A foreign investor needs to be aware of the prohibitions on unfair competition in Trinidad and Tobago.
Unfair competition may arise through the dumping of goods into the local market, or through unfair competitive practices conducted by dominant business enterprises. Legislation has been introduced to afford a remedy to local manufacturers who face unfair competition in the form of (1) imports of dumped or subsidized goods where the local manufacturer suffers material injury caused by such imports; and (2) anti-competitive practices. Fair Trading legislation has been introduced to promote and maintain effective competition; however, much of this legislation has not yet come into force but will only require proclamation by the President, and as such, can be brought into force at practically a moment’s notice.
In this Chapter, Luke Hamel-Smith, Partner in the firm’s Dispute & Risk Management Department, updates our overview of the legislative controls and restrictions on unfair competition.
Dumping occurs where a foreign entity exports into Trinidad and Tobago goods at a price which is lower than the price it would normally charge for the same goods in its own domestic market.
A subsidy is deemed to exist where a foreign government or public body provides a financial contribution to an entity which exports to Trinidad and Tobago, thereby affecting the price at which such goods may be sold in Trinidad and Tobago.
The act of dumping and the provision of subsidies may have the effect of causing injury to local manufacturers who are unable to compete with the price of goods imported into the country.
The following pieces of legislation have been introduced in Trinidad and Tobago to combat the effects of such anti-competitive activities:
The Anti-Dumping Authority established by the Minister of Trade and Industry pursuant to the Act is under a duty to:
The mere act of dumping or foreign subsidization is not prohibited. What is prohibited is such action which has caused material (or actionable) injury to the production in Trinidad and Tobago of identical or similar goods by local manufacturers. It cannot automatically be presumed that dumped or subsidized goods are the cause of injury. In fact, the Anti-Dumping Regulations list a number of factors which may cause injury but which will not be attributable to the dumped or subsidized goods.
The Anti-Dumping Authority may initiate an investigation on its own initiative, or at the direction of the Minister of Trade. The Authority may also receive a complaint in writing, by or on behalf of local producers of identical or similar goods who have been injured by the imports. Certain information, as prescribed by the Regulations, must be set out in the complaint. The Authority then decides whether to initiate an investigation.
Before the Anti-Dumping Authority can initiate an investigation, it must satisfy itself that it has sufficient prima facie evidence of:
Where it has been determined that that dumping or subsidization has occurred which has caused material (or actionable) injury, as a first step the foreign exporters shall be given the opportunity to cease exporting at dumped prices.
Where the Minister of Trade and Industry on the recommendation of the Anti-Dumping Authority has determined that dumping or subsidization has occurred which has caused material (or actionable) injury, (and that the foreign exporters have not within thirty days ceased exporting as requested) the Minister may impose certain duties. In the case of dumping, the Minister may impose an “anti-dumping duty”; and in the case of a subsidization, the Minister may impose a “countervailing duty”.
The rate of the anti-dumping duty shall not exceed an amount that is necessary to prevent dumping and in any event shall not exceed the margin of dumping. Similarly, the rate of the countervailing duty shall not exceed an amount that is necessary to prevent actionable injury being caused and in any event shall not exceed the amount of the subsidy given on the goods.
A person aggrieved by an order imposing duty may appeal to the Tax Appeal Board. As a body deriving its powers from statute, should the Anti-Dumping Authority fail to comply in material respects with its enabling legislation or the requirements of natural justice, it could be subject to Judicial Review of the exercise of such powers before the Supreme Court on any or all of the grounds of illegality, irrationality or procedural impropriety.
Anti-competition (also known as antitrust) laws are aimed at protecting trade and commerce from unfair business practices. Such laws have three primary objectives, namely:
The Fair Trading Act, Ch. 81:13 (the “Act”) aimed at establishing a Fair Trading Commission, promoting and maintaining fair competition in the Trinidad and Tobago economy, and ensuring that competition is not distorted, restricted or prevented, to the detriment of the community.
To date only Parts II, IV, V and VI of the Act have come into operation. These parts deal with the establishment, powers and functions of the Fair Trading Commission and the appointment of the Commissioners and other key staff. Part III, which is the main operative part of the Act, has not yet come into operation.
The Ministry of Trade and Industry reports that the remainder of the Act will come into effect in a phased approach, and that the proclamation of the remaining parts of the Act is being worked on.
If and when Part III of the Act comes into operation, it will be of particular significance to foreign investors as it prohibits or controls certain mergers, anti-competitive agreements and monopolistic behaviour.
The Anti-Competition Provisions under Part III of the Act are considered below:
Under Part II of the Act, the Commission exists in the form of a company. The Commission may, of its own initiative or by request of any interested person, initiate investigation of suspected anti-competitive behaviour by business enterprises. It also has the power to make an application to the Court for the determination of any contravention of the Act. To date, this part of the Act has not as yet come into operation.
The Act does not apply to the following: