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Gas Pain

Gas Pain
December 14
12:37 2019

Gas Pain

Major Lloyd Jones (Ret’d)

“Antitrust laws are regulations that monitor the distribution of economic power in business, making sure that healthy competition is allowed to flourish and economies can grow. Antitrust laws apply to nearly all industries and sectors, touching every level of business, including manufacturing, transportation, distribution, and marketing.

Antitrust laws prohibit a number of business practices that restrain trade. Examples of illegal practices are price-fixing conspiracies, corporate mergers that are likely to cut back the competitive fervor of certain markets, and predatory acts designed to gain or hold on to monopoly power.”
— Investopedia, https://www.investopedia.com/terms/a/antitrust.asp

Antitrust Laws: Keeping Healthy Competition in the Marketplace
Antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing.
www.investopedia.com
accessed December 9, 2019

In June of 2019 the Barrow administration, by statute, created a private sector monopoly by granting exclusive rights to the National Gas Company (NGC) for the importation of LPG. In what is supposed to be an open market, the NGC is an aberration!

The Belize Chamber of Commerce and Industry (BCCI) as one of the leading private sector organizations did not come down decisively and resolutely against this government-created monopoly as it should have done. Instead, through its Business Perspective published in the Reporter, one gets the impression that the BCCI thinks the NGC is a good thing and that its creation somehow provoked a downward trend in the retail prices of LPG.

It is now clear that the downward trend in retail prices is not the result of “competition” as the BCCI advances but rather a practice known as “predatory pricing:” one of the unintended consequence of the Barrow-induced realignment of the LPG supply chain. Or was it?

The current importers, having lost their dominant position as suppliers of LPG (by direct government interference); set out to reposition themselves in the retail market. In order to do so, we are told that they began to undercut the rest of the retailers. The importers made a fatal error when they implemented such a strategy and by their own miscalculations they gave Mr Barrow the pretext he needed to establish a floor for the sale of LPG.

You should recall that when Mr. Barrow wanted to pry BTL away from Mr. Ashcroft he first discredited him and then he demonized him. He had many of us deriding the “white man.” Having turned public opinion against Mr. Ashcroft, he took BTL in our name and made us feel as if we had won. A decade on, how many Belizeans now feel as if we own BTL? The promised benefits of nationalization never materialized and it never will because BTL was never about us.

Since November a number of parliamentarians and UDP operatives have been demonizing the Mexican importers. One senior Member of Parliament even referred to them as a “Mexican Cartel.” However, since coming to power in 2008 the Barrow administration did nothing to break up the oligopoly (the “cartel”) that existed then. The Mexicans were able to operate in the three segments of the LPG market: wholesale, distribution and retail, without proper antitrust oversight.

A robust antitrust regulation introduced in 2008 would have by now corrected all antitrust activities in the LPG market and would have provided real protection to the Belizean consumer. Instead, 11 years after coming to office Mr. Barrow replaced an oligopoly with a monopoly!

It is therefore not unfair to say that the Supplies Control (Amendment) Bill, 2019 was not about the Belizean consumer; it was about the NGC. December 4th was a choreographed show because it did not establish a real and impactful antitrust framework. The LPG industry is not the only place where there are predatory business practices and GOB has done naught to address such practices in other sectors. Why is this particular instance of predatory pricing of such importance?

If it was that the Barrow administration was genuine in its attempt to protect the Belizean consumer then they would have presented a properly drafted, all-encompassing set of antitrust regulations. If Belize had proper antitrust legislation, the NGC would have crashed up against such regulations and would never have been able to come into existence in the monopolistic manner that it did.

There are no angels in this LPG market and the Belizean people should know that. Think back to 2011 when it was discovered that retailers were swindling the consumers by shaving off as much as 30% off the sale of 100 pounds tank. Did not GOB pass the National Metrology (LPG) Bylaws, 2011 which required LPG sales by weight? In 2019 they still sell us LPG by metered trucks – where is GOB and its enforcers?

In 2011 it was Belizeans cheating Belizeans. Now in 2019 when the Mexicans are bringing “relief” (whatever their motive) to consumers it is those same Belizean retailers who are now crying foul and looking for sympathy from the very people they shafted in 2011.

The real winner on December 4th was the NGC, not the consumer. The NGC can now predict its minimum earnings more accurately because of the floor placed by GOB. The Supplies Control (Amendment) Bill, 2019 has effectively de-risked the business model of the NGC, making it far more attractive to financiers!

There is one other dimension to this saga that we must be mindful of. Unlike Belize, Mexico takes care of Mexicans and we should now be vigilant about the trade countermeasures that Mexico may undertake in support of the Mexican importers.

If the Mexican importers are as big as the government mouthpieces have made us believe, it is not inconceivable that they may turn to their government for assistance. Mexico, in case you did not know, has always been one of our biggest supporters in the face of the ultra-bully Guatemala and Mexico presents a huge market for Belizean exports.

If the Mexicans believe that the Supplies Control (Amendment) Bill, 2019 and the NGC constitutes a mistreatment of their citizens we could be in for some real gas pain!

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