APPOINTMENT OF DR WILLARD MWEMBA AS THE DIRECTOR AND CHIEF EXECUTIVE OFFICER OF THE COMESA COMPETITION COMMISSION
The COMESA Competition Commission (the “CCC”) wishes to inform the general public that the COMESA Council of Ministers at its 42nd Meeting held on 9th November 2021 appointed Dr Willard Mwemba as its Director and Chief Executive Officer.
The Commission’s Board, Management and Staff members wishes to congratulate Dr Mwemba on his well-deserved appointment. Dr Mwemba has been with the CCC since January 2013 being its first Head of the Mergers and Acquisitions Department until his appointment as the Acting Director and Chief Executive Officer on 1 February 2021. He has acted in this capacity until 9 November 2021 when his appointment was confirmed. Prior to joining the CCC, Dr Mwemba was the Director of Mergers and Monopolies at the Competition and Consumer Protection Commission (CCPC), Zambia.
Dr Mwemba has been instrumental in the enforcement of competition and consumer laws both at national and regional level. At national level, he has assisted a number of national competition authorities in developing and operationalising their mergers and restrictive business practices divisions. At regional level, he has been instrumental in implementing and reforming the COMESA Competition Law regime. He has written extensively on competition law and is widely consulted on the subject at global level.
Dr Mwemba holds several qualifications among them Bachelor’s degrees in Economics and Law from the University of Zambia. He also holds a Master’s degree in Competition Law from Kings College London. He further holds a PhD from the University of Cape Town specializing in competition law.
The Board of Commissioners, Management and Staff members of the CCC have great confidence in Dr Mwemba’s capabilities and wishes him well as he executes the mandate of enhancing intra-COMESA trade through the creation of competitive markets.
The Guideline establishes a two-step methodology when determining a fine to be imposed on undertakings. The first step will see the Commission set a “base amount” for each undertaking or association of undertakings. The second step provides the Commission with the necessary discretion to adjust the base amount, either upwards or downwards, having consideration of any aggravating, mitigating or any other factors (Section 5(1)(a)-(b)).
The “base amount” will be set with reference to the undertaking’s turnover in the Common Market from the previous financial year and by applying the following methodology:
The base amount will be a proportion of the turnover and will depend on the nature, degree and gravity of the infringement and multiplied by the number of years of the infringement (Section 5(8)).
The Guideline deems the following as aggravating factors:
Nature and gravity of the infringement (Section 5(10)(a));
Duration of infringement(Section 5(10)(b));
Extend of consumers affected in the Member States and any action taken by the company to mitigate or remedy the damage suffered by consumers (Section 5(10)(c)).
The Guidelines propose the following base proportion of turnover to be applied:
Cartel conduct: a base of 5% of turnover;
Other horizontal conduct: a base of 4% of turnover;
Abuse of dominance: a base of 3% of turnover;
Restraints: a base of 2% of turnover;
Consumer protection violations: a base of 1% of turnover;
Mergers implemented in contravention of the Regulations: a base of 2% of turnover;
Failure to cooperate with the Commission: a base of 0.5% of turnover; and
Other infringements: a base of 0.5% of turnover.
The following aggravating circumstances may result in the increase of the base amount:
Continuation or repeat of the same or a similar infringement: basic amount will be increased by 3% of the amount of the fine for each infringement;
Refusal to cooperate with or obstruction of the Commission’s investigation: basic amount will be increased by 5% of the amount of the fine;
Where an undertaking is a leader in, or instigator of the infringement: basic amount will be increased by 4% of the amount of the fine.
The Commission may reduce the basic amount if the following mitigating factors exist:
Cooperation: decrease in the basic amount by 5% of the fine;
First offender: decrease in the basic amount by 3% of the fine;
Justifications on efficiency and consumer benefit: decrease in the basic amount by 0.5% of the fine;
Termination of the infringement: decrease in the basic amount by 0.5% of the fine;
Negligence: decrease in the basic amount by 0.1% of the fine; and
Extent of involvement in the infringement: decrease in the basic amount by 0.5% of the fine.
A reduction of a fine could be granted, upon request, solely on the basis of objective evidence that the imposition of the fine would irretrievably jeopardize the economic viability of the undertaking concerned and cause its assets to lose all their value (Section 5(21)).
In this article, we briefly discuss the Hearing Procedure draft which has been published (in addition to the Administrative Penalties Procedure and Settlement Guidelines). The draft Guidelines have been published for public stakeholder comments due by 12 November 2021. Fundamentally, the COMESA Competition Commission (“CCC”) emphasizes that, during its investigative proceedings, the principles of natural justice must be adhered to, in the sense that the parties have the right to be heard.
Hearings will be conducted during either of the following stages:
The hearings during the investigations process;
Hearing by the Director before publication of notice of compulsory recall of defective goods; and
Hearing before the Committee for the Initial Determination (“Committee”) of cases.
The CCC notes that in regard to hearings for the initial determination of cases, hearings are not intended to be the major source of information because the primary method of information gathering will be gleaned from responses received from the “Notice of Investigation” that will first be sent in terms of Article 21(6)(a) and 22(1) of the Regulations.
When will the CCC hold hearings?
May hold hearings during investigations (at any time);
Shall hold a hearing:
Before making recommendations;
Before taking decisions; and
(In its consumer-protection role only:) Before the CCC publishes a notice of a compulsory product recall.
Hearing procedure once it has been determined that a hearing will be held
The CCC shall give fifteen working days notice to all of the parties involved;
A notice will be published to invite interested parties;
Notice of the main issue must be given within ten working days and will provide the main issues identified and the main questions that will be raised (any other questions may still be raised at the hearing as long as “they are reasonably related to the matter under investigation.”
During the Hearing
The Committee will test the evidence before it and interrogate the CCC’s team that conducted the investigation.
The party under investigation will also be provided the opportunity to:
Clarify and develop the evidence that it provided during the investigation;
Comment on and rebut evidence and information supplied by other parties; and
Make further representations, which may, in relevant cases, address the question of whether a practice has public benefits that may offset any adverse effects on competition.
After a Committee has been convened to hear the matter:
Any party required to attend the hearing must be given twenty-one days’ notice of the hearing date.
Upon application by a party, a pre-hearing can be requested to confirm that all of the parties can attend the hearing and have received all documentation relied on by the other party.
After the conclusion of the hearing, a decision will be made by the Committee within forty-five days. If the Committee finds that the respondent has breached the Rules or Regulations, in “appropriate instances” a remedy can be discussed.
Any party has a right of appeal and will do so in accordance with Rule 24(d), (e) and (f) of the COMESA Rules, 2004.
The Agency is seeking stakeholder comments with a deadline of Nov. 12th, 2021. The (draft) Settlement Guidelines are modeled expressly after European and Zambian precedent (as opposed to U.S.-American law, which is not mentioned as a source), and include key provisions that lay out the procedure envisioned by COMESA.
In this article, we discuss the Settlement Guidelines draft, which has been published (in addition to Hearing Procedure and Fines Guidelines). Key elements for a respondent party entering into the Settlement procedure outlined in the draft include:
Settlement (negotiations) may occur “before or after having sight of the Commission’s case.” (Section 3.7);
that any settlement, other than in Article 20 proceedings, must include an admission of liability (Section 4);
settlements are to achieve “procedural efficiency” and the “possibility of setting a precedent.” (Ibid.);
a rather onerous 4-factor list of requirements demanded of parties opting for a settlement procedure, including (a) liability acknowledgement, (b) commitment to pay CCC’s fines or other remedies imposed pursuant to the Regulations (with an understanding that the party has been made aware of the maximum fine amount previously), (c) acknowledgement of procedural transparency, and (d) agreement not to seek additional access to the file or request further hearings on the matter. (Section 6);
both the CCC as well as the affected party may withdraw from the procedure, with notice (Ibid., points 3-6);
submissions made during the settlement procedure are not publicly available (nor to complainants), instead they are only made available for viewing (not copying) to other addressees of the investigation who are not settling (Ibid., point 7);
COMESA member state competition authorities (NCAs) will be sent copies of the settlement submissions, under the same safeguard rules (Ibid., point 8);
Section 8 covers CCC investigations pursuant to all Articles other than Art. 20, i.e., Arts. 18, 21, and 22 investigations brought by the Commission. It lays out a time frame and procedure akin to what AAT perceives as a “quasi-leniency regime”, as it requires similarly onerous commitments: admission of liability, full disclosure of evidence related to the conduct at issue and its “implementation”, as well as a commitment to cease and desist from engaging in the conduct. The respondent party is subject to strict gag orders of non-disclosure of materials obtained during the investigation and settlement procedure, and it may propose “undertakings” to the CCC, which the Commission is not obligated to accept (point 7).
The draft Settlement Guidelines highlight “efficiency, absence of subsequent litigation, and savings on resources” as three incentives for settlement (Section 12), although it is unclear to us how the CCC envisions to achieve legal certainty as to the second factor, namely protecting the settling respondent(s) from future follow-on litigation in other jurisdictions outside COMESA. Clarity in this regard will be required, as this promise appears to be unenforceable as an extraterritorial application of the COMESA Regulations and Guidelines.
If you haven’t registered yet, there are a few more hours to go before the Primerio and Franklin société d’avocats (Law Firm) first, of a series, webinar on Regulatory and Investment Risks in Africa kicks off at 3pm CET/SAST: 9am ET on 13 October 2021.
This session will explore antitrust developments in Southern and Western Africa and will be held in English and in French.
The Competition Authority of Kenya (CAK, or the Authority) issued a public notice to members of professional associations who are seeking to set minimum chargeable fees for their members notifying them that they need to comply with the provisions of the Competition Act. The Competition Act (the Act) provides for parties to file an application for an exemption on behalf of any association whose agreements may contravene the Act. Notably, the determination of an exemption application factors in public-interest considerations. In addition to this, when an exemption is granted, the same is not perpetual the period of validity of the exemption is at the discretion of the Authority.
Regulation of professional bodies is governed by different sources under Kenyan law. This can occur either through statutory law or rules issued by the professional bodies themselves. In Kenya we have professional bodies regulated by statute and others are wholly self-regulatory. This in turn brings in the issue of self-regulation and regulation by statute. As such, if a professional body is allowed by law to prescribe fees applicable for certain services offered by members of that association. Therefore, in such an instance then the Authority cannot fault such an association because the actions of the association are sanctioned by the law. In such an instance, the correct course of action would be the Authority to first seek intervention from the courts to declare such activities authorized by the law as unlawful and if successful, then any future activities of the association that involve the prescription of fees will be subject to an exemption application.
In 2017, the Institute of Certified Public Accountants of Kenya (ICPAK) made an exemption application in regard to prescribing of fees charged by its members and the same was rejected by the Authority. Following the rejection of their application ICPAK has opted to bypass the Authority and has begun to push for the prescription of the fees through the law and in 2020, they published the proposed remuneration order. Similarly in 2020, the Engineers through the Engineers board of Kenya also have the draft scale of fees for professional engineering services.
As mentioned above, there is the issue of self-regulation versus regulation by statute. Relevant Kenyan law includes the Statutory Instruments Act, which provides for the making, scrutiny, publication and operation of statutory instruments. Statutory instruments include but are not limited to rules, guidelines or by-laws made in execution of a power conferred by an existing statute. It is important to mention the Statutory Instruments Act because under this law, all statutory instruments are required to carry out consultations with the Authority to establish whether the proposed instrument restricts competition. It is however unclear whether the opinion of the Authority matters because despite complying with this requirement. What would be interesting to watch for now is whether ICPAK is successful in its quest for setting of professional fees there being a gazette notice where the CAK rejected its exemption application over the same subject matter.
Associations that self-regulate fall squarely within the jurisdiction of the CAK and that is why the Authority has in the past successfully pursued contraventions by trade associations like in 2016, the association members in the advertising industry who were involved in price fixing were penalized. This can be compared to the activities of the Law Society of Kenya which are governed by statutes which empower it to recommend to the Chief Justice fees to be charged in relation to certain services offered by its members.
In conclusion, while the CAK may be justified in its quest to reign in the behavior of professional associations that are engaged in conduct that may amount to price-fixing, there needs to be a balance in the approach the CAK takes, where protection of fair remuneration is taken into account while preventing what would amount to abusive conduct. That being said, the CAK should also consider challenging the other laws that are in place that allow the professional associations to engage in conduct that it believes should be subject to an exemption application.
Our good friends at CONCURRENCES will be hosting the third instalment of their global antitrust conference next Thursday, September 23rd:
The 2021 edition of Concurrences annual “Global Antitrust Hot Topics” conference will be held online, with a series of 3 webinars from Tuesday, September 21st to Thursday, September 23rd.
The third and last webinar will take place on Thursday 23 September from 3:30pm CEST / 9:30am EDT with a panel focusing on key issues for in-house counsel in global antitrust, merger enforcement and emerging regimes.
The conference will then close with a virtual reception where speakers and participants will be able to exchange their thoughts on this 9th edition.
Speakers will include:
Hanna Danwall Head of Competition Law Carlsberg
Nick Hendon Vice President Mergers & Acquisitions Olin
Following the 3rd panel, Concurrences is inviting you to the closing reception of this conference. It will allow you to exchange views with the participants and speakers involved in the different webinars of this edition.
This reception will take place via the platform Remo. During this virtual event, you will be able to speak or chat with other attendees and navigate from table to table on a virtual hotel floor.
This virtual panel will also be the opportunity for you to interact with the speakers during the live Q&A session at the end of the panel discussion.
The COMESA Competition Commission (“CCC”) is stepping up to the plate in 2021, and nobody can deny it. The days of ignoring the CCC’s jurisdiction over M&A deals, joint ventures, and even anti-competitive agreements in the Common Market for Eastern and Southern Africa are decidedly over, as the antitrust enforcer has significantly increased its presence and visibility in the legal and business communities over the past 6 months.
In its latest bid to be considered by the antitrust community to rank among the leading African competition-law agencies, the CCC has issued its first-ever failure-to-notify fine on mobile-phone infrastructure providers Helios Towers Limited (“Helios Towers”), Madagascar Towers S.A (“Madagascar Towers”) and Malawi Towers Limited (“Malawi Towers”) for failure to notify the transaction within the prescribed 30-day time period under Article 24(1) of the COMESA Competition Regulations of 2004. Helios Towers is a UK-based telecommunications company, listed on the LSE and a constituent of the FTSE 250 stock index; it operates in the Democratic Republic of Congo within the COMESA region.
As we previously reported in 2017 (here and here), to AAT’s knowledge the only other reported transaction that came close to being fined for a failure to be notified by the merging parties was the paints deal between Akzo Nobel and Sadolin / Crown Paints: “In that transaction, the parties boldly proclaimed that the CCC simply did not have any statutory jurisdiction at all,” says attorney Andreas Stargard, an expert in African competition law. Indeed, four years ago, Akzo’s spokespeople flatly claimed that their deal fell “outside the CCC’s purview,” as “[w]e do not have a merger going on; we are a fully independent plant, so COMESA does not come into the picture at all.”
The COMESA’s CID observed that the Parties should have filed their merger notification on 22nd April 2021 in accordance with Article 24 (1) of the Regulations, but breached it.
Interestingly, as to the comparatively low amount of the fine, the CCC took into account significant mitigating aspects pursuant to Article 26(6), including these five considerations:
The breach was unintentional;
The delay in filing did not yield any “discernible advantage” to the Parties;
The breach did not result in any loss or harm in the market;
The Parties cooperated with the Commission from the time they were engaged leading to the merger being notified on 2nd July 2021 following their initial engagement; and
The Parties have no record of contravention with the Regulations.
Therefore, the CCC merely imposed a 0.05% fine (instead of the statutory maximum under Art. 24(5) of 10% of the parties’ turnover in the preceding calendar year in the common market). AfricanAntitrust.com confirmed this 0.05% figure with a CCC executive, clarifying that this percentage amounted to a fine of U.S. $102,101. Mr. Stargard noted his understanding that the CCC’s positioning of this fine at the extremely low end of the permissible spectrum denotes not only the parties’ significant cooperation and other mitigating factors, outlined above, but also represents a nod by the Commission to the fact that this is the first-ever enforcement action of its kind, and therefore “should not set a precedent in both substance and amount.”
The Parties may appeal the decision (available to AAT readers here) to the full Board of Commissioners in accordance with Article 15(1)(d) of the Regulations as read together with Rule 24 (e) of the COMESA Competition Rules of 2004.
The Commission’s Registrar, Ms. Meti Disasa, stated that “the fine was the first of a kind for breach of the Regulations. The Commission therefore wishes to remind Undertakings in the Common Market to be cautious of the prescribed timeline for notifying mergers in under Article 24 (1) of the Regulations.” Ms. Disasa warned undertakings operating in the Common Market “to comply with all other parts of the Regulations especially with respect to anti-competitive conduct as the Commission shall henceforth not take lightly any breaches of the regional competition law,” according to the CCC’s press release, also noting that “the decision to fine has no impact on the Commission’s assessment of any competitive effects of the merger, which is still ongoing.”