LETTER OF THE DAY - Who will really benefit from Digicel-Claro merger?
Published:Monday | March 14, 2011 | 12:00 AM
THE EDITOR, Sir:
Competition law, known in the United States as antitrust law, promotes or maintains market competition by regulating anti-competitive conduct. Is there such a law in Jamaica, or anything close to it?
Why do I ask such a question? Because I am disturbed by the announcement last Friday by Digicel that it is acquiring Claro.
Antitrust law has three main elements:
Prohibiting agreements or practices that restrict free trading and competition between businesses. This includes, in particular, the repression of free trade caused by cartels.
Banning abusive behaviour by a firm dominating a market, or anticompetitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal, and many others.
Supervising the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to 'remedies' such as an obligation to divest part of the merged business, or to offer licences or access to facilities to enable other businesses to continue competing.
It is widely known that Digicel has the most expensive call rates in Jamaica, and that Claro has the cheapest. I am a Claro subscriber, and I will be abandoning ship if and when Digicel comes aboard. Jamaica is doing just fine right now with the competition that the three cellular providers afford us the consumers. This merger will be to the benefit of Digicel only, and not to the subscribers.
Disingenuous comment
Digicel mentioned that the sale is subject to regulatory approval, and I hope that the regulator will disapprove of this merger. Not only will this result in loss of jobs, but it will also result in a cut in competitiveness. It was also disingenuous of the Digicel spokesman who commented that "it demonstrates our further investment in and commitment to Jamaica, and will enable us to further enhance our offerings to our enlarged customer base".
I believe that Claro customers, and the wider Jamaican population, should voice their disgust at this acquisition. This deal will be anti-everything, and will not be good for Jamaica. I would like Digicel to demonstrate and explain to the Jamaican people how this deal will be good for us.
I am, etc.,
NEVILLE BECKFORD
Spanish Town