Healthy Competition

The JCRA are both the promoter and enforcer of the competition law, which came into force in late 2005.  According to the 2008 annual report the cost of the authority is £1.1 million per year although this clearly does not include the costs incurred by companies in complying with both the general law and the specific regulation for postal and telecoms which are not published but must be considerable.  Much of this cost will be picked up by consumers although according to the JCRA’s 2008 annual report consumers have made considerable savings as a result of the JCRA’s interventions.

Chamber has always supported the concept of a competition law which forbids behaviour such as price fixing and abuse of dominance.  That said, we have been concerned that competition is not seen as a panacea by politicians for all the problems which occur when businesses operate in a low volume high cost environment such as Jersey.  Look at the problems with the Jersey/France ferries.

The JCRA have accumulated quite a bit of experience but they do often seem to be bound by a law that was designed for a much bigger jurisdiction.  A good example of this has been some of the recent merger consultations such as Cadbury and Kraft.  If the top management of these companies had heard of Jersey I would be pretty surprised and the idea that little Jersey might change the terms of their deal seems very ambitious indeed.  If the JCRA are obliged by law to consider global mergers, perhaps the law needs changing?

Recently at the request of the Economic Development Minister the JCRA have commenced an investigation of the motor trade specifically the sale of new cars. Years ago I worked in the motor trade for a while and I can say it was one of the most challenging businesses I have been involved in.  Retailing and servicing cars takes loads of capital, the margins are tiny and volumes in Jersey are pretty small. Added to that, moving used cars off the island can be an expensive problem. Thinking about the review, I was reminded of the advice from someone much more experienced in the trade who said to me “if you want to make a million in the motor trade, start with two million!”  Back in August the Jersey Consumer Council (JCC) was also forced to apologise to the trade for wholly incorrect rip off claims (which to the JCC’s credit they were big enough to do).  In addition consumers can and do buy vehicles off Island if they wish so the local trade is not just competing with each others, but the whole of Europe!

It will be really interesting to see what the JCRA comes up with; the report to the Minister is due soon.