain Ramsay made pertinent observations on caution with respect to the role of general cost-benefit analysis in consumer protection policy. He noted that whilst "it appears to offer a relatively value free approach and quantitative answers to policy questions the collection and assessment task is difficult and costly and could identify• t financial costs and benefits rather than efficiency."9R7 Furthermore some intangible benefits such as consumer confidence are difficult to quantify and may be outweighed by more measurable tangible costs such as compliance. The empirical basis may also be compromised by insufficiency of data collection and measurement may be unduly influenced by those pressure groups that have better access to information and expertise.288 These issues should be at the forefront of the analytical dissection of the costs and benefits not of perfect markets with perfect regulation but of imperfect markets with that of imperfect regulation.289 Economic analysis can make one more aware of the 284 See for further exploration of these issues Robert Baldwin, "Is Better Regulation Smarter Regulation" (2005) Public Law 485. 285 Philip Hampton, "Reducing Administrative Burdens - Effective Inspection and Enforcement" (HM Treasury, 2005) ["The Hampton Report"] online: HM Treasury www.hm-treasury.gov.uk/hampton (Accessed 1 December 2010). 286 The cost-benefit analysis can also be seen as a means of tempering the market failure approach by allowing explicit consideration of trade-offs and social objectives of policies. 287 "Ramsay Rationales 1984 supra note 167 at 21. 288 Ibid. 289 Ibid, at 19. 110 costs and benefits of regulation but there is a need to proceed cautiously and for a greater understanding of the process of balancing inherent values. 322 Social rationales for intervention in markets - Distributive Justice, Rights and Paternalism Market failures are the primary rationale for regulatory intervention in consumer markets but as free markets and market allocations do not necessarily lead to fair outcomes there is room for alternative rationales that take greater account of a "fairness" objective.290 These have been grouped in this section under the heading of social rationales stressing their legitimacy as independent as well as supplementary grounds for 9Q1 intervention. A preliminary point to make is that the distinction between social and economic rationales may not always be clear cut as intervention for market failure may improve social justice outcomes as well as market outcomes and intervention for social justice reasons may be equally valid for economic reasons.292 290 Alternative rationales have been classified as "non-economic" see Ogus 1994, supra note 64 at 46 and "social" see "Prosser 2006" supra note 220. 291 An important category of social rationales not addressed in the dissertation include substantive collective and community notions encompassing substantive rights of citizenship and social solidarity as well as procedural rights such as "deliberative democracy" collective and community see further discussion in Cass Sunstein, After the Rights Revolution: Reconceiving the regulatory state (Cambridge, Harvard University Press, 1990) and Julia Black, "Proceduralizing Regulation: Part" 2000) 20:4 Oxford J. Leg. Stud. 597& (2001) 21:1 Oxford J. Leg. Stud. 33. 292 Iain Ramsay, "Consumer Credit Law, Distributive Justice and the Welfare State" (1995) 15:2 Oxford J. Leg. Stud.177 ["Ramsay Consumer Credit 1995"]; Cartwright Consumer Protection 2001 supra note 70 at 27. Ill Distributive justice Regulatory measures can be deployed in order to change the existing distribution of wealth and/or power in accordance with what society sees as "fair" and "just" rather than in accordance with what will be economically efficient. The distributive justice goal has been generally expressed as the "goal of increasing equality between members of society."293 It can be seen as covering the distribution of wealth from rich to poor, disadvantaged groups excluded from society, amongst generations and redistribution of power imbalances. The legitimacy of distributive rationales for intervention in small states is supported by the empirical evidence on the uneven distributions and variations in income, education levels and standards of living in small states.294 The high poverty levels and unequal income distribution in small states in turn results in large disparities in consumption and ability to access basic services.295 These issues of "consumers" in small developing states means therefore that it is important to consider not only the overall economic efficiency 293 Thomas Wilhelmsson," Consumer Law and Social Justice" "in Iain Ramsay ed., Consumer Law in the Global Economy: National and International Dimensions (Aldershot: Dartmouth, 1997) 217at 219 ["Wilhelmsson Social Justice 1997"]. 294 World Bank Small States 2000, supra note 194 at 8; The Gini coefficient for Jamaica (1992 - 2007) which is 45.5; see UNDP, Human Development Report 2009 Online: UNDP http://hdrstats.undp.org/en/indicators/161.html (Accessed 21 September 2011); see also studies on income inequality in Jamaica which demonstrate that although there has been declining levels of inequality there are relatively high. See PIOJ, Jamaica Survey of Living Conditions; Sudhanshu Handa & Damien King "Structural Adjustment Policies, Income Distribution and Poverty: A Review of Jamaican Experience." (1997) 25:6 World Development 915. These studies use measurements/indices based on the Gini index which is the share of total income or expenditures that would need to be redistributed to achieve total equality- between 0% and 100%, the smaller the % the more equal the distribution. 29 Compton Bourne "Economic Growth, Poverty and Income Inequality" (Sir Arthur Lewis Memorial Lecture delivered September, 2008). Online: University of the West Indies http://sta.uwi .edu/resources/speeches/2009/SummaryS ALISESConfComptonBourne .pdf (Accessed 12 February 2011). 112 of the market economy and the promotion of consumer choice but also the more fundamental issue of basic needs of individual consumers. Both access to consumption of goods and services including food, water, transport and consumer education as well as the actual consumption choices should be important considerations in regulatory policy. Access to consumption is a major theme of the consumer policy literature on developing and transitional countries.296 It is also an issue in developed states and is often framed in these countries as social exclusion of 9Q7 individuals. As noted by Iain Ramsay and Toni Williams "in societies largely premised on consumerism, exclusion from consumption opportunities is tantamount to denial of citizenship."298 In the development context Sen's influential "capabilities" approach acknowledges that access and the capability to use resources is important and furthermore that some groups need additional resources to increase their capabilities.299 In addition to facilitating greater access to consumption, the reason for market intervention should also be cognizant of the fact that regulatory measures have different impact on the different groups in society.300 Consumer problems disproportionately affect vulnerable consumers in all countries. Although there are several characteristics including education and race which increase vulnerability in the market a major 296 See for example "Rachagan 1992" supra note 55. 297 See discussion in the context of underdevelopment in developing countries Bronwen Morgan & Frank Trentman, "Introduction: the Politics of necessity" (2006) 29:4 J. Cons. Pol'y 345at 346. 298 See Iain Ramsay & Toni Williams, "Inequality, Market Discrimination, and Credit Markets" in Iain Ramsay ed., Consumer Law in the Global Economy: National and International Dimensions (Aldershot: Dartmouth, 1997) ["Ramsay & Williams 1997"] 299 Amartya Sen, Development as Freedom, (Oxford: Oxford University Press, 1999) discussed further at section 3.3.1. 300Anthony Smith, "Consumer Law and Social Justice" (1995) 5:6 Cons. Pol'y- Rev. 203. 113 lAI component of vulnerability is income. There is a higher level of low-income vulnerable consumers in small states which increases the importance of ensuring that vulnerable and disadvantaged consumers are protected.302 The fundamental work of David Caplovitz on consumers in the United States demonstrated the detriment suffered by poor consumers and the fact that their concerns differ from affluent consumers. In addition to generalised concerns about quality and price their consumer issues focus on access to and price of core basic services such as public services like water and electricity. This is exacerbated in developing states like Jamaica particularly for rural populations who generally suffer greater disadvantages.304 Furthermore greater consumer detriment in relative terms is evidenced for these vulnerable consumers as overpaying for goods will have a higher impact on those on low incomes. Low income consumers often pay more for goods than higher income consumers as there is a reliance on credit, inability to travel to stores where prices will be cheaper or to shop around in a wide geographical area and purchase of small quantities which will be more expensive than bulk purchases. Fraudulent and misleading advertising is also likely to have a disproportionate effect on vulnerable and disadvantaged consumers who are less likely to report issues to authorities through ignorance of correct channels or a lack of confidence in the ability of these agencies to 301 A 1998 OFT Paper identified key characteristics in the context of the UK as low incomes, long-term illness or disability, low levels of educational attainment, ethnic minorities, elderly and the young. See Ramil Burden, "Vulnerable Consumer Groups: Quantification and Analysis" (OFT Research Paper 15, 1998); online: OFT 114 deliver.305 Market interventions should therefore seek to ensure that these vulnerable and disadvantaged groups benefit from interventions and are protected from unfair practices of suppliers. Distributional rationales for intervention can also address the fact that markets reflect preferences of current consumers and do not take effect of present decisions on future consumers. This theme is picked up by Cartwright in his consideration of sustainable consumption and the protection of future consumers.306 He argues that policymakers must also look beyond the present individual choices to the impact on future generations. Small developing states will also need to consider equity between generations however the immediate focus will be on interventions that seek to raise present standards, alleviate current inequalities and lay the foundation of development for future generations. Distributive rationales are also reflected in issues on the inequality of bargaining power between suppliers and consumers. This conflates the economic and equitable -2#y7 reasons for market intervention. A diffuse term, it is capable of covering "ignorance, vulnerability to persuasion, desperate need, lack of bargaining skill or simple lack of influence in the market place."308 In this respect it is based on equitable notions of "power distribution" or "weakness."309 Economic analysis of inequality of bargaining 305 William E. Kovacic, "Competition Policy, Consumer Protection and Economic Disadvantage" (2007) 25Wash. J. L. & Pol'y. 101 at 115["Kovacic 2007"]. 306 Cartwright Consumer Protection 2001, supra note 70 at 39. 307 See "Ramsay Rationales 1984", supra note 167 at 50. 308 Hugh Beale, "Inequality of Bargaining Power" (1986) 6:1 Oxford J. Legal Stud. 123 at 125. 309 See further discussion on this in Norbert Reich, "Diverse Approaches to Consumer Protection Philosophy" (1992) 14 J. Cons. Pol'y. 257 ["Reich 1992"]; Michael J. Trebilcock, "The Doctrine of Inequality of Bargaining Power" (1976) 26 U. T. L. J. 359. 115 power was influential in economic theory until supplanted by sophisticated theories of information analysis. Recent economic literature has tended to distort inferior bargaining power as a sound basis for formulation of a consumer policy preferring to focus on an analysis of market imperfections through inadequate and/or unequal access to information.310 Sufficiency of inequality of bargaining power as an independent economic rationale for intervention has therefore not been strongly supported by recent literature in the area with deference given to the market failure and efficiency thesis. Although it has been sceptically treated in the academic literature the equitable notion of inequality is significant in influencing public policy debates particularly in small developing states.311 In these states policymakers may be particularly concerned about the exercise of market power by dominant firms. There is often demonstrable inequality of power between consumers and dominant firms and between local importers/manufacturers and multinational companies. Political motivations may therefore be influenced by non-economic notions of fairness. Regulation of markets to redress inequality of power seeks to protect the interests of the weaker or vulnerable party. Different measures are applicable to both the supply side and demand side of the market. Consumer law can be used to address the balance of power between consumers and businesses and competition law can be used to redress inequality between small and large businesses. 310 "Hadfield et al 1998", supra note 225. 31'For example see public debate on the establishment of the Fair Trading Commission in Barbados and speech by Minister of Commerce, Consumer Affairs and Business Development Hon. Ronald Toppin (Speech at the opening of the National Consultation on the establishment of the FTC, June 1999)[unpublished] noting that the consumer protection focus was on "addressing the quality of goods and services being offered for sale as well as the apparent inequality in bargaining power between buyers and sellers." 116 Distributive approaches have been primarily critiqued on the basis that attempted transfers of wealth have a complex effect on interrelationships and may not always result in redistribution as the market may respond in different ways.312 The well-rehearsed argument is that suppliers will find a way of clawing back their reduced profits from consumers or alternatively that they will withdraw from the market.313 Despite this some economic analysis scholars do acknowledge a limited role for distributive justice goals in contract regulation in non-workable or uncompetitive markets.314 However as noted by Ramsay it must be recognised that the rules of the market have a distributive effect and on balance redistribution may be effective.315 The acceptance of distributive justice as a legitimate rationale for intervention is essentially a value statement and an explicit recognition of a vision of the type of society that policymakers wish to create. Rights Conferment of individual entitlements or rights in the area of consumer protection has been an influential reason for the introduction of consumer measures in both developed and developing states. The United Nations Guidelines on Consumer Protection marked an important phase of legislative activism in consumer policy.316 The UN Guidelines are based on the premise that consumer protection is a basic right of all persons 312 Cass Sunstein, "Paradoxes of the Regulatory State" (1990) 57 Univ. Chi. L. R 407 at 422. 313 See for example David Cayne & Michael J. Trebilcock, "Market Considerations in the Formulation of Consumer Protection Policy" (1973) 23 U. T. L.J. 396. 314 "Hadfield, et al 1998" supra note 247. 315 "Ramsay Consumer Credit 1995", supra note 292 . 3,6 United Nations Guidelines on Consumer Protection. GA Res 39/248 (1985). Subsequently revised in 1999 to incorporate sustainable development. Updated version was endorsed by the Economic and Social Council in July 1999 and adopted by the General Assembly in its decision 54; online: United Nations < .http ://www .un .org/esa/ sustde v/publications/consumption_en .pdf >[UN Guidelines] 117 encompassing those who are not considered* to form part of the "affluent society".*317 These Guidelines explicitly recognise social justice concerns placing these at the forefront of market intervention and appreciating the special position of developing •J | Q countries by referencing "a right to satisfaction of basic needs." The rights approach has been developed and followed by consumer groups. It has also been explicitly used in legislative instruments such as the Independent Consumer and Competition Commission Act 2002 of Papua New Guinea which expressly recognises that consumers have the right to safety, choice, consumer education, information, representation and redress.319 Academic scholars have advocated the elevation of consumer rights to human rights in order to promote their underlying intrinsic values.320 As Sinai Deutch argues the protection of the individual consumer can now be perceived as part of the maintenance of human dignity. He places consumer rights within human rights on the basis of their universality, emphasis on improvement of individual well-being and protection against governments.321 Deutch points to accepted doctrines of human rights, such as individual prosperity, honour and dignity that can serve as the basis for recognising consumer rights as "soft" human rights. Elevating consumer rights to human rights avoids their relegation 317 David J. Harland, "Implementing the Principles of the United Nations Guidelines for Consumer Protection." (1991) 33 Indian L. J. 189 at 193 ["Harland 1991"]. 318 UN Guidelines para 1 references justice and equity however note para.2 which states that "the costs and benefits of proposed measures" must be borne in mind. 319 See s. 105 of the Act although note that this provision does not confer liability on the State in respect of the same. 320 Sinai Deutch, "Are Consumer Rights Human Rights?"(1994) 32 Osgoode Hall L. J. 537["Deutch 1994"]; Iris Benohr & Hans-W Micklitz, "Consumer Protection and Human Rights" in Handbook of Research on International Consumer Law at 18. 3211bid. at 551 to 552. 118 to the constitutional civil and political rights focused on freedom and security of individuals and protection from state's arbitrary exercise of political power. 322 Although the translation of consumer rights to enforceable legislative instruments was popular in large developed states during the heights of consumer policy activism in the 1960s and 1970s small developing states have not been as active in translating these general principles into legally enforceable rights.323 Rights are likely to prove more useful for advocacy than enforcement as rights couched in lofty language may be difficult to reduce or translate into enforceable legislative instruments. Weidenbaum in a critique of the UN Guidelines, charged that they "are a model of vagueness and overblown phraseology".324 Rights-based systems such as set out in the UN Guidelines provide a useful checklist but do not necessarily provide a complete value system for the choice or utilisation of specific techniques for implementing consumer policy into legislative instruments. Despite these drawbacks a rights approach is important in providing a level of agreement and understanding on the basic principles and providing a framework against which consumer policy can be developed and evaluated. 325 The rights basis for intervention also recognises the basic needs of consumers placing these at the core of development-oriented market regulation and enshrines substantive and procedural social values which have resonance for the consumer regulation framework in small developing countries. 322 Ibid. 323 Consumer Protection Report of the Secretary General of the UN (1993) 16 (1) J.Cons. P'cy 97 324 M.L. Weidenbaum, "The case against the UN Guidelines for Consumer Protection", (1987) 10 J. Cons. P'cy" 425. 325 David J. Harland, "The Consumer in the Globalised Information Society." (1999) 7 Aust'l. Comp. & Cons. L. J. 1 at 13; "Harland 1991" at 196. 119 Paternalism Paternalistic rationales fundamentally alter freedom of choice by allowing the State to determine the optimum result for an individual. There has been aversion to explicitly citing paternalistic motives for the introduction of regulatory initiatives and the phrase has been considered as a pejorative one that seems to be increasingly avoided by consumer law scholars. Paternalistic interventions can be categorised according to the areas that the intervention is intended to correct deficiencies in.327 Firstly, intervention in the way a choice was exercised in favour of a particular preference, secondly, in the way a preference was formed and thirdly, on the outcome of a choice (true paternalism). A high level of market intervention can be justified under a paternalistic framework as there is "no logical stopping place".328 The central criticisms of paternalistic influences in policy-making are based on the restriction of liberty and the imposition of costly compliance costs on business. True paternalism involves a substitution of judgement by the State and it means that some consumer choices are prohibited where policymakers believe that the outcome is not in the consumer's best interest. The focus on individual autonomy in decision-making accentuated in the rhetoric of economic efficiency therefore makes it difficult for policymakers to use this language of justification. As noted by Duncan Kennedy whilst liberal and conservative scholars who are in different ideological schools will accept 326 Anthony J. Duggan, "Some Reflections on Consumer Protection and the Law Reform Process" (1991) 17 Monash U. L. Rev 252 at 262 ["Duggan 1991"]; Geraint Howells, Iain Ramsay & Thomas Wilhelmsson eds. Handbook of Research on International Consumer Law (Cheltenham, UK: Edward Elgar Publishing Limited, 2010) at 11 [International Consumer Law Handbook ]. 327 "Duggan 1991"ibid. 328 Ibid, at 263. 120 efficiency as a good reason for a rule neither schools will acknowledge that paternalism is a legitimate goal. The concept of efficiency however can be manipulated so that scholars can incorporate distributive or paternalist goals without acknowledging that they are doing so. Outside of the almost universal critique of true paternalism there is greater tolerance of interventions made on the basis of the manner in which the choice was exercised or formed. These interventions are easier to justify as they are closely tied up with bounded rationality and the recognition of the manner in which consumers understand and react to information. The new orthodoxy on the limits on the rationality of individuals legitimises these types of paternalistic interventions as it is now accepted that freedom of consumer choice is affected by the limits of decision-making. This provides space for discourse on the "new paternalism" and the lengths to which policymakers should attempt to influence choices and preferences. As noted earlier the libertarian and asymmetric paternalistic approaches, which work within a framework that technically appears to promote individual choice and decisions, are increasingly influential in academic and policy discourse.330 329 Duncan Kennedy, "Distributive and Paternalistic Motives in Contract and Tort Law, with Special Reference to Compulsory Terms and Unequal Bargaining Power" (1982) 41:4 Maryland L. Rev. 563 at 587. 330 See further "Sunstein & Thaler 2003", supra note 268 and "Camerer et al Asymmetric Paternalism 2003" supra note 270. 121 3.23 The contest between competing values in the rationales for market intervention Economic and social rationales are distinguished by their different core values. The market failure approach is closely linked with consumer choice and inherently limits the role of the state. It provides only limited justifications for intervention (albeit with widening boundaries due to the incursions of insights from bounded rationality). The market failure thesis provides an important rationale for the introduction of regulation. However it does not capture wider legitimate reasons for the introduction of regulation and can also obscure appropriate values of the regulatory environment.331 Issues of wealth distribution, fairness, respect and community values which intuitively are of relevance for formulating consumer policy are neglected. On the other hand social rationales provide wider bases for regulatory intervention on the basis of equitable concerns. However difficulty can arise in incorporating these social values, particularly in regulatory initiatives driven by international lending institutions influenced by neo-liberalism.332 Bronwen Morgan notes that even where social goals are accepted as valid and valuable they may be translated into market failure terms.333 This creates an issue as if the language of the market leads to restating of the problem then the nature of the instrument may change and in this translation the social citizenship values may be lost. Morgan has explored this 331 Prosser 2006" supra note 220. 332 Bronwen Morgan, Social citizenship in the Shadow of Competition: The Bureaucratic Politics of Regulatory Justification, (Aldershot: Ashgate Press, 2003) at 387. 333 Ibid, at 387. 122 "shadow of competition" noting that it "gives social relations a texture imparted by the influence of not legal, but economic rationality."334 The market failure thesis is generally assumed to provide clear lines and/or categories that justify intervention in the realm of private transactions between individuals. However the certainty of economic efficiency in the market failure thesis may be overstated and ephemeral. McVea cogently makes the point that the idea of a defining bright line for market failure intervention is misleading since defining categories such as externalities also requires us to balance competing values in assessing what is harm and benefit.335 Although they may be devilled by elements of indeterminacy it should also be recognised that economic efficiency interventions are not as clear cut as theorists may posit. Social justice, in addition to economic efficiency concerns, should be used as a basis for regulatory interventions in small states which need to explicitly acknowledge and consider the values inherent in these rationales for market intervention in considering their applicability to small state markets. Rationales and values for these states may differ from larger developing or developed countries in light of the varied development needs of their citizens. Policy makers in small states need to be particularly concerned about social justice, inequalities in wealth distribution and power imbalances which suggests that social rationales should be considered as legitimate grounds for market intervention. If one makes a value judgment that wealth distribution is more important than wealth 334 Ibid, at 8. 335 "McVea 2005", supra note 222 at 437. 123 maximisation then the economic efficiency approach is significantly flawed. Distributional concerns and wealth transfers between producers and consumers are not addressed by economists as Pareto efficiency, the standard measurement of allocative efficiency, does not question the initial distribution of wealth. This may lead to outcomes that can be considered unfair where the total utility of society is maximised but unequally divided.336 Ignoring the distribution of wealth is not a neutral balanced approach and actually appears to encourage inequality. In exploring this issue in the consumer credit sector Ramsay and Williams have demonstrated how the ground rules of a market have important distributional results and how they can "reinforce or counteract the unequal position of a disadvantaged group" 338 Proponents of an economic efficiency focus may argue that social justice outcomes are more suited for political intervention through other instruments such as taxation or social welfare issues. However in developing countries social welfare provision may be minimal meaning that regulators need to be more cognizant of the impact of intervention on disadvantaged groups. Furthermore, in conditions of economic deprivation and hardship, continued entrenchment of uneven welfare distributions is likely to be detrimental to the "social fabric" of society and the basic pillars of the market economy.340 The possible links between income inequality and social stability poses an additional layer of concern.341 The disruption of social fabric and the detrimental effect of income inequality on social stability is likely to be 336 Heico Kerkmeester, "Methodology: General" in Encyclopedia of Law and Economics, Boudewijn Bouckaert and Gerrit De Geest ed. (Ghent: 1999), online: Encyclopedia 124 magnified in small population where Governments may be less likely to be able to absorb the social costs of adjustment.342 Social rationales are therefore important in to fully appreciate inequalities and to draw up good outcomes for interventions in these states. Regulation is essentially a contest between "competing policy values".343 These contested values of regulation are often masked by the focus on the technical aspect of regulation. This approach is nurtured by the efforts of international agencies and the epistemic communities in economic policy areas. In line with this orthodoxy governments seek to place their regulatory policies within a neat framework, despite the competing ideologies, on the basis that regulation is essentially a technical exercise. As posited by Tony Prosser: "... the current processes do not see regulation as an organic process that requires a balancing of competing values setting out the sort of society we wish to live in, but rather as a set of individual interventions that impose technical limitations on the functioning of markets and thus always a second best." 344 This belies a falsity as the choices made by regulators are never politically neutral albeit that they are made within a legal framework and generally with a specific mandate. Different regulatory tasks may have contradictory policy implications and the activity of regulators is pluralist 345 Political judgments are necessary to determine priority and reconciliation of values and the value adopted should depend on priorities at point in time. For example the pursuit of social justice policies that seek to remove entrenched privileges of a small business class may require some "sacrifice" of economic growth. 342 "Stewart 2004" supra note 229 at 735. 343 "Prosser 2006" supra note 220 at 372. 344 Ibid, at 375. 345 Tony Prosser, Law and the Regulators (Oxford: Clarendon Press, 1997) at 305. Small states should recognise the reality of the competing policy values in the choices they are being asked to make in market interventions. They need to strike a balance taking into account their uneven levels of wealth distribution and lower levels of development. Market failures and efficiencies must be a major consideration as this provides a disciplined methodical approach to the trade-offs being made. It also leads to greater explicit reasoning and understandings of the rationale for and objective of regulatory intervention. However the fundamental importance of development and fairness goals should not be neglected or minimised. In societies aiming to establish fair and efficient markets that promote development social rationales offer legitimate reasons for regulatory intervention. 33 Regulatory goals and the case for consumer and competition regulation The overall regulatory goal in small developing states should be sustainable economic and social development through economic growth, more equitable wealth distribution and increased capabilities of individuals. This development oriented goal differs from the traditional development goal envisaged primarily in measurements of economic growth and income per person.346 Criticism of the reliance on economic determinants led to the adoption of wider approaches which have gained currency and are more suited to delineation of the development goal. 346 See discussion of traditional economic welfare measurements in Offer 2006, supra note 263 at 15 to 38. 126 The dissertation approach adopts and incorporates Amartya Sen's conception of development which provides the widely accepted key alternative to the economic growth notion of development. His human capabilities approach incorporates the capabilities of individuals and focuses on enabling human development through political freedoms, economic facilities, social opportunities, transparency guarantees and protective security.347 Although Sen's approach is clearly still rooted in the market and acceptance of individual rather than collective priorities it usefully moves the focus away from economic growth, which can obscure prevailing social and income inequalities. It focuses on the relative capabilities of individuals within a community recognising that relative wealth and the ability to participate in economic life is important. This incorporation of the "social" aspects of development is reflected in the Human Development Index used by international agencies to measure levels of development. The overall development-oriented goal must encompass several substantive goals of regulation namely economic efficiency as well as fairness. Regulatory techniques in consumer and competition law will need to be specifically structured to achieve these goals. It is acknowledged that pursuit of multiple regulatory goals may at times lead to conflict and involve "political" judgments however regulators must be prepared to resolve competing priorities and objectives. 347 Amartya Sen, Development as Freedom, (Oxford: Oxford University Press, 1999) at 89. 348 See also a conception of development goals encompassing the quality of human life and their capacity for knowledge creation and dissemination in Annalee C. Babb, Small States, the Internet and Development: Pathways to Power in a Global Information Society (Ph.D. Thesis, Fletcher School of Law and Diplomacy, 1993) [unpublished] at 178. 127 33.1 Balancing efficiency and fairness in a development-oriented goal Within the overall context of a small state development-oriented goal for market regulation, it is necessary to balance economic efficiency and fairness. Two important issues that must be considered are the contours of the economic efficiency goal and the relative priority that should be afforded to efficiency or fairness in regulatory determinations. Economic efficiency encompasses increasing the efficiency of domestic firms by improving their ability to compete internationally and deliver lower prices and greater choice to consumers as well as the promotion of innovation and technological development. Measures of efficiency include allocative efficiency, productive efficiency and dynamic efficiency.349 Productive efficiency is a static efficiency measure which is achieved when goods are produced using the most cost-effective combination of productive resources available under existing technology. In contrast dynamic efficiency is achieved through an optimal rate of invention, development, and diffusion of new products and production processes.350 As suggested by Gal small state characteristics entail a balancing of trade-offs between allocative, productive and dynamic • t efficiencies. Some scholars stress the need for a focus on dynamic efficiency measures that are perceived as more effective in ensuring as competition laws support the overall 349 See earlier definition of allocative efficiencies at p. 46. 350 Joseph F. Brodley, "The Economic Goals of Antitrust: Efficiency, Consumer Welfare and Technological Progress" (1987) N.Y.U.L.Rev.1020 at 1035 ["Brodley 1987"]. 351 Gal 2003, supra note 13 at 51 . 128 development path of an economy. Singh argues that the promotion of innovation and dynamic efficiency is the important efficiency goal for developing states.352 This concept of economic efficiency has to be reconciled with fairness objectives particularly in competition law enforcement. Michal Gal argues that economic efficiency should be the primary goal of competition law as small economies cannot deviate from efficiency as one can do in larger economies where it would be absorbed. She contends -jc-i that pursuing goals other than efficiency will be costly. Gal adds that the "undeviating pursuit of wealth dispersion and small size of firms at the expense of efficiency" risks preserving inefficiency in firms and the operation of the market.354 She also argues that the inclusion of social goals also leads to legal uncertainty as they require a higher degree • • • of subjectivity. This viewpoint is reflected in the argument commonly raised against social objectives in competition law and the view that developing countries should pursue these through other policies.356 On the other hand scholars, such as Taimoon Stewart and Eleanor Fox have advocated the inclusion of non-efficiency goals in the competition laws of small and developing states. Stewart strongly contends that efficiency cannot be the only goal 352 Ajit Singh, Competition and Competition Policy in Emerging Markets: International and Developmental Dimensions G-24 Discussion Paper (New York and Geneva: United Nations, 2002) at 15. Online. UNCTAD. http://www.unctad.org/en/docs/gdsmdpbg2418_en.pdf [Singh 2002] 353 Michal Gal 2003, supra note 13 at 48. 354 Ibid, at 252. 355 Michal Gal, "Competition Policy in Small Economies" Paper presented to the OECD Global Forum on Competition, 2003 CCNM/GF/CC)MP/WD(2003)42, online: OECD 129 stressing that there will be "social implosion unless there is space for small firms to survive, and there must be a limit as to how much foreign investors can control the 'JC'l economy." Fox has supported non-efficiency goals on the basis that whilst competition law in developing countries should address practices that reduce the size of pie and are allocatively inefficient they should also address "acts that block the channels of mobility and which keep worthy actors down and moats wide".358 As argued by Fox increasing mobility to encourage small young firms is important and efficiency must include distributional issues to be attractive to developing countries.359 Regulators in small developing states need to balance competing priorities in promoting development and the pursuit of economic efficiency should constitute one of several objectives. The regulatory goal should not be narrowed to a sole goal of economic efficiency as this is not a practical or necessary choice for small developing states. The argument for the inclusion of social goals is based on a number of factors.360 Firstly, economic efficiency cannot be the sole goal in small developing states as distribution questions do not concern those who intervene for reasons of economic efficiency. Distributive justice goals are important in small developing economies in light of the income inequalities which characterise these markets. Secondly, as has been contended with reference to the competition policy of the small states of the Caribbean the sole pursuit of efficiency goals would be deleterious and 357 "Stewart 2004" supra note 229 at 748. 358 Eleanor M. Fox, "Economic Development, Poverty and Antitrust: The Other Path" (2007) 13 SwJ.Trade Am. 211 at 224 ["Fox 2007"]. 359 Ibid. 360 See further for a review of some of the literature on non economic goals in competition law Ofer Green, Integration of Non-Efficiency Objectives in Competition Law (LLM Thesis, University of Toronto, 2008)[unpublished]. 130 lead to social implosion.361 In the concentrated market structure of small states there may also be a particular concern with failing firms that are "too big to fail". These concerns have greater intensity in light of the recent global economic crisis and its impact on poor consumers through increases in food and energy prices. Thirdly, equitable goals are often accepted as legitimate goals for consumer protection in contrast to the contested arena of the appropriateness of these goals in competition regulation. Fundamental goals in consumer protection must cover access to consumption and the protection of vulnerable consumers. Finally, single-minded pursuit of the economic efficiency goal may not be feasible in the political reality of small developing states and the need to achieve politically popular objectives. Introduction of new competition laws in these market economies requires the enforcement agency to garner public support and achieve credibility and legitimacy. The pursuit of social objectives can often assist in this respect. The goals of the law are ultimately a political choice and even though utilising non-efficiency goals may have an "economic cost" ultimately governments must weigh this cost with other objectives and take account of the social stability concerns. Social and equitable goals covering fairness, distribution of wealth and possibly protection of small enterprises, the protection of employment and historically disadvantaged groups should therefore be considered as part of the mix of goals of market regulation in small developing states. In conclusion the economic efficiency goal cannot be viewed in 361 Taimoon Stewart 2004, supra note 13 at 203. 362 Frederic Jenny, "Report of the General Rapporteur of Panel One" in European Competition Law Annual 1997: Objectives of Competition Policy Claus Dieter Ehlermann & Laraine L. Laudati eds. (Hart Publishing, Oxford 1998) ["Jenny 1998"]. 131 isolation and must be balanced against equitable considerations. As one commentator assesses it "[technocrats may be inclined to ignore distributional issues, but no one else will."363 Consumer and competition law should therefore seek to promote consumer interests through both economic efficiency and fairness and it is important that this also informs the consumer welfare standard. 332 Benefits of consumer market regulation in small developing states Where regulatory interventions in consumer markets are designed to lead to improvements in market outcomes and overall growth and development, consumer and competition regulation can contribute in varied ways working as part of a matrix of other social and economic policies. Dawar and Mathis have noted three specific ways in which regulation through consumer protection measures can contribute to development. Firstly, by the likely reduction of health costs through the distribution of safe products as well as contributing to the well-being and reliability of the work force and economic productivity; secondly, as legislated standards will mean that product development and innovation will occur through competition and not through lower quality and thirdly, as empowering consumers can have a concomitant effect on stimulating competition and rivalry between firms seeking to meet consumer demand.364 As they note these benefits 363 Dwight H Perkins & Michael Roemer eds., Reforming economic systems in developing countries 3, Nec(Harvard Institute for International Development 1991) cited in "Fox 2007" supra note 358 at 211. 364 Kamala Dawar & James Mathis, "Consumer Protection, Competition and RTA's some lessons for developing countries" in Philippe Brusick, Ana Maria Alvarez & Lucian Cernat eds. Competition Provisions in Regional Trade Agreements: How to assure development gains , (Geneva: UNCTAD, 2005) at 216, online: UNCTAD <. www.unctad.org/en/docs/ditcclp20051_en.pdf > (Accessed 11 January 2009). 132 complement the role of competition law targeted at the promotion of economic development through encouragement of competitiveness and innovation and the development of technology and industrialisation. However the benefits of competition regulation in developing states and in particular whether there is a demonstrable link between economic growth and competition law has been a contested area. The necessity for the introduction of competition laws in small developing states has been queried on several bases. One argument is that an open economy will suffice in facilitating competitive markets and that in small countries deregulation and open trade will be sufficient for competition on domestic markets. Another argument is based on the fact that the empirical work provides minimal findings in favour of a causal effect between competition law and economic growth and poverty reduction. Reviewing these studies Jenny finds that whilst there is some evidence to support a link between competition policies and growth there is a lack of conclusive evidence linking competition agency enforcement to growth.367 365 A.E. Rodriguez & Mark D. Williams, 'The Effectiveness of Proposed Antitrust Programmes for Developing Countries" (1993) 19 N.C.J. Int'l & Com. Reg. 209; James Levinsohn, "Competition Policy and International Trade" in J. Bhagwati & R. Hudec, eds. Fair Trade and Harmonisation (MIT Press, 1996) 329 where Levinsohn argued that if a small country maintains an open trading regime, in the tradeable sector a competition policy is irrelevant, as international competitors will take the place of the minimal domestic competition. 366Examples of empirical research include work by A. Dutz & A. Hayri "Does More Intense Competition Lead to Higher Growth" (2000) Policy Research Working Paper 2320, online: World Bank http://elibrary.worldbank.org/content/workingpaper/10.1596/1813-9450-2320, (Accessed 11 January 2011). which found that effective competition law implementation was positively associated with long-run growth; an OECD sponsored study of 53 countries conducted in 2002 which found a positive correlation between competition policy and economic growth is discussed in OECD (2002), Capacity Building for Effective Competition Policy in Developing and transitioning Economies, OECD presentation at UNCTAD IGE, July 2002; Patrick Rey "Competition Policy and Economic Development" mimeo (University of Toulouse, September 2007). Online: Institut d'Economie Industrielle IDEI 133 Despite these counter arguments the relevance of competition law, particularly for the non-tradeable sector for which an open economy will not suffice in providing competition, has been supported in several studies. Competition law in small states is useful as detrimental anti-competitive conduct clearly exists and imposes costs even in small and/or developing economies. Domestic anti-competitive practices in small states are now well-documented particularly regarding cases of collusion and abuse of market power by dominant players.370 Studies demonstrating evidence of this anti competitive conduct cover various types of practices such as abuse of dominance, cartels, anti-competitive mergers and vertical restrictions as well as in markets for basic foodstuffs of bread and chicken as well as banking, cement, transport and 1 telecommunication services. Kovacic has also provided empirical examples as to how competition policy contributes to economic development in developing and transitional countries.372 368 Taimoon Stewart 2004, supra note 13; Craig W. Conrath & Barry T. Freeman, "A response to "The effectiveness of proposed antitrust programs for developing countries" (1993) 19 N.C.J. Int'l & Com. Reg. 233; 369 See "Jenny 2006" supra note 367 at 111; Simon E. Evenett, Julian L. Clarke & Krista Lucenti, "Anticompetitive practices and liberalising markets in Latin America and the Caribbean" (2005) 28:7 World Economy 1029. 370 See Taimoon Stewart 2004 supra note 13; see also the collection of Papers from OECD Forum on Competition Policy and Small Economies which lists practices in several jurisdictions particularly Lino Briguglio & Eugene Buttigieg, "Competition Policy in Small Economies - Malta" OECD CCNM/GF/COMP/WD (2003)32, online: OECD 134 The importance of a domestic framework lies primarily in the control of domestic practices rather than facilitation of international co-operation on competition issues.373 The activities of international cartels and other international anti-competitive practices may impair the process of economic development in developing countries.374 International cartel activity may lead to higher prices thereby penalising small importing countries. Small countries can also be penalised by international cartels or import cartels and abuse of dominance in the countries of export as there is heavy reliance on the export markets for growth and it has been suggested that foreign firms feel freer to engage in anti-competitive cross-border activity when countries to which they export do not have a lie competition law. However the possibility of countering these international practices or fostering international co-operation on competition enforcement is unlikely for small states. Their minimal strategic importance, small markets for goods of companies and negligible utility to competition authorities in larger states means that the value of competition law in small states lies largely in its ability to foster development and consumer welfare by controlling domestic anti-competitive practices. 373 "Jenny 1998" supra note 362at 51. 374 Singh 2002, supra note 352 at 15. 375 Frederic Jenny, "Globalization, Competition and Trade Policy: Convergence, Divergence and Co operation" in Yang-Ching Chao et al eds., International and Comparative Competition Law and Policies (The Hague: Kluwer Law International, 2001) at 52 . 135 3.4 Principles for legal and institutional framework tailored to size and development The previous sections of this Chapter explored the goals, benefits and rationales of regulation of consumer markets in small states drawing out those areas of particular relevance to conditions in small states. It suggested that both efficiency and fairness should be at the core of development-oriented legal reforms. This section seeks to consider the tailoring of laws to ensure that they meet these regulatory goals and address the economic, political and cultural environments of small states.376 It sets out high-level principles for tailoring consumer and competition law based on a review of the academic literature in these fields. These principles need to be considered on a case by case basis in order to ensure that as far as possible reform of the laws meets local needs. Although the contours of a consumer law tailored to size and development are less distinct than those of a tailored competition law, in both cases the enforcement strategies and priorities of the regulatory agency are key factors in the effectiveness of the enforcement framework. The institutional design and scope of an integrated consumer and competition agency is considered in the final part of this section. 376 This section of the chapter is not intended to be a comparative law exercise. It refers to examples of laws in individual countries for illustrative purposes and recognises that detailed work on substantive statutory provisions requires more expansive and possibly empirical research. 136 3.4.1 Consumer protection The movement towards a minimal level of convergence in consumer law especially within regional organisations such as the European Union can serve to disguise the utility of tailored consumer protection laws. Consumer regulation in small states should ensure that it is development-oriented, by addressing pressing domestic issues, prioritising direct interventionist approaches and tailoring the public enforcement strategies. Sothi Rachagan has pointed to the importance of ensuring that consumer laws are development-oriented in his call for "a conceptual redefinition and realignment of consumer law so as to explicitly provide for the development dimension."•577 As he argues .. consumer law in the developing world needs to serve development. Academic lawyers can help achieve this by redefining the scope of consumer law in such a manner that it serves the consumption needs of all categories of the disadvantaged. Rachagan argues that the development goal can be assisted by extension of the term of consumer to cover those who purchase goods for their self-employment including small scale agricultural users as in this manner the statute extends the protection of consumer legislation to disadvantaged groups. Scholars have mapped the changes in the underlying philosophy of consumer protection.379 Reich has characterised it as moving from pre-interventionist to 377 Sothi Rachagan "Development and Consumer Law" in Geraint Howells, Iain Ramsay & Thomas Wilhelmsson eds. Handbook of Research on International Consumer Law (Cheltenham, UK: Edward Elgar Publishing Limited, 2010) at 48. 378 Ibid, at 74. 379 See for example Edward P. Belobaba, 'The Development of Consumer Protection Regulation: 1954 to 1984" in Ivan Bernier & Andree Lajoie eds., Consumer Protection, Environmental Law and Corporate Power (Toronto: University of Toronto Press, 1985) ["Belobaba 1985"]. 137 interventionist to post-interventionist noting the deployment and then withdrawal of state mechanisms in setting and enforcing consumer law norms. Most small developing states still require the active deployment of the state and the use of direct interventionist consumer measures in consumer regulation. As suggested by Gurjeet Singh, the economic conditions in developing states such as India may justify utilisation of more immediate, direct and interventionist approaches.381 Benjamin also contends that conditions in developing countries in Latin America lend themselves to "tighter instruments for consumers". Similarly, Hans Thorelli argued for a reversal of the policy approach found in developed countries suggesting that developing countries need to prioritise protection, then education then information.383 These conclusions are equally applicable to small developing states. Policymakers should prioritise interventionist approaches that promote access to consumption rather than the information based approaches that seek to provide consumers with information to make choices. Research indicates that "affluent, well- educated and middle-class consumers" are more likely to use information.384 However the interests of the sizeable proportion of low-income consumers and their right to satisfaction of their basic needs including access to goods for consumption and core 380 "Reich 1992" supra note 309. 381 Gurjeet Singh, "Consumer protection law in India: a socio-legal study" (Phd. Thesis, University of London, 1993) [unpublished], 382 Antonio Herman Benjamin, "Consumer Protection in Less-Developed Countries: The Latin American Experience" in Iain Ramsay ed.. Consumer law in the Global Economy: National and International Dimensions (Aldershot: Ashgate Publishing, 1997). 383 "Thorelli 1981" supra note 257 at 203. 384 "Howells 2005", supra note 229 at 357. 138 public services must be a primary consideration.385 In order to target and maximise the interests of most consumers and more particularly to ensure that benefits accrue to poorer, vulnerable or disadvantaged consumers more direct measures should be preferred. It would be inappropriate for policymakers in small developing states to model consumer laws on information approaches without establishing a level of protective rules, rights and remedies for consumer transactions. Models of minimal intervention based on the "confident" consumer place a higher level of responsibility on consumers to "activate" the market and make informed choices. An approach that aims to meet the interests of disadvantaged consumers cannot be accommodated in a framework that wrongly views the consumer as rational, confident and information-seeking. The empowerment of individuals through creation and enforcement of these basic rights should be prioritised over informational initiatives. These rights can also assist in developing the level of consumer confidence that is considered necessary to assist the operation of competitive markets. Informational remedies remain a useful tool as part of the overall framework for consumer policy and in small developing states these information measures such as prohibitions on misleading advertising should be targeted at the vulnerable or credulous consumer to ensure that disadvantaged groups are adequately covered. The impact of behavioural economics means that remedies also need to be cognizant of behavioural biases and cultural peculiarities. 385 Satisfaction of basic needs referenced in UN Guidelines for Consumer Protection adopted by consensus on 9th April 1985 including Jamaica. Online: United Nations (Department of Economic and Social Affairs), United Nations Guidelines for Consumer Protection A/RES/39/248 http://www.un.org/esa/sustdev/publications/consumption_en .pdf. 139 A development orientation of consumer law enforcement would also be reflected in the sectors that are targeted by the public enforcement authority. Rachagan advocates addressing consumer credit and financial services, privatised industries, intellectual property, medicines, food and education arguing that this will assist in overall 10/ development. Furthermore consumer education strategies need to reflect specific domestic issues. For example in the transition to a market-oriented economy consumers may need to be educated on the differential pricing expected in a competitive market. 3.4.2 Competition law Movement towards heterogeneity has been advocated by proponents of convergence in global competition law.387 As a result even where divergences from the models used by larger economies are warranted states may find it difficult to alter the instruments championed by international institutions and large developed states Dhanjee notes the inherent difficulties in crafting radical new approaches, the requirements for compliance with existing international and regional obligations, the credibility and trust issues with foreign investment that may arise from attempts to utilise unfamiliar models and the increased willingness of other agencies to co-operate in the face of familiar 386 Ibid, at 57. 387 Contrast views of David S Evans "Why Different Jurisdictions Do Not (and Should Not) Adopt the Same Antitrust Rules" (2010) 10 Chi. J. Intl. L. 161 who argues that even with the adoption of a similar goal of economic efficiency factors such as nature of legal regime including administrative and enforcement structures, political and economic history would result in diversity in the law. 140 ooo provisions. Despite this he concludes that there remains a "large margin for manoeuvre."389 Michal Gal's comprehensive work on small state competition policy provides a significant baseline for the development of a conceptual framework for competition law in small states.390 However as the policy prescriptions are directed to both developing and developed small states this study is insufficiently tailored to development issues. Gal's approach has also been critiqued on the basis that some of the policy recommendations do not differ greatly from best practice for large economies.391 On the other hand Taimoon Stewart's empirical study on the introduction of competition policy in 6 small states in the Commonwealth Caribbean considers the development context of competition policy particularly as it utilises a political economy rather than an economic analysis framework.392 Stewart has specifically noted that Gal's recommendations are not necessarily applicable to the small states of the Caribbean. The common content of competition laws in all states includes prohibitions on abuse of dominance or monopoly market power, prohibitions on anti-competitive horizontal and vertical practices and control of mergers that significantly lessen competition. Within this broad framework there are certain elements that should be tailored for size. It is suggested that tailoring of the competition law in small states should incorporate development-oriented public interest goals; adopt a behavioural rather than 388 "Dhjmjgg 2004" supra note 209. 389 Ibid, at 6. 3'X) Michal Gal 2003, supra note 13 which uses case studies of Australia, Canada and Israel. 391 OECD Background Note on Small Economies. CCNM/GF/COMP(2003)4, online: OECD Public interest goals for competition regulation in small states should consider fairness and equity and address income inequalities, protection of small entrepreneurs and historically disadvantaged groups.393 There may be adverse social consequences of efficiency enhancing measures that do not fully take into account the development dimension in key economic sectors of small states.394 Lower thresholds should be used for dominance than those used in larger states in light of scale economies, oligopolistic interdependence and higher barriers to entry.395 Small states generally co-opt large state guidelines as evidenced by Jersey and Barbados "1Q£ which both use a threshold of market shares of 50% for dominance. In contrast Malta tailored its threshold for dominance to 40% as well as shares below this to reflect small state conditions. The Maltese provisions are more consistent with the position that a lower threshold may constitute dominance in small states.397 Guidelines on potentially abusive practices such as discrimination, excessive pricing and foreclosure may require a 393 See section 3.3 of this Chapter. 394 Taimoon Stewart 2004 supra note 13 at 203. 395 Michal Gal 2003, supra note 13 at 109. 396 See discussion in Charles Webb, "Multum In Parvo: Competition Law In Small Economies Compared" (2006) 10:3 Jersey Law Rev. online: Jersey Law http://www.jerseylaw.je/Publications/jerseylawreview/oct06/JLR0610_Webb .aspx (Accessed 05.05.2010) 397 See "Briguglio & Buttigieg 2003", supra note 370 at 4. 142 different approach to that taken in larger states.398 Briguglio and Buttigieg have argued that allowing dominant oligopolies to indulge in discriminatory pricing practices may benefit consumers as it could lower prices to the benefit of consumers.399 Also the high production and transport costs may be a relevant factor in the apparently "excessive" pricing in smaller markets which should be taken into account in assessing whether pricing levels are excessive. Efficiency defences for abusive conduct may also be warranted in the small state context. Dhanjee notes the importance of this defence in order to be sensitive to business profitability as these profits are critical "both as a source of investment and as an incentive for investment in an environment with a shortage of other sources of investment capital"400 He notes that it is important to encourage introduction and use of new technologies in order to overcome the scale handicaps of small size. Buttigieg and Briguglio also noted that there is likely to be greater scope for application of the essential facilities doctrine as there are greater constraints on the duplication of infrastructure facilities.401 The balance between using rules or discretion, as reflected in the creation of per se or rule of reason prohibitions, raises a key contradiction in the criteria for design of tailored substantive legal rules. The predominant view is that developing countries should utilise per se rules due to the ease in administration and enforcement of the same.402 Ogus argues that as regulatory discretion generally creates more opportunities for corruption 398 "Briguglio & Buttigieg 2003", supra note 370 at 7. 399 Ibid. 400 "Dhanjee 2004" supra note 209 at 9. 401 "Briguglio & Buttigieg 2003" supra note 370 at 8. 402 See "Kovacic 2007", supra note 305 at 1217 who advocates simplicity in new regimes, also see "Fox 2007", supra note 358 who notes that "brighter line rules" may be required. 143 there is a preference for rules rather than discretion and that similarly command and control and formal clear rules may be preferred to informal guidance.403 On the other hand Davis in his general examination of law making in small states makes the argument that as small states experience low volumes of activity they should adopt standards rather than rules and should not defer to simplicity over complexity.404 However he adds that small developing states should not be reluctant to copy rules from large developed countries. Although the use of rules may be simpler and less costly for the enforcement agency it deprives the agency of flexibility in its enforcement approach and its consideration of efficiency issues. Rule of reason approaches allow competition agencies the flexibility to fully consider the peculiar circumstances in each case. An example provided by Stewart is that agreements may be used to meet competition from foreign-owned larger businesses and the competition agency may need to consider this in promoting development.405 This issue can also be illustrated through a discussion of merger control regulation. A rule of reason approach rather than an absolute prohibition of mergers above a certain threshold allows more detailed consideration of the efficiencies and other benefits that could result from the merger and allows the agency to focus on dynamic efficiencies.406 The difficulty is that achievement of this goal poses enforcement difficulties as these types of investigation require higher levels of sophisticated analysis of incentives for investment necessitating sufficiency of data and expertise which are a significant issue in small 403 "Ogus 2005" supra note 32 at 14. 404 Davis 2006" supra note 45 at 170. 405 Taimoon Stewart 2004 supra note 13 at 206. 406 Singh 2002 supra note 352 at 18. 144 states. This balancing of discretion and rules is symptomatic of the tension between the ideal theoretical design of legislative instrument and capacity issues in executing and implementing a tailored instrument. Although a more discretionary approach is likely to ensure that the competition policy can deliver the development benefits it has been established for the agency must be sufficiently institutionally endowed as the task of enforcement will be greater in balancing issues. Despite the overall preference for discretionary rules it is also suggested that the creation of per se offences for clearly anti-competitive horizontal practices such as price- fixing would facilitate investigation and prosecution of this type of behaviour. Cartel activity and agreements are facilitated by the oligopolistic structure of the market as signalling and tacit coordination are easier in an oligopolistic market. The level of informal relationships, social networks and bonds of family and kinship also contributes to the increased likelihood of collusive behaviour.407 The social networks and absence of a whistle blowing culture also make investigation and enforcement more difficult and clear cut rules may assist in changing the culture.408 In crafting a merger control regime careful consideration needs to be given to the threshold for notification, the use of indices that measure concentration levels and the requirement for mandatory notification. A mandatory notification system will increase the workload of the enforcement agency as will merger thresholds that are set too low. A 407 See discussion on kinship bonds in E Sathiendrakumar "Problems Faced by Indian Ocean Island Economies: The Case of the Maldives" in Rony Gabbay et al eds., Economics of Small Island Nations, (New Age International, 1996) 116 at 120. 408 "Stewart 2004 supra note 229 at 741. 145 higher threshold that reflects the concentrated nature of the market and captures mainly those mergers likely to be problematic is preferable.409 Small states should consider the inclusion of an exemption for bulk importing by small businesses.410 This is on the basis of empirical studies which demonstrate that "significant penalties are attached to small size in most of the costs that are analysed, transportation costs, labour costs etc".411 Imports of goods are affected by the high per unit transport costs in light of small cargo volumes, small cargo units and requirement for bulk breaking of cargo. This increases the prices of domestic goods 412 Allowing small firms to enter into agreements for bulk importing may alleviate some of these difficulties. In this respect location will also have an impact as costs are higher for landlocked or remote countries as air/sea transport costs for remote places will be higher than land transport costs and remote countries may have infrequent transport links. The tailoring of the substantive rules will be critical in ensuring that they meet the regulatory goals. However as has been cogently noted by Kenneth Dam "enforcement is usually more important than the substantive law in creating the conditions for economic development".413 An interventionist enforcement approach to abuse of dominance is warranted by the concentrated market structure and in some circumstances on the basis of 409 See also Michal Gal's suggestion of a "corridor" system for notification that focuses on mergers between a minimum and maximum threshold and therefore excludes international mergers that the small state competition authority is unlikely to influence discussed in Michal S. Gal, "When the Going Gets Tight: Institutional Solutions when Antitrust Enforcement Resources are Scarce" (2010) 41 Loy. U. Chi LJ. 418 ["Gal 2010"] at 437. 410 Taimoon Stewart 2004 supra note 13 at 199. 411 See study in Winters & Martin 2004 supra note 204 . This study focused on business costs in private sector and found cost disadvantages (as a result of higher charges for transport, utilities and skills) increased with diminishing size and was critical for states with populations under 200,000. 412 Lino Briguglio, "Small Island Developing States and their Economic Vulnerabilities" (1995) 23:9 World Development 1615 at 1617. 413 Dam 2006 supra note 25 at 22 to 25. 146 the historical and cultural context of post-colonial societies in small states.414 This is in contrast to the current American approach to monopolisation which is a minimalist approach that advocates greater freedom for dominant firms on the basis that their incentives coincide with consumer interests and in order to ensure that firms are not discouraged from investment and innovation.415 Enforcement action against domestic cartels is often advocated as a core regulatory strategy for new enforcement agencies as the practices are prevalent but do not require the same level of economic expertise as other issues 416 However the difficulties of proof and the likelihood of a "follow the leader" culture may make this a lower initial priority for enforcement agencies in small states 417 The importance of enforcement tools and strategies underlines the importance of ensuring there is a sound institutional structure in the regulatory framework. This often poses a challenge in developing states and an empirical study on competition agencies in African and Caribbean countries pointed to the lack of institutional capacity as a statistically significant factor in the limited effectiveness of competition policy in these states.418 The following section considers the use of public and private enforcement in small developing states arguing that the difficulties of private enforcement suggests there is a role for the public agency in securing fair and effective consumer outcomes for 414 Taimoon Stewart 2004, supra note 13 at 199. 415 See R. Hewitt Pate, "The Common Law Approach and Improving Standards for Analyzing Single Firm Conduct" in Barry Hawk ed., International Antitrust Law & Policy: Fordham Corporate Law 2003 195 cited in "Fox 2007" supra note 358 at 228. 416 "Jenny 2006" supra note 367 at 136. 417 "Stewart 2004" supra note 229 at 741. 418 A.V. Smith-Hillman "Market Power, competition policy and developing economies: divergent conditions within African and Caribbean economies" (2007) 34:2 J. Econ. Stud. 120 ["Smith-Hillman 2007"]. 147 consumers. It then looks at the design factors for optimal organisational framework for dual or integrated consumer regulation enforcement in small states. 3.43 Private and Public Enforcement The enforcement model for consumer market regulation is generally based on a mix of public and private enforcement mechanisms. The familiar economic argument is that the inclusion of private enforcement in the regulatory framework aids regulatory goals at reduced costs and alleviates the burden on a stretched public enforcement system.419 Private enforcement widens the range of enforcement outcomes by ensuring that in addition to any penalties imposed by the courts (on application by the public agency) that provision is made inter alia for the cessation of infringements through private injunctive relief, compensation of injured parties through claims for damages and punishment of the wrong doers for offences. It can also serve to act as a general deterrent for prohibited conduct and encourage the participation of consumers in both competition and consumer protection enforcement as well as assist in the development of a competition culture.420 Some theorists also contend that there are particular advantages with encouraging private enforcement in developing countries.421 419 William M. Landes & Richard A. Posner, "The private enforcement of law" (1975) 4 Journal of Leg. Stud.l. 420 Karen Yeung, "Privatising competition regulation" (1998) 18 Oxford J. Legal Stud. 581 ["Yeung 1998"]; See further for a discussion of mixed enforcement system in securities regulation Mary Condon, "Rethinking enforcement and litigation in Ontario Securities Regulation" (2006) 32:1 Queen's L. J. 6. 421 See for example Rafael La Porta, Florencio Lopez-de Silanes & Andrei Shleifer, "What works in Securities Laws" (2005) 61 Journal of Finance 1 arguing that there is strong evidence that private enforcement benefits stock markets and the lessons should be applied to developing states. 148 Adequate provision of public enforcement in a mixed enforcement model is important. Several reasons suggest that over-reliance on private enforcement is likely to be ineffective in small states. There are some general issues with the use of private enforcement mechanisms that are not peculiar to the small state context. The small individual loss typical of most consumer claims is unlikely to be proportionate to the costs and time involved in pursuing a claim. A free rider problem will also impact on litigation levels as individuals are unlikely to take action but will expect to benefit from the actions of others.422 In these circumstances the aggregate cost of consumer and competition offences will primarily justify enforcement action by a public body.423 In competition law claims private litigants may also be deterred by the high cost of proceedings and the specialised knowledge required for successful litigation of these claims. Most persons, particularly small businesses and individual consumers, who are impacted by anti-competitive behaviour will have limited investigative ability and financial resources to marshal the evidence necessary for a successful civil competition claim. Although the disclosure regime during the civil proceedings will assist private litigants they may be hampered in obtaining sufficient evidence prior to the commencement of proceedings. In contrast a public agency has statutory investigative powers such as powers of search documents that facilitate investigations of allegations of anti-competitive behaviour and establishing a prima facie case. 422 "Yeung 1998" supra note 420 at 591. 423 See Iain Ramsay, Consumer Law and Policy: Text and Materials on Regulating Consumer Markets (Oxford: Hart Publications, 2007) [Ramsay Consumer Protection 2007] at 388 to 391; Howells & Weatherill 2005, supra note 154. 149 Additional distinctive factors may pose barriers for small state enforcement. A precondition for effective private enforcement in developing states is the existence of strong legal system and judicial institutions. As noted by Trebilcock and Davis effective access to the courts for individuals and groups of citizens, and the integrity, competence and independence of the formal criminal and civil courts systems, as well as adequate staffing and resourcing of them, is a major problem for many developing countries.424 The possible lower levels of development of the supporting institutional structures will be a key factor affecting the effectiveness of private enforcement. The cultural environment for regulation which will be influenced by the role of the state and the existence of close-knit relationships will also be influential in the effectiveness of private enforcement in smaller states. It is arguable that the "ubiquity of government" is likely to lead the public to place higher reliance on state than on individual enforcement actions 425 Furthermore the issue of scale means that the relationships in small societies are grounded on the "number and quality of role relationships."426 As Benedict notes this means "that decisions and choices of individuals are influenced by their relations in many contexts with other individuals."427 This is influential as small societies have a concentrated business elite leading to the likelihood of greater co-operation between businesses. In an environment characterised by cronyism 424 Kevin E. Davis & Michael J. Trebilcock "Legal Reforms and Development" (2001) 22:1 Third World Quart. 21 at 33. 425 J. Richards, "Politics in small Independent Communities: Conflict or Consensus" (1982) 20 (2) Journal of Commonwealth and Comparative Politics 155 at 188. 426 See Burton Benedict, "Sociological aspects of smallness" in Burton Benedict ed., Problems of Smaller Territories (London: Athlone Press, 1967) at 45. Small societies are not necessarily coterminous with small states but the categories often overlap and Benedict considers a small developing state to be one which is both a small society and a small state. 427 Ibid, at 47. 150 and small cliques of business persons the use of litigation (even for strategic purposes) against business colleagues may be minimised in circumstances where the development of a hostile business environment will be perceived as an impediment to continuing close business relationships. Furthermore a "competition culture" which is important in creating a conducive environment for use of private enforcement requires time for development and is unlikely to be present with new regulatory regimes. It is important that the mixed enforcement regime in small states makes adequate provision for public enforcement through equipped institutions. 3.4.4 Regulatory Agency Design and Scope Small states are faced with considerable variety in the choice of the organisational structure for exercise of regulatory functions by public agencies. Regulatory roles may be carried out by central and local government departments as well as by stand-alone independent agencies, statutory corporations or through self-regulatory institutional arrangements.428 Agency independence has long been considered as the optimal organisational arrangement for 'depoliticisation' of regulatory functions and there is a wealth of theoretical and policy literature addressing this issue particularly for sectoral 428 See Anthony Ogus, "Comparing regulatory systems: institutions, processes and legal forms in industrialised countries" in Paul Cook et al eds., Leading Issues in Competition, Regulation and Development,(CRC series Edward Elgar, 2004) at 146 ["Ogus 2004"]; see generally on competition institutions William Kovacic & Decoursey Everseley, "An assessment of institutional machinery: Methods used in competition agencies and what worked for them" (ICN, 2007) Online: ICN http://www.internationalcompetitionnetwork.org/library .aspx?search=institutional&group=0&type=0&wor kshop=0, Accessed 11 January 2011; Michael J. Trebilcock & Edward M. Iacobucci "Designing Competition Law Institutions: Values, Structure, and Mandate" (2009 - 2010) 41 Loy.U. Chi. L.J. 455; "Gal 2010" supra note 409. 151 regulation.429 This model has also become "best practice" and is often a key ingredient of the law reform process in regulatory reform in developing states.430 This section does not address wider design issues or the pivotal issue of agency independence focusing instead on the impact of special small state scale characteristics on the scope of agencies involved in consumer market regulation. Proponents of institutional integration of consumer and competition law stress the market complementarities between the areas and additional benefits of integration such as the reduction of compliance costs for businesses 431 Functional institutional integration of consumer protection and competition enforcement is likely to be considered advantageous in small states which have a tendency towards multi-functional bureaucracies 432 In a recent review Jacinta Jordana and David Levi-Faur found that small states had a higher concentration of agency scope in sectoral regulation and "seem[ed] to be less selective about the spheres of regulation that are covered by the same regulatory institution."433 Specific important benefits of an integrated approach in small states would include achieving economies of scale in administrative and support services and human resource skills and thereby reducing the costs to the public purse. As small states do not enjoy economies of scale in the provision of public services there are higher costs per person 429 See Warwick Smith. Public Policy for the Private Sector. "Utility Regulators -The Independence Debate" World Bank Group 1997. 430 See World Bank, OECD & R.S, Khemani, A Framework for the Design and Implementation of Competition Law (World Bank, OECD, 1999). 431 "Vickers 2004", supra note 1. 432 Charles Farrugia, "The Special Working Environment of Senior Administrators in Small States" (1993) 21:2 World Development 221 discusses the multi-faceted nature of small state administrators. 433 Jacinta Jordana & David Levi Faur "Exploring Trends and Variations in Agency Scope" (2010) Jerusalem Papers in Regulation & Governance Working Paper No. 27 at 14. 152 for policy formulation and regulatory actions.434 Although the absolute cost of market regulation is less than in a large state the cost is high relative to the market size in the individual country and there is a higher per capita cost for agencies.435 An integrated agency should increase economies of scale and produce cost savings through shared costs for premises and administrative services. Small population size significantly affects the level of expertise available to regulatory institutions 436 Overall there is a smaller pool for personnel recruitment which may be exacerbated by political partisanship considerations and failure to use all qualified members of society 437 The emigration of skilled professionals can also affect the limited human resources.438 The small population size together with restrictions on salaries and remuneration means that recruitment and compensation of personnel with the requisite skills and experience is difficult 439 As similar economic and legal skills are utilised in competition and consumer investigations the pooling of professional skills can create economies of scale and lead to cross-fertilisation and a more professional ethos in 434 See E.A.G. Robinson "Size of Nation and Cost of Administration" in E.A.G Robinson , ed., Economic Consequences of the Size of Nations. (London: Macmillan & Co. Ltd, 1963) [Robinson 1963], at 239. Robinson concluded that economies of scale are on balance advantageous to a larger nation this is most significant in general administration but most significantly in the area of defence. 435 "Smith-Hillman 2007" supra note 418 at 127 discussion on position in developing countries. 436 See generally for a listing of the administrative problems associated with size Jake Jacobs "The Economic Development of Small Countries: Some Reflections of a Non-economist" in Kaminarides et al, supra note 224 at 87. 43 See Randall Baker ed. Public Administration in Small and Island States (West Hartford, Conn: Kumarian Press, 1992) at 137 discussing impact of political partisanship on the pool of talent used in public administration in small states. 438 Jean-Christophe Dumont & Georges LemaTtre "Counting Immigrants and Expatriates in OECD Countries: A New Perspective" (OECD 2005) DELSA/ELS A/WD/SEM (2005) 4 at 13 noting the level of brain drain in smaller countries. Online; OECD http://www.oecd.org/dataoecd/34/59/35043046.pdf (Accessed 10 March 2011) 439 See generally Andrew S. Downes & Avril Husbands "Human Resource Systems for Regulatory Institutions: An Imperative for the Caribbean", online: OOCUR http://www.oocur.org/Proceedings/Presentations/Downesl.pdf (Accessed 1 July2009). 153 an institution with a larger concentration of research and professional staff. Integration may also assist with the recruitment of skilled personnel as an integrated agency will provide a diversity of roles and confer greater influence of the organisation in the society. Another potential advantage of integration of consumer protection and competition enforcement is the likely impact of consolidation in reducing the level of corruption and capture in the regulatory framework. It has been asserted that the favourable conditions for corruption may be exacerbated in small developing states due to the "tyranny of demography" and the closeness of social ties and networks.440 As a response suggested strategies of institutional design to reduce the level of corruption include the creation of institutions with overlapping services and the use of committees rather than single decision-makers.441 This may also be viewed as a useful strategy to minimise the likelihood of political or regulatory capture of the agency and its officials as the broader base may increase the level of agency independence.442 The institutional integration of consumer and competition enforcement is likely to be beneficial in small states as a partial solution to economies of scale, limited financial and human regulatory capacity and the potential for corruption and capture. In contrast it must be acknowledged that the consolidation of enforcement within a single institution makes it more difficult to accommodate the different regulatory functions of competition 440 Arnold C. Harberger, "Policy making and economic policy in small developing countries", in R Dornbusch & F L C H Helmers, eds. The Open Economy: Tools for Policy Makers in Developing Countries, (Oxford University Press for the World Bank, New York, 1988) at 249. 441 "Ogus 2005" supra note 32 at 18 citing recommendation in R. Klitgaard, Controlling Corruption. (Berkeley CA: University of California Press., 1988). 442 Schwartz and Satola also note in relation to discussion of utility regulators that there is also an increased risk of industry and political capture of the entire multi-sector agency rather than the single sectoral agency in Tim Schwartz &David Satola, "Telecommunications Legislation in Transitional and Developing Economies", World Bank Technical Paper No. 489. (Washington DC: World Bank Group, 2000) at 31 to 33. 154 and consumer law enforcement. These differences are reflected in the necessity of greater bureaucratic involvement and control in a system that is designed for example to protect consumer safety.443 Consumer and competition regulation also have different requirements for redress and enforcement. Another difficulty may arise with respect to funding issues and the possibility of cross-subsidisation between services. However despite these difficulties there is a convincing argument that the context for regulatory governance in small states suggests that that baseline for the appropriate institutional model is an integrated regulatory agency. Conclusion This Chapter has posited reasons for a differential approach to small state regulation of consumer markets. The chapter has attempted to show that size is an important determinant in the goals, rationales and substantive content of consumer and competition laws as well as in the enforcement priorities and organisational structure of the regulator. Although the differences posed by the level of size and development are not fully resolved they can clearly be expected to impact on the manner in which consumer and competition law interact in the reality of the regulatory environment. Tailoring of laws for size is complex reflected in the balancing of costs, capacity of institutions and the difficulties of broadening the base from economic efficiency. 443 "Whitman 2006" supra note 185 155 A major difficulty with the interface in small developing states is that the policies are envisioned as instruments of economic policy and accordingly premised on economic efficiency and primacy of the market. However consumer policy and to a lesser extent competition policy are also social policy and a focus on interplay on consumer choice and efficiency can lead to insufficient attention being paid to basic consumer issues such as access to and safety of goods and services. It is important to stress that consumer choice and sovereignty, although important, are not always of central relevance for small jurisdictions. The following 4 chapters of the dissertation seek to move beyond a discussion of what "should" be in small states to examine "what is" in small states through a case study of actual experience in a small jurisdiction. Chapters 4 and 5 explore the policy story behind the introduction of fair competition legislation in Jamaica and examine the efficacy of the integrated consumer and competition enforcement of the Jamaican Fair Trading Commission. The study of the interplay also provides an opportunity for an exploration of the institutional evolution of the regulatory agency. Chapter 6 explores the approach of the Commission to the promotion of consumer interests. This is followed in Chapter 7 by a study of the interaction between the Fair Trading Commission and Consumer Affairs Commission and the impact of the implementation of the Consumer Affairs Act of 2005 on the efficacy of institutional enforcement. 156 CHAPTER 4 to foster, create and enhance an institutional framework which seeks to transform the country to a market-driven export-led economy -Green Paper on Fair Competition, Jamaica (1991) TRANSFORMING TO A MARKET-DRIVEN ECONOMY: DEVELOPMENT OF THE LEGAL FRAMEWORK FOR REGULATION OF CONSUMER MARKETS IN JAMAICA Regulation of consumer markets in small states is affected by distinctive political, economic and social characteristics including their colonial legacy, pervasiveness of government, lack of economic scale, concentrated markets and the level of close knit social relationships. The analysis and examination of the regulatory scheme in the Jamaica case study attempts to explore this in the context of consumer and competition law and provide insights into the practical interplay of two instruments of market regulation. The first section of this Chapter places the case study in context and introduces the political institutions, legal framework and socio-economic conditions that have a direct impact on the formulation and implementation of competition and consumer protection policy. The Chapter then provides a historical narrative on the development of consumer markets and rationales for intervention. This is followed by an analysis of the proposals for the new competition law and the policy process for the passage of the bill. 157 4.1. Politics, law and economic development in a small developing state - Jamaica in context As defined earlier in the dissertation small states are those states with populations of less than 3 million that are developmentally challenged and fall below the minimum size needed to operate a full set of regulatory policies and institutions.444 In this context Jamaica is a large small state. It is an island situated at the northernmost end of the Caribbean Sea with a population of approximately 2.7 million and a surface area of approximately 10,990 sq km.445 Martin Minogue and Paul Cook have suggested optimum conditions for "best practice" model regulation in developing states as • a stable macroeconomic environment, to reduce uncertainty in economic decision making* a redistributive tax base, to fund strong social protection arrangements through a well developed social security system;* a rules based system supported by an effective legal infrastructure and the rule of law;* a transparent and accountable public policy process;* a clear separation of administrative and political roles within a democratic constitutional framework;* appropriate financial and human resources to ensure that regulatory agencies can work effectively.446 Although "best practice" models may not always be suitable for small states it is interesting to note that on the face of it several of the political and legal arrangements in Jamaica do meet these criteria. The constitutional framework enshrines protection of private property rights; there are publicly available and transparent laws, an independent judiciary and separation of political and administrative roles within constitutionally 444 See section 3.1.2 of the dissertation at pages 88-89. 445 World Bank, World Development Indicators Database (2008) cites population of 2,687,200 for Jamaica in contrast with 49,190 for St Kitts and Nevis. World Bank: online, http://data.worldbank.org/data- catalog.Accessed 10 January 2011. 446 "Minogue & Cook 2003" supra note 196. 158 protected democracy. However commitment to the "rule of law" has been widely questioned as reflected in the World Bank rankings.447 Furthermore the stability of the macro-economic climate has varied cyclically over time and significant issues arise with limited regulatory capacity and resourcing of institutions. 4.1.1 Political institutions and process From 1944 Jamaica gradually moved towards independence in 1962 through "constitutional decolonisation" and greater self-government.448 The island is a constitutional parliamentary democracy with a system derived from the traditional Westminster model 449 The Westminster model generally encompasses three arms of State: the Executive, the Legislature (Parliament) and the Judiciary; the notion of separation of powers; and a ceremonial Head of State with effective de facto executive power vested in the Cabinet. The major distinguishing features of the Jamaican model from the traditional Westminster model are a written constitution and the inclusion of 447 In 2008 Jamaica's percentile rank was 39. Higher values on the index indicate better governance ratings as the percentile ranks indicate the percentage of countries worldwide that rate below the selected country. See World Bank Governance Indicators Database, Online: World Bank: http://info.worldbank.org/goveraance/wgi/sc_chart.asp (Accessed 12 February 2011). These indicators reflect the procedural conception of the rule of law. See in Daniel Kaufman, Aart Kraay & Massimo Mastruzzi "The Worldwide Governance Indicators: Methodology and Analytical Issues" (September 2010) who define rule of law at p. 3 as the ability to "have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence." 448 See further for treatment of final period of British colonial rule the account in Trevor Munroe, The Politics of Decolonization: Jamaica, 1944-1962 (Jamaica: University of the West Indies Institute of Social and Economic Research, 1972). A key date in the transition was November 20,1944 and the proclamation of a new Constitution and representative government with the introduction of universal adult suffrage. 449 The Constitution of Jamaica, being the Second Schedule of The Jamaica (Constitution) Order in Council 1962, (U.K.) [Constitution of Jamaica], 159 fundamental rights in the constitution.450 The constitution also enshrines protection of property rights, a factor considered important in economic growth and prosperity by proponents of the legal origin thesis.451 The Constitution of Jamaica was developed locally utilising the existing historical constitutional framework 452 Pursuant to the Constitution, the Head of State, Queen Elizabeth II appoints a Governor General, as her representative in the island, on the advice of the Prime Minister. The Governor General's duties are largely formal and ceremonial. Executive power is vested in the Cabinet, led by the Prime Minister 453 The Prime Minister and the Cabinet are selected from the Parliament454 Legislative authority is vested in a bicameral Parliament composed of an elected House of Representatives with sixty members and an appointed Senate with twenty-one members 455 The members of the House of Representatives are usually elected in general elections which must be held within five years of the forming of a new government456 However the Prime Minister may ask the Governor General to dissolve Parliament and call elections sooner. The leader of the minority party is generally appointed as Leader of 450 Margaret Demerieux, Fundamental Rights in Commonwealth Caribbean Constitutions (Faculty of Law Library, University of the West Indies, 1992) at 3. 451 Constitution of Jamaica, s. 18. 452 Lloyd F. Barnett, The Constitutional Law of Jamaica (Oxford: Oxford University Press, 1977) [Barnett 1977] at 24. 453 Constitution of Jamaica ss. 69 & 70. 454 No more than four members of the Cabinet must be selected from the upper house, the Senate. The Prime Minister must be a member of the House of Representatives and is the person who in the opinion of the Governor General is the person best able to command the confidence and support of the majority of the members of the House. The Governor General also appoints the Ministers on the advice of the Prime Minister. 455 Constitution of Jamaica ,ss.35 & 67(1). 456 Constitution of Jamaica, s.64(2). 160 the Opposition by the Governor General. The House of Representatives has the primary legislative role in contrast to the reviewing role of the Senate.457 In the post-independence period Jamaica has traditionally been a two party country. The "first past the post" system is used to determine the party that secures the majority of the seats. The two main parties that have contested general elections are the Jamaica Labour Party (JLP) and the Peoples National Party (PNP).458 The transitions between government have always been conducted constitutionally within electoral cycles although during the 1990s there were marred by violence. Patronage, "patron-clientele" and "tribal politics" is a striking feature of the Jamaican political landscape.459 Carl Stone has charted the development of "garrison communities" where armed gangs governed by a "Don" vote en bloc for one party at elections 460 More recently it has been noted that these gangs are becoming more autonomous gangs with less dependence on party political structures 461 The impact of party loyalties affects governance in several ways and the award of contracts and special consultancy services to government is often seen as influenced by party affiliation. 457 In addition to central government Jamaica also has a system of local government. 458 There have been twenty-four political parties over the course of Jamaica's history but the majority of these are presently inactive. 459 See Carlene Edie, "Jamaica: Clientelism, Dependency and Democratic Stability" in Democracy in the Caribbean: Myths and /?ea/me.s(Praeger:Westport,1994) at 25. 460 Carl Stone, Democracy and Clientelism in Jamaica (New Brunswick: Transaction Books, 1980). 461 Brian Meeks, Envisioning Caribbean Futures: Jamaican Perspectives (Jamaica: University of the West Indies Press, 2007) at 70. 161 4.1.2 Legal system and institutions In line with the colonial legacy of most countries in the Commonwealth Caribbean Jamaica's legal system is based on the common law legal tradition.462 The legal system is therefore characterised by a reliance on precedent, a combination of judge-made and statutory law, the use of equitable principles and the strong influence of English common law. A hierarchical level of courts of original and appellate jurisdiction is established under the Constitution of Jamaica and various other statutes. The final court of appeal is the Judicial Committee of the Privy Council (Privy Council) which hears appeals from the Court of Appeal of Jamaica. Procedural attempts by the Government of Jamaica to abolish appeals to the Privy Council and substitute a right of final appeal to the Caribbean Court of Justice (CCJ), without the support of the Opposition, were ruled unconstitutional by the Privy Council.463 The Court of Appeal of Jamaica is constituted by a President and six Judges of Appeal.464 The President of the Court of Appeal is generally responsible for the arrangement of work of the court and presides whenever sitting.465 The middle tier of the court system is the Supreme Court headed by a Chief Justice. The court consists of a 462 Jamaica was a settler colony see D Morrison "The Reception of Law in Jamaica (1979) 2 W.I.L.J. 43 discussing the application of Rose and Others v. Chung and others (1978) 27 W.I.R. 211 on the date of reception of English law in Jamaica. 463 Independent Jamaica Council for Human Rights (1998) Limited and Others Appellants v. Hon. Syringa Marshall-Burnett and The Attorney General of Jamaica Respondents [2005] 2 A.C. 356. 464 Constitution of Jamaica, s. 103(1),(2). 465 For general information on the court system in Jamaica see Supreme Court of Jamaica. "Annual Court Report 2003 - 2004", Jamaica Supreme Court: online www.moj.gov.jm/pdf/2003_2004_court_report.pdf Accessed 11 January 2011 162 senior puisne judge and such other puisne judges as may be prescribed.466 The appointment of 16 additional judges was allowed by the recent amendments to the Judicature (Supreme Court) Act.467 The Supreme Court has unlimited jurisdiction in civil and criminal matters. It sits in its criminal jurisdiction as the Circuit Court with sittings in all parishes across Jamaica and a Home Circuit Court in the capital city Kingston. In its civil jurisdiction, as the Supreme Court, it sits in Kingston. The Supreme Court is divided into divisions of Criminal (including the Gun Court), Revenue, Bankruptcy, Civil, Commercial, Family and Probate.468 All commercial matters are heard by judges appointed to this role by the Chief Justice. The Inferior Courts in Jamaica are comprised of the Resident Magistrates Courts and Petty Session Courts in each parish 469 The Resident Magistrates Courts have limited civil and criminal jurisdiction covering indictable offences and jury trials. The divisions of the Resident Magistrate's Court are the Family Court, the Juvenile Court, the Traffic Court, Gun Court, Small Claims Court, the Drug Court and the Night Court.470 The Petty Session Court which is comprised of three justices of the peace appointed under the Justices of the Peace Jurisdiction Act addresses matters such as bail and issues of legal process 471 These courts also exercise some administrative functions such as spirits 466 Constitution of Jamaica, s. 97(1) and (2). 467 Amendments made in 2009 to the Judicature (Supreme Court) Act, Cap. 180. 468 The Revenue Court was established in 1972 pursuant to the Judicature (Revenue Court) Act 1972; the Gun Court was established in 1974 pursuant to the Gun Court Act and later expanded to cover the Western Regional Gun Court in 1999. The Commercial Court began operations in 2001. 469 See the Judicature (Resident Magistrates Law) Cap 179. 470 See the Judicature (Family Court) Act 1975. 471 Justices of the Peace Jurisdiction Act Cap 188; also see Barnett 1977 supra note 434 at 302 to 304. 163 licensing. In addition to the inferior and superior courts there are some specialist 479 tribunals such as the Industrial Disputes Tribunal. Enforcement of decisions of the Fair Trading Commission, the imposition of pecuniary penalties and requests for injunctive relief under the Fair Competition Act come before the Superior Courts of Record.473 Appeals from decisions of the FTC are heard before a Judge in Chambers.474 However criminal proceedings for procedural offences under the Fair Competition Act such as failure to attend and give evidence, obstruction of investigations and destruction of records go before the Residents Magistrates Court475 The judicial system is independent and relatively free of controversy over the independence and impartiality of the judges. Members of the judiciary (Court of Appeal and Supreme Court) have security of tenure and are constitutionally protected from arbitrary dismissal and reductions in their salaries and emoluments. However the judicial system is adversely affected by delays in the judicial process which were recognised by the Jamaica Justice Reform Project as an impediment to justice 476 Rosemarie Antoine in noting the myriad issues with the justice system in the small island states of the Caribbean has attributed these to lack of resources and "the impact of underdevelopment."477 472 Labour Relations and Industrial Disputes Act, 1975 473 Fair Competition Act, ss 46 & 47. 474 Fair Competition Act, s. 49 475 Amendments to sections 42,43,44 and 45 by virtue of Fair Competition (Amendment) Act, 2001(No. 22 of 2001) replaced the jurisdiction of the Circuit Court and substituted the Resident Magistrate's Court. 476Jamaican Justice System Reform Task Force "Final Report" (2007) at 9 Jamaica Justice Reform Project: online http://www.cba.org/jamaicanjustice/pdf/jjsrtf_report_final.pdf .Accessed 11 January 2011. 477 Antoine 2008 supra note 44 at 304. 164 4.13 Socio-economic conditions The post-colonial economic history of Jamaica has been characterised by uneven AH ft growth and turbulent economic challenges and vulnerabilities. Jamaica is a small open export-oriented developing economy with a gross domestic product (GDP) of approximately US$14.61 billion.479 It is presently classified as a upper middle-income developing country by the World Bank having been upgraded in 2009.480 Over 1995 to 2002 agriculture accounted for 7.5% of GDP, industry for 32.7% and services for 59.9% 481 Foreign exchange comes primarily from tourism, bauxite/alumina and remittances 482 Other key industries are garment assembly, processed foods, rum, cement, metal and chemical products. Agricultural products include sugar, bananas, coffee, citrus fruits and allspice. Economic conditions in the island deteriorated during the international recession in the 1970s with negative rates of growth between 1974 and 1980 coupled with high inflation 483 Jamaica is dependent on a few major trading partners and the erosion of the preferential trading privileges with European markets for key commodities also impacted on the ability of Jamaica along with other small developing 478 For a comprehensive discussion see Carl Stone & Stainslaw Wellisz, "Jamaica" in Ronald Findlay & Stainslaw Wellisz eds. The Political Economy of Poverty, Equity and Growth: Five Small Open Economies (World Bank/Oxford University Press, 1993) [Stone & Wellisz 1993]. 479 World Bank; World Development Indicators Database (2008) in current US$. 480The Word Bank. Data. Jamaica. Online: World Bank http://data.worldbank.org/country/jamaica (Accessed 10 April 2011). 481 World Bank, The Road to Sustained Growth in Jamaica (World Bank: Washington D.C., 2004). 482 WTO Trade Policy Review - Report by the Secretariat - Jamaica 2010. (WT/TPR/S/242 7 December 2010) Online: WTO http://www.wto.org/english/tratop_e/tpr_e/tp342_e.htm (Accessed 10 April 2011) [WTO Trade Policy Review 2010]. 48 Andrew S. Downes, "Developing competitiveness in Jamaica Economy" IDB Economic and Sector Study Series Jamaica RE3-03-002(Washington DC:IDB, 2003) ch.2 at 4. 165 states, to prosper in the international economic order.484 Increases in inflation in the 1990s preceded a period of financial crisis with the collapse of several financial institutions. International institutions have played a considerable role in the fashioning of economic policy in the island. Economic stabilisation and structural adjustment processes with the International Monetary Fund (IMF) and the World Bank impacted significantly on the economic and regulatory policies adopted in the island. Between 1977 and 1990 Jamaica signed eight agreements with the IMF and six agreements with the World Bank and returned to the IMF in 2010 when it agreed a significant loan with the Fund 485 US AID loan programmes also supported the programmes of the IMF and World Bank in a "tripartite" approach to the adjustment process. A loan agreement was also signed with the Inter-American Development Bank (IDB) in 1991 to assist with financial liberalisation.486 In addition to economic challenges the island's environmental vulnerabilities have been exposed through the impact of frequent tropical storms and hurricanes 487 484 For example see the "Partnership Agreement between the members of the African, Caribbean and Pacific Group of States of the one part and the European Community and its Member States of the other part" (Signed on 23 June 2000 in Cotonou) ("The Cotonou agreement"). 485 See Stone & Wellisz 1993, supra note 478; also see Jamaica: History of Lending Arrangements from May 01,1084 to February 28,2011 .Online: IMF https://www.imf .org/external/np/fin/tad/extarr2.aspx?memberKey 1=510&datelkey=2011-02-28 (Accessed 10 April 2011); IMF Press Release No. 10/24 (February 4,2010), online:. http://www .imf .org/external/np/sec/pr/2010/pr1024.htm. 486 Michael Witter, "Trade Liberalisation - The Jamaica Experience" (2003) http://192.91.247.38/tab/events/namastudy/fullreport-versionl4nov-p202-231 .pdf (Accessed 7 September 2011)[ 487 Some of the major hurricanes that affected Jamaica in the twentieth century were Hurricane Allan in 1980, Hurricane Gilbert in 1988, Hurricane Ivan in 2004, Hurricane Emily in 2005 and Hurricane Dean in 2007. 166 Jamaica's relative level of development can be assessed by its ranking on the World Bank's human development index (HDI). This index has been used to measure development by combining indicators of life expectancy, educational attainment and per capita income into a composite index that provides a general comparative guide to the level of overall development.488 The HDI for Jamaica in the 2009 report categorised the country in the medium human development class ranking it as 100 out of 182 countries.489 Despite declines in the absolute measures of poverty, there is evidence that income inequality in Jamaica has continued to grow 490 Poverty is highly concentrated in rural areas of the country and areas with a high level of poverty are characterised by large households with high unemployment and limited access to health service, educational facilities and infrastructure and basic services 491 There are also persistently high levels of crime and violence particularly within certain enclaves.492 These socio-economic country conditions provide the context for consumerism and the operation of competition and consumer policy in the island. 488 The population of Jamaica has a life expectancy of 70.8 years and the literacy rate is 79.9%. 489 HDI categories are very high, high, medium and low, See Online. UNDP .HDI Fact Sheet on Human Development Report 2009. http://hdrstats.undp.org/en/countries/country_fact_sheets/cty_fs_JAM.html Accessed 10 January .2010 , note levels of income inequality not measured in the HDI. 49°); See discussion of income inequality in IDB. "Informal Sector in Jamaica" ( RE3-06-010. IDB Economic and Sector Study Series. December 2006). 491 PIOJ, "The poverty-environment nexus: establishing an approach for determining special development areas in Jamaica (PIOJ: Jamaica, 2007) at 5; also note that PIOJ statistics indicate percent of population below the poverty line declined from 35.2% in 1992 to 14.8% in 2005. 492 World Bank Development Progress Report October 2008 cited in in Taimoon Stewart "Competition Policy and the Informal Sector" OECD Global Forum on Competition DAF/COMP/GF/WD(2009)42 Unclassified. (Accessed 10 26 September 2011)" supra note 1. 167 4.2 Historical overview of the legal regulation and structure of the Jamaican consumer market (1800 -1990) The legacy of colonisation has been an important influence on the development of modern consumer markets and the concomitant regulatory framework.493 The British conquest of Jamaica in 1655 was followed by the establishment of a plantation system based on slave labour cultivating sugar and other agricultural products.494 This was facilitated by the forced movement and enslavement of African peoples to Jamaica 495 The intensive labour needs for the economy were also met by indentured servants from China and India. The impact of this historical inequality in the social structure is still evident in the modern marketplace with the dominance of descendants from minority elites in the ownership and control of major economic enterprises. This section charts the evolution of markets in Jamaica from agrarian based transactions involving simple goods such as fruit and vegetables to the marketing and sale of complex products in a global environment. The evidence points to mixed and changing rationales for market regulation which prioritised inequity and social control of slave and freed persons, social justice concerns and market failure at different periods in the country's history. 493 George L. Beckford, Persistent Poverty: Underdevelopment in Plantation Economies in the Third World (New York: Oxford University Press, 1972) Beckfordian political economy stresses the influence of the plantation on the distinctiveness of these economies. He notes that the plantation has been the dominant economic, social and political institution concluding "It has fashioned the whole environment which the people of these countries have inherited" at 36 infra. 494 Jamaica was also a colony under Spanish rule from 1506 until that country relinquished its claim in 1670 after British settlement of the colony. 495 Indigenous population of Tainos and Arawaks was decimated but not extinguished during English colonial rule. 168 4.2.1 Early colonial mechanisms of market control A dual formal and informal market system existed in Jamaica from the early colonial period. The formal market, was dominated by the white community, and met the needs of the plantocracy. This co-existed with the informal markets catered to by black slave and free "higglers" (itinerant tradespeople) and used by members of the lower socio-economic classes.496 The formal market also provided a wholesaling function to the informal traders. The significant informal sector which has continued to thrive is an important factor in the business landscape of the island and makes accurate measurement of some markets difficult.497 The informal marketing systems developed in the island despite the status of slaves as property. Early markets developed on large plantations and at road junctions where higglers sold agricultural produce and functional crafted items. These higglers, who were primarily women, travelled significant distances to market providing links between urban and rural areas. In addition to the itinerant trade there was a mix of permanent informal roadside markets and Government owned markets in urban areas 498 The urban markets started in the early colonial period and by the mid century, 1820s and 1830s, were an essential part of the economic landscape in which slave and free blacks 496 Lorna Elaine Simmonds, "The Afro-Jamaican and the Internal Marketing System" in Kathleen E.A. Monteith& Glen Richards eds. Jamaica in Slavery and Freedom: History, Heritage and Culture (Jamaica: University of the West Indies Press, 2002) ["Simmonds 2002"] at 277 497 See studies on informal marketing including V. Tokman & E. Klein "Informal Sector and Regulations in Ecuador and Jamaica" (1993) Technical Paper No.86, OECD Development Centre; M. Witter M & C. Kirton "The Informal Economy in Jamaica, Some Empirical Exercises"(1990) WP36, Institute of Social and Economic Research, University of the West Indies. 498 See Margaret Katzin 'The Jamaica Country Higgler" (1959) 8:4 Soc. & Econ. Stud. 428 at 429 cited in Melvin Edwards, Jamaican Higglers: Their Significance and Potential (University College of Swansea, Centre for Development Studies, 1979) Monograph No 7 [Edwards 1979] at 32 169 played a vital role. Provisions such as fresh and salted meat and fish, ground provisions, and dry goods were sold at market. These transactions in the nineteenth century would have posed fewer informational problems than modern transactions due to the simplicity of the products and repeat transactions and familiarity in relationships between the supplier and consumer. Early legal regulation of the marketplace was primarily used to limit the trading of the slave and freed higglers and bring them within a formal framework. These laws formed part of the matrix of law used for control in a slave society. As Rose Marie Antoine finds The initiation of law into Caribbean society was within a colonial, imperialist and inequitable framework, as a tool to legitimise the exploitative nature of plantation society.499 Against this overall background some of the specific regulatory measures included restricting the trading hours and days of markets and imposing burdensome licence requirements.500 These measures were accompanied by restrictions on the mobility of slaves in an attempt to limit their entrepreneurial economy.501 Attempts were also made to link their marketing to criminal activities such as handling stolen goods. Despite these legal restrictions the activities of the freed and slave blacks remained a significant influence on the markets.502 The use of law as a mechanism of social control of former slaves continued after full Emancipation in 1838. The introduction of vagrancy legislation was a particularly 499 Antoine 2008, supra note 44 at 18. 500 Statutory requirements were made largely in the Hawkers and Peddlars Act, 1867 Cap. 146\ also see "Simmonds 2002" supra note 474 at 289 discussing the Kingston Common council debate in 1830 for an increase in the licence fee from £2.13 s to £16 to protect the formal trader . 501 See "Simmonds 2002" supra note 496 at 285. 502 Ibid, at 286. 170 CA-5 pernicious attempt to perpetuate social control of freed persons. However the use of subsistence agriculture to break the entrenched and enforced links with the plantation did lead to a diversification of the economy and an increased number of higglers who continued to provide a link between rural and urban areas and as posited by Melvin Edwards linked the "peasant" economy with the "modern" economy.504 However the race segregation established under slavery and divisions on basis of ethnicity and gender have continued to be important characteristics of the business sector. Studies have noted that in addition to the predominance of black women in higglering, Chinese ex-indentured servants tended to enter the distributive retail trade and "Syrians" and Indians were the primary ethnic groups in trade.505 422 Trade policies and price controls Legislation introduced in Jamaica in the late nineteenth century established a basic framework for control of commercial transactions based on classic British precedents. This included a Sale of Goods Act enacted in 1895 based on the British legislation of 1893. The sale of goods legislation represented a fundamental departure from caveat emptor principles by introducing fairness elements in contract through implied terms on quality, fitness for purpose, correspondence with description and title. 5(13 See further Antoine 2008, supra note 44 at 21 to 24. 504 Edwards 1979 supra note 498 at 2. 505 Ibid, at 15; Winnifred R. Browne-Glaude "Spreading like a Disease?: Afro Jamaican Higglers and the Dynamics of Race/Color, Glass and Gender" in Daniel Thomas Cook ed., Lived Experiences of Public Consumption Encounters with Value in Marketplaces on Five Continents (London: Palgrave McMillan, 2008)["Browne-Glaude 2008"] at 116. 171 This statute was a replication of the British statute and although it appears that consumer protection reform was not a primary concern, copies of British laws prohibiting adulteration of foods and facilitating accurate measurements of products were also enacted post independence.506 Consumerism developed as the Jamaican economy industrialised in the decades following the Second World War. Increases in incomes, the availability of hire purchase and a growing credit society contributed to the development of a modern consumerist society in the island.507 Mass production and mass marketing of goods changed the nature of market transactions in a similar fashion to large jurisdictions leading to inequality of bargaining power between suppliers and consumers.508 Consumer issues are compounded in states such as Jamaica that are reliant on imports for consumer goods. Import reliance is problematic from a consumer protection perspective as governments in small states have little or no control over the standards observed by manufacturers of consumer goods. Sub-standard goods may also be encouraged to aid affordability.509 Additionally from the 1970s it was increasingly the modern higglers or informal commercial operators in the informal market who specialised in importing foreign products and clothing complicating the legal redress and enforcement issues.510 506 Weights and Measures Act 1976, Food and Drugs Act,1964. 507 Different financing systems existed for groups in society. The use of the partner system for saving and credit was supplemented by the entry of traditional banks after the abolition of slavery. Jamaican particularly Kingston moneylenders traditionally provided credit for the planter classes. See discussion in Trevor Burnard, "The Grand Mart of the Island: The Economic Function of Kingston, Jamaica in the Mid- Eighteenth Century" in Kathleen E. A. Moteith & Glen Richards eds. Jamaica in Slavery and Freedom: History, Heritage and Culture (Jamaica: University of the West Indies Press, 2002) at 237. 508 "Burgess 2001" supra note 15; Caribbean Law Institute, Consumer Law Advisory Committee Report. (Caribbean Law Institute, 1993) [CL1 Report 1993] at 7. 509 CLl Report 1993 ibid, at 33. 510 "Browne-Glaude 2008" supra note 505 at 133. 172 The Colonial Government played an active role in protection of the domestic market and domestic producers through trade policies. This was reflected in the imposition of protective tariffs and licensing restrictions in the 1920s and 1930s and the creation of legal monopolies and statutory commodity boards in the 1940s and 1950s to regulate the agricultural sectors.511 Important government trading monopolies included the Jamaica Commodity Trading Company and the Agricultural Marketing Corporation. The commodity boards encouraged a monopolistic structure and exercised regulatory functions of price control and licensing over a swathe of agricultural sectors such as coconut, bananas, rice and cocoa.512 These market interventions were made within the overall context of the Commonwealth system of imperial preferences with the British Empire which started in 1932 and declined after the end of the Second World War in 1945.513 Price controls were the primary tool of consumer protection regulation in the island. Although this approach was probably a response to issues of scarcity and price increases after the end of the Second World War the introduction of price control by countries was not unusual during this historical period.514 State price control and contractual price maintenance were commonly used in European countries such as France 511 See further on this Georgina Waylen, Colonial Policy towards industrialisation between the wars: the case of Jamaica ( Manchester Papers in Politics, Department of Government, Victoria University of Manchester, 1987) for a discussion of the 1927 Act (Law No. 29) on import tariffs and the 1933 Act safeguarding local interests. Even at this time discussions on the Act revealed differences over a policy of fettering competition and its possible impact on the consumer through price increases. 512 See Coconut Industry Control Act 1945, Banana Board Act 1953, Rice Industry Board Act 1956 and Cocoa Industry Board Act 1957. 513 See discussion in D.K. Fieldhouse "The Metropolitan Economics of Empire" in Judith M. Brown & Wm. Roger Louis eds. The Oxford History of the British Empire Volume IV: The Twentieth Century (Oxford: Oxford University Press, 1999) at 88. 514 Food and Control Distribution Department in Jamaica as established during World War II. 173 and Germany.515 Price control for distributional purposes in ordinary competitive markets is generally seen by economists as an ineffective measure of market control.516 The well rehearsed arguments are that they distort the allocation of resources and cause shortages of goods, quality deterioration and a black market for goods leading to price increases and inhibiting price reductions.517 A culture of price controls is believed to be likely to contribute to a dampening of a competitive culture and a protectionist attitude by firms. On the other hand price controls are attractive to policymakers seeking to protect poorer consumers through the control of prices on essential items and provide a measure of redistribution particularly in societies with extreme disparities in wealth. The enactment of the Trade Act in 1951 led to the imposition of price controls on numerous goods in the Jamaican market. The law allowed the government to fix the price of imported manufactured goods or the percentage margins to be used by wholesalers and retailers. For example the allowed mark-up in the pharmaceutical industry in the 1960s CIO and 1970s was 10% for importers and 25% for pharmacists. This scheme was regulated by a Prices Commission established by amendments to the Trade Act in 1970 which commenced operations on January 6,1971.519 Its core role was the enforcement of price control legislation through setting the price at which certain listed goods were 515 See further Reinhold P. Wolff, "Foreign Experience with Retail Price Controls" (1940) 5:2 J. Marketing 143. 516 See Clive S. Gray & Anthony A. Davis, "Competition policy in Developing Countries pursuing structural adjustment" (1993) 38 Antitrust Bulletin 425 at 434; Forrest Capie & Geoffrey Wood. "Price Controls in War and Peace: A Marshallian Conclusion." (2002) 49 Scott. J. Pol. Econ. 39. Contrast this with the classic views in favour of price control in John Kenneth Galbraith, A Theory of Price Control. (Cambridge: Harvard University Press, 1952). 5l7See Ogus 1994 supra note 67 at 295 to 317. 518 Cezley I. Sampson , "Economic Competition and Restrictive Business Practices: The Development of Jamaican Competition Policy" (UNCTAD, ITD/12, 1985) ["Sampson 1995"]. 519 This was under the leadership of the Hon. Robert Lightbourne who had also been responsible for encouraging the formation of a national consumer group. 174 sold. Price orders signed by the Minister were gazetted and monitoring of these price points was undertaken by the Commission, This role together with the conduct of surveys was supplemented by investigations into hoarding and "marrying" of goods.520 Rationing and tie-ins of goods by retailers are a common response to price controlled items in the market and through the Prices Commission the Government established an administrative system to address this issue. The era of primacy of price controls in the 1970s was consistent with the prevailing political philosophy. Equitable ideals and social justice concerns were paramount during the period of "democratic socialism" embarked on by the People's National Party (PNP). During their first term from 1972 to 1976 the government displayed a concern with distributional issues in society. The goals of the PNP were to create an economy that was less reliant on foreign controls, develop an egalitarian society, a more democratic society and accelerate the process by which Jamaicans could "recognize their history."521 Other policies introduced during this period included rural health schemes, food subsidies, free education, national minimum wage and rent controls.522 Foreign-owned utility companies were nationalised. The political background to price control suggests they were envisaged as a means of protection of the poorer and more vulnerable members of society. 520 "Marrying" which is akin to tied selling is refusal to sell a particular good without purchase of another good which "by their nature and commercial purposes are separate and unrelated " as detailed in "Consumers Guide to Post Hurricane Ivan" Published in the star October 5, 2004. CAC:online:http://www.consumeraffairsjamaica.gov,jm/hurricaneGuide_edge.htm (Accessed 10 January 2010). 521 Michael Manley, The Poverty of Nations: Reflections on Underdevelopment and the World Economy (London: Pluto Press, 1991) at 83. 522 For background on this area see further Anthony Payne, "The 'new' Manley and the New Political Economy of Jamaica" (1992) 13:3 Third World Quart. 463 ["Payne 1992"]. 175 A change of government to the Jamaica Labour Party (JLP) in the 1980s led to a reduced role for the State and a greater reliance on market-oriented policies. These market led strategies were also as a result of international influences and structural adjustments programmes. The level of price controls was reduced and greater emphasis placed on the role of the market in setting competitive prices. This was reflected in the reduction of items under price control. Although there were 60 items under price control in 1980 this had been reduced to less than 10 at the end of 1985.523 The number of controlled items was gradually reduced until February 1990 when the only items remaining were petrol, brown sugar, liquid petroleum gas, motor vehicles and motor vehicle parts.524 The new market-orientation was also reflected in the reduction of the overall levels of tariffs, the removal of import licensing and quota requirements on most items and the abolition of the import monopoly of the Jamaica Commodity Trading Company in 1991. 423 Concentrated market structure The combination of government policies, the small market size and the consequential lack of minimum economic scale led to heavily concentrated markets in Jamaica. A monopoly structure was entrenched in the Jamaican public utility sector for the provision of electricity, water and telecommunication services. The establishment of 523 "History of the Consumer Affairs Commission", online: Consumer Affairs Commission. http://www.consumeraffairsjamaica.gov.jm/cac_history.pdf (Accessed 10 January 2011) 524 Ibid. 176 commodities boards, the use of restrictive licensing techniques such as capacity licensing and the industrial incentive schemes also contributed to the monopolistic and oligopolistic structure.525 These policies, which were part of import substitution policies intended to replace imported items with domestically produced goods, led to an environment in which businesses were used to protection and were not focused on developing competitiveness. Anti-competitive behaviour and agreements were aided by the preponderance of trade associations in the distributive trades such as the Block Makers Association, the Pharmaceutical Association, the Bakers Association, the Hardware Association and the Gasolene Retailers Association.526 Market power was consolidated in a small business class and reflected the racial legacies of slavery and colonisation. In a ground-breaking article in 1980 Professor Stanley Reid demonstrated the wide ranging and significant monistic relationships between the elite groups that dominated the political economy of the post colonial territory. Reid found that concentration of economic power and control in Jamaica lay in the hands of minority elites and was mainly dispersed through 21 families and their interest groups. A later study in 1993 reached similar conclusions noting that the Jamaican business community was characterised by a concentration of wealth, corporate power and institutional influence among a small group of extended families and associates who "enjoyed privileged access to the Jamaican state apparatus."528 525 "Sampson 1995" supra note 518 at 5. 526 Ibid, at 7. 527 Stanley Reid, "Economic Elites in Jamaica: A Study in Monistic Relationship" (1980) 22:1 Anthropologica 25. 528 William J Biddle, Business elites, the state and development: Jamaica in comparative perspective (PhD. Thesis, Brown University 1993) [unpublished]. 177 4.2.4 Impact of the consumer movement As the consumer market developed a consumer movement grew out of the experiences of women and their difficulties in the domestic market. The National Consumers League (NCL) was established in 1966 out of the St Andrews Housewives Association. The pressure group was created after encouragement from the Minister of Trade and Industry the Hon Robert Lightbourne. The work of the association was carried out on a voluntary basis prioritising campaigns on staples and prices. Although the NCL has a long history of consumer advocacy and is the oldest consumer non-governmental organisational in the Caribbean it has had mixed success in c^n consumer advocacy in Jamaica. Several factors are likely to have contributed to the present-day relative weakness of the consumer movement. These include the free-rider problems that provision of such public goods will face and the need for consumer education. Historical experiences and social and cultural preferences also influence consumer behaviour and decision-making. Despite the advent of the market-oriented policies in the 1990s older Jamaican consumers with their historical experience of price control regimes were unaccustomed to comparative shopping and expected similar or C1I identical pricing by merchants. This may have also contributed to low level of 529 See National Consumers League, "Value newsletter from NCL celebrating 30 years" (April 1996) 530 Guyana also established consumer association in the 1960s. Caribbean efforts to institutionalise consumer movement through a Caribbean Consumer League in the 1970s within Caricom proved unsuccessful. 531 "Sampson 1995" supra note 518 at 4. enthusiasm for campaigning and participation in advocacy. The prevailing attitude of consumers had been summed up as "me cyan what to do but me cyan bother".532 The consumer advocacy and priorities of the NCL have changed in line with the market. However it appears that the association became less successful in dealing with issues framed in market failure terms and the emphasis placed on competitive market. The other consumer groups in Jamaica such as the National Alliance, Consumers in Action and the Consumers Disabilities Association have had a lower profile than the NCL. More recently the Office of Utilities Regulation (OUR) Consumer Advisory Committee on Utilities (CACU) a group drawn from private and public consumers, which is moving towards independence from the regulator is developing a higher profile in utility regulation consumer issues. 423 Legal framework prior to reform Prior to the reforms of the 1990s the tapestry of Jamaican laws did not seek to reflect the peculiar nature of the consumer problem in a small island state. The framework was reliant on borrowed laws and models including English common law. The legal position was complicated by the fact that although colonial and independent governments adopted some of the English statutes on consumer protection they did not keep up with the legislative developments. For instance a snapshot of the principal 532 Quote from Tess Thomas, NCL referencedin Personal interview of former consumer organisation representative (23 April, 2008) Changing this attitude has been part of the programme of consumer associations seeking to encourage consumers to seek legal redress and the NCL circulated a pamphlet entitled "me cyan bother but you must." 533 CACU was established by the OUR in January 2000. 179 English consumer legislation at the start of the economic liberalisation process in Jamaica in 1990 would have included a wide swathe of legislation on fairness of contractual transactions and product safety developed in the 1960s and 1970s.534 The laws enacted in Jamaica did not provide a similar measure of consumer protection and were based largely on private law mechanisms of contract and tort. The laws governing transactions namely the Sale of Goods Act and the Hire Purchase Act were not concerned with transactional fairness and furthermore facilitated exclusion of consumer warranties on quality of goods. Even where important legislative consumer protection measures were enacted, the amendments which would have strengthened the position of consumers were not always incorporated. Jamaica failed to enact important statutory amendments to sale of goods legislation that would have introduced a stronger regime for consumer transactions in goods and services by making some terms non-excludable, extending protection to services and regulating the fairness of terms in consumer contracts. Furthermore the development of the common law in this area did not assist in tailoring consumer protection measures. Although Jamaica adopted hire purchase legislation in 1974 a 534 See for example the Hire Purchase Acts of 1954 and 1964, Trade Descriptions Act 1968, Fair Trading Act 1973, Supply of Goods (Implied Terms) Act 1973, Consumer Credit Act 1974, Unfair Contract Terms Act 1977, Consumer Safety Act 1978, Supply of Goods and Services Act, 1982 and the Consumer Protection Act 1987. More recent consumer legislation in the UK includes the Sale and Supply of Goods Act 1994, Sale of Goods (Amendment) Act 1995, Unfair Terms in Consumer Contracts Regulation 1999, Sale and Supply of Goods to Consumers Regulations 2002, Enterprise Act 2002 and several important European measures listed in the Enterprise Act (Part 8 Community Infringements Specified UK Laws) and the Consumer Protection from Unfair Trading Regulations 2008. 535 Sale of Goods Act, Cap. 349 was based on the Chalmers draft of 1893. For a review of sale of goods legislation in the Caribbean see Stephanie Daly, "The law relating to sale of goods in the Commonwealth Caribbean (1989) 2:2 Carib. L. & Bus. 88. 536 Hire Purchase Act, No. 19 of 1974, For a review of the origins of Caribbean hire purchase legislation see Jeff Cumberbatch, "A Comparative Survey of the Legislation Relating to Contracts of Hire Purchase in the Commonwealth Caribbean" (1989) 2:2 Carib. L. & Bus. 79. 180 comprehensive commentary by Burgess which reviewed the hire purchase cases in Caribbean jurisdictions concluded that"... the courts in Caricom have shown little or no concern in their adjudication of hire purchase cases for the need to work out a consumer protection jurisprudence."537 Burgess noted that the courts interpreted the hire purchase legislation as building on the common law rather than seeking to strike out a new direction in consumer protection jurisprudence. Commerce in Jamaica was also conducted against a background of measures aimed at protection of domestic firms such COO fflQ as the Trade Act, the Agricultural Marketing and Produce Act and price control regulations.540 A similar matrix of laws existed in other Caribbean islands based on English legislation. Information and advertising were controlled primarily through common law doctrines on misrepresentation although the Weights and Measures Act did provide consumer information on measurement.541 There was no specific statutory provision on product safety and liability but several measures were also aimed at consumer health and avoidance of adulteration including the Food and Drugs Act,542 the Food Shortage and Prevention of Infestation Acf,543 and the Fertilizer and Feeding Stuffs Act544 Importantly there were no specific rules in place for public enforcement or to facilitate informal 537 Andrew Burgess, Hire Purchase and Consumer Protection Adjudication in Caricom Courts (1994) 4 Carib. L. Rev. 179 at 221 ["Burgess 1994"]. Trade Act, 1955. 539 Agricultural Marketing Act, 1944 (Cap .6), Agricultural Produce Act, 1926 (Cap .7) 540 See for example the Motor Vehicle and Motor Vehicle Parts and Accessories (Prices) Control Order 1979 (104/1979) and amendments. 541 Weights and Measures Act, No. 14 of 1976. 542 Food and Drugs Act. 1964. 543 Food Shortage and Prevention of Infestation Act, 1958 ss. 3 to 9. 544 Fertilizer and Feeding Stuffs Act, 1942. 181 dispute resolution or greater consumer access to justice providing only private individual redress and requiring consumers to use the judicial system. It is clear that prior to the enactment of the Fair Competition Act there was a weak legal and regulatory framework for protection of consumer interests. Statutes and common law from England, received in Jamaica, provided the basis of a nebulous framework for the legal protection of consumers in the marketplace. The limited revision of the statutory framework meant that there was minimal law reform and transactions were governed primarily by private law. The lack of consumer protection was compounded by the fledgling nature of the consumer movement in the island, the dominance of the business elite and most particularly the constraints of size on the resources and regulatory capacity of the island. Jamaica became a signatory to the United Nations Guidelines on Consumer Protection on their inception in 1985 but the legal measures in place at that time did not entrench the rights of consumers in a statutory framework. 43 Law reform process for competition and consumer law and policy (1990 - 1993) The economic and political climate in Jamaica during the late 1980s and early 1990s provided the impetus for the introduction of the fair competition legislation. During this period Jamaica sought to move from a highly protected economy to a deregulated economy focusing on the private sector as an engine of growth for the 182 economy. This section of the chapter analyses the catalysts for reform and the impact of the competing interests and traces the influence of borrowed statutes on the competition law. 43.1 Ideological policy shifts A dynamic political environment played a critical part in the conceptualisation and development of the Fair Competition Act. The change in ideological perspective (from democratic socialism to acceptance of the neo-liberal agenda) by the PNP who were in power during this period was a pivotal factor.545 In other jurisdictions such as the United Kingdom the rise of the "regulatory state" meant that regulation became the primary function of the state, assuming primacy over the other functions of the modern state such as redistribution and stabilisation and where the direct provision of public services by government diminished to be replaced by the provision of services by others.546 It is outside the ambit of the dissertation to determine the applicability of this term to Jamaica but there clearly was a reduction of service provision by the government and an accompanying proliferation of institutions to govern and oversee the operations of private entities such as in the financial services and utilities sectors. This was a shift in the policy paradigm in light of the traditionally high levels of state intervention that are 545 See further "Payne 1992" supra note 522. 546 See Michael Moran "Review Article: Understanding the Regulatory State" (2002) B. J. Pol. Sci 391 at 402. 183 the primary tool of governance in the Caribbean.547 Governments in the Caribbean generally envisage a much wider role for the public sector than that envisaged by neo classical economists.548 In February 1989 Michael Manley won the general election and was returned to office for a third term of government. As noted earlier he had been Prime Minister of Jamaica in 1974 when the PNP embraced democratic socialism and aggressively pursued social welfare policies and reform. On his re-election (following some time in Opposition) he continued the process embarked on by the former Prime Minister Seaga of the JLP and embraced the market oriented reforms.549 In November of 1990 the Government announced a new plan for privatisation of some public services such as airlines, telecommunications and electricity and in June of 1991 Jamaica entered into a new agreement with the IMF. Although there was no specific conditionality or term in Jamaica's agreements with the IMF or the World Bank for the enactment of a competition law the legal reforms were clearly made against this background. Taxes were raised on luxury consumer items such as airline tickets and large cars and the petroleum and diesel prices were deregulated affecting affordability. Increases also occurred in the prices of basic foods. The impact of these rising prices on 547 Compton Bourne & Marlene Attz, "Institutions in Caribbean Economic Growth and Development" (2005) 54:3 Soc.& Econ. Stud. 26 at 38 on the role of Caribbean governments in the economy and the market 548 Clive Y. Thomas, The Poor and the Powerless: Economic policy and change in the Caribbean (London: Latin American Bureau, 1988). 549 See Denis J Gayle, "Expanding Jamaica's private sector: policy sources and interim consequences". (1994) 60 Int'l. Rev. Admin. Sci. 71 ["Gayle 1994"] for a comprehensive overview of the privatisation and divestment programme. 184 consumers raised concerns and was part of the impetus for the introduction of laws to promote fair pricing of goods and services to consumers.550 Competition law was part of a package of measures that included tariff reform, removal of price controls and the deregulation of certain industries, privatisation of parastatal agencies and subjecting state enterprises to greater commercial pressures.551 Agencies divested by the state included media houses, Government printing services and the Sugar Redundancy Housing Programme.552 Perhaps foreshadowing the eventual limited efficacy of competition law in effecting consumer protection the Consumer Affairs Commission was established in 1992 as a replacement for the Prices Commission 553 It is also interesting to note that although Cabinet approved drafting instructions in 1991 for a consumer protection bill no link appears to have been made between the legislative timetables of the two bills. 432 Balancing inputs from domestic "insiders" and international "outsiders" Domestic expertise was the starting point for the development of a competition law tailored to the specific needs and circumstances of Jamaica. Several key Ministries 550 "Restrictive Business Practices - Protecting the Consumer - an urgent concern of Gov't" The Daily Gleaner (20 October 1990), online: The Gleaner; Sampson I. Czeley, "Competition Policy: Jamaica's Experience, Economic Reform Today. Reshaping Government (No. 1,1997), online: CIPE chttp:// www.cipe.org/publications/fs/ert/e23/sampsE23 ,htm>. ["Sampson 1997"]. 551 Ministry of Industry and Commerce. (1991) Green Paper on the Competition Act. No. 1 of 1991. Government of Jamaica ["Green Paper on Fair Competition"]. 552 OECD, Global Forum on Competition, 'The Objectives of Competition Law and policy and the Optimal Design of a Competition Agency - Jamaica "(Doc. No. CCNM/GF/COMP/WD 2003:3) ["OECD Jamaica 2003"]. 553 The Commission was established by a Cabinet decision not by statute. A Ministry paper #12 was presented to Cabinet in January 1990 and approved in 1992. 185 and Departments were involved and the discussions at an inter-ministerial level were chaired by the Deputy Prime Minister Percival J Patterson reflecting the high priority placed on it in the Government's reform programme. This Ministerial Committee appointed a Monopolies and Competition Technical Policy Committee with local consultants to advise it. The recommendations made to the Ministerial Committee were strongly influenced by New Zealand, one of the smaller states with a competition law framework at that time.554 Davis and Trebilcock have sounded a cautious note on the use of "outsiders" in law reform. As they noted "... policymakers need to think carefully and modestly about what comparative advantages "outsiders," especially outsiders from the developed world, possess in inducing or assisting developing countries to embark upon legal reforms."555 A difficulty with law reform in developing countries is that they often do not possess sufficient technical expertise to adequately critique the proposals and technical solutions offered by outsiders. The international expertise utilised in the second stage of competition policy development led to a discernible American influence in the revised draft proposals. 556 The Final Advisory Team Report was prepared by an American think-tank, the Brookings Institution, and was funded by the United States Agency for International Development (USAID) as part of that agency's competition capacity building programme.557 It was a primary reference source for the new 554 Personal interview of former senior government advisor (25 March 2008). 555 "Davis & Trebilcock 2008"supra note 31 at 946. 556 Robert W Crandall, Bruce M Owen & Robert A Skitol, Report of the Advisory Team on Competition Policy in Jamaica, (January 23 1991). [Final Advisory Team Report]. 557 See overview discussion of US technical assistance in this area in OECD (2002), Global Forum on Competition "The United States Experience in Competition Law Technical Assistance: A Ten Year 186 competition law and included drafting instructions. The American influence was evident in the Report's proposals on agency rule-making, punitive damages and particularly in the stipulations to ensure balanced political affiliations of members of the Commission as this is an issue that has not generally been expressly addressed in other competition law frameworks. However the European concept of dominance was used in preference to the American concept of monopolisation. The small state constraints that would affect the ambit and effectiveness of competition policy in Jamaica were clearly identified and some of the recommendations in the proposals sought to reflect small state peculiarities. Constraints highlighted in the Final Advisory Team Report included the significant reliance on imports for competition in tradable goods and services, the possible lack of minimum efficient scale in non- tradable goods and services and the tensions between achieving minimum efficient scale for export products and monopolisation of the market. The Report recognised that the existence of interlocking directorates in the island raised competition issues. The small pool of qualified and knowledgeable persons, especially in the banking sector, led to a recommendation that regulation of interlocking directorships should be based on any conflicts of interest in cross-directorships relationships rather than an absolute prohibition.558 It could be argued that the institutional enforcement proposals did not fully take account of the island's limited resources and regulatory capacity in recommending the establishment of both a Fair Trading and Monopolies Commission, Perspective" Doc. No. CCNM/GF/COMP/WD (2002) 20 (6 Feb. 2002) Online: OECDhttp://www.oecd.org/dataoecd/37/61/1833990.pdf (Accessed 10 December 2010). 558 Ibid at 24. 187 with a permanent Director General, together with a Competition Court. However acceptance of this structure would have forestalled the later jurisdictional issues of the FTC. 4.33 The Green Paper on Fair Competition Building on the work of the inter-ministerial committees and the international consultants a Green Paper was prepared.559 This Paper clearly set out the Government's policy objectives for the introduction of competition legislation in Jamaica and was accompanied by draft statutory provisions. It was envisaged that the policy would be complementary to Government's social policy and "that the benefits of deregulation should be shared throughout the community".560 As a pivotal part of the Government's emphasis on developing a market-driven economy the proposed legislation was sponsored and driven by senior Government Ministers. This included Deputy Prime Minister P.J. Patterson who was Prime Minister at the point of introduction of the fair competition legislation. The Green Paper on Fair Competition was laid in Parliament on 9 April 1991 with the following objectives: (1) to provide for competition, rivalry in markets and to secure economic efficiency in trade and commerce; (2) to promote consumer welfare and to protect consumer interest; and (3) to open markets and guard against undue concentration of economic power.561 559"The Green Paper on Fair Competition" supra note 551. 560 Ibid. 561 Ibid, at 2. These objectives were developed from the Cabinet Paper which recommended that the proposed legislation deal with restrictive business agreements and practices, consumer unfairness practices, interlocking corporate positions and merger control and abuse of dominant market positions. 188 The proposals in the Green Paper moved the Government of Jamaica away from its historical use of interventionist market measures with the aim of providing support for consumers in the new market economy. The Green Paper set out standard provisions expected in a modern competition statute. In addition to prohibitions on anti-competitive agreements and conduct, interlocking directorates and abuse of dominance, it contained a prohibition on mergers "that create or enhance dominant firms". Additionally it also sought to integrate consumer protection and addressed consumer unfairness practices.• 562 Prohibited anti-competitive practices included horizontal price-fixing, resale price maintenance on recommended prices, boycotts of suppliers and customers, use of market power for specified anti-competitive purposes, market sharing and customer allocation arrangements and collective tendering. The legality of these practices was to be determined by a rule of reason approach that enabled the enforcement authority to examine the reasonableness of the arrangements and their effect on competition. The skeletal merger control provisions outlined in the Green Paper highlighted that decisions needed to be made on matters such as pre or post notification obligations, evaluation criteria, remedies and type of procedures (judicial or administrative) and civil or criminal liability.563 The procedure would subject significant transactions to advance notification but no specific threshold was recommended. The merger control provisions were coupled with a commitment to control dominant market positions. Provisions on interlocking directorates and managements sought to restrict overlaps on horizontal competitors through ownership interests and representations on board or management as 562 Green Paper on Fair Competition supra note 551 at 4. 563 Ibid, at 8. 189 there was a difficulty with relationships that restricted competition by facilitating erection of barriers to entry or exchanges of information. The consumer protection provisions in the Green Paper envisaged the optimal consumer protection role of the Commission as investigation and banning of "industry wide practices that systematically victimise consumers."564 Proposed prohibitions included making false or misleading claims, failure to post prices and failure to honour warranties and guarantees.565 The approach to consumer protection enforcement was based on American precedent requiring the Commission to make a determination that the practice caused substantial injury to the consumer, lacked any substantial business justification and was not addressed by any other adequate existing remedy 566 Pyramid schemes were also originally to fall within the law but these provisions were not enacted. The Green Paper envisaged a separation between an investigative role to be exercised by a Fair Trading and Monopolies Commission and an adjudicative role to be undertaken by a Competition Court. The proposal for the Court was later abandoned. 43.4 The competition debate and the role of interest groups and the public The legislative proposals set out in the Green Paper were introduced into a business climate hostile to the idea of competition legislation and to a community unfamiliar with the pricing behaviour expected in competitive markets. In this 564 Final Advisory Report supra note 556 at 16. 565 "Green Paper on Fair Competition" supra note 551 at 6. 566 Similar to s.5 (a) Federal Trade Commission Act (US) 190 environment steps were taken by the Government to sensitise the public and sectoral interest groups on the scope and ambit of the legislation. The public was invited to cf.n comment on the policy set out in the Green Paper. Eighteen institutions provided submissions over the period of the consultation process.568 These were considered by the Joint Select Committee of Parliament that was established in March 1992 to consider the legislative proposals in detail. Efforts to publicise the new laws also included the publication of the entire Bill in the Gleaner Newspaper. The diverse interest groups in Jamaica influenced the process through various means. These included formal submissions and participation in the Select Committee, the use of the media to express strong views on areas of dissatisfaction, participation in seminars to influence public opinion and formal and informal lobbying of Government.569 During the public consultation period particular disquiet was expressed over provisions on monopolies, mergers and interlocking directorships. Although consumers and consumer interest groups were involved in the process they did not play a major role in altering specific provisions in the statute. Consumer issues centred around pricing and over-charging. Concerns were also raised in later stages by the National Consumers League about what they saw as attempts to water down 567 "Public Notice" Daily Gleaner (October 28,1992) inviting public comment and submissions by November 6th 1992. 568 See comments of Senator Carlyle Dunkley Jamaica, Senate, Hansard, (March 5,1993) at 214. The institutions included Consumers League, 2 multi-lateral institutions, 3 legal including the Bar Association and 2 legal firms, 8 interest groups, 3 professional associations and the Bank of Jamaica. 569 Personal interview of consumer organisation representative (14 April 2008). Personal interview of former consumer organisation representative (23 April, 2008) 570 "Consumers need proper protection", Daily Gleaner (November 1 1990);" Consumer Rights and Corporate Ethics", Financial Gleaner (November 23 1990). 191 the Act and pander to interests of large businesses.571 Although specific changes do not seem to have resulted from consumer advocacy it appears that the Government wished to ensure that there was a continuing consumer profile. This led to the belated creation of a consumer coalition including churches, trade unions, credit union league and consumer league, under the ambit of the Consumer Affairs Commission to improve the effectiveness of enforcement of the Act.572 It does not appear that any specific proposals from these groups influenced the Bill. In contrast the Private Sector Organisation of Jamaica (PSOJ) appears to have had a far greater impact than other interest groups. PSOJ objectives are to promote and enshrine private enterprise and market economy in Jamaica and they have aggressively pursued policies in support of this agenda.573 A PSOJ document from 1992 advocated that"... the government should encourage competition in the provision of all goods and services and discourage monopolies and cartels whether of producers or labour."574 One interpretation of the extent of their impact can be linked to interest group theories of regulation and the impact that the level of resources and the strength of incentives of the interest group have on the regulatory process.575 Consumers will often be weaker participants in this process as their interests are more diffuse and their resources more 571 "Accuses it of watering down the Fair Competition Act", Jamaica Gleaner (October 3,1992). 572 "Fair Competition Act well under way", Jamaica Gleaner (March 11,1992); Comments of Senator Carlyle Dunkley, Jamaica, Senate, Hansard, (March 5,1993). 573 Private Sector Organisation of Jamaica, "A Policy Framework for Economic Development in Jamaica" (PSOJ, 1985). 574 Private Sector Organisation of Jamaica "A Policy Framework for Economic Development in Jamaica II - A Progress Report" (March 1992 at 27). 575 See discussion in section 5.1.1. at p.214. 192 limited. The PSOJ had a substantial analytical and informational base in comparison to the consumer movement and other interest groups.576 The level of intervention envisaged by the Bill was critiqued by the PSOJ through formal submissions to the committee as well as by ensuring its views and concerns were expressed in public fora.577 The provisions on interlocking directorates did not form part of the law in the face of opposition from the PSOJ and other persons.578 The PSOJ argued that the provisions were ... not only misguided but unconstitutional, violating the rights of freedom of association... if the policy were implemented, it would serve to inhibit shareholders from being free to elect directors with experience and would create impediments to corporate expansion, with consequent ill-effects on investment.579 The proposals on interlocks were also criticised, albeit less vigorously, by the World Bank and a leading Jamaican law firm Myers, Fletcher and Gordon on the basis of the size of the island and the relative paucity of managerial skills.580 The PSOJ was also successful in ensuring that merger control was removed from the ambit of Act. The inclusion of merger control had been heavily criticised by the PSOJ largely due to the influence of one of its members Dr Marshall Hall.581 Dr Hall was an industrial economist, chairman of the Banana Producers Association, member of the Technical Sub-Committee and had served on the previous Public Utilities Board. He 576 "Gayle 1994" supra note 549. 577 "PSOJ unhappy with clause in Fair Competition Act", The Jamaica Gleaner (February 1, 1993). 578 "Sampson. 1995" supra note 518 at 16. 579 Ibid. 580 Ibid .at 15 referencing Myers, Fletcher and Gordon, "Proposed Notes on Competition Act" (July 1993) at 3; Pablo T. Spiller "Comments and Recommendations on the Proposal for a Jamaican Competition Act", World Bank (June 1993) at.5. 581 Personal interview of former senior government advisor (25 March 2008), Personal interview of senior lawyer (10 April 2008). 193 argued that in small economies there was a need for monopolies to enable them to compete more effectively. This argument that mergers provisions are irrelevant in a small state has subsequently been supported by one of the architects of the Act Derrick McKoy who considered it to be "burdensome and unnecessary regulation in a small economy".582 In addition to use of the abuse of dominance provisions for merger control it was also felt that these issues could be addressed in an amended Companies Act with monitoring of activities by Registrar of Companies. Concerns about merger control in small economies have been widely expressed however the absence of merger control in the Act displayed a lack of the understanding of the role of merger control in an effective competition regime. More importantly it demonstrates the importance of interest groups and the interplay of individuals and interlocking business relationships in a small society. The PSOJ played a fundamental role in ensuring that the provisions in the fair competition legislation were significantly diluted. Vehement opposition on the Bill from the Jamaica Bar Association and lawyers foreshadowed the significant challenges to the legislation from this constituent group. Strenuous representations were made through a committee appointed by the Bar Association to examine and consider implications of Bill. However although the Bar Association argued that the legal profession should be exempted from the Act it was made applicable to them. 582 "McKoy 1995" supra note 16 at 187; contrast views of Taimoon Stewart 2004 supra note 13 at 19land Malahoo 2000 supra note 15 at 8 who tend to the view that these provisions should have been included in the legislation and would have given the enforcement authority greater tools and flexibility. 583 "oeCD Jamaica 2003" supra note 552 at 3. 584 Personal interview of senior lawyer (10 April 2008); Submission of the Council of the Jamaican Bar Association on the Bill to enact a Competition Act. 194 The public debate and scrutiny by the Parliamentary Committee led to significant changes to the Bill. These were detailed in the Report of the Joint Select Committee which was submitted in February 1993. The key changes were on merger control, private rights of action, authorisations, penalties, control of state agencies and the salary and emoluments of the Executive Director. Several new provisions were included in the final Bill pursuant to the consultations. A new power of authorisations was granted to the FTC to exempt certain agreements on public benefit grounds. The penalty regime was revised to replace criminal sanctions with the novel concept of pecuniary penalties (civil fines) which were considered more practical and enforceable. The provisions were also made binding on Crown agencies involved in the production of goods and services. New private rights of action were also included in the final Bill as they had been inadvertently omitted from draft provisions. The Government was keen to devolve functions to an expert regulator however a recommendation that would have enabled a high level of embedded agency independence was not accepted. This was the only recommendation not accepted by the Senate and the House of Representatives and related to the salary and emoluments of the Executive Director. It had been recommended that these be made subject to terms passed by Resolution of the House of Representatives and that the emoluments should not be less than that payable to a Puisne judge. The Fair Competition Act had its third reading on 9th March 1993 and was part of the final legislative package the Government pushed through prior to elections.585 585 PNP was re-elected to office. 195 43J Legal transplants and tailoring of the Fair Competition Act Laws regulating the consumer markets in small developing states should be logically consistent and appropriately tailored to small state conditions. However an interesting question is the extent to which the new Fair Competition Act represented tailored legal reform or a legal transplantation from other jurisdictions facilitated by "outsiders". The drafters of the Fair Competition Act utilised existing legal models, from both large and small jurisdictions, drawing heavily on competition laws in Australia and New Zealand and to a lesser extent on the United Kingdom and federal legislation of Canada.586 The use of existing competition laws as reference points occurred because of their initial use by both the domestic policymakers and international experts. The process for development of the legislation and the changes made at various stages makes it difficult to provide a definitive answer to this question as the use of foreign legal models was clearly driven in large part by the fact that this is a common method of law reform in small states. However despite the claim by policymakers that the competition legislation was not directly mandated by the international institutions they clearly played an influential role. Their influence in this law reform process was lesser and can be distinguished from the earlyl980s World Bank driven economic reforms. Gail Edwards found that those earlier Jamaican reforms including relaxation of import licensing and 586 Personal interview of former senior government advisor (25 March 2008). 587 Overall World Bank 1990s reform generally mandated adoption of competition law and policy. For a general discussion of World Bank approach to conditionality's see Joseph Stiglitz, Globalization and its Discontents, (Penguin Books: London, 2003) at 43. 196 agricultural marketing laws ignored the specific context of the Jamaican environment. In contrast the World Bank in later reviews in late 1980s made adjustments to accommodate different political economy and social characteristics thereby improving the effectiveness of the reforms.588 Table 1 sets out a high level and broad indication as to the apparent legal origins of the Fair Competition Act. Table 1: Legislative source of the substantive prohibitions in the Fair Competition Act Section /Margin note Source legislation/material s.17 Agreements lessening Treaty of Rome (EC), art. 81(1); 81(3) legal competition exceptions. s. 18 Exclusionary provisions Commerce Act 1986 (New Zealand) s. 29. s. 19 Existence of dominant Commerce Act 1986 (New Zealand) s. 36 misuse of position market power; EC art. 82 and case law United Brands 1978 ECT 207. s. 20 Abuse of dominant Treaty of Rome (EC), art. 82. position s. 21 Action in relation to Competition Act 1985 (Canada) s.79(4) basis for dominant position s.21(2). s.. 22 - 24 Collective resale Resale Prices Act 1976 (UK), Part I ss. 1,2 and 4 price maintenance [Provisions Repealed]. s. 25 - 28 Individual resale Resale Prices Act 1976 (UK) Part 11 ss. 9 - 12 price maintenance [Provisions repealed]. 588 Gail Edwards, Legal Transplants and Economics: The World Bank and Third World Economies in the 1980s - A Case Study of Jamaica, the Republic of Kenya and the Philippines (Masters Thesis, IALS, 2007) online:SAS http://sas-space.sas.ac.uk/349/ (Accessed 11 January 2011) at 47. 197 Table 1: Legal origins cont'd Section /Margin note Source legislation/material s. 29 -32 Commerce Act 1986 (New Zealand) s.58. sS .33(1) Definitions Competition Act 1985 (Canada) s.77 (1). s. 33(2) Tied selling Competition Act 1985 (Canada) s.77 (2). s. 33(3) Exclusive dealing and Competition Act 1985 (Canada) s. 77(1). market restriction s. 34 Price fixing Competition Act 1985 (Canada) s. 61. s. 35 Conspiracy Competition Act 1985 (Canada) s. 45. s.36 Bid-rigging Competition Act 1985 (Canada) s. 47. s. 37 Misleading advertising Competition Act 1985 (Canada) ss. 74.01 and 74.03. s. 38 Representation as to Competition Act 1985 (Canada) s.74.02. reasonable test and publication of testimonials s. 39 Double ticketing Competition Act 1985 (Canada) s. 54. s. 40 Sale at bargain price (bait Competition Act 1985 (Canada) s.74.04. and switch) s.41 Sale above advertised Competition Act 1985 (Canada) s. 74.05. price ss 42 - 45 - Enforcement Commerce Act 1986 (New Zealand) ss.80,81.82 offences Note: Section references are to statues of origin as at 1993. Some of statutes subsequently amended such as section 61 of the Competition Act of Canada as this now addresses credit cards and patents, the analysis of the legislative origins was not based on interviews but primarily on comparison of the text in the Fair Competition Act with the text of the other statutory provisions. The comparative tabular overview in Table 1 of the sources of the competition and consumer provisions (at the time that the Act was developed) provides a useful context 198 for consideration of the level of tailoring of the provisions for legislative consistency and for size and development. It shows that the Act is a patchwork quilt of direct copy out (with minimal adaptation) of provisions from both large and small states and regional groupings. The modelling of the legislation on other statutes ensured that there was a comprehensive body of principles and case law on substantial provisions to facilitate interpretation of the statute. However the use of different models means that the Act also contains several contradictory provisions hampering its potential effectiveness and resulting in inconsistency in the legislation. McKoy attributes the flaws to the cut and paste approach to "reconstruction" of legislation.589 An example of the inconsistency is the overlap between the provisions in Part III (Control of Anti-Competitive Practices) of the Act with those in Parts IV (Resale Price Maintenance), V (Authorisations), VI (Exclusive Dealing, Tied Selling and Market Restrictions) and VII (Offences against Competition). This is problematic as it has introduced dual offences for several anti competitive practices. The analytical approach for essentially the same practice will differ depending on the section that the practice is being considered under. The competition offences lifted from Canadian precedent have proved particularly problematic in light of their duplication with other provisions in the statute. For example section 35 on "undue lessening of competition" can be seen as a duplication of section 17 on "agreements 589 See "McKoy 1995" supra note 16 at 184 who opined that the draft was heavily influenced by American antitrust principles and laws due largely to the influence of the American consultants. McKoy was the local consultant employed to review the Bill prior to its referral to a Parliamentary Select Committee and was subsequently Legal Advisor to the Committee and more recently Chairperson of the Commission. 199 lessening competition" albeit with a higher standard of proof.590 Section 36 which addresses the practice of bid rigging is also dealt with in section 17 however under section 17 this practice can be exempted on the basis of an efficiency defence. The practice of tied selling is dealt with in multiple places in sections 17(2)(f), 20(l)(f) and 33(2). This duplication of offences can lead to uncertainty in enforcement. The Act therefore contains both per se and rule of reason offences for the same practice. The use of legal models also meant that statutory provisions were copied from countries with different economic histories and as a result the Act contains compromises that arose as a result of peculiar consideration in each jurisdiction. An example of this is the use of modifiers, "unlawfully", "unduly" and "unreasonably" in the Canadian legislation, which are not meaningful in the Jamaican context. The "unduly" qualifier was taken from Canadian legislation where its use dates back to 1889 Combines Investigation Act.591 It has proved problematic in the Canadian context and as noted by McKoy the meaning was and remains unclear in the Jamaican context. Although local courts can seek to interpret in a manner consistent with Jamaican common law this may result in unintended consequences and limitations on the scope of the law. Legislation brings with it a cultural construct including values and goals. In countries of origin the focus on the goals and underlying values may be more consistent and clearer whereas seeking to enforce similar measures in a "receiving state" with a different culture and lack of adaptation may pose significant issues. 590 See "Malahoo 2000" supra note 15. 591 Trebilcock et al Canadian Competition Policy 2002, supra note 234 at 9 & 114; see also W.T. Stanbury, "The Legislative Development of Canadian Competition Policy, 1888-1981" (1981) 2 Canadian Competition Policy Record at lfor a chronology of attempts to remove the word from the law. 200 Although competition and consumer laws contain several standard provisions that will be applicable regardless of the level of size of the country the wholesale copying of provisions from different models of competition law did not provide a sound template for a small state integrated consumer and competition law such as the Jamaican Fair Competition Act. New Zealand and Canada have been characterised as small economies for the purposes of competition law however the circumstances and economic conditions in these states must be distinguished from those prevailing in small developing states like Jamaica. Furthermore the conditions in larger states and groupings of states such as the United States, United Kingdom and European Union are also distinctively different from that in most small developing states. This casts doubt on the appropriateness of the direct use of some of the provisions. This difficulty becomes even more apparent in the detail contained in guidelines issued to the Act on matters such as market share levels that indicate dominance. On the other hand some of the substantive provisions in the Act have been suitably adapted and as a result are more appropriate for the Jamaican small state context. Stewart contends in relation to the Caribbean that ... prohibition of abuse of a dominant market position is very important in these economies, probably more important than prohibition of cartels, particularly when the wealth divide has historical roots and still reflect a racial divide. Opportunities for new entrants are limited.592 Sections 17 to 21 addressing anticompetitive conduct and abuse of dominance are closely modelled on Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) but have several areas of departure and elaboration particularly with 592 Taimoon Stewart 2004 supra note 13 at 202. 201 respect to the efficiency defences.593 Whilst the EC provision does not contain an efficiencies defence this is relevant for abuse of dominance cases in developing states. In seeking to introduce new laws it is critical that attempts are made to tailor and craft the laws for actual conditions in the jurisdiction. The draft Bill was significantly revised to reflect views and concerns raised during the public consultation process. In this context the fact that there was a level of public debate as well as tailoring of provisions should have led to a greater likelihood of effectiveness of the laws. The efficacy of the enforcement of competition statutes is also heavily dependent on rules and guidelines adopted by the regulator. Additional tailoring and adaptation to make the law more suitable and effective in local conditions can occur in the active enforcement phase. The approach of the FTC to this is examined in the additional case study chapters. 43.6 Consumer welfare goal During the reform process a consistent focus on consumers and consumer interests influenced the goals and underlying values of the legislative scheme. The consumer protection impetus for introduction of the law was evidenced in the policy pronouncements prior to its introduction and the stated objectives in the Green Paper. Notwithstanding this, the Fair Competition Act curiously focused on restrictive business practices rather than provisions targeting more traditional consumer rights. It is 593Art. 101 TFEU (ex Art 81of the EC Treaty) and Art. 102 TFEU (ex Art.82 of the EC Treaty) Consolidated Version of the Treaty on the Functioning of the European Union (TFEU) (European Union) 2008 OJ CI 15/49. 202 interesting, in light of the colonial ties, that the UK Fair Trading Act of 1973 which contained significant new consumer protection provisions as well as fair competition laws was not adopted or used in modelling new laws. This law was an early example of a statute with both consumer protection and competition provisions. Although that Act had its genesis in new provisions for competition law it was utilised to provide additional consumer protection in response to political exigencies.594 Some insight into parliamentary intentions can be gleaned from the statements made in Parliament which reflected overriding equitable concerns. The Hon. Ronald Hugh Packer Small, Q.C. Minister of Finance and Planning in introducing the Bill noted that what it "seeks to do is to establish some new rules of fairness, fairness between business enterprises and fairness between the consumer and the business community." Hon. Raphael Carl Rattray Q.C. Attorney General referenced the new "ethical dimension to doing business".595 However a cautionary note on the interpretation of parliamentary statements proffered by Lande should be heeded. In his review of the origins of American antitrust legislation he opined that it is often difficult to discern the central or true legislative goals as there may be a multiplicity of statements by various players (and difficulty in determining who the pivotal players were). There may be conflicting statements or clear statements may simply be political rhetoric.596 594 See Iain Ramsay, '"The Office of Fair Trading: Policing the Consumer Market Place"' in Robert Baldwin & Christopher McCrudden eds. Regulation and Public Law (London: Weidenfeld and Nicolson, 1987). 595 Jamaica, House of Representatives, Hansard, Unbound (9 March 1993). Hon. Hugh Small and Hon. Pearnel Charles also mentioned consumer education in the debate. 596 "Lande 1982" supra note 109 at 81. 203 Equitable rationales were significant in the development of competition legislation and welfare of consumers was a paramount consideration from the outset of the process for preparation of the law.597 The legislation was piloted by a government built on social justice goals and determined to ensure that the benefits of a market system were shared by "all members of the community."598 Although the democratic socialism of the PNP was tempered in the move to a market economy these values were clearly important in the scheme. The legislation was regarded as providing a counter-balance to the strength and influence of the business sector and equitable objectives included the promotion of small business as a core value. One key official involved in the process espoused the view that competition legislation has been seen by the political directorate as a consumer protection measure and a mechanism to help the small entrepreneur rather than being part of a general set of measures designed to advance economic efficiency.599 The goal of improving consumer welfare through the introduction of these antitrust measures is also evidenced in the legislation by explicit consumer protection measures to deal with systemic market abuses. This focus on prohibiting false and misleading conduct sits squarely with the orthodoxy on the sphere of interaction between consumer and competition law. Despite the emphasis on social concerns in the debate on the Act these concerns were not reflected in the actual legislative provisions. It is difficult to discern the meaning of consumer welfare in Jamaica within the context of the academic and policy debates on 597 Personal interview of former senior government advisor (25 March 2008). 598 "Qreen paper on pajr Competition" supra note 551. 599 "Sampson 1995" supra note 518 at 24. 204 consumer welfare. For example no guidance is provided as to whether policymakers preferred the adoption of a total welfare or consumer welfare standard. The standard adopted has a fundamental impact on the benefits delivered to consumers and the class of consumers to be considered. Apart from the long title, the Fair Competition Act does not contain any other clear statement of its objectives necessitating the elaboration of the concept of consumer welfare by the enforcement agency.600 This long title, in accordance with principles of statutory interpretation, should be useful for ascertaining the general purpose of the Fair Competition Act and focuses on competitive prices and product choice. Conclusion Consumers in Jamaica, as in all states, are not a homogenous group and policy approaches are required to make trade-offs between the protection of vulnerable, disadvantaged consumers who often prefer greater state involvement in the market and wealthier, better educated consumers who generally prefer greater discretion in making choices. This choice is stark in light of the income disparity, class differentiations and strong social and political divisions in Jamaica's population. It is particularly important that societies with limited provision for social welfare and disparate wealth levels do not 600 A mission statement has been adopted by the FTC twinning the goals of promotion of competition, equal opportunity of businesses and consumer interests through increased choice and more competitive pricing. See Fair Trading Commission, "Fair Competition Act Guide to Anti-Competitive Practices" Online.www.jftc.com Accessed 17 October 2007). 205 focus solely on individual choice as the level of income inequality also leads to consumption inequality. The policy decision to include prohibitions against fraud and misleading advertising would seem to indicate that promoting freedom of choice was an important underlying consideration in the consumer protection regime. In this respect the twining of the consumer protection and fair competition provisions was a logical juxtaposition. However additional protection is necessary in small states and the legal frameworks in these states must go further than promote freedom of choice where choice itself is difficult and illusory. Economic theory on advertising contends that businesses respond to consumer demands leading to consumer sovereignty. However this concept of consumer sovereignty which conceptualises the consumer as an active seeker rather than a passive victim is of doubtful application in socio-economic conditions of poverty and limited access to consumption. Although the political rhetoric also points to paternalistic and equitable policy objectives, statutory provisions to address inequality in bargaining power and transactional unfairness were not incorporated in the Act. This chapter has mapped the policy process and identified the primary values underpinning the introduction of the integrated competition and consumer protection legislation as protection of consumer interests. Development of the law was driven by both domestic and outside influences. The policy process was laudable for its extensive public consultation processes but despite this the end-result of the Act is not an ideal small-state model. There are standard provisions in the Act that are appropriate for small states as some of the prohibitions and controls on anti-competitive conduct should apply 206 regardless of the size of the economy. However the Act has not been sufficiently tailored and a notable shortcoming is the lack of merger control regulation which means that the Commission cannot control establishment of dominant positions in the market. Most importantly the transplantation and arbitrary copying of provisions has led to legislative inconsistencies that are likely to compromise the effectiveness of the Act. The Act has drawn on several influences without sufficient integration of the provisions and with limited attention to the underlying competition principles and values. As posited by McKoy "literal translation of foreign legislation has compromised the effectiveness of the Act." 601 The following chapter of the dissertation traces the institutional evolution of the Fair Trading Commission and looks its enforcement practice between 1993 and 2004 examining the preliminary efforts of the agency to implement an effective enforcement strategy for integrated competition and consumer protection. 601 "McKoy 1995" supra note 16 at 186. 207 CHAPTER 5 The Fair Trading Commission ... a primary watchdog for the protection of the rights of the public in relation to the supply of goods and services. Former senior FTC manager (2008). A RHETORICAL INTERPLAY BETWEEN CONSUMER PROTECTION AND COMPETITION LAW: THE JAMAICA FAIR TRADING COMMISSION IN ACTION FROM 1993 TO 2004 The Fair Competition Act enacted into law in March 1993 was a ground-breaking piece of legislation for the small states of the Commonwealth Caribbean.602 It established a new enforcement agency equipped with a range of legal tools to assist it in meeting its regulatory goals of maintaining and encouraging competition and providing consumers with competitive prices and product choices. The Act also prohibited unfair practices directly affecting consumers and incorporated standard competition law provisions on dominance and anti-competitive conduct and agreements.603 A regional commercial law survey report conducted in 1989 had lamented the absence of "a regulatory system designed to ensure freedom of competition from restrictive practices and monopolies".604 Accordingly the introduction of the Act was generally lauded with one commentator describing the new legislation as a "commercial law revolution."605 602 The Act was passed on March 9,1993 and became effective 6 months after its enactment on September 9,1993. Minor amendments were made in 2001. 603 See discussion in section 4.3.6 of the dissertation. 604 Ralph Carnegie, "Commercial Law Survey Report" (1989) 1:3 Carib. Law & Bus. 59 at 61. 605 "McKoy 1995"supra note 16 at 183. 208 The success and effectiveness of a legal regulatory framework is to a large extent dependent on the nature and level of the enforcement. As has been cogently stated by Belobaba ""without... effective enforcement and legislative review, the paramountcy of symbolism over substance becomes inevitable."606 A consistent theme of the story of the new agency, the Fair Trading Commission (FTC), over the period 1993 to 2004 was the formidable challenge in achieving substantive results. The agency lost its early promise as an agent for substantial consumer change in the face of adverse judicial decisions, inadequate legislative review and significant resource constraints. The main aim of this Chapter is to examine the operations of the FTC in order to provide an insight into the dynamics of the interplay between consumer and competition law enforcement within this small state regulatory agency. The first section of the chapter looks at the evolution of the FTC within the context of the "life-cycle" theory of regulation. The second section analyses more closely the enforcement strategies and tools used by the FTC in the exercise of its regulatory discretion during the relevant period with a view to discerning the applicable lessons for small state enforcement strategies. The chapter concludes with a brief examination of the impact of private enforcement on competition law enforcement in Jamaica. 606 Edward P Belobaba, "Unfair Trade Practices Legislation: Symbolism and Substance in Consumer Protection" (1977) 15:2 Osgoode Hall L. J. 327 at 388 ["Belobaba 1977"]. 209 5.1 The public interest and the evolution of the Fair Trading Commission The regulatory framework established under the Fair Competition Act implicitly reflects a public interest perspective that was driven by consumer welfare objectives and designed to be enforced by administrative and technical specialists in an independent enforcement agency. The Fair Trading Commission was established as an integrated consumer protection and competition agency comprised as a collegial body of between three and five part-time Commissioners together with an ex officio Executive Director.607 The Commissioners are appointed by the Minister and are expected to exercise overall strategic control as well as adjudicative functions. Staff exercise the investigative functions delegated to them by the Executive Director. The agency was designed with structural independence through its establishment /TfJQ as a statutory corporation rather than a government department. It was also granted a reasonable level of autonomy in its investigative and adjudicative capacities.609 In theory this type of stand-alone arrangement reduces the level of politicisation of regulatory decisions and provides greater space for freedom in decision-making. In practice the level of agency independence was tempered by the provision for Ministerial policy directives, the lack of financial independence and the limitations on organisational autonomy with matters such as senior staff appointments and salaries being subject to Ministerial oversight.610 Independent regulation, by its very nature, requires 607 Fair Competition Act, Schedule, para. 1(1). 608 Ibid. s. 4. 609 Ibid s. 49. 610 Ibid, ss.9, 15 & 16. 210 accountability and transparency of agency actions and decisions. Accountability and transparency were enshrined in the framework through the requirements for periodic reporting to Parliament and the Government, external audit of finances, disclosure of interests, reviews and appeals and public hearings.611 5.1.1 The Fair Competition Act, the FTC and theories of regulatory origin Diverse and competing theories are used to explain and justify the introduction of new regulatory measures.612 These theories attempt to explain regulation as it is and analyse from different academic standpoints the reasons for introduction of regulation as fs 1 ^ well as the actors involved in the process and their interactions. At the risk of over simplification of the great wealth of literature in this area, the major clash in theoretical strands is between public interest theories of regulation, that argue that regulation is based on the pursuit of public interest goals undertaken by disinterested bureaucrats, and 611 Ibid ss. 8,13 & 14; Schedule para. 11. 612 For a comprehensive oversight and categorisation of the theories see "Introduction" in Robert Baldwin, Colin Scott & Christopher Hood eds., A Reader on Regulation, (Oxford: Oxford University Press, 1998J [Baldwin, Scott & Hood 1998J\ also see Baldwin & Cave 1999 supra note 58 at 18, Morgan and Yeung 2007 supra note 57 at 16. 613 Wider regulatory models have been developed from a variety of perspectives including "regulatory space", "cultural" and "principal-agent" theories The limitations of the dissertation research means that it does not seek to engage with the diversity of the theoretical frameworks in this area and influential regulatory theories such as principal-agent theories and institutional theories of regulation including regulatory space are not discussed in the thesis. See further L Hancher & M Moran "Organising Regulatory Space" in L Hancher & M Moran eds. Capitalism, Culture and Economic Regulation (Clarendon Press, Oxford, 1989). 211 private interest theories that assess the role of other interest groups in the regulatory process and the self-interested motivations of bureaucrats.614 The dissertation uses the political science "life cycle" approach to analyse the evolution of the Fair Trading Commission. Bernstein's influential life cycle theory argued that public interest regulation eventually gives way to capture.615 The argument is that initially agencies demonstrate independence and radical spirits and then become captured by the entities or industries that they are seeking to regulate. In describing agency stages of gestation, youth, maturity and old age Bernstein noted that the early phase of agencies is characterised by vigour and energy moving after 10 to 15 years to regulatory capture or senility and decline.616 Although Bernstein's categorisation has been critiqued, for imprecision on characterisation of the stages and the use of anecdotal evidence rather than systematic empirical study, the approach is useful in studying agency evolution 617 Notions of agency capture are considered to be of particular relevance to small states in light of the nature of the relationships in these jurisdictions. There is almost inevitably a greater interplay between the political and business elite which facilitates access by the business elite to the political elite and the exertion of pressure to protect their entrenched interests. The relative inactivity of other interest groups may also facilitate lobbying against 614 For a critique of this simple division of theoretical approaches and an example of the use of alternative reputation-based framework see Daniel Carpenter, Reputation and Power Organizational Image and Pharmaceutical Regulation at the FDA (Princeton: Princeton University Press, 2010) [Carpenter FDA 2010]. 615 Marver H Bernstein, Regulating Business by Independent Commission. (Princeton, New Jersey: Princeton University Press, 1955) at 74 to 100. [Bernstein 1955] 616 ibid. 617 See Barry Mitnick, Political Economy of Regulation: Creating, Designing, and Removing Regulatory Forms, (Columbia University Press: New York, 1980) [Mitnick 1980] at 45 to 50 and 73. 212 stringent regulatory measures and aid corruption in the political and policy process. Capture refers to ex ante capture of the agency through development of the regulatory framework but primarily to ex post capture of an agency and its• staff.618 Nature of relationships and small population size in small states may be seen as providing a greater susceptibility to both forms of regulatory capture. Public interest explanations for regulation were most popular in American scholarly debate in the late nineteenth century up until the 1960s.619 It is now regarded by some as an old-fashioned approach.620 Political public interest theories are underpinned by notions developed in bureaucratic theory and Max Weber's conception of administrators as impersonal, detached and objective. These political public interest approaches should be distinguished from economic public interest accounts which explain regulation as the response to market failures and use normative theory in a "positive" approach. A standard critique of economic public interest theory is that it 618 Frederic Boehm, "Regulatory Capture Revisited - Lessons from Economics of Corruption" (ICGG Working Paper July 2007) at 15. 619 James M Landis, The Administrative Process, (New Haven, Yale University Press; London, H. Milford, Oxford University Press, 1938) [Landis 1938]; Public interest approach has been used as explanation for several regulatory agencies see for example Samuel P. Huntingdon, "The Marasmus of the ICC: The Commission, the Railroads and Public Interest" (1952) Yale Law Journal and William Wardell & Louis Lasagna Regulation and Drug Development (American Enterprise Institute, 1975) cited in Bruce M. Owen & Ronald R. Braeutigam, The Regulation Game: Strategic Use of the Administrative Process, (Cambridge, MA, Ballinger,1978) at 10 [Owen & Braeutigam 1978]. 620 See for applications of the political public interest approach the following works Cass Sunstein, A/rer the Rights Revolution-. Reconceiving the Regulatory State (Cambridge, Mass: Harvard University Press, 1990), Mike Feintuck, The Public Interest' in Regulation, (Oxford University Press: New York, 2004), Stephen Croley, Regulation and Public Interests: The Possibility of Good Regulatory Government (Princeton: Princeton University Press, 2008) and "Prosser 2006" supra note 220; 621 See extract from Max Weber, The Theory of Social and Economic Organisation, (trans. A.M. Henderson and Talcott Parsons) (New York, Free Press, 1947) at 337 cited in Seidman 1994 supra note 50 at 138 in discussing bureaucratic failure in developing countries. 622 See welfare economics approach to public interest regulation detailed in Anthony Ogus, Regulation: Legal Form and Economic Theory (Hart Publishing: Oxford-Portland Oregon, 2004) at 29 to 46. 213 does not take account of transaction and information costs.623 In response to critiques a "sophisticated" public interest theory has also been developed.624 The public interest perspective can be contrasted with the more recent countervailing private interest theories which include the "Chicago economic theory of regulation" and the "Virginia school of public choice" which use micro-economic theory to explain the origins of regulation. The Chicago School is associated with the economic theory of regulation which contends that regulation can be affected by special interests and is the "outcome of strategic pursuits by rational actors, notably big firms and regulators in big agencies".625 This theory has been primarily applied to economic regulation of industries. George Stigler theorised that regulation was designed for and operated primarily for the benefit of regulated entities. In discussing the demand and supply of regulation he noted that smaller interest groups with a high per capita stake were likely to be more successful in influencing regulatory outcomes. This seminal Stigler model was extended by Sam Peltzman to include the assumption that maximisation of vote margins is the aim of the politicians and agency officials and that this is achieved through redistribution to those who will "supply electoral rewards to the politicians who engineer redistribution". Peltzman also incorporated the influence of 623 See discussion in R.G. Noll, "Economic Perspectives on the Politics of Regulation" in Richard Schmalensee & R. Willig eds. Handbook of Industrial Organisation, Vol. 2 (Elsevier, 1989) 1253. 624 See discussion in G. Stigler, "The theory of economic regulation." (1971) 2:3 Bell J. Econ. Man. Sci 394 625 "Stigler 1971" supra note 64. 626 Owens & Braeutigam 1978, supra note 619 at 11. 214 powerful consumer interest groups concluding that in weighing the balance business interests would not always dominate. Wilson offered an alternative politically based perspective to the view that it is only organised interest groups whose views will impact on politicians.628 Rather than reliance on the public/private interest dichotomy Wilson explains the origin of legislation by examining the motives, behaviours and strategies of actors at different levels and the centrality of the distribution of regulatory costs and benefits. Wilson contends that rather than the Chicago approach which assumes that legislators control regulators, the behaviour of the agencies depends on a combination of various factors including ambiguity of agency work, imperatives of the work, peer and professional expectations. Another economic approach developing from the economic theory of regulation focuses on the competition between "pressure groups" or "interest groups" in politics. In developing this approach Becker contended that the relative strength of the groups affected the outcome.629 This was further expanded by Laffont and Tirole based on the information asymmetries between the interest groups and between the interest groups and the regulator. A third variant of economic theory is the public choice theory associated with the Virginia School. This developed from concepts of "rent-seeking" and lobbying 627 Sam Peltzman,'Toward a More General Theory of Regulation' (1976) 19 J. Law & Econ. 211. 628 James Q. Wilson, Bureaucracy: What Government Agencies Do and Why they do it, (New York: Basic Books, 1989). 629Gary S. Becker, "A Theory of Competition among Pressure Groups for Political Influence" (1983) 98(3) Quart. J. Econ. 371. 630 J.J. Laffont & J. Tirole, 'The politics of government decision making. A theory of regulatory capture", (1991)106(4) Quart. J. Econ. 1089. 215 f\\ I through the political system which distorts the process in favour of strong groups. It attributed the motivations of regulators and legislators to possible electoral and ideological gains. Tollison identifies the differences between the two schools as "the interest-group theory of government is about lobbying, and the theory of rent seeking is about the costs of lobbying."632 Private interest theories stress the motivations of bureaucrats to maximise their individual utility through maximisation of personal wealth or protection of financial budgets and the prestige of their agencies.633 In this context officials are rational, self- interested and respond to incentives and the possibility of bias for personal gain. This pursuit of rational self-interest is central to the economic private interest models of regulation embodied in the Chicago "economic theory of regulation" and the Virginia "public choice" theory. The positive economic models have been extremely influential but have also been extensively critiqued on several bases. Critics contend that the limitations include that they do not explain where the "preferences" of the individuals in the market come from or the reasons for diversity, variance and change in preferences.634 In so doing they fail to take account of the fact that parties preferences may be affected by altruistic reasons and motivations. Furthermore as they are based on rational choice and the expectation that 631 Gordon Tullock, 'The Welfare Cost of Tariffs, Monopoly and Theft" (1967) 5 Western Economics Journal 224. 632 R.D. Tollison, 'The Interest-Group Theory of Government" in A. Owens, C. Rowley, eds.: The Locke Luminary, Vol. I, No. 1 (Summer 1998), Part 4. 633 See on this R.E. Cushman The Independent Regulatory Commissions (New York: Octagon Books, 1941) at 52. 634 See discussion in Baldwin, Scott & Hood 1998 supra note 593 at 11. 635 Carpenter FDA 2010 supra note 614 at 42. 216 regulatory officers will behave in a rational and self-serving manner they do not factor in the impact of informational deficiencies. A commonality between "life cycle" theory and the economic theory of regulation is capture of the agency by interest groups. Different levels of ex post agency capture include control, co-ordination, non-performance and co-opting of the regulatory agency by interest groups 637 The level of capture can be partially assessed through measures such as bribery of officials or the possibility of bias from a "revolving door" policy evidenced in movements between regulated industries and the regulator.638 As has been previously noted the nature of the relationships in small states means that this may be of greater relevance in small states as administrators and agencies may be more susceptible to capture. The analysis in Chapter 4 on the legislative development of the FTC suggests that the political public interest approach provides a credible explanatory base. The tenor of the Parliamentary debates focused on public interest goals and confidence was placed in the expertise of independent decision-makers. The public interest objectives in the Green Paper and the Fair Competition Act focused on remedying market failures and improving consumer welfare including but not limited to economic efficiency. Legislators demonstrated their belief in the motivation of the regulators and the trustworthiness of expert regulators by conferring a high level of discretion and reliance on the expertise of 636 "See behavioural study of SEC in "Choi & Pritchard" supra note 275. 637 Mitnick 1980 supra note 617 at 96. 638 T. Makkai & J. Braithwaite "Making Sense of Regulatory Capture" in Baldwin, Scott & Hood 1998 supra note 593 at 175 for an explanation of revolving door and capture and empirical approach in nursing home regulation to testing links between level of persons recruited from and/or going to industry and impact/failures in regulatory enforcement; also see Ernesto Dal Bo, "Regulatory Capture: A Review" (2006) 22:2 Oxford Rev. Econ. Pol'y 203 at 215 discussing determinants of regulatory capture. 217 the Commission.639 The existence of a public interest approach is also supported in the nature of the appointments over the history of the Commission. Expertise was seen as a critical factor for appointment to and service with the Commission. Although the enabling statute contained no express rules on the qualifications of the Commissioners, the appointments generally reflected a range of professional skills. There was also a bias towards legal and economic qualification in the trend of the appointment of the part-time chairpersons of the agency.640 This is not to suggest that the implicit recognition by the Jamaican policy-makers of the importance of expertise was the sole consideration for appointments as these also reflected the common political practice of changing boards of regulatory and statutory corporations on change of governments.641 However the nature of the appointments to and the staffing of the Commission reflected aspects of public interest theory with reliance placed on the application of independent technical expertise in the investigation and adjudication of matters before the Commission. The preference for the public interest theory in explaining the regulatory framework in Jamaica is not intended to suggest that theories detailing the pressures of interest groups and regulatory capture do not have some merit. The role of interest groups in the developmental and regulatory process of the FTC was important. However it is quite clear that despite the theoretical likelihood of capture there has been no 639 Landis 1938 supra note 619; John G. Francis, The Politics of Regulation: A Comparative Perspective (Blackwell: Oxford; 1993) at 7. 640 The first chairperson Shirley Playfair was an attorney at law and subsequent chairpersons were Dr Peter John-Gordon was an economist and Derrick McKoy an attorney at law influential in drafting the policy proposals for the Fair Competition Act. 1 See Pablo T. Spiller & Cezley I. Sampson, "Regulation, Institutions, and Commitment - The Jamaican Telecommunications Sector", (World Bank, Policy Research Working Paper 1362, October 1994) at 8 ["Spiller & Sampson 1994"] on importance of personal relationships and political affiliations on appointments in Jamaica. 218 empirical or anecdotal evidence (in this study or previous studies of the FTC) that would point to or suggest capture of agency officials.642 Although detailed analysis of the motivations of FTC staff and Commissioners or the existence of corruption was not feasible in the context of the dissertation research at least on the "revolving door" measure there has been very limited movement between industries and the regulator.643 This may be due in part to the larger constituent base of an integrated consumer protection and competition agency which reduced the actual or perceived susceptibility of the agency to interest group lobbying and may have encouraged a more balanced, even- handed approach. On the other hand, the legal proceedings by powerful interest groups had a pivotal impact on the legal framework and the trajectory of the Commission's effectiveness. In this respect it can be conceded that elements of regulatory capture in a wider sense relating to the ex ante development of the overall framework as well as the ex post capture of the agency through limitations on its enforcement approach may be suggested in the influence and pivotal role of the private sector interest groups in the regulatory process. As illustrated by the preceding analysis there are dangers inherent in adoption of either a monolithic public interest or private interest theoretical approach to analysis of regulatory origins. Bernstein's life cycle theory therefore provides a useful lens for analysing the development of public interest consumer market regulation in Jamaica and 642 See UNCTAD, "Voluntary Peer Review on Competition Policy: Jamaica" (UNCTAD/DITC/CLP/2005/5) ["UNCTAD 2005 Peer Review Jamaica"] at 74; online: UNCTAD, < http://www.unctad.org/templates/Page.asp?intItemID=4165&lang=l>. Accessed 1 July 2009; Taimoon Stewart 2004, supra note 13 although note that these case studies did not set out to specifically investigate capture levels. 643 Telephone interview of senior FTC manager B (4 May 2010) 219 the process of growth of the FTC. The following sections discuss the life cycle of the Commission over two distinct phases of "crusading" and "stagnation". 5.1.2 Life cycle phase one - Crusading and spirited approach (1993 to 2000) The early enforcement strategy of the Fair Trading Commission was consistent with that of a "youthful" crusading and assertive agency operating in an environment full of conflict.644 One interviewee opined that ... the FTC was at that time very aggressive and which you will see both in the General Legal Council case and in the subsequent case involving the Jamaica Stock Exchange where they adopted an approach not of voluntarily negotiating the matter but of dictating. 5 In this first phase of its development the Commission adopted an activist approach to both consumer and competition law enforcement.646 Action was taken to correct information failures in the key consumer markets of real estate and used cars.647 These markets are characterised by asymmetry of information between the supplier and the consumer and as the transactions often represent a significant purchase for consumers they are likely to be infrequent rather than repeat transactions which may exacerbate the consumer problems. The used car sector also raises distributional concerns as the market for second-hand cars is especially important to low-income consumers. Effective consumer protection enforcement in these areas was important as although the markets 644 Bernstein 1955 supra note 615 at 79. 645 Personal interview of senior lawyer (10 April 2008).. 646 Personal interview of former senior FTC manager (15 April 2008). 647 Fair Trading Commission, Annual Reports (1997 - 2004). 220 were supplied by a large number of players they still posed competitive and consumer concerns. Although it was less active in competition investigations the Commission also sought to address market failures on the supply side in seeking to improve competition in the markets for legal services and telecommunications services. The organisational structure of the FTC and the lack of specialist competition policy expertise of the start-up staff and Commissioners contributed to a focus on consumer protection and hindered the development of an integrated approach to business regulation enforcement. The professional staff was organised in separate economic and legal departments and multi-disciplinary teams which would have aided in creating synergies in wider market investigations were not generally utilised. Business regulation of this nature was novel in Jamaica and staff were recruited in the expectation that training would be provided in the relevant areas. The comparative lack of specialist expertise of both staff and Commissioners in competition analysis clearly impacted on the selection of enforcement areas by the Commission.648 This was underlined by a former Executive Director who indicated that the FTC focus on consumer protection for the first 10 years of its existence was due to limitations in technical capacity noting that this undermined its status as a competition agency.649 There were comparatively fewer competition investigations and limited exploration of the possible synergies between the different instruments in correcting endemic market problems. On the other hand the successful consumer law enforcement profile enabled the agency to create a platform for 648 Personal interview of senior FTC manager A (18 April 2008).. 649 Barbara Lee, "Competition Policy in the Caribbean: Some Emerging Trends and Developments - Special focus on Jamaica" Competition Matters 10 (December 2005) at 10, online: Jamaica Fair Trading Commission http://www.jftc.com/Libraries/Newsletters/Competition_Matters_2005_- _Caribbean_Competition_Policy.sflb.ashx. ("Lee 2005") 221 education and advocacy on the more complicated competition cases that the FTC attempted to investigate after enactment of the Consumer Protection Act in 2005. Despite the overall difficulties with effective enforcement the integrated framework was useful in improving consumer welfare in the market for telecommunications services and the Commission was generally viewed as having a beneficial impact in the early liberalisation of the sector.650 A regulatory vacuum existed during the preparatory phase of telecommunications liberalisation as the nominated regulator, the Office of Utilities Regulation (OUR), was only given statutory jurisdiction over the sector with the enactment of the Telecommunications Act on 1 March 2000.651 The FTC adopted a "measured approach" to enforcement in the sector and did not directly challenge the constitutional legitimacy of the telecommunications licences granted to the incumbent company Telecommunications of Jamaica (TOJ) during this xr eo interim period. However it utilised both its consumer and competition law tools to "test" the scope of the exclusivity and to effect substantial change and enhanced consumer welfare in the sector.653 650 Interview (March 25,2008); See for an overview of the telecommunication sector and enforcement institutions in Jamaica prior to liberalisation from an institutional economics perspective "Spiller &Sampson 2004", supra note 620; also see Minto 2008, supra note 86. 651The OUR was established in 1997 pursuant to the Office of Utilities Regulation Act, 1995 (No. 13 of 1995). 652 The incumbent company was Telecommunications of Jamaica (TOJ) which was the holding company that took over domestic and international services. The name of the company was later changed to Cable & Wireless (Jamaica) Limited (C&W) consequential on a change in majority ownership from the Government of Jamaica to private ownership. 653 For a synopsis of the debate on the constitutional legitimacy of the 1988 grant of licences by the Government of Jamaica to Telecommunications of Jamaica see discussion in Martin Lodge & Lindsay Stirton, "Embedding Regulatory Autonomy: The reform of Jamaican Telecommunications Regulation 1988 - 2001" (2002) CARR Discussion Paper No. 5 at 5, online: LSE http://www2.lse.ac.uk/researchAndExpertise/units/CARR/pdf/DPs/Disspaper5.pdf ["Lodge & Stirton 2002"]; also see discussion in Franklin A. Brown, "Telecommunications Liberalization in Jamaica"(2002) 2(2) Intl. J. Reg. & Gov. 107 ["Brown 2002"]; Proceedings were issued by the company on the exclusivity 222 Over the period 1993 to 2004 the Commission used the provisions in the Fair Competition Act to successfully intervene in the telecommunications sector in at least four significant instances. In 1993 the Commission was instrumental in effecting a change in policy to enable domestic customers to purchase and connect their own customer premises equipment to the network of the incumbent company.654 A subsequent intervention by the Commission in 1994 facilitated the entry of other internet service providers (ISPs) by forcing C&W to allow these providers to interconnect with the public service network. At this time C&W also tried to impose an extra charge on internet users and this was also effectively addressed by the Commission who advised that the new rate required Ministerial approval and that imposition of the charge was likely to amount to an abuse of dominance.655 During this period of active FTC enforcement on possible abuse of dominance by C&W pressure was also applied by an ISP which commenced legal proceedings utilising the private enforcement provisions under the FCA.656 Another of its licences see Cable & Wireless Jamaica Ltd. V Minister of Commerce and Technology Suit No. M89 of 1998; also see Telecommunications of Jamaica Limited v. Fair Trading Commission; also see Cezeley Sampson & Faye Sampson "Reforming and Privatising the Telecommunications Sector in Jamaica: Experiences of a Small Developing Country" in Politics Trumps Economics? Political Economy and the Implementation of Competition Law and Economic Regulation in Developing Countries, Pradeep S. Mehta & Simon J. Evenett eds. (CUTS International, CIRC, Jaipur, 2009) Online: CUTS http://www.circ.in/pdf/PoliticsTriumphsEconomics-Vol2.pdf ["Sampson & Sampson"] (Accessed 11 January 2011). 654 Consent agreement between Fair Trading Commission and Telecommunications of Jamaica (21 December 1994) cited in "Brown 2002" ibid, at 109. 655 A suit filed by C&W in response challenging the Commission's jurisdiction over regulation of user rates was settled out of court see 'Through the Years - Life with the FTC" in FTC Competition Matters Newsletter (2003) at 25. 656 See InfoChannel v. Telecommunications of Jamaica Limited , SCCA No 49/95, (Supreme Court of Judicature of Jamaica) (July 1995); The internet service provider InfoChannel was active in challenging Jamaican telecommunications sector policy and instituted legal proceedings against both C&W and the Government of Jamaica to establish its rights see Info Channel Suit E014/99; Infochannel Ltd. v. Cable & Wireless Jamaica Ltd., Suit No. C/L 1.038/2000 [Decision date 17.8.2000]; Infochannel Ltd. v. Cable & Wireless Jamaica Ltd. S.C.C.A 99/2000 [Decision date 20.12.2000], The company also brought subsequent 223 significant intervention in the telecommunications sector in 1999 resulted in the removal of messaging services that had been unilaterally imposed by C&W on customer's services. The provision of this free messaging service was done in tandem with delays in transferring lines to a small operator offering messaging services and was seen as restricting entry in the messaging service market.657 The FTC noted "... we believe it was only because of the plan by Cable and Wireless to get into the market of value - added services that there was this inordinate delay."658 The intervention of the FTC in this case also led to the provision of additional public information on interconnection and service/time periods for installation of value-added services.659 As in the earlier case there was no admission of liability on the part of the company of any breach of the Act.660 The Commission's approach to enforcement in this sector clearly demonstrated its early crusading spirit as it sought to advance the public interest and challenge the incumbent telecommunications company, the largest multi-national company operating in the region 66'An effective interface occurred as a single agency was able to simultaneously utilise provisions on misleading conduct as well as abuse of dominance in order to address the behaviour of a dominant business enterprise and promote consumer cases against the Minister when request for VOIP licence turned down after 2000 Act even though had been granted one previously 657 See "Sampson & Sampson", supra note 634 at 33. 658 See Press Release FTC v C&W settle Info Touch VoiceMail Suit October 15,1999; also see C&W responds to complaint lodged by FTC Nov 12, 1999] cited in Minto 2008 supra note 86at 53. 659 See details of the consent agreement with Cable & Wireless Ltd. (10 November 1999) in "Appendix B- FTC Consent Agreements and Out-of-Court Settlements 1993 - 2010". 660 The telecommunications sector continued to be a focal point for the Commission. In 2004 the FTC developed guidelines with the sector on rules of conduct for telecommunications advertising see Fair Trading Commission Annual Report (2004) at 8 to 9 and later in 2006 it undertook a study into competitiveness in the telecommunications sector in conjunction with the OUR see details in "Appendix C - FTC Macro Investigations, Economic and Industry Studies and Market Studies". 661 For a comprehensive insightful analysis of the behaviour of C&W and the use of anti-competitive practices in Jamaica see Minto 2008, supra note 86 particularly pp 51 - 54. 224 interests. The Commission's actions increased consumer choice in customer premises equipment and choice of ISP's, addressed consumer pricing in the sector, improved standards of comparative advertising and led to an overall improvement in consumer welfare. The consolidation of functions in the agency also ensured there was no regulatory duplication in addressing these issues. Despite the effective use of the regulatory tools in the telecommunications sector it is notable that no clear rationale or theory in terms of prioritisation or goals appeared to underpin the market interventions of the FTC during this early period. Although it attempted to respond to what it perceived as key consumer issues for the public the FTC proceeded and was primarily driven by complaints received by the agency. This provided a level of immediate assistance to consumers and raised the Commission's profile. However in order to identify market issues agencies need to do more than rely on consumer complaints. Reliance on case-driven investigations and complaint negotiation poses several problems in adequately identifying consumer harm.662 All complaints may not be recorded and vulnerable groups such as poorer consumers may underreport issues. There are also some problems that cannot be discovered in this manner such as long-term safety and health issues. The focus on dispute settlement is also likely to hinder development of the links between consumer and competition law concerns and pursuit of an overall public interest goal. The early campaigning efforts by the fledgling and inexperienced staff team ultimately led to legal and jurisdictional difficulties. Judgments in two key cases placed 662 See "Ramsay Rationales 1984", supra note 167; Bardach & Kagan 1982 supra note 67 at 154. 225 significant restrictions on the jurisdictional ambit of the Commission. Legal proceedings in both the Jamaica Stock Exchange v Fair Trading Commission (JSE case) and the General Legal Council v. Fair Trading Commission (GLC case) which started within the first two years of the establishment of the Commission tested the legal powers of the agency. The judgment in GLC effectively removed a large portion of the activities of the legal profession from the ambit of the Fair Competition Act and the ruling in JSE hindered the adjudication of competition cases by its finding that the Commission's institutional and organisational structure did not meet natural justice requirements. As Bernstein found new agencies are prone to legal challenges and opposition from regulated groups.f.f/1 Legal proceedings and challenges to the regulators are often made in areas that are "highly specialized, technical and frequently obscure."664 This was reflected in the proceedings brought against the FTC by interest groups with authoritative grasp and dexterity in the legal system. The weakness of the Fair Competition Act in the face of legal challenge from a powerful and entrenched interest group was evidenced in GLC. This case concerned a possible breach of section 35 of the Fair Competition Act on the basis of the inconsistency of the legal profession's canons of professional ethics with the Act. The investigation focused on the rules (a) restricting the freedoms of attorneys on advertising or promoting the supply of legal services by their firms or disseminating information about their qualifications; (b) restricting the inclusion of non-lawyers in legal practices; (c) setting the levels of charges and prices for services; and (d) restraining attorneys who 663 Bernstein 1955, supra note 615 at 81 to 82. 664 Ibid. 226 served as Supreme Court or Court of Appeal judges from returning to practice as attorneys.665 In response to the allegations the General Legal Council of the Bar, the regulatory and governing body for lawyers, filed legal proceedings seeking clarification of the Commission's jurisdiction over the activities of lawyers. The Supreme Court held that the General Legal Council was not subject to the jurisdiction of the Commission as specific legislation namely the Legal Profession Act and the Legal Profession (Canons of Professional Ethics) Rules governed the specified practices.666 Justice Chester Orr also held that the rules made by the General Legal Council under the Legal Profession Act did not constitute an "agreement" within the meaning of the term as used in the Fair Competition Act. It is interesting to note that the FTC proceeded in this case on the basis of conspiracy under section 35 rather than anti competitive conduct under section 18 which may have been easier to prove. It is arguable that a more effective legal approach would have been to seek clarification of the scope of section 3(g) of the Fair Competition Act which exempts from the Act the activities of f\f\1 professional association considered reasonably necessary for public protection. The FTC did not appeal the ruling and the General Legal Council on its own initiative subsequently changed many of the rules to which the FTC had drawn attention. As one interviewee noted ...the legal profession ... recognised the spirit of the legislation and the General Legal Council in fact voluntarily reviewed some of its statutory regulations. Despite having succeeded in court we in fact thereafter voluntarily introduced relaxations on 665 The Legal Profession (Canons of Professional Ethics) Rules were made under the Legal Profession Act 1972. 666 General Legal Council of the Bar v. Fair Trading Commission (14 November 1995) Suit No. E35 of 1995 (Supreme Court of Judicature of Jamaica). 667 "Lee 2005" supra note 649 at 13. 227 the rules of advertising ... [and] abandoned any scale of fees. So there was certainly on the part of the profession a voluntary recognition and modification to the (scheme.)668 Therefore although the Commission was unsuccessful in these legal proceedings it is clear that the establishment of the agency and the new focus on competitive market conditions was instrumental in changing the market for professional legal services. The judicial ruling on the Commission's investigation into the operations of the Jamaica Stock Exchange had a significant and dramatic detrimental effect on the operations of the Commission. JSE started within the first few months of the establishment of the Commission when a complaint was brought by investment bankers Dehring, Bunting and Golding Limited regarding the failure of the Stock Exchange to respond to its application for membership for over a year.669 Legal proceedings were instituted by the Commission to determine whether the JSE had a dominant position in the market for brokerage services and had by its actions abused its position in the market. At first instance in July 1997 Justice Theobalds summarily disposed of all the arguments and ruled in favour of the FTC.670 The judge held that the jurisdiction of the Securities Act did not oust the jurisdiction of the Fair Competition Act and that brokerage services fell within the jurisdiction of the Fair Competition Act. This decision was overturned on appeal in 2001. The Court of Appeal held that the Fair Competition Act was not applicable to the JSE as the JSE was governed 668 Personal interview of senior lawyer (10 April 2008). 669 The JSE had been established under the Securities Act which was passed in Parliament on the same date as the Fair Competition Act pursuant to the Securities Act No. 8 of 1993. 670Jamaica Stock Exchange v Fair Trading Commission (4 July 1997), Suit No. C.LJ. 127 of 1994, (Supreme Court of Judicature of Jamaica) [JSE case]. 228 f\71 by the Securities Act. The key part of the judgment was the finding that the action and proceedings of the FTC in the case were in breach of the rules of natural justice and void as the agency was acting as both complainant and adjudicator in the same matter. An appeal to the Privy Council was not taken forward by the Government of Jamaica. The Commission was therefore left in the untenable legal position where its organisational structure did not allow it to exercise the investigative and adjudicative roles contemplated under the Act. The Court of Appeal judgment in JSE was a defining moment in the history of the Fair Trading Commission and practically ensured that the agency would be unable to fulfil its public interest mandate and fully exploit the synergies in its regulatory instruments. The jurisdictional incapacity of the Commission following on from the decision in JSE was not addressed by the Government of Jamaica and no definitive action was taken on the strengthening of the institutional structure of the FTC. This delay in the rectification of the legal authority of the Commission may be partially attributed to a low level of political support and the limited influence of the institution. The time-consuming nature of the bureaucratic process to decide whether to seek to appeal to Privy Council also contributed to the delay in reaching a solution. It has been indicated that one of the reasons that this option was not taken was because of cost concerns over continued litigation.673 Once the decision was taken not to appeal, exploration of the policy options and scope of legislative amendments to remedy the problem coupled with the level of 671 Jamaica Slock Exchange v Fair Trading Commission (29 January 2001), Supreme Court Civil Appeal No: 92/97(Court of Appeal of Jamaica). 672 Application for leave made on February 16,2001 see Fair Trading Commission Annual Report (2001) at 9. 673 Personal interview of senior FTC manager A (18 April 2008).. 229 extensive discourse on this between the agency and the portfolio ministry prolonged the rectification of this fundamental issue. Although reasonable explanations have been offered in respect of the delay the significant impact this has had on agency efficacy and the consequential detriment to consumer welfare is unquestionable. It also clearly illustrates the significant impact of cost constraints on regulation in small states. The judgments in GLC and JSE have led to another difficulty in the regulatory framework. They appear to have established a "regulated industry" or "regulated conduct" defence in the Jamaican regulatory scheme. This defence essentially exempts industries regulated under sector specific legislation from general competition law provisions.674 The GLC case exempted the legal profession and the JSE case may have exempted not only the Stock Exchange but the financial services sector from the purview fine of the Fair Trading Commission. The contours of this regulated industry defence have not been fully clarified in subsequent case but law the exemption of financial services from the authority of the Commission in this manner would clearly be deleterious to consumer interests in light of the significance of financial services for consumers. During this first phase of Commission activity budgetary constraints were camouflaged by the significant level of technical assistance provided to the Commission 674 See for a discussion of the regulated conduct defence in the Canadian context Trebilcock et al Canadian Competition Policy 2002 supra note 234 at 690 to 704 and Michael J. Trebilcock, "Regulated Conduct and the Competition Defence" (2005) 41 Can. Bus. L. J. 492. 675 Concern has been expressed that the ruling in the JSE case means that the financial sector is not subject to the jurisdiction of the Fair Trading Commission but is regulated on other grounds by the Financial Services Commission see "UNCTAD 2005 Peer Review Jamaica" supra note 642 at 66. 230 through USAID.676 This funding, which followed assistance in drafting the legislation, was used for procurement of administrative and technical consultancy services, training, development of job descriptions and employee code of ethics, purchase of office equipment, furniture and library materials, development of information and media awareness campaigns. Government funding covered the day to day operations and staff remuneration costs. Specific funding was subsequently provided to develop economic expertise of the Commission.677 Accordingly even though the budget allocation was low, senior personnel involved in the area considered the Commission to be adequately resourced during the first phase.678 It is also likely that this perception and complacency about the adequacy of resources was due to insufficient recognition of the breadth of the mandate of the agency. 5.13 Life cycle phase two - Gradual agency stagnation (2001 to 2004) In charting an institutional life cycle it is not possible or wise to provide a precise time demarcation as the boundaries between the phases are fluid and will inevitably be blurred. The vigorous enforcement approach of the FTC eroded on a gradual basis but certainly the 2001 judgement in JSE represented a watershed in the institutional development of the agency and is a convenient point to mark the commencement of a 676 See OECD Global Forum on Competition, Questionnaire on the Challenges Facing Young Competition Authorities - Contribution from Jamaica, DAF/COMP/GF/WD (Paris, OECD, 2008) [OECD Jamaica Questionnaire 2008], online: OECD http://www.oecd.Org/dataoecd/8/57/41851680.pdf. 677 Funding provided in 1995 see online: USAID http://pdf.usaid.gov/pdf_docs/PNABW867.pdf (Accessed March 23,2011). 678 Personal interview of former senior FTC manager (15 April 2008). 231 period characterised by significant challenges and declining public confidence in the agency. This second phase was marked by reduced activism, budgetary constraints, continued lack of technical capacity and limited jurisdictional authority stemming from the judgments in JSE and GLC. The behaviour of the agency during the second stage was partially consistent with Bernstein's model which predicts that regulatory agencies will enter a mature phase in their life cycle characterised by agency apathy and lack of public and political support evidenced by reduced funding due to a view that the agency is not well-managed.679 Additionally he found that there is generally a change in operating philosophy to an agency that seeks to manage rather than police and is reliant on precedent and routine procedures in the process becoming captive or captured by regulated groups.680 Although characterised by reduced activism, this stage in the Commission's history was different to the maturity phase mapped by Bernstein. Despite the reduced level of activism, attributable to poor institutional design and financial limitations, the Commission did not "surrender" to the regulated interests particularly in its consumer protection remit. The private sector appeared to consistently view the FTC throughout the first and second periods of its evolution as being unsympathetic to its concerns. As noted by a former senior Commission officer the agency was perceived as a "hindrance to business".681 This viewpoint was also reflected in interviews held with private sector personnel.682 679 Bernstein supra note 599 at 86 to 90. 680 Ibid, at 87. 681 Personal interview of former senior FTC manager (15 April 2008)... 682 Personal interview of senior lawyer (10 April 2008); Personal interview of private sector organisation representative (23 April 2008). 232 Although the budgetary allocations to the Commission increased over the period under review the Commission's overall budget was inadequate. An UNCTAD study suggested that the Commission's budget was at least 75% below that of agencies in other developing countries. Agency funding became more of an issue in this second stage with increased recognition of the economy-wide regulatory role that it was expected to play in this environment. The adverse impact of the budgetary constraints became a recurring theme in the annual agency reports.684 As the small size of economies does not reduce the level of technical analysis, investigation or information data set required in order to investigate possible breaches of legislation the lack of resources available to the Commission also impacted on the information gathering capacity of the agency and its ability to gather sufficient market data for investigations. In addition to its budgetary constraints the FTC also suffered from significant human resource constraints due to low staff recruitment and high staff turnover levels.685 According to a former Executive Director It is no secret that but for the diehard nationalist or the committed student of competition very few persons remain at the FTC for much beyond three years, 683 See "UNCTAD 2005 Peer Review Jamaica" supra note 642 at 61. The UNCTAD report noted that comparable budgets of competition authorities in developing countries varied from 0.06 to 0.08% of government's non-military operations and on this basis assessed that the expected level of budgetary allocation for 2004-2005 would be between US$1,871,211 and $2,494,948. The Commission was actually allocated US$568,976 in 2004,The FTC budget ranged from $499,973 in 2001 to 568,976 in 2004. 684 See Fair Trading Commission Annual Report (2001) at 12; Fair Trading Commission Annual Report (2002) at 1; Fair Trading Commission Annual Report (2003) at 1; Barbara Lee, "Coping with Challenges at the Jamaica Fair Trading Commission" Paper presented to the American Bar Association Antitrust Section, Spring 2006), online: ABA http://www.abanet.org/antitrust/at-committees/at-ic/pdf/spring/06/146.pdf. ["Lee ABA 2006"]. 685 Taimoon Stewart 2004, supra note 13 at 182; also see "UNCTAD 2005 Peer Review Jamaica" supra note 642 at 47. 233 which is the contract period for the professional staff. By a long stretch, the meagre salaries is the reason identified.686 Staffing levels over the case study period increased only slightly despite the increasing workload.687 This affected not only the output of the agency but the institutional memory. Furthermore despite the clear requirement for expertise in a technocratic agency minimal opportunities were provided for the training of staff. This led the Commission to rely on both formal technical assistance through a new USAID project and informal cooperation from other agencies 688 For example the US Federal Trade Commission provided informal advice as well as a skilled negotiator to assist the staff of the FTC in ZOQ negotiating a consent agreement with a large business enterprise. Although piggybacking on other mature agencies can provide an informal method of support it is unsustainable in the long term and cannot replace development of local agency knowledge and skills. The sheer volume of consumer protection investigations placed a strain on the agency. Over the period 1993 to 2005 consumer offences enforcement consistently remained the foremost agency activity with the caseload dominated by section 37 misleading advertising investigations.690 Investigations of consumer protection offences reached its peak in 2003 with a reported 85% of cases falling within the category of 686Barbara Lee, "The most important institutional challenges in promoting competition in Jamaica." (Paper presented to the OECD Latin American Competition Forum, June 2004) at 6 online: OECD http://www.oecd.org/dataoecd/52/43/32033702.pdf ["Lee OECD 2004"]. 687) Personal interview of senior FTC manager A (18 April 2008).. 688 The USAID New Economy Project from September 2002 to February 2004 provided funding for technical and infrastructural development see discussion in "Lee OECD 2004" supra note 686 at 7. 689 Ibid. 690 Misleading advertising statistics compiled from annual reports and ministry papers show the following annual breakdown (1997) 43%; (1998) 35%; (1999) 49%; (2001) 52%; (2002) 72%; (2003) 85%; (2004) 82%; (2005) 79%; (2006) 79% and (2007) 79%. 234 misleading advertising.691 Although the number of cases rose steadily in line with increased public awareness of the agency and its role competition investigations comprised only a small minority of the cases. Despite the paucity of competition cases the following table demonstrates that competition law enforcement was still responsible for a significant proportion of the budget and work hours of the Commission. This high proportion, despite the overall low level of competition cases, is explained by the fact that competition law enforcement is inherently more time-intensive than the consideration of consumer claims. Table 2: Breakdown of the FTC budget and working hours between consumer and competition enforcement and administration activities (1999 to 2004) (in per cent) Competition Consumer Administrative enforcement protection management Work hours 29.58 44.58 25.84 Budget 34 39 27 Source: UNCTAD Voluntary Peer Review on Competition Policy: Jamaica (2005) at 9. As the Commission evolved the mismatch between the technical demands of its role and its institutional capacity widened. Regulatory challenges arose from the limited resources of the FTC and the lack of legislative amendments to statutorily strengthen its powers. The Commission appears to have been a weak player in the political bargaining process with a demonstrable lack of political support after the initial blush of enthusiasm on its establishment. This was the case even though there were strong ties to the political directorate with the movement of both a former Executive Director and acting 691 After 2005 there was a slight dip in the proportion of cases due to an express focus by the agency on competition matters and macro-investigations. 235 f\QO chairperson to ministerial portfolios. However the failure to strengthen the agency meant that the public interest goals were only partially fulfilled and the Commission was unable to properly build on the links between consumer and competition law. 52 Analysis of the regulatory enforcement style and strategies of the Fair Trading Commission Public enforcement of consumer and competition laws ensures that the wider public interest as distinct from individual justice is properly considered. Regulatory enforcement which concentrates on the strategic disposition and prioritisation of cases should be distinguished from dispute settlement which focuses on the settlement of individual claims.693 Maximising the consumer benefits of business regulation enforcement requires that the enforcement agency utilises strategic regulatory enforcement. The choice of an enforcement strategy has significant implications for effectiveness and the FTC's approach to the use of its tools is considered in this section. 692 Philip Paulwell, former Executive Director and Aloun Ndombert-Assaba, former acting chairperson were subsequently appointed as Ministers. Paulwell was appointed as Minister with direct responsibility for the FTC. 693 See Eric H. Steele, "Two Approaches to Contemporary Dispute Behavior and Consumer Problems" (1977) 11:4 Law & Soc. Rev. 667 at 669. 236 5.2.1 Moving beyond dispute settlement to regulatory enforcement The FTC initially operated as a dispute settlement body driven by individual complaints.694 The FTC dealt with each complaint on its individual merits with the legal officers taking the lead in consumer protection investigations supported by research and complaints officers and operating on a client-attorney type relationship.695 This type of reactive strategy is to be expected in an agency dealing with a significant number of consumer complaints as there is an expectation that it will focus on individual consumer complaints settlement rather than general enforcement.696 However this approach did not allow FTC to use these consumer-related complaints to change general industry behaviour which led to recurring industry issues.697 It also led to uneven and unequal business regulation enforcement as the complaint driven caseload did not address the less visible competition cases. The Commission's dispute settlement role eventually evolved into a regulatory enforcement role providing a platform for more integrated enforcement. Endowed with significant regulatory discretion the Fair Trading Commission is able to rely on a mixture of compliance strategies (based on persuasion and dialogue) and deterrence strategies (based on prosecutions and penal sanctions). Examination of the enforcement style of the Commission demonstrates a preference for a regulatory 694 Although it should be noted that the FTC initiated some investigations for instance the Fair Trading Commission Annual Report (1998) at p. 4 cited investigations into the National Housing Corporation Limited, Petroleum Retail Industry and General Insurance Industry carried out on own initiative. 695 The FTC did not have formal case selection criteria until 2006. 696 Peter Grabosky & John Braithwaite Of Manners Gentle: Enforcement Strategies of Australian Business Regulatory Agencies (Oxford University Press, Melbourne, 1986) [Grabosky & Braithwaite 1986] at 80. 697 Peter John Gordon, "Competition Policy in a Developing Country Setting - A Perspective from Jamaica" (Paper presented to WTO Workshop. Kingston, Jamaica, April, 2003), online: Fair Trading Commission http://www.jftc.com/news/Speeches.aspx. 237 compliance approach. It is unclear whether this compliance enforcement style was self consciously adopted as an express strategy of the Commission or developed over time as a practical response to the jurisdictional issues of the FTC in competition law enforcement. A compliance style and higher reliance on consensual approaches may be £QO expected in a small state environment with close community ties. This approach is also in line with the empirical evidence from agency case studies which have demonstrated that a compliance approach is generally favoured by regulators.699 However reliance on compliance tools adversely affected the effectiveness and efficiency of the agency. A different approach that sought to utilise an explicit enforcement pyramid and a mixture of responsive compliance and deterrent strategies would have led to more impactful regulatory outcomes. There is no evidence that the Commission has formally utilised the responsiveness model or actively sought to use escalation and de-escalation as a regulatory strategy. However the enforcement pyramid tool of responsive regulation provides a useful frame for examining the enforcement tools available to the Commission.700 The Commission's enforcement pyramid which is illustrated in a tabular format below moves from education and advocacy at the base of the pyramid through to 698 The work of Richards who used case studies of Faroe Islands, Malta and the Isle of Mann with smaller populations supports the hypothesis that small states are more consensual see Jeffrey Richards, "Politics in small independent communities: conflict or consensus" (1982) 20(2) J. Commonwealth & Comparative Politics 155. 699 Grabosky & Braithwaite 1986 supra note 696; "Hutter 1997' supra note 51; A. Reiss "Selecting Strategies of Social Control over Organisational Life" in Keith Hawkins & John M. Thomas eds., Enforcing Regulation (Boston, Massachusetts: Kluwer-Nijhoff, 1984); Cartwright Consumer Protection 2001supra note 70 referencing R.J. Bragg Trade Descriptions (Oxford: Clarendon Press,1991) at 202 and Ross Cranston, Regulating Business Law and Consumer Agencies (London: Macmillan: Social Science Research Council, 1979) [Cranston 1979], 700 See earlier discussion of responsive regulation in section 1.2.3 of the dissertation and Figure 1- Enforcement Pyramid. 238 civil or criminal legal proceedings and incapacitation at the apex of the pyramid depending on the regulatory offence or business practice under investigation. Table 3: FTC Enforcement pyramid Pyramid strategy Fair Competition Act provision and/or FTC activity Incapacitation • Imprisonment of individuals for failure to attend and give evidence, obstructing the Commission's investigation, destroying or altering records, giving false and misleading information (ss.42- 45) • Injunctions (s.47(l)(b)) Criminal proceedings and • Criminal fines for procedural offences as above fines (ss .42-45) Civil proceedings and • Pecuniary penalties for breaches of substantive pecuniary penalties offences in Parts III, IV, VI or VII of Act (s.47(l)(a)) • Enforcement of Commission directions on findings of abuse of dominance or tied selling and exclusive dealing (s.46) Agency adjudications and • Authorisations (ss.29 -32) directions • Findings on anti-competitive actions (ss.21& 33) Negotiations and • Settlement of civil proceedings settlement • Settlement following Commission findings • Settlement following investigation and staff opinion Education and advocacy • Advice to Minister (s.5(l)(c)) • Consumer and Business education (s.5(2)(a)) • Consumer studies and reports (s.5(2)(b) • Promotion of voluntary self-regulation with trade associations (s.5(2)(c)) 239 5.2.2 FTC use of deterrence strategies - Incapacitation and legal proceedings The deterrent effect of prosecutions and civil legal proceedings was immediately recognised and acted upon by the Commission. This was useful as perceptions of the regulator as a tough and successful litigator can be a key factor in creating a compliance culture and a more co-operative attitude from businesses.701 The Commission felt that enforcement against the very big players in the market like C&W meant that there would be greater and more immediate compliance by the smaller players in the market.702 The agency was initially perceived as a successful litigator although this perception was revised over time particularly with the high profile negative ruling before the Court of Appeal in JSE. Empirical research has shown that prosecutions are infrequent in consumer protection.703 Over time this was evident in the Commission's approach to consumer protection caseload. However it had a relatively more active prosecutorial approach and made greater use of deterrence strategies for consumer protection than competition law enforcement. This can be attributed to the fact that the Commission's legal role in consumer protection was clearly prosecutorial which differed from the role in competition where it was statutorily expected to exercise an adjudicative role by making a finding and enforcing the findings through the courts. The use of deterrence strategies was hindered by the inability of the agency to adjudicate and institute legal proceedings for enforcement in competition cases. As has 701 "Parker 2004" supra note 58 at 211. 702 Personal interview of former senior FTC manager (15 April 2008). 703 Cranston 1979 supra note 699 at 101. Statistics collected by the Institute of Trading Standards Administration in 1979 indicated that of 21,430 infringements of the Trade Descriptions Act in a 6 month period 1,003 cases were prosecuted and in 14,542 cases advice was provided. 240 been cogently noted by Ayres and Braithwaite, "...a regulatory agency with only a sanction that cannot politically or legally be used in a particular situation is unable to deliver a punishment payoff." 704The prosecution of offences is prohibitively expensive and small state regulatory agencies are characteristically underfunded. The utilisation of deterrence strategies was clearly hampered by financial constraints so that by 2004 the FTC cited lack of funds as a contributory factor in their enforcement strategy indicating that it significantly affected their ability to pursue cases in the Supreme Court particularly after the introduction of higher fees in 2003.705 Criminal Prosecutions Despite the constraints the Commission undertook prosecutions for breach of procedural offences.70 Proceedings were instituted against a company for failure to answer a Notice for Examination and the company eventually complied with the Commission's information request.707 Similarly proceedings taken against a financial institution for failure to provide information were settled following an apology and 704 Ayres & Braithwaite 199 2supra note 76 at 36 7U5See Executive Director's Remarks in Fair Trading Commission Annual Report (2004) that "... respondents are already avoiding prosecution because the FTC does not have the manpower required to pursue Court action to the measure required" and OECD Jamaica Questionnaire 2008 supra note 676 where the FTC indicated that increases in the cost of filing court cases in the Commercial Court created financial burden for the Commission particularly as an application to the court for general waiver of fees jjaid by the FTC was not granted. See Fair Competition (Amendment) Act No. 22 of 2001 which amended sections 42 to 44 of the Fair Competition Act which provided for the offences to be triable before the Circuit Court and subject to a fine or imprisonment of up to five years. Provisions were amended to make the offences subject to the summary jurisdiction of Resident Magistrates and provide for a fine of up to $500,000 and imprisonment of up top one year on conviction. Section 45 was also amended to increase the fine on conviction from $20,000 to up to 1 million dollars. 707 R. v. Jovor Limited cited in FTAA Working Group on Competition Policies, "Report on Developments and Enforcement of Competition Policy and Laws in the Western Hemisphere" (1997) FTAA: online http://www.ftaa-alca.org/Wgroups/WGCP/English/dae/dae_toce.asp#jam.["FTAA 1997"] 241 provision of the information. 708 The Commission has had mixed success in these types of proceedings and in another procedural prosecution for failure of a senior executive to attend a Commission hearing the respondent was found not guilty.709 As there is only a limited amount of publicly available material on legal proceedings by the Commission it is difficult to draw firm conclusions on the frequency and rationale behind the Commission's use of these prosecutions. However the use of the procedural offences points towards a desire by the Commission to secure enforcement outcomes. Pecuniary Penalties Outside of criminal prosecutions for procedural offences civil pecuniary penalties, which can be imposed by the courts for contravention of substantive offences, are the most significant deterrence tool available to the Commission for enforcement of the law. Contravention of obligations or prohibitions in Part III, IV, VI or VII of the Act is subject to a pecuniary penalty in civil proceeding.710 The penalties are paid to the Crown via the Office of the Accountant General.711 Pecuniary penalties under the Fair Competition Act pose a lesser deterrent to businesses as the maximum penalties that can be imposed by the courts are low. The Act provides for penalties of up to one million dollars for individuals and 5 million dollars for persons other than individuals. Linking the penalties under the Act to the nature of the breach as well as the turnover of the business would provide a more effective method of 708 R. v, Michael Vacciana & Caribbean Housing Finance Corporation Limited (CHFC) cited in Fair Trading Commission Annual Report (1998) at 2. 709 FTC v.J and J Garage and Dennis Woodbine cited in Fair Trading Commission Annual Reports (1999) and (2001). 710 Fair Competition Act s. 46. 711 Repayment procedure noted in the Fair Trading Commission Annual Report (2005) at 11. 242 determining fines that would actually deter businesses as well as compensate the community for the harm caused.712 This approach would be particularly apt for wide spread, long term anti-competitive activity such as cartels that may have caused significant adverse effect on consumer welfare. Over the period under review pecuniary penalties were only imposed in section 37 cases. This reflects both the relative inactivity of the Commission in competition law enforcement and the fact that Commission findings on competition matters prior to the Court of Appeal decision in JSE disclosed no breaches of the Act.713 Following the judgment in JSE the Commission was unable to make findings on competition breaches under the Act and although it could arguably have chosen to investigate cases and institute legal proceedings to enable the Court to make a finding it did not choose to utilise this option. Table 4 lists the pecuniary penalties imposed for regulatory breaches under the Fair Competition Act between 1993 and 2004J14 712 The position under the Fair Competition Act can be contrasted with competition legislation in Barbados, United States, Japan and the European Community which links fines to turnover. 713 See the trio of Commission findings on abuse of dominance and predation namely Super Plus Food Store, FTC Case No. 3794 (13 August 2001); Tank Weld Metals, FTC Case No. 3328 (10 August 2001); Telstar Cable Ltd, FTC Case No. 3263 (29 August 2001). 714 Pecuniary penalty of J$250,000 (US$3,484) imposed outside of this period in Fair Trading Commission v. Errol Bailey Trading as Foundation Music Showcase (4 July 2008) Claim No. 2007 CD003 (Supreme Court of Jamaica Commercial Division). 243 Table 4: Pecuniary penalties ordered by the courts for contravention of section 37 of the Fair Competition Act, 1993 to 2004 Case Name Brief Description Penalty J$ Date of (US$) decision Fair Trading Failure to provide owners with an $1.5 million 4 Feb.1999 Commission v. intercom system between the ($32,933) Home Builders property gatehouse and apartment or Development with individual metering for water as Company Ltd. had been described in the brochure. and Jintsu Limited Fair Trading Failure to properly install a new roof $700,000 12 June Commission v. on a consumer's house. The job was ($15,369) 2001 Pyramid poorly done resulting in leaks and Roofing System poor roof appearance. Fair Trading Failure to honour a warranty on $100,000 28 Sept. Commission v. security gates. The consumer had ($2,196) 2001 Airtight paid the company over $500,000 to Security Ltd. install and maintain gates The respondent company did not appear. Fair Trading Failure to provide townhouse $2.5 million 30 March Commission v. facilities promised in advertising ($41,421) 2004 SBH Holdings material namely swimming pool, Limited and tennis court and clubhouse. Forest Hills Joint Venture 7je Limited. Source: Fair Trading Commission Annual Reports (1999 - 2002). Note'. Currency converted using Bank of Jamaica historical conversion rates. 715 Fair Trading Commission v SBH Holdings Limited and Forest Hills Joint Venture Limited (30 March 2004) Supreme Court Civil Appeal No: 92/2002 (Court of Appeal of Jamaica) rev'g (19 July 2002) (Supreme Court of Judicature) [SBH Holdings]. 244 Table 4 illustrates that the overall level of pecuniary penalties was low with penalties totalling just under US$70,000 being imposed on offending businesses in court judgements between 1993 and 2005 highlighting the problem of imposition of inadequate fines by the judiciary.716 However the deterrent value of the penalties has been recognised in the only reported case on the consumer protection offences in which the court noted that "where representations are false or misleading, a very strong message must be sent to those persons or corporations who are in breach of the law.717 Under the Act consumers are required to take independent action to recover damages and the Commission has not focused on securing compensatory damages although it has incorporated limited remedial measures in consent agreements to include payment of damages.718 Enforcement action has therefore resulted in a minimum level of compensatory damages and deterrent fines on businesses. 523 FTC use of compliance strategies - Negotiation, advocacy and education The Commission settled on an approach that promoted compliance relying primarily on authorisations, negotiation of consent agreements and provision of education and advice. 716 Terms of imprisonment have not been imposed for any breaches of the Act. 717 Judgment of Harrison, J.A.(Ag.) in SBH Holdings supra note 715 at 30. 718 See details of cases in Appendix B - List of FTC Consent Agreements. 245 Authorisations Authorisations can be considered as part of the compliance tools of the Commission as this approval process seeks to prevent or limit harm and is initiated by dialogue between the players. Practices approved under the authorisations procedure set out in Part V of the Act are exempted from the operation of the Act and provide immunity from action. Any agreement or business practice which is a practice affected or prohibited by the Act can be authorised. The FTC deals with authorisations only on *T 1 Q application not on its own initiative, under a public benefit test. The history of authorisations under the Fair Competition Act is intriguing and does demonstrate a level of pro-active enforcement and competition advocacy by the Commission despite the fact that the FTC has only approved a single authorisation in its history. This was the authorisation of the Futures Group allowing it to recommend the range of prices at which certain contraceptive products could be sold by suppliers.720 Although this recommended price range would have constituted a breach of section 34 of the Fair Competition Act on price fixing the Commission found that the public benefit of allowing affordable contraception was promoted by the proposed arrangement. Early in its history the Commission also considered the possibility of authorisations of the activity of agricultural commodity boards namely the Banana Board, the Spirit Pool and the Coconut Industry Board.721 The Coffee Board had been exempted 719 The interaction between this provision and the efficiency defences available under in sections 17 and 20 is not clearly spelt out. 720 FTC Public Register, online: http://www.jftc.com/PublicRegister/Authorizations.aspx. 721 Fair Trading Commission Annual Report (1997). 246 from the purview of the Act by Ministerial decree.722 This appears to have prompted a pro-active reaction by the FTC to consider inviting other commodity boards to apply for authorisation of their activities.723 The applications were not definitively settled at that time and the Commission returned to the issue of agricultural boards in 2001 with a framework for analysis of the activities of the Boards based on the legal exemption test in section 17(4).724 The attempt at a pro-active approach was unsuccessful as the investigations were discontinued due to the lack of human and financial resources to conduct full research into the area and the ineffectiveness of persuasion techniques with the affected bodies.725 Consent Agreements A significant number of the cases resolved by the FTC have been administratively T)f\ concluded by the use of consent agreements. The use of consent agreements or settlement of proceedings is a key tool in a compliance approach and are advantageous to both regulator and regulatees in allowing proceedings to be finalised at lower costs and with greater speed. The limited regulatory capacity of small state agencies makes this a particularly attractive strategy in enforcement. Influential academic research has also supported the effectiveness of the use of undertakings in the Australian context.727 It is important to distinguish the enforceable undertakings used by the ACCC from the FTC 722 The other ministerial exemption was made in 2001 to exempt the Jamaica Public Service Company, the electricity service provider from jurisdiction of the FTC. 723 See "FTAA 1997" supra note 707. 724 Fair Trading Commission Economics Department, "Commodity Boards in Jamaica: A Framework for Analysis" (9 August, 2001). 725"Lee OECD 2004"supra note 686. 726 See Appendix B : FTC Consent Agreements and Out-of Court Settlements (1993 - 2009). 727 "Parker 2004", supra note 73. 247 consent agreement procedure. ACCC undertakings are strengthened by the express statutory basis for its jurisdiction and guidelines which provide additional safeguards for their use. In contrast the FTC's agreements are purely administrative solutions and if the terms of FTC settlements/agreements are broken then the FTC can take action for the original breach of the Fair Competition Act subject to statutory limitations.728 Settlement procedures which were issued in 1998 and codified in regulations aq contain guidelines on the out-of-court settlements negotiated by the Commission.7 In considering whether to enter into settlement Commission staff is required to consider degree of co-operation of the respondent; nature, degree and gravity of the breach and level of repeat offending i.e. whether it is the first time that the respondent is under investigation by the Commission.730 Recommendations are then made to the Commission. A clear benefit of consent agreements is that they can be creatively tailored and include non-standard remedies such as individual compensation claims and "community service" which would not be possible in the course of legal proceedings.731 Innovative compensation measures can be included in the agreements.732 In an early FTC consent agreement provision was made for a fast food business to provide lunches for a school in 728 The ACCC is empowered under section 87B of the Trade Practices Act to accept enforceable undertakings. 729 The Fair Competition Act (Notices and Procedures) Regulations, 2000 [FCA Regulations 2000]. 730 Reg. 23(1) FCA Regulations 2000. 731 "Parker 2004", supra note 73. 732 The FCA Regulations 2000 make provision for inclusion of compensation, refunds, charitable donations, apology and such other remedy as the Commission may see fit. 248 the community.733 These agreements can also extend the jurisdictional reach of the Commission in allowing it to obtain damages for individual consumers without requiring them to use findings to commence a private civil claim under section 48 of the Act. Importantly it has allowed settlement of consumer and competition law issues such as in the telecommunications sector.734 It has however also allowed the FTC to move beyond dispute settlement and address market issues and the settlement of claims of a large 7^c number of persons such as in the used car and furniture sectors. Despite the benefits to the use of consent agreements the practice raises concerns for an agency seeking to develop an effective enforcement policy. Consent agreements have limited the transparency of the regulatory process as negotiations are conducted behind closed doors. Furthermore although a public register of agreements is maintained on the Commission website this does not appear to provide a complete list of settlement agreements and some agreements are referenced only in the annual commission reports. Additionally compliance reports on the terms of consent agreements are not published with the consequential difficulty in determining efficacy of these settlements. The Commission also enters into settlements even where liability is not accepted which limits 733 See details of Consent Agreement in Restaurants of Jamaica signed 14 July 1998 in Appendix B:FTC Consent Agreements and Out-of Court Settlements (1993 - 2009). 734 See agreements with Cable & Wireless detailed in Appendix B. 735See agreements entered into with Key Motors, Courts detailed in Appendix B. the Commission also attempted to address and settle multiple claims in an action against Warehouse Ltd. for late delivery and non-delivery of furniture. No remedy was enforced by the courts as the directors had emigrated and accordingly there was no respondent against whom the order could be enforced. See FTC Annual Report (2006). 249 the use of consent agreements as precedent and hinders the development of legal principles in the area.736 One peculiar difficulty in the Jamaican context is that the enforcement strategy and use of consent agreements appears to be seen by the agency as a critical method of generating fees and income. Although cost-recovery provisions are utilised by several regulatory agencies, the approach provides the FTC with an incentive for settlement of cases in this manner.737 The incentive is different from the recovery of costs in litigation as it may be perceived that there is greater uncertainty in litigated proceedings and higher upfront costs as the Commission has to make actual disbursements such as payment of filing fees. The income-generating potential of consent agreements is likely to be a critical factor in the Commission's approach to case management as it has traditionally suffered from budgetary constraints. The importance of this income is illustrated by the inclusion of fees recovery in consent agreements as an FTC priority in the annual reports.738 The Fair Trading Commission has calculated that during 2003 to 2006 the •yjQ Commission received over 1 million dollars by way of costs. Education and advocacy Creating informed consumers is integral to successful enforcement and integration of consumer and competition law enforcement. Information remedies were used by the Commission on several occasions in sectors which appeared competitive with 736 Liability was not admitted in 4 out of 15 consent agreements on the public register up to 2005. 737 The Commission guidance on the determination of FTC costs for consent agreements indicates that fees must be related to the gravity of the breach, length of time, effort and money expended by Commission in the investigation into the hearing see regulation 9 of the FCA Regulations 2000. 738 Fair Trading Commission Annual Report (2001) at.l 739 "Lee ABA 2006" supra note 684. 250 several players but were likely to be responsible for consumer detriment in light of high levels of information asymmetry or information failures.740 A good example of this is the used car sector where following investigations of a large number of individual complaints the Commission issued informational guidance for consumers on aspects of the automotive industry in 1994 and 2000.741 Similarly, an investigation into the content of advertisements by airlines operating in Jamaica resulted in an agreement for additional consumer information including the display of prices with added taxes.742 The Commission has also used several educational initiatives through seminars, publications and speeches to target different stakeholders in the community. Educational initiatives for both consumers and businesses on general awareness of the Act as well as specific areas and sectors of concern such as tendering and bid-rigging, insurance have been another important area of Commission activity.743 Competition advocacy is seen as critical in developing countries as it targets "the conditions (regulatory, structural, legal or cultural) which will enable a market economy to function".744 FTC's competition advocacy, through meetings with ministries and commentary on government policy and proposals, is conducted informally as there is no statutory role enshrined in the law and accordingly the agency has had to carve out this role. This is a deficiency in the legal framework as government action and regulation can 740 "Hadfield et al 1998" supra note 247. 741 "Guidelines to customers of used cars" (6 July 2000), online: FTC http://www.jftc.com/guidance/consumermatters/usedcardealers.htm (Accessed 23 October , 2007 742 FTC Case No.5396 Airline Ticket Advertising, (March 1,2004). 743 Seminar on Tendering and Bid-Rigging (1998), Seminar on General Insurance Industry (1998); Judges Seminar/Annual Shirley Playfair Lecture (September 30,2000). 744"Jenny 1998" supra note 362 at 36. 251 lead to an anti-competitive environment and may lead to promotion of producer interests over that of consumers particularly in respect of policies that seek to create monopolies. 5.2.4 Measurement of regulatory activity and effectiveness As a small state agency with obvious limited financial and human resources the FTC has relied on the use of clearance statistics to assess its performance. The difficulty is that these statistics detail agency activity rather than measure effectiveness. Table 5 sets out the cases received, investigated and closed as well as the resolution rate for the period 1997 to 2005 are set out.745 Table 5: Cases received, investigated and resolved by the FTC, 1997 to 2004 Year Received Investigated Closed Resolution Rate 1997 Not available 547 387 70.7% 1998 531 Not available 463 Not available 1999 Not available 736 450 61.1% 2000 Not available 644 348 54% 2001 275 628 346 55% 2002 553 826 273 33% 2003 662 1148 589 51% 2004 504 1064 244 23% Source: Annual information in the table was sourced from the Fair Trading Commission Annual Reports (1997) to (2004). Notes: The yearly statistics relate to the Commission financial year which begins April 1 and ends March 31 of the following year, the resolution rate refers to the percentage of investigated cases that are "closed" The table shows that there was increasing agency activity as the FTC investigated an increasing volume of cases over the period under review. In contrast there was a gradual 745 Statistics for the first three years of the Commission's operation are not available. 252 decline in resolution rates from 70.7% in 1997 fluctuating with a downward trend to as low as 23% in 2004. Several difficulties arise in using the statistics in Table 5 to measure the effectiveness of the Commission's enforcement activity. They do not provide any qualitative analysis or weighing of the impact of the cases under review. There is no differentiation between consumer law cases and competition law cases or major and minor complaints.746 The statistics therefore conceal the greater complexity of competition cases and the consequential increase in time required for their resolution. The difficulties with using resolution rates as a measure of efficacy are also illustrated by the Commission's approach to highlighting a high resolution rate in "maters not covered under the Act".747 This would be irrelevant in judging the Commission's performance as these cases merely involved re-directing consumer's complaints with a minimal impact on consumer welfare. An alternative measurement of effectiveness used by the FTC is also flawed. The Commission cited a high success rates on matters taken to court noting that between February 1994 and 2008 it had a 75% success level in matters pursued in court.748 This approach to measurement of outcomes does not adequately reflect the impact of the adverse ruling in the Court of Appeal judgment in JSE and the fact that the majority of 746 Although the Commission provides further breakdown of cases categorised according to products and breaches of statutory provisions these are not cited or relied on in the measurement of its performance which tends to focus/comment on the resolution rate. The statistical reports on products do not identify the specific offences. 7 7 Fair Trading Commission Annual Report (1998). lwOECD Jamaica Questionnaire 2008 supra note 676. 253 these court proceedings were section 37 misleading advertising cases that were less technical and more easily proven than the competition offences. Measuring the regulatory impact of enforcement work requires sophisticated techniques that may not be readily available in small state agencies with limited levels of financial and human resources.749 These include techniques such as estimates of financial benefit, direct financial impact on consumers, the likely deterrent effect of competition enforcement work and estimated consumer savings as well as levels of potential consumer detriment which are used by larger agencies such as the Office of Fair Trading.750 Conversely however the failure or inability to provide this type of impact assessment means that small state agencies may be hindered in proving their intrinsic value to policy-makers or supporting their case for institutional strengthening. It is clear that finding an appropriate tool for the measurement of the success of an agency is difficult. As previously noted the figures of complaints handled, matters closed and resolution rates do not represent appropriate measurements and provide little indication of the outcomes and success of the enforcement activity in improving consumer welfare. Despite the shortcomings of these measurements it is still apparent that the level of effectiveness of the Commission was a cause for concern up to 2005.751 749 Keith Hawkins & John M. Thomas, 'The enforcement process in regulatory bureaucracies" in Keith Hawkins & John Thomas eds. Enforcing Regulation (Kluwer Nijhoff Publishing, The Netherlands, 1984) at 19 who note that it is easier to monitor activity than effectiveness and attribute the need for measurement to another indicator of political vulnerability of agencies. 750 The Office of Fair Trading Annual Report and Resource Accounts (2007 - 2008), online: OFT http://www.oft.gov.uk/OFTwork/publications/publication-categories/corporate/annual-report/. 751 "UNCTAD 2005 Peer Review Jamaica " supra note 642. 254 53 Private enforcement and the Fair Competition Act Although the focus of the dissertation is on the public enforcement agency, the examination of the enforcement framework under the Fair Competition Act would be incomplete without analysis of the efficacy of the private enforcement mechanisms. The Fair Competition Act introduced a mixed private and public enforcement framework for consumer protection and competition. Persons aggrieved by behaviour that is prohibited under the Act can pursue the matter through initiating the Commission investigative process, instituting follow-on litigation that relies on a court judgement obtained by the Commission in a particular case or by instituting entirely independent civil litigation in the court system. Statutory remedies of damages and injunctive relief for breaches of the substantive provisions are available to private litigants and the limitation period for civil actions for damages is three years.752 Private enforcement of the Fair Competition Act has been sparse and during the period under review in the research study there were only three reported cases of private enforcement under the Act. After the first private action in 1995 it was over twelve years before private legal proceedings were instituted utilising causes of action under the Act. All of the three reported cases were concerned with interlocutory relief on competition law breaches and none proceeded to a full consideration of the claims on the merits or the imposition of pecuniary penalties or civil damages. 752 Fair Competition Act, s. 48. 255 In the first reported case of private enforcement, Infochannel Limited v Telecommunication of Jamaica Limited, a private action for abuse of dominance was brought by a small telecommunications service provider against the incumbent telecommunications company.753 The legal arguments in that case centred on whether a private litigant could seek injunctive relief. The Court held that section 47(1 )(b) of the Fair Competition Act on injunctive relief was available to a private person in an action initiated by him and not only to the Commission. One noted Caribbean academic has argued that the court erred in its statutory interpretation of this provision as the cross- reference to the Commission in section 46 of the Act makes it explicit that injunctive relief should not be available to persons other than the FTC.754 However, as noted in recent case law under the Act, the court in any event has general discretion to grant interlocutory injunctive relief. Interlocutory injunctive relief to a private litigant was granted by the Court of Appeal in another reported case under the Act National Commercial Bank Jamaica. Ltd. v. Olint Corporation Ltd. (Olint) where the claimant had applied for an injunction against its bankers who had threatened to close its bank account. The injunction was subsequently dismissed by the Privy Council who found no triable issue.756 Injunctive relief was also sought, albeit unsuccessfully, in the final reported case of Cybervale Limited v. Cable & Wireless J A Ltd , which was another claim against the 753 Infochannel Limited v Telecommunication of Jamaica Limited SCCA No 49/95, (Supreme Court of Judicature of Jamaica). 754 "Burgess 2001" supra note 15 at 379. 755 Olint, Civil Appeal No 40 of 2008 (Court of Appeal of Jamaica) rev'g April 18, 2008 (Supreme Court of Jamaica) at p. 42 para. 65. 756 National Commercial Bank of Jamaica v Olint Corporation [2009] UKPC 16, [2009] 1 WLR 1405 rev'g (July 18, 2008) Civil Appeal No 40 of 2008 (Court of Appeal of Jamaica) aff g (April 18, 2008) (Supreme Court of Jamaica). 256 incumbent telecommunications service provider.757 It is notable that in these two later cases the Fair Competition Act was one of several causes of action that were cited in an effort to get interlocutory relief and the inclusion of the Fair Competition Act may have been slightly speculative. The level and effectiveness of the private enforcement framework under the Fair TCO Competition Act could be strengthened by collective enforcement mechanisms. The existing rules of the Supreme Court on representative actions which provide a basis for this would be enhanced by mechanisms for identification of injured parties, provision for greater access to evidence and measures for the calculation of damages particularly for indirect purchasers in competition claims.759 Steps would also need to be taken to increase the capacity of the consumer movement in Jamaica to facilitate its role in collective actions. The creation of financial incentives for private litigants may also improve the use of private enforcement of the Fair Competition Act. In other jurisdictions such as the United States and Australia there has been a much higher level of private enforcement 757 Cybervale Limited v Cable & Wireless JA Ltd (October 22,2008) HCV No. 02945/2008 (Supreme Court of Judicature of Jamaica). 758 Rule 21.1 of the Jamaican Civil Procedure Rules 2003 provides for representative actions where five or more persons have the same or similar interest. The Court can appoint one of the persons or a body having sufficient interest in the proceedings to act as representative. See further on civil procedure in Jamaica Gilbert Kodilinye & Vanessa Kodilinye, Commonwealth Caribbean Civil Procedure (Routledge- Cavendish, London, 2009) 759 Issues such as these are addressed in the European Union's consideration of private enforcement see further European Commission, Study on the Conditions of Claims for Damages in Case of Infringement of EC Competition Rules by Ashurst (25 August, 2004) [Ashurst Study] European Commission: online http://ec.europa.eu/competition/antitrust/actionsdamages/study.html; Green Paper - Damages actions for breach of the EC antitrust rules (COM (2005) 672) (19 December 2005) European Commission: online http://ec.europa.eu/competition/antitrust/actionsdamages/documents.html; also see Ontario Law Review Commission Report on Class Actions (1982) - MCG see article by Thomas A. Cromwell "An Examination of the Ontario Law Reform Commission Report on Class Actions" )1983) 15 Ottawa L. Rev. 587. 257 activity.760 In the American context this has been attributed to the rights afforded to American litigants under antitrust law where litigants can recover treble damages under the Sherman Act. The American system is thought to provide better incentives for private enforcement and studies have shown a high proportion of private to public enforcement of antitrust statutes. Initiatives to increase the level of private enforcement are being considered and adopted in other jurisdictions such as the EC modernisation and decentralisation initiatives which examined private antitrust enforcement. It has also been suggested that greater private enforcement of consumer/unfair trade practices legislation would be encouraged by financial incentives such as a minimum recovery.762 The implementation of this type of innovative damages regimes for private litigants may also improve the functioning of the private aspects of business regulation enforcement in smaller states. The low usage of the private enforcement provisions in Jamaica is demonstrably an indication of its limited utility, in its present statutory form, in enhancing consumer interests in small states. Although there are several advantages to a mixed enforcement regime including ensuring the accountability of the public agency these have not been realised in the Jamaican context. The demonstrable difficulties in a private enforcement framework heighten the need to ensure that the public enforcement system in a small state works effectively through strategic enforcement by an adequately resourced public agency. 760 See Grabosky & Braithwaite 1986, supra note 696 at 94 noting that private actions were at least 5 times more frequent than public enforcement competition cases. 761 Assimakis P Komninos, EC Private Antitrust Enforcement: Decentralised Application Of EC Competition Law by National Courts, (Hart Publishing, Oxford, 2008) at 9. 762 "Belobaba 1977" supra note 606 at 363. 258 Conclusion A key argument in the interface between consumer and competition law enforcement is the synergies to be gained in placing enforcement within a single agency. Multi-function agencies can provide cost efficiencies through savings on common administrative agency costs. Synergies can also be achieved by a small complement of trained staff working in an integrated manner on market matters. A focus on markets and competition outcomes can assist analysis of consumer cases and lead to a co-ordinated approach to remedies. However challenges and tensions can also arise in an integrated agency. A minimum level of budgetary support is required in order to ensure that the agency can be operationally effective and tensions may arise in the allocation of budgetary support between consumer and competition enforcement. Enforcement styles may also differ as consumer protection and competition investigations have different requirements. Thus whilst the limited regulatory capacity of agencies in small states may theoretically lend itself to consolidation of functions in this manner distinct enforcement issues still arise that will create tensions in business regulation enforcement. The history of the Commission's enforcement of the Fair Competition Act provides a solid example of the difficulties of business regulation in small state environments. The FTC was faced with clear and compelling basic institutional challenges over a 12 year regulatory cycle. The efficacy of the agency was significantly hindered by interest group pressure which led to Court of Appeal decision that the legal framework breached natural justice requirements. The resulting jurisdictional uncertainty 259 led the agency to focus on the negotiation of consent agreements and a compliance- centric approach especially in its competition law enforcement. Difficulties in the recruitment and retention of skilled staff also affected the type of investigations conducted. The lack of expertise and financial constraints magnified the difficulties with integrated enforcement as the agency was unable to adopt robust enforcement strategies. Furthermore the lack of development of a competition culture and private sector response to the enforcement agency all impacted negatively on the regulatory outcomes. The consensual culture associated with small states together with the impact of legal challenges were probably influential factors in the development of the Commission's style. The enforcement style and use of deterrent or compliance strategies was also related to the life cycle of the Commission. During the early crusading phase of its regulatory cycle the Commission seemed to prefer greater use of deterrent mechanisms in both competition and consumer investigations. The perception was that it was less prepared to engage in dialogue with stakeholders and keen to utilise legal proceedings. In the second stage of its cycle, characterised by legislative uncertainty and reduced capacity, the Commission made more use of compliance techniques employing moral suasion in its efforts to reach negotiated settlements. The Commission was partially successful within the confines of its capacity in achieving effective and purposeful enforcement outcomes in core consumer protection issues. It was able to utilise consumer protection activity to create a sense of legitimacy within the public eye which was important for agency credibility. However the apparent lack of a clear enforcement strategy coupled with its limited regulatory and legal capacity 260 hindered the effective integration of consumer and competition law in its overall business regulation enforcement. The logical interfaces between consumer and competition law were recognised by the Commission on a high theoretical level rather than at the enforcement level leading to a perception that in this case the interplay was merely rhetorical and not substantiated by effective agency enforcement. There was a no clear vision of how the FTC viewed the interplay and little depth in the exploration of the inter-relationship. A difficulty with the relationship between consumer law and competition law is the nature of the consumer interests that each of these laws seek to protect. Competition law can protect consumers indirectly through promotion of their economic interests whilst consumer law protects a wider range of interests. The approach of the FTC to the promotion of consumer interests in its enforcement strategy is explored in the following chapter. 261 CHAPTER 6 The term consumer welfare is the most abused term in modern antitrust analysis. - Brodley (1987)763 PROMOTING CONSUMER INTERESTS: THE FAIR TRADING COMMISSION'S APPROACH FROM 1993 TO 2004 The consumer interests objective of the Jamaica Fair Competition Act as reflected in the long title is ... to provide for the maintenance and encouragement of competition in the conduct of trade, business and in the supply of services in Jamaica, with a view to providing consumers with competitive prices and product choice.764 The Fair Trading Commission has adopted the long title as its mission statement and the focus of the agency is on promoting the economic interests of consumers through increased choice and more competitive pricing. As discussed in an earlier Chapter there is no single universally used and accepted consumer welfare standard for implementation of the consumer interest goal.765 Indeed the choice of a consumer welfare standard has proved to be a contested area of competition law enforcement with academics and practitioners proffering standards that differ considerably in their impact on consumers.766 These standards take divergent approaches to the distributional impacts of decisions and the possibility of transfers from 763 "Brodleyl987" supra note 350 at 1032. 764 Fair Competition Act, Long Title. 765 See the earlier discussion at section 2.1.2 on consumer welfare standards. 766 See further on this "Cseres 2007" supra note 117. 262 consumers to producers. Under the total welfare standard the concern is with the total welfare of society not with wealth transfers or distributional effects. In contrast the "true consumer welfare" or "public interest" standard is disapproving of transfers from consumers to producers. Alternative standards such as "balancing weights" and "consumer well-being" can be considered as variations of the true consumer welfare standard providing different mechanisms for weighting and measurement of the distributional outcomes. The choice of the standard by the enforcement institution influences the interests that will be directly protected and provides an important indicator of the agency priorities. However consumer welfare standards are problematic as although they effectively measure efficiency gains they are less accurate in balancing social welfare objectives that promote socio-economic justice and equitable development. The differences in results under consumer welfare standards are most apparent in merger cases but in some cases the choice of standard may also have implications in other competition cases. This Chapter examines the Fair Trading Commission's overall approach to fulfilment of its core consumer protection objective through a legal analysis of the agency's approach to consumer interests in its competition and consumer law enforcement.767 The Commission decisions and formal guidance referenced in the Public Register, between 1993 and 2004, are the basis of the review.768 The first section examines the implications 767 The Chapter references relevant economic theories but does not seek to provide an empirically based economic analysis or comparison of the consumer welfare standards/tests and their applicability in Jamaica. 768 Public register of the Commission which is available on the Commissions website. It details Court Judgments, Commission decisions, Consent Agreements and Authorisation. The Register is incomplete as a review of annual reports and other material published by the Commission reveals names of cases not listed 263 of the statutory definition of "consumer" in the Act. The Chapter then looks at the manner in which the Commission has actively sought to advance consumer interests in consumer law enforcement and advocacy. Following this the chapter reviews the legal framework and Commission guidance and limited agency decisions on unilateral and collusive anti-competitive behaviour and authorisations of anti-competitive conduct acknowledging that the absence of formal case decisions means that there cannot be a detailed assessment of promotion of consumer interests in competition law enforcement. The Chapter concludes with an overall assessment of the effect of FTC enforcement on consumer interests and the contours of a consumer-focused enforcement strategy for small state integrated agency. 6.1 Conflict between the statutory definition of consumer and approach of the FTC The legal definition of the consumer is important in determining the category of persons whose welfare and interests should be protected under the law. The statutory definition of "consumer" in section 2 of the Fair Competition Act appears to have been drafted with the consumer protection offences of Part VII in mind and limits the notion of consumer to the end-user. This definition of consumer is inappropriate in an integrated consumer and competition law as the category of persons whose interests will be affected in considering the impact of the competition offences will be wider than the end-user on the Public Register. However the Register appears to contain details of the most significant matters pursued by the Commission. consumer and is likely to cover all levels of the supply chain. In particular, in markets for industrial products or services, the persons affected by anti-competitive activity will be those using the product in turn in the course of their business. However this has been recognised by the Commission who have adopted an interpretation of consumer which although it is in direct contradiction to the statutory provision reflects the generally accepted interpretation of the term in competition law.769 The FTC considers that consumer applies to "customers of the parties to the agreement at all levels of the supply chain."770 The expanded definition of consumer in competition law (and as applied in Jamaica) leads to diffused consideration of the interests of end-user consumers. Katalin Cseres and Eugene Buttigieg have opined that the regulator needs to bear in mind the end-user consumer more in their consideration of consumer welfare and consumer interests.771 Buttigieg has noted that interpreting consumer broadly leads one away from considering consumer benefits from a consumer protection perspective.772 In the particular context of small states characterised by concentrated markets, inequitable wealth distribution and uneven shareholdings this expanded definition may further marginalise the interests of end-users. In smaller countries the concentration of wealth and shareholdings means that a competition law focus on productive efficiencies and the wealth of the firm and its shareholders will preclude consideration of the benefits of a 769 Amendment of the Fair Competition Act to provide a definition for the term consumer in the different Parts of the Act would resolve the inconsistency particularly as the definition of consumer is less relevant for the consumer offences as on a literal reading of the provisions a definition of consumer is not required. 770 See Fair Trading Commission, 'The Fair Competition Act: A Guide to Anti-competitive Practices" (2002) ("FTC Guidelines") at paras. 2.12 & 3.12. 771 "Cseres 2007" supra note 117 at 332. 772 Buttigieg 2009 supra note 100 at 130. 265 wide group of persons. This situation is in contrast to larger developed countries such as the United States where an overall increase in the wealth of shareholdings is likely to be shared amongst a greater number of persons.773 Small state agencies such as the FTC should be particularly cognizant of this and place higher weight on the interests of end- user consumers and focus its enforcement activity on markets of direct import to consumers. Promotion of the interests of end-user consumers is more easily achieved in enforcement of consumer offences and practices which directly harm consumers. 62. Consumer interests in consumer law enforcement under the Fair Competition Act Consumer protection investigations have been the cornerstone of the Commission's workload which relied heavily on section 37 of the Fair Competition Act to address misleading and deceptive practices in Jamaica. The other consumer offences available to the agency, under Part VII of the Act, address specific types of misleading conduct by suppliers of goods and services and cover representations on services, tests and publication of testimonials, specific pricing practices such as double ticketing, "bait and switch" behaviour and sale of goods above advertised price but have not generally been used in FTC enforcement.774 773 Paul Karlsson, "Change of Enforcement Standards can affect Institutional Design" (Paper presented at Workshop on Competition Policy in Caribbean Small States, October 2009) [unpublished], 774 The only reported exception to the use of section 37 is recorded in the consent agreement with Courts (Jamaica) Ltd. (5 February 2001) which included cause of action under s. 40(l)(b) (sale at bargain price) of the Fair Competition Act; see details in Appendix B - List of Consent Agreements. Section 37 is a broad provision that prohibits any "representation to the public that is false or misleading in a material respect" for the purposes of promoting, directly or indirectly, any business interest. Its utility is based on the fact that the section applies beyond "advertisements" to apply more widely to "representations", it applies both to representations that are or that are likely to be false and misleading and it is based on a "credulous person test" which is squarely directed at protecting representations made to the wider public even the "gullible" or "credulous" ones.775 The choice of the "credulous person" standard is appropriate in the Jamaican context. This standard was used in earlier court decisions and enforcement of the Federal Trade Commission Act in the US776 and in some provincial legislation in Canada.777 It can be contrasted with the "average consumer" standard used in the EU Unfair Commercial Practices Directive.778 The scope and limitations of the average consumer standard and its ability to protect vulnerable European consumers has been an issue of concern as it appears to prioritise rationality. However some academics have firmly contended that the new standard still allows national authorities scope for targeted protection of particular groups of vulnerable consumers.779 The credulous person standard more clearly protects vulnerable persons 775 Test confirmed in Fair Trading Commission v SBH Holdings Limited and Forest Hills Joint Venture Limited. (30 March 2004) Supreme Court Civil Appeal No:92/2002 (Court of Appeal of Jamaica) followed in FTC v Errol Bailey (trading as Foundation Music Showcase) (4 July 2008) Supreme Court of Jamaica Commercial Division Claim No. 2007 CD003 at 18. 776 1 5 U.S.C.§§ 41-58 777For a discussion in the Canadian context see "Belobaba 1977" supra note 606 at 339 and F.A. Minter "Misleading Advertising: The Standard of Deceptiveness" (1976) 1 C.B.LJ. 435; For a discussion on the evolution to a "reasonable consumer" test in the US see David L. Belt, The Standard for Determining "Unfair Acts or Practices" Under State Unfair Trade Practices Acts, (2006) 80 Conn. Bar J. 247; see generally Ramsay Consumer Protection 2007 supra note 408 at 301. 778 Directive 2005/29 [2005] OJ L. 149/22. 779 See Stephen Weatherill, "Who is the 'Average Consumer'?" in Stephen Weatherill & Ulf Benitz eds. The Regulation of Unfair Commercial Practices Under EC Directive 2005/29 : New Rules and Techniques, 267 including those who may not be as well-informed and observant and puts the onus on business enterprises in marketing practices. In this respect it is more appropriate for small states with developing markets. Additionally section 37 is an offence of strict liability which means that the Commission does not have to prove that the conduct was carried out knowingly, recklessly or dishonestly and no need to prove intent.780 The FTC had mixed success in its consumer protection enforcement efforts. Enforcement of the misleading advertising provisions sought to remedy information failures and ensure that accurate information was provided by businesses. Greater information disclosure assisted in greater accuracy of marketplace signals, lower distortion in the marketplace from ill-informed consumer decisions and levelling of the playing field between businesses and with consumers. Enforcement against fraudulent and misleading representations included addressing misleading representations on property characteristics;781 misleading price representations in the airline industry;782 and misleading representations on the year of manufacture of motor vehicles.783 These case investigations also led to the mandatory provision of better industry information and guidance to consumers such as in the airlines, used cars and commercial banking (Oxford: Hart Publishing, 2007); Chris Willett, "Fairness and Consumer Decision Making under the Unfair Commercial Practices Directive" (2010) 33:1 Journal Cons. Pol'y 247 who argues that scheme may be capable of extending protective effects despite its basis on informed decision making. 780 Fair Trading Commission v SBH Holdings Limited and Forest Hills Joint Venture Limited. (30 March 2004) Supreme Court Civil Appeal No:92/2002 (Court of Appeal of Jamaica) at 7 followed in FTC v Errol Bailey (trading as Foundation Music Showcase) (4 July 2008) Supreme Court of Jamaica Commercial Division Claim No. 2007 CD003. 781See Table 4 for details of referenced cases including Home Builders (failure to provide intercom); SBH Holdings (failure to provide swimming pool). 782 FTC v. Air Jamaica Love-A-Fare cited in "FTAA 1997" supra note 707. 783 See in Appendix B - List of Consent Agreements in Stewarts Auto Sales (20 August, 1999); John Crook (19 January 2001); Challenger Transport (11 April 2000); Cars and Commercial Limited (October 2002). 268 1QA sectors. The enforcement action in markets of particular import to consumers made an important contribution to the enhancement and advancement of consumer interests in Jamaica. For example motor vehicles are a perennial source of consumer detriment due to information failures and the level of FTC activity in this sector was useful. Other markets that have been identified as problematic in developing countries include construction and newly liberalised utility sectors.785 These sectors were also investigated by the Commission which took enforcement action against property developers and telecommunications service providers.786 Critical steps were taken to facilitate consumer choice in the newly liberalised telecommunications market through both competition and consumer law interventions on the advertising campaigns of service providers and streamlining of mechanisms for competitor disputes.787 However despite the successes in achieving positive consumer outcomes in these sectors the consumer interest was not served by the Commission's use of dispute resolution rather than regulatory enforcement. The early emphasis on dispute resolution led to limited assessment of the level of consumer harm and prioritisation of cases. 784 Clarity in Banking Documents cited in Taimoon Stewart 2004 supra note 13 at 188; FTC Guidelines on Airline Advertising (March 2004) ; FTC Guidelines to Customers of Used Cars (July 2000). 785 "Jenny 2006" supra note 367 at 120 and 124. 786 See in Appendix B - List of Consent Agreements. 787 See "Guidelines for Telecommunications Industry - Rules of Conduct in Advertising" which focus on dispute resolution referenced in Fair Trading Commission Annual Report (2004) at 8 to 9. 269 63. Balancing economic efficiencies and consumer benefits in anti-competitive conduct investigations Competition law enforcement by the FTC has primarily addressed consumer interests indirectly through promotion of competitive markets. The primary provisions on anti-competitive conduct under the Fair Competition Act are set out in sections 17 and 20 of the Act which deal with collusive and unilateral anti-competitive conduct respectively.788 Analysis of the Commission's approach to the promotion of consumer interests and/or benefits in competition law enforcement is difficult in light of the limited number of court judgments and formal Commission decisions, the consequential absence of judicial decisions on the substantive points of competition law and the Commission's reliance on consent agreements. There were relatively few investigations into anti competitive conduct over the period 1993 to 2005 as the Commission focused its enforcement efforts on consumer protection investigations. With respect to the competition law investigations, the two investigations that were the subject of judicial noc\ decisions were determined by the courts on preliminary issues. The Commission's other decisions on anti-competitive conduct did not disclose breaches of the Act.790 The Commission adopted a "soft" compliance approach to competition law enforcement 788 As noted in section 4.3.5 of the dissertation there are overlapping statutory provisions in the Fair Competition Act on horizontal and vertical conduct however as these have not been utilised by the Commission they are not addressed in the discussion in this Chapter. 789 See discussion of the JSE and GLC cases in section 4.3.5 of the dissertation. 790 The Commission decisions on the Public Register referenced four cases and no breach was found in any of these cases. 270 which meant that only a few matters were fully investigated and these were primarily settled through consent agreements. The use of consent agreements is problematic as there is no formal reasoning or elucidation of the Commission's approach to consumer 7Q1 benefits or efficiency gains. In most instances liability is not even admitted by the respondent parties. Taken together all of these factors hinder a conclusive interpretation of the approach to consumer interests under the Act and limit the level of analysis on the issue. It is clear that the paucity of agency decisions and court cases highlights an important issue on the regulatory capacity of small state competition agencies. The low level of competition investigations should be attributed not only to the unfavourable court decisions but also to the considerable agency difficulties in building skills and technical expertise. This means that underlying legal and economic issues were not fully developed and key issues remained untested. 63.1 Unilateral conduct - Abuse of dominance and protection of consumer interests Unilateral anti-competitive conduct occurs where an enterprise which is in a dominant position i.e. it is able "... to operate in a market without effective constraints from its competitors or potential competitors" abuses its position by impeding the 791 However some limited analysis is available in the published staff opinions setting out recommendations made to the Commission. 271 nM maintenance or development of effective competition in the market. In Jamaica the working threshold for dominance is 50%.793 If it is proven that a firm has abused its position in the market under section 20(1) it must also be proved that it has had, is having or is likely to have effect of substantially lessening competition.794 There is no need to prove intent. Abusive practices can be characterised as exclusionary or exploitative practices. Whilst exclusionary practices are those targeted at competitors that indirectly harm consumers, exploitative practices are targeted at consumers and directly disadvantage consumers. The illustrative examples of abusive conduct listed in section 20(1) are restricting entry into a market; preventing or deterring a person from engaging in competitive conduct in a market; eliminating or removing another person from a market; directly or indirectly imposing unfair purchase or selling prices; limiting production of goods or services to detriment of consumers and making conclusion of agreements subject to acceptance by others of supplementary obligations which by their nature or according to commercial usage have no connection with the agreements. Direct consideration of consumer interests may be most fully expected to be achieved through investigation of exploitative practices that directly harm consumers. The FTC has not focused on investigating exploitative practices contending that they are not fully within the ambit of the Act.795 Excessive pricing to final consumers is the oft used 792 Fair Competition Act, s. 19. 793 See "FTC Guidelines" supra note 770, This guidance follows the practice in large jurisdictions however given the small size of the market a lower market threshold may be warranted as with high market barriers a lower threshold may constitute dominance in small states 794Fair Competition Act, s.21. 795 "OECD Jamaica questionnaire" supra note 552. 272 example in the literature of an exploitative practice.796 It is arguable that despite the absence of this term in the illustrative list of anti-competitive practices in section 20 that excessive pricing is still covered within the ambit of "unfair pricing" in section 20 of the Act.797 Section 20(1 )(a) contains similar wording to Article 102 of the TFEU (ex Article 82) which has been applied, albeit on limited occasions, to exploitative abuses and coverage of excessive• pricing.• • 798 Tying practices, although generally characterised as exclusionary leveraging abuse, can also be seen as an exploitative practice. It restricts and reduces consumer choice, makes products separately unavailable and exerts pressure on the consumer through the expectation they will be afforded more favourable treatment by purchasing both products.799 Tying arrangements allow competitors to leverage market power in different markets and fundamentally affect consumer choice as consumers cannot determine independent and separate pricing of products. The FTC investigated this practice in the case of Grace Kennedy Remittance Services, where there was an allegation of abusive conduct through tied selling of electronic money transaction services and a utility bill collection service.800 The FTC did not find evidence of a tying arrangement in this case. 796 Pinar Akman, "Exploitative Abuse in Article 82EC: Back to Basics?" 11 (2008-2009) Cambridge Yearbook European Legal Studies 165 at 169 to 173 ["Akman 2009"] who argues that exploitative abuse should be considered as a breach of competition laws where there is evidence of harm to competition. 797 In contrast the Barbados Fair Competition Act s.16 (3)(e) specifically references excessive pricing as an illustrative example of abusive conduct. 798 See discussion in "Akman 2009" supra note 797 at 170 of Case 27/76 United Brands Company and United Brands Continental BV v EC Commission 1978 ECR 207 para 250 in which ECJ considers a price to be excessive if "it has not reasonable relation to the economic value of the product" and the approach which uses evidence of an excessive price to assess whether pricing is unfair. 799 See "Akman 2009"supra note 797 at 181 to 182. ^Commissioners' Decision Case no. 3685 Grace Kennedy Remittance Services (GKRS) under Section 20 of the Fair Competition Act: April 30,2002. 273 Investigations of exclusionary anti-competitive behaviour, particularly predatory pricing, was the primary area of the agency's competition workload. Predatory pricing allegations are generally raised where a dominant business enterprise is selling products at low prices below the average variable cost. The Commission noted it would investigate prices in the "gray range" between average total cost and average variable cost.801 Predatory pricing is considered anti-competitive as it may lead to the exit of players from the market and the consequential reduction of consumer choice and an increase in prices. Although predatory behaviour has been a primary area of investigation for the Commission none of these investigations disclosed any breach of the Act.802 In Super Plus Food Store no predation was established as the time period of sale was short and the on-i promotional list of items was limited. In Tank Weld Metals although the company was in a dominant position its prices for nails were generally above average variable costs and in Telstar Cable Limited the pricing of the cable services was not below costs and the offer was for a short period only.804 The Commission returned to the issue of predatory pricing with an investigation into the retail sector for pharmaceuticals and again no breach of the Act was established.805 801 Commissioners Decision Case 3794, Super Plus Food Store (August 13,2001 at para 3.13 [Super Food Plus]. 802 Commission followed earlier guidance by the Canada Competition Bureau "Competition Bureau Predatory Pricing Enforcement Guidelines 1992" Online: http://www.competitionbureau.gc.ca/eic/site/cb- bc.nsf/eng/01746.html . The 1992 Guidelines are under revision by the Bureau to consider average avoidable cost. 803Super Food Plus, supra note 785. 804 Commissioners Decision Case 3328, Tank Weld Metals Ltd (August 10,2001); Commissioners Decision Case 3263, Telstar Cable Ltd, (August 29,2001). 805 See Case 5102 Investigation into allegation of predatory pricing on the part of Drug Serv pharmacy limited - The staffs conclusion (April 29, 2004) were reduced to consent agreement with Health Corporation Ltd. Case No. 5102 Drug Serv Pharmacy Limited. 274 Despite its avoidance of exploitative practices investigations and the overall low number of successful investigations the Commission has been able to use the abuse of dominance provisions to improve consumer choice. For example it has been asserted that intervention in the brewery market to limit the level of exclusivity in promotional agreements of the dominant brewery meant that rival firms survived in the market and increased annual revenues providing consumers with additional choices. The abuse of dominance provisions also provide for consumer benefits to be specifically addressed in considering the efficiency defence in section 20 (2). Efficiency defences for abuse of dominance have been canvassed at the EU level and were suggested as being important for small states.807 An enterprise will not be treating as abusing dominance if can show that its behaviour is targeted to productive, technical enhancements and consumers are allowed a "fair share of the resulting benefit". After having determined that the enterprise has abused its dominant position the FTC must also consider whether the abuse is having the effect of substantially lessening competition and in this respect a consideration is whether the practice is "the result of superior competitive performance"808 806 See details of Desnoes & Geddes (Red Stripe Limited) in Appendix B - Consent Agreements and discussion in Barbara Lee, "Bridling Market Dominance: A View from Jamaica" in Lino Briguglio et al eds. Small States and the Pillars of Economic Resilience (Institute of Small Island States, 2008) at 182 807 See "Briguglio & Buttigieg 2003" supra note 370. *mFair Competition Act, s. 21 (2). 275 632 Collusive conduct - Anti-competitive agreements and efficiency defences Competition law rules on collusive anti-competitive behaviour have been analysed as requiring an assessment of consumer welfare on a negative and positive level. The negative assessment relates to the nature of consumer harm caused by the anti competitive practice and the positive assessment relates to consideration of the efficiency defences raised by the businesses.809 An illustrative list of collusive anti-competitive conduct is set out in section 17(2) of OIA the Fair Competition Act. Section 17 applies to provisions in agreements which have as their purpose or likely effect the "substantial lessening of competition". The substantial lessening of competition (SLC) test in section 17(1) means that the provisions do not apply to all agreements but only to those affecting competition. The SLC test requires an assessment of market power and the FTC has indicated it will generally consider a market threshold of 25% to be sufficient i.e. that if the enterprise's share in the market is less than 25% then generally not likely to amount to an SLC.811 This may be 809 See "Cseres 2007" supra note 117 utilising this analytical framework on the equivalent EC provision. Sl° This includes matters such as directly or indirectly fixing purchase or selling prices or any other trading conditions; limiting or controlling production, markets, technical development or investment; sharing markets or sources of supply; affecting tenders to be submitted in response to request for bids; applying dissimilar conditions to equivalent transactions with other parties putting them at a competitive disadvantage; and making the conclusion of agreements subject to acceptance by others of supplementary obligations which by their nature or according to commercial usage have no connection with the agreements 811 See section 6 of FTC 'The Fair Competition Act - A Guide to Anti-competitive practices" for guidance on FTC approach to measurement of market power. 276 affected if there are cumulative arrangements and ultimately the figure is provided for q t <7 guidance only and the FTC will assess each arrangement on its merits. Where the Commission determines that the enterprise has engaged in anti-competitive conduct it must then decide whether to grant an exemption from the Act on the basis of an efficiency test. There is no statutory requirement for proof of consumer harm or injury in order for conduct under section 17(1) to be considered as anti-competitive therefore this efficiency test, the positive assessment of consumer welfare, is the focal point for considering consumer interests under the collusive conduct provisions of the Fair Competition Act. Consumer harm will be implicit in a finding of reduced competition and for example its impact on excessive pricing to consumers. However explicit attention to consumer interests is mandated by the legal exceptions/efficiencies defences provided in section 17(4). This requires the Commission to make an express consideration of consumer benefits weighing the pros and cons of anti-competitive effects in determining whether to exempt certain agreements or practices from the operation of the Act.813 Section 17(4) of the Act provides a legal exception for anti-competitive agreements and practices based on the satisfaction of four criteria.814 Given that the exemption test in section 17(4) of the Fair Competition Act and the efficiency defence in section 20 (2) are modelled on Art. 101 of the TFEU (ex Art. 81 of the EC Treaty) and commentary and guidance on the EC provisions will be used for comparative guidance in 812 See further on this in the Canadian context Trebilcock et al Canadian Competition Policy 2002 supra note 234 at 373. 813 Positive assessment is also required in looking at possible efficiencies as a defence for abuse of dominance. 814 Section 20(2) on unilateral conduct uses a two criteria test for the efficiency defence. the interpretation of the provisions of the Fair Competition Act.815 It is recognised however that the small size of the market affects the enforcement of the competition law and warrants departure in particular circumstances from principles used in larger jurisdictions. Efficiency defences in sections 17 and 20 of the Act The first criterion to be satisfied in considering whether anti-competitive conduct should be exempted under section 17 is whether the agreement contributes to the improvement of production or distribution of goods and services; or the promotion of technical or economic progress. The second criterion to be considered is whether the agreement allows consumers a fair share of the resulting benefit. Although the criteria in section 17 is similar to that for abuse of dominance under section 20 the section 17 criteria is wider in its coverage. Under section 17 consideration must be given to the contribution to improvement of production or distribution of both goods and services whereas on a literal reading of section 20 the test is only applicable to goods. Consideration of the promotion of technical or economic progress under both sections 17 and 20 is applicable to both goods and services. Again here the test under section 17 is also wider as under section 17 the behaviour must contribute to improvements in production etc whereas under section 20 it must be exclusively directed to improvements in production etc. The two additional criteria for consideration of an exemption for 815 See Treaty on the Functioning of the European Union (TFEU) and Treaty Establishing the European Community (EC Treaty/ (Treaty of Rome) These provisions in the Fair Competition Act were clearly based on EC models however the treaty does not provide a legal exemption for abuse of dominance. This was canvassed in DG Competition discussion paper on the application of Article 82 of the Treaty to exclusionary abuses (2005) EC Commission Online: http://ec.europa.eu/competition/antitrust/art82/discpaper2005.pdf (Accessed 11 January 2011) agreements under section 17 of the Act are indispensability namely that the Commission must be satisfied that the agreements only impose such restrictions that are indispensable 0|Z to the achievement of the objectives and finally that the restrictions do not allow for the possibility of eliminating competition in a substantial part of the market.817 Productive and dynamic efficiencies gains!test - Improvement of production or distribution or promotion of technical or economic progress In deciding whether to grant a legal exemption from the Fair Competition Act under section 17(4) the Commission must consider the nature of the benefits that will flow from the agreement i.e. the level of improvements of production or distribution or the promotion of progress.818 The FTC has demonstrated in its guidance a clear preference for a focus on narrow economic efficiencies, similar to the current EC approach. Under EC law the standard that is in the ascendancy is a narrow efficiency test that balances possible allocative inefficiency with corresponding enhancement of productive efficiency.819 This is reflected in the Article 81 (3) Guidelines detailing the approach to be used by courts and competition authorities in the EU in assessing the nature of the consumer benefits.820 In some previous Commission decisions an alternative approach which took into account broader considerations such as industrial and environmental policy and non-economic factors could be discerned.821 Buttigieg Klfl See "FTC Guidelines" supra note 770. 817 Ibid, para 2.14 818 Also applicable to section 20(2) efficiency defence. 819 Whish 2009 supra note 100 at p.152; the leading case in which Commission advocated a narrow approach is GlaxoSmithKline Services Ltd v Commission [2006] ECR11-2969, [2006] 5 CMLR 29. 8 0 European Commission, Guidelines on the application of Article 81(3) of the Treaty, OJ [20004]C 101/97 1975] 2 CMLR D40 [Article 81(3) Guidelines]. 821 Whish 2009 supra note 100 at 155. 279 references the CECED decision that prioritised maximisation of energy efficiency of washing machines. In this case the Commission considered the public interest benefit as a consumer benefit from a collective long-term approach based on public interest environmental considerations rather than an individual economic purchaser perspective.822 The FTC Guidelines eschew references to wider goals and non-economic benefits accruing from the conduct. The Guidelines cite examples of improvement in production or distribution as "lower costs from changes in the methods of production or distribution or economies of scale; product quality improvements; increases in the range of goods or services provided" which are primary examples of productive efficiencies. In looking at whether the agreement promotes technical or economic progress the Commission will consider matters such as "efficiency improvements from scale economies and specialization, increased research and development and enhanced speed of innovation and technical progress" which also address dynamic efficiencies.823 The FTC applied section 17(4) in consideration of an agreement in 1998 between the multi-national petroleum companies Shell, Esso and Texaco to jointly build and operate a storage facility in the western part of Jamaica. The FTC considered that the agreement was covered by the defence in s 17(4) as it contributed to a reduction in operating costs and was efficiency enhancing ultimately benefitting the consumer through lower pump prices.824 It is unfortunate that there is no public record of the Commission's 822 Buttigieg 2009, supra note 100 at 133. 823 "pjc Guidelines" supra note 770. 824 OECD 2004 supra note 667 at 3. 280 reasons for their decision in this matter as this makes it difficult to fully ascertain the range of factors and benefits that were taken into account by the Commission in the decision-making process. It may be that in this case in considering consumer welfare the Commission reasoning was based on productive efficiencies that also overlapped with consumer interests i.e. the existence of cost savings leading to reduced prices. Furthermore it should be noted that co-operative agreements in small states may be more readily tolerated in light of the constraints on achieving minimum efficient scale and productive efficiencies. The Commission's decisions on the section 17 and section 20 investigations do not provide clarification or detailed consideration of the issues arising with respect to the exemption test or efficiency defences. However, although clearly of less weight than formal Commission decisions, some staff opinions have been published relating primarily to the operation of commodity boards and the proposed privatisation of certain government services. The investigations on the activities of the Coconut Industry Board and the Cocoa Industry Board did not disclose contraventions of the Act and although revealed some competition concerns these were not completed or followed up by the Commission in light of the difficulties in negotiating agreements and under-resourcing of the Commission.825 Staff also considered the exemption test under section 17(4) in analysis of proposed exclusivity agreements on privatisation of motor vehicle inspection 825 FTC Staff Opinion. Commodity Boards in Jamaica: A Framework for Analysis (August 9, 2001); FTC Staff Opinion. The Cocoa Industry Board: Implications for competition in the Jamaican cocoa industry (January 28,2002); FTC Staff Opinion, The Coconut Industry Board: Implications for competition in the Jamaican coconut industry (January 28,2002). 281 service.826 The analysis in this case identified several consumer benefits and adopted a qualitative approach to analysis of the benefits in improving efficiencies, consumer safety and public interest concerns. Over the period under review Commission staff also investigated the level of competitiveness in several other sectors however these reports and opinions are not directly applicable to exemption test and efficiency defence. Pass -on requirement - Consumers fair share of resulting benefit The second criterion for a legal exemption under section 17(4) (or section 20(2)) of the Fair Competition Act is that consumers are provided with a fair share of the benefits.827 In essence a "fair" share of the benefits identified must be passed on to the consumer. The FTC Guidelines do not provide detailed consideration of the passing-on requirement or the time frame for consideration of consumer benefits. The Guidelines merely indicate that the determination of benefits under sections 17 and 20 "may be enjoyed immediately or may be manifested in the foreseeable future." This is not useful in indicating the balance that the FTC will make between short-term and long- term consumer interests. In contrast under the Article 81(3) EC Guidelines consumer benefits the pass on requirement is considered with respect to cost efficiencies and qualitative O'JQ efficiencies. A sliding scale approach is used so that if the restrictive effects of the agreement are limited and the efficiencies are substantial it is considered likely that a fair share will be passed on to consumers. The EC approach incorporates discounting of long 826 Fair Trading Commission, Staff Opinion, "Privatisation of Motor Vehicle Inspection Service", (November 23,2001). 827 Article 81(3) Guidelines para. 39 . It should be noted that although this is the second criteria the EC is of the view that it should be considered after indispensability as unless the indispensability test is satisfied there is no need to proceed to a consideration of consumer benefits. 828 Article 81(3) Guidelines paras 95 to 104. 282 term benefits as they are harder to prove whereas benefits over shorter to medium term are easier to establish. Under the FTC approach consumers are presumed to indirectly benefit from the competitive process. The FTC's reliance on a presumption of benefit is not unique. Indeed as Buttigieg has noted in relation to the European Community, the European Commission has assumed that if the agreement/practice leads to improvement in distribution etc there is consumer benefit and accordingly there is no in depth analysis of the potential impact or consumer detriment by the Commission. Buttigieg argues that the Article 81 (3) defence does not therefore appear to be applied in the best interests of consumers as a sharing of benefit is often presumed to result from productive efficiency and sharing the benefits is given too wide a meaning rather than being limited to sharing in cost savings.829 This acceptance of presumptive benefit has also been noted by Howells and Weatherill in their consumer protection treatise.830 The FTC also appears to make implicit assumptions about consumer benefits resulting from a more competitive environment. For example in the staff opinion on privatisation of railway services it was noted that as competition in the market would not be reduced the consumer would receive a fair share of the benefit.831 This echoes the earlier approach of the European Commission. Buttigieg 2009, supra note 100 at 70. 830Howells & Weatherill 2005, supra note 154 at 534. 831 Fair Trading Commission, Staff Opinion, "Concession Agreement for Railway Services), December 14, 2001. 283 Section 17(4) details two additional conditions to be taken into account in deciding whether to grant an exemption.832 The third criteria on indispensability of the restrictions has been interpreted by the FTC as meaning the "agreement should contain the least restrictive means of achieving the benefits." Paragraph 3.9 of the FTC Guidelines notes that enterprises would need to show that the restrictions are specifically tailored to the attainment of the efficiencies and that the absence of the restrictions would eliminate or significantly reduce the claimed efficiencies. The final criteria is that there not be an elimination of competition and the FTC will look at this in the "overall context of the effect of the agreement on effective competition in the relevant market(s)".833 Difficulties caused by the lack of regulatory capacity of small states is apparent in the paucity of formal material and cases addressing consumer interests in competition law enforcement in Jamaica. Although the Commission attempted to provide overall guidance on the operation of the Act the low number of investigations and the inability to issue binding decisions precluded further development and refinement of its approach during the first two phases of its existence. Issuance of guidance by regulatory agencies benefits from application to actual cases and in the absence of this enforcement knowledge and experience, the development of regulatory issues will remain minimal and untested. 832 These conditions are not relevant to section 20(2). 833 See "FTC Guidelines" supra note 770. 284 6.4 Authorisations and the public benefit test Part V of the Act allows the Commission to consider consumer interests in determining whether to authorise an agreement or practice that "is likely to promote the public benefit". The authorisation process provided an ideal opportunity to carve out an agency approach to consumer interest under the "public benefit" test as the statute contains no definition or guidance on the meaning of the term public benefit and allows for wide approach to consideration of consumer benefits under the Act through consideration of both efficiency and non-efficiency considerations. However similar to its approach to exemptions under sections 17 and 20, it appears that the Commission preference is to focus on efficiencies rather than wider non-economic matters in considering whether to authorise practices. In a consistent theme on the operations of the FTC there has been insufficient formal reasoning to provide useful insights on evaluation of the public benefit in this area. Only one authorisation has been granted under the Act. 6.4.1 Authorisation Guidelines and the Meaning of Public Benefit and Detriment In the absence of statutory guidance in the Fair Competition Act the FTC issued authorisation guidelines in 1999.835 These provide key insights into its approach to consumer interests and the adoption of a consumer welfare standard. The Guidelines covered procedural matters and also provided a framework for the analysis of public 834 Fair Competition Act, s. 29(2)(a). 8,5Fair Trading Commission, Annual Report (1999) at 7. 01£ benefits and detriments in authorisation applications. It was expressly acknowledged that the guidelines would not necessarily bind future Commissions but it should be noted that the guidelines were in use by the Commission over the period covered by the research.837 The guidance issued by the FTC provided a narrow conception of public benefit tied to economic efficiency and clearly relied heavily on New Zealand authorisation guidelines repeating the language and approach focusing on efficiencies and requiring quantification of benefits.838 Although it must be acknowledged that the "public" under the authorisation provisions is wider than "consumer" under the exemption test the guidance is still indicative as to the primacy of the type of interests, equitable or economic, that are likely to be considered by the Commission. "Public" was construed as the public of Jamaica and benefits to foreigners would only be considered if also benefited Jamaicans.839 The Guidelines accept that in considering domestic versus foreign shareholders it is appropriate to differentiate between benefits to Jamaicans and benefits to foreigners. They noted that benefits to foreigners will represent public benefit in limited circumstances only such as where involve "benefits which would not otherwise have occurred, such as increased taxation receipts from increases in foreign shareholder income". This focus on consumer welfare of nationals was supported in a wider context by Stewart who stressed that welfare 836Fair Trading Commission. Guidelines to the Analysis of Public Benefit and Detriments. (Initiation Date February 1998. Revised Date May 1998). ["FTC Authorisation Guidelines"]. 837 Personal interview of senior FTC manager A (18 April 2008). 838 See New Zealand Commerce Commission, Guidelines to the Analysis of Public Benefits and Detriments, (revised ed. 1997). 839 «pyc Authorisation Guidelines", supra note 838 at 7. 286 benefits accruing to foreign providers as a result of anti-competitive activities should be carefully considered as benefits should be accruing to nationals.840 Both tangible and intangible benefits were included in the assessment of public benefits. Although there is an acknowledgment that intangibles such as health and environmental matters may be difficult to quantify in monetary terms. The Guidelines also noted that efficiency improvements should take into account intangibles such as environmental matters within the efficiency perspective and be quantified.841 The Guidelines make an implicit adoption of a total welfare standard as evidenced in the approach to distributional issues. The Authorisation Guidelines dealt explicitly with distributional gains detailing the Commission's view that one should not take account of distributional impact of agreements/practices as (a) subjective - no a priori reason why status quo should be favoured over new distribution of wealth (b) competition analysis generally gives more consideration to direct impacts - benefits accruing to a small section of the population are diffused generally through taxation and (c) the Act contains no explicit distributional objectives and should be slow to read in. The Guidelines added that the government has social welfare and taxation policy to address distributional issues. However the inclusion of consumers in the long title of the Act and the definitional approach provide some justification for the view that distributional effects are relevant and should be considered in the determination of public benefits under the Act. 840 Taimoon Stewart 2004 supra note 13 at 207. 841 "FTC Authorisation Guidelines" supra note 838 at 8. 842 Ibid, at 10. 287 Public benefit test was construed as "a total net benefit". Benefits were to be focused on true benefits or net gains not transfers of wealth.843 The guidelines addressed the quantification of benefits both "with" and "without" the practice - the factual and counterfactual not before and after. The importance of avoiding double-counting was stressed. Commission also indicated that quantification of benefits will be important in allowing better focusing of the Commission's decision-making. These Public Benefit Guidelines were closely modelled on the New Zealand Guidelines for assessing public benefit and focused quantitative matters rather than a qualitative approach. Although the crafting of the guidelines represented an ideal situation into which to bring in other public interest considerations this opportunity was not taken up by the FTC who focused on pure efficiencies with the express disavowal of any distributional concerns. 6.4.2 Public Benefits recognised in FTC Authorisation Decisions and Reports The single authorisation granted under the Act was for contraceptives and was granted early in the agency's history. An application was made by The Futures Group in November 1994 who requested an authorization to allow it to recommend prices for the sale of contraceptives by identified suppliers. The authorisation was granted on February 1995 for three years.844 The reasoning and decision have not been made publicly 843 Ibid, at 4. 844 Public Register of Authorizations. Online Jamaica FTC. http://www.jftc.com/new/index.php?option=com_content&task=view&id=16&Itemid=57 (Accessed 26 June 2008). 288 available and was issued prior to the development of the Authorisation Guidelines. It would seem however that the decision was made on the basis that there would be a clear benefit to the public in allowing affordable prices for contraceptive products. This may have been on the basis of social benefits and the importance of access to affordable healthcare for the population. On the other hand in the authorisation application received in respect of the mandatory Banana Insurance Fund in 1997 the consideration of efficiencies was paramount in the Commission's approach to enforcement of the Act. The application was considered and rejected on the grounds that it did not meet the requirement for economic efficiency as whilst providing cheaper insurance to 25% of the industry it did not do so for the balance and increased the cost of growing bananas. In the 2004 Report on Competition and the Financial Sector the Commission sets out its view on public interest considerations under the Act with particular reference to the financial sector echoing the economic efficiency approach and considerations in the Authorisation Guidelines.846 Conclusion The Commission's primary impact on the promotion of consumer interests has been made through its consumer protection enforcement role. Regulation of misleading and deceptive advertising in key markets has addressed information failures and led to 845 FTAA 1998, supra note 707. 846 Fair Trading Commission, Staff Opinion, "Competition Policy and the Financial Sector" (October 13, 2004). 289 changes in business behaviour by influencing marketing promotions in the island. In contrast the promotion of consumer interests through competition law enforcement has been weak as there have been few investigations, no investigation of exploitative practices and the Commission approach has been too narrowly focused on economic efficiencies and the economic interests of all "consumers". The approach of the Commission to consumer and competition law enforcement was significantly influenced by its institutional cycles and the varied levels of expertise at different phases in the agency's existence. The limited regulatory capacity in the early stage of competition law enforcement adversely affected the level of analysis as capacity constraints raise difficulties for gathering factual and empirical evidence and providing useful measurements of gains and losses in competition law analysis. Accordingly the Commission did not have full opportunity to refine its approach in these cases. The Commission has indicated a preference for a total welfare standard. This narrower economic efficiency approach is evidenced in official Commission guidance on application of the exemption test in anti-competitive conduct and on authorisations. For example the Commission Authorisation Guidelines embrace a total welfare standard in circumstances where "wide" public interests and distributional issues could have been considered. Interestingly, this explicit economic efficiency focus is out of step with the wider interpretation of consumer interests in the early authorisation decision on sale of contraceptives that implicitly accepted social rationales for authorisation. Competition law enforcement requires balancing of interests and the making of difficult trade-offs. Should consumers bear short-term price increases to benefit from 290 longer-term innovations and efficiencies? Should the focus be placed on short-term immediate consumer interests through low prices and access to goods? Regulation needs to weigh these conflicting priorities in light not only of economic considerations but the political economy environment. The objectives of competition policy in small developing countries differs from those in larger developed countries and the broader political goals of competition policy in small states are influenced by undeveloped market structures, lower understanding and acceptance of competition law and consequently a greater emphasis on the development of a market economy which accommodates more QA"7 "populist" goals. These influential characteristics dictate a need for a consumer- focused competition law and policy that is mindful of its distributional effects. This will have the most significant implications for laws that include merger control. Consumer interests in small developing states should lead to different emphases placed on the nature or class of the "consumer", price, quality, choice, access to goods and product safety (through protection from unsafe dumped/imported goods). These concerns should be reflected in the case selection criteria for prioritising consumer law cases and in the consumer welfare standard used in competition law enforcement. In order to more fully protect consumer interests, integrated small state competition agencies such as the FTC need to adopt a consumer-focused competition law enforcement approach. On the substantive level this consumer-focused approach would include adoption of a "true" consumer welfare standard that takes into account non- economic benefits in considering legal exemptions to anti-competitive conduct and the 847 "Jenny 1998" supra note 362 at 35. 291 public benefits of authorisation. It would also, centre on the interests of end-user consumer and target and prioritise the investigation of the distribution sector and retail markets that have a greater impact on end-user consumers. Changes could also be made through procedural mechanisms used in larger states to provide a direct consumer voice in competition law enforcement. Consumer-focused competition law is beneficial not merely in ensuring consumer gains are realised but importantly in maintaining and/or securing public and political support for competition law enforcement and the competition institution. These would lead to improvements in accessibility and rights to private enforcement. However it is acknowledged that these mechanisms for private law enforcement may have significant disadvantages in a small state context with the limited capacity of civil society. The FTC embarked on a new direction with the enactment of the Consumer Protection Act in 2005. This provided an opportunity for revival of the FTC, a deepening of its skills and expertise and placement of greater emphasis on competition law enforcement. In the third phase of the Commission's life cycle there is clear development of economic expertise and competition law analysis. Greater explicit recognition was afforded to market failure and economic analysis. The evolution of the FTC over the period 2005 to 2009 is addressed in chapter 7 in the context of its changing approach to enforcement and its relationship with the Consumer Affairs Commission. 292 CHAPTER 7 ...[an] important role for the FTC...is to ensure that we create genuine competition in the market., that will enable the FTC to provide greater focus and some of the consumer issues will now go to the Consumer Affairs Commission for redress. Hon. Philip Paul well (2004) 848 REGULATORY INTERSECTIONS: THE FAIR TRADING COMMISSION AND THE CONSUMER AFFAIRS COMMISSION FROM 2005 TO 2009 The introduction of a new statutory framework under the Consumer Protection Act of 2005 radically changed the nature of the logical and institutional intersection between consumer protection and competition laws in Jamaica. This Act not only provided a greater range of mechanisms for consumer protection but also divided the statutory enforcement responsibility for consumer law between two agencies. The analysis of the interface between consumer and competition law in Jamaica would therefore be incomplete without detailed consideration of the legal and organisational changes introduced by the new statutory regime. The first section of this chapter maps the lengthy policy-making process for the Consumer Protection Act attempting to identify the underlying regulatory rationales. The chapter then provides an overview critique of the potential effectiveness of the new legal framework. The final section of the chapter examines the evolving role of the FTC in a third stage of the agency's life cycle. It is suggested that enactment of the Consumer Protection Act and the partial divestment of consumer protection from the FTC has contributed to greater effectiveness in the use of both competition and consumer law 848 Jamaica, House of Representatives, Hansard Parliamentary Proceedings, vol. 30 No. 2 (21 September 2004) (Hon. Philip Paulwell). 293 instruments by that agency. It should be noted however that without rectification of the substantial legal and procedural deficiencies in the new consumer protection framework this institutional separation may also adversely affect the interests of the consumers. 7.1 Consumer Policy Making and Law Reform 1990 to 2005 The early reforms in consumer protection reform were clearly market-oriented with the utilisation of competition law and prohibitions on unfair trade practices. The focus of the Fair Competition Act meant that direct consumer regulation centred on remedying information failures and controlling false and misleading conduct that affected both suppliers and consumers. However the desirability of a more comprehensive framework that also provided basic consumer rights was recognised by policymakers and reflected in a concurrent consumer law reform process. This started in 1992 with the renaming of the Prices Commission as the Consumer Affairs Commission and the expectation that the consumer affairs agency would support the Government's move from "price-maker" to facilitator for the effective operation of the market.849 The changed remit, from price surveillance and monitoring to consumer advocacy and education, was however restricted by its reliance on moral suasion rather than formal statutory powers. This section maps the internal and external dynamics that determined the nature and the sequencing of consumer protection reforms in Jamaica. 849 Consumer Affairs Commission, "History of the Consumer Affairs Commission (formerly the Prices Commission)" citing Cabinet decision (1992) on Ministry Paper No. 12. (February 13, 1990). 294 7.1.1. The impact of market-oriented influences on the nature and sequencing of consumer law reform It is clear that policymakers in Jamaica neglected an ideal opportunity to provide a cohesive system for the protection of consumer interests by failing to integrate the developmental process for the Fair Competition Act and the Consumer Protection Act. The disconnection between the development of the consumer and competition laws is curious in light of the shared objective of improvement in consumer interests and the fact that the reform process for both Acts commenced at the same time in the early 1990s. The process for the development and enactment of the Consumer Protection Act was lengthy and took over a decade. Although the process started in 1992 a first draft of the Bill was not produced until 1996. A re-draft of the Bill, influenced by laws in various Commonwealth territories especially those of the United Kingdom and New Zealand, was published in February 2001. The Bill was laid in Parliament and received its first reading in April 2004 before final passage almost a year later on 1 March 2005.850 In contrast the Fair Competition Act was enacted after a three year period of conceptualisation, drafting and consultation. The long gestation for the Consumer Protection Act has been partially attributed to competing priorities on Government's legislative agenda.851 However a more compelling explanation lies in the fact that the international influences promoting the 850Jamaica, House of Representatives, Hansard Parliamentary Proceedings, Session 2004 - 2005, vol. 30, No 1 (31st March 2004 - 28 July 2004) at 1 to 758. 851 Personal interview of senior CAC manager (22 April 2008). 295 benefits of fair competition legislation were far stronger resulting in the relegation of consumer protection legislation. Domestic factors provided renewed vigour to the legislative process in 2004. The Government Minister introducing the legislation specifically refuted any suggestion that the timing of the Bill was in response to consumer concerns on price gouging during Hurricane Ivan.852 However the tenor of the debate on the Bill was clearly influenced by market conduct during that period and Opposition Parliamentarians were of the view that this may have led to a desire on the part of the Government to exert greater control over the operations of the distributive and retail segments of the business sector.853 1X2 Social rationales and regulatory goals in the new reforms The consumer emphasis under the new legislation was evidenced in a long title that reflected the wider traditional goals of consumer protection legislation854 ... the promotion and protection of consumer interests, in relation to the supply of goods and the provision of services in order to ensure protection of life, health and safety of consumers ...855 The Consumer Protection Bill, aimed to fulfil multiple objectives and was driven by domestic as well as regional considerations. A primary goal of the Bill was strengthening 852 Jamaica, House of Representatives, Hansard Parliamentary Proceedings, Session 2004 - 2005, vol. 30, No.2 at 1591 (21 September 2004) (Hon. Philip Paul well). 853 Jamaica, House of Representatives, Hansard Parliamentary Proceedings, Session 2004 - 2005, vol. 30, No 1 (31st March 2004 - 28 July 2004) at 1 to 758. 854 Section 2 provides that the category of consumers protected under the Act include businesses. The definition is linked to private use or consumption of goods but also applies to commercial undertakings purchasing consumer goods. OC( Consumer Protection Act, No. 9 of 2005, Long Title. 296 the role of the Consumer Affairs Commission so as to ensure that it could provide gc£ effective redress for consumers and act as more than a mere consumer advocate. The Bill also sought to achieve greater clarity and certainty in the law through the codification of the existing consumer protection provisions which were scattered in a multiplicity of Q*r"7 statutes and common law provisions. The proposals were introduced against the background of the establishment of the Caricom Single Market and Economy (CSME) and the desire to harmonise the commercial laws in the region in order to facilitate the freedom of movement for people, goods, services and capital.858 A mix of rationales was evidenced in the political debate preceding introduction of the new regulatory framework. Equitable notions of fairness were clearly important and far greater relative weight was placed on these objectives as opposed to market failure considerations. The parliamentary discourse was couched in the language of inequality, QCQ power and fairness. However the legislators were cognizant of the importance of competitive markets and the role of consumers in making markets work effectively. The consumer was recognised as an active agent in the marketplace rather than as the mere target of regulation. As expressed by Hon. Philip Paulwell 856 Memorandum of Objects and Reasons, Consumer Protection Act, 2005. ""Personal interview of senior CAC manager (22 April 2008). 858 Revised Treaty of Chaguaramas establishing the Caribbean Community including the Caricom Single Market and Economy, 5 July, 2001, at art.169 setting out the objectives of the Community Competition Policy which includes the promotion of consumer interests. 859 Jamaica, House of Representatives, Hansard Parliamentary Proceedings, Session 2004 - 2005, vol. 30, No.2 (21 September 2004) (Hon. Philip Paulwell; Jamaica, Senate, Hansard Parliamentary Proceedings, Session 2004-2005, vol. 30, (29, October, 2004) (Hon. Burchell Anthony Whiteman); Hon. Whiteman the Minister of Information and Leader of Government Business noted it is "about strengthening the platform on which consumer rights must stand if we are to have a greater sense of equity and shared benefits across the society, as consumer and provider both enjoy a sense of security, in respect of trade, in respect of contracts and in respect of the benefits of quality goods and services" aim to empower consumers and "achieve greater consumer confidence and a more competitive market." 297 ... the perception of the place and role of the consumer ... has evolved. The consumer is no longer just a person to be protected. He or she is the major actor in the market, influencing price, place, product and promotion.860 This acceptance of the role of the informed confident consumer in making markets work effectively is at the centre of consumer policy making in many larger developed states.861 Although the importance of informed consumers within a market economy was recognised there was little discussion of the extent of these types of market failures within the Jamaican context. There was also an absence of any explicit recognition of the connections between the overall stated rationales for the consumer protection legislation and the precise rules adopted by the Legislature. The proposed interventions were not initially supported by Opposition Parliamentarians. In line with the broad philosophical approach of the Jamaica Labour Party and its promotion of free market approaches they were of the view that there was no need for additional market intervention or the creation of a new consumer affairs agency that would potentially duplicate the role of the FTC.862 Concern was also expressed at the disproportionate effect the law would have on regulated professionals and more particularly the informal sector especially the higglers.863 However the primary concerns expressed about the Bill related to the legal sufficiency and coherence of the proposed legal rules. The draft provisions were criticised on the basis that they were "bad 860 Jamaica, House of Representatives, Hansard Parliamentary Proceedings, vol. 30 No. 2 at 1591 (21 September 2004) (Hon. Philip Paul well). 861 U.K., Department of Trade and Industry, White Paper Modern Markets: Confident Consumers (Cm 4410) July 1999. 862 Jamaica, Senate, Hansard Parliamentary Proceedings, Session 2004-2005, vol. 30 at 1611 (19 November 2004) (Senator Shirley Williams). Also see comments of Senator Bruce Golding, Senator Anthony Johnson and Senator Dorothy Lightbourne who were members of the Jamaica Labour Party Opposition during the passage of this Bill. The legal profession was also quite active in its opposition to the Bill making an unsuccessful case for the profession to be exempted from the legislation (Interviews 10,11 & 22 April 2008). 298 law" and duplicated existing legislative provisions particularly those in the Trade Act and Sale of Goods Act864 Subsequent discussions with private sector representatives resulted in amendments to the Bill which addressed some of the perceived substantive and procedural legal shortcomings.865 The new law made tentative steps in the right direction by introducing higher levels of information disclosure for businesses, improving minimum quality standards for goods and services and conferring enforcement responsibilities on a statutory consumer agency. It also marked a sharp reversal to the former approach of integrated institutional enforcement of consumer and competition law. During the introduction of the legislation the intended complementary but divergent roles of the CAC and FTC were specifically highlighted by the Government who noted that it would entail a shift in focus for the Commission to the creation of genuine competition in the market. Despite the initial misgivings expressed in the Parliamentary debate, the Consumer Protection Act was eventually passed in the House of Representatives on 1 March 2005 Of.fi with support from the Opposition. The Opposition spokesperson noted it was "... one of the most far reaching pieces of legislation which offers to consumers a great amount of protection which they now do not enjoy."R f\l The Act became effective on 1 June 864 Jamaica, House of Representatives, Hansard Parliamentary Proceedings, vol. 30 No. 2 (28 September 2004) (Hon. Karl Samuda). 865 Amendments included provision for exemption of categories of business, restriction of information- gathering powers of the Commission, interim amendments to reduce duplication with labelling laws, defences for non-delivery of goods. 866A curious legislative procedure was adopted by the Government whereby the amendments to the Bill were first taken in the Senate and approved by them prior to being brought to the House of Representatives. 867 Jamaica, House of Representatives, Hansard Parliamentary Proceedings, vol. 30 No. 3 (1 March 2005) (Mr. Karl Samuda). 299 0£0 2005. As expected the introduction of the Act was warmly welcomed by consumer organisations with the National Consumers League noting that "the passing of the Consumer Protection Act into law will help tremendously in providing the legal framework to enforce these rights, but consumers must know them nonetheless."869 12 Legal and Institutional Framework of the Consumer Protection Act The Consumer Protection Act introduced a range of techniques to control business behaviour and govern consumer transactions including mandatory registration of businesses, information remedies, regulation of contract terms and product recalls. Public enforcement of the Act is through the Consumer Affairs Commission and jurisdiction to determine disputes is shared between the agency, Resident Magistrates and the Supreme Court. 7.2.1 Regulatory Enforcement and the Consumer Affairs Commission The Consumer Affairs Commission (CAC) is a statutory corporation headed by a board of between seven and fifteen members.870 The Executive Director is responsible for the management of staff who are allocated between the main and two regional offices. An enforcement pyramid under the Consumer Protection Act, illustrated in tabular format below, demonstrates the range of strategies under the legislation. It is important to 868 Ministerial Policy Directive Minister of Information, Technology, Energy and Commerce the Hon. Philip Paulwell (31 May 2005). 869 National Consumers League, Work of National Consumers League Report 2004 - 2005, (Jamaica) at 7. 870 Sched. 1, para. 1 of Consumer Protection Act, 2005. 300 highlight that escalation of the pyramid in the manner envisaged under responsive regulation is difficult as several of the remedies available under the Act can only be used in private proceedings or by or with the consent of the Director of Public Prosecutions (DPP). Table 6: Consumer Affairs Commission Enforcement Pyramid Pyramid strategy Statutory provision in the Consumer Protection Act Incapacitation • Imprisonment of individuals for breach of substantive offences Criminal proceedings and • Criminal fines for breach of substantive offences fines and compensation • Compensation orders - Damages and repayment of orders deposits - s.35 Compensatory remedies in • Damages - s.24 (2) civil proceedings • Replacement or refund - s 25(2) for limited group of litigants - s. 7(4) Mediation • Alternative dispute resolution - s.44 Negotiation • Duty to resolve disputes - s.6(l)(a) • Substantiation/verification of facts/complaint - ss. 22 (2); s. 23(1 )(b) Education and advocacy • Consumer and business education- s. 6(l)(e)&(f) • Consumer studies and reports - s. 6(l)(c)&(d) At the base of the pyramid are consumer education and advocacy activities and the CAC places a significant amount of its compliance efforts on these initiatives. Ascending up the pyramid the next main strategy available to the agency is to seek to negotiate or mediate in disputes. The mediatory role for the CAC was intended to facilitate a less formal, quicker and cheaper alternative to consumer redress through the 301 judicial system.R71 It was implemented through an administrative Consumer Affairs Tribunal.872 The Tribunal was active during its period of operation and had been o7-» considered by the CAC as a valuable tool for resolution of consumer grievances. During 2006 to 2007 there were nine sittings of the Tribunal which negotiated settlements for consumers in twenty-nine cases.874 However it was suspended after two years as there was no clear statutory authority and its settlements were therefore highly susceptible to legal challenge. These concerns were particularly important against the illustrative example of the successful legal challenge on natural justice grounds to the authority of the Fair Trading Commission.876 Consequently although the Act makes formal reference to CAC powers of alternative dispute resolution the agency has not been granted legal capacity to properly exercise these functions. The mid-pyramid strategies are the ability of the CAC to seek damages and other remedies for consumers in civil proceedings where the Court finds that a person has suffered loss or damage by conduct that contravenes the Act.877 Available orders include repair or replacement of goods and payment of damages. However the utility of this power is restricted by the fact that the Commission can only institute proceedings for 0*70 limited categories of persons. Despite this limitation the CAC has prioritised *7lConsumer Protection Act, s.44 on alternative dispute resolution and ss. 22 and 23. 872 The tribunal was comprised of 3 persons chaired by an external attorney-at-law and including the Chief Executive Officer and a member of the Board. The head of the complaints department and a case officer were also in attendance at sittings. 873) Personal interview of senior CAC manager (22 April 2008).. 874 Consumer Affairs Commission, Ministry Paper (2007) at 4. 875 Personal interview of senior CAC manager (22 April 2008).. 876 JSE case, supra note 651. 877 S. 24(2) & 25(2). 878 Consumer Protection Act, s.7(2) stipulates that the categories are limited to minors, infirm persons or actions on behalf of an estate. 302 individual consumer dispute settlement. The importance to the agency of its compensatory role goal is demonstrated by the statistics used by the CAC to measure its effectiveness which stress the overall level of compensation obtained for consumers.879 The last strategy under the Act is the institution of criminal prosecutions leading to the imposition of fines and/or terms of imprisonment for breaches of the Act or compensation orders by the court. The criminal sanctions include fines ranging from approximately US$5,800 (J$50,000) to US$23,300 (J$2 million) and terms of imprisonment of up to 2 years. Breach of most of the substantive provisions in the Act is a criminal offence.880 The agency is not empowered to independently institute prosecutions under the Act as the DPP has sole authority for institution and conduct of oot criminal proceedings in Jamaica. A "fiat" or consent of the DPP is therefore required before initiation of proceedings which the Commission has obtained on an annual basis.882 In any event the CAC, in common with most consumer protection agencies, utilises a compliance style that places only minimal emphasis on the use of criminal prosecutions. This is demonstrated by the fact that in the period from 2005 to July 2010 legal proceedings were only instituted in one civil and two criminal cases. The time period for completion of each case has been a lengthy two to three years.883 879 Consumer Affairs Commission, Ministry Reports 2005 to 2008. 880 Part IV - Duties of Providers and Consumers, Part V - Misleading and Deceptive Conduct, False Representations and Unfair Practices and other miscellaneous offences. 881 Constitution of Jamaica, 1962 s. 94(3); Interview (30 August 2010). 882 Complainants are required to report the matter to the police and if there is sufficient evidence the party in breach is charged by the police for the specific breach and either summoned or offered/granted bail with a date to attend court As the CAC is not the virtual complainant in these matters, the actual complainant has to give a statement to the police, upon which the police ensures that the person who is in breach is brought before the courts 883 Telephone interview of CAC staff member (30 August 2010). Several statutory amendments have been proposed to make clearer provision on the investigative and adjudicative functions of the Commission and entrench procedural fairness in the system. These include giving the agency the capacity to investigate a breach on its own initiative even where there is no complaint or evidence that a consumer has been disadvantaged, more stringent procedural provisions for the making of determinations by the agency and the establishment of a Mediation Council or Hearings Commission.884 Modifications on this basis would both enhance the ability of the CAC to take enforcement action and improve the level of redress available to individual consumers. The reliance on criminal sanctions in the enforcement framework coupled with the inability of the CAC to prosecute on its own behalf limits the utility of the Act. Consideration needs to be given to the creation of pecuniary penalties and/or a general fiat that would allow the agency to conduct criminal prosecutions under the Act.885 In order for the institutional separation of consumer and competition law to meet its objectives the CAC will need to be equipped with a wider range of appropriate powers to ensure that it can exercise a strong enforcement role that meets deterrence and compensatory objectives of the statutory framework. 884 Personal interview of senior CAC manager (22 April 2008). Also see Consumer Affairs Commission, "Proposed amendments to the Consumer Protection Act 2005"; See also JLP Press Release, "Act to be amended to provide greater protection for consumers" (June 20,2008) noting that the CAC to be provided with power to independently institute legal proceedings in own name for any breach of the Act not linked to complaint and the establishment of a mediation or hearings commission, online: Jamaica Labour Party http://www.jamaicalabourparty.com/base/content/act-be-amended-provide-greater-protection-consumers. (Accessed 23 March 2009). 885 This is discussed further in section 7.2.3. of the dissertation. 304 122. Overview critique of regulatory techniques The enactment of the Consumer Protection Act has provided stronger legal underpinning for consumer protection in Jamaica and supports the competition law framework under the Fair Competition Act. New public and private enforcement mechanisms have been established as well as higher quality standards and greater levels of information disclosure. The Act was also clearly designed and tailored to address endemic domestic consumer issues as reflected in the specific provisions on repair services,886 open-ended commitment on services887 and electrical goods.888 The Commission has found the Consumer Protection Act to be a useful tool as it is more OQQ tailored to consumer issues than the Sale of Goods Act. Despite these benefits it is clear that the Consumer Protection Act is riddled with substantive technical and drafting deficiencies, does not provide sufficiently comprehensive coverage of consumer rights and remedies and unnecessarily duplicates provisions in the Fair Competition Act. This section examines the coherence and content of the Consumer Protection Act and its effectiveness in meeting its goals. The Jamaican legislation represents a modest attempt at reform of the various aspects of sale of goods law.890 In contrast to law reforms in other small jurisdictions within the Caribbean, such as Barbados and St Kitts and Nevis, no attempt was made in 886 Consumer Protection Act, s. 29. 887 Consumer Protection Act, s. 26. 888 Consumer Protection Act, ss. 25 and 28. 889 Interview (30 August 2010). 890 See Consumer Guarantees Act, CAP. 326E Barbados and Consumer Affairs Act, 2003 St Kitts and Nevis. 305 the Consumer Protection Act to set out new implied terms for both goods and services that would provide a higher and more certain level of consumer protection in contractual transactions. The retention of the test of "merchantable quality" under the Sale of Goods Act arguably minimise the impact that the consumer protection reforms will have on consumer transactions. Merchantable quality has been subject to a high level of judicial interpretation and as a result several difficulties can be identified in the common law OQ 1 interpretation of "merchantable quality" under sale of goods legislation. Merchantability is based on notions more relevant to commercial transactions and relies too heavily on fitness for purpose neglecting aspects that are important to consumers such as appearance, finish and freedom from minor defects. It is based on goods being saleable RQ9 rather than meeting consumer expectations. The Act does not attempt to provide a definition to aid in determining the meaning of the quality standard. Provisions on sale of goods law are amalgamated in the new statute however it did not simplify the language or the structure of the scheme. The relevant provisions of the Sale of Goods Act and the Hire Purchase Act are not expressly re-stated in the Act so the provisions remains less accessible for non-legally trained persons who will be required to cross-reference several pieces of legislation in order to assess their legal See Law Commission, Law of Contract: Implied Terms in Contracts for the Sale and Supply of Goods (HC 142,1979); Law Commission, Law of Contract: Implied Terms in Contracts for the Supply of Services (Cmnd 9773,1986) para 2.6 or Law Commission, Sale and Supply of Goods (SLC104) (Cml37) for exploration of the judicial approaches to merchantable quality in English law characterised as acceptability and usability tests, also note key cases in the Caribbean that followed this approach see "Burgess 1994" , supra note 537. 892 See England and Wales Law Commission, Sale and Supply of Goods (Law Com No. 160, Cm 13,1987) para 2.9. 306 position. A comprehensive overhaul of the Sale of Goods Act rather than this piece-meal approach would have been tidier and more effective in protecting consumers. The Act seeks to remedy information failures by mandating the disclosure of accurate information to consumers and prohibiting the communication of false or deceptive information. Information failures that occur through imperfect information and information asymmetry between suppliers and consumers are a primary cause of market failure and used as standard justification for legal intervention. The Fair Competition Act was aimed at creating competitive markets however these markets serve consumer interests best where consumers are in a position to undertake accurate comparative evaluation of products and services. Accordingly the Fair Competition Act and subsequently the Consumer Protection Act placed central importance on remedying information failures. Suppliers are required to ensure that prior to sale the consumer is provided with relevant information (verbally or in writing) on a range of important factors on the characteristics of goods. These include place of origin, the price of the goods in Jamaican currency, care of goods, terms, components, proper use, weight, size, instructions for assembling and installation of goods and professional fees of the provider.893 The Jamaican market for consumer products is dominated by imported goods with North America providing the major source of imports. As the major suppliers of goods also include countries where English is not the official language, such as Japan, China and Venezuela, explicit legislative provision is made to ensure that the information is 893 Consumer Protection Act, ss. 18 and 19. 307 provided in English.894 The provisions supplement existing legislation on labelling and packaging.895 Although most goods in modern markets are pre-packaged the Consumer Protection Act includes provisions that are primarily applicable to the sale of loose goods. Consumers are therefore entitled to verify the weight, volume and measurements of goods sold and the standards are required to be in accordance with the Weights and Measures Act. This is important in light of the fact that a sizeable number of transactions especially for basic perishable foodstuffs are likely to be purchased unpacked and in on/: market trading conditions. Contravention is a criminal offence. Regulation of exemption clauses provides significant improvement in controlling procedural and substantive fairness in certain consumer transactions. In introducing the Bill the Hon Philip Paul well noted that ... perhaps the most fundamental new provision deals with ... unfair contracts. Because from time to time two parties will enter into contractual arrangements but oftentimes they are of different strengths, bargaining strength and power and in most cases the consumer is the weaker of the two. The law will now allow us to focus on contracts, contractual terms that are clearly unconscionable, unreasonable and unfair.897 In the absence of these statutory provisions, consumers would have been forced to utilise common law doctrines that temper the use of exemption clauses such as the doctrine of fundamental breach which means providers cannot rely on a clause that 894 See overview of trading partners in "Economic Environment" in WTO Trade Policy Review 20 JO, supra note 482. 895 Consumer Protection Act, s. 18(1). Additional statutes and statutory instruments on labelling and packaging include Standards Act,1968, Processed Food Act, and Weights and Measures Act and the Labelling Standards JS1 Parts 1 to 29 enforced by the Bureau of Standards. 896 Consumer Protection Act, s. 19. 897 Jamaica, House of Representatives, Hansard Parliamentary Proceedings, Session 2004 - 2005 vol. 30, No 2. (21st September 2004) (Hon. Philip Paulwell). 308 exempts from performance of a fundamental obligation under the contract such as QQO delivery of goods. However although a reasonableness test has been introduced to regulate exemption clauses additional provision is required to place obligations on providers to ensure that contract terms and advertisements are legible and in plain intelligible language. The consumer safety regime only makes provision for mandatory product recall and would have been strengthened by statutory extension of tortious liability for death, injury, loss etc through product liability regimes based on fault or strict liability schemes. The Act relies on a combination of public and private enforcement. However although individual private rights are an integral part of the Act and a duty has been placed on the Commission to promote the development of consumer organisations no specific provision is made for collective action or enforcement by consumer organisations or other representative groups.899 In conclusion, although the aims of the Consumer Protection Act were laudable it offers insufficient guarantees and rights for consumers. The drafting style has compromised its effectiveness as a tool of consumer protection. Inadequate codification of the common law and existing statutory consumer provisions means that a primary aim of the legislation in providing consumers with a comprehensive "one-stop" law is unfulfilled. A cleaner and more elegant drafting and policy approach would have also ensured duplication with the Fair Competition Act was minimised through reconciling 898 See CLI Report 1993 supra note 508 at paras. 3.7.0 - 3.7.6 on common law control of exemption clauses. 899 Consumer Protection Act, s. 6(l)(c). 309 the provisions, making consequential amendments to the Fair Competition Act or making express statutory provision for a formal co-operation agreement on enforcement. Small state law reform processes are often adversely impacted by the lack of adequate technical and drafting capacity to meet legislative requirements. Efforts were made to address this in the Caribbean context through the establishment of Caribbean Law Institute (CLI) a regional commercial law reform body.900 CLI produced model consumer legislation informed by a status report authored by a noted Caribbean academic.901 It is unfortunate that this report was not adequately utilised as a basis for the enactment of consumer legislation in Jamaica. The process of consumer law reform in Jamaica would have benefitted from a comprehensive codification programme and a stronger law reform process that also focused on simplification and modernisation of the law. It is worrying that the Jamaica Consumer Protection Act which is replete with errors and oversights was used as the basis for the Draft Caricom Consumer Protection Bill that forms the basis of regional harmonisation in consumer law and has been used as the basis for new consumer protection statutes in Bahamas and Guyana.902 Law reform that attempts to tailor legislation to national circumstances should be applauded but undertaken with the requisite level of technical subject area professional expertise. Whilst transplanting and copying of legislation from larger developed states may fail to give sufficient recognition to specific problems occasioned by size the 900 The Caribbean Law Institute (CLI) was established in 1988 under a grant from USAID again reflecting the pervasive influence of technical assistance on regional law reform initiatives. It has produced model laws on consumer protection, insolvency, insurance, banking and companies law which has been widely used as base for Caribbean law reform. 901 CLI Report 1993, supra note 508. 902 Note however that the revised 2008 Draft Caricom Consumer Protection Bill has addressed some of the deficiencies and errors in the original draft. 310 tailored legislation must be carefully developed to ensure that it produces coherent provisions.903 The dangers of tailored but inadequate provisions are reflected in the Jamaica Consumer Protection Act which requires reconsideration. It may be preferable to repeal and replace the Act rather than tinkering with its existing provisions which is likely to lead to further legal ambiguity and uncertainty in the regulatory framework for consumer protection. 1.23 Statutory overlap of regulatory offences on unfair trade practices Control of unfair trade practices such as misleading and deceptive conduct by suppliers is the main area of statutory overlap between the Consumer Protection Act and the Fair Competition Act.904 These provisions are contained in Part V of the Consumer Protection Act and Part VII of the Fair Competition Act. The offences created under both Acts bear all the characteristics of "regulatory offences" in the consumer protection field. Although regulatory offences do not constitute a formal category of offences, Iain Ramsay has identified three principal characteristics namely their over-inclusive nature with reliance on strict liability (although there may be statutory defences such as the due diligence offence); enforcement by specialised bureaucracies who enforce by utilising compliance strategies; and implementation by the magistrates courts with the higher 903 The New Zealand Fair Trading Act and United Kingdom Unfair Contract Terms Act, 1977 influenced Parts V (unfair trade practices) and VI (unfair contract terms). 904 The term unfair trade practices is being applied in this Chapter to misleading and deceptive conduct, misleading advertising and other specific pricing and/or marketing practices. 311 QAC courts developing guidance on the operation of the Act. Peter Cartwright notes that additional characteristics are that the defendants in regulatory offences are generally acting in the course of business and the offences carry a lower moral stigma.906 The unfair trade practices offences in the Act meet many of these characteristics with the preponderance of strict liability offences prosecuted by the CAC or FTC before the Resident Magistrates Court. An important difference between the two statutory frameworks is that whilst both statutes create regulatory offences the Fair Competition Act regime is based on civil liability and the Consumer Protection Act is based on criminal liability. Breaches of Part VII of the Fair Competition Act are punishable by a civil pecuniary penalty of up to 1 million dollars for individuals and 5 million Jamaican dollars for companies.907 The offender is also subject to civil liability for damages.908 In contrast breaches and offences under Part V of the Consumer Protection Act are criminally punishable on summary conviction with fines ranging between up to 1 million or up to 2 million Jamaican dollars and/or imprisonment not exceeding one year. The other remedies available through criminal proceedings include payment of damages and repayment of deposits on conviction of a person under the Act.909 This means that compensatory damages can be obtained by the CAC in the same proceedings in contrast to the more restrictive requirement under the Fair Competition Act which requires an individual consumer to institute private proceedings in order to receive individual compensation. 905 Ramsay Consumer Protection 2007 supra note 408 at 356. 906 Cartwright Consumer Protection 2001 supra note 70 at 84. 907 Fair Competition Act 1993 s. 45. 908 Fair Competition Act 1993 s. 48. 909 Consumer Protection Act 2005 s. 35. 312 The appropriateness of the use of criminal regulatory offences under the Consumer Protection Act is debatable in these circumstances. The utility of the criminal law for regulatory offences has been widely addressed in the literature with several commentators calling for reform and "de-criminalisation" of these types of offences.910 It may be queried whether the criminal law approach is likely to be any more effective than the civil pecuniary penalty used in the competition legislation. Both schemes have a similar deterrence goal and having established a precedent for the hybrid pecuniary penalty in the Fair Competition Act it may have been preferable to have utilised a similar approach in the consumer legislation. Judicial experience with pecuniary penalties under the Fair Competition Act suggests that the judiciary in Jamaica is unlikely to impose maximum fines for these regulatory offences. However a civil pecuniary scheme would have assisted in ensuring consistency of the case law and afforded recognition of the different and lower level of stigma accorded by the public to these types of regulatory offences in comparison to mainstream criminal offences. Furthermore the additional merits of the hybrid pecuniary penalty is that it is based on the civil standard of proof which is a lower standard based on a balance of probabilities and also requires less strict rules of evidence.911 These factors make it easier to institute proceedings against offending businesses. There may however still be a role for criminal penalties for breaches that involve serious moral culpability. 910 D Tench, Towards a Middle System of Law (Consumers Association, 1981); Gordon Borrie"Laws and Codes for Consumers" (1980) J. Bus. L. at 318 to 321; also see England and Wales Law Commission, "Criminal Liability in Regulatory Context" Consultation Paper No. 195 (2010 ); Australia Law Reform Commission, Principled Regulation: Federal Civil and Administrative Penalties in Australia, ALRC 95 (2002); Macrory Review supra note 55. 911 Under the Fair Competition Act there is a civil standard of proof which is lower than that required in criminal proceedings. 313 Consumer offences under the Fair Competition Act address misleading and deceptive practices by business such as misleading advertising, bait and switch, double ticketing and misleading representations on testimonials. As noted in Chapter 6 the Commission has primarily relied on section 37 of the Act which is the general prohibition on misleading advertising and also addresses the non-fulfilment of promises, warranties, guarantees and other obligations by the customer. Under the Consumer Protection Act sections 28 to 30 cover misleading and deceptive conduct and apply to wider categories of behaviour than the Fair Competition Act. Section 28 is an omnibus provision which makes it a criminal offence to "engage in conduct that is misleading or deceptive or is likely to mislead or deceive."912 This sets out a broad prohibition on unfair practices which can be flexibly applied to meet emerging consumer issues. Section 29 prohibits misleading the public as to the nature of goods or services but conduct that breaches this provision is also likely to breach section 28 and the criminal penalty is the same. This prohibition is also similar to section 37 of the Fair Competition Act but of narrower scope as it is limited to representations on the nature, manufacturing process, characteristics, suitability for purpose or quantity of goods or services. Section 30 lists 10 different types of representations that are not to be used by businesses supplying or promoting goods. Section 32 of the Consumer Protection Act covers the "bait and switch" tactics addressed in section 40 of Fair Competition Act. In contrast to section 40 it is a strict liability offence and there is no due diligence defence in the section. 912 Genesis is s.9 New Zealand Fair Trading Act, s.52 Australia Trade Practices Act however in these jurisdictions limited to civil liability. 314 The regulatory offences on unfair trade practices in the Consumer Protection Act and the Fair Competition Act address misleading advertising and other specific pricing and other marketing practices. Given the level of overlap between the Acts with respect to unfair trade practices theoretically businesses could face both civil and criminal legal proceedings by different agencies. Although there is no prohibition on imposing civil and criminal liability for the same conduct this does raise legitimate fairness concerns about the prospect of prosecution by different agencies with varied foci and priorities. The enactment of the Consumer Protection Act has led to proposals for revision of the Fair Competition Act in order to minimise duplication of functions. A preliminary view of the FTC is that it would be desirable for it to retain sections 37(misleading advertising) and 38 (representation as to reasonable test and publication of testimonials) of the Fair Competition Act as these are not purely consumer related provisions. Revision of the statutes on this basis would still leave a minimum level of duplication in light of the omnibus in the Consumer Protection Act clause prohibiting misleading or deceptive conduct. This would however assist in overall market enforcement as the design and approach of the FTC is more suitable for market-based regulation than the CAC whose present strength lies in obtaining effective remedies for individual dispute settlement. 315 73. FTC Life Cycle Third Phase -Reviving Vigour and Strengthened Regulatory Capacity (2005-2009) The enactment of the Consumer Protection Act and the new enforcement mandate of the CAC significantly impacted on the role of the FTC and its enforcement strategies. During this third phase the FTC moved towards greater effectiveness in its use of its regulatory instruments by introducing a more strategic and consumer-focused competition law enforcement approach. 73.1 Institutional Separation of Consumer Protection and Competition Law Enforcement Although the Consumer Protection Act did not formally divest the FTC of its consumer protection role there was a clear and deliberate policy split in the enforcement of consumer and competition law evidenced in the Ministerial directive that the FTC should concentrate on its competition law enforcement.913 This organisational separation was not reflected in the statute as the overlapping jurisdiction on the investigation and enforcement of unfair trade practices remained. Domestic precedent, on express statutory guidance for enforcement agencies with parallel authority such as in the telecommunications sector, was not adopted in this area.914 913 Ministerial Policy Directive by the Minister of Information, Technology, Energy and Commerce the Hon. Philip Paulwell (31 May 2005). 914 Telecommunications Act, s, 5 provides for the OUR to refer matters of "substantial competitive significance" to the FTC. 316 The FTC recognised the advocacy and enforcement benefits that were gained from its previous overall market surveillance activities. A wider mandate can assist in providing greater independence and credibility for a fledgling competition agency, shape public perception and help in competition advocacy and the building of support for the introduction of competition measures. As a result the FTC was reluctant to surrender all of its consumer protection enforcement responsibilities and the negotiations on a Memorandum of Understanding (MOU) to implement the policy directive were unsuccessful. The proposal of the FTC that it divest itself only of the consumer claims that were suited for individual redress allowing it to focus on overall market conduct and recurring industry issues, was unacceptable to the CAC.915 The failure to amend the statutes together with the inability of the agencies to negotiate a formal MOU means that the agencies continue to have overlapping jurisdiction on unfair trade practices. There has been some institutional efforts at co operation in case referrals, market studies, sharing of market information on agency databases and consumer education. Limited referral of cases between the agencies occurs primarily in respect of those cases that the FTC considers more suitable for individual remedies. The CAC does not generally refer cases to the FTC for resolution but may seek a view on a decision or case (prior to publication) where the CAC is of the view that its findings may have an impact on competition rules.916 915 Personal interview of senior FTC manager A (18 April 2008) & Personal interview of senior CAC manager (22 April 2008).. 916 Ibid. 317 Co-operation on market studies is generally led by the FTC with the CAC as a junior partner primarily responsibility for data collection. The agencies co-operated on a Pharmaceutical Industry Study which looked at the impediments to competition in the distribution of pharmaceuticals in Jamaica. In the study the analysis was primarily carried out by competition specialists at the FTC utilising CAC experience in survey design and data collection.917 Similarly the FTC used data compiled by the CAC to conduct its 2009 market study on basic food items.918 Apart from the use of database information for these specific studies the sharing of market intelligence appears to be informal and sporadic. Good information sharing requires good data and similarity in reporting/categorisation of information. Sharing information in an ad hoc and informal manner could adversely affect the effectiveness of consumer market regulation as trends in consumer complaints that may evidence endemic market problems may be less easily detected. Prior to the enactment of the Consumer Protection Act there was co-operation between the two agencies on educational initiatives for consumers and businesses and this has continued. There is no indication however that joint consumer education initiatives have increased since the enactment of the Consumer Protection Act. Targeted educational initiatives particularly on the respective roles of the agencies would enhance 917 Fair Trading Commission, "An Assessment on Impediments to Competition in the Pharmaceutical Sector in Jamaica" by the FTC in collaboration with the Consumer Affairs Commission and the University of Technology, funded by International Development Research Centre (IDRC) (July 2007), online: FTC http://www.jftc.com/Research/IndustryStudies.aspx. 918 David Miller, "Competition and Consumer Protection: The Relationship in Practice" (Paper presented at the 5th IDRC Pre-ICN Forum on Competition and Development on April 26, 2010) ["Miller ICN 2010"], online: FTC http://www.jftc.com/Libraries/Speeches_and_Presentations/Competition_and_Consumer_Protection_The_ Relationship_in_Practice_in_Jamaica_-_Mr_David_Miller.sflb.ashx 318 public knowledge and confidence in both institutions and in the absence of this there is a real danger of consumer confusion on their respective roles. At an operational level the changes introduced by the Consumer Protection Act has resulted in mixed effectiveness of consumer and competition law enforcement. Although the CAC is now the primary consumer enforcement agency the FTC has continued to exercise its enforcement powers in the prosecution of consumer offences. The primary danger of concurrent jurisdictional is the risk of multiple legal proceedings for the same conduct by different agencies under different statutes. This raises fairness issues and poses an unacceptable level of uncertainty for businesses. It would be preferable for the FTC and the CAC to provide clear joint and individual guidance on the manner in which they will exercise their consumer law enforcement functions and prosecutorial and investigatory discretion. The risks of duplicate proceedings is tempered by the focus of the CAC on its dispute settlement role in contrast to that of the FTC which has adopted a more strategic approach to disposition of its cases. 132 Organisational Changes within the FTC During its first 12 years of existence the FTC's operation as a fully integrated consumer and competition agency was adversely affected by a lack of regulatory capacity and an insufficiently targeted enforcement approach. This suggested that on balance the establishment of the institution provided symbolic rather than actual substantive change for consumers. The establishment of the CAC under the Consumer Protection Act has 319 been a catalyst for change and revitalisation of the FTC. It has ushered in a third phase in the regulatory life cycle of the Commission characterised by more focused competition law enforcement aided by the adoption of a new case selection criteria and improved regulatory capacity. One of the advantages of small size can be nimbleness and flexibility in achieving change. The FTC is in the process of re-fashioning itself as a competition agency, albeit one that is consumer-focused, and it may be that as a relatively small organisation its organisational culture may allow relatively rapid evolution in this manner. The adoption of a new enforcement approach has also allowed the FTC to make better use of its resources despite the continued modest level of budgetary allocations.919 However the inadequacy of the financing of the agency given its responsibilities will continue to be a considerable obstacle. The Commission has therefore continued to access technical assistance funding from bilateral and international organisations.920 The internal capacity of the agency has been enhanced by several agency initiatives some of which preceded the enactment of the Consumer Protection Act. Greater economic focus and specialist expertise was facilitated by the replacement of the generalist economist posts with specialist competition analyst posts and the establishment of the post of Competition Bureau Chief. The movement to a more inter-disciplinary approach was reflected in the assignment of both lawyers and economists on all competition cases 921 The staff turnover also stabilised and this enhanced institutional 919 The budgetary allocations of the Commission did increase between 2005 to 2009. 920 Funding of CAD$46,000 from International Development Research Centre (IDRC) Canada and a three year IDB Project aimed at strengthening technical capacity detailed in FTC Annual Report (2008). 921 "Lee ABA 2006" supra note 684 at 3; see also Fair Trading Commission Annual Report (2007) at 15. 320 learning and memory. Technical assistance was also utilised more appropriately to ensure greater institutional knowledge transfer. The creation of the commercial division of the Supreme Court allowed the FTC to institute legal proceedings in a specialised forum. This not only increased the speed of disposition of cases but also encouraged the specialisation of the judiciary in Fair Competition Act matters.924 The strengthened regulatory capacity aided the Commission's new approach to macro-investigations and market, economic and industry studies which is examined in the following section. 733 "Joined-up" Strategic Enforcement through Market Studies and Consumer- Focused Competition Law Maximisation of consumer interests in integrated or partially integrated competition and consumer law enforcement requires a "joined-up" approach that considers both the supply and demand side of markets. The movement of the FTC towards this approach commenced with the adoption of criteria that allowed it to be strategically selective and proactive in its enforcement approach. This joined-up approach has been used in the United Kingdom by the Office of Fair Trading (OFT) which was re organised to maximise regulatory interplay and a focus on markets.925 The OFT has noted 922 Personal interview of senior FTC manager A (18 April 2008). 923 Fair Trading Commission, Ministry Report (2008) at 14. 924 Fair Trading Commission, Ministry Report (2008) at 13. 925See Office of Fair Trading, Annual Plan (2007 - 2008) Online: OFT http://www.oft.gov.uk/shared_ofit/about_oft/349517/ap08.pdf and National Contribution of the United Kingdom detailed in OECD Policy Roundtables, The Interface between Competition and Consumer Policies AF/COMP/GF(2008) 10 at 215 - 223 Online: OECD 321 Our view is that it is more effective to look at the demand and supply sides of markets together. The competition and consumer regimes are complementary to each other. Empowered and well-informed consumers act as a positive stimulus to competition between businesses. Where consumers are able to make informed decisions, businesses are more likely to innovate, reduce inefficiencies in production and supply, and compete in ways which make markets work well for consumers and the wider economy.926 The OFT considers the role of consumer policy in markets as (a) making markets work well through promotion of consumer confidence and (b) enhancing the ability to drive vigorous competition.927 The OFT market model approach uses market studies to exploit the synergies and ensure that competition and consumer policy are complementary. This approach to integration is based on "a shared approach to collecting intelligence", "a joined up approach to choosing tools", a consistent approach to enforcement policy" and "a consistent approach to resource prioritisation.928 The institutional designs implemented to facilitate this approach including reporting to same decision-makers on enforcement decisions and integration with research policy and strategy and cross-office policy committees. Assessments of the work of the OFT in this area have generally been encouraging.929 This example of joined-up regulation in a large state demonstrates the importance of sufficient regulatory capacity and expertise coupled http://www.oecd.org/dataoecd/22/34/40898016.pdf (Accessed 27 March 2011) ["OECD Policy Roundtable 2008"]. 926 OFT Annual Plan (2007-2008) ibid, at 6. 927 "OECD Policy Roundtable 2008" supra note 925 at 216. 928 Ibid, at 218. 929 See "Hampton Report" supra note 285; National Audit Office, Progress Report on Maintaining Competition in Markets (5 March 2009) Online: National Audit Office http://www.nao.org.uk/publications/0809/progress_market_competition.aspx (Accessed 27 March 2011). 322 with appropriate legal mechanisms in attempting to successfully integrate enforcement of consumer and competition law.930 Case Selection Criteria The case selection criteria, developed and implemented by the Commission in 2006, provide for the FTC to assess and prioritise enforcement action according to the seriousness of conduct, priority and capacity to investigate.931 The adoption of these guidelines marked a significant departure in approach for an agency used to investigating all complaints regardless of merit. The use of case selection criteria means that the agency can seek to maximise use of its limited resources. With respect to the seriousness of the conduct the degree of incentives for the business enterprise to engage in the alleged conduct and the degree of anticompetitive effects are assessed. Consideration is also given to the likelihood of increased costs to rivals, lower consumer welfare, loss of revenue, foreclosure, inhibiting of innovation and impairment of infant markets. If these effects are low then the FTC is likely to consider lesser action. However if the anti-competitive effects are high then the likely pro- competitive effects such as promotion of innovation and increased access to market are considered together with how widespread the conduct is in the industry. 930 Note however that reform of the consumer role of the OFT and integration with the Competition Commission to create a Competition and Markets Authority (CMA) was proposed in the 2010 re organisation of quangos announced by the UK Government. See Guardian newspaper October 14,2010 Online: Guardian http://www.guardian.co.uk/business/2010/oct/14/office-of-fair-trading-competition- commission-to-merge (Accessed 10 April 2011); BIS, Consultation Paper: A Competition Regime for Growth: A Consultation on Options for Reform Online: BIS http://www.bis.gov.uk/Consultations/competition-regime-for-growth?cat=open (Accessed 10 April 2011). 931 Fair Trading Commission, Case Selection Criteria. (Designed September 8,2006). 323 Prioritised cases are determined by the deterrence value of litigation, availability of remedies, jurisprudential value, level of public interest, likelihood of obtaining relevant evidence by reliable and reasonable means and local or foreign precedents for pursuit of action. Commission investigations are made with an initial intent of achieving effective competition advocacy, publication of an economic report or industry study or pursuit of litigation. Cases may also be recommended for closure or referral to another agency. The FTC will focus on industry trends and cases investigated by the FTC still require the consumer to sue to get individual redress after FTC has taken matter to court. In determining which cases to pursue the FTC also considers whether it is the agency best placed to undertake the investigation. The introduction of the case selection criteria assisted in creating a more focused agency albeit one that is targeted more specifically at competition matters. Table 7 indicates that after enactment of the Consumer Protection Act the number of complaints received by the FTC declined and more cases were closed probably due in part to the closure of dormant cases outside the ambit of the new priorities. Table 7: Cases received, investigated and resolved by the FTC, 2005 - 2009 Year Received Investigated Closed Resolution Rate (%) 2005 403 1,222 301 25 2006 236 1,458 301 21 2007 93 837 253 30 2008 116 937 357 38.1 2009 164 497 489 98.8 Source: Figures based on those in Fair Trading Commission Annual Reports and Ministry Reports (2005) to (2009). Notes: The yearly statistics relate to the Commission financial year which begins April 1 and ends March 31 of the following year, the resolution rate refers to the percentage of investigated cases that are "closed". 324 Consumer Protection Offences Enforcement During the period the Commission continued to use its consumer protection instruments but enforcement became more targeted. This is evidenced in its approach to control of misleading advertising and promotions in the entertainment industry. A trend had developed with respect to failure of scheduled artistes to perform, failure of events to start at scheduled times, ticket prices being higher than advertised and failure of organisers to notify material changes such as change of venue.932 The Commission's approach to enforcement in the sector was based on a clear escalation of enforcement strategies. Compliance activity was the first step with the hosting of educational seminars for event promoters.933 The enforcement strategies escalated with the Commission prosecuting promoters who had engaged in misleading advertising.934 This resulted in settlements by consent agreements and in one case the imposition of a pecuniary penalty of J$250,000 (approximately US$3,484).935 Additionally macro-investigations have been used by the Commission to effectively investigate market issues in diverse sectors including automobiles, computers, education and travel. These investigations have generally been prompted by data analysis of the trends in complaints or investigations that revealed industry wide market problems 932 See newspaper reports detailing problems in the sector such as "FTC Targets Promoters!" The Gleaner, November 10, 2006; "FTC blows the whistle on stunt festival" Jamaica Star, April 17, 2007; "Under Fire - Promoters to be sued for misleading advertisements" The Star, November 15, 2006; "Bryson's no-show sparks FTC probe" Gleaner, January 9, 2007. 9 3 Seminar held on October 23,2006 as noted in FTC Ministry Paper (2007) at 3. 934 Proceedings were issued by the Commission in FTC v Solid Agency (Consent agreement); FTC v Brent/Speare Entertainment Limited (Supreme Court of Jamaica Consent agreement payment of costs and apology - November 19,2008); FTC v Errol Bailey (trading as Foundation Music Showcase) (4 July 2008) Supreme Court of Jamaica Commercial Division Claim No. 2007 CD003. 935Penalty imposed in FTC v Errol Bailey (trading as Foundation Music Showcase) (4 July 2008) Supreme Court of Jamaica Commercial Division Claim No. 2007 CD003. 325 for consumers and have led to recommendations to Government departments and trade associations and the issuance of public notices and advisories.936 Consumer-focused, competition law enforcement Irina Haracoglou opines that a consumer-focused enforcement strategy can be implemented by regulators through a focus on the investigation of retail markets.937 She notes that this would allow greater attention to be paid to the level of injury to consumers in those sectors that are more likely to cause direct harm. This has particular relevance for small states with open economies with high levels of imports and low levels of manufacturing. Concentration on retail markets in small states is therefore a beneficial approach to enforcement as it helps to ensure that direct consumer interests are more fully protected. The Commission has indicated that it will be using a consumer-focused competition law enforcement approach by concentrating on markets that have a direct impact on the end-user consumer.938 It has identified priority markets as those that represent a significant portion of consumers' disposable income, focus on essential items, necessities, products consumed by the elderly or complex products. This approach would also be strengthened by the adoption of a consumer welfare standard in competition law enforcement and the development of institutional and enforcement mechanisms that maximise involvement of consumers and consumer groups. 936 See Appendix C - List of FTC Macro-Investigations, Market, Economic and Industry Studies 1993 - 2009. 937 Irina Haracoglou, "Competition Law, Consumer Policy and the Retail Sector: the systems' relation and the effects of a strengthened consumer protection policy on competition law", (2007) 3:2 The Competition L. Rev. 175. 938 "Miller ICN 2010" supra note 918 at 6. 326 Competition Law Advocacy & Compliance - Market, Economic and Industry Studies After 2005 market, economic and industry studies were used as a basis for Commission investigation of possible anti-competitive conduct. The use of these studies by the Commission has been driven by their strategic use in supporting enforcement and advocacy activities of the Commission.939 Market studies are a relatively recent enforcement tool used by competition authorities. As defined in an ICN handbook they are research projects conducted to gain an in-depth understanding of how sectors, markets, or market practices are working. They are conducted primarily in relation to concerns about the function of markets arising from one or more of the following: (i) firm behaviour; (ii) market structure; (iii) information failure; (iv) consumer conduct; (v) public sector intervention in markets (whether by way of policy or regulation, or direct participation in the supply or demand side of markets); and (vi) other factors which may give rise to consumer detriment.940 An important example of the Commission's approach in this area was the FTC market study on food pricing in 13 basic food items including bread and chicken which revealed that the rise in retail prices was probably due in part to rising input prices and volatile exchange rates.941 Additional work is to be undertaken to investigate levels of anti competitive behaviour. This sector is of central importance to consumers and reflected 939 "More focus on market studies", FTC Competition Newsletter Vol. XIV (2009) at 3. 940 ICN, Draft Market Studies Good Practice Handbook (April 2010), online: ICN www.internationalcompetitionnetwork.org/uploadsAibrary/doc646.pdf. 941 ICN, "Report on the 8th Annual Conference Of The International Competition Network" (June 3-5, 2009, Zurich, Switzerland) at 4, online: ICN http://www.internationalcompetitionnetwork.org/uploads/library/doc60.pdf (accessed 30 June, 2010) at 4 "An Economic Enquiry into the Causes of the Perceived Asymmetric Price Transmission in Markets for Specific Consumer Goods in Jamaica" (2009) Online: FTC http://www.jftc.eom/Libraries/Industry_Studies/2009_04_15_FTC_Study_of_the_Distributive_Trade.sflb.a shx (Accessed 10 April 2011); . 327 the Commission attention to core consumer issues. Other market studies have covered cement, fertilisers, telecommunications and tourism.942 Market studies could be effectively used to maximise the interplay between consumer and competition law and assist in integrated and complementary enforcement. The use of these studies must be complemented by enforcement action in order to build credibility. In the absence of enforcement activities the Commission may be perceived as operating more like a research or public policy agency through publishing recommendations and advocacy. It could be questioned whether market studies activity actually increases the effectiveness of the agency or dilutes its expertise and focus. Conclusion Regulatory scholars have advanced strong arguments for the integration of consumer and competition law enforcement. Given the special features and characteristics of small states integration of regulatory functions on this basis would seem appropriate. Consolidation of regulatory functions within a single institution may enhance regulatory capacity and make the agency less likely to be prone to regulatory capture. However full or partial integration is not necessarily a desirable or practical workable solution in small states with limited capacity. This was reflected in the history of the Jamaica FTC which experienced technical and capacity difficulties in enforcing both consumer and competition law. 942 See Appendix C - List of FTC Macro-Investigations, Market, Economic and Industry Studies 1993 - 2009. 328 There are several difficulties with logical and institutional integration of consumer and competition law enforcement in small states. Firstly, competition law is necessary but not sufficient for consumer protection. The insufficiency of competition law in meeting consumer interests and the consequential need for additional consumer protection measures is more pronounced in small developing states. In these states market failures exacerbated by small size together with the levels of economic inequality and disparity mean that policymakers must place greater reliance on interventionist measures rather than the promotion of competitive markets and reduced state intervention. Secondly, greater integration may not be possible or advisable as competition and consumer laws may be guided by different philosophical standpoints and goals. This is evidenced in the contrasting history and operating philosophies of the CAC and FTC. There is a different balance between equitable and economic efficiency rationales in the Consumer Protection Act and the Fair Competition Act. The FTC and its governing legislation was more heavily influenced by economic efficiency and consumer sovereignty approaches and although the CAC also promotes consumer choice and sovereignty its historical origins represent a more paternalistic model of consumer protection that is reflected in its present philosophical and institutional approach to enforcement of the Consumer Protection Act. Thirdly, the consolidation of functions may exacerbate rather than ameliorate the institutional capacity constraints in small state regulation. Under- resourcing coupled with lack of expertise means that agencies will find it difficult to enforce effectively where there is a wide range of regulatory functions. 329 During the period 2005 to 2009 the FTC demonstrated a new approach that is likely to lead to greater effectiveness in the protection of consumer interests in enforcement of consumer and competition law instruments. The synergies between the Consumer Affairs Commission and Fair Trading Commission have not been entirely successful however the effectiveness of the FTC is based on its ability to use collective measures rather than individual redress. This is in contrast to the CAC which has primarily sought to address individual compensation claims in a dispute resolution role. As the agency responsible for public enforcement of the Consumer Protection Act it is important that the CAC seeks to develop a regulatory role that builds compliance by market players and ensures that detrimental market-wide conduct is addressed. Effectiveness is greater when an agency "enforces" rather than "resolves" matters. However the absence of a wider range of enforcement techniques available to the CAC and the inability of the CAC to act on its own initiative or exercise a mediatory or adjudicatory role in consumer disputes makes the effective adoption of a regulatory enforcement role unlikely. In contrast the regulatory effectiveness of the FTC has improved with the narrowing of its regulatory remit, its focus on retail markets and its concentration on collective rather than individual redress. 330 CHAPTER 8 ... adapting [seminal ideas] to small societies was not just a question of reducing them in scale. Their very applicability to societies of a different scale itself posed a formidable intellectual change and called for sustained theoretical work. J.J. Lee (1989)943 CONCLUSION: SUMMARY OF FINDINGS AND CONTRIBUTION This study sought to explore the efficacy of consumer market regulation in small developing states through a case study investigation of the Jamaican Fair Trading Commission and its approach to the interface between consumer protection and competition law. The study was conceptually divided into two parts. Firstly, a theoretical and normative study on consumer market regulation in small developing states and secondly, a socio-legal study of the Jamaican Fair Trading Commission. Chapter 2 set out a review of the published literature on theoretical perspectives on the interplay between consumer and competition laws. Chapter 3 discussed the normative foundations for market regulation in small states through an exploration of the regulatory rationales, goals and tailored content of the regulatory instruments. Chapters 4 through to 7 provided a detailed analytical history of the Fair Trading Commission and its approach to enforcement of the Fair Competition Act. Chapter 4 covered the historical development of market regulation in Jamaica and the law reform process for new competition legislation. The evolutionary "life cycle" of the enforcement agency and the efficacy of its regulatory style and strategies were examined in Chapter 5. Chapter 6 provided a more 943 Lee 1989, supra note 212 at 628. 331 detailed evaluation of the Commission's approach to the protection of consumer interests across its regulatory remit. Chapter 7 considered new consumer protection legislation enacted in 2005, the role of the Consumer Affairs Commission and the implications of two separate agencies with overlapping responsibilities. The dissertation research has confirmed that the size of a state matters in the design of legal instruments and institutions. It achieved what it set out to do to the extent that it has provided a different perspective and appreciation of the small state context for consumer market regulation. The specific findings and the research contribution of the study are examined in this concluding chapter. The first section will indicate how the research questions set out in the introductory chapter were answered by the theoretical and practical research and outline the contribution made to the field. The second section will discuss the implications of the dissertation research and make some tentative proposals for improved consumer market regulation in small states. Suggestions for future avenues of research are set out in the final section of the chapter. 8.1 Summary of Findings and Contribution The research question posed at the beginning of the study, asked whether there was a logical and institutional interplay between consumer protection and competition laws in small developing states. The short answer is that although at the theoretical level there is likely to be some commonality with the adoption of a development-oriented consumer interest goal, on the practical level functional integration is hampered by inadequate 332 regulatory capacity. Small states face significant challenges in designing and implementing an integrated regulatory framework that maximises the synergies between consumer protection and competition law. The following conclusions can be drawn from the research. Firstly, this study has found that consumer market regulation in small developing states should be development-oriented. This orientation encompasses economic and social development through not only economic growth but also through more equitable wealth distribution and increased individual capabilities of the population. It argues that the values underlying the economic and non-economic rationales for regulation essentially represent a contest between economic efficiency and fairness. The economic rationale is based on the market failure thesis and prioritisation of efficiency in contrast to broader social rationales which can take greater account of individual fairness and/or procedural and substantive public interest community objectives such as access to consumption of basic goods and services. It is accepted that both consumer and competition laws seek to constrain economic market activities and in this context it is to be expected that their introduction may be prefaced by economic rationales. However particularly in small developing countries with their extremes of income and development disparity, consumer market regulation must be re-conceptualised so that in balancing economic efficiency and fairness other public interest objectives such as social stability concerns, distribution of wealth, protection of small enterprises, the protection of employment and historically disadvantaged groups are considered as part of the mix of goals. The analytical history of the legal regulation of consumer markets in Jamaica 333 provided an indication of the actual small state rationales for regulation. This case study research showed that in practice there were mixed rationales for the introduction of both the Fair Competition Act and the Consumer Affairs Act but that on both occasions social justice and public interest considerations were important for policymakers. Secondly, the study found that although existing legal models are a useful and practical method of commencing law reform in small states, wholesale legal transplants are problematic unless they are tailored to the distinguishing characteristics of size. Tailoring and domestic inputs in the policy process are critical in crafting an appropriate legal and institutional framework. The adverse result of limited tailoring and tailoring without specialist expertise was reflected in the type of substantive provisions copied into the Fair Competition Act and the inelegant drafting of the Consumer Protection Act. Review of the literature on consumer protection and competition laws in small states suggested that consumer protection techniques should inter alia initially focus on interventionist tools and strategies to facilitate both access to consumption and consumer choice. Additionally small state competition laws should incorporate development- oriented public interest goals; use lower thresholds for assessing dominance; balance per se and rule of reason prohibitions and select enforcement tools and priorities that reflect small state realities of limited agency capacity. Thirdly, the study found that public agency enforcement of competition law is critical in small states and potentially more important than private enforcement mechanisms which are likely to be underutilised. Overall the effectiveness of competition law enforcement in a small state is complicated by cultural and social norms, limited financial 334 and human resources, limited expertise and the lack of a competition culture and low public awareness of the benefits of competition law in promoting development which all adversely affect development outcomes. Fourthly, one of the more significant findings to emerge from this study is that functional integration of consumer protection and competition law enforcement will not necessarily effectively deliver better consumer outcomes in small states. Although the agency design and scope must take account of limited regulatory capacity it may be more effective to establish multiple agencies with clear individual visions and goals. The analysis demonstrates that although the Commission was partially successfully in promoting consumer interests and changing market conditions particularly in the newly liberalised telecommunications sector, it failed to maximise the synergies between consumer and competition law enforcement. The early approach of the FTC showed potential in promoting consumer interests however enforcement was ad hoc and insufficiently strategic. Accordingly, the study has shown that regulatory capacity is not necessarily strengthened by the creation of a multi-function agency and that functional integration can dilute the focus and effectiveness of the agency. Fifthly, the study identified significant domestic dynamics influencing small state regulation as the overall lack of regulatory capacity evidenced in the lack of financial and human resources and the influence of entrenched interest groups. Over the period of the study the Commission was inadequately funded and in addition to domestic budgetary allocations it also relied on external technical assistance for training and upgrading of infrastructure and professional expertise. The study also confirmed the importance of 335 domestic interest groups in the regulatory process. Private sector organisations in Jamaica significantly influenced the final form of the competition legislation as well as the level of effectiveness of the enforcement agency. Submissions from the private sector led to the removal of merger control regulation. Their legal challenges adversely affected institutional capacity and as a result the agency was hampered by jurisdictional uncertainty over the scope of its authority (possibility of regulated industry defence) and the exercise of its functions (separation of investigative and adjudicative roles). Sixthly, the study confirmed that external dynamics influenced the trajectory of both law reform and enforcement. Legal development assistance and the global diffusion of norms and rules through epistemic communities play a pivotal role in shaping the regulatory framework for consumer markets in small developing jurisdictions. This study has shown that international and bilateral agencies have a significant influence on the path of reforms. It provides a clear illustration of the indirect and direct influences of USAID, the World Bank, the IDB and to a lesser extent the IMF on legislative development and institutional approaches and strengthening. The Fair Competition Act was labelled as "home-spun" but in actual fact appears to have been driven by international dictates. This conclusion is suggested by the use of USAID funded consultants for a draft Bill, the provision of comprehensive USAID funding for the start up costs of the agency as well as by the timing of the law reform process. During the 1990s competition legislation which was important for withdrawal of the state from the market was prioritised and the law reform process for state intervention through the traditional consumer protection tools later introduced in the Consumer Protection Act was 336 relegated. Technical assistance from both USAID and IDB continued to be important sources of funds for institutional strengthening of the Commission in the life cycle phases. The study also notes the likely influence on the "ethos" and enforcement approach of the Commission of epistemic communities such as the ICN, the global and regional competition forums held under the auspices of the OECD and competition agencies in larger developed countries. These institutions sponsored attendance at meetings and conferences and facilitated agency pairings and mentoring, such as with the US Federal Trade Commission, providing the Commission's foremost avenue of knowledge transfer and development. Finally, the analysis of the agency's evolution between 1993 and 2009 revealed three distinct phases. An initial phase characterised by a crusading and spirited approach, a second phase of agency stagnation before moving to a third resurgent phase of gradual revitalisation. It indicated that the enforcement approach of the Fair Trading Commission, particularly as demonstrated in its guidance on authorisations of anti-competitive conduct, focused on economic efficiency and consumer choice in contrast to a more appropriate approach that took into account wider public interest considerations. The research findings demonstrate that although the Fair Trading Commission did not initially fully maximise the use of its regulatory instruments it has subsequently moved to greater protection of the consumer interest. A consumer-focused approach to competition law enforcement was evidenced in the post 2005 approach. The Commission implemented a new approach through strategic prioritisation of cases and a focus on retail markets. It appears that the institutional development of the Consumer Affairs Commission after 337 2005 facilitated the "deepening" of the expertise of the Fair Trading Commission in competition law enforcement and allowed greater exploration of public interest outcomes through targeted enforcement in sectors of primary concern for consumers. This consumer-focused approach provides a glimmer of hope of the implementation of a tailored consumer interests approach. However the case study also indicates the necessity of clarity on underlying values and the inclusion of public interests goal particularly in competition law enforcement where it also needs to be translated into a precise consumer welfare standard that reflects these values. The dissertation research sought to engage with a broad range of literature on theories of regulatory origin and regulatory enforcement as well as consumer and competition regulation and the role of law and legal institutions in development. Although initially the study intended to focus on the sphere of legal interaction between consumer protection and competition laws, the absence of a strong interface in Jamaica, led to a wider focus on the evolution of a small state regulatory agency and its enforcement style and use of enforcement strategies. The argument for the originality of the work is that it provides a rare case study into both the legal instruments and enforcement agencies of consumer market regulation in a small state. The findings from this study make several contributions to the current literature and enhance our understanding of small state regulation. The research suggests suitable normative goals for market regulation in small states through a development-centric notion of consumer welfare. These suggestions enhance our understanding of the impact of size on the theoretical underpinning of small state regulation and the norms and values 338 embodied within. The work supports the findings from prior research that cites regulatory capacity as an important factor in efficacy of regulatory reform.944 However the study also challenges other research that emphasises the primacy of economic efficiency and advocates institutional integration and consolidation of functions as a panacea for regulatory institutional constraints'.945 These findings add to the growing body of literature on legal transplants and transfers and increase our understanding of the effects of different models of legal development in emerging and developing economies. It acknowledges that the "one size fits all" approach is not appropriate for legal reform in small states 946 The limitations of the current study need to be acknowledged. The study has only examined a single jurisdiction and consequently the results may not be representative or fully transferable to all small states. Furthermore in the context of this study the ambit of "consumer market regulation" has been narrowed to the legal instruments and the role of the public agency and accordingly the impact of private players and self-regulatory mechanisms in the overall framework were not addressed. Nonetheless, these findings incrementally increase our understanding of small state issues. 944 See for example "Lodge & Stirton 2002" supra note 634. 945 Cseres 2005, supra note 14. 946 "Gal 2010" supra note 409, Taimoon Stewart 2004, supra note 13. 339 8.2 Implications of the research findings for policy and practice - Possible lessons The results of this research suggests that greater consideration needs to be given to the manner in which both consumer protection and competition laws can be strengthened and enforced to promote consumer interests in small developing states. This must be done in a manner that moves towards an overall development-oriented regulatory goal. The complexity of enforcement is not reduced by the size of these states and may actually increase as a result of the need to carefully balance efficiency and non-efficiency considerations. Accordingly, these findings suggest several future courses of action for both policymakers and regulatory agencies. By definition these states "fall below the minimum size needed to operate a full set of regulatory policies and institutions." The main approach to tackle these issues must therefore involve innovative solutions to institutional design and scope. Taken together, these findings do not support strong recommendations to establish multi-function regulatory agencies as consolidation of functions at the domestic level dilutes agency focus and may adversely impact rather than promote consumer interests. However there is a need for prioritisation of regulatory policies and initiatives as small states cannot sustain proliferation of agencies which are likely to function at sub-optimal levels. Establishment of under-endowed agencies with insufficient capacity to tackle issues across their regulatory remit will be counter-productive and likely to raise unreasonable 340 consumer expectations. Policymakers need to determine core areas for regulatory interventions and establish agencies to address these areas. Both domestic and regional solutions need to be developed. At the domestic level policymakers need to address sequencing in the enactment of laws and the establishment of agencies. For example prioiitisation of disadvantaged consumers and increased access to consumption may call for a focus on the implementation of consumer protection reforms prior to competition law interventions. Consumer law is an important independent field that is critical for improving the welfare of consumers in small states. This should be reflected in the institutional endowment of consumer agencies which should not be relegated behind competition agencies which generally seek to protect consumer interests indirectly. The strengthening of the consumer movement and the development of the capability of civil society would also assist in improving consumer redress and place the consumer at the centre of competition law enforcement. This is important in empowering consumers and as a back up to the limitations of public administration. At the regional level convergence of enforcement functions as well as the establishment of regional law reform agencies and small state epistemic communities are possible initiatives for consideration. Regional initiatives may be particularly useful for groupings such as CARICOM which has states with like size and development levels, as the territories in the grouping will have similar issues. However the regulatory challenges of institutional and financial constraints are a primary impediment in regional groupings of small developing states. On the other hand regional groupings such as the 341 Common Market for Eastern and Southern Africa (COMESA) and the EU incorporate both developed and developing states. This facilitates aid to less developed states in the group but may deliver less tailored solutions. It should also be recognised that membership of supra-national organisation will be a two edged sword as whilst it ensures that policies are updated and there is access to research data the mandatory requirements for measures to meet regional standards reduces the ability to tailor policies. Recent reforms in the Caribbean in the context of the CSME illustrate the difficulty with law reform and enforcement on a regional basis. Although regional expertise was pooled to draft model domestic legislation to support the common market there has been uneven adoption and enactment of model legislation by Member States.947 Furthermore although a regional competition commission has been established the early signs during the negotiations on the agency's establishment and implementation were that, in the absence of extensive technical assistance, it was likely to be hampered by financial constraints and insufficiency of technical capacity.948 This has been confirmed in the inability of the agency to attract suitably qualified staff 949 There is an overall imperative for greater small state collaboration and dialogue and the creation of epistemic communities on small state issues at both the policy and enforcement levels. Recent initiatives suggest that greater attention is being paid to 947 For example in respect of the competition law obligations of the 16 members states of the CSME only 4 states have established national institutions and enacted legislation including Barbados, Guyana, Jamaica and Trinidad and Tobago. Although should be noted that the 6 member states who are also members of the Organisation of Eastern Caribbean States (OECS) will have the regional body serve as their national commission but they have not enacted a uniform competition law. 948 Community Competition Commission was inaugurated in Suriname on January 8,2008. 949 "State of competition law in Caricom", Business Monday, Barbados Advocate (25 April 2011) at 12. 342 increasing the efficacy of this strategy.950 This approach will assist in developing tailored policy solutions and in institutional strengthening. Information sharing and mutual assistance between small states will facilitate greater development of domestic expertise and enhance the capacity to participate more fully in international dialogue on regulatory issues. The findings of the study also have general implications for the work of enforcement agencies in small states. They need to be strategic, focused and transparent in their operating procedures. A primary lesson for small state agencies is the overriding need to prioritise and target enforcement interventions and use both compliance and deterrence strategies. As regulatory agencies, particularly in small states, cannot adequately address all issues increased emphasis should be placed on ensuring that there are strategic interventions that maximise the use of resources and increase agency effectiveness. Strategic prioritisation will assist in improving overall effectiveness of the agency and deliver more beneficial consumer outcomes. Investigations should focus on local issues and markets of key importance to low-income and vulnerable consumers that are important to development such as food and pharmaceuticals. The enforcement strategies and styles of the public enforcement agency must also be aimed at ensuring that the governing legislation is a "living" statute that evolves through interpretation by agency guidance and the courts. Enforcement will need to build and develop a competition 950 This has been increasing in competition law and policy for example in 2009 a conference to exchange small state experiences on competition law was held in Barbados under the auspices of Small States Network for Economic Development (SSNED) with attendees from Caribbean and EU small states see online: SSNED http://www.ssned.org/uwi_barbados (Accessed 11 January 2011). Regional small state conferences have subsequently been convened under the auspices of SSNED. 343 culture and instil moral norms on compliance. This also requires that agencies institute legal proceedings, issue decisions and develop community expertise in regulatory issues. A specific lesson for enforcement agencies is the importance of the choice of a consumer welfare standard for competition law cases. It has been suggested in the study that this should be based on a "true" consumer welfare standard. However there is a need for agencies to undertake empirical work and testing and fashioning of an appropriate standard for their needs. The solution to small state conditions is not to ignore distributional issues and political constraints but to maintain transparency in the approach adopted. The overriding lesson is that transparent regulators must clearly indicate the trade-offs that are being made in their regulatory decisions. The research findings have direct relevance to the specific strengthening of the substantive and procedural provisions of the Fair Competition Act. Work has been in progress with respect to legal amendments to facilitate the separation of investigative and adjudicative functions, the addition of merger control and the inclusion of a formal advocacy role for the Commission.951 However the scope of the amendments may need to be widened to address exploitative practices such as excessive pricing in abuse of dominance, give statutory backing to enforceable consent agreements, incorporate financial incentives to aid private enforcement and facilitate collective enforcement of competition and consumer provisions by consumer groups. 951 Personal interview of senior FTC manager A (18 April 2008). 344 83 Final Remarks and Avenues for Future Research Work on Market Regulation in Small States The enactment of the Fair Competition Act represented a pioneering small state attempt to increase consumer welfare and maximise the interface between competition and consumer law. However this attempt was met by several challenges both external and internal to the agency. These challenges meant that the laudable consumer interest goals and objectives which informed the legislation were not fully achieved during the first decade of the operation of the Act. Furthermore the synergies that should have resulted from the institutional integration of consumer and competition law were not fully realised. This chapter has summarised the findings of the theoretical and case study research and suggested some implications of these findings. If consumer market regulation in small states is to address social justice considerations and ensure broad based benefits of market based reforms and development, then market led economic growth must be balanced with equity. In fashioning a responsive and effective framework, small states need to set their own policy agenda and establish institutional agencies that reflect their specific realities and make clear the political and social choices being made in regulatory design. This research has thrown up many questions in need of further investigation. The paucity of comprehensive research on the implications of small state characteristics on the appropriate framework for consumer protection and 345 competition laws and regulatory enforcement in small developing states means that there is potential for the development of a comprehensive research strand. More detailed work on the parameters for legal and institutional frameworks tailored to size and development would help to establish a better understanding of the principles to be applied to small state frameworks. A cross-national agency study would be useful in determining the broader applicability of the findings from this single jurisdiction case study. Small jurisdictions have established diverse models of functional integration. The Barbados Fair Trading Commission integrates consumer protection, fair competition and multi-sector utility regulation as does the Fiji Commerce Commission. Malta is to establish an integrated Competition and Consumer Affairs Authority.952 In this context further research might investigate the experiences of different types of integrated agencies. Diversity of experiences and problems can be recognised even within the category of small states. This additional research would address the applicability to other small states and the differences posed by regulation in micro-states. The insights of behavioural economics will continue to set the research agenda for consumer market regulation. Previous research has highlighted variations in the behaviour of consumers in different cultural contexts.953 Research on the impact of social norms and customs of small state consumers would be useful in assisting the selection of regulatory tools and the development of targeted regulatory intervention in this area. 952 'Consumer Bill lacks protection' Times of Malta January 20,2011. Online: http://www.timesofmalta.com/articles/view/20110120/local/consumer-bill-lacks-protection (Accessed 17 March, 2011). 953 See studies cited supra note 266. 346 Costs benefit analysis of competition enforcement has been carried out in developing state context that demonstrates that savings made outweigh the running and establishment costs of the agency.954 In addition to academic and policy research enforcement agencies need to undertake studies to justify their existence. Additional empirical research and measurement of impact of consumer and competition law enforcement on the costs and benefits of regulation would assist small state agencies in demonstrating their tangible benefits to policymakers. However the caveats on the limitations of quantitative measures and the incorporation of qualitative concerns should be borne in mind. This study was conducted against the background of the significant body of scholarly contributions on the links between law and development. It focuses specifically on markets and the law and the role of consumer and competition law as tools to increase the welfare of consumers and promote consumer interests. It is hoped that the research will encourage greater consideration of the role and ambit of the regulation of consumer markets in small developing states and lead to greater discussion and a new research agenda on the tailoring of regulatory instruments and agencies in these vulnerable states. 954 See J.L. Clarke, & Simon Evenett, (2003) 'The deterrent effects of national anti-cartel laws: Evidence from the international vitamins cartel" (2003) 48:3 Antitrust Bulletin, 689; J.M. Connor, & Y. Bolotov, "Cartel overcharges: survey and meta-analysis" (2006) 24 (6) Int'l. J. Ind. Org. 1109. 347 APPENDIX A: RESEARCH METHODS This section sets out (a) the ambit and type of data studied (b) the methods of data collection (c) the manner in which the researcher obtained the data and (d) the claims the researcher is making about the data. It also provides an overarching exposition of the techniques used for data collection and analysis examining both the advantages and limitations and rationales for the preferences for certain techniques. Doctrinal legal research, policy research and comparative literature Primary and secondary law sources including statutes, statutory instruments, Supreme Court decisions and guidelines issued by the regulatory agencies were the starting point for the analysis of the material. Academic literature and existing research studies relevant to the research question were examined and reviewed, particularly recent writings by Caribbean academics and other persons in this field. Policy research studies provide a useful perspective on the development and implementation of the laws. The policy literature particularly of "epistemic communities" is important in this field particularly literature from OECD, UNCTAD, ICN and IDB. Consideration of the models in the territories that formed the templates for the transplanted law provides an additional contextual layer in the research. The transplanted laws in Jamaica owe a great deal to regimes in Canada, the European Community, New Zealand, Australia and the United States and comparative information from these territories was reviewed to highlight 348 possible original intent, divergences and possible aids to interpretation of the domestic statutes. Appreciation of national differences and comparative approaches is necessary in light of the convergence in models across jurisdictions. This movement towards convergence and multilateral frameworks are particularly prevalent in competition law. Fieldwork Research - Documentary/archival research The fieldwork research which comprised archival research and elite interviewing contextualised the issues and provided a appreciation of the social and cultural characteristics and styles that informed policy-making and community involvement. Steps taken to enhance the credibility of the case study research included creating a manual case study database and policy grid for the events conflicts and characters involved and maintaining links to specific evidentiary sources. Collection and examination of the policy papers that informed the Government of Jamaica such as briefs prepared by civil servants, consultant reports as well as Hansard debates and the submissions of interested organisations were important archival sources accessed through university collections and during the fieldwork visit. Other documents reviewed and analysed included educational material and guidelines prepared prior to enactment of the legislation, speeches and addresses by participants in the process. Electronically available newspaper archives of the Jamaica Gleaner, a daily newspaper, were also explored in building the policy story. 349 In considering the value of documentary and archival analysis close attention should be paid to the authenticity, credibility, representativeness and meaning of the documents.955 No issues arose in the research with the authenticity and credibility with reliance placed on consulting original records of Hansard debates on the legislation subject to review. Secondary accounts were utilised where primary records not available such as select committee reports. Newspapers were mainly used as a guide to identifying themes and players in the policy story. Fieldwork Research - Elite interviewing Inherently interviewing is based on a guided conversation.956 Whilst the interview process has limitations and critics point to its subjectivity and tendency to bias interviewing elite persons provides good data and enriches case studies based on desk or documentary research. The techniques and approach in the dissertation research drew on the wealth of academic writing on interviewing for qualitative and quantitative research which provided guidance on effective interviewing techniques and approaches and the strengths and limitations.957 955 Peter Burnham et al, Research Methods in Politics 2nd ed. (Hampshire: Palgrave Macmillan, 2008) at 208. 956 Steiner Kvale, Interviews: An Introduction to Qualitative Research Interviewing (London: Sage Publications, 1996) at 19 [Kvale 1996]. 957 Ibid.; Jeffrey M. Berry, "Validity and Reliability Issues in Elite Interviewing" (2002) 35:4 Political Science & Politics 679 ["Berry 2002"]; C. Welch et al, "Corporate Elites as Informants in Qualitative International Business Research" (2002) 11 Int'l. Bus. Rev. 611; Wyn Grant, "Elite Interviewing: A Practical Guide"(University of Birmingham, Institute for German Studies, 2000) IGS Discussion Papers Series Number. IGS2000/11; Teresa Odendahl & Aileen M. Shaw, "Interviewing Elites" in Jaber F. Gubrium & James A. Holstein eds., Handbook of Interview Research: Context and Methodology (London: Sage Publications, 2002) at 299. 350 The design and analysis of the interviewing component of the case study took into account Kvale's seven stages of the interviewing process addressing the methodological and ethical issues in thematising, designing, interviewing, transcribing, analyzing, verifying and reporting in order to strengthen the methodological rigour of the approach.958 Dexter described elite interviewing in his classic text as ... an interview with any interviewee .... who in terms of the current purposes of the interview is given special, non-standardized treatment. By special non-standard treatment I mean 1. stressing the interviewee's definition of the situation, 2. encouraging the interviewee to structure the account of the situation, 3. letting the interviewee introduce to a considerable extent (an extent to which will of course vary from project to project and interviewer to interviewer) his notions of what he regards as relevant, instead of relying upon the investigator's notions of relevance" 59 In contrast to other qualitative interview types and techniques (such as focused interviews where the interview is within set boundaries and presuppositions) elite interviewing raises distinctive concerns on issues such as access, power relations, appropriate questioning techniques. It was important to have a solid knowledge base prior to conducting interviews in order to interrogate the responses and get maximum benefit from the interview and accordingly the interviews were conducted after the majority of the archival research was completed. The primary goal of the interviews, which were conducted face to face, was to complement the archival research material and supplement undocumented or insufficiently documented areas. Additionally the interviews were used to elicit first-hand accounts of players involved in the process to elucidate the decision-making process for 958 Kvale 1996 supra note 936 at 88. 959 L.A. Dexter, Elite and Specialised Interviewing (Evanston USA: North western University Press, 1970) at 5 [Dexter 1970]. 351 policy by focusing on different perspectives drawing out motives of policy-makers and constraints in the involvement in the policy process. A selection of regulatory actors from both the private and public sector and business and consumer representatives were identified from the policy matrix in order to discover different webs of influence and interrogate the varied viewpoints. The interviewees knowledge spanned the time period of the policy story with some interviewees able to provide the perspectives across the entire period of the policy story. Limitations arose due to issues of access and timing of some interviews but the cross-section provided insights on issues from all perspectives. The interviews were framed against the conceptual and theoretical basis of the research developed after review of the literature on the interplay between consumer and competition policy. This study owes a debt to the interviewees in Jamaica who pursuant to university academic regulations for doctoral research remain anonymous. Those persons formally interviewed were 1 government official, 9 regulatory agency officials and 4 representatives from private sector and consumer interest groups. An open-ended semi-structured approach was adopted rather than closed questions as this was felt more likely to provide useful insights. Aberbach and Bachman support this approach contending that the "conversational flow and depth of response outweigh the disadvantages of inconsistent ordering".960 Their research findings support the view that elites are more responsive to open-ended questioning. Different interview guides/protocols designed and used for different interviewees. Confidentiality assured and interview process in accordance with York University Ethical Code. The open-ended 960 Joel D. Aberbach & Bert A. Rockman, "Conducting and Coding Elite Interviews" (2002) 35:4 Political Science & Politics 673 at 674. 352 questioning allowed respondents to organise within their own framework. As the research study did not take a quantitative approach and the statistical rigour that favours the closed questioning approach was not a priority. However this meant that the interviews also covered a wider context than was directly relevant to the research question. The technique of initially focusing on interviewees background did appear to relax interviewees and provide a comfortable environment for conducting the interviews. Interviews were conducted in conversational tone and avoided adversarial or confrontational approach as it was felt this was the most effective way to elicit information. Interviews were not of equal weight. Several interviewees although familiar with general areas covered did not have expert views or opinions on the interplay question and interviews tended to focus on more general issues in introduction and enforcement of competition and consumer law. Expertise in this area was largely concentrated within the enforcement agency. Most of the interviewees directly involved provided insightful comments and context for analysis of the research question. On occasion the subjects were unrevealing due to a lack of familiarity with particular time periods. These deficiencies were not considered a problem in light of the documentary data available for the historical perspective. Also problems and inaccuracies that could arise as a result of occasional lack of objectivity and exaggerated roles in policy story were countered by the use of multiple sources and documentary archival research. Limitations were imposed in light of the time-consuming and costly process of conducting field research. The fieldwork 353 research was confined to a single trip and the face to face interviews primarily took place in Jamaica over a 3 week period in 2008. Two additional telephone interviews were subsequently conducted telephone in 2010. Whilst writers on research methods and methodologies have mixed views on the recording of interviews the interviews were recorded in order to minimise information loss, provide an easily accessible record for analysis and facilitate a conversational style and approach.961 Recording and transcribing oral interviews into written evidence rather than reliance on contemporaneous note taking also provided an opportunity to study body language and allowed the researcher to focus on the questions asked and the responses rather than on note-taking. The tape-recording provided a comprehensive record to refresh memory on key aspects of interview. The field notes written at the time or immediately after the interview also provided supplementary information about interaction during the interview where details such as location, ambience, interruptions and used together with transcribed audio recording. Interviews were fully transcribed by the researcher. The transcription ran concurrently with interviewing phase to enable interviewer to build on responses and themes. In the initial exploration of data there were recurrent themes and issues which were explored in the interview process. The transcribed material was analysed and results reported in chapters 5 to 7 of the dissertation research. The material was analysed to digest and condense the essential points, common and divergent themes and discover new perspectives on the issue using an intuitive approach by the researcher rather than formal 961 See Dexter 1970 supra note 942 at 59 who changed mind on this issue during writing of the text and recommended tape recording despite its disadvantages. 354 categorisation. The type of interviewing did not lend itself to a systematic or detailed coding framework. Selective standardised or edited quotes are used in the dissertation as exact replication of verbal/oral speech in written text distracts from the content and may appear to minimise the expertise of the interviewee.962As raised earlier the validity and reliability of minimally semi-structured interviews has been acknowledged as an area of concern as Berry notes "... the valuable flexibility of open-ended questioning exacerbates Ail the validity and reliability issues". Controls put in place for counteracting biased and selective interpretations include triangulation i.e. cross-checking the interviews against the multiplicity of sources including other interviews, documentary evidence and secondary accounts of the process. Triangulation employed to validate the data with continuous comparison with alternative explanations. 962 See discussion on preservationist and standardised approach to quotations in Robert Weiss, Learning from Strangers : The Art and Method of Qualitative Interview Studies (New York: Simon & Schuster, 1995) at 192. 963 "Berry 2002" supra note 940 at 679. 355 APPENDIX B: FTC CONSENT AGREEMENTS AND OUT-OF-COURT SETTLEMENTS 1993 - 2010 Business Enterprise FCA Brief Description of Facts Date of Source Agreement Air Jamaica Love-A- s.37 Misleading representation, through non-disclosure of Not known FTAA Fare charges in addition to the quoted cost of the "Love-a- report Fare" package. Remedy: Air Jamaica agreed that 1997 passengers who could prove that they travelled within the period that the "Love-a-Fare" package was offered, would be eligible for special upgrades on subsequent flights taken. Costs were also paid to the Commission Premier Food s.37 Misleading promotion of "free lunch". Remedy: Out- Not known Annual Company (Popeyes of-court settlement. Report Famous Fried (1998) Chicken & Biscuits) Restaurants of s.37 Failure to disclose material information in a KFC 14 July 1998 Public Jamaica Limited promotion. Remedy: Provision of 50 mega sized meals Register to a school, lunch to complainant and payment of J$6,000 in costs to FTC. Galleria Ltd, s.37 Misleading representations on electrical appliances. Not known Annual Remedy: Out of court settlement. Details not disclosed. Report (1999) Homelectrix Ltd. s.37 Misrepresentation of an item of furniture namely a 31 March Public "leather" sofa which was made from synthetic material. 1999 Register Remedy: Refund of purchase price to complainants and costs of J$36,000 to FTC. Sunset Beach Resort s.37 Advertisement which contained inaccurate information 25 May Public & Spa Hotel Limited as well as failure to disclose material information, in a 1999 Register promotion. Remedy: Complainant provided with two nights free accommodation, costs of J$36,000 paid to the Commission. Use for educational purposes but to be vetted by counsel for company. Stewarts Auto Sales s.37 Purchase by a Complainant of a 1996 model vehicle 20 August Public Limited which was later found to be a 1995 model. Remedy: 1999 Register Refund of difference in value, issuance of apology to complainant and undertaking to support complainant's application for refund of custom's duties Cable Wireless ss.20 Complaints regarding C&W's conduct in the 10 Public Jamaica Ltd. & 21 messaging services market i.e. that their voice mail November Register facility was unilaterally imposed on customers' 1999 telephone lines which caused, inter alia, a disruption in basic telephone service. Court proceedings instituted. Remedy: Removal of messaging system and installation on consumer phones only when requested, Preparation of interconnection manual within sixty days, Publication of minimum time periods for provision of value added services; Separation of accounts for messaging services market and basic telephony in accordance with liberalisation timetable, costs of J$175,000. No admission of liability. 356 Appendix B Consent Agreements cont'd. Executive Motors s. 37 Advertisement considered as being misleading, and 3 March Public Ltd upon which a customer had acted. Remedial consent 2000 Register agreement signed and filed before the supreme court Remedy: Refund of deposit to customer with interest, retraction of advertisement, costs of J$85,000, public education programme, no admission of liability Crichton Automotive s.37 Purchase by a complainant of a vehicle which was 11 April Public Ltd alleged to be "unfit for the purpose". Remedy: 2000 Register Replacement of engine of vehicle, courtesy vehicle for use during period of repair, use of details of case in public education programme. Kidzone Limited Consumer purchased a "microwave safe" food storer Not known Annual set. Covers became warped after use in a microwave Report oven. Court proceedings were issued and notice of (2001) discontinuance was filed in court. No formal agreement. Remedy: Replacement of the warped set with a new one and costs of J$20,000 to the FTC. Courts (Jamaica) ss.20, Numerous complaints made by consumers between 5 February Public Ltd. 37 & Sept 1999 and January 2000 against company primarily 2001 Register s.40( about items being out of stock after payment of deposit D(b) by consumers. Remedy: Admission of breach, public apology, settlement of individual claims of complainants ranging from delivery of items ordered, refund of monies paid corrective statement/retraction and payment of $ 1 million dollars to the Commission inclusive of costs.964 National Commercial s.37 Inaccurate disclosure of information on the 13 February Public Bank computation of interest charges, on its credit card 2001 Register statement. Remedy: Reversal of interest charges on complainant's account, change and clarification of wording on credit card statement, Commission costs of J$150,000, Material to be used in educational programmes. John Crook s.37 Purchase of a 1993 Subaru legacy misleadingly 19 January Annual Automobiles Ltd represented as a 1994 model. Court proceedings 2001 Report issued. Consent agreement. Remedy: Costs of (2001) J$ 125,000. Affected consumer was also refunded the difference between the prices of the 1993 and 1994 models with interest at the rate of 15% per annum Challenger Transport s.37 Misleading advertising of 1998 Chevrolet Joy motor October Annual Company Ltd car sold as 1999 model. Respondent admitted breach. 2001 Report Remedy: Payment to consumer of J$40,000 (2002) representing the difference in cost between the model together with compound interest at 20% from date of purchase to actual date of payment. Commission costs of J$60,000. 1,64 Rationale for section 20 breaches not clear from agreement. 357 Appendix B Consent Agreements cont'd. Institute of s.37 Misleading advertising of hotel and hospitality management Not known Annual Management course. At orientation institute falsely claimed that course was Report Services accredited and transferable to local and overseas colleges. (2002) Remedy: Corrective advertisement, apology to consumers/informants, Commission costs of J$25,000. Desnoes & s.20 Nature and scope of agreements of dominant local brewery 20 May 2002 Public Geddes (Red with its customers. Remedy: No admission of breach. FTC to Register Stripe Limited) be similarly guided by agreement in dealing with competitors. Redacted agreement. Compliance reports to be filed. Also (a) removal of options to renew and rights of first refusal from all of its events sponsorship contracts (b) duration of sponsorship agreements not to exceed three years (c) all contracts to allow for termination without cause except those involving very significant contributions (d) sales exclusivity of brewed products could be required only in situations where contributes more than J$50,000 annually to event (e) removal of terms relating to recommendation that non red stripe products be sold at premium prices at red stripe events. Also company not to request non D&G data from customers and resale prices to be recommendations only. Blue Cross of s.20 Provision of a claims processing system to providers of health 10 Public Jamaica Limited 965 care services. New electronic claims adjudication system September Register introduced and providers required to pay a fee of 1.75% on 2002 adjudicated claims. No admission as to breach of law by Blue Cross. Remedy: Compliance report to be filed, requirement that specifications be made available to any party wishing to develop an alternative processing system, provision of a claims processing system for which the providers are not required to bear any incidental costs, fees or charges to Blue Cross and maintenance/retention of manual system for transitional period. Cars & s.37 Misrepresentation of Subaru Legacy motor car 1997 model as October Annual Commercials 1998 model. Remedy: Payment to complainant of 2002 Report Limited J$112,137.22 difference in value between the models with (2003) interest and Commission costs of J$51,000 Health ss. Advertisement issued by Drug Serv Pharmacy, the retail arm 5 January Public Corporation Ltd 20 of Health Corporation Limited, stated that its prices are "on 2004 Register (Drug Serv & the average 30% to 40% below the average market price". Pharmacy) 37 Remedy: Publication of corrective advertising notice, Commission enabled to use information in public education campaign, Payment of costs to the Commission however the amount was kept confidential, investigation/allegation re predatory pricing not completed under this agreement Gotel s.37 Failure to deliver telephone and internet services within time. 2004 Annual Communications Defendant admitted breach. Remedy: Details not available. Report Ltd Report indicated consent agreement being drafted. (2004) 965 Section not referenced in report/agreement. 358 Appendix B Consent Agreements cont'd. Cable & Hosting of a competition which purported to give its 5 May 2005 Public Wireless customers of mobile telephone service an opportunity to win a Register (Jamaica) BMW X5 motor vehicle. Competition winner was drawn and Limited announced earlier than advertised date. Remedy: Hosting of second promotional campaign, costs of J$ 184,000, knowledge of misleading advertising policy to be communicated to officers and representatives. Commission to be able to use facts of case in educational material. Solid Agency s.37 Promoters of show in 2003 at the rescheduled show two of the Not known Annual Limited advertised artistes did not perform and show did not start at Report advertised time. Remedy: Consent agreement acknowledged (2006) breach, provided for a public apology, payment of J$ 189,000 in costs. Public education seminar held for promoters in 2006. Key Motors s.37 Investigation of 37 complaints between 1999 and 2003 re 1 November Annual Limited Hyundai motor vehicles. Court mediation. Remedy: 2005 Report Settlement remained confidential as a result of process. (2006) Proceedings commenced October 2003 Jamil s.37 Failure to provide a Jacuzzi with the accessories that were 9 April 2008 Public International advertised as a complete package. Remedy: Consent Register Limited agreement in out of court settlement, payment of J$117,141.25 in costs, payment of J$80,000 in compensation. Bent/Speare s.37 Misleading advertising on price of advance VIP tickets for 19 Public Entertainment concert. Remedy: Consent order. Payment of costs amounting November Register Limited to J$437,000. Publication of public apology within 60 days. 2008 University of Advertisement of its 'UTech Track and Field Classic 2009' 18 January Public Technology where several featured Olympic stars did not participate at the 2010 Register event. Remedy: Payment of costs of J$126,333.30, Publication of public apology within 30 days. 359 APPENDIX C: FTC MACRO-INVESTIGATIONS, ECONOMIC AND INDUSTRY STUDIES AND MARKET STUDIES 2005 - 2009966 CI Macro-investigations Sector Issue Outcome/Remedy Source Automobiles - Short warranty periods of Information remedy recommended for Annual Used auto parts between 7 and 21 days on execution by CAC and letter sent Report dealers used parts of mandatory recommending that advisory be issued. (2006) warranty on used vehicles. Automobiles - Fairness and transparency Information remedy recommended. Ministry Motor vehicle of procedures for motor Discussions with trade association MVRA. Paper repairs vehicle repair work Draft policy and procedures forwarded to (2008) MTEC Automobiles - Determination of whether Revision of Guidelines to Purchasers of Ministry Re-stocking two particular companies Used cars to draw attention to restocking fee Paper fees provided sufficient details (2008) information on re-stocking charges applicable for purchase of used cars. These particular companies didn't follow industry practice as based fees on either a high fixed fee or a % of sale price as opposed to a % of deposit. Computers - Domestic assembly and Study concluded that (a) less brand name Ministry Computer sale of computers computers being repaired relative to sales (b) Paper malfunction 54% of cloned computers subsequently (2009) repaired (c) parts classified as high end or low end and sold as such (d) most complaints on defective computers contained low-end parts Education - Inconsistency and Competition advocacy. Guidelines for Ministry Schools Refund unfairness in school refund refund policies developed for issuance and Paper Policies policies. implementation by Ministry of education (2007) April 27,2006 Education - Complaints re standards of Ongoing investigation from 2007 - proposed Ministry Regulation of quality of education and competition advocacy to submit info to other Paper overseas fulfilment of promises agencies (2009) tertiary institutions in Jamaica Electronic Failure of technicians to Information remedy - Public advisory - Ministry Equipment - properly carry out repair passed to CAC for action under ss. 26 and Paper Repair Service functions 27 of CPA (2008) 966 Macro investigation, economic and industry studies and market studies primarily adopted as a competition advocacy tool after 2004; studies listed alphabetically by sector. 360 CI Macro-investigations cont'd. Food - Investigation into Co-ordination with Bureau of Standards Ministry Accuracy of misleading representations Jamaica, Scientific Research Council, Paper labels on food labels including Ministry of Health. To implement (2009) (a) absolute nutrient and standards/regulations on nutrition labelling health claims which may and dietary health claims be false or misleading (b) Whole wheat bread investigation - Nutrient content claims for consumer advisory - warning on s.37 foods that contain high investigation. Bakers Association of Jamaica levels of nutrients which made efforts to have standard implemented have health implications on whole wheat bread. (c) comparative nutrient content claims which did not make the basis for the comparison clear (d) claims that a particular ingredient has various health benefits. Petroleum Misleading representations Advisory issued and indication of change of Ministry Market - on gasoline sales - listing practice on display of boards Paper Launch of E10 of regular unleaded 87 (2009) Gasolene grade vis a vis E10 grade gasoline. Travel - Airline Provision of reasonable Ongoing from 2006 to 2009 Ministry special fares number of seats by airlines Report when special fares offered (2009) and possible breach of s.40 Travel - Assessment of policies on Consumer Advocacy 2006 Loss/Damaged compensation levels Luggage Policy Travel - Determination as to Information remedy. Public notice advising Ministry Information on whether obligation on persons that should check visa requirements Paper visa travel agents to issue visa before purchasing tickets, request for (2009) requirements information to travellers. agencies to provide info, recommend to Min For Affairs re information on website. 361 C2 - Economic and Industry Studies Paper Issue Outcome/Remedy Date & Title/Sector Source Banking - Investigation into possible No finding of anti-competitive Ministry Collusion in the collusive behaviour conduct Paper Commercial (2007); Banking Sector FTC website Banking - The Aim of study : assess whether any Main finding was that the Dec. 2010 nature and bank or group of banks could be commercial banking sector is highly extent of hindering competition; and concentrated. Also found there is FTC competition in recommend measures to enhance significant room for promoting Website the commercial competition in the sector. competition within the sector, with banking sector Particular focus placed on fees improvement in the flow of adequate in Jamaica. charged on ancillary services. information. Recommended that (a) mechanisms be put in place to ensure that banks provide adequate information on their services, (b) Facilities should be put in place to make it easier for consumers to access information about banking services and (c) Mechanisms should be put in place to make it easier for banks to access customer information. Cable Aim of study was to get Conclusion sufficient information Ministry Television additional information on the provided to consumers before Paper sector particularly responsibility contract; possibly need for more (2009) of subscriber television operators information on available channels to with respect to cable boxes, non- be provided to consumers; no provision of cable services in concerns re market sharing; link some areas of assigned zones and between lack of provision of cable provision of information on service in communities with history changes to program offerings of non-payment of bills. Cambio Investigation into tying of cambio Relevant Geographic Market defined Ministry Services and services with remittances and as the world therefore no dominance Paper Electronic requirement for recipients of of firms and therefore unlikely tying (2009) Money remittance to convert the foreign of cambio services to inbound Transmission currency received to local remittance services could SLC. On (Remittances) currency using the facility of the the other hand tying of cambio to remittance company outbound remittance services could be anti-competitive. In any event practice was discontinued in May 2008 after commencement of investigation which was then terminated. 362 C2 - Economic and Industry Studies (cont'd) Cement- The Pursuant to ministerial Finding of consumer benefit from March Impact of Waiving directive - FTC investigation lower prices as noted that consumers 2009 Safeguard on quantification of having expenditure on cement purchased from Measures on the several suppliers of cement as CCCL was $694.27 million lower than FTC Monopoly against a sole supplier in light what it otherwise would have been. Website Producer of of waiver of safeguard March 2009 Cement in Jamaica measures. Fertiliser - Level Investigation on level of Recommendation on formula for Ministry of subsidy on subsidy with importation and determining fluctuation in prices assoc Paper importation and distribution of fertilizer by with input prices and level of subsidy (2009) distribution of GOJ. Evaluation of proposal necessary to support fertilizer fertilizer by sole local mfr for supply of importation programme. blends of four blends of fertilizer. Gasolene - Report Pursuant to a Ministerial Study found no evidence of predatory Sept. on the Supply of Directive - Market research pricing, price fixing or resale price 2004 Gasolene in and investigation in order to maintenance but evidence of exclusive Jamaica prepare and later implement a dealing and price discrimination in the FTC Code of Conduct to govern the sector and Commission website relationship between recommended that such contracts be petroleum marketing limited to a period of no more than five companies and retailers. (5) years. Also found that some retailers were not displaying fuel prices on display boards. Draft Code circulated. Pharmaceuticals - IDRC funded study on the Study made several recommendations July Assessment of impediments to competition in to policy makers need to reduce the 2007 impediments to the distribution of degree of information asymmetries to competition in pharmaceuticals in Jamaica, mitigate the inefficiencies in the FTC pharmaceutical specifically those prescription pharmaceutical sector. website sector medications that are used in the treatment of the following five chronic ailments: arthritis, asthma, diabetes, hypertension and high cholesterol. Telecommunicatio Position Paper developed with Report examined the competitive Annual ns - Provision of OUR to establish basis on issues which may emanate from the Report Direct Exchange which the dominant fixed introduction of licence-exempt bands (2006) Lines (DEL) carrier should provide access for spectrum; and the second examined to DEL. issues which were responsible for the downward trend in international settlement. Led to detailed study on telecommunications industry to determine level of competition. Telecommunicatio Pursuant to Ministerial Study found that liberalisation resulted August ns - A Review of directive in Sept. 2005 - Study in strongest competition in retail 2007 the Jamaican conducted with the OUR to mobile and international segments. Telecommunicatio determine the level of Recc. ex-ante access obligations be FTC ns Sector competition in sector. placed on dominant network operators. Website 363 C2 - Economic and Industry Studies (cont'd) Tourism - Study designed to inform the Concluded inter alia that the potential August Identifying the design of policies geared benefits from improving the cost of 2009 Drivers of toward increasing Jamaica's starting a business is unlikely to justify Competitiveness in share of the revenues the potential costs of attempting to do FTC the Jamaican generated by the global so and that increasing the number of Website Tourism Industry tourism industry. international fairs and exhibitions hosted by Jamaica is the most effective driver of competitiveness C3 - Market Studies Paper Issue Outcome/Remedy Source Title/Sector Food Items Pursuant to Ministerial Determination as to whether Ministry Paper Directive investigation into impediments to competition or (2009) asymmetric price anti-competitive conduct. Finding transmission mechanisms in that input prices increased over the markets for basic food items period - including increases in of 13 food items inc rice, electricity rate - also volatility in flour, bread, chicken and exchange rates contributed to food mackerel price increases. 364 BIBLIOGRAPHY PRIMARY SOURCES Legislation Jamaica The Constitution of Jamaica, being the Second Schedule of The Jamaica (Constitution) Order in Council, 1962 (U.K.). Agricultural Marketing Act, 1944 (Cap.6). Agricultural Produce Act, 1926 (Cap .7). Banana Board Act, 1953 (No. 24 of 1953). Cocoa Industry Board Act, 1957 (No. 21 of 1957). Coconut Industry Control Act, 1945 (Cap. 62). Consumer Protection Act, 2005 (No. 9 of 2005). Fair Competition Act, 1993 (No. 9 of 1993). Fair Competition (Amendment) Act, 2001 (No. 22 of 2001). Fertilizer and Feeding Stuffs Act, 1942 (Cap. 126). Food and Drugs Act, 1964 (No. 46 of 1964). Food Shortage and Prevention of Infestation Act, 1958. Gun Court Act, 1974 (No. 8 of 1974). Hire Purchase Act, 1974 (No. 19 of 1974). Judicature (Family Court) Act, 1975 (No. 41 of 1975). Judicature (Resident Magistrates Law) Cap 179. Judicature (Revenue Court) Act, 1972 (No. 29 of 1971). Judicature (Supreme Court) Act, Cap. 180. Justices of the Peace Jurisdiction Act, Cap 188. Labour Relations and Industrial Disputes Act, 1975 (No. 14 of 1975). 365 Legal Profession Act, 1971 (No. 15 of 1971). Office of Utilities Regulation Act, 1995 (No. 13 of 1995). Processed Food Act, 1955 (No.32 of 1955). Rice Industry Board Act, 1956 (No. 38 of 1956). Sale of Goods Act, 1895 (Cap. 349). Securities Act, 1993(No. 18 of 1993). Standards Act, 1968 (No. 57 of 1968). Telecommunications Act, 2000 (No. 1 of 2000). Trade Act, 1955 (No. 4 of 1955). Weights and Measures Act, 1976 (No. 14 of 1976). Fair Competition (Notices and Procedures) Regulations, 2000. Civil Procedure Rules, 2003. United Kingdom Consumer Credit Act, 1974. Consumer Protection Act, 1987. Consumer Safety Act, 1978. Enterprise Act, 2002. Fair Trading Act, 1973. Hire Purchase Act 1954 and 1964. Resale Prices Act, 1976. Sale and Supply of Goods Act, 1994. Sale of Goods (Amendment) Act, 1995. Supply of Goods (Implied Terms) Act, 1973. Supply of Goods and Services Act, 1982. Trade Descriptions Act, 1968. Unfair Contract Terms Act, 1977. 366 Unfair Terms in Consumer Contracts Regulation, 1999. Consumer Protection from Unfair Trading Regulations, 2008. Sale and Supply of Goods to Consumers Regulations, 2002. Other Jurisdictions Combines Investigation Act (Canada). Commerce Act, 1986 (New Zealand). Competition Act, R.S. 1985, c. C-34. (Canada). Consumer Affairs Act, 2003 (St. Kitts and Nevis). Consumer Guarantees Act, 2002 Cap. 326E (Barbados). Fair Competition Act, 2002 Cap. 326C (Barbados). Fair Trading Act (New Zealand). Independent Consumer and Competition Commission Act, 2002 (Papua New Guinea). Sherman Act. 15 U.S.C. (1890) (United States). Trade Practices Act, 1974(Australia). Regional and International Materials - Treaties. Conventions and Guidelines Consolidated Version of the Treaty Establishing the European Community (EC Treaty) /Treaty of Rome) (European Union). [2002] OJ C325. Consolidated Version of the Treaty on the Functioning of the European Union (TFEU) (European Union) 2008 OJ CI 15/49. Revised Treaty of Chaguaramas establishing the Caribbean Community including the Caricom Single Market and Economy, 5 July, 2001(Caribbean Community). United Nations Guidelines for Consumer Protection A/RES/39/248. Guidelines on the application of Article 81(3) of the Treaty, OJ [20004]C 101/97 1975] 2 CMLR D40. 367 Jurisprudence Jamaica Cybervale Limited v Cable & Wireless J A Ltd (October 22,2008) HCV No. 02945/2008 (Supreme Court of Judicature of Jamaica). Fair Trading Commission v SBH Holdings Limited and Forest Hills Joint Venture Limited (30 March 2004) Supreme Court Civil Appeal No: 92/2002 (Court of Appeal of Jamaica) rev'g (19 July 2002) (Supreme Court of Judicature). Fair Trading Commission v Errol Bailey (trading as Foundation Music Showcase) (4 July 2008) Claim No. 2007 CD003 (Supreme Court of Jamaica Commercial Division). General Legal Council of the Bar v Fair Trading Commission (14 November 1995) Suit No. E35 of 1995 (Supreme Court of Judicature of Jamaica). Independent Jamaica Council for Human Rights (1998) Limited and Others v. Hon. Syringa Marshall-Burnett and The Attorney General of Jamaica [2005] 2 A.C. 356. Infochannel Limited v Telecommunication of Jamaica Limited, SCCA No.49/1995. Jamaica Stock Exchange v Fair Trading Commission (29 January 2001), Supreme Court Civil Appeal No: 92/97, (Court of Appeal of Jamaica) rev'g Jamaica Stock Exchange v Fair Trading Commission (4 July 1997), Suit No. C.L.J. 127 of 1994, (Supreme Court of Judicature of Jamaica). National Commercial Bank of Jamaica v Olint Corporation [2009] UKPC 16, [2009] 1 WLR 1405 rev'g (July 18, 2008) Civil Appeal No 40 of 2008 (Court of Appeal of Jamaica) aff g (April 18, 2008) (Supreme Court of Jamaica). Rose and Others v. Chung and others (1978) 27 WER 211. 368 Canada Canada (Commissioner of Competition) v. Superior Propane Inc. and ICG Propane Inc., 2001 F.C.A. 104. Canada (Commissioner of Competition) v Superior Propane Inc (2000), 7 C.P.R. (4th) 385 (Comp. Trib.). European Union Bayer/Gist-Brocades [1976] OJ L30/13,19. CECED [2000] OJ LI 87/47. GlaxoSmithKline Services Ltd v Commission [2006] ECR 11-2969, [2006] 5 CMLR 29. Kabel und Metallwerk Neumeyer/Luchaire OJ [1975] L 222/34,1975] 2 CMLR D40. United Brands 1978 ECT 207. United States United States v. Microsoft Corp., 84 F. Supp 2d. 9 (D..D.C. 1999) and 84 F. Supp 2d 30 (D.D.D. 2000). Government Documents - Parliamentary Documents. Official Reports and Papers Jamaica, House of Representatives, Hansard Parliamentary Proceedings, Session 2004- 2005, vol. 30, No 1. Jamaica, House of Representatives, Hansard Parliamentary Proceedings, Session 2004 - 2005, vol. 30, No.2. Jamaica, House of Representatives, Hansard Parliamentary Proceedings, Session 2004 -2005, vol. 30 No. 3. 369 Jamaica, Ministry of Industry and Commerce, Report of the Advisory Team on Competition Policy in Jamaica by Robert W. Crandall, Bruce M. Owen & Robert A. Skitol, (January 23 1991). Jamaica, Ministry of Industry and Commerce, Green Paper on the Competition Act. No.l of 1991 (Government of Jamaica, 1991). Jamaica, Senate, Hansard Parliamentary Proceedings, Session 2004-2005, vol. 30. N.Z., Ministry Economic Development, Competition Policy in Small Economies: issues arising for New Zealand by Rory McLeod (Ministry of Economic Development: Wellington, 2003), mimeo. U.K., H.M. Treasury, Reducing Administrative Burdens - Effective Inspection and Enforcement by Philip Hampton (HM Treasury, 2005) online:< HM Treasury www.hm-treasury.gov.uk/hampton>. (Accessed 1 December 2010). U.K., Department for Business, Enterprise and Regulatory Reform (BERR), Regulatory: Justice: Making Sanctions Effective - Final Report by Richard Macrory (London: Her Majesty's Stationery Office, 2006), online: BERR < http://www.berr.gov.uk/files/file44593.pdf. >.(Accessed 11 January 2011). U.K; Department for Business, Innovation and Skills( BIS), Consultation Paper: A Competition Regime for Growth: A Consultation on Options for Reform Online: BIS http://www.bis.gov.uk/Consultations/competition-regime-for- growth?cat=open (Accessed 10 April 2011). U.K., Department of Trade and Industry(DTI), Comparative Report on Consumer Policy Regimes (October 2003), online: BIS < www.bis.gov.uk/files/file34673.pdf>. (Accessed 11 January 2011). U.K., Department of Trade and Industry, White Paper Modern Markets: Confident Consumers (Cm 4410) July 1999. U.K., National Audit Office, Progress Report on Maintaining Competition in Markets (5 March 2009) Online: National Audit Office http://www.nao.org.uk/publications/0809/progress_market_competition.aspx (Accessed 27 March 2011). 370 SECONDARY SOURCES Books. Monographs & Theses Antoine, Rose Marie. Commonwealth Caribbean: Law and Legal Systems 2nd ed. (London: Routledge-Cavendish, 2008). Ayres, Ian & John Braithwaite, Responsive Regulation (Oxford: Oxford University Press, 1992). Babb, Annalee C. Small States, the Internet and Development: Pathways to Power in a Global Information Society (Ph.D. Thesis, Fletcher School of Law and Diplomacy, 1993) [unpublished]. Baker, Randall ed. Public Administration in Small and Island States (West Hartford, Conn: Kumarian Press, 1992). Baldwin, Robert & Martin Cave. Understanding Regulation: Theory, Strategy and Practice (Oxford: Oxford University Press, 1999). Bardach, Eugene & Robert A. Kagan. Going by the Book: The Problem of Regulatory Unreasonableness (Philadelphia Temple University Press 1982). Barnett, Lloyd F. The Constitutional Law of Jamaica (Oxford: Oxford University Press, 1977). Beckford, George L. Persistent Poverty: Underdevelopment in Plantation Economies in the Third World (New York: Oxford University Press, 1972). Bernstein, Marver H. Regulating Business by Independent Commission. (Princeton, New Jersey: Princeton University Press, 1955). Biddle, William J. Business elites, the state and development: Jamaica in comparative perspective (PhD. Thesis, Brown University 1993) [unpublished]. Braithwaite, John. Responsive Regulation and Restorative Justice (Oxford: OUP, 2002). Braithwaite, John & Peter Drahos. Global Business Regulation (Cambridge: Cambridge University Press, 2000). 371 Breyer, Stephen G. Regulation and its Reform (Cambridge: Harvard University Press, 1982). Burnham, Peter et al. Research Methods in Politics 2nd ed. (Hampshire: Palgrave Macmillan, 2008). Buttigieg, Eugene. Competition Law: Safeguarding the Consumer Interest. A Comparative Analysis of US Antitrust Law and EC Competition Law (Kluwer Law International, The Netherlands, 2009). Caplovitz, David , The Poor Pay More (Free Press, 1963). Carlton, Dennis W. & Jeffrey M. Perloff. Modern Industrial Organisation 4th ed. (Boston: Pearson/Addison Wesley 2005). Carpenter, Daniel. Reputation and Power: Organizational Image and Pharmaceutical Regulation at the FDA (Princeton: Princeton University Press, 2010). Carothers, Thomas ed. Promoting the Rule of Law Abroad: In Search of Knowledge (Brookings, 2006). Cartwright, Peter. Consumer Protection and the Criminal Law: Law, theory and policy in the UK (Cambridge: Cambridge University Press, 2001). Caves, R.E., M.E. Porter, A.M. Spence, J.T. Scott. Competition in the Open Economy - A Model Applied to Canada (Cambridge, MA: Harvard University Press, 1980). Cook, Paul & Sarah Mosedale, eds. Regulation, Markets and Poverty (Manchester: Edward Elgar Press, 2007). Croley, Stephen. Regulation and Public Interests: The Possibility of Good Regulatory Government (Princeton: Princeton University Press, 2008). Cseres, Katalin J. Competition law and Consumer Protection (The Hague: Kluwer Law International, 2005). Cunningham, James P. The Fair Trading Act 1973 (London: Sweet and Maxwell, 1974). Cushman, R.E. The Independent Regulatory Commissions (New York: Octagon Books, 1941). 372 CUTS. Pulling up our socks (Consumer Unity and Trust Society Centre for Competition, Investment and Economic Regulation, Rajasthan, India, February, 2003). Dam, Kenneth. The Law-Growth Nexus: The Rule of Law and Economic Development (Brookings Institution Press, 2006). Demas, William G. The Economics of Development in Small Countries with Special Reference to the Caribbean (Montreal: McGill University, 1965). Demerieux, Margaret. Fundamental Rights in Commonwealth Caribbean Constitutions (Faculty of Law Library, University of the West Indies, 1992). Dexter, L.A. Elite and Specialised Interviewing (Evanston USA: North western University Press, 1970) Edwards, Gail. Legal Transplants and Economics: The World Bank and Third World Economies in the 1980s - A Case Study of Jamaica, the Republic of Kenya and the Philippines (Masters Thesis, IALS, 2007) online: SAS Favaro, Edgardo M. ed. Small states, small solutions: Improving Connectivity and Increasing the Effectiveness of Public Services, (World Bank, 2008), online: World Bank 373 Gal, Michal S. Competition Policy for Small Market Economies (Cambridge: Harvard University Press, 2003). Galbraith, John Kenneth, A Theory of Price Control. (Cambridge: Harvard University Press, 1952). . The Great Crash (Boston: Houghton Mills, 1955). . Affluent Society (Boston. Mass: Houghton Mifflin, 1984). Goyder, D.G. EC Competition Law, 4th ed. (Oxford: Oxford University Press, 2003). Grabosky, Peter & John Braithwaite. Of Manners Gentle: Enforcement Strategies of Australian Business Regulatory Agencies (Oxford University Press, Melbourne, 1986). Green, Ofer, Integration of Non-Efficiency Objectives in Competition Law (LLM Thesis, University of Toronto, 2008) [unpublished]. Gunningham, Neil & P. Grabosky, Smart Regulation (Oxford: Clarendon Press,1998). Harvey, David. A Brief History of Neoliberalism, (New York: Oxford University Press, 2005). Hawkins, Keith. Environment and Enforcement Regulation and the Social Definition of Pollution (Oxford: University Press,1984). Howells, Geraint & Stephen Weatherill, Consumer Protection Law 2nd ed. (Markets and the Law) (Dartmouth Publishing, 2005). Hutter, Bridget M., Compliance, Regulation and Environment (Oxford: Clarendon, 1997). Jordana, Jacint & David Levi Faur. The Politics of Regulation: Institutions and Regulatory Reforms for the Age of Governance (CRC Series Edward Elgar, 2004). 374 Kaminarides, J., L. Briguglio, H.N. Hoogendonk eds. The Economic Development of Small Countries: Problems, Strategies and Policies (Netherlands: Eburon Publishers, 1989). Katzenstein, Peter J. Small States in World Markets: Industrial Policy in Europe (Cornell University Press, 1988). Kodilinye, Gilbert & Vanessa Kodilinye, Commonwealth Caribbean Civil Procedure (Routledge-Cavendish, London, 2009). Komninos, Assimakis P. EC Private Antitrust Enforcement: Decentralised Application Of EC Competition Law by National Courts, (Hart Publishing, Oxford, 2008). Kvale, Steiner, Interviews: An Introduction to Qualitative Research Interviewing (London: Sage Publications, 1996). Landis, James M. The Administrative Process, (New Haven, Yale University Press; London, H. Milford, Oxford University Press, 1938). Lee, J J. Ireland 1912-1985: Politics and Society (Cambridge: Cambridge University Press, 1989). London Economics, Consumer Detriment under Conditions of Imperfect Information, (OFT Research Paper 11,1997). Manley, Michael. The Poverty of Nations: Reflections on Underdevelopment and the World Economy (London: Pluto Press, 1991). Meeks, Brian, Envisioning Caribbean Futures: Jamaican Perspectives (Jamaica: University of the West Indies Press, 2007). Milhaupt, Cutis J. & Katharina Pistor. Law & Capitalism (University of Chicago Press, 2008). Minogue, Martin & Ledivina Carino eds. Regulatory Governance in Developing Countries (Manchester: Edward Elgar Press, 2006). 375 Minto, Indianna Deborah. Incumbent Response to Telecommunications Reform: The Cases of Jamaica and Ireland, 1998 - 2007 (PhD. Thesis, London School of Economics and Political Science, 2008) [unpublished]. Mitnick, Barry. Political Economy of Regulation: Creating, Designing, and Removing Regulatory Forms, (Columbia University Press: New York, 1980). Monti, Giorgio. EC Competition Law (New York: Cambridge University Press, 2007). Morgan, Bronwen. Social citizenship in the Shadow of Competition'. The Bureaucratic Politics of Regulatory Justification, (Aldershot: Ashgate Press, 2003). Morgan, Bronwen & Karen Yeung. Introduction to Regulation and Law: Text and Materials (Cambridge: Cambridge University Press, 2007). Munroe, Trevor. The Politics of Decolonization: Jamaica, 1944-1962 (Jamaica: University of the West Indies Institute of Social and Economic Research, 1972). Offer, Avner. The Challenge of Affluence: Self-Control and Weil-Being in the United States and Britain Since 1950 (Oxford: Oxford University Press, 2006). Ogus, Anthony I. Regulation: Legal Form and Economic Theory (Oxford: Oxford University Press, 1994). . Regulation: Legal Form and Economic Theory (Hart Publishing: Oxford- Portland Oregon, 2004) Owen, Bruce M. & Ronald R. Braeutigam, The Regulation Game: Strategic Use of the Administrative Process, (Cambridge, MA, Ballinger, 1978). Perkins, Dwight H. & Michael Roemer eds., Reforming economic systems in developing countries 3, (Harvard Institute for International Development 1991). Pigou, A.C., The Economics of Welfare, 4th ed. (MacMillan, London: 1932). Prosser, Tony, Law and the Regulators ( Oxford: Clarendon Press, 1997). .The Regulatory Enterprise: Government, Regulation and Legitimacy (Oxford: Oxford University Press, 2010). 376 Ramsay, Iain, Rationales for Intervention in the Consumer Marketplace Occasional Paper (Office of Fair Trading, London, 1984). . Consumer Law and Policy: Text and Materials on Regulating Consumer Markets (Oxford: Hart Publications, 2007). Rey, Patrick, "Competition Policy and Economic Development" mimeo (University of Toulouse, September 2007). Online: Institut d'Economie Industrielle IDEI Scherer, Frederic M. et al. The Economics of Multi-plant Operation: An International Comparisons Study (Cambridge, Mass.: Harvard University Press, 1975). Scherer, Frederic M. & David Ross. Industrial Market Structure and Performance, 3rd ed. (Boston, Mass: Houghton Mifflin, 1990). Scott, Colin & Julia Black. Cranston's Consumers and the Law 3d ed. (London: Butterworths, 2000). Seetahal, Dana S., Commonwealth Caribbean Criminal Practice and Procedure (Routledge-Cavendish, Oxford, 2nd ed. 2006. Seidman, Ann & Robert Seidman. State and Law in the Development Process: Problem- solving and Institutional Change in the Third World (London: St. Martin's Press, 1994). Sen, Amartya. Development as Freedom, (Oxford: Oxford University Press, 1999). Singh, Ajit, Competition and Competition Policy in Emerging Markets: International and Developmental Dimensions G-24 Discussion Paper (New York and Geneva: United Nations, 2002) at 15. Online. UNCTAD. 377 Singh, Guijeet, "Consumer protection law in India: a socio-legal study" (Phd. Thesis, University of London, 1993) [unpublished]. Stewart, Taimoon. An Empirical Examination of Competition Issues in Selected Caricom Countries: Towards Policy Formulation (Sir Arthur Lewis Institute of Social and Economic Studies, 2004). Stiglitz, Joseph, Globalization and its Discontents,{London: Penguin Books, 2003). Stone, Carl, Democracy and Clientelism in Jamaica (New Brunswick: Transaction Books, 1980). Sunstein, Cass, After the Rights Revolution: Reconceiving the Regulatory State (Cambridge, Mass: Harvard University Press, 1990). Swann, Dennis, Competition and Consumer Protection (Penguin Books, 1979). Thaler, Richard H. & Cass R. Sunstein. Nudge: Improving Decisions about Health, Wealth and Happiness (New Haven & London: Yale University Press, 2008). Thomas, Clive Y. The Poor and the Powerless: Economic policy and change in the Caribbean (London: Latin American Bureau, 1988). Thorelli, Hans. The Federal Antitrust Policy: Origination of an American Tradition (Stockholm: John Hopkins Press, 1955). Trebilcock, Michael J. et al. The Law and Economics of Canadian Competition Policy, (Toronto: University of Toronto Press, 2002). Trebilcock, Michael J. & Ronald J. Daniels. Rule of Law Reform and Development: Charting the Fragile Path of Progress (Cheltenham: Edward Elgar Publishing Limited, 2008). Vogel, David. National Styles of Regulation: Environmental Policy in Great Britain and the United States (Cornell University Press, Ithaca NY., 1986). Watson, Alan. Legal Transplants: An approach to Comparative Law (Athens, GA: University of Georgia Press, 1993). 378 Weiss, Robert. Learning from Strangers: The Art and Method of Qualitative Interview Studies (New York: Simon & Schuster, 1995). Whish, Richard. Competition Law (Oxford University Press, 2009 6th ed). Wilson, James Q, Bureaucracy: What Government Agencies Do and Why they do it, (New York: Basic Books, 1989). Winters, L. Alan & Pedro G. Martin. "Beautiful But Costly: Business Costs in Small Remote Economies" (Commonwealth Secretariat, 2004). World Bank, OECD & R.S. Khemani. A Framework for the Design and Implementation of Competition Law (World Bank, OECD, 1999). Yeung, Karen. Securing Compliance: A Principled Approach (Oxford: Hart Publishing, 2004). Yin, Robert K. Case Study Research: Design and Methods, 4th ed. (Sage Publications ,2009). Journal Articles. Chapters in Edited Books. Occasional Papers & Agency Reports Aberbach. Joel D. & Bert A. Rockman, "Conducting and Coding Elite Interviews" (2002) 35:4 Political Science & Politics 673. Adhar, Rex, "Consumers, Redistribution of Income and the Purpose of Competition Law "(2002) 23(7) E.C.L.R 341. Akerlof, George A. "The Market for "lemons": Quality Uncertainty and the Market Mechanism" (1970) 84 Quarterly J. Econ. 488. Akman, Pinar, "Exploitative Abuse in Article 82EC: Back to Basics?" (2008-2009) 11 Cambridge Y.B. Eur. Leg. Stud. 165. Armstrong, Harvey & Robert Read. "Geographical handicaps and small states: Some implications for the Pacific from a global perspective" (2006) 47 Asia Pacific Viewpoint 79. 379 Averitt, Neil W. & Robert H. Lande. "Consumer Sovereignty: A Unified Theory of Antitrust and Consumer Protection Law" (1997) 65 Antitrust L. J. 713. Baldwin, Robert, "Is Better Regulation Smarter Regulation" (2005) (Autumn) Public Law 485. Baldwin, Robert & Julia Black, "Really Responsive Regulation" (2008)71:1 Mod. L. Rev. 59. Beales, Howard, Richard Craswell & Steven C. Salop, "The Efficient Regulation of Consumer Information" (1981) 24 J.L. & Econ. 491. Beale, Hugh, "Inequality of Bargaining Power" (1986) 6:1 Oxford J. Legal Stud.123. Becker, Gary S."A Theory of Competition among Pressure Groups for Political Influence" (1983) 98(3) Quart. J. Econ. 371. Belobaba, Edward P. "Unfair Trade Practices Legislation: Symbolism and Substance in Consumer Protection" (1977) 15:2 Osgoode Hall L. J. 327. . "The Development of Consumer Protection Regulation: 1954 to 1984" in Ivan Bernier & Andree Lajoie eds., Consumer Protection, Environmental Law and Corporate Power (Toronto: University of Toronto Press, 1985). Belt, David L. "The Standard for Determining "Unfair Acts or Practices" Under State Unfair Trade Practices Acts" (2006) 80 Conn. Bar J. 247. Benedict, Burton. "Sociological aspects of smallness" in Burton Benedict ed., Problems of Smaller Territories (London: Athlone Press, 1967). Benjamin, Antonio Herman. "Consumer Protection in Less-Developed Countries: The Latin American Experience" in Iain Ramsay ed. Consumer law in the Global Economy: National and International Dimensions (Aldershot: Ashgate Publishing, 1997). Benohr , Iris & Hans-W Micklitz, "Consumer Protection and Human Rights" in Geraint Howells, Iain Ramsay & Thomas Wilhelmsson eds. Handbook of Research on International Consumer Law (Cheltenham, UK: Edward Elgar Publishing Limited, 2010). 380 Berkowitz, Daniel, Katharina Pistor & Jean-Francois Richard. "The Transplant Effect" (2003) 51 Am. J. Comp. L. 164. Berry, Jeffrey M."Validity and Reliability Issues in Elite Interviewing" (2002) 35:4 Political Science & Politics 679. Betrand, Marianne, Sendhil Mullainathan & Eldar Shafir. "A Behavioral Economics View of Poverty" (2004) 94:2 Am. Econ. Rev. 419. Black, Julia, "Proceduralizing Regulation" (2000) 20:4 Oxford J. Leg. Stud. 597 & (2001) 21:1 Oxford J. Leg. Stud. 33. . "Critical reflections on regulation" (2002) 27 Austl. J. Leg. Phil. 1. Boehm, Frederic, "Regulatory Capture Revisited - Lessons from Economics of Corruption" (ICGG Working Paper July 2007). Bork, Robert H., "Legislative Intent and the Policy of the Sherman Act" (1966) 9 J. L. & Econ .7. . The Antitrust Paradox: A Policy at War with Itself. (Toronto: Maxwell Macmillan Canada, 1978,1993 reprint). Borrie, Gordon, "Laws and Codes for Consumers" (1980) J. Bus. L. 318. Bourne, Compton & Marlene Attz. "Institutions in Caribbean Economic Growth and Development" (2005) 54:3 Soc.& Econ. Stud. 26. Braithwaite, John. "Responsive Regulation and Developing Economies" (2006) 34:5 World Development 884. Brautigam, Deborah & Michael Woolcock, "Small States in a Global Economy: The Role of Institutions in Managing Vulnerability and Opportunity in Small Developing Countries" (United Nations University, World Institute for Development Research, 2001), online: UNU-WIDER 381 Briguglio, Lino & Eugene Buttigieg. "Competition Policy in Small Economies - Malta, Competition Constraints in Small Jurisdictions" OECD Global Forum on Competition 2003, CCNM/GF/COMPAVD(2003)32. OECD: online 382 Burnard, Trevor, "The Grand Mart of the Island: The Economic Function of Kingston, Jamaica in the Mid-Eighteenth Century" in Kathleen E. A. Moteith & Glen Richards eds. Jamaica in Slavery and Freedom: History, Heritage and Culture (Jamaica: University of the West Indies Press, 2002). Camerer, Colin et al. "Regulation for Conservatives: Behavioral Economics and the Case for 'Asymmetric Paternalism' (2003) 151 U. Pa. L. Rev. 1211. Capie, Forrest & Geoffrey Wood. "Price Controls in War and Peace: A Marshallian Conclusion." (2002) 49 Scott. J. Pol. Econ. 39. Carnegie, Ralph, "Commercial Law Survey Report" (1989) 1:3 Carib. Law & Bus. 59 Cayne, David & Michael J. Trebilcock, "Market Considerations in the Formulation of Consumer Protection Policy" (1973) 23 U. T. L.J. 396. Chand, Satish. "Development Challenges for the Small Open Economies of the Commonwealth" in Lino Briguglio & Eliawony J. Kisanga eds. Economic Vulnerability and Resilience of Small States (Islands and Small States Institute of the University of Malta and the Commonwealth Secretariat, 2004). Choi, Stephen J. & A.C. Pritchard, "Behavioral Economics and the SEC" (2003)56:1 Stan. L. Rev. 1. Clarke, J.L. & Simon Evenett. (2003) "The deterrent effects of national anti-cartel laws: Evidence from the international vitamins cartel" (2003) 48:3 Antitrust Bulletin, 689. Coffee Jr. John C., "Law and the Market: The Impact of Enforcement" (2007) 156:2 Univ. Penn L. Rev. 230. Collier, Paul & David Dollar, "Aid, Risk and the Special Concerns of Small States" (Development Research Group, World Bank, 1999). Online: World Bank http://siteresources.worldbank.org/PROJECTS/Resources/40940- 1118776867573/aidrisk.pdf (Accessed 11 January 2011). Condon, Mary. "Rethinking enforcement and litigation in Ontario Securities Regulation" (2006) 32:1 Queen's L. J. 6. 383 Connor, J.M. & Y. Bolotov. "Cartel overcharges: survey and meta-analysis" (2006) 24 (6) Int'l. J. Ind. Org. 1109. Cook, Paul. "Competition Policy, Market Power and Collusion in Developing Countries" in Paul Cook et al eds., Leading Issues in Competition, Regulation and Development (Edward Elgar Publishing, 2004). ., "Competition, Regulation and Regulatory Governance: an Overview", in Paul Cook et al eds. Leading Issues in Competition, Regulation and Development, (Edward Elgar, 2004). Cordina, Gordon. "Economic Resilience and Market Efficiency in Small States" in Lino Briguglio et al eds. Small States and the Pillars of Economic Resilience (Islands and Small States Institute of the University of Malta and the Commonwealth Secretariat, 2008). Conrath, Craig W. & Barry T. Freeman, "A response to "The effectiveness of proposed antitrust programs for developing countries" (1993) 19 N.C.J. Int'l & Com. Reg. 233. Crowards, Tom. "Defining the category of small states." (2002) 14:2 J. Int'l. Dev. 143. Cseres, Katalin. "The Controversies of the Consumer Welfare Standard" (2007) 3:2 Competition Law Review 121. CUTS Centre for Competition, Investment and Economic Regulation. "The Role of International Co-operation in Building an Effective Competition Regime" CUTS Newsletter 6/2003 at 1. Online: CUTS-C-CIER 384 Davenport, Michael A. "A study of alternative special and differential arrangements for small states" in Roman Grynberg ed., WTO at the Margins: Small States and the Multilateral Trading System (Cambridge University Press, 2007). Davis, Kevin E. "Law Making in Small Jurisdictions" 56:3 (2006) U.T.L.J. 151. Davis Kevin E. & Michael J. Trebilcock. "Legal Reforms and Development" (2001) 22:1 Third World Quart. 21. Davis, Kevin & Michael J. Trebilcock. "The Relationship between Law and Development: Optimists versus Skeptics" (2008) 56 Am. J. Comp. L. 895. Dawar, Kamala & James Mathis. "Consumer Protection, Competition and RTA's some lessons for developing countries" in Philippe Brusick, Ana Maria Alvarez & Lucian Cernat eds. Competition Provisions in Regional Trade Agreements: How to assure development gains , (Geneva: UNCTAD, 2005) at 216, online: UNCTAD <. www.unctad.org/en/docs/ditcclp20051_en.pdf >. De Leon, Ignacio, "The Role of Competition Policy in the Promotion of Competitiveness and Development in Latin America" (2000) 23(4) World Competition 115. Deutch, Sinai. "Are Consumer Rights Human Rights?"(1994) 32 Osgoode Hall L. J. 537. Dhanjee, Rajan. "The Tailoring of Competition Policy to Caribbean Circumstances: Some Suggestions" (2004) 9:3 Caribbean Dialogue 13. Downes, Andrew S. "On the Statistical Measurement of Smallness: A Principal Component Measure of Country Size" (1988) 37:3 Soc. & Econ. Stud. 7. ., Developing competitiveness in Jamaica Economy" IDB Economic and Sector Study Series Jamaica RE3-03-002(Washington DC:IDB, 2003). Downes, Andrew S. & Avril Husbands. "Human Resource Systems for Regulatory Institutions: An Imperative for the Caribbean", online: OOCUR http://www.oocur.org/Proceedings/Presentations/Downesl.pdf (Accessed 1 July 2009). Duhamel, M. & P.G. Townley, "An effective and enforceable alternative to the consumer surplus standard" (2003) 26(1) World Competition 3. 385 Duggan, Anthony J. "Some Reflections on Consumer Protection and the Law Reform Process" (1991) 17 Monash U. L. Rev 252. Dumont Jean-Christophe & Georges Lemaitre. "Counting Immigrants and Expatriates in OECD Countries: A New Perspective" (OECD 2005) DELSA/ELSA/WD/SEM (2005) 4. Online; OECD http://www.oecd.org/dataoecd/34/59/35043046.pdf (Accessed 10 March 2011). Carlene Edie. "Jamaica: Clientelism, Dependency and Democratic Stability" in Democracy in the Caribbean: Myths and Realities (Praeger:Westport,1994). Elzinga, Kenneth G.'The Goals of Antitrust: Other than Competition and Efficiency, What Else Counts?" 125 (1976) U. Pa. L. Rev. 1191. Evans, David S."Why Different Jurisdictions Do Not (and Should Not) Adopt the Same Antitrust Rules" (2010) 10 Chi. J. Intl. L. 16. Evans, Lewis & Patrick Hughes. Competition Policy in Small Open Distant Economies: Some Lessons from the Economic Literature, (New Zealand Treasury Working Paper 03/31,2003), online: New Zealand Treasury http://www.treasury.govt.nz/publications/research-policy/wp/2003/03-31/twp03- 31.pdf. Evenett, Simon J. "Link between development and competition law in developing countries", Commissioned by UK Department for International Development, Case Studies for the World Development Report 2005: Investment Climate, Growth and Poverty, (October 2003). Online: University of Gallen www.alexandria.unisg.ch/EXPORT/DL/22249.pdf; Evenett, Simon E., Julian L. Clarke & Krista Lucenti, "Anticompetitive practices and liberalising markets in Latin America and the Caribbean" (2005) 28:7 World Economy 1029. Ewald, William. "Comparative Jurisprudence: The Logic of Legal Transplants" (1995) 43 AJ.C.L. 489. 386 Fallon, John. "ACCC's Authorisation Decisions: Interpretation of Public Benefit" 12:4 (2005) Agenda, 335. Farrugia, Charles. "The Special Working Environment of Senior Administrators in Small States" (1993) 21:2 World Development 221. Fieldhouse, D.K. "The Metropolitan Economics of Empire" in Judith M. Brown & Wm. Roger Louis eds. The Oxford History of the British Empire Volume IV: The Twentieth Century (Oxford: Oxford University Press, 1999). Fox, Eleanor M. "The Modernisation of Antitrust: A New Equilibrium" (1981) 66 Cornell L. Rev. 1140. . "Consumer Beware Chicago" (1985) 84 Mich. L.R. 1714. . "Economic Development, Poverty and Antitrust: The Other Path" (2007) 13 SwJ.Trade Am. 211. Fox, Eleanor M. & L.A. Sullivan, "Antitrust- Retrospective and Prospective: Where are we coming from? Where are we going? (1987) 62 N.Y.U. L. Rev. 936. Gal, Michal S. "The Ecology of Antitrust: Preconditions for antitrust enforcement in Developing Countries" in Competition, Competitiveness and Development: Lessons from Developing Countries Philip Brusick et al eds. (UNCTAD, Geneva: 2004). . "The Cut and Paste of Article 82 of the EC Treaty in Israel: Conditions for a Successful Transplant" (2007) 9 Euro. J. law Ref. 467. . "When the Going Gets Tight: Institutional Solutions when Antitrust Enforcement Resources are Scarce" (2009 - 2010) 41 Loy. U. Chi LJ. 418. Gans, J.S. "Protecting consumers by protecting competition: Does behavioural economics support this contention?" (2005) Austl. Comp. & Cons. L. J. Gayle, Denis J. "Expanding Jamaica's private sector: policy sources and interim consequences"(1994) 60 Int'l. Rev. Admin. Sci. 71. Glaeser, Edward L. & Andrei Shleifer. "Legal 0rigins"(2002) 117 Quart. J. Econ. 1193 387 Gomez Pomar, Fernando. "EC Consumer Protection Law and EC Competition Law: How related are they? A law and economics perspective", (InDret 2003 Working Paper No. 113), online: INDRET http://www.indret.eom/pdf/l 13_en.pdf. Grant, Wyn. "Elite Interviewing: A Practical Guide"(University of Birmingham, Institute for German Studies, 2000) IGS Discussion Papers Series Number. IGS2000/11. Gray, Clive S. & Anthony A. Davis. "Competition policy in Developing Countries pursuing structural adjustment" (1993) 38 Antitrust Bulletin 425. Graziadei, Michele. "Comparative Law as the Study of Transplants and Receptions" in Mathias Reimann & Reinhard Zimmermann eds. , The Oxford Handbook of Comparative Law,(Oxford: Oxford University Press, 2006). Grynberg, Roman "A Theory of Trade and Development of Small Vulnerable States" Roman Grynberg ed., WTO at the Margins: Small States and the Multilateral Trading System (Cambridge: Cambridge University Press, 2006). Hadfield, Gillian K., Robert Howse & Michael J. Trebilcock. "Information-Based Principles for Rethinking Consumer Protection Policy" (1998) 21 J. Cons. Pol'y 131. Hancher, L. & M. Moran. "Organising Regulatory Space" in L Hancher & M Moran eds. Capitalism, Culture and Economic Regulation (Clarendon Press, Oxford, 1989). Handa, Sudhanshu & Damien King "Structural Adjustment Policies, Income Distribution and Poverty: A Review of Jamaican Experience." (1997) 25:6 World Development, 915 . Harberger, Arnold C. "Policy making and economic policy in small developing countries", in R Dornbusch & F L C H Helmers, eds. The Open Economy: Tools for Policy Makers in Developing Countries, (Oxford University Press for the World Bank, New York, 1988). 388 Haracoglou, Irina."Competition Law, Consumer Policy and the Retail Sector: the systems' relation and the effects of a strengthened consumer protection policy on competition law", 3:2 (2007) The Competition L. Rev. 175. Harland, David J, "Implementing the Principles of the United Nations Guidelines for Consumer Protection." (1991) 33 Indian L. J. 189. . "The Consumer in the Globalised Information Society" (1999) 7 Aust'l. Comp. & Cons. L. J. 1. Hawkins, Keith & John M. Thomas. "The enforcement process in regulatory bureaucracies "in Enforcing Regulation (Kluwer Nijhoff Publishing, The Netherlands, 1984). Hein, Philippe. "Origins of the category and definition issues" in Is special treatment of small island developing states possible? (New York & Geneva, UNCTAD, 2004) at 5, online: UNCTAD http://www.unctad.org/en/docs/ldc20041_en.pdf (Accessed at 1 October 2005). Henrich, Joseph et al. "In search of homo economicus: Behavioral experiments in 15 small-scale societies" (2001) 91:2 Am. Econ. Rev.73. Henry, Peter B. & Conrad Miller."Institutions vs. Policies: A Tale of Two Islands", (2009) 99:2 American Econ. Rev. 261. Herbert, Simon. "A Behavioral Model of Rational Choice" in Models of Man, Social and Rational: Mathematical Essays on Rational Human Behavior in a Social Setting. (New York: Wiley, 1957). chng in cite ref** Hobbs, Caswell O. "Antitrust and Consumer Protection: Exploring the Common Ground" (2005) 72 Antitrust L.J. 1153. Horscroft, Virginia. "Small Economies and special and differential treatment strengthening the evidence, countering the fallacies" in Roman Grynberg ed. WTO at the Margins: Small States and the Multilateral Trading System (Cambridge: Cambridge University Press, 2006 ). Hovenkamp, Herbert. "Distributive Justice and the Antitrust laws" (1982) 51 Geo. Wash. L. Rev. 1. 389 ."Antitrust Policy after Chicago" (1985) 84 Mich. L.R. 213. Howells, Geraint, Iain Ramsay & Thomas Wilhelmsson, "Consumer law in its international dimension" in Geraint Howells, Iain Ramsay & Thomas Wilhelmsson eds. Handbook of Research on International Consumer Law (Cheltenham, UK: Edward Elgar Publishing Limited, 2010). Howells, Geraint, "Contract Law: The Challenge for the Critical Consumer Lawyer" in Thomas Wilhelmsson, ed. Perspectives of Critical Contract Law (Aldershot: Dartmouth, 1993). . "The Potential and Limits of Consumer Empowerment by Information" (2005) 32 J. L. & Soc.349. Howell, Nicola & Therese Wilson, "The Limits of Competition: Reasserting a Role for Consumer Protection and Fair Trading Regulation in Competitive Markets" in Deborah Parry et al eds. The Yearbook of Consumer Law 2009 - Markets and the Law (Ashgate Publishing, 2009). Hutchinson, Allan C. "Life After Shopping: From Consumers to Citizens" in Iain Ramsay ed., Consumer Law in the Global Economy: National and International Dimensions (Aldershot, Hants: Ashgate/Dartmouth, 1997). Jacobs, Jake. 'The Economic Development of Small Countries: Some Reflections of a Non-economist" in J. Kaminarides, L. Briguglio, H.N. Hoogendonk eds., The Economic Development of Small Countries: Problems, Strategies and Policies (Netherlands: Eburon Publishers, 1989). Jalan, Bimal. "Classification of Economies by Size" in Problems and Policies in Small Economies (Commonwealth Secretariat: Croom Helm, 1982). Jamaica, Consumer Affairs Commission. "History of the Consumer Affairs Commission (formerly the Prices Commission)" Jamaica, Consumer Affairs Commission. Ministry Reports (2005 to 2008). Jamaica, Fair Trading Commission, Staff Opinion Economics Department. "Commodity Boards in Jamaica: A Framework for Analysis" (August 9, 2001). 390 Jamaica, Fair Trading Commission, Staff Opinion. "Application of the Banana Insurance Fund for Authorization" (August 14, 1997). Jamaica, Fair Trading Commission, Staff Opinion."Privatisation of Motor Vehicle Inspection Service" (November 23, 2001). Jamaica, Fair Trading Commission, Staff Opinion. "Concession Agreement for Railway Services" (December 14, 2001). Jamaica, Fair Trading Commission, Staff Opinion. "The Cocoa Industry Board: Implications for competition in the Jamaican cocoa industry" (January 28, 2002). Jamaica, Fair Trading Commission, Staff Opinion. "The Coconut Industry Board: Implications for competition in the Jamaican coconut industry" (January 28, 2002). Jamaica, Fair Trading Commission, Staff Opinion. "Competition Policy and the Financial Sector" (October 13, 2004). Jamaica, Fair Trading Commission. "Fair Competition Act Guide to Anti-Competitive Practices" Online.www.jftc.com (Accessed 17 October 2007) Jamaica, Fair Trading Commission. Annual Report, 1997. Jamaica, Fair Trading Commission. Annual Report, 1998. Jamaica, Fair Trading Commission. Annual Report, 1999. Jamaica, Fair Trading Commission. Annual Report, 2000. Jamaica, Fair Trading Commission. Annual Report, 2001. Jamaica, Fair Trading Commission. Annual Report, 2002. Jamaica, Fair Trading Commission. Annual Report, 2003. Jamaica, Fair Trading Commission. Annual Report, 2004. Jamaica, Fair Trading Commission. "An Assessment on Impediments to Competition in the Pharmaceutical Sector in Jamaica" by the FTC in collaboration with the Consumer Affairs Commission and the University of Technology, funded by International Development Research Centre (IDRC) (July 2007), online: FTC http://www.jftc.com/Research/IndustryStudies.aspx. (Accessed 23 October 2007). 391 Jamaica, Fair Trading Commission. "Guidelines to the Analysis of Public Benefit and Detriments" (Initiation Date February 1998. Revised Date May 1998). Jamaica, Fair Trading Commission. "Guidelines to customers of used cars" (6 July 2000), online: FTC http://www.jftc.com/guidance/consumermatters/usedcardealers.htm (Accessed 23 October 2007). Jenny, Frederic. "Report of the General Rapporteur of Panel One" in European Competition Law Annual 1997: Objectives of Competition Policy Claus Dieter Ehlermann & Laraine L. Laudati eds. (Hart Publishing, Oxford 1998] ."Cartels and Collusion in Developing Countries: Lessons from Empirical Evidence" (2006) 29(1) World Competition 109. . "Globalization, Competition and Trade Policy: Convergence, Divergence and Co-operation" in Yang-Ching Chao et al eds., International and Comparative Competition Law and Policies (The Hague: Kluwer Law International, 2001). Jordana, Jacint & David Levi Faur "Exploring Trends and Variations in Agency Scope" (2010) Jerusalem Papers in Regulation & Governance Working Paper No. 27. Kahn-Freund, O. "On Uses and Misuses of Comparative Law"(1974) 37 Mod. L. Rev. 1. Katzin Margaret. "The Jamaica Country Higgler" (1959) 8:4 Soc. & Econ. Stud. 428. Kaufmann, Daniel. "Governance Redux: The Empirical Challenge" in The Global Competitiveness Report Xavier Sala-i-Martin ed. (Oxford University Press, 2004). Kaufmann, Daniel, Aart Kraay & Massimo Mastruzzi."Governance Matters VII - Aggregate and Individual Governance Indicators 1996 - 2007" Policy Research Working Paper 4654, (World Bank, 2008) online: World Bank 392 Kennedy, David. "Laws and Developments" in John Hatchard & Amanda Perry-Kessaris Law and Development: Facing Complexity in the 21s' Century (London: Cavendish Publishing Limited, 2003). Kennedy, Duncan. "Distributive and Paternalistic Motives in Contract and Tort Law, with Special Reference to Compulsory Terms and Unequal Bargaining Power" (1982) 41:4 Maryland L. Rev. 563. Kerkmeester, Heico, "Methodology: General" in Encyclopedia of Law and Economics, Boudewijn Bouckaert and Gerrit De Geest ed. (Ghent: 1999), online: Encyclopedia 393 Laffont, J.J. & J. Tirole, "The politics of government decision making. A theory of regulatory capture", (1991)106(4) Quart. J. Econ. 1089. La Porta, Rafael et al. "Legal Determinants of External Finance" (1997) 52 J. Fin. 113. . "Law and Finance" (1998) 106 J. Pol. Econ 1113. La Porta, Rafael, Florencio Lopez-de Silanes & Andrei Shleifer. "What works in Securities Laws" (2005) 61 J. Fin. 1. . "The Economic Consequences of Legal Origins" (2008) 46:2 J. Econ. Lit. 285. Lande, Robert. "Consumer Choice as the Ultimate Goal of Antitrust" (2001) 62 U. Pitt. L. R. 503. Landes, William M. & Richard A. Posner, "The private enforcement of law" (1975) 4 Journal of Leg. Stud.l. Langevoort, Donald C. "Behavioral Theories of Judgment and Decision Making in Legal Scholarship: A Literature Review" (1998) 51 Vand. L.Rev. 1499. Leary, T.B. "Competition Law and Consumer Protection Law: Two Wings of the Same House", (2005) 72 Antitrust L. J. 1147. Lee, Barbara. "Competition Policy in the Caribbean: Some Emerging Trends and Development - A Special Focus on Jamaica" Competition Matters 10 (December 2005) 10. online: Jamaica Fair Trading Commission http://www.jftc.com/Libraries/Newsletters/Competition_Matters_2005_- _Caribbean_Competition_Policy .sflb .ashx. . "Bridling Market Dominance: A View from Jamaica" in Lino Briguglio et al eds. Small States and the Pillars of Economic Resilience (Institute of Small Island States, 2008). Leslie, Helen & Donovan Storey. "Practical Issues" in Regina Scheyvens & Donovan Storey eds., Development Fieldwork: A Practical Guide (London: Sage Publications, 2003). Levi-Faur, David. "The global diffusion of regulatory capitalism" (2005) 12 Annals of the American Academy of Political and Social Sciences 598. 394 . "Regulatory Capitalism and the Reassertion of the Public Interest" (2009) 27:3 Politics & Society 181. Levinsohn, James. "Competition Policy and International Trade" in J. Bhagwati & R. Hudec, eds. Fair Trade andHarmonisation (MIT Press, 1996). Levinson, Justin D. & Kaping Peng. "Valuing Cultural Differences in Behavioural Economics" 4:1(2007) ICFAI J. Beh. Fin. 32. Lodge, Martin & Lindsay Stirton. "Embedding Regulatory Autonomy: The reform of Jamaican Telecommunications Regulation 1988 - 2001" (2002) CARR Discussion Paper No. 5 online: LSE http://www2.lse.ac.uk/researchAndExpertise/units/CARR/pdf/DPs/Disspaper5.pd f. Maher, Imelda. "Competition Law in the International Domain: Networks as a New Form of Governance" (2002)29:1 J. Law & Soc. 111. . "Regulating Competition" in Christine Parker et al eds., Regulating Law (Oxford: Oxford University Press, 2004). Makkai T. & J. Braithwaite. "Making Sense of Regulatory Capture" in R. Baldwin, C. Scott & C. Hood eds. A Reader on Regulation (Oxford: Oxford University Press: 1998). Malahoo, Marlene. "Competition Law in Emerging Economies: The Jamaican Experience", Occasional Paper No. 3 (London: Centre of European Law, Kings College, 2000). Manisha, Sheth. "Formulating Antitrust Policy in Emerging Economies" (1997) 86 Georgetown L. J. 451. Marsden, Philip & Peter Whelan. "Consumer Detriment and its Application in EC and UK Competition Law", (2006) 27:10 E.C.L.R. 569. McKoy, Derrick. "Antitrust Law in Jamaica." (1995) 5 J. Transnat'l L. & Pol'y 183. McVea Harry. "Financial Services Regulation under the Financial Services Authority: A Reassertion of the Market Failure Thesis" (2005) 64 Cambridge L. J. 413. 395 Micallef, Edgar. "The Future of Consumer Law: Reflections on a Regulatory Framework for a Small Island State" in Christian Twigg-Flesner et al eds. Yearbook of Consumer Law 2008 (Aldershot: Ashgate Publishing, 2008). Minogue, Martin. "Apples and Oranges: Problems in the Analysis of Comparative Regulatory Governance" (2005) 45 Quart. Rev. Econ. & Fin.195. Minogue, Martin & Paul Cook. "Regulating for development" Insights 49 ID2(Institute of Development Studies, University of Sussex, 2003. Minter, F.A. "Misleading Advertising: The Standard of Deceptiveness" (1976) 1 C.B.L.J. 435 Monti, Giorgio. "The Revision of the Consumer Acquis from a Competition Law Perspective" (2007) 3 Euro .Rev. Contr. L 295. Moran, Michael. "Review Article: Understanding the Regulatory State" (2002) B. J. Pol. Sci. 391. Morgan, Bronwen & Frank Trentman. "Introduction: the Politics of necessity" (2006) 29:4 J. Cons. Pol'y345. Morrison, D. "The Reception of Law in Jamaica (1979) 2 W.I.L.J. 43. N.Z., Commerce Commission. "Guidelines to the Analysis of Public Benefits and Detriments", (revised ed. 1997). Nelson, Philip. "Information and Consumer Behaviour" (1970) 78 J. Pol. Econ. 311. Newton, Scott. "Post-Communist Legal Reform: The Elision of the Political" in John Hatchard & Amanda Perry-Kessaris eds., Law and Development: Facing complexity in the 21st Century (Cavendish Publishing Limited: London, 2003). ."The Dialectics of Law and Development" in David M Trubek & Alvaro Santos eds., The New Law and Economic Development: A Critical Appraisal (New York: Cambridge University Press, 2006). 396 Noll, R.G. "Economic Perspectives on the Politics of Regulation" in Richard Schmalensee & R. Willig eds. Handbook of Industrial Organisation, Vol. 2 (Elsevier, 1989) 1253. Odendahl, Teresa & Aileen M. Shaw. "Interviewing Elites" in Jaber F. Gubrium & James A. Holstein eds., Handbook of Interview Research: Context and Methodology (London: Sage Publications, 2002). Ogus, Anthony. "Comparing regulatory systems: institutions, processes and legal forms in industrialised countries" in Paul Cook et al eds., Leading Issues in Competition, Regulation and Development,(CRC series Edward Elgar, 2004). . "Towards Appropriate Institutional Arrangements for Regulation in Less Developed Countries" (2005) Centre on Regulation and Competition, Working Paper Series Paper No. 119. Palim, Mark R.A. "The Worldwide Growth of Competition Law: An Empirical Analysis" (1998) 43:1 Antitrust Bull. 105. Parker, Christine. "Introduction" in Christine Parker et al eds., Regulating Law (Oxford: Oxford University Press, 2004). ."Restorative Justice in Business Regulation? The Australian Competition and Consumer Commission's Use of Enforceable Undertakings" (2004) 67:2 Mod. L. Rev.209. . "The "Compliance" Trap: The Moral Message in Responsive Regulatory Enforcement" (2006) 40:3 Law & Society Rev. 591. Parker, Christine & V L Nielsen. "The ACCC Enforcement and Compliance Project: Explanation of Project and Methodology". Online: http://www .cartel .law .unimelb.edu .au/go/related-projects/the-australian- competition-and-consumercommission-enforcement-and-compliance-project. (Accessed 11 January 2011). 397 . "How Much Does It Hurt? How Australian Businesses Think About the Costs and Gains of Compliance with the Trade Practices Act" (2008) 32 Melbourne University Law Review, 554. ."Testing responsive regulation in regulatory enforcement" (2009) 3 Regulation & Governance 376. Pate, R. Hewitt. "The Common Law Approach and Improving Standards for Analyzing Single Firm Conduct" in Barry Hawk ed., International Antitrust Law & Policy: Fordham Corporate Law (2003). Paulwell, Philip."Legislating for Fair Competition: A Comparison of some Provisions of Jamaica and United States Legislation" (1994) 5 Carib. L. & Bus. 50. Payne, Anthony. "The 'new' Manley and the New Political Economy of Jamaica" (1992) 13:3 Third World Quart. 463. Peltzman, S. 'Toward a More General Theory of Regulation',(1976) 19 J. Law & Econ. 211 Posner, R. "Theories of Economic Regulation" (1974) 5 (2) Bell J. Econ. & Mgt. Sci. 335. Prosser, Tony. "Regulation and Social Solidarity" (2006) 33:3 J. L. & Soc. 364. Puri, Poonam. "Legal Origins, Investor Protection, and Canada" (2010) 6:1 CLPE Research Paper Series, Online: CLPE http://www .comparativeresearch .net/papers .jsp?pubyear=2010( Accessed 20 January, 2011). Rachagan, Sothi S. "Protection against Unfair Trade Practices in Malaysia - Law, Enforcement and Redress in a Developing Country" 15 (1992) J. Cons. Pol'y 255. . "Competition Policy and Law in the Consumer and Development Interest" (UNCTAD, 2003) online. IACL< http://www.iaclaw.org/Research_papers/Rachagan.pdf > Accessed 1 July 2009. 398 . "Development and Consumer Law" in Geraint Howells, Iain Ramsay & Thomas Wilhelmsson eds. Handbook of Research on International Consumer Law (Cheltenham, UK: Edward Elgar Publishing Limited, 2010). Ramsay, Iain. "'The Office of Fair Trading: Policing the Consumer Market Place"1 in Robert Baldwin & Christopher McCrudden eds. Regulation and Public Law (London: Weidenfeld and Nicolson, 1987). . "Consumer Law, Regulatory Capitalism and the 'New Learning' in Regulation"(2006) 28:9 Sydney L. Rev. 9. Ramsay, Iain, & Toni Williams. "Inequality, Market Discrimination, and Credit Markets" in Iain Ramsay ed., Consumer Law in the Global Economy: National and International Dimensions (Aldershot: Dartmouth, 1997). Ransom, Alan. "The Fair Competition Act, 1993 (Jamaica) - Analysis and Comment - Part I" (1994) 4 Carib. Law Rev.l 10. . "The Fair Competition Act, 1993 (Jamaica) - Analysis and Comment - Part II" (1994) 4 Carib. L. Rev. 290. Rebstock, Paula. "The Consumer - Competition Interface in New Zealand: A Response to Sylvan." (2005) 13:1 Austl. Comp. & Cons. L. J. Reich, Norbert. "Diverse Approaches to Consumer Protection Philosophy" (1992) 14 J. Cons. Pol'y. 257. .Competition Law and the Consumer" in L Gormley ed. Current and Future Perspectives in EC Competition Law (Kluwer: London, 1997). Reid, Stanley. "Economic Elites in Jamaica: A Study in Monistic Relationship" (1980) 22:1 Anthropologica 25. Reiss, A. "Selecting Strategies of Social Control over Organisational Life" in Keith Hawkins & John M. Thomas eds., Enforcing Regulation (Boston, Massachusetts: Kluwer-Nijhoff, 1984). Richards, Jeffrey. "Politics in small independent communities: conflict or consensus" (1982) 20(2) J. Commonwealth & Comparative Politics 155. 399 Robinson, E.A.G. "Size of Nation and Cost of Administration" in E.A.G Robinson, ed., Economic Consequences of the Size of Nations. (London: Macmillan & Co. Ltd, 1963). Rodriguez, A.E. & Mark D. Williams. "The Effectiveness of Proposed Antitrust Programmes for Developing Countries" (1993) 19 N.C.J. Int'l & Com. Reg. 209. Salop, Stephen. "The Noisy Monopolist; Imperfect Information, Price Dispersion and Price Discrimination" (1977) 44 Rev. Econ. Stud. 393. Sampson , Cezley I. "Economic Competition and Restrictive Business Practices: The Development of Jamaican Competition Policy" (UNCTAD, ITD/12, 1985). Sampson, Cezley & Faye Sampson. "Reforming and Privatising the Telecommunications Sector in Jamaica: Experiences of a Small Developing Country" in Politics Trumps Economics? Political Economy and the Implementation of Competition Law and Economic Regulation in Developing Countries, Pradeep S. Mehta & Simon J. Evenett eds. (CUTS International, CIRC, Jaipur, 2009) Online: CUTS http://www.circ.in/pdf/PoliticsTriumphsEconomics-Vol2.pdf (Accessed 11 January 2011). Scherer, Frederic M. "Efficiency, Fairness and the Early Contributions of Economists to the Antitrust Debate", (1990) 29 Washburn Law Journal 243. Sathiendrakumar E. "Problems Faced by Indian Ocean Island Economies: The Case of the Maldives" in Rony Gabbay et al eds., Economics of Small Island Nations, (New Age International, 1996). Schramm, W. "Notes on case studies of instructional media projects". (Working Paper for the Academy for Educational Development, Washington D.C. December 1971. Schwartz, Tim &David Satola. "Telecommunications Legislation in Transitional and Developing Economies", World Bank Technical Paper No. 489. (Washington DC: World Bank Group, 2000). 400 Selznick, Philip. "Focussing organizational research on regulation" in Roger G. Noll ed., Regulatory Policy and the Social Sciences (Berkeley: The University of California Press. 1985). Siems, Matthias M. "Legal Origins: Reconciling Law and Finance and Comparative Law" (2007) 52 Mc Gill L.J. 55. Simmonds, Lorna Elaine. "The Afro-Jamaican and the Internal Marketing System" in Kathleen E.A. Monteith and Glen Richards eds. Jamaica in Slavery and Freedom: History, Heritage and Culture (Jamaica: University of the West Indies Press, 2002). Smith, Anthony "Consumer Law and Social Justice" (1995) 5:6 Cons. Pol'y. Rev. 203. Smith, Dimity Kingsford, "What is Regulation? A Reply to Julia Black" (2002) 27 Austl. J. Leg. Phil 37. Smith, Warwick, Public Policy for the Private Sector. "Utility Regulators -The Independence Debate" World Bank Group (1997) Online: World Bank http://rru .worldbank.org/documents/publicpolicyjournal/127smith .pdf (Accessed 12 February 2011). Smith-Hillman, A.V. "Market Power, competition policy and developing economies: divergent conditions within African and Caribbean economies" (2007) 34:2 J. Econ. Stud.120. Sokol, D. Daniel. "Monopolists Without Borders: The Institutional Challenge of International Antitrust in a Global Gilded Age" (2007) 4 Berkeley Bus. L.J. 41. . "Law and Development - The Way Forward or Just Stuck in the Same Place" (2010) 104 Nw, U. L.Rev.237. Spiller, Pablo T. "Comments and Recommendations on the Proposal for a Jamaican Competition Act", World Bank (June 1993). Spiller, Pablo T. & Cezley I. Sampson. "Regulation, Institutions, and Commitment - The Jamaican Telecommunications Sector", (World Bank, Policy Research Working Paper 1362, October 1994) 401 Stanbury, W.T. "The Legislative Development of Canadian Competition Policy, 1888- 1981" (1981) 2 Canadian Competition Policy Record. Steele, Eric H. "Two Approaches to Contemporary Dispute Behavior and Consumer Problems" (1977) 11:4 Law & Soc. Rev. 667. Stigler, George J. "The Theory of Economic Regulation" in The Citizen and the State: Essays on Regulation, (Chicago: University of Chicago Press, 1975). Stiglitz, Joseph. "The Contributions of the Economics of Information to Twentieth Century Economics" 115:4 (2000) Quarterly Journal of Economics,1441. Stewart, Taimoon. "Is Flexibility Needed When Designing Competition Law? A View from the Caribbean" (2004) 38:4 J. World Trade 725. Stone, Carl & Stainslaw Wellisz. "Jamaica" in Ronald Findlay & Stainslaw Wellisz eds. The Political Economy of Poverty, Equity and Growth: Five Small Open Economies (World Bank/Oxford University Press, 1993). Streeten, Paul. "The Special Problems of Small Countries" (1993) 21:2 World Dev. 197. Stuyck, Jules. "EC Competition Law After Modernisation - More than ever in the interests of consumers" (2005) J.Cons. Pol'y 1. Sunstein, Cass. "Paradoxes of the Regulatory State" (1990) 57 Univ. Chi. L. R 407. Sunstein, Cass R. & Richard H Thaler, Libertarian Paternalism is not an Oxymoron" (2003) 70 Univ. Chic. L. Rev. 1159. Sylvan, Louise. "Activating Competition: the Consumer - Competition Interface" (2004) 12:2 Austl. Comp. & Cons. L. J. 191. Thorelli, Hans B."Consumer Policy for the Third World" (1981) 3 J. Cons. Pol'y 197. Tokman, V. & E. Klein. "Informal Sector and Regulations in Ecuador and Jamaica" (1993) Technical Paper No.86, OECD Development Centre. Tollison, R.D. "The Interest-Group Theory of Government" in A. Owens, C. Rowley eds. The Locke Luminary, Vol. I, No. 1 (Summer 1998), Part 4. Trebilcock, Michael J. "The Doctrine of Inequality of Bargaining Power" (1976) 26 U. T. L.J.359. 402 . "Competition Policy, Trade Policy and the Problem of Second Best" in R.S. Khemani & W.T. Stanbury eds. Competition Policy and Law at the Turn of the Century (Halifax: The Institute for Research on Public Policy,1991). . "Regulated Conduct and the Competition Defence" (2005) 41 Can. Bus. L. J. 492. Trebilcock, Michael J. & Edward M. Iacobucci. "Designing Competition Law Institutions" (2002) 25:3 World Competition 361. . "Designing Competition Law Institutions: Values, Structure, and Mandate" (2009 - 2010) 41 Loy.U. Chi. L.J. 455 Trubek, David M. "The 'Rule of Law' in development assistance: past, present, and future" in David M Trubek & Alvaro Santos eds., The New Law and Economic Development: A Critical Appraisal (New York: Cambridge University Press, 2006). Trubek, David M. & Marc Galanter. "Scholars in Self-Estrangement: Some Reflections on the Crisis in Law and Development Studies in the United States" (1974) 4 Wis. L. Rev. 1062. Tullock, Gordon. "The Welfare Cost of Tariffs, Monopoly and Theft" (1967) 5 Western Economics Journal 224. Tunney, James. "The Neglected Tension between disclosure of information in consumer and competition law contexts" (2002) 25 J. Cons. Pol'y 329. Tustin, Jeremy & Rhonda L. Smith. "Joined-up Consumer Protection and Competition Policy: Some Comments" (2005) 12:3 Austl. Comp. & Cons. L. J. 305. Tversky, Amos & Daniel Kahneman. "Judgment under uncertainty: Heuristics and Biases" (1974) Science 185. . "The framing of decisions and the psychology of choice" (1981) 211:4481 Science January 453. 403 U.K. Office of Fair Trading. "Annual Report and Resource Accounts (2007 - 2008)", online: OFT http://www.oft.gov.uk/OFTwork/publications/publication- categories/corporate/annual-report/. Van Cuong, Nguyen. "The nature of consumer law reforms in Developing and Transitional Countries: A Brief Literature Review (May 17,2010). Available at SSRN: http://ssrn .com/abstract= 1609523. Van den Bergh, Roger & Peter D. Camesaca. European Competition Law and Economics: A Comparative Perspective, 2nd ed. (Thomson, Sweet & Maxwell, 2006). Vickers, John. "Economics for Consumer Policy" (Keynes Lecture in Economics) (2004) 125 Proceedings of the British Academy 287. Waller, Spencer. "Antitrust as Consumer Choice: Comments on the New Paradigm" (2001) 62 U. Pitt. L.R. 535. . "In search of economic justice: considering competition and consumer protection law" (2005) 36 Loy. U. Chicago L. J. 631. Waterson, Michael. "The Role of Consumers in Competition and Competition Policy" (2003) 21 Int'l. J. Indus. Org.129. Watson, Alan. "Comparative Law and Legal Change" (1978) 37 Cambridge L. J. 313. Waylen, Georgina. Colonial Policy towards industrialisation between the wars: the case of Jamaica (Manchester Papers in Politics, Department of Government, Victoria University of Manchester, 1987). Weatherill, Stephen. "The role of the informed consumer in European Community" (1994) 2 Cons. L.J. 49. . "The links between competition policy and consumer protection" in Geraint Howells et al eds. The Yearbook of Consumer Law 2007 (Ashgate Publishing, 2007). 404 . "Who is the 'Average Consumer'?" in Stephen Weatherill & Ulf Benitz eds. The Regulation of Unfair Commercial Practices Under EC Directive 2005/29 : New Rules and Techniques, (Oxford: Hart Publishing, 2007). Webb, Charles. "Multum In Parvo: Competition Law In Small Economies Compared" (2006) 10:3 Jersey Law Rev. online: Jersey Law http://www .jerseylaw .je/Publications/jerseylawre view/oct06/JLR0610_Webb .asp x. Weidenbaum, M.L. "The case against the UN Guidelines for Consumer Protection", (1987) 10 J. Cons. P'cy" 425. Wein, T. "Consumer Information Problems - Causes and Consequences" in S. Grundman, W. Kerber and S. Weatherill ed., Party Autonomy and the role of information in the internal market. (Berlin:De Gruyter, 2001). Welch, C. et al. "Corporate Elites as Informants in Qualitative International Business Research" (2002) 11 Int'l. Bus. Rev. 611. Whitman, Glen. "Against the New Paternalism: Internalities and the Economics of Self- Control" (2006) 563 Policy. Analysis, online: Cato Institute http://www .cato.org/pubs/pas/pa563 .pdf. Whitman, James Q. "Consumerism versus Producerism: On the Global Menace of "Consumerism" and the Mission of Comparative Law" (2006) Yale Law School, Yale Law School Faculty Scholarship Series, Paper 6, online: Yale Law School < http://digitalcommons.law.yale.edu/fss_papers/> Wilhelmsson, Thomas. "Consumer Law and Social Justice" "in Iain Ramsay ed. Consumer Law in the Global Economy: National and International Dimensions (Aldershot: Dartmouth, 1997). Williamson, O.E. "Economies as an Antitrust Defense: The Welfare Trade-offs" (1968) 58 Amer. Econ. Rev. 18. Winters, Alan, L. & Pedro Martins. 'When Comparative Advantage Is Not Enough: Business Costs in Small Remote Economies' (2004) 3 World Trade Review 347. 405 Witter M. & C. Kirton. "The Informal Economy in Jamaica, Some Empirical Exercises"(1990) WP36, Institute of Social and Economic Research, University of the West Indies. Wood, Allan. "Competition Legislation and the Legal Profession: Developments in Jamaica" (1995) 5 Carib. L. & Bus. 56. Yeung, Karen. "Privatising competition regulation" (1998) 18 Oxford J. Legal Stud. 581. Addresses and Papers delivered at Conferences Bourne, Compton. "Economic Growth, Poverty and Income Inequality" (Sir Arthur Lewis Memorial Lecture delivered September 2008). Online: University of the West Indies http://sta.uwi.edu/resources/speeches/2009/SummarySALISESConfComptonBour ne.pdf (Accessed 12 February 2011). Chetty, Vani. "The place of public interest in South Africa's competition legislation: some implications for international antitrust convergence"(Paper presented to the American Bar Association's Section of Antitrust Law 53rd Spring Meeting, Washington, DC, March 2005) online: American Bar Association http://www.abanet.org/antitrust/at-committees/at-ic/pdf/spring/05/aba-paper.pdf. Field, Chris. "Having One's Cake and Eating It Too - An Analysis of Behavioural Economics from a Consumer Policy Perspective" in Behavioural Economics and Public Policy — Roundtable Proceedings (Australian Government Productivity Commission, 2007) online: Australian Productivity Commission http://w w w .pc .gov .au/ data/assets/pdf_file/0005/79250/behavioural- economics.pdf 406 Gal, Michal. "Competition Policy in Small Economies" paper presented to the OECD Global Forum on Competition, 2003 CCNM/GF/CC)MP/WD(2003)42, online: OECD Karlsson, Paul. "Change of Enforcement Standards can affect Institutional Design" (Paper presented at Workshop on Competition Policy in Caribbean Small States, October 2009) [unpublished]. Lee, Barbara. "The most important institutional challenges in promoting competition in Jamaica." (Paper presented to the OECD Latin American Competition Forum, June 2004) at 6 online: OECD http://www.oecd.org/dataoecd/52/43/32033702.pdf . "Coping with Challenges at the Jamaica Fair Trading Commission" (Paper presented to the American Bar Association Antitrust Section, Spring 2006), online: ABA http://www.abanet.org/antitrust/at-committees/at- ic/pdf/spring/06/146.pdf. Miller, David. "Competition and Consumer Protection: The Relationship in Practice" (Paper presented at the 5th IDRC Pre-ICN Forum on Competition and Development on April 26,2010), online: FTC http://www.jftc.com/Libraries/Speeches_and_Presentations/Competition_and_Co nsumer_Protection_The_Relationship_in_Practice_in_Jamaica_- _Mr_David_Miller.sflb.ashx. Muris, T.J. "The Interface of Competition and Consumer Protection" (Address to Fordham Corporate Law Institute's 29th Annual Conference on International 407 Antitrust Law and Policy, October 2002) online: Federal Trade Commission http://w ww .ftc .gov/speeches/muris/021031fordham .pdf. Toppin, Hon. Ronald. "Speech at the opening of the National Consultation on the establishment of the FTC", (June 1999)[unpublished]. Other Materials Australia Law Reform Commission. Principled Regulation: Federal Civil and Administrative Penalties in Australia, ALRC 95 (2002). Caribbean Law Institute, Consumer Law Advisory Committee Report. (Caribbean Law Institute, 1993). E.C. Study on the Conditions of Claims for Damages in Case of Infringement of EC Competition Rules by Ashurst (25 August, 2004), European Commission: online http://ec .europa .eu/competition/antitrust/actionsdamages/study .html. E.C. Green Paper - Damages actions for breach of the EC antitrust rules (COM (2005) 672) (19 December 2005) European Commission: online http://ec .europa.eu/competition/antitrust/actionsdamages/documents .html. FTAA Working Group on Competition Policies. "Report on Developments and Enforcement of Competition Policy and Laws in the Western Hemisphere" (1997) FTAA: online http://www.ftaa- alca.org/Wgroups/WGCP/English/dae/dae_toce .asp#jam. ICN. "Report on the 8th Annual Conference Of The International Competition Network" (June 3-5,2009, Zurich, Switzerland), online: ICN http://www .internationalcompetitionnetwork .org / uploads/library/doc607 .pdf (accessed 30 June, 2010). ICN. Draft Market Studies Good Practice Handbook (April 2010), online: ICN www.internationalcompetitionnetwork.org/uploads/library/doc646.pdf. 408 Jamaican Justice System Reform Task Force. "Final Report" (2007), Jamaica Justice Reform Project: online http://www.cba.org/jamaicanjustice/pdf/jjsrtf_report_final.pdf. (Accessed 11 January 2011). Law Commission, England and Wales. "Criminal Liability in Regulatory Context" Consultation Paper No. 195 (2010). Law Commission, England and Wales. Law of Contract: Implied Terms in Contracts for the Sale and Supply of Goods (HC 142,1979). Law Commission, England and Wales. Law of Contract: Implied Terms in Contracts for the Supply of Services (Cmnd 9773,1986). Law Commission, England and Wales. Sale and Supply of Goods (Law Com No. 160, Cm 13,1987). Myers, Fletcher and Gordon. "Proposed Notes on Competition Act" (July 1993) National Consumers League. Work of National Consumers League Report 2004 - 2005, (Jamaica) National Consumers League, "Value newsletter from NCL celebrating 30 years" (April 1996). Ontario Law Review Commission Report on Class Actions, Canada (1982). OECD. (2002) "Capacity Building for Effective Competition Policy in Developing and transitioning Economies" OECD presentation at UNCTAD IGE, (July 2002). OECD. (2003) "Background Note on Small Economies" CCNM/GF/COMP(2003)4, online: OECD 409 OECD. (2008) "Policy Roundtable on the Interface between Competition and Consumer Policies", OECD online: www.oecd.org/dataoecd/22/34/40898016.pdf. OECD. (2002) Global Forum on Competition "The United States Experience in Competition Law Technical Assistance: A Ten Year Perspective" Doc. No, CCNM/GF/COMP/WD (2002) 20 (6 Feb. 2002) Online: OECDhttp://www .oecd.org/dataoecd/37/61/1833990.pdf (Accessed 10 December 2010). OECD. (2003) Global Forum on Competition, "The Objectives of Competition Law and policy and the Optimal Design of a Competition Agency - Jamaica "( Doc. No. CCNM/GF/COMP/WD 2003:3). OECD. (2008) Global Forum on Competition, Questionnaire on the Challenges Facing Young Competition Authorities - Contribution from Jamaica, DAF/COMP/GF/WD (Paris, OECD, 2008), online: OECD http: //www .oecd .org/dataoecd/8/57/41851680.pdf. Planning Institute of Jamaica, "The poverty-environment nexus: establishing an approach for determining special development areas in Jamaica (PIOJ: Jamaica, 2007) Private Sector Organisation of Jamaica. "A Policy Framework for Economic Development in Jamaica" (PSOJ, 1985). Private Sector Organisation of Jamaica. "A Policy Framework for Economic Development in Jamaica II - A Progress Report" (PSOJ, 1992). Supreme Court of Jamaica. "Annual Court Report 2003 - 2004", Jamaica Supreme Court: online www.moj.gov.jm/pdf/2003_2004_court_report.pdf (Accessed 11 January 2011). UNCTAD. "Voluntary Peer Review on Competition Policy: Jamaica" (UNCTAD/DITC/CLP/2005/5) online: UNCTAD, < http://www.unctad.org/templates/Page.asp?intItemID=4165&lang= 1>. (Accessed 1 July 2009). 410 United Nations Office of the High Representative for the Least Developed Countries. Landlocked Developing Countries and Small Island Developing States, List of Small Island Developing States (2005) online: United Nations 411