Predatory Business Practice?

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Business News

Monday, 11 June 2012 02:30

By Colin Sampson

Antigua St John's - The issue of fair competition and predatory pricing in the business arena has arisen recently, as some consumers utilizing the services of Karib Cable continue to contend that they are being cheated by the company.

The cable-TV service provider recently announced a rock bottom startup package for new customers. At the same time, no similar relief is being offered to existing clients. Some Karib Cable customers have told Caribarena.com they believe the company is treating them unfairly.

Even if this were indeed the case, investigations have revealed that the cable company could very well get away with it, as there are no laws on the books presently that guard against such practices.

Reports are that the cable company has introduced a new “switch” package designed to encourage consumers to leave the competition and use their service for a mere $50 per month for six months. What has existing customers uneasy is the fact that the company seems to have made no provisions for them.

They continue to pay the regular rate of over $80 per month. The complaining customers believe their loyalty is being ignored.

Caribarena.com discussed the issue with consumer rights advocate Hudson Knight, who is vice-chair of the National Consumers Association. He found no qualms with the programme – considering that the promotion is for a limited time.

However, Director of Prices and Consumer Affairs Hildred Simpson advises that the cable company may be acting unlawfully.

Simpson cited Article 177 of the Revised Treaty of Chaguaramas that addresses the prohibition of Anti-Competitive Business Conduct, which includes “predatory pricing and price discrimination.”

“One of the anti-competitive conducts that is prohibited under Chapter 8 of the Revised Treaty of Chaguaramas is: Treating parties engaged in similar commercial transactions unequally, so as to give competitive advantage to one party over another,” Simpson said.

This means that businesses are not allowed to charge different prices to different customers, or category of customers, for the same product where the differences in prices do not reflect the quantity, quality or any other trading conditions relating to the items supplied.

“The Karib Cable promotion to lure CTV customers appears to be employing both predatory pricing and price discrimination,” the director said. “Although it appears obvious that Karib Cable is involved in anti-competitive conduct,” Simpson continued, “without the benefit of an investigation, we can only indicate that it (the company) seems prima facie to be in breach of the rules of fair competition.”

Ms. Simpson explained that such a development only strengthens the urgent need for ratification of the competition law, “as such situations require examination and application of necessary procedures to make a determination.”

In the meantime, Scotia Bank has also introduced a “switch” initiative where it has opened its doors to homeowners with mortgages at other banks to transfer their home loans.

But while the bank is looking to attract business, its loan officers maintain that before any new customers are accepted they must be screened and approved like any other candidate seeking a loan directly from the bank.

When approval is granted, the bank takes care of all transfer arrangements including legal and other fees. If new customer desire, they can also be afforded credit cards and other lines of credit, like any longstanding Scotia Bank customer.

“You are awarded all the rights and privileges as someone who opened an account directly with us. Not because it is a transfer you are regarded differently,” a loans officer said in response to probing about whether or not these transferees are placed in a category by themselves.

“That is why we go through the same progression as we do with a mortgage being requested directly from us. So that when you are accepted, you become part of the Scotia family,” she added.

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The officer said this is done in order to not create the notion that the bank is unfairly attracting business. An unfair move like that, she believes, would do more harm than good for the bank as the improper screening of customers could land the bank in trouble.

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