The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Democratic National Alliance (DNA) leader yesterday urged the Government to tackle “unfair competition” in the pharmaceutical industry caused by wholesale drug suppliers also owning retail outlets.

Branville McCartney, whose family owns Wilmac’s Pharmacy, was careful not to call any names as he told Tribune Business it “happens quite often” where pharmaceutical distributors favour their own retailers over independent merchants such as his own.

Asserting that this typically occurs with drug and medicine “availability, in particular”, and product selection, he backed the Davis administration’s stated intent to introduce antitrust and competition laws in The Bahamas and said: “Everyone must begin at the starting line otherwise it’s not fair.”

Focusing on industries he and his family have businesses in, Mr McCartney told this newspaper: “In the pharmaceutical business, unfortunately, we have wholesalers who are also retailers. That’s really unfair competition if you have wholesalers who also have retail businesses. That’s certainly unfair competition. That’s what’s going on now in the pharmaceutical business.”

Pointing to product availability and selection as particular challenges for small, independent pharmacies, he added: “I’ll give you an example. When the wholesaler says they are out of a particular product they are the sole distributors for, their retail stores may have it but no other pharmacies. That’s not fair. That’s absolutely not fair.

“That happens quite often as you try to purchase a product, a drug, and you can only get a limited supply of it when it is not sufficient to accommodate your customers. They [the Government] may wish to look at this situation now, which is not fair, and adjust it.

“I more than welcome competition, more than welcome that for the businesses I’m involved in. That just causes you to be more on your game in your particular business but it ought to be fair across the board. Everyone must start at the beginning line, the starting line, otherwise it’s not fair,” Mr McCartney continued. “I would encourage the Government to look at the status quo now and make it fair across the board.”

Prime Minister Philip Davis KC, in unveiling the 50 percent VAT rate cut to 5 percent on most food items, and at subsequent events has repeatedly sought to blame high prices and the cost of living on a lack of competition in key Bahamian industries. He and members of his government have also repeatedly promised to introduce competition legislation that has been talked about for almost two decades.

Addressing the recent Bahamas Business Outlook conference, Mr Davis asserted: “For too long, we’ve lived in a system where hard work doesn’t guarantee progress, where opportunities are blocked, and where it feels that the wealth of this nation belongs to a few when we need it to be available for all who want to achieve it. This is a multi-generational legacy issue for us.

“Too much of our economy has historically been controlled by a small group of our society, and our economic framework serves the interests of a few at the expense of the many. High prices, inefficiency and a lack of real competition in certain industries have created artificial barriers to entry in our economy. It has created a system where consumers are overburdened, businesses are boxed out and progress is stifled.

“We are going to dismantle those barriers, no matter how entrenched they are. We are putting in place strong anti-competition laws to ensure that prices to the consumer are more fair, and artificial barriers to entry are dismantled. No more unfair practices that crush small businesses before they even have a chance to grow and get established.”

Mr Davis and his government have also repeatedly promised to intervene in the supply chain to “cut out the middle men” they assert are making Bahamian consumer prices unnecessarily high. However, Mr McCartney told Tribune Business he is “curious” to see how the Davis administration will achieve this objective as he warned it against “stepping on the toes of private enterprise’.

The Halsbury Chambers managing partner challenged how the Government can “dictate” who Bahamian merchants and wholesalers buy from. And joining Rupert Roberts, Super Value’s president, in questioning whether the Government is seeking to “eliminate” Bahamian wholesalers, he also warned against causing massive supply chain upheavals and forcing local companies to break long-established supplier contracts.

“The Government has indicated they are going to try and cut out the middleman. It’s good in theory but I’m just curious to see how they’re going to do it,” Mr McCartney told this newspaper. “Merchants, retailers, they are private entities. Is the Government saying they are going to dictate to private entities who they are going to purchase from?

“It’s a good idea what the Government is trying to do, and I look forward to seeing how it’s going to be done. I can’t tell you how. Is it taking away or stepping on the toes of private enterprise in terms of the retailers determining who they want to purchase from?

“Governments are not good at being in business and that’s a concern,” Mr McCartney added. “That’s a grave concern, and then again you don’t want the Government to be in a position where they dictate who the retailers or merchants purchase from. Those supply chain relationships are established by contract.

“Those distributorships, depending on their contracts, if the Government implements something and they have to renege or get out of those contracts they could be penalised. It depends on the contractual relationships they have with suppliers and where they have to take their supplies. It could cause a tremendous amount of hardship. A lot goes into it. I’m very curious to see how the Government goes about it.”

Reiterating that tackling the cost and ease of doing business in The Bahamas must be two government priorities, Mr McCartney backed the recent 50 percent VAT rate cut on most food items but warned that price control inspectors will be “pivotal” in ensuring the tax savings are passed on to hard-pressed consumers and families.

“They have to do something for persons to really survive in this country,” he told Tribune Business. “It’s beyond ridiculous what people have to pay just for food items, necessities just to live. The reduction of VAT down to 5 percent for foods is a start.

“What needs to be done with that is to ensure merchants comply price control. You don’t want, on one end, where the Government reduces VAT but merchants keep their prices high. That would knock out what the Government did with the VAT reduction.

“Price control is going to have to play a pivotal role in ensuring merchants comply and don’t up their prices even marginally. That will certainly undo what the Government is trying to do. That’s my concern with that. Who loses at the end of the day? They consumer. They end up paying if price control don’t take a handle and ensure the retailer, the merchant is complying. We’re back to square one.”