Dr Taimoon Stew­art

There is no doubt that there are pow­er­ful firms in the im­port and dis­tri­b­u­tion of phar­ma­ceu­ti­cal drugs in T&T. This is the case for sev­er­al key sec­tors in the T&T econ­o­my. The firms that dom­i­nate the phar­ma­ceu­ti­cal sec­tor achieved their dom­i­nance by the ad­van­tage they had start­ing their orig­i­nal com­pa­nies back in the late 19th cen­tu­ry.

Aven­ta’s gen­e­sis goes back to Smith-Robert­son’s for­ma­tion in 1894, while Bry­den was es­tab­lished in Bar­ba­dos in 1898, and Bry­den & Sons Trinidad Ltd was start­ed in 1923 by Bry­den’s son. Through merg­ers and ac­qui­si­tions, both firms ex­pand­ed lat­er­al­ly and ver­ti­cal­ly. So, es­sen­tial­ly, these com­pa­nies orig­i­nat­ed in colo­nial times when the colonis­ers con­trolled the econ­o­my, and their com­mer­cial class dom­i­nat­ed im­port and ex­port.

There­fore, while these com­pa­nies cur­rent­ly dom­i­nate sev­er­al sec­tors, and their roots are deep and struc­tur­al, the pow­er they ac­quired is not il­le­gal by any ex­ist­ing law of the coun­try then and now.

If there is cause to in­ves­ti­gate a dom­i­nant firm for breach of the Fair Trad­ing Act (FTA), then the law pro­vides for the Fair Trad­ing Com­mis­sion (FTC) to ini­ti­ate an in­ves­ti­ga­tion.

To do so, they need in­for­ma­tion from the phar­ma­ceu­ti­cal sec­tor, and both the firm(s) un­der in­ves­ti­ga­tion and com­peti­tors need to co­op­er­ate with the FTC to pro­vide da­ta. If they find ev­i­dence of an­ti-com­pet­i­tive be­hav­iour, sec­tion 23 of the FTA states that at the end of each in­ves­ti­ga­tion, the Com­mis­sion shall pre­pare a re­port in­di­cat­ing the prac­tices that con­sti­tute the abuse of mo­nop­oly pow­er if any and sub­mit same to the en­ter­prise con­cerned with a re­quest for the en­ter­prise to cease the abu­sive prac­tice with­in six months (much too long a pe­ri­od in my view).

Sec­tion 25 states: “The en­ter­prise con­cerned sub­mit to the Com­mis­sion the mea­sures it would take to re­move the mo­nop­oly pow­er it has on the mar­ket.”This es­sen­tial­ly means that if the firms are found to be in breach of the law, then the TTF­TA does say that the of­fend­ing firms have to take steps to “re­move their mo­nop­oly pow­er.”

This is a unique pro­vi­sion in com­pe­ti­tion law and one that is seem­ing­ly a draft­ing er­ror, but un­til the law is changed, the dom­i­nant firms who have en­gaged in an­ti-com­pet­i­tive con­ducts and this is proven in an in­ves­ti­ga­tion, may well find them­selves hav­ing to di­vest parts of their busi­ness en­ter­prise if they do not abide by a con­sent agree­ment to cease the abu­sive prac­tice and the case is re­ferred to the Court. There­fore, they are well ad­vised to tread care­ful­ly.

Note al­so that it is not the FTC that will have to make that de­ci­sion, but the Court. The FTC is an in­ves­tiga­tive in­sti­tu­tion and re­quired to sub­mit in­ves­tiga­tive re­ports to the Court for ad­ju­di­ca­tion. They can make con­sent agree­ments with firms which is what ap­plies in sec­tions 23 cit­ed above. How­ev­er, any breach of a Con­sent Agree­ment will have to be sub­mit­ted to the Court, and sanc­tion ap­plied, which, ac­cord­ing to Sec­tion 25, re­quires the firm to ‘re­move its mo­nop­oly pow­er’. Judges seek to know what the facts are, and what does the law say. They will ap­ply the let­ter of the law. So, they are like­ly to en­force sec­tion 25.

Some have been ques­tion­ing why has the FTC not in­ves­ti­gat­ed the high con­cen­tra­tion in the phar­ma­ceu­ti­cal dis­tri­b­u­tion sec­tor?

Let us be clear that hav­ing a mo­nop­oly is not a breach of the law. It is the abuse of that pow­er that is caught by the FTA. In any com­pe­ti­tion in­ves­ti­ga­tion, firms must sub­mit in­for­ma­tion and da­ta to the Com­mis­sion up­on re­quest. It was dis­closed at the re­cent Pub­lic Ad­min­is­tra­tion and Ap­pro­pri­a­tions Com­mit­tee (PAAC) meet­ing on the State’s Ac­qui­si­tion of Phar­ma­ceu­ti­cals that the FTC has on­ly re­cent­ly re­ceived da­ta from the Phar­ma­ceu­ti­cal Re­tail Board As­so­ci­a­tion to sup­port its pre­vi­ous claims of abuse of mo­nop­oly pow­er in the phar­ma­ceu­ti­cal sec­tor. It was al­so at that meet­ing, that the FTC’s ex­ec­u­tive di­rec­tor point­ed out that he is not in a po­si­tion to launch an in­ves­ti­ga­tion with­out a Board of Com­mis­sion­ers be­ing in place.

It would be good to ex­plain here to the pub­lic the re­al­i­ties of how the FTC is con­sti­tut­ed and what re­sources they have to ful­fill their man­date.

In both Ja­maica and T&T, com­pe­ti­tion law was in­tro­duced as part of a struc­tur­al ad­just­ment pro­gramme (SAP) im­posed by the World Bank and IMF in re­turn for fi­nan­cial as­sis­tance in the 1990s. Jam­i­ca act­ed swift­ly, passed its law and ful­ly pro­claimed it in 1993, set up its Com­mis­sion and start­ed en­forc­ing the law in 1993.

It took from 1991 to 2020 for TT to go through the process of draft­ing its com­pe­ti­tion law and tak­ing it through the leg­isla­tive process (2006) to ful­ly pro­claim­ing it in Feb­ru­ary 2020.

The FTC, there­fore, could not in­ves­ti­gate cas­es for an­ti-com­pet­i­tive con­duct or do merg­er re­views un­til Feb­ru­ary 2020. This is just short of six years ago. Note that it took 12 years af­ter pass­ing the an­ti-trust law for the US to in­ves­ti­gate its first case, and nine years af­ter the pass­ing of the EU com­pe­ti­tion law for the EU Com­mis­sion to in­ves­ti­gate its first case.

The Com­mis­sion is very un­der-re­sourced. It oc­cu­pies a small open space in the Min­istry of Trade, In­vest­ment and Tourism. It does not have sep­a­rate quar­ters, so in­ter­view­ing firms that could re­quire re­veal­ing con­fi­den­tial in­for­ma­tion is not pos­si­ble.

By com­par­i­son, the Bar­ba­dos Com­mis­sion oc­cu­pies a stand­alone build­ing and Ja­maica Fair Trad­ing Com­mis­sion does oc­cu­py shared space, but ful­ly ad­e­quate for its func­tion­ing needs. As a lo­cal ex­am­ple, The Of­fice of Pub­lic Pro­cure­ment is housed in the Wa­ter­front Build­ing and oc­cu­pies three floors, it has an of­fice in To­ba­go, and it has a con­sid­er­ably larg­er staff and bud­get.

The com­mis­sion is fund­ed through a trans­fer item in the line min­istry’s bud­get. Specif­i­cal­ly, un­der “oth­er trans­fers” No 16, page 553, it is al­lo­cat­ed $2 mil­lion. By com­par­i­son, the sum al­lo­cat­ed in the same bud­get to main­tain the golf cours­es at Mag­dale­na Grand Beach and Golf Re­sort, To­ba­go, is 1.9 mil­lion. (Tak­en from doc­u­ment: Re­pub­lic of T&T Draft Es­ti­mates: De­tails of Es­ti­mates of Re­cur­rent Ex­pen­di­ture for the Fi­nan­cial Year 2026).

By con­trast, the bud­get for the Ja­maica Fair Trad­ing Com­mis­sion is US$1 mil­lion or ap­prox­i­mate­ly $7 mil­lion, some three and a half times the bud­get of the TTFTC.

The FTC is se­vere­ly un­der­staffed. The tech­ni­cal staff con­sists of the ex­ec­u­tive di­rec­tor, a se­nior le­gal coun­sel and an in­ves­ti­ga­tor.

The re­main­ing staff is ad­min­is­tra­tive. By con­trast, the Ja­maica Fair Trad­ing Com­mis­sion has 10 tech­ni­cal staff: three econ­o­mists, three at­tor­neys, two re­search of­fi­cers, a gen­er­al man­ag­er who is al­so versed in com­pe­ti­tion law, and the ex­ec­u­tive di­rec­tor. No­tably, the Bar­ba­dos Fair Trad­ing Com­mis­sion, who reg­u­lates a con­sid­er­ably small­er econ­o­my than the TTFTC has a di­rec­tor, a chief econ­o­mist and an econ­o­mist, a re­search of­fi­cer, a gen­er­al le­gal coun­sel and a se­nior le­gal of­fi­cer.

Let it be clear to all those who are call­ing for the breakup of the dom­i­nant firms that noth­ing in the Fair Trad­ing Act al­lows the FTC to break up a firm sim­ply be­cause of high mar­ket share, even if it is 100 per cent. It must com­mit abus­es that are in breach of the pro­vi­sions in the law, and this can on­ly be proven through in­ves­ti­ga­tion and ad­ju­di­ca­tion.

To ini­ti­ate an in­ves­ti­ga­tion, the ex­ec­u­tive di­rec­tor must be sure that not on­ly does he have the ap­proval of the new board to do so and that he has the hu­man and fi­nan­cial re­sources to un­der­take such a com­plex in­ves­ti­ga­tion and the fund­ing to hire le­gal rep­re­sen­ta­tion to take the case to court if nec­es­sary. The ex­ec­u­tive di­rec­tor must al­so be sure that he has the ev­i­dence (ac­cess to da­ta and in­for­ma­tion and co­op­er­a­tion of key stake­hold­ers).