CUA is asking: How fair is the Aruba Fair Trade Authority?

Last Friday was World Telecom Day, and the state-owned and controlled telecommunications company, SETAR, spent good money in the media showcasing its bundles and vision for the future. However, that paid media exposure was overshadowed by a press conference held by the trade organization CUA, Commerciantenan Uni Aruba. The CUA questioned both the competition practices of SETAR and how fair the Aruba Fair Trade Authority,  AFTA, really is or will be vis-a-vis the unfair competition practices of the SETAR. In this week’s column, I will share CUA’s position and questioning of the AFTA. Is the AFTA’s only mission to go after the private sector, or will it also investigate and, if need be, take enforcement actions against SETAR and other state-owned and controlled enterprises? In other words, how fair is the Aruba Fair Trade Authority?

AFTA

In a previous column, I wrote about the introduction and the role of AFTA. Aruba’s new antitrust law, effective January 1, 2024, marks a significant shift towards a competitive and fair economic environment influenced by European and Dutch frameworks.  Key aspects include defining market dominance and competitive neutrality, establishing the Aruba Fair Trade Authority (AFTA) to enforce these laws, and ensuring fair competition across all economic activities. This reform aims to foster transparency, innovation, and growth in Aruba’s economy.

WILL THE AFTA BE IMPARTIAL TO STATE-OWNED OR CONTROLLED ENTITIES?

As CUA stated last week, a crucial question remains: will the AFTA impartially enforce the new antitrust laws against state-owned entities? More often than not, state-owned entities enjoy many privileges that private companies do not get. These privileges allow these state-owned companies – aided by the state – to violate by-pas or circumvent even the most basic government procurement rules. In return, these companies make lots of money, absorb “friends and family” onto payroll or contracts, and pay healthy dividends to the government. Given past instances where government-related bodies have had these substantial undue advantages, AFTA must demonstrate impartiality to maintain market integrity and trust. Fairly applying these laws, even against government institutions, will test AFTA’s commitment to fostering a competitive environment.

EXAMPLE

One of the most brutal forms of granting undue advantage and violating government procurement laws is when the Minister of Finance Juan David Irausquin, supported by the entire Mike Eman Cabinet, signed a ministerial decree published on August 22nd, 2014, granting SETAR the exclusivity to provide all telecommunication services to the government (see pages 12 to 14). That decree, as unbelievable as it may have been, was merely a formalization of an ongoing practice to benefit the state-owned company, limit competition, and maximize dividends.  Since then and since the Irausquins and the Eman’s have left office, the practice has continued under the prime ministership of Evelyn Wever-Croes. Ask any IT manager or director of any government department if they are allowed to procure telecommunication services from any company other than SETAR. You can search long and hard, but you won’t find any.

BACK TO CUA

CUA announced that SETAR acquired ITP Caribbean. ​​ITP Caribbean is an IT consulting and software development company specializing in administrative business processes with years of experience in consultancy, implementation, training, and software development. Founded in 1997 in Aruba, ITP Caribbean has become a key player in the automation market. With a strong regional focus, they offer IT consulting, software development, and network services. CUA’s concern is that by adding ITP to its portfolio of companies, it will not only have a dominant position in the ITP market but also be enhanced and multiplied by the fact that SETAR is privileged by the government. The fair is clear: other IT or ICT companies simply can’t compete with state-owned or controlled entities. Under this umbrella, all government departments must follow suit or at least understand that the “BOSS ” expects them to buy exclusively from ITP. SETAR already owns the local TV station and cable company, and I hear it also has shares in a cybersecurity company. With every acquisition that is funded by tax payer’s money as well as consumption of services paid to SETAR by the business community and individuals, SETAR is getting funding to go on a shopping spree and acquire businesses that will directly compete against the same company that pay SETAR for services but that will be squeezed out when SETAR steps into their field.

CUAs QUESTION

CUA’s burning question to the AFTA is, will the AFTA call it down the middle and look seriously at the practices of SETAR, or will they turn the other cheek and go after the local private businesses? Will SETAR enjoy yet another benefit by being state-owned and be a priori exonerated from scrutiny by AFTA? CUA wants to know. The community wants to know. The credibility and the rights of existence of the AFTA hinges on this essential yet pivotal question. The President of the board of AFTA, Martijn Snoep, who will be lecturing on May 20th, 2024, at the University of Aruba, may very well be the first to address this question and clarify it to the community.

ELMAR

After the CUA spoke out, the minister of energy confirmed what the CUA had anticipated. The minister now wants the state-controlled power distribution company  ELMAR to finance or lease solar panel systems to the public, thus competing directly with lenders and solar companies that offer financing on their systems. Don’t be surprised if ELAMR acquires the strongest privately owned solar company for this purpose. Then, of course, all government departments and companies will have to buy from ELMAR exclusively. 

UNFAIR BANKING PRACTICES

Let this column not be all about SETAR and the burning question to AFTA. Let’s look at some examples identified in the banking sector in the EU, known as “Tying.” What is tying? According to an EU report, “tying” occurs when two or more products are sold together in a package, and at least one of these products is not sold separately. Pure bundling occurs when none of the package components is available separately, and the components are offered in fixed proportions. The same report mentions some examples:

“..The extent of tying practices was found to be widespread conduct across EU Member States. The inquiry focused in particular on five types of practice: (i) mortgages and current accounts, (ii) mortgages and the obligation to pay salary into current accounts; (iii) mortgages and life insurance, (iv) loans (other than mortgages) and current accounts and; (v) loans (other than mortgages) and the obligation to pay a salary into a current account….”

In Aruba, we only have a handful of banks. That is a fact. Ask yourself if you have ever experienced any of the aforementioned examples in your years of banking with these banks. If the answer is yes, you have been “tied”. If yes, you may have been tied in the past and may even be tied today. If you want to do something about this or verify if a harmful practice is happening, contact the AFTA via the tip-off online form. I am pretty sure the AFTA will keep your name confidential, but ask them just in case you are concerned about being brown under the bus or being exposed. Tipping-off makes sense only if the AFTA is fair in acting against the government companies, if it is not, then why should we bother typing off against private companies?

BUNDLE OR TYING?

Wait, but did I not see an ad published by the state-owned telecommunications company promoting packages under the name of “home bundle” where it is so kind as to “allow” you to choose between either (i) voice and TV or (ii) voice & internet; or (iii) TV & internet. This looks like “tying” because two or more products are sold together in a package, and at least one is not sold separately. The president of CUA mentioned this specific example in his res conference and mentioned that if he wanted to “untie” and ask for only one of the products, SETAR would charge him more money. If so, I am curious to see what the AFTA thinks of this practice. How many senior citizens have been forced to pay for the Internet while they only want to watch TV? How many parents had to pay for TV when their kids only cared for the Internet? If I am lucky enough and the AFTA reads this column, perhaps they can address this matter on their FaceBook page, where they actively promote their role and educate us on competition laws aspects. 

CLOSING

CUA’s question is very pertinent. The question deserves to be answered so that the community can ascertain the role of AFTA. 

• Will the AFTA be impartial, or will the “independent”/”Zelfstanding bestuursorgaan” let itself be guided by the government’s interest? 
• How will the minister of Economic Affairs and Telecommunications, who is both the minister of AFTA and SETAR, act or react if the AFTA starts an investigation on SETAR that could potentially lead to exposing unfair practices by the very own state-owned company? I am confident the minister will do the right and ethical thing, but I have been proven wrong before by (too) many politicians.
• Will the AFTA dodge the issue with a Keannu Reeves-like bending in The Matrix to avoid the bullets? 
• Will the AFTA cite things like: “other priorities”, “under-staffed”, “limited resources”, “too complex” etc., to shy away from the Goose that lays the Golden Eggs for the government? 
• Will AFTA apply the right standards and do the right thing?

Time will tell. Perhaps AFTA and the minister will. Let’s hope they don’t contradict each other if the latter is the case.

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