Namibian Competition Commission (“NaCC”) asked to Prohibit N$250 million (Approx. US$ 15 500 000) Deal on Public Interest Grounds

By Michael-James Currie

On 18 February 2016, an objection was filed at the NaCC in relation to the Lewis Stores and Bears Stores merger, two furniture retailers who are set to merge in Namibia.

Lewis Stores operates mostly out of South Africa and has recently appeared in the financial press in South Africa as a result of various adverse allegations in relation to its micro-lending policy.  The allegations against Lewis Stores include claims that Lewis targets individuals whom they are ‘aware’ of will not be able to afford the credit instalments and then subject those individuals to high interest rate penalties – An allegation which Lewis denies.

Irrespective of the merits of the allegations against Lewis, it is a very interesting complaint which has been brought before the NaCC. In essence, the complainant’s objection is based on the argument that the businesses practices of Lewis will “be detrimental to the public” as the Namibia Financial Institutions Supervisory Authority (“NAMFISA”), the regulator of micro lenders (including in-store credit providers), has not proven its effectiveness in adequately protecting consumers from the type of harm envisaged by the complainant in respect of Lewis’ business practices.

The complaint immediately raises a number of interesting considerations.

  • Firstly, from a policy perspective, it would appear highly unusual for a regulator such as the NaCC to so assume the duties of another regulator, NAMFISA. The complainant in this matter argues that the NaCC should take NAMFISA’s inadequacy into account when considering the impact of the merger on public interest grounds. Whether the NaCC is prepared to entertain such a complaint remains to be seen, however, it would seem unlikely given that in terms of the Namibian Competition Act, there are specified public interest grounds which the NaCC may consider when evaluating the impact of the proposed merger on public interest grounds. It should be noted, however, that the list of grounds, although identical to the public interest grounds contained in the South African Competition Act, is not exhaustive and the NaCC is entitled to consider broader public interest grounds.

 

  • Secondly, and somewhat bizarrely,  the Namibian Competition Act states that “a merger must either be approved or rejected” (without express wording that it can be approved subject to conditions).  Despite this, the MassMart/Wal-Mart merger was, however, approved subject to conditions which were largely a replication of the public interest conditions imposed by the South African Competition Authorities in respect of the same merger.

The existence of public interest provisions in a number of African jurisdictions’ competition law legislation has been subject to extensive debate, largely due to the uncertainty with which competition authorities approach the evaluation of such public interest considerations when compared to the more traditional competition law objectives.

Accordingly, the NaCC should guard against entertaining a complaint which will jeopardise ‘merger control certainty’ which is pivotal to all good merger control regimes.

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