WILLEMSTAD – The Fair Trade Authority Curaçao (FTAC) intends to order PADI Worldwide to stop enforcing exclusivity conditions that prevent affiliated dive centers and resorts on Curaçao from offering training and certifications from competing diving organizations.
The proposed measure forms part of a draft decision following an investigation triggered by a complaint from Bahia Apartments & Diving. The FTAC published the substance of its proposed decision in the Landscourant.
At the center of the case is a provision in PADI's Retail and Resort Association Membership Agreement. According to the FTAC, a PADI Dive Center or Dive Resort is generally required to offer only PADI training and certifications. A center that also provides courses from another organization, such as Scuba Schools International (SSI), could lose its PADI classification and associated commercial benefits.
The competition authority has provisionally concluded that the arrangement restricts competition on Curaçao by making it more difficult for competing certification organizations to gain access to established dive centers.
Under the proposed binding instruction, PADI would have to inform all affiliated dive centers on Curaçao in writing that they may offer training and certifications from other recognized organizations without losing their PADI status solely for that reason.
PADI would also be prohibited from requiring prior approval before a dive center offers competing programs. Membership agreements, standards, policies and other applicable rules would have to be amended accordingly.
The FTAC also wants to prevent PADI from replacing the existing restriction with other conditions that would effectively produce the same exclusivity.
According to the regulator's preliminary analysis, PADI holds an estimated 80 to 84 percent of the Curaçao market when measured by the number of diving certifications issued annually.
That is significant because Curaçao's competition legislation establishes that a company with a market share above 60 percent is, in any case, considered to have an economic dominant position.
The FTAC also considers PADI commercially difficult for many local dive operators to replace. Many tourists specifically request PADI courses, while others arrive on Curaçao after already beginning a PADI eLearning program.
Leaving the PADI network altogether could also mean losing the right to use the PADI brand, inclusion in its Dive Shop Locator and access to marketing and support programs.
According to the FTAC, those circumstances make it more difficult for dive centers simply to switch to another certification organization. The exclusivity provision could consequently restrict organizations such as SSI, NAUI and SDI/TDI from competing for business through existing PADI centers.
PADI has defended its conditions by arguing, among other things, that they help maintain quality standards, prevent consumer confusion and protect the company from competitors benefiting from investments it has made in its brand and marketing.
The FTAC has provisionally concluded, however, that PADI has not sufficiently demonstrated that a general exclusivity requirement is necessary and proportionate to achieve those objectives.
The regulator stressed that no final finding of a violation has yet been made. PADI, Bahia and other interested parties have until October 30 to submit their views before the FTAC reaches a final decision.
The draft decision and non-confidential case documents have been available for inspection at the FTAC office at Pietermaai 6 since September 18 for a six-week period.