Harmonising agricultural seed regulations across COMESA: COMSHIP Certification

COMSHIP advances bloc’s Certification Programme to next level

Announced in Lusaka by COMESA’s Assistant Secretary General in charge of Programmes, the long-awaited Regional Seed Certificates will be issued by member states’ national seed authorities, in an attempt to level the competitive playing field and establish guaranteed performance and yields of otherwise unpredictably performing seed products.  The COMESA programme requires verification that a registered seed lot in the region’s “Variety Catalogue” has been inspected to field standards and laboratory analysis.

Andreas Stargard

Andreas Stargard

“The COMESA Competition Commission (CCC) having approved no less than three major agricultural mergers over the past year (Bayer/Monsanto, Dow/DuPont, and Syngenta/ChemChina) — all of which involved significant seed production and R&D elements — the Regional Seed Certificate programme represents the next step in bringing to fruition the COMESA Seed Harmonisation Implementation Plan (COMSHIP), designed to align seed regulations within the trading bloc,” says Andreas Stargard, a competition lawyer with Primerio Ltd.  “The Secretariat’s stated goal of COMSHIP is not only to assure product quality and grow intra-bloc commerce, but also increase the extra-regional competitiveness of the trade group’s substantial seed industry,” in line with COMESA’s Seed Trade Harmonization Regulations of 2014.

COMESACCAccording to its own statements, whilst only five member countries (Burundi, Rwanda, Kenya, Uganda and Zimbabwe) have fully modelled their national seed laws on the COMESA Seed System, the group’s Seed Certification system is the first such “use and distribution of seed labels and certificates as a way of improving access to quality seeds in the region” anywhere in the world, based on a model suggested by the OECD.  The system will “impact virtually all of the approximately 130 million COMESA inhabitants, who stand to benefit, according to the group, from assured-quality improved seed production and usage, as well as a de-fragmentation of the historically rather localised, national markets for seeds,” commented Stargard.

Practically speaking, the seed certification labels will incorporate machine-readability, traceability, and security features, and will be printed in the COMESA official languages: English, French and Arabic.

COMESA to Introduce Seed Labels and Certificates to Boost regional Trade


Competition Authority approves KFC Franchise M&A with public-interest conditions

On 7 February 2018 the Competition Authority of Botswana (“The Competition Authority”) approved, with conditions, the acquisition by Bradleymore’s Holdings (Pty) Ltd (“Bradleymore’s”), which is incorporated in accordance with the laws of the Republic of Botswana (a joint venture between Vivo Energy Africa Holdings Limited and Baobab Khulisani South Africa (Pty) Ltd) of KFC franchises in Botswana, namely VPB Propco (Pty) Ltd (in liquidation), QSR Food Company (Pty) Ltd (in liquidation), Boitumelo Dijo (Pty) Ltd (in liquidation) and Greenax (Pty) Ltd (in liquidation).

The Competition Authority determined that the Proposed Transaction is not likely to result in the prevention or substantial lessening of competition, or endanger the continuity of the services offered in the market for quick-service or fast food restaurants.

Section 60 of the Competition Act No 17 of 2009 (“the Competition Act”) allows the Competition Authorities to approve a merger “subject to such conditions as it considers appropriate” and “contain such directions as the Authority considers necessary, reasonable and practicable to remedy, mitigate or prevent any adverse effects of the merger”.

Furthermore, section 61 of the Competition Act provides for either of the parties to a merger to offer an undertaking to the Competition Authority to address any concerns that may arise or be expected to arise during the Competition Authorities consideration of the notified merger and the Competition Authority may make determinations in relation to the merger on the basis of such an undertaking.

Pursuant to the provisions of section 60 and 61 of the Competition Act; the Competition Authority approved the Proposed Transaction with the following conditions:

  1. Bradleymore’s shall source a significant portion of their input requirements locally by continuing to source from existing suppliers that were engaged by VPB, provided they are YUM accredited; as well as consider sourcing from any other YUM accredited suppliers based in Botswana who are currently not supplying KFC;
  2. Bradleymore’s shall ensure that local suppliers are assisted in penetrating or meeting YUM’s standards of accreditation with the aim of sourcing from these suppliers; and
  3. The Parties shall not retrench any employees of the target entities as a result of the acquisition for a period of three (3) years from the implementation date. For the sake of clarity, retrenchments do not include: voluntary separation; voluntary early retirement; unreasonable refusal to be deployed in accordance with the provisions of the labour laws of Botswana; resignations or retirements in the ordinary course of business; terminations in the ordinary course of business; dismissals as a result of misconduct of poor performance.

In order for the Competition Authority to properly monitor compliance with the above conditions, the Competition Authority shall require Bradleymore’s to adhere to the following:

  1. Bradleymore’s shall annually (for a period of three years from the implementation date) submit to the Competition Authority, a detailed report     indicating:-
  2. Any changes to its employment records in the country and the reasons thereof;
  3. A list of its existing and new locally based suppliers (including the type of inputs they supply). This information can be captured in the supply agreements KFC has with such suppliers; and
  4. A copy of the strategy to be employed in building capacity of local suppliers in ensuring they meet YUM accreditation standards. That copy should be availed to the Authority within a period of twelve (12) months from the implementation date. The parties need to demonstrate to the Authority efforts made in identifying potential suppliers in line with their expansion strategy.

Stephany Torres, a competition lawyer, believes such a decision is indicative of the Competition Authorities’ tendency to give public interest considerations a prominent role in merger review.

In terms of section 59(1) of the Competition Act, “[i]n assessing a  proposed merger, the Authority shall first determine whether the merger (a) would be likely to prevent or substantially lessen competition or to restrict trade or the provision of any service or to endanger the continuity of supplies or services; or (b) would be likely to result in any enterprise, including an enterprise which is not involved as a party in the proposed merger, acquiring a dominant position in a market”.

In addition to considering the effect of a merger on competition, in terms of section 59(2) of the Competition Act, the Competition Authority may consider any factor which it considers bears upon the broader public interest, including the extent to which “(a) the proposed merger would be likely to result in a benefit to the public which would outweigh any detriment attributable to a substantial lessening of competition or to the acquisition or strengthening of a dominant position in a market; (b) the merger may improve, or prevent a decline in the production or distribution of goods or the provision of services; (c) the merger may promote technical or economic progress, having regard to Botswana’s development needs; (d) the proposed merger would be likely to affect a particular industrial sector or region; (e) the proposed merger would maintain or promote exports or employment; (f) the merger may advance citizen empowerment initiatives or enhance the competitiveness of citizen-owned small and medium sized enterprises; or (g) the merger may affect the ability of national industries to compete in international markets”.

Torres believes the Competition Authorities’ willingness to push public-interest considerations even in instances such as the proposed transaction, where no competition issues arise, is indicative of them trying to address unemployment issues in Botswana through their merger review.  This willingness to let public interest take centre stage is often seen in countries with new competition law regimes.  She expressed concern that public interest considerations may possibly be the deciding factor when making decisions regarding mergers as these are particularly difficult to quantify or objectively assess.

Seeking exemptions from Resale Price Maintenance rules

Kenya’s RPM regime of exemptions to floor price-fixing regulations

The Kenya Ships Contractors Association (KSCA) recently became the latest in a long line of industry associations that have approached the Competition Authority of Kenya (CAK) for an exemption to set minimum prices.  Other recent applicants include the Law Society of Kenya (LSK); the Institute of Certified Public Accountants of Kenya (ICPAK), the Institute of Certified Public Secretaries of Kenya (ICPSK) and the Institute of Surveyors of Kenya.

kenyaSection 21 of the Kenyan Competition Act 12 of 2010 (the Act) prohibits firms or associations from entering into any agreement that “involves a practice of minimum resale price maintenance” (‘RPM’).

Under sections 25 and 26 (read jointly), however, firms or associations may apply to the CAK to be exempted from this prohibition by way of an application to the CAK in the prescribed form, especially in instances where they believe there are exceptional and compelling reasons (of public policy) justifying setting such resale price floors.

In evaluating requests for exemption, the CAK will consider whether the granting of an exemption will promote exports, bolster declining industries or, more generally, the potential benefits outweigh the cost of a less competitive environment due to the RPM conduct.

Kenyan competition lawyer Ruth Mosoti, with Primerio Ltd., notes that, “although each exemption will be considered on its own merits, the CAK’s recent decisions in applications of a similar nature seem to have created a precedent unfavourable to the KSCA’s request being approved.” In this regard, the CAK in the ICPAK application rejected the application and stated that the “[i]ntroduction of fee guidelines will decrease competition, increase costs, reduce innovation and efficiencies and limit choices to customers and is in fact likely to raise the cost of accountancy services beyond the reach of some consumers”.

The CAK’s Director General, Mr. Wang’ombe Kariuki has now issued a notice requesting input from the public regarding the application.

Media cartel exposed and fined

By AAT Senior Contributor Stephany Torres

Print media companies Independent Media and Caxton & CTP Publishers and Printers (“Caxton”) have agreed to pay an administrative penalties as well as an amount to the Economic Development Fund of over R8 million as part of two separate settlement agreements with the Competition Commission (“The Commission”) after admitting to fixing prices and trading conditions in contravention of section 4(1)(b)(i) of the Competition Act no. 89 of 1998 (“The Competition Act”).

Caxton owns local print media, including the Citizen newspaper and magazines Bona, Rooirose and Farmer’s Weekly, among others.  Independent owns newspapers The Star, Cape Times, Sunday Independent, among others and magazines GQ and GQ Style.

Attorneys from African competition law firm Primerio Ltd. report that this development follows from a 2011 investigation by the Commission into the matter where they found that, through the facilitating vehicle of the Media Credit CoOrdinators (“MCC”) organization, various media companies agreed to offer similar discounts and payment terms to advertising agencies that place advertisements with MCC members.  MCC accredited agencies were offered a 16.5% discount, while non-members were offered 15%.  In addition, the Commission found that the implicated companies employed services of an intermediary company called Corex to perform risk assessments on advertising agencies for purposes of imposing a settlement discount structure and terms on advertising agencies.  “The Commission found that the practices restricted competition among the competing companies as they did not independently determine an element of a price in the form of discount or trading terms”.

In a media release, the Competition Commission confirmed Caxton will pay a fine of R5 806 890.14, and R2 090 480.45 to the Economic Development Fund over three years.  It will also provide 25% bonus advertising space for every rand of advertising space bought by qualifying small agencies for three years, capped at R15 000 000 per annum.

Independent Media will pay an administrative penalty of R2 220 603 and will contribute R799 417 to the Economic Development Fund over a three-year period, and provide 25% bonus advertising space for every rand of advertising space bought by qualifying small agencies, over three years and capped at R5 000 000. Independent has also said it would obtain its own credit insurance so small agencies are not required to commit any securities or guarantees in order to book advertising space.

The Economic Development Fund is designed to develop black-owned small media or advertising agencies, which require assistance with start-up capital and will assist black students with bursaries to study media or advertising.

The agreements were confirmed as orders of the Competition Tribunal.


SA Airlink referred to Tribunal for Engaging in Alleged Excessive and Predatory Pricing Conduct

By Stephany Torres

The Competition Commission (Commission) has referred SA Airlink, a privately owned regional feeder airline, to the Competition Tribunal (Tribunal) for prosecution on charges of excessive and predatory pricing in relation to a specified domestic route in South Africa (Johannesburg-Mthatha).  The Commission was prompted to investigate the matter after receiving complaints lodged by Khwezi Tiya‚ Fly Blue Crane and the OR Tambo District Chamber of Business between 2015 and 2017.

The Commission found SA Airlink to be dominant in the market for the provision of flights on the Johannesburg-Mthatha route and further found that SA Airlink contravened the Competition Act by abusing this dominance from September 2012 to August 2016 by charging excessive prices on the route to the detriment of consumers in contravention of Section 8(a) of the Competition Act no 89 of 1998 (“the Competition Act”).  The Competition Act defines an “excessive price” as a price for a good or service “which bears no reasonable relation to the economic value of that good or service and is higher than the value referred to in 8(a)”.

SA country flag outlineAn additional requirement which the Commission will need to demonstrate in order to succeed with an excessive pricing complaint is that the “excessive pricing” was to the detriment of consumers.  In this regard the Commission found that consumers would have saved between R89 million and R108 million had SA Airlink not priced excessively on this route.  Furthermore, lower prices would also have resulted in more passengers traveling by air on the route‚ possibly contributing to the local economy of Mthatha.

The Commission also found SA Airlink to have engaged in predatory pricing to exclude a competitor from the market in contravention of section 8(c) and Section 8(d)(iv) of the Competition Act. In this regard, the Commission alleges that prior to Fly Blue Crane entering the market, SA Airlink had charged excessive prices. When Fly Blue Crane entered the route, SA Airlink allegedly reduced its prices below its average variable costs and average avoidable costs for some of its flights and then subsequently, after Fly Blue Crane stooped flying the relevant route, SA Airlink reverted to their alleged excessive prices.

The Commission went further to say that the effect of the predation is also likely to deter future competition on this route from other airlines which would also be to the detriment of consumers.

The Competition Act provides for an administrative penalty of up to 10% of SA Airlink’s annual turnover for contravention of Section 8. The Commission stated that “it will seek the maximum administrative penalty before the Tribunal”.

In addition‚ the Commission has asked the Tribunal “to determine other appropriate remedies in order to correct the conduct“.

Michael-James Currie, a competition lawyer, notes that “in addition to the potential administrative liability, should SA Airlink be found by the Tribunal to have abused its dominance, SA Airlink may also face civil damages claims similar to those which Nationwide and Commair successfully instituted against South African Airways (SAA) following the Tribunal’s decision that SAA had engaged in abuse of dominance conduct”.

John Oxenham, a director of Primerio and editor of the recently published book “Class Action Litigation in South Africa”, states that “this case may potentially also result in class action litigation if the Commission is correct in its quantification of the harm caused to consumers”.

The Competition Commission’s case against Airlink comes at an interesting juncture in light of the recently published Competition Amendment Bill. Andreas Stargard, also a director at Primerio notes that the underlying motivation for the proposed amendments to the abuse of dominance provisions is to assist the Commission in prosecuting dominant firms (by placing the onus on a dominant firm to demonstrate that its conduct is pro-competitive). The case against Airlink, however, will be decided in terms of the current regime as the Amendment Bill has not yet been brought into effect.

For further information and insight into excessive pricing and predatory pricing cases in South Africa, AAT has previously published papers on the Competition Appeal Court’s decision in Sasol (the seminal excessive pricing case in South Africa) and the Media 24 cases (the first successfully prosecuted case based on a predation theory of harm).



South African Competition Tribunal Rules against Wal-Mart in South Africa on “Exclusive Leases”

By Michael-James Currie

On 13 February 2018, the South African Competition Tribunal ruled against Massmart Holdings, a subsidiary of Wal-Mart in relation to a complaint filed by Massmart against three of South Africa’s largest grocery retailers (as well as the South African Property Owners Association – who did not actively participate in the hearing).

The history of the complaint dates back to 2014, when Massmart submitted a complaint to the Competition Commission alleging that the exclusive lease agreements which the respondents had concluded with the relevant landlords in respect of shopping malls were exclusionary and contravened the South African Competition Act. The Competition Commission elected not to refer the matter to the Competition Tribunal and dismissed Massmart’s complaint based on a lack of evidence demonstrating any anti-competitive effects.

Massmart proceeded to refer the complaint itself to the Competition Tribunal in 2015 (which is permissible only if the Competition Commission elects not to refer the matter to the Tribunal) on the basis that the respondents had contravened Section 5(1) of the Competition Act — which prohibits any vertical arrangement which has anti-competitive effects and which cannot be outweighed by pro-competitive efficiency enhancing justifications.

Massmart’s case against the respondents was essentially that the respondent retailers had entered into long term lease agreements with landlords of various shopping centres which contained exclusivity provisions effectively precluding (or limiting) competing retailers from entering that same shopping centre.  In other words, the crux of Massmart’s complaint was that Massmart could not enter into a number of shopping centres in a manner which would enable Massmart to compete with the incumbent retailers.

Although the respondents raised a number of exceptions to the Massmart complaint (including the “non-citation” of the relevant landlords who are parties to the respective lease agreements), the Tribunal did not need to rule on these exceptions. The Tribunal dismissed the complaint on the basis that Massmart did not prove that the exclusivity provisions contained in the lease agreements resulted in anti-competitive effects in the relevant market.

In conducting its assessment, the Tribunal considered whether the “exclusive leases” are likely to either:

  1. have an adverse impact on consumer welfare; or
  2. lead to the foreclosure of a rival in the market.

Central to the Tribunal’s assessment was the appropriate definition of the “relevant market”. In this regard, the Tribunal found that Massmart had not properly demonstrated that each shopping mall constituted a separate geographic market.

Assuming that the relevant geographic market is the boundaries of a shopping mall,  the Tribunal went on to state that Massmart’s complaint was not supported by sufficient evidence to demonstrate that there would be a “substantial lessening of competition” in that market. In this regard, the Tribunal confirmed that the mere exclusion of a rival does not equate to a “substantial lessening of competition” – particularly if there is at least one other competitor in the relevant market – which based on the evidence appeared to be the case in a number of circumstances.

In relation to an alternative proposition put forward by Massmart, the Tribunal considered whether the “exclusive leases” would lead to anti-competitive effects in the “national market”. Again, the Tribunal found that there was insufficient evidence pleaded to demonstrate that there was a substantial lessening of competition on the national market. Importantly, however, the Tribunal indicated that the respondent retailers appear to impose a competitive constraint on each other in the national market – assuming that there is in fact a competition dimension at a ‘national level’.

The Tribunal’s decision does not therefore go as far as confirming that ‘exclusive leases’ between retailers and shopping malls are inherently pro-competitive, but rather that parties seeking to demonstrate the anti-competitive effects of the ‘exclusivity arrangements’ must do so with credible theories of harm which is supported with the necessary evidence.

The Tribunal’s decision comes at an interesting juncture in light of the current market inquiry being conducted by the Competition Commission in the grocery retail sector. One of the key objectives of the market inquiry is to assess the anti-competitive effects of “exclusive leases”. The Competition Commission is scheduled to finalise its market inquiry in 2018 following which the SACC will make recommendations to Parliament to remedy any potential anti-competitive features of South Africa’s grocery retail sector.

In relation to international precedent, the UK’s competition agency adopted a view that “exclusive leases” are not anti-competitive per se but rather that the duration of the exclusivity provisions contained in lease agreements should be curtailed. Accordingly, exclusivity provisions in the UK are limited to five years. The Australian agency (the ACCC), after conducting a public inquiry into various features of the grocery retail sector, concluded that exclusive lease provisions may be justified in ‘developing areas’ but are unlikely to be justified in ‘metropolitan areas’.

Accordingly, it remains to be seen whether the Competition Commission will propose that any remedial action be taken to address exclusive leases agreements in the context of the South African grocery retail sector (following the conclusion of the market inquiry) or whether Massmart (and/or other complainants) will look to reformulate a complaint to the Tribunal and focus on specific shopping malls as opposed to an overarching complaint against the existence of exclusivity provisions.

Importantly, however, in light of the Tribunal’s finding that Massmart was not able to sufficiently plead and support an argument that the exclusive leases were likely to lead to anti-competitive effect in any defined market, it was unnecessary to consider whether there are any pro-competitive arguments or economic justifications which would outweigh any anti-competitive effects.

[Michael-James Currie is an admitted attorney of the High Court of South Africa and advises clients on competition law matters across sub-Saharan Africa]

Enforcement Alert: MU Competition Commission to Permit Cartel Initiators to Seek Leniency

The Competition Commission of Mauritius (CCM) has announced changes to its leniency programme. Though the CCM did have a functioning leniency programme in place since its inception in 2009, the it was often criticised as being inadequate.

Competition lawyer John Oxenham notes that under the existing programme, firms which were found to be cartel ‘initiators’ (an enterprise which has coerced others into a collusive agreement) did not qualify to receive any immunity or other benefit.

John Oxenham

John Oxenham

Oxenham believes that this had led to uncertainty and prevented companies from applying for leniency (which required full disclosure of anti-competitive conduct), as firms may be unsure whether or not they would be considered to be ‘instigators’ (and so be disqualified from receiving immunity from prosecution). This meant that firms often had to weigh the risk of being considered an ‘initiator’ against the risk of prosecution to ultimately decide on whether to apply for leniency.

The CCM had previously identified this aspect as a potential area of concern, which led to the temporary special amnesty programmes under which firms who believed themselves to be ‘initiators’ could apply for leniency. This, according to the CCM, led to various successful leniency applications and related prosecutions.

In its media release of 23 January 2018, CCM executive director Deshmuk Kowlessure stated that “[w]ith respect to leniency programmes, we have observed that several advanced competition authorities have adopted leniency for cartel initiators and coercers…” “Likewise, the CCM has taken a step beyond traditional leniency programmes and we are now extending the possibility for initiators or coercers to apply for leniency.”

The recent amendment, therefore, seeks to formalise the CCM’s previous (temporary) amnesty programme for ‘initiators’ by allowing them to approach the CCM for leniency in return for a 50% reduction in the administrative penalty otherwise payable, says fellow Primerio Ltd. antitrust attorney Andreas Stargard.  “This level of fine reduction is in line with what the CCM has been offering in the past to leniency applicants who were not ‘first through the door’.  Unlike certain other countries, such as the United States, where the Department of Justice offers leniency benefits only to the first successful applicant, Mauritius allows for successive, reduced penalties to subsequent amnesty seekers.”

Corporate leniency policies are widely considered to be the most effective tool in the prosecution of cartel conduct. The CCM’s decision to include ‘initiators’ among those eligible to participate, therefore, not only strengthens its leniency programme but is also a significant step towards the prosecution and enforcement of cartel conduct in Mauritius, as more leniency applications directly imply more prosecutions of fellow cartelists.

Oxenham notes that the inclusion of initiators into the CCM’s official corporate leniency policy is welcomed from a business perspective, as it alleviates the concerns prospective leniency applicants may have previously had: “It will certainly lead to an increase in the amount of leniency applications received by the CCM”.

According the CCM’s media release, its guideline for leniency applicants will be amended accordingly and an explanatory note will be made available on its website in due course.

South African Competition Tribunal Finds in Favour of Ster-Kinekor in Market Allocation Case

The South African Competition Tribunal (“the Tribunal”) last week dismissed a complaint referred to it by the Competition Commission (“the Commission”) in 2009 which alleged that two rival cinemas, Primedia’s Ster-Kinekor Theatres and Avusa’s Nu-Metro Entertainment (Pty) Ltd, which operate in the market for the exhibition of films at the V&A Waterfront shopping complex in Cape Town, engaged in market allocation by agreeing not to screen the same film genres in contravention of section 4(1)(b)(ii) of the Competition Act[1].

The Commission initiated the complaint after Avusa applied for conditional immunity and provided evidence of the existence of a settlement agreement, which was made an order of court in 1998, between Nu Metro and Ster-Kinekor. In terms of the settlement agreement, Ster-Kinekor agreed not to exhibit any films identified as “commercial films” and Nu Metro would not exhibit any films identified as “art films” at the V&A waterfront.

The two companies first signed the ‘non-compete’ settlement agreement in May 1998, before section 4 of the Competition Act (which prohibits cartel conduct) became effective. Section 4 of the Competition Act only became effective as at 1 September 1999.

The Tribunal dismissed the complaint on the basis that the settlement agreement was concluded before the Competition Act came into operation and Ster-Kinekor and Nu Metro could only be found guilty of a contravention if there was evidence of actions or discussions between them directed at actually implementing the agreement after the Competition Act came into force.

In this regard cross-examination of witnesses revealed that while leniency applicant Nu Metro had attempted to invoke the settlement once after the Competition Act came into force, Ster-Kinekor employees “did not know about the… agreement, did not implement it, and had not implemented it before”, the Tribunal stated.

The Tribunal did not deal with Primedia’s other defence that no relief could be granted against Primedia because Primedia had only purchased Ster-Kinekor in 2008, so could not be liable for the actions of its predecessor.

John Oxenham, a South African competition lawyer, said that “the case confirms that the Competition Act does not apply retrospectively and some form of understanding or agreement (in essence a “new” agreement) needs to arise between the parties after the Act came into force for the conduct to be unlawful”.  He believes that although the Tribunal mentioned that there needs to be some implementation of the agreement after the Competition Act came into force, what they are actually saying or should be saying is that it is not the implementation which is necessary but the arising of a “new” agreement between the parties which is essential.

Section 4(1)(b)(ii) of the Competition Act is a per se offence and an agreement does not need to be implemented in order to contravene the market allocation prohibitions.

Accordingly, the Tribunal has to some extent blurred the distinction between a ‘lack of implementation’ and the duty to distance oneself from a ‘prohibited agreement’.



The South African Competition Commission (SACC) recently referred a complaint investigation to the South African Competition (Tribunal) regarding a complaint lodged by South African power utility, Eskom in March 2016 vis-á-vis contracts for the supply and installation of scaffolding and thermal insulation for Eskom’s 15 coal-fired power station.

The companies involved are: Waco Africa‚ acting through its subsidiary SGB Cape‚ Tedoc Industries‚ Mtsweni Corrosion Control and Superfecta Trading‚ and three joint ventures involving these companies.

According to the SACC, SGB submitted multiple tenders (in its individual capacity and through the various joint ventures) which were all signed by the same individual (and which contained identical “Safety‚ financial‚ technical and quality document”) which it used to manipulate tender prices.

Interestingly, the complaint was subsequently withdrawn by Eskom when Matshela Koko (Koko) took over as interim CEO. The SACC, however, exercised its rights in terms of Rule 16 of the Competition Act to continue the investigation despite the complaint being withdrawn.

Notably, Koko has been the subject of various investigations into allegations of corruption, which included allegations that Koko allegedly engaged in tender rigging in awarding tenders to a company in which some members of his family had interests, without following proper process.

Collusive tendering is a contravention under section 4(1)(b) of the Competition Act (89 of 1998) (which is a per se contravention) and can lead to an administrative penalty of up to 10% of turnover and more recently, criminal prosecution. Collusive tendering also falls under the definition of corruption under the Prevention and Combating of Corrupt Activities Act (12 of 2004).

Firms are therefore urged to ensure that their employees are aware of the provisions of the Competition Act, especially when submitting ‘joint tenders’ (i.e where a firm provides certain products or services to a competitor for purposes of a tender bid and also submit an individual tender bid) or tendering through a joint venture. Furthermore, should there be any uncertainty as to whether or not a current practice falls foul of the Competition Act, firms should seek legal advice.

Ethiopia Competition Agency Files Charges against Fourteen Metal Producers

By AAT Senior Contributor Stephany Torres

On 28 January 2018 the Ethiopian Trade Competition and Consumer Protection Authority (“TCCPA”) filed charges against fourteen Ethiopian rebar, corrugated sheet, steel tube and pipe producers and seven rebar importers respectively for allegedly fixing prices in contravention of Article 7(1) of the Ethiopian Trade Competition and Consumer Protection Proclamation (“Article 7(1)”), which provides that “(1) An agreement between or concerted practice by, business persons or a decision by association of business persons in a horizontal relationship shall be prohibited if:…(b) it involves, directly or indirectly, fixing a purchase or selling price or any other trading condition, collusive tendering or dividing markets by allocating customers, suppliers territories or specific types of goods or services”.

It is worth mentioning that in most jurisdictions, which have an active competition law enforcement regime in place, ‘cartel conduct’ (i.e. price fixing, market allocation and/or collusion) is a per se prohibition in that the conduct is prohibited outright, without an examination of the actual effects on competition and without permitting a showing of net efficiency or other pro-competitive defensive arguments.

Where cartel conduct is prohibited per se, the relevant competition authorities require no further proof other than the existence of the agreement or concerted practice which underpins the conduct.  The conduct is simply presumed to have negative effects on the relevant market.

Article 7(1) of the TCCPA, however, is not a per se prohibition and is based on the ‘rule-of-reason’ standard – effectively permitting respondents to lead evidence demonstrating that the alleged conduct can be justified by pro-competitive, technology or efficiency gain justifications which outweigh any anti-competitive effect.

From a policy perspective, Africa competition lawyer Michael-James Currie notes that the permissibility of the ‘rule of reason defence’ is largely due to the fact that a respondent who is found to have contravened Article 7(1) of the TCCPA is liable to a penalty calculated at fifteen percent of the respondent’s annual turnover. This is a prescribed penalty. For non-cartel conduct, the penalty ranges between 5-10%.

Of the aforementioned fourteen Ethiopian steel producers; three manufacture reinforcement bars, namely East Steel PLC, Habesha Steel Mills PLC and Saint Nail PLC.  Six are involved in manufacturing corrugated sheets namely; Ethiopian Steel Profile, Ethiopian Steel PLC, Kombolcha Steel Products Industry PLC (KOSPI), a subsidiary of MIDROC Technology Group and Bazeto PLC and amongst the five manufacturers of steel tubes and pipes are Walia Steel Industry PLC and Mame Steel PLC.

The seven rebar importers accused of price fixing include Dag Trading PLC, Aberus PLC, Berhe Hagos PLC, Marka Trading, Beranea Yeshene and Haileselassie Amabye PLC.

Andreas Stargard, competition counsel with Primerio Ltd. notes that the trigger event for engaging in the alleged price fixing was the fifteen percent devaluation of the birr by the National Bank of Ethiopia (NBE) in October 2017 which may have influenced retailers and wholesalers to look for ways of recouping losses by raising prices for their goods and services.

It is, however, in fellow Primerio Director John Oxenham’s view, unlikely for a well-executed price-fixing cartel to be created ad hoc without any pre-existing information exchange structure.  Therefore, pre-existing trade association, interest groups or other vehicles are commonly used as the enabling platform for competitors to engage in collusive conduct.

The defendants are scheduled to submit their response to the Tribunal on February 20, 2018.

The metal and related products sector is a priority sector in Ethiopia and the Ethiopian government is investigating a greater number of business entities involved in the production and importation of metal and metal related products who are also suspected of allegedly fixing prices.