Introduction
New Aruba antitrust laws were introduced on January 1st, 2024 (AB2023 no. 51). The Competition Ordinance Aruba (COA) aims to prevent the undesirable economic effects of antitrust practices by companies in the Aruba market economy, shown to be present in the supermarket and banking sector, amongst others.
Fair competition between companies guarantees optimal prices for consumers, an increased living standard and an optimal business and investment climate, amongst others.
COA aims to:
- prohibit agreements or coordinated behaviors between companies that aim to hinder or restrict competition (cartel prohibition)
- prevent the abuse by companies of their dominant position in certain markets
- supervise the concentration of companies (concentration supervision)
EU antitrust legislation and COA
The European antitrust legislation is regulated in (amongst others) articles 101-109 of the Treaty on the Functioning of the European Union (Verdrag betreffende de Werking van de Europese Unie, VWEU).
EU antitrust legislation is not applicable to Aruba due to its status of an Overseas Country and Territory, OCT (Landen en Gebieden Overzee).
However, article 60 – Title III, Trade Related Areas – of the Overseas Association Decision, 2013/755/EU (LGO-Besluit) instructs OCT’s to implement antitrust legislation. Aruba complied herewith by introducing COA which is largely based on EU antitrust laws.
Aruba Fair Trade Authority (AFTA)
Supervision on the compliance with COA is carried out by the Aruba Fair Trade Authority (AFTA). AFTA (www.afta.aw) is an independent administrative body (zelfstandig bestuursorgaan) with a status similar to that of the Aruba Tourism Authority and Serlimar.
AFTA may, insofar as this is reasonably required for the performance of its duties, request information, request book inspections, enter all areas including residences, amongst others.
AFTA may furthermore impose exceedingly high administrative fines on offenders.
In March 2024, the Association of Aruba Realtors retracted its commission guidelines following a meeting with AFTA. The guidelines restricted price competition between realtors which was in violation of COA (article).
Cartel prohibition
Core principle of cartel prohibition: independent policymaking
Companies must independently decide on policy (zelfstandigheidsvereiste). This is the core principle of the cartel prohibition. Any (in)direct contact between companies that influences the market behavior of a competitor or that informs them about decisions or considerations regarding their own market behavior is prohibited.
Cartel agreements and the 25% redundancy threshold
Agreements and coordinated behaviors between two or more companies that aim to restrict competition in the Aruba market economy (hereinafter: cartel agreements) are prohibited and null and void unless the combined market share of the companies involved does not exceed 25%.
“Horizontal” and “vertical” cartel agreements
Cartel agreements between companies that compete with each other, for instance between producers, wholesalers, or retailers, are called “horizontal” cartel agreements.
Cartel agreements between a supplier and a distributor (retailer, agent or franchisee) are called “vertical” cartel agreements, for instance a supplier that requires the distributor to charge a fixed or minimum price (prijsbinding).
Exemption for “beneficial” cartel agreements
AFTA may grant an exemption for cartel agreements if the benefits thereof outweigh its disadvantages. The companies must submit the agreement with AFTA for approval:
- the agreement contributes to the improvement of the production or distribution of products or the improvement of the technical or economic progress
- the users of the product receive a fair share of the benefits that result from said improvements
- the agreement does not impose restrictions on the companies involved that are not essential for achieving the objectives or, which makes it possible to suppress competition with regards to a substantial part of the related goods and services
Prohibited “hardcore” cartel agreements
The following cartel agreements are always prohibited and null and void, without exception (“per se” cartel agreements):
- agreements on price fixing or fixing of other sales conditions
- agreements on tender price fixing or fixing of bidding conditions
- agreements that aim to restrict or control production or sales
- agreements that aim to split market shares
Agreements excluded from cartel prohibition
The following agreements are excluded from the cartel prohibition:
- Collective labor agreements aim to improve the socio-economic position of workers and are therefore excluded from the cartel prohibition.
- Agreements between the Aruba Government and companies that provide services of general economic interest (e.g., water and electricity) are excluded from the cartel prohibition.
Abuse of dominant position
Dominant position
A company has a dominant position in a certain market if its position prevents sustainable effective competition in the relevant market. The dominant position of the company enables it to behave independently of its competitors, customers and consumers.
Dominant position and market share
The market share of a company is indicative of the influence of the company in the relevant market but is not the only relevant factor that determines whether the company has a dominant position. Other relevant factors may be:
- the number and size of its competitors
- the fluctuation of market shares in the relevant market
- the accessibility of new competitors to the market
A dominant position is assumed at a market share of 60% or more, without the need for further assessment of the facts and circumstances by AFTA.
Abuse of dominant position
The company may not abuse its dominant position in the concerning market. Said abuse may consist of the following practices (not limited):
- the dominant company sets unfairly high prices for products or services
- the dominant company bundles products or services together. For example, the consumer buys an investment product and must also take out insurance
- the dominant company sets the product or service below cost price in order to suppress competition
- the dominant company does not sell products to certain companies
- the dominant company forbids a supplier to supply to another customer in order to force the customer out of the market
Exemption for services of general economic interest
A company that provides services of general economic interest (e.g., water, electricity) may engage into practices that otherwise would be considered abusive if these practices are necessary for the unhindered provision of the services, provided the company has requested and was granted an exemption from AFTA.
Preventive measures by AFTA
AFTA may impose certain requirements to prevent abuse of power by a dominant company. The preventive measures may be imposed for a maximum of 3 years:
- disclosure of information
- requirement to treat customers equally
- requirement to sell products and services separately
- requirement to keep separate accounts for certain products compared to other activities carried out by the company
- requirement to use reasonable conditions
Concentration supervision
Reporting requirement
Concentration of companies through mergers and acquisitions may restrict competition and must therefore be reported to AFTA, prior to effectuation. The reporting requirement is applicable if:
- the companies involved had a combined net turnover (after taxes) in the previous calendar year of more than AWG 125,000,000, of which at least two of the companies had a net turnover realized in Aruba of at least AWG 15,000,000
For banks: Instead of the net turnover, the total net income (after taxes) in the profit and loss of the previous financial year consisting of interest or similar income, proceeds from securities, commission received, results from financial transactions, other operating revenues.
For insurance companies: Instead of the net turnover, the value of the gross booked premiums (as mentioned in the Supervision of the Insurance Business Ordinance) in the previous financial year.
- Or, if the concentration of the companies involved creates or reinforces a market share of 30% (or more) in one or more markets in Aruba.
Required information
The following information must be submitted when a concentration of companies is reported:
- information about the companies involved
- information about the market(s) affected by the concentration
- information about competitors and customers of the companies involved
The reporting is published in the National Gazette of Aruba (Landscourant).
Until 2029: only reporting, no assessment
For the coming 5 years, the concentration supervision will limit itself to the reporting of proposed concentrations of companies if the threshold is met. AFTA will not assess the content of the concentrations nor block them.