Update: Rum fight goes to Fair Trading Commission
Published:Sunday | January 12, 2025 | 12:17 PM
National Rums of Jamaica Limited has sought the intervention of the Jamaica Fair Trading Commission, FTC, to address alleged anti-competitive practices by large players, including J. Wray & Nephew Limited.
“We ask the commission to investigate the anti-competitive practices preliminarily outlined herein and to assess damages due to the complainants,” said the NRJ competition complaint sent to the FTC and copied to the Financial Gleaner.
The parties that filed the complaint are National Rums and its affiliated Long Pond Distillers Limited and Clarendon Distillers Limited.
David Miller, the executive director at the FTC, confirmed receipt of the complaint but had no further comment.
The complaint cites alleged issues of dominance, price-fixing and conspiracy.
This move follows a dispute in which Spirits Pool of Jamaica successfully prevented the ageing of rum outside Jamaica while retaining the GI, or geographic indication. The GI for Jamaican rum certifies that the product meets specific standards tied to the island’s heritage and production methods, ensuring global consumers associate Jamaican rum with authenticity, quality, and unique characteristics rooted in the environment.
Some players assert that ageing outside the island shifts the additional value produced from ageing in Jamaica to the developed world, which mostly consumes the drink. While most producers have their own brands which benefits from local ageing, National Rums produces mostly bulk rum that’s branded elsewhere. Conversely, National Rums contends that restricting its operations in this manner stifles its business model and unfairly limits its ability to compete internationally.
“The application of a GI must operate in the context of fair competition and should not be used as a device to restrict competition or to fortify market dominance,” National Rums stated in the complaint.
Last October, the Jamaica Intellectual Property Office, JIPO, ruled explicitly that the rum GI requires local ageing and blending. The tribunal at JIPO however added that JIPO was not the correct forum to adjudicate unfair competition matters, according to the National Rums complaint to the FTC.
“In doing so, JIPO did not provide a ruling on the anti-competitive practices of the Spirits Pool and/or its members,” the complaint stated.
National Rums also raises concerns in the complaint about the governance of the GI and whether the current rules favour certain producers to the detriment of others. It has called for the regulatory body to investigate potential anti-competitive practices arising from the enforcement of the GI rules.
The complaint stated that J. Wray & Nephew Limited occupies a position of “dominance” in the retail market for Jamaican rum locally and in overseas markets. Its “dominance” is borne out in its “crop volume” at just over half the island’s total crop volume. It also holds the largest stock of aged rums with “several local warehouses” for ageing rum, National Rums said.
“The commission should consider that a dominant player in one market can abuse its position to distort competition in a neighbouring market in which it may not hold a dominant position,” the complaint stated.
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UPDATE: This story was updated to correct the reference in the sixth paragraph from National Rums to Spirits Pool of Jamaica.