ABUSE OF DOMINANCE CASE
Competition Law and Policy Workshop
March 30-31, 2011
Savannah Hotel
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CASE STUDY
 Is
Com-Com guilty of any type of anticompetitive conduct and if so what is it and
how was that determined?
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STEPS IN INVESTIGATING AN ABUSE OF A
DOMINANT POSITION

Step 1: Identify the “relevant” market in which an
abuse of a dominant position is suspected.

Step 2: Determine whether a company has
sufficient control of that market to constitute a
dominant position.

Step 3: Identify the conduct that may harm
competition.

Step 4: Assess the conduct’s overall competitive
effects.
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CASE STUDY - INVESTIGATION
Step 1: Establishing the relevant market(s):

A market will usually be defined by the products supplied
(relevant product), the area of competition between the
relevant firms (geographic dimension), and the nature of
the economic activity being undertaken (functional
dimension)

In this case it would be necessary to define two markets


Where the company has market power, and
Which is affected by the practice
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CASE STUDY - INVESTIGATION
Step 1: Establishing the relevant market (continued)
 Product:
 Look for substitutes – what will consumers substitute for


these sugars; possibly perform SSNIP test
Look at both demand side and supply side substitutability
BROWN and GRANULATED SUGAR
 Geographic:
 Where is the product sold
 Would consumers easily switch to buy this sugar directly

from the US
BARBADOS Market
 Functional:
 Looks at whether retail, wholesale, distribution,
manufacture/production etc.
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CASE STUDY - INVESTIGATION
Step 1: Establishing the relevant market (continued)
 Relevant Market is:

The production of brown and granulated sugars in
Barbados
 Market
is:
which is affected or harmed by the conduct
 The transportation/distribution of wholesale brown and
granulated sugar
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CASE STUDY - INVESTIGATION
Step 2: Establishing whether the company has
a dominant market position
 Check market share:
 Look at local sales of Com-Com and local imports.

this you will get total consumption and then what
percentage of this is Com-Com’s local sales
93% average over a 4-year period
Local Sugar Sales for Com-Com Factory
Years Brown Crystal Granulated Total Sales of Sugar
2005
15,710,000 4,600,000
20,310,000
2006
26,405,000 7,345,000
33,750,000
2007
30,100,000 8,700,000
38,800,000
31,520,000 9,980,000
41,500,000
2008
Total Sugar
Consumed
Total Sugar Imports locally
1,700,000
1,610,000
2,400,000
3,950,000
22,010,000
35,360,000
41,200,000
45,450,000
From
Percentage
market share
for Com-Com
92%
95%
94%
91% AVG: 93%
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CASE STUDY - INVESTIGATION
Step 2: Establishing whether the company has
a dominant market position (continued)
 Check barriers to entry:
 Look for governmental, economies of scale, financial
barriers, etc
 Imported sugar faces high import duties
 Due to economies of scale it is not profitable to open another
sugar factory
 Start-up costs for a sugar factory are very high
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CASE STUDY - INVESTIGATION
Step 3: Identify the conduct that has the potential to
harm competition
 Under Section 16 (3) (g) of the FCA it holds that an
enterprise is abusing its dominant position if it
“engages in exclusive dealing, market restriction or
tied selling
 TIED SELLING occurs when a seller of product A and B
requires all purchasers of A (the tying product) to also buy
product B (the tied product).
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CASE STUDY - DECISION
Step 4: Assess the competitive effects
 Com-Com
was found to have abused its dominant
position by forcibly tying the delivery of sugar to the
manufacture of that sugar. It was therefore found to be
in breach of Section 16 (3) (g) of the FCA
 The Commission directed Com-Com to “grant the option
to those distributors who wished to make alternative
delivery arrangements the opportunity to do so” i.e. they
did not have to accept Com-Com’s delivery put could selfdeliver.
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CASE STUDY - DECISION
Step 4: Assess the competitive effects (continued)
 It
was understood by the Commission that Com-Com’s
directive was a rational response aimed at improving
their productivity (Section 16 (4)), however, the manner in
which the practice was instituted (without proper
consultation from the affected parties) constituted an
abuse of their dominant position
 Some distributors had stated that they had adjusted to
the Com-Com’s new delivery system
 Therefore, benefits to the decision included:



Reduced distribution costs and lower prices
Avenues now available to self deliver
Retail pricing of sugar became more competitive
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THANK YOU
Competition Law and Policy
workshop
March 30-31, 2011
Fair trading Commission
Good hope
Green Hill
St. Michael
[email protected]
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