Concerns and alternatives

Re: Consultation on the Proposed Competition Act 2026

Dear Minister,

I am writing to object to the proposed Competition Act 2026 and the related proposal to transfer consumer affairs functions to the Competition and Regulatory Authority (CRA).

While I support fair competition and consumer protection, I do not believe the proposed legislation is the right solution for Bermuda. The proposal would create a large and complex regulatory framework to address problems that occur only rarely in Bermuda's small economy.

The consultation document relies heavily on a small number of past transactions, particularly in the grocery and health insurance sectors, as justification for a permanent competition regime. However, mergers of this type are infrequent in Bermuda. Creating a Competition Division, Healthcare Competition Unit, merger review system, market studies program, enforcement functions, and appeals processes to address occasional transactions is likely to create significant costs while providing limited benefits.

The proposal also appears to contradict its own recognition that Bermuda is a small island economy where some market concentration is unavoidable. The document acknowledges that Bermuda cannot realistically support large numbers of competitors in many sectors. In such an environment, market share alone is not evidence of consumer harm. A business may hold a large share of the market simply because the market is too small to support multiple competitors.

I am particularly concerned about the proposal to transfer non-housing consumer affairs functions to the CRA. Consumer Affairs currently serves as a dedicated office that receives consumer complaints and works directly with the public. Under the proposal, the CRA would be responsible for telecommunications regulation, electricity regulation, merger reviews, competition investigations, market studies, price monitoring, consumer complaints, and other enforcement activities.

This transfer is likely to slow responses to consumers rather than improve them. Consumer complaints often require quick attention and practical solutions. There is a real risk that complaints from ordinary consumers will receive less attention while the Authority focuses on complex investigations, court disputes, merger applications, and policy studies. A larger bureaucracy does not necessarily result in better service.

The consultation document also places considerable emphasis on consumer complaints regarding pricing. However, complaints about prices can already be made to Consumer Affairs. Consumer Affairs already performs consumer protection and price-monitoring functions. The proposal does not explain how moving these complaints from one office to another will lower prices or improve affordability.

In reality, many of Bermuda's high prices are caused by factors that competition law cannot solve. Import costs, shipping costs, energy costs, labour costs, taxes, duties, housing costs, and Bermuda's small market size all contribute to the cost of living. Creating a new competition regulator will not change many of these underlying factors. The proposal risks creating expectations that it cannot realistically meet.

I am also concerned that the Government has not provided a detailed cost-benefit analysis. The proposal would require new staff, external experts, legal support, market studies, enforcement proceedings, decision panels, and expanded administrative functions. Before creating a new regulatory regime, Government should clearly demonstrate that the expected benefits to consumers will exceed the costs imposed on taxpayers and businesses.

Another concern is the impact on investment. Businesses and investors need certainty when making long-term decisions. The proposed legislation would allow mergers to be blocked, subjected to conditions, reviewed after completion, or investigated under transitional powers. These powers may discourage investment by increasing regulatory uncertainty in an already small market.

I also object to the proposed power to review mergers that were completed before the legislation comes into force. Businesses completed those transactions in accordance with the law that existed at the time. Reviewing lawful transactions after the fact is unfair and creates uncertainty regarding the finality of business decisions.

The proposal further includes a ministerial exemption power allowing agreements, conduct, or mergers to be exempted on public policy grounds. This raises concerns about political influence and undermines confidence that decisions will be made solely on objective legal and economic criteria.

Rather than creating a broad competition bureaucracy, I believe a simpler and more proportionate solution would be to enact legislation granting the Attorney General authority to challenge mergers before the Supreme Court.

Such legislation could:

1. Require notification of mergers above specified thresholds.
2. Authorize the Attorney General to investigate qualifying transactions.
3. Permit the Attorney General to apply to the Supreme Court to block a merger where there is evidence that it would substantially lessen competition or harm consumers.
4. Allow the Court to approve, prohibit, or impose conditions on a merger based on the evidence.
5. Preserve judicial independence and due process.
6. Avoid the cost of creating a permanent competition enforcement bureaucracy.
7. Focus government intervention on the small number of mergers that genuinely raise public interest concerns.

This approach would directly address the stated concern regarding major mergers while preserving Consumer Affairs as a dedicated consumer service and avoiding the creation of a large new regulatory structure.

For these reasons, I respectfully oppose the proposed Competition Act 2026 in its current form and encourage the Government to consider a narrower and more cost-effective legislative alternative centred on Attorney General enforcement and judicial oversight of major mergers.