Uncategorized

Kowlessur appointed as head of Mauritian Competition Commission

New head of CCM announced

Amid some controversy over other past (and some other pending) political appointments and potential nepotism, Mr. Deshmuk Kowlessur has been appointed as new head of the Competition Commission in Mauritius.

An article in Le Mauricien states (French skills required) that the rules have “followed to a T” in Mr. Kowlessur’s case, thereby alleviating readers’ concerns that the Competition Commission’s recent appointment may have been similarly tainted:

Les nominations de proches du MSM continuent conformément à l’engagement donné par Pravind Jugnauth. Et c’est d’ailleurs un proche, Deshmuk Kowlessur, qui décroche le poste de directeur de la Competition Commission en attendant que d’autres affidés du Sun Trust soient casés.

Deshmuk Kowlessur, un professionnel de la gestion qui a occupé divers postes dans le management de quelque grandes compagnies dont Rogers ou Emtel, est le beau-frère du beau-frère du leader du MSM et il avait déjà occupé le poste de président de la SIC lorsque Pravind Jugnauth était vice-Premier ministre et ministre des Finances entre 2003 et 2005. Week-End a toutefois appris que, contrairement à l’ICAC, les procédures et les consultations d’usage ont été respectées à la lettre pour la nomination de M. Kowlessur.

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agriculture, East Africa, EU, Kenya

EU gives Kenya until October 1 to sign Partnership Agreement

kenya

Kenya is currently at risk of losing preferential access to European markets

As of next year, this risk will expose the country’s exporters of flowers, fish, fruits and vegetables to high tariffs and logistical problems.

Lodewijk Briët, the European Union Ambassador has indicated that the bloc would remove Kenya from the preferential list again, if the East African Community fails to ratify the new Economic Partnership Agreements by October 2015. The removal of Kenya from the list would result in Kenya accessing the European Union market under the Generalised System of Preferences which results in tariffs of up to 15 per cent.  The deadline is apparently not a “must-beat” time limit, according to a quote from the Daily Nation article on the topic:

Negotiations between EU and EAC started in 2002, culminating in the two trading blocs signing an interim EPA in 2007 that ensured duty-free, quota-free access for its products under the Market Access Regulation that will end in October.

Kenya exports flowers to the European Union worth Ksh46.3 billion and vegetables worth Ksh26.5 billion annually resulting in the horticulture sector being one of the most important contributors of foreign exchange. The European Union takes about 40 per cent of Kenya’s fresh produce exports. The horticulture industry has also created job opportunities for about 90 000 Kenyans.

In October 2014, the European Union removed Kenya from its list of duty-free exporters after the East African Community failed to meet the Economic Partnership Agreements deadline which subjected fresh produce to levies of Ksh100 million per week.

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distribution, exclusivity, Malawi, mobile, Telecoms

Mobile phone provider loses antitrust appeal

malawi

 

 

Mobile phone provider loses antitrust appeal

Airtel Malawi Limited, a company incorporated under the Companies Act, engaged in the provisions of mobile phone and telecommunication services in Malawi has lost its appeal against the decision of the Competition and Fair Trading Commission regarding its application for authorisation of an exclusive distribution arrangement.

In a letter dated 28 May 2013, Airtel applied to the commission for the authorisation of an exclusive dealership agreement with its distributors in respect of the sale of its recharge vouchers and other products. This application is in line with section 44 of the Competition and Fair Trading Act Cap 48:09 of the Laws of Malawi.

Due to the fact that Airtel’s exclusive dealership agreement with its distributors contained a clause to ensure that the Distribution Sales Accountants are employed exclusively to undertake Airtel’s sales activities, the Commission refused its approval. The Commission provided its reasoning in a letter to Airtel dated 1st August 2013, specifically stating that the clause “would negatively affect competition in the distribution of mobile products particularly in rural areas.”

Airtel filed an appeal at the High Court Commercial Division against the Commssion’s order that required the company to remove or amend the clause in issue. Airtel submits that the Commission cannot reasonably expect it to appoint Distributor Sales Accountants who will be engaged in accounting for the sales of Airtel’s competitiors in the market.

Delivering his ruling on the 10th of February 2013, Justice Mtambo upheld the decision of the commission and found the justification for the rejection of Airtel’s application for the approval of distributorship agreement to be reasonable. Justice Mtambo went further and stated that, “it is after all the Appellant who is attempting to regulate the business affairs and conduct of its distributors who are independent businesspersons just because the Appellant has dominance on the market.”

 

The court also ruled that it was within the mandate of the Competition and Fair Trading Commission to require companies that use exclusive distribution arrangements in the distribution of their products or services to amend their standard agreements.

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Botswana, mergers

Botswana authority seeks to improve merger notification process

AAT welcomes the news that the Competition Authority of Botswana is currently seeking to improve the merger notification filing process.  In this regard, on 11 February 2015,  the Competition Authority engaged representatives of parties filing merger notifications in an effort to address the merger notification, merger assessment and merger determination processes. This discussion was aimed at positively impacting on the time taken to assess mergers by the Competition Authority.

Mr. Innocent Molalapata, the manager of Mergers and Monopolies identified factors which continuously contribute to the delay in the merger assessment and determination process. Mr. Molalapata stated that the following factors lead to a delay in the process;

  • the submission of unaudited financial statements,
  • failing to provide the required information,
  • giving incorrect or misleading information and
  • failure to provide the most recent version of all documents constituting the merger agreement.

The representatives of merging parties expressed concern with requests by the Competition Authority for clarification or the provision of further information near the expiry of the 30 day merger review window.  In his regard, the representatives stated that these requests cause delays as they often lead to applications for extensions. The representatives suggested that further information requests should be made as soon as the documents are filed with the Competition Authority.

Finally, representatives of merging parties requested a review of the P10 million merger notification threshold (approximately USD 1 million) indicating that the threshold is too low.

The Competition Authority noted the suggestion and indicated that a review of the threshold was currently underway.

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Big Picture, cartels, collusion, economics, legislation, politics, South Africa, Trade Secrets, Unfair Competition

Government-mandated sharing of trade secrets: anticompetitive interference

south_africa

Ms. Zulu proposes foreign competitors share trade secrets with SA counterparts

Perhaps it is time for increased advocacy initiatives within the South African government, or at a minimum a basic educational program in competition law for all its sitting ministers.
In what can only be described as startling (and likely positively anticompetitive), Lindiwe Zulu, the S.A. Minister of Small Business, has demanded foreign business owners to reveal their trade secrets to their smaller rivals.
The South African Competition Commission, and perhaps one of the Minister’s own fellow Cabinet members, minister Ebrahim Patel, who is de facto in charge of the competition authorities, can see fit to remind Ms. Zulu that fundamental antitrust law principles (and in particular section 4 of the South African Competition Act), preclude firms in a horizontal relationship from sharing trade secrets that are competitively sensitive – i.e., precisely those types of information Ms. Zulu now proposes to be shared mandatorily amongst competitors.
While SACC has utilized this provision with much success against big business in South Africa, it would be remiss not enforce the provisions of the Act without fear or favor should the traders act out on the instruction of the Minister.  It is also time that the Cabinet seeks to enforce business practices which comply with South African legislation.
BDLive‘s Khulekani Magubane reports in today’s edition (“Reveal trade secrets, minister tells foreigners“) that “foreign business owners in SA’s townships cannot expect to co-exist peacefully with local business owners unless they share their trade secrets, says Small Business Development Minister Lindiwe Zulu.”

Lindiwe Zulu. Picture: PUXLEY MAKGATHO

Lindiwe Zulu. Picture: PUXLEY MAKGATHO

“In an interview on Monday she said foreign business owners had an advantage over South African business owners in townships. This was because local business owners had been marginalised and been offered poor education and a lack of opportunities under apartheid.

“Foreigners need to understand that they are here as a courtesy and our priority is to the people of this country first and foremost. A platform is needed for business owners to communicate and share ideas. They cannot barricade themselves in and not share their practices with local business owners,” Ms Zulu said.”

Research fellow at the SA Institute for International Affairs Peter Draper said Ms Zulu’s remarks, underscored government’s mistrust of foreign investors which was also reflected in business regulations. “If you connect this to the broader picture, essentially this is part of a thrust to single out foreign business, which is contrary to the political message President Jacob Zuma went to portray in Davos. We are at a tipping point and we are going beyond it. You can only push foreign business so far before they disengage,” he said.Mr Draper agreed with Ms Zulu’s remarks on the effect of apartheid on local business owners in townships but said foreign business owners had to confront their own challenges with little state support.

“Apartheid did disadvantage black people and over generations it inhibited social capital. Many foreigners have trading entrenched in their blood. Wherever they go they bring social capital, networks and extended family. Is that unfair? I don’t think so. That’s life,” he said.

Ms Zulu’s comments show the about-turn in the African National Congress’ (ANC’s) ideology of Pan Africanism and in line with remarks by party leaders.

After a week of looting in Soweto last week, ANC secretary-general Gwede Mantashe told residents in Doornkop that immigration laws needed to be strengthened to protect the country from terror.

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Uncategorized

South Africa: Competition Commission makes available draft guidelines for the assessment of the public interest criteria in merger control matters

south_africa

In what is certainly a most welcome development, the South African Competition Commission (SACC) has made available for comment draft guidelines for the Assessment of Public Interest Provisions in Merger control.

The Draft Guidelines seek to provide guidance on the Commission’s approach to analysing mergers by indicating the approach that the Commission is likely to follow and the types of information that the Commission may require when evaluating public interest grounds in terms of section 12A(3) of the Act.

The Guidelines come after recent Competition Tribunal and Competition Appeal Court decisions and the ongoing debate among stakeholders on how public interest issues should be assessed in merger investigations. Contributors and editors of AAT have also called for clarity from the SACC.  In this regard see 140822-What-is-competition-good-for-FINAL

Written comments on the guidelines, and not the accompanying background information document, can be e-mailed to Ms. Seema Nunkoo at SeemaN@compcom.co.za. Alternatively, stakeholders can call (012) 394 3203, for further enquires.

The closing date for comments is Monday, 23 February 2015.

AAT welcomes the SACC’s initiative particularly in light of the fact that public interest conditions imposed in the past have been a cause for concern.  In many instances merging parties were faced with public interest conditions with little or no nexus to the transaction which caused delays and unnecessary and significant costs to the parties in having to fulfill the conditions.  Clear guidelines are invaluable to the broader competition law community and particularly to the business community.

Final-Background-Note-to-Public-Interest-Guideline-210115 Final-Public-Interest-Guidelines-public-version-210115

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agriculture, BRICS, cartels, South Africa

Pistorius family embroiled in Ag price-fixing cartel

The Pistoriuses refuse to stay out of the media (Ag-)limelight

Starting in late 2009, the South African Competition Commission had suspected cartel activity in the Agricultural Lime (“AgLime”) industry.  Notably, one of the participants in the alleged price-fixing scheme was the Hendrik Pistorius Trust and its Pistorius-family trustee members, all of whom are respondents (defendants) in the action now referred by the CompComm to the S.A. Competition Tribunal (official referral document here).

The connection of this antitrust case with now-infamous Olympic runner Oscar Pistorius is obviously only a family link (based on some quick research, it seems as though one of Oscar’s cousins is involved, namely Arnoldus Pistorius, the son of yet another respondent, Leo Pistorius who is apparently known as an elephant hunter).

It is interesting to note that the Commission requests a 10% penalty, however, they do not explicitly state that it is for the period of the contravention (page 10).

On 16 January 2015, the South African Competition Commission filed a complaint against Hendrik Wilhelm Carl Pistorius N.O., Leo Constantin Pistorius N.O., Hermine Pistorius N.O., Arnoldus Kurt Pistorius,  Kalkor (Pty) Ltd, CHL Taljaard & Son (Pty) Ltd, PBD Boerdedienste (Pty) Ltd, Grasland Ondernemings (Pty) Ltd and Fertiliser Society of South Africa.

south_africa

The Commission alleges that the respondents were engaged in a prohibited practice from 1995 until 2008, by agreeing or entering into a concerted practice to fix the commissions payable by each of them to fertiliser companies who employ agents to market, sell and distribute agricultural lime, which is crushed / pulverised limestone or dolomite used for soil treatment in order to reduce the acidity of the soil.  This alleged practice is in contravention of section 4(1)(b)(i) of the South African Competition Act, which provides the following:

An agreement between, or concerted practice by, firms, or a decision by an association of firms, is prohibited if it is between parties in a horizontal relationship and if –

(a) it has the effect of substantially preventing, or lessening, competition in a market, unless a party to the agreement, concerted practice, or decision can prove that any technological, efficiency or other pro-competitive gain resulting from it outweighs that effect; or

(b) it involves any of the following restrictive horizontal practices:

(i) directly or indirectly fixing a purchase or selling price or any other trading condition;

(ii) dividing markets by allocating customers, suppliers, territories, or specific types of goods or services; or

(iii) collusive tendering.

 

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