Nigerian President Muhammadu Buhari has signed the Federal Competition and Consumer Protection Bill into law (the “Competition Act”).
After years of deliberations, the legislative process is now complete, and with the establishment of a Competition Commission and Competition Tribunal, Nigeria is the latest African jurisdiction to establish a dedicated antitrust authority.
From a merger-control perspective, the Competition Act and the Commission’s jurisdiction will ultimately supersede the ‘placebo antitrust’ role historically played by the Securities and Exchange Commission (SEC), which has thus far received and assessed merger notifications above certain turnover thresholds, pursuant to the Investments and Securities Act. The Act repeals the Consumer Protection Act, which did not contain stand-alone antitrust provisions.
Michael-James Currie, a competition lawyer advising clients across Africa, says the new Competition Act applies broadly to all commercial activities within Nigeria, but also to conduct outside of Nigeria (if the person or company is a Nigerian resident or incorporated in Nigeria or products are sold into Nigeria). Furthermore, any acquisition or change of control of a business or asset outside of Nigeria which results in the change of control of an asset or business in Nigeria will also fall within the jurisdiction of the Competition Act.
The Commission has substantial powers, including considering and approving mergers, declaring business practices as amounting to abuse of dominance, prohibiting price discrimination or declaring unlawful any agreement which is in contravention of the Competition Act.
From an investigatory perspective, the Commission may subpoena witnesses or, upon obtaining a search warrant, conduct dawn raids, consistent with international best practices.
Any reviews or appeals in relation to a decision taken by the Commission may be made to the Competition Tribunal.
In relation to prohibited conduct, any agreement which has the effect or likely effect of preventing, restricting or distorting competition in any market is unlawful. Currie notes that the Act in particular prohibits collusive arrangements but also various forms of unilateral conduct include tying or bundling or limitations on the production or distribution of goods. John Oxenham, director at Primerio, echoes these sentiments and confirms that the Act provides for a rule-of-reason analysis. He notes further that, in addition to the above general prohibitions, the Act also prohibits minimum resale price maintenance.
Fellow Primerio Director, Andreas Stargard, notes that the “monopolisation” prohibition against abuse of dominance mirrors those typically found in most jurisdictions; the wording of the Act appears to be influenced largely by the South African Competition Act. That said, the test for dominance is essentially whether a firm is able to exert market power and, unlike South Africa, cannot be based on market-share thresholds alone. In sum, he concludes:
“This latest piece of competition legislation was first introduced in 2011 by Rt. Hon. Yakubu Dogara from Bauchi State, who perhaps not surprisingly happens to be an attorney, and co-sponsored by Sen. Ahmed Lawan (Yobe North).
Its now final — and successful — iteration that was signed into law this week brings Africa’s largest economy into the fold of modern antitrust jurisdictions. Many have called for this to happen for years [see hereand here). Our firm’s West Africa team is eager to work on matters arising under the Act.”
In terms of penalties, an antitrust violation attracts both a potential administrative penalty (capped at 10% of the respondent’s annual turnover) and criminal liability for directors who commit an offence, notes Currie, pointing to a maximum of three years imprisonment as a fairly severe white-collar sentence potential. It remains unclear to-date whether the turnover calculation for purposes of the administrative penalty determination refers to local or worldwide revenues, observes Stargard.
In relation to merger control, Oxenham notes that the Competition Act provides further clarity as to the type of transactions which require mandatory notification, notably including joint ventures, which were previously not identified by name under the SEC’s legislative regime. The Act has introduced both de facto and de jure forms of control as potential triggers for merger notification. The Commission has not yet published Regulations which will prescribe turnover thresholds for “small” and “large” mergers. Both Oxenham and Currie point out that based on the wording of the Act, there seems to be a substantial amount of similarity between the Nigerian Act and the merger control process in South Africa including time frames involved and the introduction of public interest assessment in merger control.
This is not surprising, as the South African Competition Commission (SACC) has, through the African Competition Forum, been instrumental in advocating a robust competition regime. Furthermore, Oxenham suggests that there may be substantial amount of cooperation and assistance provided by the SACC to their Nigerian counterparts.
[AfricanAntitrust will provide further updates in relation to the Nigerian Competition Act and appreciates the input from leading antitrust practitioners and the on-going support of the Primerio team. To contact a Primerio representatives, please click here ]