Author: Editor

Editorial staff of AAT

Competition Authority of Kenya exempts MSMEs from merger control provisions to stimulate economy

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Competition Authority adds exemptions to boost economic activity

By Joshua Eveleigh and Katia Lopes

In a recent speech by Kenya’s Minister of Finance, Professor Njuguna Ndung’u, it is clear that the Competition Authority of Kenya (“CAK”) will take active steps in promoting micro, small and medium-sized enterprises (“MSMEs”) in the local economy.

Firstly, to facilitate their growth and contribution, Professor Ndung’u, noted that government plans to ease the cost of doing business and to minimize compliance costs for MSMEs.  Specifically, the CAK will exempt MSMEs from having to notify otherwise mandatorily notifiable mergers to the CAK. By removing the significant regulatory hurdle of obtaining prior merger approval, and its associated costs, it is hoped that Kenya will see a promotion of start-up and digital businesses. This development is particularly important considering that Kenyan startups ranked second, in Africa, in terms of funding raised but fell behind other African jurisdictions when it came to acquisitions of MSMEs.  Fidel Mwaki, legal practitioner based in Nairobi, observes that “this is a positive move from the CAK that should hopefully bode well for MSME’s, many of whom are battling under the strain of increased taxation, inflation, and licensing requirements and will certainly benefit from the proposed waiver on merger notification fees.”  His Primerio colleague, attorney Diana Wariara, adds that “regulating buyer power remains a challenge for the agency.  A greater emphasis on audits and investigations may help strengthen the CAK’s enforcement mandate and ensure a level playing field and fair competitive practices within these sectors.”

In addition to merger exemptions and emphasising the CAK’s position as Eastern Africa’s lodestar in the enforcement of abuses of buyer power, the CAK will monitor and conduct surveillance audits, specifically in the manufacturing and agro-processing sectors, to further protect MSMEs from incidences of abuses of buyer power. Professor Ndung’u also noted that the CAK will implement codes of practice to ensure MSMEs in the retail and insurance sectors are protected from powerful buyers.

Lastly, Professor Ndung’u highlighted that the CAK will take measures to address the issues of price fixing by professional services, ensuring that fees and the quality of professional services remain competitive.

Given the pivotal role that MSMEs play in the Kenyan economy, comprising 98% of all local business entities and contributing approximately 24% of Kenya’s GDP, their promotion will be a welcome development among the local business community. In this respect, Professor Ndung’u’s speech demonstrates the CAK’s commitment towards ensuring a competitive marketplace that is free from abuses of dominance.

Important Regulations recently published by the Department of Trade Industry and Competition to prepare for the upcoming release of the SACC’s final recommendations in respect of its various market inquiries.

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By: Gina Lodolo

By way of background, the Competition Amendment Act 18 of 2018 (“Act”) included amendments to the powers of the South African Competition Commission (“SACC”) in respect of market inquiries.  In terms of the amended Section 43C of the Act, should the SACC find that there are features which have an adverse effect on competition, with particular regard to the “impact of the adverse effect on competition on small and medium businesses, or firms controlled or owned by historically disadvantaged persons”, the SACC must make recommendations, which will mitigate the adverse effects on competition.  The SACC’s remedial powers include, most notably under Section 43D(2) read with Section 60(2)(c), that the SACC can make a recommendation to the Competition Tribunal to order a divestiture in relation to such an adverse effect on competition identified in the market inquiry.

On 24 May 2023, the Minister of Trade, Industry and Competition published regulations titled ‘Regulations relating to appeals arising from market inquiries before the Competition Tribunal in terms of section 43F and Regulations relating to a divestiture recommendation by the Commission in terms of Section 43D(2) of the Competition Act, No.89 of 1998, as amended’ (“Regulations”), which took effect upon publication thereof, to govern the procedure that the SACC must follow when making such a recommendation to the Competition Tribunal to order a divestiture following a market inquiry, together with the rules for appealing a decision made by the SACC emanating from a market inquiry.  In this regard, where the SACC concludes in a market inquiry that a divestiture be recommended to the Competition Tribunal to make such an order, the SACC must file a notice of motion and affidavit providing:

  1. grounds for the recommendation;
  2. material facts;
  3. the law relied on by the SACC; and
  4. provide reasons for the divestiture being reasonable and practical.

The respondent will be provided with an opportunity to oppose the recommendation to the Competition Tribunal.

In respect of appealing a recommendation by the SACC emanating from a market inquiry, any person that is materially and adversely affected by a decision of the SACC in respect of remedial action taken by the SACC to remedy an adverse effect on competition, may appeal the decision by filing a Notice of Appeal. The Notice of Appeal must be filed within 25 business days after the affected organisation has received a notice from the SACC of the decision. While the evidence in the appeal will usually be confined to the market inquiry record, the Regulations do provide a number of exceptions.

The Regulations provide that the Notice of Appeal must contains the following:

‘(a) the determination or decision that is the subject of the appeal;

(b) whether the whole or part of the determination or decision is the subject of the

appeal;

(c) if only part/s of the determination or decision are being appealed against, which

part/s of the determination or decision are the subject of the appeal;

(d) the grounds on which the appeal is based; and

(e) the relief sought.’

For the full process governing the appeal, see here.

These Regulations are vital to be cognisant of as the SACC is currently in the process of undergoing various market inquiries, including the Fresh Produce Market Inquiry, the Media and Digital Platforms Market Inquiry, the South African Steel Industry Market Inquiry and most notably the Online Intermediation Platform Market Inquiry which is due to be completed on 30 June 2023 (after an extension was recently granted for the SACC to finalise the report and draft remedial actions and recommendations).

Primerio director, Michael-James Currie says given the SACC’s broad remedial powers following the conclusion of a market inquiry, coupled with a very different competition test to be used in market inquiries than the traditional SLC test, is likely to result in various market participants utilising the appeal procedures in the near future.

CCC Celebrates ’10’ — a Decade of COMESA Competition Law

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Anniversary of CCC’s 2013 Creation to be Celebrated, Developments Discussed

Next week, African heads of state, ministers of trade and commerce, the secretary general of the 21-member state COMESA organization, Commissioners, and several heads of various competition agencies across the region, from Egypt to Eswatini & from Mauritius to Malawi, will join antitrust practitioners, legal experts, business people, and journalists in celebrating the occasion of the 10-year anniversary of the COMESA Competition Commission in Lilongwe, where the agency is headquartered.

Of course, AAT will be there to cover it.

As leaders of this august publication will know by now, our authors have followed the development of the CCC since its very beginning: from the nascent stages of having only a rudimentary staff and foundational rule documents, lacking sufficient guidance for practitioners and businesses alike, to the significant developmental stage under its first chief executive officer, Dr. Lipimile, who built out his enforcement team to coincide with the stellar growth of the CCC’s “one-stop-shop” merger notification statistics and attendant agency reviews (hiring economists and lawyers alike from across COMESA member nations) — and culminating, so far at least, in what we have come to call “CCC 2.0”: the latest iteration of the vastly successful multi-jurisdictional antitrust body, now led by its long-term member Dr. Willard Mwemba.

Under Mwemba’s aegis, the Commission has advanced well beyond a mere ‘rubber-stamping’ merger review body, as some had perceived the fledgling agency in its very early years (approx. 2013-15). The triple-C has since then begun to launch serious investigations into price-fixing, monopolization, attempted monopolization, gun-jumping, as well as market allocation schemes and secretly implemented transactions that parties had failed to notify.

While ‘antitrust is on our minds’, we note here for the record that, beyond its “competition” ambit that mostly remains in our focus at AAT, the CCC’s enforcement mission also includes a fairly large “consumer protection” brief, and the agency’s dedicated unit has investigated areas of consumer concern as broad as airline practices, imported faulty American baby powder, online ‘dark’ practices, pay-TV, and agricultural product quality disputes (milk and sugar come to mind) between Uganda and Kenya, to name only a few…

Our publication, together with several of the business journals and newspapers across the southeastern region of Africa, will report in great detail on the events, and possible news, to take place next week. Says Andreas Stargard, a competition practitioner with Primerio International:

“I look forward to hearing from these leaders themselves what they have accomplished in 10 years, and more importantly what they wish to accomplish in the near to mid-term future. In addition, I have a feeling that we may be treated to some truly newsworthy developments: I could imagine there being either confirmation or denials of the circulating rumour that the COMESA merger regime will soon become not only mandatory, but also suspensory. As most attorneys practicing in this arena know by now, the current Competition Regulations are not suspensory, which may be deemed too restrictive by the group’s Secretariat and its agency leadership in terms of its enforcement powers. After all, it is much more difficult to unscramble the egg than to never let it drop in the pan from the get-go!

Also, the CCC may reveal its plans in relation to a leniency programme for cartel conduct, which is plainly in order!”

Beyond that, Stargard surmises, participants at the almost week-long event may be treated to news about the CCC’s thoughts on digital markets, sectoral investigations, and the Commission’s upcoming “beyond-mere-merger” enforcement activities.

Criminal cartels & dilapidated energy networks: Will South Africa act?

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A true challenge to the impartiality of the South African Competition Authority: Eskom and its Criminal Supplier Cartels — Let’s wait and see what SACC does now

By Joshua Eveleigh

Will South Africa’s antitrust watchdog, under the aegies of its relatively new head Doris Tshepe, investigate and prosecute flagrant cartel conduct, when it is practically presented on a sliver platter by one of the CEOs of the (willing?) victims of said illegality…? Andre De Ruyter, former CEO of South Africa’s recently-infamous Eskom, is no stranger to the limelight – this is particularly true, following his scandalous (but not so surprising) bombshell allegations of deep-rooted and systemic corruption within the State-Owned Enterprise, together with ‘senior politicians’.

Even more recently, De Ruyter tested the antitrust waters and emphasised the existence of at least four cartels amongst coal mines in Mpumalanga (the Presidential Cartel, the Mesh-Kings Cartel, the Legendaries Cartel, and the Chief Cartel, respectively) intent on defrauding Eskom by, amongst a myriad other means, engaging in collusive tendering, so as to ensure that one of the cartel’s participants would ultimately be appointed as a lucrative vendor.

While there may not be any definitive or public available evidence, as of yet, the mere allegations of such cartels by the SOEs former CEO should at least raise enough red flags for South Africa’s Competition Commission. In this respect, section 4(1)(b)(iii) of the Competition Act expressly prohibits collusive tendering, forming part of the ‘cartel conduct’ category, the most egregious form of competition law contraventions due to their unnecessary raising of prices – of which may be passed down to end-consumers.  Mr. De Ruyter noted that the mere reality that cartel chiefs had ceased posting personal jet set lifestyle photos on social media was evidence of their having been alerted to the risks attendant to flagrant antitrust violations.

Given the current state of load-shedding, Eskom’s R423 billion indebtedness (as of March 2023) and the prejudicial impact that these factors are having on both business and personal livelihoods, the South African Competition Commission – theoretically in charge of cartels in the country — must surely regard the energy sector as a priority.  In this regard, one would expect a similar sense of urgency and emphasis that the Competition Commission has recently placed on the retail and grocery sectors, for the focus to be on South Africa’s energy sector.  After all, says Primerio partner John Oxenham, “this sector impacts every facet of commerce and consumer welfare.  If this was the case, the South African public could expect to see the prosecution and sanctioning of numerous cartels, each allowing for a maximum administrative penalty of 10% of the cartelist’s locally derived turnover as well as the potential for subsequent civil follow-on damages claims as well as criminal prosecutions.”

Oxenham’s competition-law colleague, Michael Currie, opines that, “[i]n the event that the Competition Commission does not investigate and prosecute against the coal mine cartels, such a position would largely reinforce the notion that some of the most unscrupulous of cartels are immune from prosecution, further entrenching the existence of cartels in South Africa’s most sensitive sectors.”

Market Inquiry here, Market Inquiry there, Market Inquiry everywhere! – 3 Market Inquiries in as Many Months

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By Joshua Eveleigh and Nicholas Petzwinkler

The South African Competition Commission (“SACC”) has not spared any time in demonstrating its bench strength by publishing three draft Terms of Reference for as many separate market inquiries within the first four months of 2023.

This article provides a brief overview in respect of the: Fresh Produce market inquiry (“FPMI”); Media and Digital Platforms market inquiry (“MDPMI”); and South African Steel Industry market inquiry (“SASMI”) and what this all means for firms across these varying sectors.

What is a Market Inquiry and what is its Purpose?

In brief, a market inquiry is an investigative tool used by the SACC to identify whether there are any aspects of a particular market that impedes, distorts or restricts competition by asking industry stakeholders for information regarding their business, its operations within a specific market as well as the market in general.

FPMI

On 14 February 2023, the SACC published the final Terms of Reference for the FPMI which seeks to identify and understand the state of competition within the industry, market features affecting pricing outcomes and the challenges faced by, in particular, small and emerging farmers.

The FPMI will focus on the following themes:

  1. Efficiency of the value chain, with an emphasis on the dynamics around fresh produce market facilities;
  2. Market dynamics of key inputs and its impact on producers; and
  3. Barriers to entry, expansion and participation.

The Terms of Reference also provide that the FPMI will focus on, in particular: apples, bananas, oranges / citrus, stone fruit, pears, avocados, grapes and nuts, potatoes, onions, tomatoes, sweetcorn, carrots and cabbage and will also extend to processed fruit and vegetables.

Most notably, the FPMI concerns the entire value chain, including inputs (such as fertiliser, agrochemicals and farming equipment), production, wholesalers, intermediaries, national fresh produce markets, distribution, marketing and retailers.

Given that the SACC views the fresh produce sector as a priority sector, it is foreseeable that the SACC will place increased scrutiny in its investigations across the value chain. This is particularly in light of recent and controversial Essential Food Price Monitoring Report which concluded that there were reasons to suspect that firms across the value chain may have engaged in opportunistic price increases

All Things Digital: MDPMI

On 17 March 2023, the SACC announced and published the draft Terms of Reference for the MDPMI.

The MDPMI appears to largely come off the back of several inquiries and investigations led by competition authorities globally, on the impact of digital platforms on news media publishers that use these platforms to distribute content online as well as the SACC’s recent Online Intermediation Platforms Market Inquiry (“OIPMI”) where the Publishers Support Services made submissions that the widespread shift towards digital news consumption has resulted in a substantial decline in advertising revenue.

The MDPMI will focus on whether there are any market features in digital platforms that distribute news media content which impede, distort or restrict competition, or undermine the purposes of the Competition Act, 89 of 1998 (“Competition Act”), and which have material implications for the news media sector of South Africa, which includes news publishers and broadcasters. The scope of the market inquiry will extend to the following digital platforms:

  1. Search engines (e.g. Google Search and Microsoft Bing);
  2. Social media sites (e.g. Meta);
  3. News aggregator sites and/or apps (e.g. Google News and Apple News);
  4. Video sharing platforms (e.g. YouTube and Tiktok);
  5. Generative AI services whether integrated into the above platforms or not (e.g. ChatGPT alone or integrated with Bing); and
  6. Other platforms identified in the course of the inquiry.

Evidently, the MDPMI will be far reaching and will also extend to emerging technologies, such as open AI search engines.

The draft Terms of Reference can be accessed here.

South African Steel Industry market inquiry (“Steel Industry Inquiry”)

On 07 April 2023, the SACC published the draft Terms of Reference for the Steel Industry Inquiry, and will focus particularly on inputs and raw materials (such as iron ore and coking oil) and the upstream primary steel production. The SACC notes specifically that:

Iron ore

  1. Based on 2018 estimates, the three largest market participants in the mining of iron ore account for more than 95% of total ore mined in the country with the largest participant having a market share in excess of 55% while the third-largest iron ore miner held a market share of approximately 15% which, alongside large levels of production, may result in a large degree of market power. The SACC also states that there is a need to assess the pricing mechanisms adopted by iron ore producers in South Africa to ensure the competitiveness of steel producers.
  2. It has received information that there were previously contractual arrangements in respect to allocations of capacity on the Sishen-Saldanha railway line which may result in competitive concerns. The SACC has also received complaints of differential pricing whereby larger rail customers are provided favourable rates in comparison to emerging miners.

Coking oil

  1. The SACC highlights that South African steel manufacturers rely heavily on imported coking oil which could negatively impact the sustainability of the local steel manufacturing market due to import taxes and which may allow local producers to set their prices at import parity levels.
  2. The SACC considers it important to determine whether, inter alia, there are any policy interventions to encourage the local production of coking oil and the entering of new market participants.

Upstream Primary Steel Production

  1. In its Terms of Reference, the SACC notes that there is a considerable degree of market concentration with there only being three blast furnace plants in South Africa (of which are all owned by one company). Additionally, there are six electric arc furnaces which are owned by six different companies.
  2. The SACC also notes that he pricing behaviour of upstream suppliers, in relation to the supply of long and flat steel, may have a direct impact on the ability of downstream metal fabricators to be competitive in their respective markets. Additionally, the SACC also identified that there may be high barriers to entry in the upstream level of steel production which has the ability to increase the capital requirements for entry and sustainability in various markets in the upstream level.

The Terms of Reference are open for public comment until 05 May 2023 and can be accessed here.

What do market inquiries mean for industry stakeholders?

As is evident from the scopes of the above market inquiries, market inquiries provide the SACC with broad and seemingly unfettered powers to investigate competitive dynamics within a particular sector.

More importantly, the Competition Act affords the SACC with the powers to publish binding recommendations to specifically redress any anticompetitive effects that it identifies within a market during the course of a market inquiry. In this respect, companies which may be approached by the SACC during the course of its investigations are encouraged to seek specialised competition law advice to ensure that the proper information and legal safeguards are provided to mitigate against the imposition of onerous industry recommendations.

COMESA clarifies merger procedure

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COMESA Competition Commission’s Revised Guidance Note provides much-needed clarity to parties in avoiding fines for late merger notifications

By Tyla Lee Coertzen

On 20 February 2023, the COMESA Competition Commission (“CCC”) published its “Revised Guidance on Engagement with the COMESA Competition Commission on Merger Filings”[1] (“Revised Guidance Note”), replacing the “Notice of Interim Measures in Merger Review of the COMESA Competition Commission due to the COVID-19 Pandemic”[2] (“Interim Measures Note”).

As per Article 24(1) of the CCC’s Competition Regulations, merging parties must notify proposed transactions to the CCC within 30 days of a ‘decision to merge’. The CCC’s Merger Assessment Guidelines further describe a ‘decision to merge’ to either be:

  • a joint decision taken by the merging parties and so comprise of the conclusion of a definitive, legally binding agreement to carry out the merger (which may or may not be subject to conditions precedent); or
  • the announcement of a public bid in the case of publicly traded securities.

Where merging parties do not provide the CCC with a notification within the above specified time, they are at risk to penalties of up to 10% of the merging parties’ combined turnover in the Common Market.[3] In contemplation of a fine, the CCC will consider the following factors for purposes of determining an appropriate penalty:

  • the nature, duration, gravity and extent of the contravention;
  • any loss or damage suffered as a result of the contravention;
  • the behaviour of the parties concerned;
  • the market circumstances in which the contravention took place;
  • the level of benefits derived from the contravention;
  • the degree to which the parties have co-operated with the CCC; and
  • whether the parties have previously been found in contravention of the CCC’s Competition Regulations.

Where the CCC has found parties to have contravened this Article, the CCC has imposed penalties of 0,05% of the merging parties’ combined turnover in the Common Market. However, where parties derive large turnovers in a number of COMESA Member States, even the lower end of the threshold could result in a hefty fine.

The above provisions have caused uncertainty and adverse effects against companies involved in lengthy deal negotiations and execution of large multinational mergers and acquisitions. Often, preparing a merger notification within 30 days of initial decisions to merge places results in large administrative burdens on merging parties who may meet the requirements of a ‘decision to merge’ even before the drafting or execution of important agreements relating to the merger.

The Interim Measures Note was published during the Covid-19 pandemic as a result of uncertainties relating to the timing of merger notifications submitted to the CCC upon recognition of “unprecedented, uncertain and challenging times.” The Interim Measures Note allowed for a relaxation of various rules related to merger notifications to the CCC, such as an allowance for parties to deliver hard copies of their filings after the prescribed 7-day period.

The Interim Measures Note provided guidance to parties who, as a result of the uncertainty posed by the pandemic, were unable to provide a complete notification to the CCC within the 30-day period as required by Article 24(1). In this regard, the CCC allowed parties to proactively engage with it during the 30-day period at the beginning of the merger notification process. Thereafter, the CCC would consider the filing complete after all information required is submitted. The Interim Measures Note provided that “as long as the parties have engaged the Commission on the notification process, they shall not be penalized for failure to submit complete information within 30 days of the parties’ decision to merge.”

However, the Interim Measures Note seemingly only applied during the ‘temporal period’ where the Covid-19 pandemic was rife.

As a result of the relaxation of Covid lockdown regulations and restrictions worldwide, the CCC has now provided further guidance on parties’ options where merging parties are unable to provide the CCC with a complete filing within the strict 30 day time period.

The Revised Guidance Note replaces and overrides the Interim Measures Notice released in 2020. The Revised Guidance Note recognised that in relation to the approach it took for Article 24(1) prohibitions, the Interim Measures Notice was “widely utilized by merging parties” and that the ‘initial engagement approach’ adopted by the CCC had proven “beneficial for both merging parties and for the CCC in monitoring non-compliance with Article 24(1) of the Regulations.”

As a result of the above, the Revised Guidance Note confirms that the CCC will maintain the ‘initial engagement’ approach until further notice and possible amendment to the Competition Regulations. As such, where parties are uncertain as to the conclusion of a proposed transaction within the strict timer period and fear being penalised for an Article 24(1) contravention as a result, they are advised to engage the CCC on the notification process within the 30-day period and shall therefore avoid being penalised. Importantly, the Revised Guidance Note provides that this approach will not apply where there are “unreasonable and unexplained delays in the parties’ submission of a complete notification.”

The Revised Guidance Note provides useful direction to parties who are engaging in proposed transactions within the Common Market and certainly provides clarity on how merging parties who are in good faith unable to provide a complete merger notification within the period prescribed by the CCC may prevent a fine for non-compliance of Article 24(1).

[1] CCC-Notice-2-of-2023.

[2] CCC-Notice-4-of-2020.

[3] Namely, the COMESA Member States, which comprise of the following jurisdictions: Burundi, Comoros, Democratic Republic of the Congo, Djibouti, Egypt, Eswatini, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tunisia, Uganda, Zambia, and Zimbabwe.

Pursuing Produce: New SA Market Inquiry Starting in 1, 2, 3 …

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South African Competition Commission’s Fresh Produce Market Inquiry & its Final Terms of Reference

By Gina Lodolo

Pursuant to the South African Competition Commission’s (“Commission”), draft terms of reference into an inquiry into the Fresh Produce Market, on 14 February 2023, the final terms of reference into the Fresh Produce Market Inquiry (“FPMI”) were published in the Government Gazette, marking 20 business days before the start of the FPMI.

 Market Inquiries are instituted by Section 43B(1)(a) of the Competition Act 89 of 1998, as amended (“the Act”), which provides that “the Competition Commission […] may conduct a market inquiry at any time […] if it has reason to believe that any feature or combination of features of a market for any goods or services impedes, distorts or restricts competition within that market; or (ii) to achieve the purposes of this Act”.

The terms of reference to the FPMI indicate a focus on the entire fresh produce value chain (fruits and vegetables). In particular, the main fruits on the Commissions radar are apples, bananas, oranges / citrus, stone fruit, pears, avocados, grapes and nuts, while the main vegetables are potatoes, onions, tomatoes, sweetcorn, carrots and cabbage (fresh and processed).

Of importance is that the terms of reference do not only find application to the fresh produce itself, rather the scope of the inquiry relates to the entire value chain, including considerable inputs, such as fertiliser, equipment, water and agrochemicals. The terms of reference show that every stage of the value chain will be assessed and broken down as follows: inputs, production, wholesalers and intermediaries (agents), national fresh produce markets (where wholesale of fresh produce between producers and buyers occur), distribution, marketing and retailers.

Particular focus will be placed on value chain efficiency, the market dynamic surrounding significant inputs and any barriers to entry, expansion and participation. 

Market Inquiries initiated by the Commission are significant because the Competition Amendment Act introduced broader remedial powers to the Commission who, after the conclusion of a market inquiry, can remedy structural features identified as having an adverse effect on competition in a market by utilising, inter alia, a recommendation of a divestiture order to the Competition Tribunal under section 60(2)(c) of the Act.

Broadly, the terms of reference highlights that the Commission, not only views the food and agro-processing sector as a priority sector but will be utilizing this sector “as a driver of inclusive growth in the South African economy”. This is of importance as the Commission is increasingly imposing public interest conditions – and in particular the promotion of Historically Disadvantaged Persons ownership – in competitively benign mergers that are also neutral into terms of public interest concerns. As fresh produce has been earmarked as a priority sector by the Commission, it will not come as a surprise if this market inquiry further emboldens the Commissions current trajectory to increasingly impose public interest conditions on merging parties.

Unless an extension is granted by the Minister of Trade, Industry and Competition, the Commission is statutorily obligated to conclude the market inquiry within 18 months.

Primerio Ltd Partner, John Oxenham commented that “the final terms of reference confirm the Commission’s intent on utilising the robust market inquiry mechanism to further not only pure competition initiatives, but more importantly, socio-economic redress mechanisms. The FPMI will result in likely structural changes to the fresh produce market and all entities involved should seek robust counsel prior to commencement of the inquiry.”

To access the FPMI terms of reference click here.

Zambia: New Board of Commissioners Signals Possible End of Increased Enforcement

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By Joshua Eveleigh and Shivaan Naicker

The Board of Commissioners of the Zambian Competition and Consumer Protection Commission (“CCPC”) recently fined Airtel Money and Avian Ventures Ltd (trading as Farm Depot Zambia) each 3% of their annual turnovers in Zambia.

The CCPC’s investigation found that Airtel Money had increased its cash collection and cash disbursement fees among different sports betting companies, in contravention of section 16 of the Competition and Consumer Protection Act (the “Act”). Airtel was found to have imposed differing transaction conditions to differing parties for identical transactions, a type of price discrimination akin to U.S. Robinson-Patman Act violations that may be falling back into favor across the pond.

Additionally, Farm Depot Zambia was found to have contravened sections 15 and 16 of the Act by engaging in product tying by requiring customers to purchase certain brands of chicken feed when they intended on only purchasing Day-Old Chicks, with the Board of Commissioners of the CCPC emphasising that product typing places a particular strain on small and medium-sized businesses.

More recently, the Zambian Minister of Commerce, Trade and Industry, Chipoka Mulenga, announced a new Board of Commissioners comprised of:

  1. Mrs. Angela Kafunda;
  2. Mr. Fredrick Imasiku;
  3. Mr. Stanford Mtamira;
  4. Mr. Sikambala M. Musune;
  5. Mr. Emmanuel M. Mwanakatwe;
  6. Mrs. Sambwa Simbyakula Chilembo; and
  7. Mr. Derrick Sikombe.

While the sanctions against Airtel Money and Farm Depot Zambia may have emphasised the steady investigation of, and enforcement against, anti-competitive conduct under the previous Board of Commissioners, the new Board of Commissioners does not appear to consist of any competition law practitioners. Various local counsel in Zambia have raised concerns in this regard for the future of the CCPC’s competition enforcement initiatives.

Media PAIA request reveals evidence underlying South African Competition Commission dawn raid

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By Tyla-Lee Coertzen

Following the South African Competition Commission’s (“SACC”) dawn raids conducted on eight major South African insurance firms in August of 2022, a popular South African news resource, News24, was successful in a Promotion of Access to Information (“PAIA”) request to gain access to the court documents which granted the SACC permission to conduct the dawn raid.

In our previous update on the matter, we recorded that the SACC conducted a dawn raid on the following insurance firms: Discovery Limited; Hollard Insurance Group (Pty) Ltd; Momentum, a division of MNI Limited; Old Mutual Limited; BrightRock Life Limited; FMI, a division of Bidvest Life Limited; Professional Provident Society Limited, and South African National Life Assurance Company (Pty) Ltd. The dawn raids were conducted as part of the SACC’s ongoing investigation into potential collusion between insurance firms.

Collusion is described as a per se prohibition in the South African Competition Act, 89 of 1998 (as amended) (“the Act”). This means that competitors who are found to have colluded with each other may not raise efficiency defences. Mere participation in a restrictive horizontal practice will attract administrative penalties and imprisonment.

The PAIA request provided News24 with access to certain evidence including emails circulated between insurers which the SACC believes to have taken place since 1989. According to News24, the SACC alleges that historically, the insurers formulated a ‘rate book’ in which information regarding information regarding prices of certain products were recorded. This rate book was allegedly exchanged between insurers. Thereafter, it is alleged that the insurers exchanged floppy disks with sensitive pricing information. In more recent times, it is alleged that pricing information was uploaded onto password protected online platforms, and the passwords were shared between insurers. The SACC also alleges that technical information regarding the design of products were shared, thereby allowing insurers to decrease competition amongst themselves. To see the full News24 article on the matter, click here.

Primerio director, John Oxenham, who notably acted for the leniency applicant in the infamous bread cartel says: “After a lengthy hiatus, it is apparent that the SACC is using significant investigative tools in an effort to uncover and prosecute potential cartel conduct. In the past, this mechanism of investigation, namely dawn raids, has been of significant effect in assisting the agencies to fulfil its mandate of preventing corrupt activity.”

Fellow Primerio director. Michael-James Currie said “one of the key challenges, for all parties involved, in cases where the alleged conduct was often historic, there is a lack of credible witnesses to contextualize certain evidence. It very often happens that evidence, when considered in isolation, presents a very different picture than what truly transpired”.

Do antitrust settlements require an admission of guilt? Appellate body says “no”, overrules CID

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Barring an application for review to the community’s highest court, decisions by the COMESA Competition Commission and its CID (Committee for Initial Determinations) are reviewed by the COMESA Appeals Board (“CAB”). In other words, the CAB is the crucial mid-layer of appellate review in antitrust matters across the COMESA region.

The CAB recently published its important December 2022 ruling in the CAF / Confédération Africane de Football matter. The CAF case is noteworthy in at least 3 respects, says Andreas Stargard, a competition attorney with Primerio International:

“For one, it deals with one of the CCC’s very first cases involving anti-competitive business practices; heretofore, virtually all decisions by the Commission involved pure merger matters.

Second, the CAB ruling is important in that it lays the groundwork for future settlements (or commitments) between the Commission and parties accused (but not yet found guilty) of violations of the COMESA competition regulations.

Lastly, the Appeals Board highlights the importance of issuing well-reasoned, written decisions, on which the parties (and others) can rely in the future. The CAB has made clear what we at Primerio have long advocated for: a competition enforcer must articulate clearly and state fully all of the reasons for its findings and ultimate decision(s). This is necessary in order for readers of the written opinion to evaluate the factual and legal bases for each. The CAB has now expressly held so, which is a welcome move in the right direction for COMESA litigants!”

In an ironic twist in the 5-year saga of the CAF investigation by the CCC, the Commission and the parties themselves had reached an agreed settlement, according to whose terms the parties did not admit guilt, yet agreed to (and in fact anticipatorily did) cease and desist from performing under their sports-marketing contract, which was essentially torn up by the commitment decision. Yet, to the surprise of the CCC and the private parties under investigation, in the summer of 2022 the CID refused to sign off on the settlement, due to the sole (otherwise unexplained) reason that there was a lack of an admission of guilt. The parties sought reconsideration on various grounds, which the CID again refused a second time. These rulings were then appealed — successfully — to the CAB, which quashed the CID’s unsubstantiated determinations and gave effect to the parties’ previously-reached settlement agreement with the CCC.

The full decision — which deals in detail with the CAF’s distribution agreements for the commercialization of marketing and media rights in relation to sports events — can be accessed on AAT’s site, see below.

comesa-appeals-board-decision-in-caf.pdfDownload