Proposed N.J. legislation ‘anti-competitive?’

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03/03/2011

TRENTON, N.J.—Hot on the heels of the New York licensing flap over Article 6-E, proposed legislation in New Jersey that looks to restrict doing business in the state to alarm companies that have business offices here has at least one alarm company owner concerned.

“This is being done quickly and quietly,” said Peter Rogers, COO of McLean, Va.-based FrontPoint Security of A-2394. “What it really comes down to is making life more difficult for any out-of-state competitors. Think of all the companies in New York or Pennsylvania, or Delaware and even farther afield who are following all the rules, but suddenly they can’t operate. It’s anti-competitive and bad for consumers.”

FrontPoint is licensed to do business in New Jersey, but maintains no brick-and-mortar presence there.

The NJBFAA said it proposed the legislation to protect consumers from out-of-state companies that could potentially operate “under the radar.”

“The benefit from this is that it will substantiate the regulations to make sure that permitting for jobs is being properly done by a business qualifier or a licensed individual and to provide onsite supervision,” NJBFAA president Rich Trevelise said. “That way if an issue comes up on a project it can be addressed in a timely fashion by an onsite license holder.”

Eric Pritchard, attorney with Kleinbard Bell & Brecker, said A-2394 is not groundbreaking.

“States are permitted to regulate these sorts of activities, and in fact many do regulate security and fire services,” he said. “Many states have requirements like that being considered in New Jersey.”

The legislation continues to go through revisions and gain momentum. Particularly onerous according to Rogers is a recent amendment that removes a clause allowing out-of-state companies to do business if they at least maintain a power of attorney in New Jersey.

What will be the impact of this legislation if it passes?

“The question becomes, what’s driving this. And from an outsider’s perspective this will be viewed as an anti-competitive effort on the part of those within the state. The impact will certainly be that it lessens competition,” Pritchard said. “Part of what I’ve been told is that what’s driving this is regulating the summer programs. I have tell you, if I represented a summer model company that was trying to do business in New Jersey, I don’t think it would be that difficult to comply with this law. I think this will lead to office-sharing arrangements—which exist in other states already—where a number of alarm companies get together and rent space or pay a service fee to a service provider to act as the local office. It happens in all industries all the time in all states.”

What’s next for A-2394?

“We passed the first milestone in mid-February when it made it through the assembly,” Trevelise said. “The next step is for it to go to the Senate.” The NJBFAA said it welcomes all comments from the industry.