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Panel bestows cum laude Ph.D. on AAT contributing author

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Ranchordas, Sofia: Tilburg University doctoral dissertation defense

Tilburg University bestows doctorate cum laude  on AAT author Ranchordás

AfricanAntitrust.com contributing writer, assistant professor of law at Tilburg Univ., and lead author of our #InnovationAntitrust series Sofia Ranchordás was honoured yesterday by a distinguished panel of academics at Tilburg University (Netherlands) with a Ph.D. marked cum laude — a distinction granted only to approximately 2% of Dutch doctoral degrees.

She defended her dissertation on experimental legislation, sunset clauses, innovation, of which we publish a short “layman’s terminology” summary extract here.

Congratulations, doctor!

Sofia Ranchordas, Ass't Professor, Tilburg University

Sofia Ranchordás, Ph.D. cum laude, Ass’t Professor, Tilburg University (Law School)

10-Minute Presentation of Ranchordás Ph.D.
Dissertation in Layman’s Terms

Good afternoon ladies and gentlemen,

Thank you for being here today.

I especially welcome my front row guests, in particular my mother, and my sister who managed to convince her boss that it is possible do a PhD in Law, and two young guests that even had to ask permission to skip classes today:

Hallo Tim en Indy, fijn dat jullie er zijn en dat jullie vrij van school konden krijgen.

(Last week one of my students asked me why I had written yet another book to obtain a PhD degree. My straightforward answer was: because no one else has even written about it and the world needs to know more about sunset clauses, experimental legislation and innovation. My student wasn’t totally convinced by my answer, but at the end of these 10/9 minutes I hope you will be.

Experimental legislation, sunset clauses, innovation: three enigmatic words, 3 Pandora boxes to lawmakers, 3 years and 3 months to write one book. [And as you can see, it is a thick one, but not thick enough to ask all the questions that should have been asked or to provide all the answers]. This book tells the story of two legislative instruments which have been overlooked by legislators. Two instruments that seem to have much to offer to that one reality we all seek these days: innovation.‘

1. ‘Sunset clauses’ are dispositions that impose the termination of a law after a determined period, which means that a law or some of its dispositions might only last for 5 years.

2. ‘Experimental legislation’ submits new rules to a test, trying them out in the real world, testing their effectiveness. The new rules are tried in a part of the territory, while the ‘old ones’ remain applicable to the other. At the end of a certain period, results are compared and, in principle, the legislator ‘should allow the best law to win. However, in the lawmaking process the legislative winner does always not take it all. Politics very often does.

3. ‘Innovation’ is a broad concept that cannot be reduced to a brilliant idea: it is more and less than this common perception of the innovative wheel, a light bulb or a pair of Google glasses. Innovation is instead the first successful commercialization of a new idea, brilliant or not, that can improve the existing state of technology of society.

4. Innovation is ‘a kind of magic’: it is our hope in difficult times, the promise for long-term sustainable growth. Innovation is also ‘a crazy little thing’: it is all around us, but it is impossible to grasp and to generate through a simple formula. Instead, it is a very complex process that can be stimulated or impeded by a number of elements, including outdated regulation.

5. It is a difficult mission to regulate innovation but I know two perfect candidates for the job: sunset clauses and experimental legislation. They provide the flexibility and adaptability that regulators need to regulate under uncertain conditions, allow legislators to revise rules as more information about innovative products becomes available, and terminate obsolete dispositions.

6. However, as always, friends get the best jobs, strangers do not. And that is the case of sunset clauses and experimental legislation: they are total strangers to most lawyers and lawmakers. Before I started doing my research, how many of you had ever heard about sunset clauses and experimental regulations? And even now how many would be able to recognize you?

7 In my research, I looked into the reasons why sunset clauses and experimental legislation have not been more often used to regulate innovative fields and there are legal and non-legal reasons underlying this general resistance to these instruments. An apparently simple research question, you might say. However, as life often teaches us, appearances are misleading and this question allowed me to rethink the meaning of different principles of law in a changing world, the meeting of minds between innovators and regulators and the non-legal elements influencing the lawmaking process.

8. There appears to be a widespread belief that these instruments ‘are bad’ because they violate a number of principles of law we hold dear. That is the case of the principle of legal certainty that is often connected with the idea of predictability, stability and continuity of law. However, some laws cannot live forever because they regulate phenomena that evolve rapidly or problems that might be temporary. Sunset clauses and experimental legislation can provide in these cases more temporary certainty, because they do not expose laws to the erosion of time. In my dissertation, I also argue that experimental laws do not endanger the principle of equal treatment. While it is true that not all citizens will be equal before the law, this differentiation will be temporary, objectively justified and it is intrinsic to the main objective of experimental legislation: gather more information about the effects of a new law.

10. The scarce use of sunset clauses and experimental legislation can be attributed to a number of non-legal elements, such as lack of information or expertise, a certain intellectual reluctance towards termination of laws or the experimental method, high costs, fear of being confronted with unpleasant facts, or political rationality. While law is for a great deal about politics, there must be a way to ensure that some legislative decisions are rendered more transparent.

11. The real Achilles heel of experimental legislation and sunset clauses is the lack of a clear legal and methodological framework. Legislators do not know when they should choose temporary laws in detriment of lasting ones, how to enact them and for how long. The main contribution of my dissertation lies in the design of a framework, where guidelines are provided to lawmakers: go for sunset clauses when you expect a technology to evolve rapidly, experiment with new rules when you do not know enough about their effectiveness; make sure experiments are meaningful and truly convert the lawmaking process into a learning one, set transparent evaluation criteria and ask regulators to justify their decisions to follow or reject the results of an experiment. Educate lawmakers and citizens with the truth of the facts and not the power of opinions.

12. Are sunset clauses and experimental legislation a blessing or a curse to innovation? I leave you, ladies and gentlemen, with this question. It results from my research that they are not a curse for a law that keeps up with reality, for a law that lives along the paths of innovation. Instead, they bless the courageous legislators that try new laws to see if they work, allow laws to expire when they are no longer necessary, removing unnecessary burdens from the shoulders and pockets of innovators. However, sunset clauses and experimental legislation will only be blessings for innovation, if they are drafted along the lines of law. However, and excuse me for citing a lawyer in a speech supposed to be to laymen: as Felix Frankfurter affirmed: ‘science and technology cannot reshape society while law maintains its Blackstonian essence’, i.e., in layman’s terms this means: while lawyers try to confer their own interpretation to every single phenomenon, lagging behind reality.

Battle of the Agencies: ICASA vs. CompCom

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In dispute over competition-law & merger enforcement in South Africa, Communications agency raises its voice

Jurisdictionally crossed wires and agency disputes in antitrust are no longer the exclusive playground of the FCC and DOJ, of COMESA’s CCC and the Kenyan CAK, or DOJ and FTC.  They have now reached the shores of the Republic of South Africa as well, in the form of the Independent Communication Authority of South Africa (“ICASA”) challenging the country’s Competition Commission’s de facto exclusive right to review merger deals.

Factual Background

ICASA, created in July 2000 by the Independent Communication Authority of South Africa Amendment Act is reported to be in a jurisdictional dispute with the country’s traditional merger watchdog, the South African Competition Commission (“SACC”).  ICASA wants the power to take a closer look at relevant deals such as MTN and Telkom’s network sharing and the announced Vodacom / Neotel deal, on which AAT has reported previously (see Telecom adversaries to remain “principled” in their competing bids for 4G spectrum, Internet & mobile operators at war: merge, acquire, complain, and our prior reports mentioning ICASA here).

ICASA’s specialized “Markets & Competition” division is tasked to deal with promoting “competition, innovation and investment in respect of services and facilities provided in the electronic communications, broadcasting and postal sectors, whilst ensuring account cultural diversity, especially regarding broadcasting content.”  The authority as a whole is “mandated to create competition in the telecommunications, broadcasting and the postal industries. In turn, competition brings about affordable prices for goods and services rendered and provides value for money to consumers.”

Legal Standard – “Public Interest”?

In recent reports by the New Telegraph and HumanIPO, ICASA is said to have voiced discontent with the Competition Commission’s failure to send proposed communications-related M&A deals to the authority.

That said, it is unclear to AAT precisely which legal standard ICASA wishes to impose on any potential future merger review it might undertake.  In the U.S., notably, the FCC’s standard of review is a more flexible public-interest standard, vs. the “classic” antitrust agencies’ (FTC/DOJ) “substantial lessening of competition” standard.

Regardless of (at least our) uncertainty of the legal standard to be applied, ICASA is quoted as saying that deals cleared by the SACC may still require separate approval from the Communications authority, irrespective of any competition-law based decision reached by the Competition Commission:

“While consolidation is a global phenomenon and anticipated in the market, all such deals may require regulatory approval.”

“The authority is aware of what is currently before the Competition Commission; and in accordance with our institutional arrangements with the Competition Commission we will collaborate, however, that in no way negates the regulatory approvals required from ICASA.”

In addition to the previous lack of coordination between the Commission and ICASA on merger reviews, there has also been criticism of the country’s limited allocation of more frequency spectrum to wireless operators.

south_africa

 

Private Health-Care Sector Inquiry: Time Table & Details

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south_africa

Inquiry panel’s head details logistics

On 16 April 2014, the South African Competition Commission held a media briefing, in which the administrative guidelines, the administrative timetable and statement of issues for the inquiry were announced.  AAT previously reported on the health-care sector investigation here.

Addressing the media and other stakeholders at the briefing, the chairperson of the inquiry, former Chief Justice Sandile Ngcobo, provided a brief explanation of what a market inquiry is, provided an overview of its possible outcomes, the Competition Commission and panel’s approach, the use of information during the inquiry and the management of confidential information.

Furthermore, the former Chief Justice elaborated on the important dates and timelines of the inquiry, the statement of issues, theories of harm and that stakeholders ought to provide accurate information in order to assist the panel.

The important dates are:

Date Event
31 May Statement of Issues and Administrative Guidelines issues for public comment
30 June Deadline for submission of public comment on Statement of Issues and Administrative Guidelines
1 July – 31 July Incorporation of comments on Statement of Issues and Administrative Guidelines
01 August Publication of final Statement of Issues and Administrative Guidelines
01 August Call for submissions on subject matter of the inquiry
March and April 2015 Public hearings
November 2015 Forecasted completion of the inquiry

Philips & innovation in Africa: Driving worldwide growth

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Philips’ CEO Frans van Houten recognizes untapped potential, invests in Africa

new multi-part series

In February, AAT launched its multi-part series on innovation & antitrust as a thematic collection focusing on the concept of innovation markets and how competition and IP laws are able to address the, by definition, novel issues that arise.  Recently, and timely so, Philips has joined this debate.

Philips & the future of African innovation: From “things” to “ideas”

For one, Frans van Houten, its President and CEO, has been quoted as saying: “Innovation is our lifeblood and will be the main driver of profitable growth going forward. … I intend to drive innovation with more intensity to help us win new customers.”

Notably, Philips changed its official company slogan from “We make things better” to “We create better ideas.”

Mr. van Houten (source: Philips)

Even more pertinent, Mr. van Houten not only recognizes the crucial forward-looking importance of innovation.  Unlike many Western corporate leaders, he positively links it with the economic growth prospects of Africa.  In an insightful piece entitled “How Africa’s innovation will change the world” (published on the Davos World Economic Forum blog), Mr. van Houten discusses the promises, challenges, and realities of African innovation and resulting economic growth.

The article highlights the intuitive, yet elusive, insight that challenges become opportunities when looked at with an inventive spirit.  It also addresses the importance of multi-disciplinary approaches (such as the one at the foundation of our #AntitrustInnovation series, combining law, economics, and business innovation) and that of partnerships:

Seven years ago, millions of Kenyans were struggling to access basic financial services such as a bank account; they were unable to transfer money or receive microcredit. Then, a locally developed mobile payment system called M-Pesa [see AAT coverage here; — Ed.] radically changed everything. Today, more than two-thirds of Kenya’s population uses M-Pesa to make and receive payments and an estimated 43% of the country’s GDP flows through the system. This is transforming life in the country, increasing income in rural households and spawning a range of start-ups.

This speedy adoption of mobile payments captures the enterprising spirit of African innovation. It reflects the resourcefulness with which people in Africa find local solutions to local issues. It also shows how Africa’s challenges are opportunities in disguise and how the continent can bypass development stages without paying for their replacement. Mobile phones, for example, were rapidly adopted in Africa because of the lack of fixed telecom infrastructure. And solar panels are being adopted faster than in other parts of the world, because kerosene is so expensive that the payback time for investments in solar power is months rather than years.

Healthcare is another exciting area. According to a report from the World Economic Forum, Africa faces 28% of the global disease burden with only 3% of the world’s healthcare workforce. In response, Africa is adopting new operating models and technologies. By training health extension workers to focus on education, family planning and sanitation, Ethiopia achieved a 32% drop in child mortality and 38% drop in maternal mortality. In Kenya, e-learning has taught 12,000 nurses how to treat major diseases such as HIV and malaria, compared to the 100 nurses a year that can be taught in a classroom.

Africa is also embracing new business models that tap into the vitality of the country’s communities. Philips, for example, teamed up with Inyenyeri, a Rwandan NGO, to give families access to an innovative cookstove. Crucially, the cookstove is given away for free and families pay for the stove by harvesting twigs, leaves and grass. This biomass is compressed into fuel pellets, half of which are returned to the family for personal use and half of which are sold by the NGO. The cookstove is produced in Africa, highly energy efficient and, because it is smoke free, significantly healthier.

This example also shows the power of partnerships, without which many African innovations would not come to fruition. Solar-powered light centres, for example, increase the social activity and productivity of communities by generating light after sundown. These communities, however, are often unable to invest in a light centre, so this technology is rolled out through NGOs and governments. Sometimes these light centres are used to power medical equipment such as an ultrasound, or refrigerators that store vaccines. This type of cooperation ensures that innovation generates both financial and social value.

The complexity of Africa’s challenges also requires a multidisciplinary approach to innovation. Kenya, for example, is investing in systems that encourage open innovation. This sees local universities and small and medium enterprises join forces with NGOs, governmental organizations and foreign multinationals such as IBM and Philips, which have set up regional research and innovation centres in Nairobi. Nairobi is also home to iHub, a booming community of local entrepreneurs, investors and some of the world’s leading technology firms.

For innovation to really succeed in Africa, other factors need to be addressed, too. There is a lack of prototyping equipment and workshops, so local innovators depend on Europe or China, making the process costly and cumbersome. And while there are good patent laws in place, there are still too many counterfeit versions of successful products. Also, international firms should source locally and work with local distributors, whenever possible. And governments should focus their development money on stimulating entrepreneurship and innovation.

While in Africa millions of people still live on less than $2.50 a day, the continent looks set to have a brighter future thanks to local solutions for finance, healthcare and energy that could become globally relevant. M-Pesa, for example, has already been rolled out in other African countries, India, Afghanistan and Eastern Europe. Perhaps sooner than we think, African innovations will help the rest of the world create lasting social and economic value.

[Frans van Houten, President and CEO, Royal Philips, emphasis and links added, “How Africa’s innovation will change the world” published on Davos World Economic Forum blog.]

Investment: done

More than just writing op-ed pieces, Philips’ leadership has put its money where it matters: On March 20, 2014, the company (with 23-plus billion Euros in annual revenue) announced that it was establishing a “Research & Innovation Hub” in Nairobi, Kenya.  The full Philips statement says:

  • The Philips Africa Innovation Hub in Kenya will be the center for developing innovations “in Africa-for Africa” in the areas of healthcare, lighting and healthy living

  • Hub underlines Philips’ commitment to invest in Africa and provide Africa-relevant innovations to address key challenges facing the continent

 Nairobi, Kenya – Royal Philips (NYSE: PHG, AEX: PHIA) today announced the establishment of its Africa Innovation Hub in Nairobi, Kenya, which underlines the company’s commitment to invest in Africa. The Philips Africa Innovation Hub will work both on the creation of new inventions, as well as bringing these inventions to the market.

The Philips Africa Innovation Hub will do application-focused scientific and user studies to address key challenges like improving access to lighting and affordable healthcare as well as developing innovations to meet the aspirational needs of the rising middle class in Africa.

The Philips Africa Innovation Hub will be located at the Philips East African Headquarters in Nairobi, where African talents and international researchers will operate on the concept of “open innovation” and will work in close collaboration with the R&D ecosystem of Kenya and Africa. Philips is in discussions with local organizations and Universities on R&D collaborations to co-create meaningful solutions for Africa.

“We welcome the establishment of Philips’ Innovation Hub in Kenya; Philips is a globally recognized innovation powerhouse and their selection of Nairobi as the site to establish their African Innovation hub is a testament to the Kenyan government’s commitment to nurture the drive for research and innovation in the region”, says, Hon’ble Adan Mohammed, Cabinet Secretary for Industrialization. “We lend our full support to the investment being made by Philips and look forward to the outcomes of their Africa-specific research and projects that can contribute to transforming society, business and government across the continent”.

JJ van Dongen, Senior Vice President & CEO Philips Africa states: “Philips is passionate to invent, apply technology and partner to help people succeed. Our ambition is to create impactful innovations that matter to people and address the key challenges that confront society. With Kenya as a leader in the continent in science and entrepreneurship as well as a hub of collaboration on technology and innovation, Nairobi, is the ideal location to establish Philips’ African research presence. We want to tap into the city’s vibrant R&D eco-system and contribute to the process of co-creating new solutions, new business models and meaningful partnerships to provide innovations that make an impact.”
Enhancing people’s lives in Africa though meaningful innovations
Some innovations that Philips was already working on have now become part of the Innovation Hub, hence, the Philips Africa Innovation Hub will kick-off with ventures that are under development as well as in the pilot phase; these include:

Respiratory rate Monitor to support pneumonia diagnosis: Pneumonia is the leading cause of death among children under the age of five, resulting in 1.1 million deaths worldwide annually¹. Of these, 99% of deaths occur in developing countries in low-resource settings, which typically entail rural areas with very limited or poor healthcare facilities or with low-skilled health workers. The current diagnostic tools in such settings are not easy to use, can easily distract the workers from an accurate conclusion, and thus lead to a poor diagnosis.

The Innovation hub is working on the development and clinical testing of a robust and affordable Automated Respiratory Rate Monitor that aims to support the diagnosis of pneumonia among infants and children, using smart sensing technology on the body which is intended to be more accurate and reliable compared to manual processes being currently observed. This device will be specially designed for use by community health workers and nurses in rural areas. In Kenya, discussions are on with the Kenya Medical Research Institute (KEMRI) to further develop this project and co-create an effective solution tailored to circumstances in rural Africa.

Community care services: The development and testing of a work-flow innovation designed to reduce the number of avoidable maternal and child deaths. The purpose of the workflow is to enable remote area health centers to diagnose, triage, treat, stabilize and (prepare for) transport expectant mothers that come in for a check-up and treatment.

Smokeless cook stove: Philips has designed and is manufacturing this innovative stove to improve the lives of those who rely on wood or biomass for their daily cooking. These specially designed stoves are extremely efficient and significantly reduce the use of wood as fuel. The cook stove can reduce smoke and carbon monoxide emissions by more than 90% compared to an open fire² thus reducing the health risks of indoor cooking. The contribution of the innovation hub is to create new go-to-market models for these stoves.

Consumer solar solutions: Today an estimated 560 million Africans live without electricity; Philips is committed to improving access to lighting in Africa, for the majority of the population that lives in off-grid communities. The Innovation hub is designing and developing new consumer products using the combination of solar power and energy efficient LED technology. New go-to-market models are also being established to ensure these solutions become accessible to people that would not be able to afford them otherwise.

The Philips Africa Innovation Hub while headquartered in Kenya, will be responsible for pan-African research and projects and will have operations across Africa, linked to the Philips regional offices across the continent; the hub will be headed by Dr. Maarten van Herpen and will work in close collaboration with the Philips research labs in Bangalore, Shanghai and Eindhoven.

¹ Source : Unicef  www.unicef.org/media/media_70890.html
² Reference source:  Water boiling test version 4.2.2 done at accredited stove laboratory, Aprovecho Research Center, Oregon, USA.

 

Internet & mobile operators at war: merge, acquire, complain

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Deals and accusations rock ZA’s Vodacom

The South African mobile operator landscape can be described as a microcosmic reflection of the larger African experience: Mobile technology is exponentially more developed than what an outside observer would otherwise predict, based on distinct economic predictors.  One of the key reasons for this highly-developed sub-Saharan mobile world is the concomitant lack of hard-wired infrastructure, necessitating that mobile make up for the copper-wire slack.  Other reasons include the hot topic of mobile banking (again: lack of brick-and-mortar banks necessitates mobile banking alternatives, such as M-Pesa’s services, on which AAT has reported extensively).

South Africa, as the continent’s largest (or second-largest, depending on whether you trust the revised Nigerian GDP numbers) economy, is of course at the forefront of the African mobile/internet frontier.

Now, the large South African operator Vodacom has rejoined the antitrust headlines simultaneously in two ways:

First, Vodacom ZA plans to acquire Neotel, a large S.A. internet provider, for 7 billion Rand (circa $650m).  This transaction will, of course, be subject to merger review by the South African Competition Commission (“SACC”).

Second, Vodacom has confirmed the prior reports of its competitor Cell-C’s October 2013 complaint, accusing Vodacom of discriminatory pricing, which is now being taken rather seriously by the SACC, according to TechCentral’s reporting.  On that front, Vodacom’s spokesman Richard Boorman is quoted as using classic competition-law argumentation as a clever shield:

“Cell C is apparently arguing for an increase in the price that Vodacom customers pay to call other Vodacom customers. It’s hard to argue that increasing prices would be a benefit to consumers.”

Vodacom’s official press statement on the Neotel deal follows below:

Vodacom reaches agreement to acquire Neotel

Monday, 19 May 2014

Further to the SENS announcement on 30 September 2013, Vodacom has reached an agreement with the shareholders of Neotel Proprietary Limited (“Neotel” or the “Company”) to acquire 100% of the issued share capital in, and shareholder loans against, Neotel for a total cash consideration equivalent to an enterprise value of R7.0bn.

Principal benefits of the transaction

Leading fixed telecommunications network

Neotel, which started operations in 2007, is the second largest provider of fixed telecommunications services for both businesses (commonly referred to as enterprise services) and consumers in South Africa. The company has access to over 15,000 km of fibre-optic cable, including 8,000 km of metro fibre in Johannesburg, Cape Town and Durban. Neotel also has access to 2 x 12 MHz of 1800 MHz spectrum, 2 x 5 MHz of 800 MHz spectrum and 2 x 28 MHz of 3.5 GHz spectrum.

Acceleration of Vodacom’s unified communications strategy

Neotel will become a subsidiary of Vodacom South Africa and the combination with Vodacom’s South African fixed enterprise business will create a national service provider with annual revenues of more than R5bn.

Vodacom sees a significant opportunity to accelerate growth in unified communications products and services by integrating its extensive distribution and marketing capabilities with Neotel’s fixed network and product capabilities. The combined entity will be able to offer an expanded and enhanced range of converged services (e.g. hosted PBX, OneNet) to enterprise customers. Vodacom estimates revenue synergies with a total net present value of approximately R0.9bn after integration costs.

Enhancement of next generation network capabilities in South Africa

The combination of Neotel’s and Vodacom’s networks will improve overall network availability and reduce the cost to serve customers. The combined business will also be ideally positioned to accelerate broadband connectivity in line with the South African Government’s broadband targets, enabling Vodacom to take a leading position in the fibre to the home and fibre to the enterprise segments of the market.

The combined entity will also be able to use the radio spectrum currently assigned to Neotel more effectively. This spectrum will enable Vodacom to accelerate the roll-out of LTE (commonly referred to as 4G) services, providing high speed, high quality wireless connectivity to a greater proportion of the South African population.

In-market consolidation with substantial cost and capex savings

Vodacom expects to achieve substantial cost and capex synergies with an annual run-rate of approximately R300m before integration costs in the full fifth year post completion, equivalent to a net present value of approximately R1.5bn after integration costs. These savings will primarily be derived from the joint utilisation of Neotel’s extensive fibre network and the elimination of overlapping elements, joint procurement and the combination of overlapping administrative functions. The transaction values Neotel at a multiple of 8.8x annualised 1H2014 OpFCF, adjusted for cost and capex synergies.

Neotel management and employees

Vodacom looks forward to welcoming Neotel’s employees. Their fixed and enterprise skills will enable the combined entity to deliver enhanced and extended service offers.

Additional information on the transaction

Vodacom will fund the acquisition through available cash resources and existing credit facilities.

The transaction remains subject to the fulfilment of a number of conditions precedent including applicable regulatory approvals and is expected to close before the end of the financial year.

Speaking about the transaction, Vodacom Group CEO Shameel Joosub said:

“Through the combination of these two businesses, the provision of a wider range of business services and much needed consumer services like fibre-to-the-business and fibre-to-the-home becomes a concrete reality – it will be good for the consumer, good for business and good for the country.  And for our investors, the transaction fits perfectly within the priorities of Vodacom’s growth strategy focused on continuing our investment in data and our Enterprise business.”

 

New Competition Commissioner not so new: Bonakele retains top job

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south_africa

Interim South African Acting Competition Commissioner Tembinkosi Bonakele confirmed in permanent post by minister who unceremoniously fired predecessor Ramburuth

Plus ça change, plus c’est la même chose…

This morning, economic-development minister Ebrahim Patel announced the retention of the 38 year-old Mr. Bonakele as the top antitrust enforcer in the South African republic, making permanent for a five-year term the interim appointment of the man who said the following in an interview regarding the independence of the competition authorities in South Africa:

“While competition authorities should not be beholden to the government neither can they be loose cannons who claim independence without accountability.”

In prolonging Mr. Bonakele’s interim appointment for another five years, Minister Patel thus assured that the important position of Competition Commissioner did not go to a “loose cannon”…

Legislative basis

The appointment is made pursuant to Part A, Art. 22 of the South African Competition Act of 1999, as amended, which also provides (in sub section 4) for the flexible salary and benefits determination to be made by the minister himself: “The Minister must, in consultation with the Minister of Finance, determine the Commissioner’s remuneration, allowances, benefits, and other terms and conditions of employment”

Minister Patel
Commissioner Bonakele
Public announcement and emphasis on enforcement

In the duo’s official tweets announcing the decision (see graphic extract below), Patel congratulated Mr. Bonakele, reaffirming his and the SA cabinet’s support of the “eminently suitable” candidate, and emphasizing the importance of (1) the Competition Commission‘s ongoing and hotly debated private health-care inquiry as well as (2) the “social-justice” elements of merger conditions imposed by the SACC on mergers in the past 5 years, purportedly “protecting” 4,900 jobs.

The agency had come under considerable flak in the past year due to its high staff and executive-level turnover and a work environment that has been described as “toxic” by insiders.

The official release by the Ministry of Economic Development quotes Patel as follows:

“I am pleased to have someone of Bonakele’s calibre at the helm of the Competition Commission. He is taking leadership of the Commission at a time when the South African economy needs to become more competitive and create many more decent work opportunities by combatting market abuse such as cartels and pervasive monopolies and ensure competitive pricing of products. In particular, the key jobs drivers identified in our policy frameworks require coordinated and concerted efforts improve economic performance and development outcomes.
“The Competition Commission has been one of a number of successful economic agencies and regulators that are together beginning to transform the South African economy. Mr Bonakele possesses the skills and experience to build on the successes of the Competition Commission.”

The agency’s official “Structure” page had not yet been updated as of the day of the announcement, listing Mr. Bonakele as “Acting” head and still showing the long-departed Ms. Makhaya as a Commission official.

Official S.A. government tweets announcing SACC personnel decision of permanent Bonakele appointment

COMESA news of the day: web site down again; 5 “exemption” letters granted

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COMESA Competition Commission logo

Site down – 5 “comfort letters in 5 months – Guidelines revision by June

In an almost farcical repetition of its information-technology woes, the COMESA Competition Commission’s web site (http://www.comesacompetition.org/) is off-line, yet again, after having been successfully hacked multiple times.  Whether the latest outage is due to a similar attack or simply (and hopefully) due to its webmaster’s shoring up the competition enforcer’s IT security measures remains to be seen.  (We have not yet heard back from the agency’s leadership on our request for information on the online data safety of parties’ submissions.)

In more substantive news, IFLR reports that the CCC has issued five so-called “Comfort Letters” since December 2013, exempting otherwise notifiable transactions from the duty to file (as well as the concomitant payment of the (high) filing fees), where the actual nexus to the COMESA region was negligible or non-existent.  This may help explain some of the lackluster filing statistics on which we reported previously.

The report also quotes the CCC’s head of mergers, Mr. Willard Mwemba, as saying that the revision of the Competition Guidelines should be finalised by the end of June 2014.

Language barrier persists in Tribunal proceedings

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south_africa

A report by the South African Citizen discusses the language barriers still present in the Republic today.

The piece, entitled “Tribunal struggles with Afrikaans” by Antoinette Slabbert, notes that the RSA Competition Tribunal has decided to have testimony given in Afrikaans transcribed, together with its English translation, “to ensure the court properly captures what a witness was trying to say.”

The underlying case is the Competition Commission’s case against Media24, alleging an abuse of dominance by squeezing its competitor, Gold-Net News, out of the market for advertising in community newspapers in the Free State Gold Fields between 2004 and 2009.

The Citizen reports:

Tribunal chairperson Norman Manoim asked whether Van Eck would mind testifying in English, since he was concerned about the quality of the translation of her responses the previous day. Media24′s legal team objected, saying Van Eck was already assisting the tribunal by taking questions in English.

The legal representative of the commission pointed out that Van Eck’s English was good. Both legal teams shared Manoim’s concern about the English interpretations. Van Eck said she prefered testifying in her home language to better express herself.

Earlier, Wian Bonthuyzen, Van Eck’s former manager and a key witness, switched from Afrikaans to broken English during his testimony, after another interpreter failed to properly convey his responses to the tribunal.

Financial Times: Africa “most exciting”; FT hosts inaugural investment summit

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First-ever FT African Investment Summit to be held in London

In October, the Financial Times will be hosting a timely “FT-Live” London symposium on investment in Africa.  The Oct. 6th FT Africa Summit (agenda) is expected to draw a global audience from various industry sectors, limited to 150 attendees.

Whether or not the conference will spark a wave of M&A activity (and hence antitrust scrutiny) on the continent remains to be seen.  For now, the paper’s event PR proclaims optimistically:

The continent’s economic growth is the second fastest in the world, underpinned by a virtuous cycle of improved governance, Chinese-led investments in infrastructure, high commodities prices, and the growth of a nascent, even if fragile, middle class. Yet, risks abound, from rising inequality to the potential of setbacks in governance.

The inaugural FT Africa Summit will provide a global platform to hear and discuss the views of finance ministers, investors and businesses leaders from around the region. Altogether the first Summit and the special report will be a unique opportunity to gain insights into one of the world’s most exciting markets.

Today’s edition also reports, fittingly, that large-scale investors (such as Atlas Mara’s head and  former Barclays CEO Bob Diamond) are looking increasingly to the African continent for high-growth financial investment opportunities.  Diamond is reported to have raised $1/3 billion for his “African war chest” of Atlas Mara to invest in African bank acquisitions, and is said to plan another $400m round of fund-raising later this year.

Bob Diamond

As the FT points out, the growth potential for financial services in sub-Saharan Africa is theoretically immense, as the majority of the region’s 1-billion-plus population does not yet have bank accounts.  However — and the FT omits this crucial fact — as we reported elsewhere, the dearth of access to brick-and-mortar banks in Africa has led to the pioneering use of GSM mobile technology, such as M-Pesa, for retail financial transactions at a record-setting adoption rate in Africa; see our M-Pesa reporting and other stories.

Competition authority issues sectoral warning, threatens criminal sanctions

Posted on by Editor

kenya

Wake-up call to would-be cartelists and monopolists in Kenya

The Standard reports that the Competition Authority of Kenya (“CAK”) (AAT archive on CAK issues here) is threatening cartelists with prison terms of up to 5 years and fines up to 10 million Shilling ($115,000).

According to the report, CAK Director General Francis Wang’ombe Kariuki said that “investigations are already being conducted in [the] transport, insurance, shipping, milling, banking, cement, sugar, health care and tea” sectors, pursuant to purported consumer complaints.

CAK Director General Kariuki

The CAK has actively pursued antitrust matters, using novel approaches of late, as AAT recently reported on a seemingly hybrid unilateral/collusion case (“Kenya: Lafarge faces possible price-fixing penalties due to cross-shareholding“).  The CAK is also the sole COMESA member enforcement authority that has, to our knowledge, challenged the fledgling and issues-plagued COMESA Competition Authority’s jurisdiction in various merger cases.

COMESA old flag color