Due process arguments come to the fore as the Botswana Competition Authority gears itself for enforcement

By Mark Griffiths (@markgjhb) and Wiri Gumbie

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In September and October, the Botswana Competition Commission (Commission) took its first two rulings on cartel enforcement. Both rulings have a keen (if not almost exhaustive) focus on due process. Given that due process arguments have tended to be prominent only after a wave of cartel enforcement in more established jurisdictions, the cases demonstrate how developing competition jurisdictions are setting their own learning curves by absorbing the lessons from elsewhere.

Having been set up in 2011, the Botswana Competition Authority (Authority) has been primarily active in merger control and has taken a number of prominent decisions, in particular, on the issue of the relevance and scope of public interest considerations in merger control decisions. Unlike other young authorities across the Africa continent, the Authority has also been keen to pursue cartel enforcement as a priority area. While it has undertaken a number of dawn raids in a range of sectors and is in the final stages of adopting a leniency programme, the Authority is only now taken its first steps to establish a clear enforcement record with alleged cartels in the public procurement of food rations and also the panel beating sector.

The first ruling concerns alleged bid-rigging in relation to the supply of food rations to the Botswana government. Super Trading, a food supplier, provided the Authority with details of how one of its directors allegedly provided its competitor,Ya Raheem, with commercially sensitive information which enabled Ya Raheem to win tenders during a sustained period. Following a raid by the Authority, Ya Raheem opted to settle with the Authority and admitted to bid rigging as well as providing details of its involvement.

Notwithstanding Ya Raheem’s admission, on 17 September 2013, the Commission refused to confirm the settlement on the basis that it considered that the Authority had failed to provide any evidence of Ya Raheem’s involvement in the alleged bid rigging. Evidence of payments allegedly received by Super Trading’s director from Ya Raheem did not, in the Commission’s opinion, substantiate any finding of an agreement between competitors. To put it mildly, the Commission was scathing of the Authority’s approach regarding the lack of evidential or material information. Moreover, the Commission dismissed the significance of the joint undertaking between the Authority and Ya Raheem, labeling it “as simply a report that did little to cure the defects in the main application…”

The key question arising from the Commission’s ruling is whether or not due process requires additional evidence (over and above an admission) to support a settlement in a cartel case? Given that Ya Raheem’s involvement in bid rigging was not in dispute, was it necessary for the Commission to insist on further evidence? Moreover, given that Ya Raheemadmitted to and gave details of its involvement in the alleged bid rigging as part of its settlement with the Authority, it is not clear what additional evidence the Commission required to satisfy itself that alleged bid rigging had taken place.

One would expect that an undertaking with a clear statement of the facts and nature of the offence would have satisfied the procedural requirements of the South African settlement procedure, a pertinent observation given the Commission’s reliance on South African precedent on the treatment of evidence in this case.

It could be questioned whether the Commission’s implicitly categorized the settlement as a ‘contested’ proceeding (as opposed to an ‘uncontested’ consent order), which would have inevitably led them to require the Authority to provide sufficient evidence of Ya Raheem’s involvement in bid rigging. Should the significance of this ruling be dismissed asa teething problem regarding the first settlement procedure or does it reflect a fundamental difference in how settlement proceedings will be treated in Botswana? If the latter, it may hamper the Authority’s ability to expeditiously conclude settlement proceedings, a tool that has proved spectacularly successful in South Africa.

The second ruling relates to an alleged concerted practice between panel beaters. Following the referral of the matter to the Commission, the alleged cartelists raised a number of due process issues prior to the substantive hearing of the facts. In particular, it was argued that the Commission was incompetent to rule in the matter as, given its role as both referee and player in the dispute, the parties under investigation were not guaranteed a fair hearing. The parties sought the relief that the matter be stayed pending the establishment of an independent and impartial body.

In sharp contrast to the tone and substance of its previous cartel ruling, on 30 October 2013, the Commission dismissed the procedural challenges in their entirety. Irrespective of the fact that the Commission is formally located within the Authority and also functions as a governing Board for the Authority, the Commission stressed that the roles and functions are clearly delineated in the Competition Act, with the Authority authorized to carry out investigations and then refer matters for adjudication to the Commission.

The Commission emphasized that due process was furtherguaranteed by the jurisdiction of the High Court over rulings of the Commission whereby it can remit matters back to theCommission, revoke, increase or reduce any financial penalty, give any direction of its own in substitution for that of the Commission and make any decision as it sees fit.

Underpinning the Commission’s ruling is an implicit acknowledgement of the fact that the institutional design of a competition regime is a policy decision relative to the best fit for a given jurisdiction (taking into account international best practice). Acknowledging that the Botswana model is a hybrid between the integrated (e.g. European Commission) and bifurcated model (e.g. South Africa), the Commission appeared uncomfortable with second-guessing the legislature’s view as to what model was most suitable for Botswana’s current circumstances.

The ruling demonstrates a welcomed openness to international precedence. The Commission makes explicit reference to ICN guidelines on institutional design, while there is implicit reference to the “full jurisdiction” jurisprudence of the European Court of Human Rights relating to the application of due process to administrative proceedings when the Commission emphasizes the full extent of the High Court’s review of the Commission’s rulings. This review process will be further probed in this case given that the parties have appealed the ruling.

These two recent rulings illustrate how in the relatively short period since their inception, both the Authority and the Commission have absorbed the lessons from more established jurisdictions and are forging their own path in the enforcement of the Competition Act. Both the Authority and the Commission are already grappling with complex issues of due process on par with those confronting their more established counterparts. For example, by contrast, it has taken decades to obtain an arguably definitive ruling on the application of Article 6 of the European Convention of Human Rights to the competition proceedings before the European Commission.

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