Imagine if Bula, Inc was the only company that sold soap in Fiji.

Anyone wanting to buy soap had to purchase it from Bula, Inc.

The company is for-profit, owned by shareholders whose main goal is to make as much money as possible.

Since the company realise they have no competition, they decide to raise the price of soap to $10 a bar.

There is no substitute for soap, and everyone ends up paying $10 per bar.

In the real world, there is competition in the market. If a company sells soap for $10, they will likely go out of busi­ness.

In Fiji, the Fijian Competition and Consumer Commission (FCCC), is the agency responsibe for regulating markets to ensure they remain com­petitive.

The commission launched a new five-year strategic plan in March this year.

Its 31-year-old chief exectuive officer, Joel Abraham, says the FCCC hopes to enhance competition in the Fijian market to a level that benefits and safe­guards consumers interests.

He says much of their work involves ‘pre-empting’ the things that can go wrong in any given situation.

The stragetic goals align with the the objectives of the FCCC Act, 2010.

But as a young agency, the commis­sion has at times found it difficult to engage with the public – its most im­portant stakeholders.

Many even today confuse it with the Consumer Council of Fiji, a parallel institution with similar goals.

Mr Abraham says that as economic activity in the country increases, the role of the two insitutions cannot be overlooked.

In an Interview with the Fiji Sun, Mr Abraham outlines the goals of the FCCC and why such an institution is needed in Fiji.

Here are excerpts from the

interview:

Which industries do you think need tougher regulations and why?

Well, I think at this point in time, I don’t think it would be prudent to say which industries needs tougher regulation because in order to arrive to that conclusion we would have to undertake thorough analysis of the industry itself.

As market dynamics continually change and the requirements of in­dustries change and the demand and supply cycle change.

For example, if you look at the hard­ware industry that’s one where there is a lot of demand and the demands are driven due to natural disasters – so, tropical cyclone Winston, Keni and Josie would be responsible for the con­struction boom or the excess demand.

If you go to hardware stores, you’ll find that they are finding it quite hard to service the demands and what they have done is they’ve recruited many more people to come on board. They’ve never seen demand as they are witnessing now.

Regulatory oversight and what peo­ple need to understand is what FCCC’s role really is to ensure that there is fairness in the market.

We’re always about ensuring equity, a level playing field and ensuring that consumers are treated fairly.

Our four strategic goals are basically targeted in this major area.

The areas that we are looking at are: to make markets competitive and whether strict regulations would suf­fice or would self-regulation is the way forward.

That really depends where the indus­try is and the commitment from the industry itself.

I usually say, the need for the FCCC to exist is to act as the regulatory arm of Government.

To be the regulatory arm, we only step in to correct market failures.

There are some market failures such as asymmetry of information mean­ing not everybody will have the same type of information.

One party may have more informa­tion and be able to sell better or one party will have limited information and that will restrict their ability to make an informed choice.

Or there will be an inequality of bar­gaining power, so you walk into a store and they sell only one particular type of good.

It’s either you get it from them or you don’t get it at it all.

All in all, these market failures re­duce consumer welfare.

So what the FCCC does is use differ­ent types of tools to ensure that at the end of the day the welfare of Fijian people is enhanced.

If you are able to help the market regulate itself or correct itself to come to a situation where the supply and the demand side of the market are in tandem – that is a sign of a competitive market.

Then what we will do is take a step back and look at oversight to ensure that such practices continue.

You look at the liquefied petroleum gas market which has two players, that is basically called a duopoly.

For quite some time we were noticing that there was a price leader-follower relationship.

It went up to a point where standard sized gas cylinder used to be retailed at $54. Post-regulatory intervention, it never touched the $50 mark; in fact we’ve never crossed the $45 mark. The lowest we went was up to $28.

What we do is that every three years or so we re-assess whether there is a need for us to continue to have regula­tory oversight, for which we do exten­sive consultation.

Otherwise, what we try and do is see how we can move to systems that are less of a command-and-control based approach to more self-regulatory sys­tems where there is flexibility. So we want there to be free markets in Fiji but we want it to work; it must work in the benefit of the people.

As long there are unethical traders, there will be a need for organisations such as the FCCC.

Tougher regulations in terms of industries, I think there needs to be tougher penalties; there needs to be tougher sentences passed down.

If you go back 10 years or even less there were cases we took to court and the courts would give us $75 fine and people would re-offend.

You fast track in to late 2017 and early 2018, the courts have started imposing fines up to $20,000.

Now that would show you that tough­er penalties are coming up because even the courts are realising that this is not enough and the laws are already aligned.

There are a lot of things yet to be done before we have a system that is proactive and there is a lot of catching up to do.

It wasn’t until 2010 when the Baini­marama Government came in and said we need to ensure that there is an agency that looks after consumer interest.

When I joined the commerce commis­sion in 2010, there was about 9 of us; now there’s 64 of us and that will just tell you of the resources Government is putting in to the FCCC because they recognise that it’s important to have an institutions such as the FCCC.

In what areas does the FCCC still lack funding and resources?

We used to lack funding and resourc­es in the area of litigation and special investigation but the Fijian Govern­ment has been very generous in pro­viding more than adequate funding in these two areas and we’ve now got dedicated funding for special litigation and also for special investigation.

If I had to take anyone to court today, I could get an army of lawyers to come in – and not just any lawyers, we could get the best in the country or maybe even the best abroad as well.

The reason why FCCC needs a healthy litigation fund is because when we regulate businesses, we are not just regulating small businesses.

There are a lot of large businesses that have very deep pockets, and to fight deep pockets you need a pocket of your own that you can get funds out of.

The Government has been quite gen­erous in terms of ensuring that the FCCC has adequate funding in these two areas and while we were looking at the strategic plan that had previous­ly always been a weakness; we would struggle in taking matters to court.

But now, it’s a different ball game al­together.

So funding and resourcing is not an issue.

And that is why you will see, if com­pared to say five years ago, you will find that the FCCC is more visible; people know about what we do; there’s more complaints coming in; there’s more reliance on FCCC as an organi­sation that is taken as independent and fair.

The thing with some of these inves­tigations is that it takes time because you don’t want to spend weeks and months investigating a matter only to go and lose in court over a technical matter.

For example, there is one case of mis­leading advertisements.

The advertisement said up to certain per cent discount and that discount was not provided.

There was a whole month of getting different experts to confirm what ‘up to means.’

Why do you think it is important for FCCC to mandatorily  scrutinise mergers and acquisitions?

Fiji is a small market. If I can hypo­thetically give you an example of Blue gas and Fiji Gas.

Currently, you have some choice be­cause there are two in the market.

But say that Fiji Gas decided to takeo­ver blue gas tomorrow and they de­cided that they didn’t want to do 12 kg cylinders but instead do 4kg cylinders and levy a charge on the usage of cyl­inders as well.

Right now you just pay for the gas; the cylinders are free after the first purchase. What do you do if they start charging $2 extra for cylinder.

That is why before a merger happens we must be able to go in and scrutinise and see into the future to pre-empt if there will be any limitations to compe­tition.

One of the mergers that we approved was Vinod Patel and Sun Court a few years back.

There were certain considerations that had to placed.

At that time, Mr Bikka was going away for some time and Sun Court on the verge of closing.

And that would mean the firm was not performing well, people would have lost their jobs so we went ahead and based the merger based on public interest.

There are certain times where we consider that prima facie may reduce competition in the short run, but in the long run it will be better for the people.

If we are not careful in approving mergers, things could be catastrophic for consumers.

That’s why they go through a great deal of scrutiny. So, people applying for mergers really don’t like us give the level of scrutiny we impose.

But we have to do it otherwise the market would not function that it’s supposed to.

You have a plan to publicise the outcome of major investigations, including enforcement operations. This will face a pushback from businesses. How do you plan to deal with this?

Let me explain the underlying basis for this.

The need for us to publicise the out­come of the investigation is simply be­cause we want to send a message out to the others that may be contemplat­ing such behaviour that this is a warn­ing for you not to that.

Secondly, it’s for consumers also to be aware of how they can be duped into certain things.

We’ve given some coverage around the e-commerce case which was pink window creations.

We’ve charged them more than $20,000 and they are in court now.

The reason that we want to publi­cise is not because we have anything against the proprietors.

It’s because that sends a signal to the others that there are certain pitfalls for traders for doing business online and what are some of the things con­sumers should be aware of before they get into a transaction.

It raised more awareness.

It’s a good example for people to look at the things they are not supposed to do.

Of course, there will be push backs but at the end of the day actions have consequences.

If you don’t want your name out there, don’t do it.

What measures are you taking to ensure that SMEs protected and can also thrive in Fiji?

One of the considerations that needs to be done for SMEs is they dont have access to the resources that larger en­terprises would have.

One of the things that businesses can have confidence in, especially SMEs, is that the FCCC accepts business-to-businesses cases as well, unlike the consumer council which only has the mandate to receive consumer com­plaints.

We receive business complaints and can investigate the conduct between businesses. That’s one degree of pro­tection that they have.

If it comes to a point where they need assistance, that is available free of charge.

The other thing for SMEs is, going back to strategic goal one, is that if markets are competitive barriers to entry are reduced. People can enter the market freely and sell their prod­ucts.

Anti-competitive behaviour like predatory pricing would be curbed from the market.

Feedback: sheldon.chanel@fijisun.com.fj