AFTA’s Performance in 2024: Is it Meeting Expectations?

The Aruba Fair Trade Authority (AFTA) has completed three-quarters of its operation, but its effectiveness and priorities deserve scrutiny. I’ve written about AFTA before, including a detailed analysis of Aruba’s new antitrust law here and the intervention in certain practices of (ceratin) realtors in Aruba here. The question now is: Has AFTA lived up to its mandate?

Real Estate: Small Wins, Big Questions

One of AFTA’s main achievements so far has been in real estate. The Association of Aruba Realtors was forced to stop certain practices that could violate competition laws. However, this mainly affects a narrow group: brokers and the small percentage of the population who can afford to buy property or those purchasing second homes. For most Arubans, this action doesn’t seem to provide any tangible benefit.

The broader question remains: Why is AFTA focusing on real estate when larger sectors could benefit from more attention? Real estate represents a small part of the population’s financial reality, whereas many government-owned or controlled enterprises affect everyone.

AFTA’s Seemingly Lack of Action Raises Concerns

In May, Commerciantenan Uni Aruba (CUA) raised concerns about SETAR, the state-owned telecom provider, accusing it of monopolistic practices and calling on AFTA to investigate. AFTA’s response was immediate – it issued a press release promising to meet with SETAR. However, four months later, no follow-up, update, or outcome was provided. SETAR has continued to operate without any visible changes to its market dominance.

In its original press release, AFTA emphasized the need to be cautious due to its limited resources and capacity. AFTA also stated that the “Mededingingsverordening” (Antitrust Law) is new, and its immediate focus is on educating businesses through associations. But does this caution and hesitation point to a deeper problem?

This raises questions of bias: Is AFTA unwilling to challenge state-owned enterprises like SETAR? Despite its claims of independence, AFTA’s leadership has close ties to the Minister of Economic Affairs, who oversees SETAR. If enforcing competition law on a dominant state enterprise could benefit the island, why isn’t AFTA acting more decisively? Especially since state-owned telcos globally have been forced to adapt to their behavioral positions because of their dominant positions.

Healthcare: Another Area of Concern

Another sector that affects every Aruban is healthcare, yet AFTA has shown similar reluctance to address it. While the healthcare system is riddled with concerns about monopolistic tendencies and unfair competition, AFTA’s intervention has been minimal. Time will tell if they will take meaningful action, but their caution is concerning.

If AFTA continues to hesitate in sectors that impact the broader population, it risks becoming a body that only handles niche issues while avoiding areas where competition is crucial for everyone’s well-being.

AFTA presents itself as a small organization with limited resources, and its challenges go beyond just budgetary constraints. Staffing is a major issue as well. The most experienced professional on their team has retired, and the remaining legal staff—while holding law degrees—lack significant experience in the private sector. This absence of proven track records in high-stakes, competitive environments is concerning, as such expertise is crucial for effectively enforcing competition laws. As I’ve seen in government, law graduates without private sector experience often don’t attract attention from headhunting firms seeking top legal talent.  This gap in experience within AFTA raises severe doubts about their capacity to handle more substantial investigations, particularly those involving large, government-controlled entities.

If AFTA’s message to the public is that they are still learning the ropes due to their staffing challenges, it’s easy to see why their actions might fall short of expectations. With limited expertise and experience, it’s difficult for them to address more complex cases that could benefit the broader community.

AFTA’s Food Price Study: Vague 

Earlier this month, AFTA published the results of a study on food prices, comparing Aruba with the Netherlands, Curaçao, and the United States. The findings were predictable: food is more expensive in Aruba. AFTA spend time and resources to tell is what we already knew. Despite this even the report shows some inconsistencies. Some retailers pointed out that the reports fails to account for certain food pricing that is more or less similar compared to the USA and the Netherlands and some items, like Dutch cheese, which is cheaper here than abroad. AFTA attributed the high prices to factors like import dependency, transport costs, and limited competition in the logistics chain. Exclusive distribution agreements between importers and wholesalers were also highlighted as potential price drivers.

While some of AFTA’s conclusions are factually or mostly correct, the report’s language was vague. Instead of offering clear solutions, the study was filled with “maybes” and “possiblys.” For example, AFTA acknowledged the existence of parallel imports – unregulated goods entering the market – but failed to address the public health risks posed by unmonitored shipping conditions for food products. Parallel import also prevents wholesalers from being able to control or manipulate prices.

Moreover, the study gave the government a “free pass” by downplaying the impact of import duties and customs valuation (“douane waarde”), significantly inflating food prices. By focusing on private sector practices while glossing over the role of government policies, AFTA once again raised concerns about its bias toward protecting government interests.

Conclusion: AFTA’s Priorities Seem Misplaced

While AFTA’s resource limitations are a legitimate concern, they should not serve as an excuse for inaction, particularly in sectors that affect the entire population. The authority’s reluctance to address significant issues involving state-owned enterprises, combined with its vague reports, lack of tangible action and focus on public relations efforts, suggests that AFTA’s priorities may be misplaced.

If AFTA aims to foster fair competition in Aruba, it must move beyond small victories in niche markets and tackle the more significant, impactful cases that affect everyone. Failure to do so risks diminishing public trust and rendering AFTA a toothless organization more concerned with optics than outcomes.

I support the AFTA and its mission, but this doesn’t prevent me from being critical and informing you – the community. Thanks for reading this week’s column! Don’t forget to visit www.lincolngomez.com for more insights and updates on Aruba’s economic and legal landscape. See you next week!