M&A Breaking News: Regional Antitrust Enforcer Aligns Merger Rule with European Union Principles

BREAKING NEWS: The COMESA Competition Commission (“CCC”) issued new guidance today in relation to its application of previously ambiguous and potentially self-contradictory merger-notification rules under the supra-national COMESA regime. As Andreas Stargard, a competition practitioner with Primerio notes:

“This new Practice Note issued by Dr. Mwemba is an extremely welcome step in clarifying when to notify M&A deals to the COMESA authorities. Specifically, it clears up the confusion as to the meaning of the term ‘to operate’ within the Common Market.

Prior conflicts between the 3 operative documents (the ‘Rules’, ‘Guidelines’, and the ‘Regulations’) had become untenable for practitioners to continue without clear guidance from the CCC, which we have now received. I applaud the Commission for taking this important step in the right direction, aligning its merger procedure with the principles of established best-practice jurisdictions such as the European Union.”

The full text of the new Guidance is as follows:

PRACTICE NOTE ON THE COMMISSION’S APPLICATION OF THE TERM “OPERATE” UNDER THE COMESA COMPETITION REGULATIONS AND THE “APPLICATION OF RULE 4 OF THE RULES ON THE DETERMINATION OF MERGER NOTIFICATION THRESHOLDS AND METHOD OF CALCULATION”

February 11, 2021

CCC – MER – Practice Note 1 of 2021

The COMESA Competition Commission (the “Commission”), having received several queries from merging parties and their legal representatives in relation to the application of certain merger control rules, hereby issues this practice note on its application of the term “operate” under the COMESA Competition Regulations, 2004 (the “Regulations”) and the COMESA Competition Rules, 2004 (the “Rules”) and its approach to the application of Rule 4 of the Rules on the Determination of Merger Notification Thresholds and Method of Calculation (the “Rules on the Determination of Merger Notification Thresholds”).

  1. Application of the Term “Operate”

Article 23 of the Regulations establishes the jurisdiction of the Commission to assess cross-border mergers where the term “operate” is central to the application of Article 23 of the Regulations which, inter alia, applies where “…both the acquiring firm and target firm or either the acquiring firm or target firm operate in two or more Member States…”.

The Regulations have not defined the term operate. However, paragraph 3.9 of the COMESA Merger Assessment Guidelines of 2014 (the “Merger Guidelines”) states that an undertaking is considered to operate in a Member State for purposes of Article 23 (3)(a) of the Regulations if its operations in that Member State are substantial enough that a merger can contribute to an appreciable effect on trade between Member States and restrict competition in COMESAFurther, the Merger Guidelines state that “…an undertaking operates in a Member State if its annual turnover or value of assets in that Member State exceeds US$ 5 million…”.

It should be noted that at the time the Merger Guidelines became applicable, the prescribed merger notification thresholds envisaged under Article 23(3)(b) of the Regulation, were set at US$ 0. This effectively meant that all merger transactions satisfying the regional dimension requirement of Article 23 (3)(a) of the Regulations were required to be notified to the Commission, irrespective of the magnitude of the merging parties’ operations in the Common Market. In line with the Regulations’ objectives, the Commission sought to only capture those mergers likely to affect trade between Member States and restrict competition in the Common Market. As a result, the Merger Guidelines attached a quantitative definition to the term ‘operate’, as meaning the turnover or value of asset in a Member State to be at least US$ 5 million.

All stakeholders are hereby informed that following the enactment of the Rules on the Determination of Merger Notification Thresholds, the definition of ‘operate’ under paragraph 3.9 of the Merger Guidelines in no longer applicable as the Rules take precedence over the Guidelines. In view of this, paragraph 3.9 of the Guidelines has been rendered ineffective with the coming into force of Rule 4 of the Rules on the Determination of Merger Notification Thresholds. Therefore, for purposes of merger notification in line with Article 23 of the Regulations, all stakeholders should be referring to Rule 4 of the Rules on the Determination of Merger Notification Thresholds which stipulates that:

 “Any merger where both the acquiring firm and target firm, or either the acquiring or the target firm, operate in two or more Member States, shall be notifiable if:

  1. the combined annual turnover or combined value of assets, whichever is higher in the Common Market of all parties to a merger equals to or exceeds US$50 million; and
  2. the annual turnover or value of assets, whichever is higher, in the Common Market of each of at least two of the parties to a merger equals or exceeds US$10 million, unless each of the parties to a merger achieves at least two-thirds of its aggregate turnover or assets in the Common Market within one and the same Member State.”

 2.  Application of Rule 4 of the Rules on the Determination of Merger Notification Thresholds

Rule 4 applies to merger transactions that satisfy both the “Regional Dimension” and “Notification Thresholds” requirements under Article 23 of the Regulations. Rule 4 is cumulative and must be satisfied entirely before a merger is notified to the Commission. Rule 4 is therefore applied as follows:

Firstly, Regional Dimension must be satisfied. This is contained in the chapeau of Rule 4 which requires the merging parties to operate in at least two COMESA Member States. Further, it gives three alternative scenarios under which merging parties can operate in Member States namely:

  1. Both the acquiring firm and target firm can operate in at least two Member States;
  2. The acquiring firm can operate in at least two Member States, while the target firm can operate only in one Member State; or
  3. The target firm can operate in at least two Member States, while the acquiring firm can operate only in one Member State.

Regional Dimension will therefore be met once any of the three scenarios is satisfied and if they are, the next step is to confirm whether Rule 4(a) is satisfied. Rule 4(a) must be satisfied by confirming that either the combined annual turnover or combined annual assets in the Common Market of all the parties to the merger equals to at least US$ 50 million. The option to use combined annual turnover or combined annual asset shall depend on the higher amount of the two total values.

Assuming the Regional Dimension and Rule 4(a) is satisfied, the next step is to confirm whether the merging parties satisfy Rule 4(b). To satisfy Rule 4(b), it should be demonstrated that the annual turnover or annual asset, whichever is higher, of each of at least two of the parties in the Common Market is at least US$ 10 million. Whether to use annual turnover or annual asset depends on the higher of the two. It should also depend on the measure (turnover or asset) used in Rule 4(a).

As an illustration, assume annual combined turnover is higher than annual combined asset under Rule 4(a). This shall mean annual combined turnover will be adopted under Rule 4(a). Therefore, proceeding to Rule 4(b) shall mean confirming whether the annual turnover of each of at least two of the parties in the Common Market is at least US$ 10 million.

The final step in applying Rule 4 is to confirm if the 2/3 exemption rule holds. Given that Rule 4 must be applied in its entirety, the 2/3 exemption rule must also be read in conjunction with the preceding limbs in establishing the thresholds i.e. Rule 4(a) and Rule 4(b). For both the collective and individual thresholds requirements under Rule 4(a) and 4(b), it is the higher value of the turnover derived or asset value held which must be considered. In this regard, the 2/3 rule is meant to apply once the higher value has been established. It would be contrary to the principles and spirit of the 2/3 rule to rely on a different financial criterion to exempt a notification than the criterion used to establish a notification requirement under first two limbs of Rule 4.

Healthy foods & price-gouging during Pandemic?

High ginger, garlic and lemon prices have left a sour taste in mouths of South Africans

By Gina Lodolo and Jemma Muller

The exorbitant and rapid increase in prices of ginger, garlic and lemon, that which spans up to 300%, has been the source of much public outcry and regulatory concern over the past few months. The question remains whether the price increases by massive retailers can be justified or whether they should be considered as excessive?

The Consumer and Customer Protection and the National Disaster Regulations and Directions (the “Regulations”), which came into effect in March 2020, were put in place to consider inter alia when a price is excessive.  They empower the South African Competition Commission (“SACC”) and National Consumer Commission (“NCC”) to investigate and prosecute cases of price-gouging.  Contraventions may result in penalties of up to ZAR 1 million or 10% of annual turnover. According to the NCC, price gouging is defined as “an unfair or unreasonable price increase that does not correspond to or is not equivalent to the increase in the cost of providing that good or service.”

The NCC has launched an investigation under the Consumer Protection Act into potential contraventions of the COVID-19 Regulations against major retailers such as Woolworths, Pick ‘n Pay, Shoprite, Spar, Food Lovers market, Cambridge Foods and Boxers Superstores. According to the Regulations, and in terms of section 120(1)(d) of the Consumer Protection Act, a price increase of a goods, including inter alia “basic food and consumer items”, which does not correspond to the increase in cost of supplying such goods, or increases in the net margin or mark-up on the good(s) which exceeds the average margin or mark-up on the said good in the three month period before 1 March 2020 is “unconscionable, unfair, unreasonable and unjust and a supplier is prohibited from effecting such a price increase”.

The preferred tools of the COVID-19 Regulations relating to excessive pricing seem to be predominantly similar to competition policy and its associated institutions. Upon assessing an increase in pricing to determine whether the increase is excessive, the test would be whether the prices were increased due to cost-based increases (such as reduced supply due to an increase in import costs as the domestic currency get weaker) as opposed to price increases only due to a demand increase (such as more consumers buying ginger as an immune booster during the COVID-19 pandemic). When assessing exploitative conduct, it is more likely to establish that there has been an abuse of dominance when a firm is dominant or enjoys great market power.

It has appeared that the trend in the increase of ginger and garlic retail prices is that the allegedly exploitative conduct no longer originates from only one dominant player as such (eg. only Spar) but rather affects shops in the whole of South Africa. The price increases have sparked outrage with consumers who are driving shop-to-shop in an attempt to purchase ginger or garlic at a lower, or somewhat ‘standard’ pre-COVID-19, price.

As stated above, increasing prices will be seen as excessive when the increase is due only to an increase in demand. Retailers have claimed that the increase is not only because of rising demand but also due to an actual decrease in the product supply.  It is therefore pertinent to determine the extent to which the supply has been reduced in relation to the increased demand. This would require a proportionality balance, as shops would have to prove to the competition authorities that the increase of pricing is only due to the decrease in supply. Extortionary pricing above and beyond that would demonstrate an increase of pricing due to the increase of demand, and as such would fall foul of the  Competition Act and the Regulations cited above.

The rising prices in garlic and ginger have been on the SACC’s radar since July 2020, when it concluded a consent agreement with Food Lovers Holdings whereby the retailer agreed to immediately halt excessively pricing its ginger products at one of its stores. Notwithstanding this fact, the subsequent regulation and enforcement of ginger and garlic prices by the SACC under Regulations has become somewhat tricky due to the fact that the products are not considered to be essential products under the COVID-19 Regulations.

The SACC previously found that the increases in prices were largely attributed to the rise in costs experienced by retailers and they found no evidence of price gouging targeted at taking advantage of the constrained mobility of consumers or shortages during the pandemic. What the SACC found to be concerning, however, were the high pre-disaster margins on products such as ginger and garlic, which have largely been maintained throughout the pandemic by retailers raising their prices for the goods as the costs were increasing. Accordingly, as mentioned above, although the SACC did not find evidence of price gouging, it did find possible contraventions of the Consumer Protection Act and as such, referred the potential contraventions to the NCC to investigate further.

A spokesperson for the SACC, Siyabulela Makunga has stated the following:

We also appreciate the changes in demand for garlic and ginger, but it is our view the price of ginger and garlic have [sic] increased astronomically at retailers. We don’t think that the increased demand in ginger justified the price of up to R400 a kilogram…

John Oxenham, an R.S.A. competition lawyer with Primerio Ltd., notes that “the prosecution of the matter demonstrates the respective authorities’ commitment to priority sectors and an unbridled effort to root out any form of price-gouging.”

To conclude, market power of the implicated retailors has likely been increased due to the reduced availability of substitutes for customers as a majority of retailers have introduced a dramatic price increase. The investigation launched by the NCC is, however, a step in the right direction to protect consumers who have been left with very limited choices in the widespread steep increase in price of ginger and garlic.

Antitrust enforcer to allow self-assessment of competitor collaborations amidst pandemic

Following the (thus far rarely used) “Block Exemption” procedure under Section 30 (2) of the Kenyan Competition Act, the Competition Authority of Kenya (“CAK”) has proposed a new set of draft Guidelines as to competitor collaborations during the COVID-19 pandemic, so as to assist with the country’s economic recovery efforts. It specifies five (5) focus sectors, namely Manufacturing, Private Healthcare, Aviation, Travel & Hospitality, and Health Research. The Guidelines are ostensibly inapplicable to firms that engage in economic activity outside these five sectors.

In issuing its soon-to-be finalized guidance, the CAK wishes to provide “direction to undertakings in making a self-assessment as to whether the agreements, decisions or practices which they intend entering into will qualify for block exemption within the Covid-19 Economic Recovery Context without the need to seek the Authority’s intervention.” (A.(4))

A key aspect, in the view of antitrust litigator Andreas Stargard, is the renewed attention given to “public-interest factors” in competition law.

He believes that this concession to non-traditional competition-law theory is “necessitated by the broad economic havoc COVID-19 has wrought, including on historically peripheral-to-antitrust aspects such as overall employment, public health, en masse business closures, and the like, which would normally not be highly relevant factors in the strict sense of conducting a rigorous competition-law analysis.”

Stargard continues that “Condition III of the CAK’s so-called ‘Self-Assessment Principles‘ expressly highlights this element, namely forcing firms to evaluate whether their proposed collaboration with competitive entities is ‘in the public interest, such as creation of employment’,” citing para. 11(vii) of the draft Block Exemption Guidelines on Certain Covid-19 Economic Recovery Priority Sectors.

The CAK’s proposal thus strongly echoes what its regional sister authority, the COMESA Competition Commission (“CCC”) openly discussed as early as July of last year. As we wrote in our assessment of the official CCC staff’s thoughts on competition enforcement amidst the pandemic in 2020:

The concept of non-competition factors (i.e., the public-interest element) was also raised, as there is a “growing debate on whether the pandemic may necessitate changes in [the] substantive assessment of mergers, e.g., towards more lenient consideration of failing firms.”

As Andreas Stargard observes, “just as COVID-19 is truly global, Kenya and COMESA are likewise not alone in their quest to master the difficult balancing act between sufficiently enforcing their domestic or regional antitrust laws versus allowing reasonable accommodations to be made for necessary competitor collaborations in light of the pandemic’s impact. Indeed, other enforcers have also made accommodations for such unusual collaborative efforts, given the emergency nature of the pandemic.”

In the U.S., the federal antitrust agencies have issued analogous guidance for competitors, issuing a joint guidance document specifically on health-care providers collaborating on necessary public-health initiatives. What stands out is the agencies’ express invitation for health-care players to take advantage of the (now-expedited to 7 days’ turnaround time) business-review/opinion-letter procedures.   Mr. Stargard notes however that, unlike the Kenyan proposal of “self-assessment by the affected entities, the American approach still necessitates an affirmative approach of the enforcers by the parties, seeking official sanctioning of their proposed cooperation by submitting a detailed explanation of the planned conduct, together with its rationale and expected likely effects.

By way of further example, in Canada, as the OECD notes, the government “has developed a ‘whole-of-government action’ based on seven guiding principles including collaboration. This principle calls on all levels of government and stakeholders to work in partnership to generate an effective and coherent response. These principles build on lessons learned from past events, particularly the 2003 SARS outbreak, which led to dedicated legislation, plans, infrastructure, and resources to help ensure that the country would be well prepared to detect and respond to a future pandemic outbreak.”

New Antitrust Whistleblower Reward Scheme: Are ‘Paltry’ Rewards & Anonymity Enough?

As of January 1st, 2021, Kenya’s competition-law enforcer, the Competition Authority of Kenya (CAK), started benefitting from its new “Informant Reward Scheme” (IRS). The IRS encourages “confidential informants” — often also referred to as “whistleblowers” — privy to inside information about antitrust offenses to come forward and report the illicit conduct to the Authority.

The IRS incentivizes informants with promises of anonymity as well as — rather modest, as we will see — monetary rewards: the CAK vows to maintain the confidentiality of the informant’s identity, and provides for up to Sh1,000,000 (approximately US$9,100 at today’s Fx rate).

Andreas Stargard, a competition lawyer active on the African continent, has delved more deeply into the CAK’s enabling “Guidelines” document, trying to ascertain the precise contours of the IRS program. He reports as follows:

AfricanAntitrust.com: “Who is eligible to participate in the IRS?”

Andreas Stargard: “What we know from the implementing Guidelines, and also from Director General Kariuki‘s speech on the IRS, is that only third parties or those individuals playing merely a remote and peripheral role in relation to the anti-competitive conduct are eligible to benefit from the IRS. This means that a 3rd-party customer, or a non-executive employee such as a secretary or copy clerk of the offending company, may report wrongdoing under the IRS.”

AAT: “What about insiders with executive authority, then?”

Stargard: “Similar to Western countries’ antitrust regimes, those individuals can still report illicit conduct by their employers, but they would have to resort to the Kenyan leniency process as opposed to the Informant Reward Scheme.”

AAT: “Understood. Are there other, similar whistleblower schemes in existence?”

Stargard: “Yes. We recently held a very timely webinar with leading international and African experts on the topic of whistleblowing, which I moderated. A recording of it is available on the web. Whistleblowing has become an important piece of the enforcement puzzle for many governmental authorities around the globe, not only on competition issues. In Kenya, specifically, President Kenyatta recently doubled the rewards for tax-fraud whistleblowers, who are now entitled to receive up to Sh5,000,000 ($45,000), and the country’s revenue service implemented the so-called iWhistle portal to allow informants to report tax fraud anonymously.”

AAT: “Speaking of money, what is your take on the amount of the offered reward under the terms of the IRS?”

Stargard: “Frankly speaking, one million Kenyan shillings is a paltry sum. I cannot comprehend how reporting a competition-law violation such as a price-fixing cartel that may cost the Kenyan economy and its consumers billions in losses is deserving of 5-times less reward than an informant reporting an individual’s tax fraud to the revenue service, which may cause significantly less injury to the government purse than an international cartel of corporates…”

AAT: “Strong words.”

Stargard: “I’m serious. Compare and contrast the meager sum of not even US$10,000 maximum IRS reward with the potential 5-year prison sentence liability for executives convicted of collusion! There is simply no comparison…”

AAT: “In a perfect world, what would you change about the Kenyan whistleblower scheme?”

Stargard: “If I had had any input into the process of devising the IRS Guidelines, I would have ensured that the maximum reward amount be commensurate with the economic harm and financial damage done by cartels — in short, I would raise the IRS reward to an un-capped straight-up percentage portion of the fines recovered by the CAK. The more, the better for everyone.”

AAT: “Do you have any parting words or final observations on the IRS program for our readers?”

Stargard: “Well, for starters, it is not too late to implement changes to the regime. The CAK (and the legislature, to the extent necessary) can easily increase the maximum reward, as I proposed earlier. I am certain that it would yield better results than the current Sh1m cap, which can easily be ‘outbid’ by an already-corrupt employer, seeking to ‘buy’ its employees’ loyalty! So, Mr. Kariuki, if you’re reading this interview, I’d strongly suggest considering an increase in the reward.

Secondly, from our international experience, we know one thing about ‘secret’ informant schemes: One key element of any successful whistleblower regime (besides ensuring adequate rewards) is the strictest maintenance of confidentiality of the informant’s identity. I realize that section ‘F’ of the Guidelines assures the public that anonymity will be guaranteed and that the CAK will ‘take utmost care to ensure that the identity of the confidential informant is not disclosed.’ However, as an attorney, I can only say that the proof is in the pudding. We will have to wait for the first proceedings pursuant to IRS-provided reports, in order to determine whether or not the whistleblowers’ anonymity will indeed be preserved successfully in practice. That said, I look forward to advising clients on the many issues that are likely going to arise from the Scheme!”

AAT: “Thank you for your time and insights on this new development!”

CAK Director General Wang’ombe Kariuki

Thursday webinar: Calling Out COVID Corruption & Why We Need Whistleblower Regimes


“Calling Out COVID Corruption: Why the pandemic requires robust Whistleblower regimes to combat corruption – lessons from abroad”

Primerio Ltd. and Constantine Cannon LLP are pleased to invite you to what promises to be a lively & informative seminar on whistle-blowing, corruption, and lessons learned from the pandemic.

REGISTER HERE FOR FREE: https://lnkd.in/dW_FjY8

With Panelists Zanele Mbuyisa – Counsel PPLAAF, John Oxenham- director Primerio, Mary Inman – partner Constantine Cannon Llc, Bill Kovacic – GWU Professor and non-executive director of the UK Competition and Markets Authority, Glynnis Breytenbach – former prosecutor for the South African National Prosecuting Authority (NPA) & a member of parliament for the Democratic Alliance (DA), Johannes Stefansson – “Fish Rot” Whistleblower.

This webinar is part of a 2 part series dedicated to whistleblowing, fraud and corruption during COVID 19: the panels will include politicians, lawyers and whistleblowers. The discussion will touch on all aspects of the importance of instilling a whistleblowing regime in corporate, government and other pertinent spheres of society.

COMESA seeks replacement for CCC’s Dr. Lipimile

The COMESA Competition Commission has announced that it is accepting applications for the position of Director of the CCC until the end of October.  Says Andreas Stargard, an antitrust practitioner with Primerio Ltd.:

“The post is currently held by Dr. George Lipimile, the agency’s first and, therefore by definition, most influential chief.  Dr. Lipimile has certainly steered the comparatively young Commission into the right direction during its formative years, notably overseeing a complete makeover of the merger-notification procedure early on in the process, after much criticism of the initial system.

We are curious to see who will replace him in March 2021, as Dr. Lipimile’s term expires at the end of February.  Will it be a true competition-law expert, or will it be a politically-motivated appointment made by the COMESA Secretariat, pushing for someone who is more of a trade lawyer or, worse, economic protectionist.  What the CCC needs now to continue gaining international recognition and respect (from its peer agencies, as well as from commercial parties!) is a qualified antitrust attorney who understands the law & economics aspect of competition practice, and who will apply these principles neutrally throughout the COMESA region!”

Dr. Lipimile
George Lipimile, CEO, COMESA Competition Commission

Back in 2015, we quoted Mr. Stargard as follows, suggesting a path forward for the agency:

“If the CCC steps up its enforcement game in the non-transactional arena, it could become a true force to reckon with in the West.  I can envision a scenario where the CCC becomes capable of launching its own cartel matters and oversees a full-on leniency regime, not having to rely on the ‘follow-on enforcement’ experience from other agencies abroad.  The CCC has great potential, but it must ensure that it fulfills it by showing principled deliberation and full transparency in all of its actions — otherwise it risks continued doubt from outsiders.”

It remains to be seen who the Director’s replacement will be and which of these topics will dominate her or his agenda, if any.  The Director’s term is for 5 years, offering a salary of between $70,000 and $83,000.  Details on the opening can be found here.  Only Member State nationals can apply.  Interestingly, COMESA member states’ antitrust enforcers likewise posted the announcement on their individual web sites:

Abusing antitrust enforcement for personal gain? Malawi’s Competition Agency Misled by Textbook Competitor

textbooks

As it turns out, some savvy ‘entrepeneurs’ have been able to use competition-law enforcement on the African continent to their personal gain, namely by making misleading — if not outright false — accusations against their competitors, thereby triggering an antitrust investigation, and even causing this venerable publication to report on such.  We have been made aware by the initial “target” company (now, as it turns out, the actual “victim”) of the Malawi investigation that one of its competitors in the textbook market had essentially weaponized the CFTC’s investigative powers by launching direct and indirect accusations against Mallory International that triggered the probe.  In the end, the CFTC concluded that none of the purported cartel conduct actually occurred.

To be clear and to avoid any doubt: Mallory International was cleared of any misconduct allegation.  The Editor has reviewed conclusive evidence of the CFTC’s closure of this investigation in August of 2018.  “What remains to be seen is whether or not the agency might use its powers to pursue the perpetrators of this inherently anti-competitive attack of false accusations (which coincidentally also wasted government resources) any further,” says AAT Editor Andreas Stargard, pointing to the underlying nature of such false claims as “quintessential unfair competition that should neither enjoy immunity from prosecution nor escape government scrutiny.”

For background, in our original reporting on this case (entitled “CFTC Investigates Foreign Textbook Supplier in Cartel Probe“), we had written as follows:

In a potential first, Malawi’s Competition and Fair Trade Commission’s (CFTC) Chief Executive Officer, Ms Charlotte Malonda, recently announced that the CFTC is investigating a UK-based supplier of textbooks, Mallory International, for alleged cartel conduct.  Mallory had partnered up with a local company, Maneno Books Investments, as part of a joint venture, called “Mallory International JV Maneno Enterprise”.  In addition, other companies also being investigated include Jhango Publishers, South African based Pearson Education Africa, Dzuka Publishing Company and UK based Trade Wings International.  
The investigation follows complaints received by the Human Rights Consultative Committee as well as a number of its constituent civil society organisations and NGOs.  The allegations include price fixing and collusive tendering vis-à-vis tenders issued by the Malawian government for the supply of pupils’ text books.  [Editor’s Note: “Contrary to the statements in our original article, the actual complaint by HRCC and FND alleged neither price fixing nor collusive bidding. Its main allegation was that unjustified objections were made to contract awards in Malawi, and that attempts were made to dissuade publishers from issuing authorisation letters to particular bidders. Neither of these allegations was true, and no evidence to support either of them was ever produced. The complaint was dismissed by CFTC in August 2018.”]
The Nyasa Times quoted the CFTC head as confirming that the agency had “received a few complaints about allegations of a cartel and other procurement malpractices, hence our commencement of the investigations to get the bottom of the matter.”
Based on the language of Section 50 of the Act suggests that the sanctions for committing an offence in terms of the Act requires the imposition of both a penalty and a five year prison sentence. Although not aware of any case law which has previously interpreted this provision, the wording of the Act is particularly onerous, particularly in light of the per se nature of cartel conduct.
Section 33 of the Competition and Fair Trade Act prohibits collusive tendering and bid rigging per se. Furthermore, a contravention of section 33 is an offence in terms of the Act carries with it not only the imposition of an administrative penalty, which is the greater of the financial gain generated from the collusive conduct or K500 000, but also criminal sanctions, the maximum being a prison sentence of five years, notes Andreas Stargard, a competition attorney:
“The Malawian competition enforcer, under Ms. Malonda’s leadership, has shown significant growth both in terms of bench strength and actual enforcement activity since her involvement began in 2012.”
The Act is not clear what “financial gain” means in this instance and whether the penalty is based on the entire revenue generated by the firm for the specific tender (allegedly tainted by collusion) or whether it applies only to the profit generated from the project. Furthermore, it is unclear how this would apply to a co-cartelist who did not win the tender. The Act may be interpreted that the “losing bidder” is fined the minimum amount of K500 000 which equates to appox. USD 700 (a nominal amount) while the “winner” is penalised the value of the entire tender value (which would be overly prejudicial, particularly if turnover and not profit is used as the basis for financial gain).
Although the investigation has only recently commenced and no respondent has admitted to wrong doing nor has there been a finding of wrongdoing, this will be an important case to monitor to the extent that there is an adverse finding made by the CFTC. Unless the Malawian authorities adopt a pragmatic approach to sentencing offending parties, section 50 of the Act may significantly undermine foreign investment as a literal interpretation of the Act would render Malawi one of the most high risk jurisdictions in terms of potential sanctions from a competition law perspective.
It may also result in fewer firms wishing to partner up with local firms by way of joint ventures as JV’s are a particularly high risk form of collaboration between competitors if there is no clear guidance form the authorities as to how JV’s are likely to be treated from a competition law perspective.

 

COMESA antitrust enforcer holds COVID seminar

 

Willard Mwemba
Dr. Mwemba of the CCC

The COMESA Competition Commission (“CCC”) hosted a live webinar today on the impact of COVID-19 on merger regulation and enforcement within the common market in the COMESA region.  The seminar was aptly sub-titled “Challenges and Way Forward,” and the CCC representatives, in particular Dr. Willard Mwemba, did indeed lay out the problems faced by them and the measures proposed and taken to alleviate them.

COVID-related business and national competition agency closures have led to “significant delays in information gathering” from NCAs, third parties, and merger parties themselves.

CCC has relaxed the hard-copy filing requirements for merger notifications.

The concept of non-competition factors (i.e., the public-interest element) was also raised, as there is a “growing debate on whether the pandemic may necessitate changes in [the] substantive assessment of mergers, e.g., towards more lenient consideration of failing firms.”

That said, the CCC emphasized that its adjustment to enforcement actions should not be construed as any weakening of competition principles taking place.  The harmonization and coordination among the COMESA member countries’ agencies and the CCC remain a critical element of the operation of the single market.

South Africa’s Second Price Gouging Case: Dis-Chem Penalised For Excessive Pricing re Face Masks

By Michael-James Currie and John Oxenham

On 14 July 2020, the South African Competition Tribunal published its written reasons in relation to its decision to penalize Dis-Chem (a large pharmaceutical chain in South Africa) for contravening section 8(1)(a) of the Competition Act by charging excessive prices for a variety of surgical face-mask products.

The Tribunal’ latest price gouging decision follows closely on the heels of the Tribunal’s decision in Babelegi, which was the first decision price gouging decision in South Africa during the Covid-19 pandemic (in terms of which the Tribunal also imposed a penalty on Babelegi based on a finding that Babelegi charged excessive prices for face masks during the pandemic). Babelegi was a firm which -pre-Covid 19 had a market share of less than 5%.

Turning to the Dis-Chem case, the price increases at play for three different face-masks were 261%, 43% and 25% respectively, on 9 March 2020 as the Covid-19 pandemic gripped South Africa, but before the Minister of Trade and Industry published the commonly referred to ‘Price Gouging Regulations’ (Regulations). The Regulations, promulgated, on 19 March 2020, essentially place a reverse onus on dominant firms (in relation to a defined list of “essential goods”) to demonstrate why any price increases post the proclamation of the Regulations, which were not directly and proportionally linked to a corresponding cost increase, are not “excessive”.

Although the Competition Commission (SACC) had initially framed its case in terms of the Regulations, the Tribunal confirmed that the Regulations did not apply retroactively. Accordingly, the Tribunal proceeded to analysis the complaint in terms of section 8(1)(a) of the Act read together with the factors set out in section 8(3) of the Act in order to determine whether a price is excessive. This is noteworthy as the principles underpinning the Dis-Chem decision are applicable regardless of whether the Regulations are, or remain in, force and may well apply to cases beyond the Covid-19 pandemic.

In terms of the recently amended Competition Act, an “excessive price” is defined as a price which has “no reasonable relation to the economic value of the product”. If there is a prima facie case of excessive pricing, the onus shifts to the respondent to demonstrate that the price is not excessive.

The Tribunal held that in order to demonstrate an “excessive price”, what the complainant must show is a price which “on the face of it was utterly exorbitant”. The respondent would then need to show that the increase was reasonable.

The crux of the case, however, largely turns on whether Dis-Chem is in fact considered “dominant”. Dominance, generally, is determined with reference to whether a firm is able to exert a substantial degree of “market power”. In terms of South Africa’s Competition Act, a firm is irrebuttably presumed to be dominant if it has market shares in excess of 45%. A firm can still be found to be dominant, however, with market shares less than 45% if it can be established that the firm is able to exert “market power”. “Market power” is specifically defined in the Act as “the power of a firm to control prices or to exclude competition, or to behave to an appreciable extent independently of its competitors, customers or suppliers”.

The Commission argued that defining the relevant market was not necessary. Rather, the fact that Dis-Chem was able to materially increase its prices in the context of a global health crisis independently of its competitors, customers or suppliers, meant that Dis-Chem was able to exert “market power” and was therefore “dominant”.

The Tribunal confirmed that the assessment of “market power” may be conducted with reference to the prevailing market conditions without having to specifically define the market. In essence, the Tribunal asked itself what advantages the global-health crisis conferred to the respondent (in this case Dis-Chem) that it would not enjoy absent the crisis?

At the time of the relevant price increase, the public were encouraged to wear surgical face-masks. The Tribunal rejected, therefore the argument raised by Dis-Chem that cloth face-masks are a suitable substitute. Dis-Chem had argued that barriers to entry were low as face-masks where easy to produce from a supply-side. The product market was broadly defined as the market for surgical face masks.

Turning to the geographic market definition, the Tribunal suggested that the geographic market must be narrowed (based on customers reluctance to travel far during the pandemic) despite Dis-Chem applying a national pricing strategy. The Tribunal ultimately did not define the geographic market. Instead, its assessment essentially refers back to that relating to the tests for market power. In essence, the Tribunal held that because there were concerns among consumers about supply shortages, consumers would not be prepared to “shop around” for better options fearing they may miss out altogether. The Tribunal mentioned that applying the well known “hypothetical monopolist test”, that Dis-Chem would have been able to profitably raise its prices by more than 5% and, therefore, was essentially in its own market (the Tribunal did not define the precise geographic boundaries of the market even though these was evidence put up suggesting that there were many suppliers of surgical face masks within a very small geographic radius of Dis-Chem’s largest outlets). Accordingly, this case was not determined by narrowing the geographic market.

Turning to the economic tests utilized or considered by the Tribunal, the following is summarized:

  1. The relevant “benchmark” price used was the price immediately before the Covid-19 pandemic compared to the prices thereafter.
  2. The relevant complaint period was held to be 1-31 March 2020.
  3. That the empirical evidence assessed pointed to an increase in prices in March (compared to prices prevailing in January and February) without a direct link to cost increases. Consequently, the Tribunal found that the gross-margins increased “exponentially” during the complaint period.
  4. The Tribunal rejected the argument that for multi-product retailers, profit margins ought to be assessed with reference to “net” as opposed to “gross” margins. In other words, the Tribunal precluded any cross-subsidization type defences.

The Tribunal found that had it not been for the surge demand for surgical face-masks as a result of the health crisis posed by Covid-19, Dis-Chem would not have been able to increase the prices to the extent it did. Further, the Tribunal found Dis-Chem enjoyed and exerted market power by substantially increasing its prices and profit margins for face-masks and therefore the SACC had established a prima facie case of excessive pricing which shifted the burden of proof to Dis-Chem to show its price increases were “reasonable”.

In determining whether a price increase is “reasonable”, the Tribunal appears to disfavour any economic assessment to the inquiry. Instead the Tribunal suggests that any price increase (presumably irrespective of the percentage increment) in relation to an item essential for the public’s health is unreasonable. Following the Tribunal’s earlier finding that the price increases were substantial, the Tribunal held that Dis-Chem’s price increases during the pandemic were “utterly unreasonable and reprehensible”.

As an aside, the Tribunal suggests that the price increase of any good in South Africa between 47%-261% would affect the public interest adversely. In the context of a health crisis where those increases related to essential goods, the price increase has a particular impact on poor customers.

Accordingly, the Tribunal found that Dis-Chem had engaged in excessive pricing in contravention of the Act and imposed a penalty of R1.2 million (which was calculated based on approximately twice the turnover which Dis-Chem derived from face-masks during the complaint period).

The Tribunal’s decision in Dis-Chem provides more analysis and considerations to market definition than the case of Babelegi although the central features and findings in both cases are the same. Due to the Covid-19 pandemic, both Dis-Chem and Babelegi charged higher prices to consumer in relation to products considered essential to the health and well-being of the public and because these price increase were nor justified with reference to cost increases, the prices were considered “excessive”.

The Tribunal (as part of its assessment under the geographic market definition analysis) provides an important qualifier to intervening in matters arising from short-term market conditions. In particular, the Tribunal stated that “material price increases of life essential items such as surgical masks, even in the short run, in a health disaster such as the Covid-19 outbreak, warrants our intervention”. This is an important caveat as the Tribunal appears to recognize that intervening in competition law matters based on short term market conditions may have unintended consequences and that ordinarily competition authorities should allow the market to “self-regulate”.

While opportunistic and exploitative behaviour during a time of crisis may indeed warrant scrutiny, one does question whether these decisions fall into the classic “hard cases make bad law” dictum coined by US Supreme Court Justice, OW Holmes.

Different standards of law and economics should not apply to firms simply based on the type of product that they produce or sell. To punish a firm because it supplies essential healthcare products may indeed be a noble public interest objective, but caution must be had to using mechanisms such as the Competition Act to achieve these outcomes if the economic principles and justifications do not stack up.

While the Tribunal was at pains to point out in Dis-Chem that context matters, it is less clear precisely what context matters in excessive pricing cases going forward. Are the market dynamics due to the Covid-19 pandemic an outlier unlikely to repeat itself in history and that the Tribunal’s recent price gouging decisions should be assessed in that context? Or, does the Tribunal’s decision effectively mean that any firm who is able to profitably increase a price by 5% has market power (and is, therefore, dominant) and, therefore, any such price increase (unless linked proportionately to a cost increase) is prima facie excessive? When will the Tribunal intervene in excessive price cases and when will it allow the normal forces of supply and demand and the hallmark features of a dynamic competition to rectify any market abnormalities?

While the Tribunal suggests that a 47% increase and above would be excessive for “any good” in South Africa, the Tribunal does not provide much guidance on where to the draw the line. The Tribunal rejected the US’s guidance which refers to a 10% increase (in the context of a price increase of an essential good). Previously the Competition Appeal Court in the Sasol judgment suggested (without setting a firm benchmark) that a price which is less than 25% more than the economic value of the product cannot be said to be excessive.

While the Tribunal does make cursory mention of the prices of other competitors, the Tribunal seems to err in one important regard. Excessive price cases and indeed the assessment of market power should not be conducted with reference to the overall demand shock in the market but with reference to the firm’s ability to act independently of other competitors in the same prevailing market conditions. A comparison therefore between pre-market shock and post-market shock insofar as the shock applies to the whole market, is somewhat irrelevant.

If the overall demand for face-masks increased and all face-mask suppliers are able to profitably increase their prices for face-masks during the relevant period, it can hardly be said that every face-mask supplier is “dominant” during that period. If all ice-cream suppliers raise their prices in summer versus winter that would clearly not be a result of ice-cream suppliers having market power during the summer months only. The Tribunal’s analysis in Dis-Chem does not seem to answer this issue and in fact lends credence to such an outcome which would clearly not be supported by any credible economic justification.

The Tribunal does not deal with another important aspect relating to principles of supply and demand more generally. The Tribunal recognizes that there were (and are) a shortage of supply for face-masks. It was the shortage of supply (be it actual or potential) which in fact led to “panic buying” and higher demand and therefore higher prices. To suggest that the poorest customers are most likely to be harmed due to price increases following demand shocks is correct. However, all customers (including the poorest) are likely to be harmed if the supply shortage cannot be addressed and is perpetuated by the on-going health crisis. The most sensible way to encourage entry into the supply side market for face-masks is to allow such firms to earn short term profits which it would not otherwise enjoy. Without the upside incentive, new entry into the supply side market is unlikely and the only disciplining safeguard left in the market is quasi-price regulation by the competition authorities. The forces of competition in such instances are, therefore, precluded from being allowed to operate to restore the market to competitive levels. The Tribunal, however, recognizes in the Dis-Chem decision that in certain instances it should in fact play the role of a price regulator.

So where does that leave us? Firstly, it seems very likely that the Dis-Chem decision will be taken on appeal. Until such time as the Tribunal’s decision is altered (if at all), firms selling goods which are considered “essential” in the fight against Covid-19 should take particular cognizance of this decision. Secondly, the price gouging regulations published by the Minister are essentially rendered nugatory by the Tribunal’s approach to excessive pricing cases. Thirdly, regardless of the size of the firm pre-Covid, if a firm is able to increase its prices unilaterally as a result of a demand shock following the Covid health, there is a significant risk that the Tribunal will consider such a firm to possess market power and hence unless such price increase is justified with reference to cost increases, potentially liable to an administrative penalty (and possibly follow-on civil damages).

[About the Authors: John Oxenham and Michael-James Currie are practicing competition law attorneys based in South Africa and advise clients on competition law related matters across most African jurisdictions]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pandemic Antitrust Exemptions, or: “The Virus Let Me Do It!”

In antitrust circles, the term “Competitor Collaboration” may refer to quite an innocent practice, but is perhaps more often used as a euphemistic reference for good old-fashioned collusion: namely, a cartel by any other name.  Antitrust enforcers around the globe attempt to harness its “good side” during the viral pandemic…

In the COVID-19 world, several competition-law enforcers, including those in the United States and in South Africa, have tried to act swiftly to create express “safe harbours” for certain types of permissible conduct between (otherwise horizontal and direct) competitors.  The goal of these (usually temporary) exemptions from the strictures of antitrust prohibitions against collaboration, information exchanges, and the like, is to enable medical-supply providers to ensure that urgently-needed products and services can be delivered most expediently to the affected areas, patients, and hospitals.

Andreas Stargard
Andreas Stargard

In the United States, notes Andreas Stargard, an antitrust attorney, the COVID-19 pandemic has shown that the federal antitrust agencies are capable of proceeding with speed when it comes to signing off on such allowable “competitor collaborations”, which are in the best interest of facilitating an efficient health-care industry response to the crisis.  The FTC and DOJ are now swiftly, within one week of the submission of a detailed request for review, sanctioning proposed cooperation agreements by firms that would otherwise compete to supply medicines or equipment.  Applicants for a business-review letter (“BRL”) must provide a detailed explanation of the planned conduct, together with its rationale and expected likely effects, to the agencies.

The first of these opinion letters was issued on April 4th, 2020, under the expedited procedure to McKesson, Cardinal Health and others.  It allows them to collaborate on PPE production, following the call for such action by FEMA and other federal agencies, and pursuing the coordinated response under their supervision for a limited time period (namely the duration of the crisis).  What could be deemed anti-competitive effects, such as an undue price increase, output reduction or the like, is expressly excluded from the permissible conduct.

Applying the “same analytical framework” as the DOJ’s approval of the PPE-related collaboration between McKesson, Cardinal Health, Owens & Minor, Medline Industries and Henry Schein Inc., the Department’s Antitrust Division has now issued a second BRL, dated April 20th, to AmeriSource Bergen and others, approving their similarly designed scheme to distribute medicinal products jointly across the country.  AmerisourceBergen sought the agency’s blessing of the proposal pursuant to the expedited review procedure outlined in the March 24th joint FTC and DOJ guidance on health-care providers collaborating on necessary public-health initiatives, in which the dual antitrust enforcers announced their goal to answer COVID-19-related BRL requests within one week of receiving the BRL applicants’ detailed description of the proposed collaborative conduct.

Mr. Stargard counsels that those firms seeking a BRL exemption should consult with a competent antitrust specialist lawyer.  He notes that the federal agencies have expressly invited providers to take advantage of the expedited BRL procedure, which is temporary in nature and only available during the time of the declared COVID-19 pandemic.

In South Africa, the South African Minster of Trade and Industry and Competition (“Minister”) has taken a similar tack, having published Regulations under Section 78 of the South African Competition Act 89 of 1998 (“Competition Act”).  Unlike the U.S., however, these Regulations go well beyond the medical industry.  John Oxenham, a Johannesburg-based competition lawyer, observes that “these Regulations exempt industry players in certain sectors from prosecution for conduct in contravention of Sections 4 and 5, also known as Block Exemptions.”  They also apply to the prohibition of excessive pricing (and ensuring sufficient supply) by firms selling key supplies.  Related to the exemption process in terms of the Competition Act are the powers of the Minister to publish directions under the recent Regulations issued under section 27 (2) of the Disaster Management Act (GN 318 of 18 March 2020). In this regard, Regulation 10(6) provides that the Minister may issue directions to “protect consumers from excessive, unfair, unreasonable or unjust pricing of goods and services during the national state of disaster; and maintain security and availability of the supply of goods and services during the national state of disaster.”

Block Exemptions

John Oxenham
John Oxenham

Block Exemptions have been published by the Minster in terms of section 10(10) of the Competition Act which provides that the Minister may, after consultation with the Competition Commission (SACC), issue regulations in terms of section 78, exempting a category of agreements or practices from the application of sections 4 and 5 of the Competition Act. As at the date of writing, Block Exemptions have been granted to the Healthcare Sector, the Banking Sector and Retail Property Sector.

Health Care Sector

The exemption include a range of industry players, including healthcare facilities, pharmacies, medical suppliers, medical specialist, pathologists and laboratories, and healthcare funders.  The Block Exemption will similarly allow industry players to coordinate on procurement of supplies, transferring equipment and coordinating the use of staff. In effect, the Block Exemption extends and broadens the scope of the exemption enjoyed by the NHN to include state and private healthcare. While this move is certainly a welcome one to ensure that South Africa is able to effectively deal with the spread of COVID-19, its effect on competition in this market will be most interesting. The health care sector, and particularly large private sector players (Private Health Care), has long been in the cross-hairs of the SACC, with many enforcement actions, heavily contested merger control proceedings and most recently, the market inquiry into the private healthcare sector conducted and concluded by the SACC. Concentration and Coordination has been key to the debate. While the Exemptions will apply only for so long as the state of disaster remains in effect, the effects of these measures on the industry is likely to endure for some time and will reform the debate around the future of health care in South Africa.  On the 8th of April the Block Exemption was amended to additionally cater for the following:

(i)         Those agreements which are exempt can only be undertaken at the request of the Department of Trade, Industry and Competition or the Department of Health. Furthermore, either of these departments may impose further conditions on the agreements or practices; and

(ii)        The Exemption now caters for agreements or practices between manufacturers and suppliers of medical and hygiene supplies.

Banking Sector

The Block Exemption published in favour of the Banking Sector is aimed at exempting a category of agreements or practices between Banks, the members of the Banking Association of South Africa and/or Payments Association of South Africa from application of sections 4 and 5 of the Act and promoting cooperation between these industry participants to mitigate damages and to ensure the effective continuance of banking infrastructure. In this regard, industry participants are to coordinate and agree on, inter alia:

operation of payment systems and the continued availability of notes at ATMs, branches and businesses; debtor and credit management to cater for payment holidays and debt relief (including limitations on asset recovery and the extension of further credit terms).

Retail Property Sector

The Block Exemption in respect of the Retail Property Sector applies only to retail landlords and designated retail tenants (required to shut down in terms of the national shut down currently in place) and aims to provide a framework for cooperation between industry participants in respect of payment holidays and rental discounts and limitations on the eviction of tenants. The Block Exemptions also seek to cater for cooperation on limitations to the restrictions placed on tenants to protect their viability during the nation disaster, likely to allow tenants to alter of expand their product or service offerings to fall within the category of businesses or services exempt from the restrictions currently enforced by Government, thereby ensuring alternative income and increased capacity on key products and services.

Hotel Sector

The Exemption granted to hotel industry operators seeks to enable the hotel industry to collectively engage with various Government departments with respect to identifying and providing appropriate quarantine facilities. The Exemption applies to agreements or practices pertaining to the identification and provision of quarantine facilities, and cost reduction measures in providing accommodation for persons in quarantine.

Block Exemptions have not been widely utilised in South Africa. To the extent that the measures introduced by the Block Exemptions are effectively implemented, however, the use and application of the process of exemptions under the Competition Act may become a more prominent feature of the South African competition law process. The nature of emergencies are such that they expedite the implementation of historical process which were otherwise untouched or contested as the counterfactual has changed.

It is already evident that more and more industries affected by the COVID-19 will apply for or be granted block exemptions to ensure that they are able to effectively avert the negative effects associated with disruptions caused to the business and economy. Examples of these include the Grocery Retail and/or Fast Moving Consumable Goods Sectors, Security Sector and more.

Price Regulation

The Pricing Regulations, are published in terms of a combination of the Competition Act, the Consumer Protection Act 61 of 2008 (2008) and the Disaster Management Act (2002) and apply only to the ‘key supplies identified in the Pricing Regulations and will remain in effect only for so long as COVID-19 remains a ‘national disaster’.  Section 8(3)(f) of the Competition Act provides that in determining whether a price is an excessive price (for purposes of section 8(1)),  it must be determined whether that price is higher than a competitive price and whether such difference is unreasonable, determined by taking into account any regulation published by the Minister in terms of Section 78.  In terms of the Pricing Regulations a price will be considered an excessive price for purposes of Section 8(1) of the Competition Act where, during this period of national disaster, a price increase: does not correspond to or is not equivalent to the increase in the costs of providing that goods or service; or increases the net margin or mark-up on that good or service above the average margin or mark-up for that good or service in the three month period prior to 1 March 2020.

Notably, Section 8 applies only to dominant firms.

In addition to the above, the Pricing Regulations contain a similar assessment for the consideration of what is termed unconscionable, unfair, unreasonable and unjust price increases in the Consumer Protection Act. While it is likely that what constitutes an excessive price under the Competition Act will also constitute an unreasonable price increase for purposes of the Consumer Protection Act, the opposite may not be true. The Consumer Protection Act is enforced by a different authority in South Africa and case precedent has been quite limited, compared to the competition authorities.

The Pricing Regulations also cover quantities and the restrictions on sale to maintain equitable distribution and curb stockpiling. No mention is made of the Competition Act or Consumer Protection Act in these paragraphs, although they should also be considered in the broader context of competition policy and what the Pricing Regulations seek to achieve. Although South African competition policy is not ordinarily concerned with discrimination at the final consumer level, in terms of the Pricing Regulations, retailers are effectively required to ration the quantity sold, as the normal economic mechanism, whereby suppliers sell to those parts of the demand curve with a sufficient willingness to pay, is suspended.

The penalty provisions of the Pricing Regulations require prosecution in terms of the underling legislation, being the Competition Act and Consumer Protection Act respectively as these sanctions exceed the powers given to the Minister in the Disaster Management Act. The Pricing Regulations state that subject to the further specific provisions of the respective pieces of legislation, a failure to comply with the Pricing Regulations may attract a fine of up to R1 000 000 and/or a 10% of a firms turnover and imprisonment for a period not exceeding 12 months (depending on the applicable legislation). In terms of the Competition Act, only cartel conduct under section 4(1)(b) attracts criminal liability.

The Minister has recently announced that a number of firms are under investigation for allegedly contravening the provisions of the Competition Act and/or Consumer Protection Act in a manner prohibited by the Pricing Regulations.

The Disaster Management Act provides that the declaration of a national state of disaster can terminate after the expiry of 3 months or upon notice in the Government Gazette by the Minister before the expiry of 3 months. The Minister can nonetheless extend such a period for one month at a time.

Accordingly, the Disaster Management Act offers little certainty on how and when the measures implemented will come to an end.