Professor Emeritus Andrew Downes

Dominant businesses in small Caribbean economies should face scrutiny over whether their prices are justified, economist Professor Emeritus Andrew Downes said, warning that limited competition must not become an opportunity to exploit consumers.

Speaking during a panel discussion at the 28th Sir Arthur Lewis Memorial Lecture, Downes said the region’s small markets may only have room for one or two suppliers in some sectors.

The central concern, he explained, is whether those businesses abuse their position.

Drawing on his experience with the Barbados Fair Trading Commission, where he served as deputy chairman, Downes said companies had been required to explain their prices or proposed increases.

“We asked the companies to justify the increase … or the price that you were charging in the market,” he said.

He said that scrutiny involved examining whether costs reflected what businesses needed for production and whether their profit margins were reasonable.

Downes, also a former chairman of the CARICOM Competition Commission, acknowledged that having several competing suppliers may not always be practical in a small economy. In some cases, dividing a limited market among too many businesses could waste resources.

However, he argued that a dominant position should not allow a company to raise prices without justification.

Fellow panelist Carissa Rudolfo similarly said regulators should examine how businesses operate, what they control, who depends on them and whether the benefits of their market position reach consumers.

She argued that market share should be one factor in assessing a company’s influence, alongside its conduct and the interests of the people it serves.

The discussion followed Downes’ lecture on “Competition, Regulation and the Caribbean’s Cost of Living Problem,” which examined how imported costs, domestic charges and business practices affect household spending.

Downes said businesses need to earn a return, but effective oversight can help ensure that consumers face reasonable charges.

This article was originally published by Antigua News Room. Read the original article here: Dominant businesses must justify prices, former competition chairman says.