Ky­ron Reg­is

ky­ron.reg­is@guardian.co.tt

When merg­ers take place in the coun­try and by ex­ten­sion the re­gion, they can have a pos­i­tive im­pact but when they are not close­ly scru­ti­nised they can re­sult in harm­ful ef­fects on con­sumers and the econ­o­my. These sen­ti­ments were echoed yes­ter­day by Per­ma­nent Sec­re­tary in the Min­istry of Trade and In­dus­try, Nor­ris Her­bert.

Speak­ing at a Com­pe­ti­tion Law and Merg­er Pol­i­cy Work­shop, Her­bert said: “A merg­er can be an op­por­tu­ni­ty for a busi­ness to ex­pand, di­ver­si­fy and ac­cess new mar­kets both ge­o­graph­i­cal­ly and prod­uct-wise.”

He con­tin­ued: “Un­for­tu­nate­ly, there are al­so sit­u­a­tions where a merg­er may have harm­ful ef­fects on con­sumers and on the econ­o­my as a whole, which may lead to high­er prices, low­er qual­i­ty of goods and ser­vices and thus a de­crease in con­sumer wel­fare.”

Hebert de­fined a merg­er as “an amal­ga­ma­tion or join­ing of two or more firms in­to an ex­ist­ing firm or to form a new firm.” Ac­cord­ing to Her­bert, there are many rea­sons why a busi­ness will ac­quire or merge with an­oth­er busi­ness - where the most com­mon fac­tor is the po­ten­tial growth for the busi­ness and the prospect of in­creased mar­ket share.

How­ev­er, he not­ed that the ben­e­fits of most merg­ers out­weigh the harm­ful ef­fects. Her­bert added that merg­ers and ac­qui­si­tions are cost-ef­fec­tive and can lead to greater ef­fi­cien­cy and pro­duc­tiv­i­ty, while al­so help­ing to achieve sus­tain­able growth.

Nonethe­less, an­ti-com­pet­i­tive merg­ers, said Her­bert, can re­sult in very large costs to con­sumers and to the econ­o­my in gen­er­al. This is why “it is es­sen­tial that there be a prop­er merg­er re­view sys­tem in place,” Her­bert not­ed.

The po­ten­tial ben­e­fits and an­ti­com­pet­i­tive ef­fects of a merg­er dic­tate that staff in com­pe­ti­tion agen­cies be prop­er­ly trained in the area of merg­er re­view and analy­sis.

Ac­cord­ing to the CARI­COM Com­pe­ti­tion Com­mis­sions Com­mis­sion­er, Ema­lene Mar­cus-Bur­nett, “The re­gion must en­sure that there is the req­ui­site reg­u­la­to­ry and leg­isla­tive frame­works, but­tressed by train­ing and ca­pac­i­ty build­ing.”

Mar­cus-Ber­nett said that as glob­al­iza­tion pro­gress­es and “firms seek to en­hance their economies of scale and se­cure mar­kets, it is ex­pect­ed that merg­ers will con­tin­ue and be­come more com­plex.”

There have al­ready been many merg­ers in the Caribbean, from tele­com to fi­nance. The most re­cent be­ing the Ja­maican Na­tion­al Com­mer­cial Bank’s ma­jor­i­ty ac­qui­si­tion of T&T’s Guardian Hold­ings Ltd.

Mar­cus-Bur­nett ex­pressed that the Cari­com re­gion has not agreed on a har­mo­nized plat­form for merg­er con­trol pol­i­cy and leg­is­la­tion, “which is nec­es­sary for that holis­tic ap­proach to merg­ers, giv­en their cross bor­der im­pli­ca­tions”. She not­ed that such a pol­i­cy is im­per­a­tive as the re­gion seeks to strength­en and deep­en the im­ple­men­ta­tion of the sin­gle mar­ket com­po­nent of the CSME.

She not­ed that in spite of not hav­ing a har­monsed merg­er con­trol pol­i­cy, train­ing and ca­pac­i­ty build­ing will con­tin­ue to en­sure that merg­er trans­ac­tions “do not dis­tort and ham­per com­pe­ti­tion in af­fect­ed mar­kets.”

Har­mo­nized pro­ce­dures for the as­sess­ment of trans­ac­tions, ac­cord­ing to Mar­cus-Bur­nett, re­duce op­er­a­tional de­lays, fa­cil­i­tate co­op­er­a­tion be­tween au­thor­i­ties in the re­gion and aid over­all de­ci­sions re­lat­ing to merg­ers.