Category: COMESA

COMESA Competition Commission investigates football broadcasting rights

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COMESA old flag colorThe COMESA Competition Commission (CCC) recently announced that it will be investigating allegations of exclusionary conduct in relation to the Confederate of African Football’s (CAF) decision to extend an exclusive marketing of broadcasting rights and sponsorship agreement with Lagardère Sports in relation CAF tournaments.

It is not yet clear whether the CCC is investigating this matter as an ‘abuse of dominance’ case or rather, in terms of Article 16 of the CCC’s Rules, general restrictive practices.

COMESA Article 16 essentially precludes firms from implementing an agreement in the Common Market which has as its object or effect the distortion or prevention of competition in the Common Market, to the extent that it may restrict trade between member states.

The Registrar of the CCC, Meti Demissie Disasa, is quoted as saying: “The aim of the Commission’s investigation is to ensure that competition in the commercialisation and award of media and marketing rights for African Football tournaments is not undermined as a result of anti-competitive practices from market operators and that football fans can benefit from better and more coverage of the games and affordable viewing options.”

“Any agreement which contravenes Article 16 is automatically void. In light of the fact that the CAF agreement in question here is valuable and moreover only set to expire in 2028, a voiding of the contract by the CCC would likely be contested by the parties,” says competition practitioner Andreas Stargard.

cafsoccerThe CCC, which has to date largely focused on merger control, has certainly made clear strides to moving towards a greater enforcement role, as AAT first reported here. While there is still some ways to go, the current investigation follows the CCC’s announcement that it intends to conduct a market inquiry into the grocery retail sector and has also issued an announcement calling on all firms who may have exclusive agreements being implemented in the Common Market to disclose these agreements to the CCC in an effort to obtain authorisation (i.e., an exemption) from the CCC.  In 2016, Eveready applied to the CCC to have a number of distribution agreements “authorised” by the CCC.

The ECA and the CCC signed a Memorandum of Understanding in August 2016 which envisages increased cooperation between the two agencies including information exchanges.

In relation to the CAF complaint, the CCC received the complaint by the Egyptian Competition Authority (ECA) who is in turn also investigating this matter. This raises an interesting question as to whether or not the CCC has exclusive jurisdiction over this matter which, in terms of the CCC’s Rules, the CCC should have but other COMESA member-state competition authorities have challenged in the past.

UPDATE: the official CCC statement seeking stakeholder input includes the following passage regarding the agreements at issue:

It is alleged that on 12th June 2015, CAF entered into an agreement with Lagardère Sports S.A.S. for the exclusive commercialization of marketing and media rights of main regional football competitions in Africa, including the Africa Cup of Nations, African Nations Championship and African Champions League, for the period 2017 to 2028. CAF and Lagardère Sports S.A.S. are alleged to have previously entered into a similar commercialization agreement for marketing and media rights of CAF tournaments for the period 2009 to 2016. Consecutively and cumulatively, the length of the alleged exclusive agreement is twenty years. It should be noted that the commencement of investigations neither presupposes that the conduct being investigated is anti-competitive nor that any of the parties to the agreement has violated the Regulations. The Commission will, in accordance with the provisions of Part 3 of the Regulations, conduct an inquiry into the agreements concluded between CAF and Lagardère Sports S.A.S. to determine whether the alleged conduct has as its object or effect the prevention, restriction or distortion of competition in the Common Market or in a substantial part of it. In view of the foregoing, the Commission hereby gives notice to all interested stakeholders and the general public to submit their representations to the Commission … no later than 21st April 2017.

Don’t wait for leniency… Lipimile signals delays

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COMESA Chief Warns of Delayed Implementation of Leniency Policy

George Lipimile, CEO, COMESA Competition Commission
George Lipimile, Director, COMESA Competition Commission

In an interview with Concurrences, CCC Director George Lipimile stated cautiously that, while the agency had engaged a consultant to help it craft a regional leniency programme, it still had to “be discussed in detail with Member States. Given the different legal systems and the feedback coming from the consultations with Member States so far, this may take some time.”

Thus, “while there is no amnesty programme visible on the near-term horizon, the CCC’s novel cartel enforcement push poses particular concerns for undertakings operating in the COMESA region,” says Andreas Stargard, attorney with Africa advisory firm Pr1merio.  “Director Lipimile has expressed his agency’s plan — jointly with the World Bank organisation — to launch a project designed to combat cartel activity.  They propose to do so first, it seems, by piggy-backing off of other enforcers’ previous investigations, such as the South African Competition Commission’s cartel cases, and analysing whether those instances of foreign collusion could have harmful effects on the COMESA economies.”

The WRAP: a short COMESA retrospective

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COMPETITION-LAW DEVELOPMENTS: A WRAP FROM THE COMP-CORNER

Issue 3 – October 2016

The editors and authors at AAT welcome you to the third edition of “The WRAP”: COMESA Competition Commission: What has taken place in past 10 months?

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The author, Mr. Currie

In this instalment, Senior Contributor Michael James Currie takes a look back at the developments from the COMESA region in 2016.

As always, thank you for reading the WRAP, and remember to visit us at AAT for up-to-date competition-law news from the African continent.

         –Ed.

 

 

Notifying African M&A – balancing burdens & costs

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Merger filings in Africa remain costly and cumbersome

By AAT guest contributor Heather Irvine, Esq.

The Common Market for Eastern and Southern Africa Competition Commission (COMESA) recently announced that it has received over US$3 million in merger filing fees between December 2015 and October 2016.

heatherirvineAbout half of these fees (approximately $1.5 million) were allocated to the national competition authorities in various COMESA states. However, competition authorities in COMESA member states – including Kenya, Zambia and Zimbabwe – continue to insist that merging parties lodge separate merger filings in their jurisdiction. This can add significant transactional costs – the filing fee in Kenya alone for a merger in which the merging parties combined generate more than KES 50 billion (about US $ 493 million) in Kenya is KES 2 million (nearly US $ 20 000). Since Kenya is one of the Continent’s largest economies, significant numbers of global transactions as well as those involving South African firms investing in African businesses are caught in the net.

Merging parties are in effect paying African national competition authorities twice to review exactly the same proposed merger. And they are not receiving quicker approvals or an easier fling process in return. Low merger thresholds mean that even relatively small transactions, often with no impact on competition at all, may trigger multiple filings. There is no explanation for why COMESA member states have failed to amend their local competition laws despite signing the COMESA treaty over 2 years ago.

Filing fees are even higher if a proposed cross-border African merger transaction involves a business in Tanzania or Swaziland– the national authorities there have recently insisted that filing fees must be calculated based on the merging parties’ global turnover (even though the statutory basis for these demands are not clear).

The problem will be exacerbated even further if more regional African competition authorities, like the Economic Community of West African States (ECOWAS) and the proposed East African Competition authority, commence active merger regulation.

Although memoranda of understanding were recently signed between South Africa and some other relatively experienced competition regulators on the Continent, like Kenya and Namibia, there are generally few formal procedures in place to harmonise merger filing requirements, synchronise the timing of reviews or align the approach of the regulators to either competition law or public interest issues.

The result is high filing fees, lots of duplicated effort and documents on the part of merging parties and the regulators, and slow merger reviews.

If African governments are serious about attracting global investors, they should prioritise the harmonisation of national and regional competition law regimes.

CCC Begins Conduct Enforcement & Activates Its Exemption Regime for Potentially Anti-Competitive Agreements

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Parties Start Discussing Business Practices with COMESA’s CCC

As AAT reported recently — see “Growing Pains: From One-Trick Pony to Full-Fledged Enforcer?” — the COMESA Competition Commission (CCC) has begun to move from being a pure merger-control administrator to becoming a full-fledged antitrust enforcer.  The CCC issued a Notice calling on firms to notify the CCC of any agreements (both historic and forward-looking) that may be anti-competitive, for the purpose of having such agreements ‘authorised’ or ‘exempted’ under Article 20 of the COMESA Competition Regulations.  (More details on that regime are in our June article, referenced above.)

Eveready products (sample)
Eveready products (sample)

AAT has now learned that several companies have taken the agency up on its Exemption proposal: Andreas Stargard, a competition practitioner with Primerio Ltd. observes that the CCC’s announced “leniency ‘window’ to incentivise firms to come forward and obtain an exemption” has closed at this point in time, although he expressed doubt that the relatively short one-month period was sufficient and will likely be extended.  Says Stargard: “We are seeing several parties, both global & local companies, who are beginning to take the CCC’s non-merger enforcement seriously.  These undertakings are considering to obtain advance clearance of their business practices under the Commission’s Notice procedure.”  One such example, he adds, is Kenya’s financially embattled Eveready East Africa: it has reportedly sought CCC approval of its agreements with international manufacturers for the importation and distribution within the COMESA common market of their diverse products, ranging from batteries to fountain pens to CloroCOMESA old flag colorx-brand chemicals.  The Commission has invited “general public and stakeholders” for comments according to its formal statement.

In light of these developments, Stargard advises that:
“multi-national firms operating within COMESA or jointly with a COMESA-based importer or other domestic business partner should consider engaging counsel to evaluate their practices, and if they may fall within Article 16 of the Regulations, consider approaching the CCC for an authorisation letter.”

 

COMESA sees slight uptick in merger notifications

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Merger filings still dither, but YTD numbers now tentatively promise to exceed FY2015

Making sense of the COMESA Competition Commission’s merger notification site is no  easy undertaking.  The perplexing nature of its case-numbering system mirrors perhaps only the level of confusion surrounding the CCC’s original merger threshold and notification-fee guidelines (e.g., see here on that topic).

As we pointed out here, the merger statistics (as they had been released as of January 2016) for 2015 were disappointingly low.  In today’s post, please note that we are upgrading those numbers, however, to reflect additional material now made available on the official CCC web resource, reflecting 3 additional filings, bringing the year-end total for FY2015 to 18.  Three of those were “Phase 2” cases.  In addition, according to the CCC, there were 3 supplemental cases in which “Comfort Letters” were issued to the parties.

For year-to-date 2016 statistics, the numbers look analogous, albeit somewhat higher than the 2015 slump — that is to say, still diminished from the 2013-2014 height of COMESA ‘mergermania’, during which (mostly international) counsel took the confusion surrounding the CCC notification thresholds to heart and erred on the side of caution (and more fees), advising clients to notify rather than not to (65 in the 2 years), or to seek Comfort Letters, which also were issued in record numbers (19 total for the 2-year period)…   With that said, the agency is now up to 16 merger cases, with 2 Second-Phase matters on deck.

AAT 2016 September mergermania statistics
Number of merger notifications based on CCC-published notices (using educated inferences where the original CCC case numbers, dates and/or descriptions lack intelligibility; note that 2013-14 statistics only reflect actual filings made available online and not the official statistics issued by the CCC of 21 and 43, respectively)                                                                         (c) AfricanAntitrust.com

“The WRAP” — our monthly summary of antitrust developments across the continent

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AAT Header square

Competition-Law Developments: a WRAP from the Comp-Corner

Issue 2 – August 2016

The editors and authors at AAT welcome you to the second edition of “The WRAP.”

We look at the most recent developments and updates in respect of competition law and enforcement which has taken place across the African continent in recent months.

As always, thank you for reading the WRAP, and remember to visit us at AAT for up-to-date competition-law news from the African continent.

         –Ed. (we wish to thank our contributors, especially Michael James Currie, for their support)

Growing Pains: From One-Trick Pony to Full-Fledged Enforcer?

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COMESA Competition Commission Expands Enforcement Ambit from Merger Control to Conduct —

CCC Seeks Information on “Potentially” Anti-Competitive Agreements

By AAT Senior Contributor, Michael-James Currie.

Breaking News: The COMESA Competition Commission (CCC) has issued a notice (the “Notice”) calling on firms to notify the CCC of any agreements (both historic and forward looking) that may be anti-competitive, for the purpose of having such agreements ‘authorised’ or ‘exempted’ in terms of Article 20 of the COMESA Competition Regulations (the “Regulations”).

In terms of Article 20 of the Regulations, agreements which are anticompetitive may be exempted by the CCC if such an ‘anticompetitive agreement’ contributes positively to the ‘public interest’ to the extent that the public interest benefit outweighs the anti-competitive effect.

In terms of the CCC’s notice 1/2013, the following agreements may well be considered to be in the public interest when evaluating whether an anti-competitive agreement or concerted practice should be exempted:

  • Joint research and development ventures;
  • Specialisation agreements; and
  • Franchising agreements

As to the agreements or concerted practices which may be anti-competitive, the Notice refers specifically to the restrictive business practices listed in Article 16 of the Regulations which states that:

“The following shall be prohibited as incompatible with the Common Market:

all agreements between undertakings, decisions by associations of undertakings and concerted practices which:

(a) may affect trade between Member States; and

(b) have as their object or effect the prevention, restriction or distortion of competition within the Common Market.”

It should be noted that Article 16 is deliberately drafted broadly so as to prohibit conduct which has as its “object” the prevention, restriction or distortion of competition. Certain conduct, such as price fixing, fixing of trading terms or conditions, allocating suppliers or markets or collusive tendering may be considered as having as its ‘object’ the distortion or restriction of competition in the market. Accordingly, firms who have engaged in this type of conduct may be held liable in the absence of any evidence of an anti-competitive effect (whether actual or potential).

Says Andreas Stargard, a competition practitioner with Primerio Ltd., “[t]he CCC’s notice is a clear sign that the agency is gathering momentum in its efforts to detect and prosecute anticompetitive practices within the member states — and is going beyond its ‘one-trick pony’ status as a pure merger-control gatekeeper.  We anticipate a more active role by the CCC in conduct investigations and presumptively also enforcement actions, as opposed to its previous rubber-stamping activity of approving transactions with a COMESA community dimension (and concomitant collection of vast filing fees).”

The CCC has recently signed a number of Memoranda of Understanding and Cooperation Agreements with various member states as well as a tripartite agreement with other broader regional forums such as the Southern African Development Community and the East African Community.

COMESA old flag colorThe web of MoU’s recently concluded, which have as their primary objectives the facilitation of information exchanges and cooperation between competition agencies, is certainly a significant stride made to assist the authorities, including the CCC, in detecting and prosecuting anticompetitive practices which may be taking place across the African continent.

A further indication of the CCC’s growing appetite and confidence to identify anticompetitive practices is that the CCC has announced that it is conducting a market enquiry into the grocery retail sector.  This is the first market inquiry to be conducted by the CCC.

In terms of the CCC’s Notice, firms who have not yet notified the CCC of agreements which may be anticompetitive, have approximately one month to do so. In other words, the CC has offered a leniency ‘window’ to incentivise firms to come forward and obtain an exemption in respect of agreements already implemented which may be in contravention of Article 16 of the Regulations.

 

Cooperation, handshakes & MoUs: all the rage in African antitrust?

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AAT the big picture

Significant Strides made to Promote Harmonisation across African Competition Agencies

By AAT Senior Contributor, Michael-James Currie.

In the past 12 months there has been a steady drive by competition law agencies in Africa to promote harmonisation between the respective jurisdictions.

The African regional competition authority, the COMESA Competition Commission (CCC), has entered into memorandum of understandings with a number of its nineteen member states. On 5 June 2016, it was announced that the CCC has further concluded MoU’s with the Swaziland Competition Commission as well as the Fair Trade Commission of the Seychelles.

On 7 May 2016, it was announced that nine members of the Southern African Development Community (SADC) have also entered into and MoU. These member states include South Africa, Malawi, Botswana, Swaziland, Seychelles, Mozambique, Namibia, Tanzania and Zambia.

The SADC MoU was based on the 2009 SADC Declaration on Regional Cooperation and Consumer Policies.

SADC MoUAccording to the South African Competition Commissioner, Mr Tembinkosi Bonakele, the MoU creates a framework for cooperation enforcement within the SADC region.  “The MoU provides a framework for cooperation in competition enforcement within the SADC region and we are delighted to be part of this historic initiative,” said Bonakele.

Interestingly, although a number of the signatories to SADC MoU are not member states of COMESA (that is, South Africa and Namibia, who in turn, have a MoU between their respective competition authorities), Swaziland, Malawi and the Seychelles have existing MoU’s with the COMESA Competition Commission. Says Andreas Stargard, a competition practitioner with Primerio Ltd., “it will be interesting to see, first, whether there may be conflicts that arise out of the divergent patchwork of cooperation MoUs, and second, to what extent the South African Competition Authorities, for example, could indirectly benefit from the broader cooperation amongst the various jurisdiction and regional authorities.”

Part of the objectives of the MoUs to date has largely been to facilitate an advocacy role. However, from a practical perspective, the SADC MoU envisages broader information exchanges and coordination of investigations.

While the MoU’s are a positive stride in achieving cross-border harmonisation, it remains to be seen to what extent the collaboration will assist the respective antitrust agencies in detecting and prosecuting cross border anticompetitive conduct.

There may be a number of practical and legal hurdles which may provide challenges to the effective collaboration envisaged. The introduction of criminal liability for cartel conduct in South Africa, for example, may provide challenges as to how various agencies obtain and share evidence.

COMESA enters into agreement with Seychelles antitrust regulator

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Information-sharing, investigative assistance, and capacity-building at forefront of MoU

As reported by the Swaziland Observer, the Seychelles Competition Commission and COMESA’s Competition Commission have entered, on 20 April 2016, into a Memorandum of Understanding that aims to deepen the cooperation and coordination between the two agencies (as well as the Seychelles Fair Trading Commission).  Republic of Seychelles has been a member of COMESA since its accession to the common market in 1997.

 

image The MoU creates positions of “desk officers” in each agency to ensure that the institutions will cooperate on investigations and share relevant information to ensure enforcement.  It also foresees policy coordination, technical assistance and capacity-building programs.

FTC Seychelles CEO Georges Tirant pointed out that the MoU merely formalises what has already been a day-to-day reality, with the aim of legislative harmonisation and ultimately regional integration.  “I have a dream that all African member states should work together for a better Africa,” he said.  COMESA Competition Commission Board Chairman Mattews Chikankheni said that it would “improve efficiency in day to day processes, remove entry barriers create an enabling ground for small businesses and medium enterprises which will enable economic growth, job creation and reduce poverty.”

COMESA old flag colorseychellesCCC Chief Executive Officer George Lipimile emphasised the need to create jobs and “link industries,” as well as explain the agency’s mission: “We are going to work hard so that competition laws make sense to the people, because a law that does not benefit people is useless.”