OfReg proposes rules to prevent anti-competitive behavior

The Utility Regulation and Competition Office, known as OfReg, has released a set of proposed rules designed to curtail price fixing, bid rigging, and other anti-competitive practices among the companies it regulates.

OfReg initially proposed anti-competitive prevention rules about a year ago, but the proposal was widely criticized. For instance, Flow and Digicel slammed OfReg’s proposed minimum penalty of $10,000 for anti-competitive behavior.

“The Draft Rules do not explain why the Office believes minimum penalties are required or how the levels of such minimum penalties were established,” Digicel said in a statement, adding that minimum penalties are contrary to best practices internationally. “Digicel believes that even if the Office had the statutory power to set minimum penalties, it would not be appropriate to set a minimum penalty of approximately US$12,000 [CI$10,000] for minor infringements that could be easily cured.”

Flow also stated that it found OfReg’s proposed maximum penalty of $3 million to be unreasonable.

“We understand this maximum amount is permitted law, but we do not believe that this justifies or condones its application,” Flow stated. “Absent an empirical basis, such as past history or legitimate suspicion of future misconduct, the application of this maximum amount is an unnecessary exercise of the Office’s authority.”

Additionally, Rubis stated that OfReg should provide guidance on how penalties are determined.

In response to those and other criticisms, OfReg revised its proposal and released a new set of rules last month.

“The Office held the position that it would redraft the rules in order to expand on the calculation methodology that the Office will utilise when determining amounts of penalties to be imposed,” OfReg explained in its latest proposal. “In addition, the Office also outlined how it will enter into leniency agreements with parties guilty of participating in concerted practices.”

The new set of proposed rules removes the $3 million maximum and $10,000 minimum penalties, and replaces them with a six-step procedure. Under that procedure, OfReg first determines the seriousness of the offense and the relevant turnover of the guilty party in order to determine an appropriate starting point.

“After determination of the starting point has been made, adjustments will be made in relation to duration of the infringement, and aggravating or mitigating factors, as well as for the purposes of specified deterrence and proportionality as the second, third and fourth steps respectively,” OfReg stated. “The Office, as the fifth and sixth steps of the calculation methodology, will then make further adjustments if the maximum penalty exceeds total turnover and if a reduction needs to be applied as a result of a leniency agreement.”

OfReg will also offer potential leniency for companies who come forward and admit to anti-competitive practices.

Companies have until 5 p.m. on Wednesday to respond to OfReg’s new proposal. OfReg will review the responses and issue a determination on the matter by the end of July.

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