Fair Trading Commission v Barbados National Oil Company Ltd

JurisdictionBarbados
JudgeGibson, C.J.,Moore, J.A.,Burgess, J.A.
Judgment Date25 February 2015
Neutral CitationBB 2015 CA 2
Docket NumberCivil Appeal 20 of 2009
CourtCourt of Appeal (Barbados)
Date25 February 2015

Court of Appeal

Gibson, C.J.; Moore, J.A.; Burgess, J.A.

Civil Appeal 20 of 2009

Fair Trading Commission
and
Barbados National Oil Company Ltd.
Appearances:

Sir Richard Cheltenham, QC in association with Ms. Shelley-Ann Seecharan and Ms. Dava Leslie for the appellant.

Mr. Roger Forde, QC in association with Mr. Frank Odle for the respondent.

Competition Law - Restraint of trade — Fair competition — Utility Regulations Law — Whether the trial judge excluded material evidence such as an appreciation to appreciate the preliminary point was based on a preliminary report from his assessment — Whether the trial judge should have consolidated the suits — Whether the action was incorrect where the action proceeded contrary to section 36 of the Fair Competition Act — Whether the Fair Trading Commission had the jurisdiction to initiate the investigation and acted in accordance with sections 5 (1) (b) of the Fair Competition and section 25 (1) of the Fair Trading Commission Act — Whether the trial judge misdirected itself in the interpretation of section 4 (6) of the Fair Trading Commission Act Cap 326B — Whether the trial judge misapprehended the applicable law, namely section 5 of the Fair Competition Act and as such erred in appreciating the findings of facts based on the law — Whether the trial judge's finding was inconsistent with the essential facilities doctrine implicit in section 16 (3) of the Fair Competition Act — Contextual or purposive approach — Abuse of dominant position — Whether the Barbados National Oil Company Ltd had violated section 16 of the Fair Competition Act — Whether Barbados National Oil Company Ltd occupied a dominant position in a given market — Electric power system — Market share — Consideration of Hoffman — La Roche v. Commission of the European Communities Case 85/76 [1979] ECR 461; [1979] 3 CMLR 221 — Unilateral undertaking — Whether there was evidence of exclusive dealing contrary to section 16(3)(g) — Essential Facilities doctrine — Whether the essential facilities doctrine existed under the Fair Competition Act.

INTRODUCTION
1

MOORE and BURGESS, JJ.A.: The appellant in this case, the Fair Trading Commission (the FTC), is a body established by the Fair Trading Commission Act, Cap. 326B (the FTCA). Its functions are stated in section 4 of the FTCA to be “to enforce the Utilities Regulation Act, Cap. 282 and any laws relating to consumer protection and fair competition which the Commission has jurisdiction to administer”. By section 4 of the Fair Competition Act, Cap. 326C (the FCA), the FTC is vested with the administration of the FCA. Two of the principal purposes of the FCA are expressly stated in that Act to be “(a) to promote and maintain and encourage competition” and “(b) to prohibit the prevention, restriction or distortion of competition and abuse of dominant positions in trade in Barbados and within the Caricom Single Market and Economy”.

2

In pursuance of its function under the FTCA in respect of fair competition under the FCA, the FTC made findings that the respondent, the Barbados National Oil Co. Ltd. (BNOCL), had abused its position of dominance in the market for the supply of heavy fuel oil (HFO) to the Barbados Light and Power Co. Ltd. (BL&P) contrary to section 16 of the FCA. BNOCL appealed some of these findings under section 36 of the FCA. Worrell J heard that appeal and made an order setting aside the FTC's findings. The FTC has brought this appeal against that decision of Worrell, J.

3

We feel bound to observe by way of introduction that this appeal is potentially of seminal importance. It is the first appeal under the FTCA and the FCA to be heard by this Court. It raises a complex of novel issues relating to the FTCA and the FCA for this Court's determination, including issues of interpretation, procedure and substantive law.

BACKGROUND
1. BRIEF HISTORY OF SALE AND SUPPLY OF HFO TO BL&P
4

On 17th June, 1976, a company called Mobil Oil (Barbados) Ltd. entered into a contractual agreement with the BL&P for the sale and supply of HFO to BL&P for the use at BL&P's power plant at Spring Garden. The agreement commenced on the date of the contract and was to continue in force for a period of five years and thereafter from year to year unless terminated by notice given by either party. This contract was subsequently acquired by Shell Antilles & Guianas Ltd. (Shell) and later by Simpson Oil Ltd (SOL).

5

On 13th December, 1979, a company called Mobil Exploration (Barbados) Ltd. (Mobil) was incorporated under the former Companies Act, 1910-7 to conduct oil exploration in Barbados. This company was a private company limited by shares. The original subscribers to the shares of Mobil were the late Jack Dear (later Sir Jack) and Dorothy Williams, attorneys-at-law.

6

By virtue of a certificate of continuance issued on 17th January, 1986, Mobil was continued under the existing Companies Act, Cap. 308 as the BNOCL. The Crown in right of its Government of Barbados owns the majority of the shares in BNOCL with the National Petroleum Corporation, a statutory body, holding a minority interest.

7

BNOCL is the holding company of the Barbados National Terminal Co. Ltd. (BNTCL). BNTCL was incorporated as a company limited by shares on 5th February, 1998. The main business which that subsidiary proposed to carry on was stated in its “Request for Name Search and Name Reservation” application to be: “(a) Purchasing of the Mobil Refinery … (b) Coordinating the supply of petroleum products on the island.”

8

After the incorporation of BNTCL and up until 2005, BNOCL pursued the business of sourcing and freighting petroleum products to Barbados. BNOCL, in sourcing refined oil products entered into an arrangement with the state owned oil refinery of Trinidad and Tobago, Petrotin. Under the arrangement, BNOCL sold locally mined crude to Petrotrin to be refined in exchange for the refined products and BNOCL received a discount on the products shipped to it for sale in Barbados.

9

Ownership of these products was passed from BNOCL to BNTCL at the ship's flange for on sale to the major oil companies (MOCs), namely Esso Standard Oil SA Ltd. (ESSO), Texaco West Indies Ltd (TEXACO) and SOL, in Barbados. BNTCL transported the products to various storage facilities, including a storage facility at Needham's Point, from which the HFO was lifted by truck. BNTCL then sold the HFO to Shell (and later to SOL) at its full cost which then transported it to BL&P to be used by BL&P to produce electricity for use in Barbados.

10

On 1st March, 2005, BNTCL met with stakeholders in the petroleum and related industries to, inter alia, update them on the status of the construction of new or additional terminal facilities at Fairy Valley and Holborn and to inform them of BNTCL's new mandate. Present at the meeting were representatives of the MOCs, the BL&P and the FTC. It is noteworthy that the minutes of the meeting record that the meeting was informed that a major project planned for the ESSO Holborn terminal involved the installation and commissioning of a new 12 inch pipeline running from that terminal to the BL&P Spring Garden power plant. However, the minutes do not record anything to suggest that it was then the intention of either BNOCL and/or BNTCL that the pipeline would be for their exclusive use.

11

On or about 8th September, 2005, the Cabinet of Barbados met and approved a proposal contained in Cabinet Paper (05) 998/MEP 1001 prepared by BNOCL (Cabinet Paper). That Cabinet Paper outlined the existing operations of the BNOCL and the BNTCL and proposed that the commercial relationship between BNOCL and BNTCL should change. It recommended that BNOCL should henceforth source and maintain ownership of the petroleum product throughout the supply chain and should pursue the competitive supply of fuel oil to BL&P and other users taking into account the implications of alternative arrangements. BNTCL should operate as a terminal facility, charging a throughput fee for refined petroleum products moved through the ESSO Holborn terminal which BNTCL leased from ESSO.

12

Cabinet agreed to these proposals.

13

By letter dated 4th October, 2005, the Permanent Secretary (Ag) of the Ministry of Energy wrote to SOL as follows:

“THE SUPPLY AND DISTRIBUTION OF PETROLEUM PRODUCTS

The Government of Barbados, cognisant of the likely effect of high oil prices on a small developing economy, is seeking to implement a number of measures aimed at mitigating this impending impact.

In this context, the Barbados National Oil Co. Ltd. will be given an expanded role in the downstream petroleum sector.

Accordingly, the Cabinet of Barbados has decided as follows:

That the Barbados National Oil Company Limited (BNOCL) should assume full responsibility for the sourcing and freighting of gasoline and diesel and that ownership of these products move from Barbados National terminal (sic) Company Limited (BNTCL) to BNOCL within the Terminal;

That BNOCL pursue the competitive supply of fuel oil to the Barbados Light and Power Company Ltd. and other users taking into account the implications of alternative arrangements.”

14

Later, by letter dated 15th November, 2005, the Permanent Secretary (Ag) of the Ministry of Energy also wrote BL&P as follows:

“SUPPLY OF FUEL OIL TO BARBADOS LIGHT AND POWER COMPANY LIMITED

I am informing that Government has decided that fuel oil will be supplied by Barbados National Co. Ltd. (BNOCL) to the BL&P Spring Garden Plant through the Esso Terminal at Holborn.

You are to note that the General Manager of BNOCL will be meeting with you to implement this arrangement.”

15

Notwithstanding this correspondence from the Ministry, the BL&P by way of a letter and tender document dated 23rd December, 2005 wrote inviting all oil companies operating in Barbados, including the BNOCL, ESSO, Texaco and SOL, to bid for the opportunity to...

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