Category: cartels

From Cartel to Courtroom: Why Tembisa Is the Case the Competition Commission Should Be Bringing

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By Joshua Eveleigh and Astra Christodoulou

Introduction

In 2016, an important amendment to the Competition Act 89 of 1998 (the “Act”) was brought into operation. The amendment introduced criminal liability for cartel conduct in the form of section 73A of the Act, which states:

“(1) A person commits an offence if, while being a director of a firm or while engaged or purporting to be engaged by a firm in a position having management authority within the firm, such person –

(a) caused the firm to engage in a prohibited practice in terms of section 4(1)(b); or

(b) knowingly acquiesced in the firm engaging in a prohibited practice in terms of section 4(1)(b).”

Section 74 states further:

“Any person convicted of an offence in terms of this Act, is liable –

(a) in the case of a contravention of section 73(1), or section 73A, to a fine not exceeding R500 000-00 or to imprisonment for a period not exceeding 10 years, or to both a fine and such imprisonment; or

(b) in any other case, to a fine not exceeding R10 000-00 or to imprisonment for a period not exceeding six months, or to both a fine and imprisonment.”

In other words, a manager or director who steers a firm into price fixing, market division or collusive tendering can, under section 74 of the Act, face a fine up to R500,000 or imprisonment for up to 10 years, or both. Section 73A(5) of the Act would provide that a consent order or a finding by the Competition Tribunal (the “Tribunal”) or Competition Appeal Court (the “CAC”) that a firm is guilty of price fixing, dividing markets or colluding on tenders could be used as prima facie proof in criminal proceedings against any of that firm’s directors or managers. It must be noted, however, that while section 73A(1) to (4) came into operation on 1 May 2016, subsections (5) and (6) (the former dealing with the prima facie evidentiary effect, and the latter prohibiting a firm from paying or indemnifying a convicted individual) have not yet been brought into operation.

Despite section 73A having been in force for over a decade, it has not yet been put into practice.

One of South Africa’s largest and ongoing corruption cases, the investigation into the Tembisa Hospital Scandal, offers an opportunity to consider why this is the case. The case involves collusive manipulation of South Africa’s procurement system to the tune of billions of rands; however, the criminal cartel offence and operation of the Act have played no part thus far in the State’s investigation. Setting aside the criminal offence, section 59 of the Act gives the Commission a route against the firms involved that carries administrative penalties measured against their turnover, and that could be pursued independently of the criminal process. Tembisa’s sharpest lesson may lie not in the dormant criminal route but in the unused civil one.

The criminal cartel offence

Section 73A criminalises individual involvement in hardcore cartel conduct prohibited in section 4(1)(b) of the Act, namely price fixing, the division of markets and collusive tendering. It does not address criminal liability for the firm, which remains subject to the civil regime, but for the natural person who directed it.  Liability extends beyond registered directors to anyone “engaged or purporting to be engaged by a firm in a position having management authority”; therefore, the whole management chain may be exposed.

The offence may be committed in one of two ways: by causing the firm to engage in the prohibited practice, or by knowingly acquiescing in it. Section 73A(2) indicates that acquiescence requires actual knowledge of the conduct; therefore, mere negligence or a failure to detect a cartel operating below management level will not found liability.

The consequences of conviction are found in section 74, which provides for a fine of up to R500,000, imprisonment for up to 10 years, or both. Any fine must be paid personally by the convicted individual, and section 73A(6) would, once in operation, prevent a firm from paying it or indemnifying the person against it. A conviction also carries collateral consequences under company law, including potential disqualification from serving as a director.

Crucially, an individual cannot be charged in a vacuum. Section 73A(3) provides that a person may only be prosecuted once the firm has admitted, in a consent order, that it engaged in a prohibited practice under section 4(1)(b), or once the Tribunal or the CAC has made a finding to that effect. The finding against the firm is therefore a precondition to the criminal charge against the individual. Section 73A(5) would then allow that finding to serve as prima facie proof in the criminal proceedings against the individual. That feature, though not yet in operation, has attracted sustained criticism on the basis that it may amount to a reverse onus and could raise constitutional concerns regarding the rights protected in section 35 of the Constitution of the Republic of South Africa, 1996, including the right to be presumed innocent and the right to a fair trial

Enforcing the offence

The difficulty lies not in the definition of the offence but in the conditions attached to prosecuting it. South Africa operates two separate enforcement processes for cartel conduct. The civil process is directed at the firm, is investigated and prosecuted by the South African Competition Commission (the “Commission”) and is adjudicated by the Tribunal. The criminal process is directed at the individual and may be prosecuted only by the National Prosecuting Authority (the “NPA”).

Due to the precondition in section 73A(3), the civil process must ordinarily conclude, whether by consent order or by a Tribunal or CAC finding, before the criminal process against an individual can begin. Cartel matters are frequently litigated for years on technical and jurisdictional grounds before any such finding is made, therefore meaning the ability to prosecute criminal liability tends to arise long after the underlying conduct has occurred.

The interface between the two authorities must also be considered. The Commission cannot prosecute individuals and cannot grant them immunity from criminal prosecution. Under section 73A(4), the Commission is limited to certifying that a person is “deserving of leniency”, in which case it may not itself seek or request that person’s prosecution, and it may make submissions to the NPA in support of leniency. The final decision, however, is that of the NPA, which is not bound by the Commission’s view. Effective enforcement therefore depends on close coordination between the Commission, the NPA and the South African Police Service.

This division of functions establishes a tension with the Commission’s Corporate Leniency Policy, which has historically been its most effective tool for uncovering cartels. Therefore, if a firm’s admission in a consent order can be used as the basis for criminal prosecution of the firm’s own directors and managers, the incentive to cooperate and settle diminishes. Further, as section 73A remains untested in practice, there is also the unresolved tension as to what extent the NPA may access the material a firm hands over in the course of seeking leniency.

Tembisa Hospital and the potential use of the Act

The Tembisa Hospital scandal concerns the alleged looting of more than R2 billion from the procurement budget of the Tembisa Provincial Tertiary Hospital in Gauteng. The scheme is said to have exploited the Request for Quotation system for purchases below the R500,000 threshold (set in National Treasury Practice Note No 8 of 2007/2008 “Supply Chain Management: Threshold Values for the Procurement of Goods, Works and Services by Means of Petty Cash, Verbal / Written Price Quotations or Competitive Bids”, since amended), deliberately splitting orders to circumvent the formal tender process. Investigators have identified several syndicates operating through large networks of companies. One alleged network is said to have controlled dozens of entities, the majority of which were irregularly appointed as suppliers; another is alleged to have funnelled contracts through a cluster of commonly linked companies.

The use of many nominally separate companies gives the matter a competition-law dimension. From the perspective of Tembisa Hospital, there would have appeared to be several separate entities competing for each quotation. In reality, those entities were, unbeknownst to the hospital, allegedly controlled by a single mind, which caused them to submit coordinated and inflated quotations, ensuring that the lowest of several artificially high bids would win. That is the classic mechanism of bid rigging. The appearance of competition is manufactured to conceal an allocation of business that has already been decided among the bidders. Where a single controlling mind allegedly causes several ostensibly independent firms to submit competing quotations, thereby creating the appearance of competition while allocating business among themselves, the conduct falls squarely within collusive tendering or market division of the kind prohibited by section 4(1)(b). On that characterisation, the individuals directing those firms could, in principle, fall within the reach of section 73A. The concealment of common control is foundational in the competition-law analysis because it is what allowed the entities to hold themselves out as independent competitors. The Commission would still need to establish an agreement or concerted practice between them, but the coordinated submission of rigged quotations is itself compelling evidence.

The difficulties of using the Competition Act at Tembisa

Several obstacles arise when considering whether Tembisa is a suitable vehicle for the first practical use of section 73A.

The first difficulty is that the core issue of the Tembisa scandal has been corruption, not cartelisation. Its core is the corrupt relationship between officials inside the hospital and the suppliers they favoured, a relationship between buyer and seller rather than between competitors. The cartel offence is aimed at competitors who secretly agree to rig a market against a buyer, not at insiders who capture a procurement system from within. Whatever residual element of collusive tendering might be found among the front companies is, for criminal purposes, overshadowed by the established offences of fraud, corruption and money laundering.

Furthermore, the structure of the offence makes the utilisation of the route slow. The criminal case against the individual depends on a prior admission by, or adverse finding against, the firm. The Commission would first have to investigate, refer and litigate to a conclusion its case against the firm. Cartel proceedings of that kind practically run for years. One of South Africa’s longest-running cartel investigations, into the alleged manipulation of the rand, lasted close to a decade before the Constitutional Court had ruled only on preliminary questions of pleading and jurisdiction, without yet deciding whether any collusion had occurred at all. A procurement-corruption matter of this severity and national importance cannot sensibly wait on that timetable.

A further consideration is the sanction available under section 73A, which may be viewed as modest against the scale of the conduct. Section 74 caps the penalty at a fine of R500,000 and imprisonment for up to 10 years. Against an alleged scheme running to billions of rand, a fine of that order may be seen as negligible, and the competition route offers nothing equivalent to the asset-recovery machinery that is at the core of the State’s response, namely the forfeiture and preservation of the proceeds of the fraud. By contrast, the ordinary offences of fraud, corruption and money laundering carry heavier penalties and unlock the confiscation of the stolen funds.

This modest cap, however, attaches only to the criminal sanction against the individual. The Act’s civil regime is another matter entirely. An administrative penalty imposed on the firms, by section 59 of the Act, can reach 10% (ten per cent) of the firm’s annual turnover, a figure that, on contracts totalling billions of rand, would be anything but negligible. While imprisonment for up to ten years remains a significant sanction, section 73A offers little by way of asset recovery and may therefore be less attractive to prosecutors than the ordinary offences. The availability of a substantial administrative penalty, by contrast, raises a distinct question about the regulator’s own role.

Taken together, these difficulties explain why the criminal cartel offence, for all its apparent reach, may be seen as a slow and, on its criminal side, ill-suited instrument for a matter such as Tembisa, which largely explains the criminal route the State has taken.

The route the State has taken  

The State has thus far opted not to utilise the Competition Act. The response has been driven by the Special Investigating Unit (the “SIU”), which was authorised by Presidential Proclamation 136 of 2023, to conduct a forensic investigation. Under the Special Investigating Units and Special Tribunals Act 74 of 1996, the SIU refers evidence of possible criminal conduct to the NPA for prosecution and is separately empowered to bring civil proceedings in the High Court or the Special Tribunal to recover the State’s losses.

On the criminal side, the charges brought and contemplated are the offences of fraud, theft, corruption, money laundering, forgery and uttering, and contraventions of the Public Finance Management Act. In August 2026, one of the alleged syndicate masterminds was arrested on his return to South Africa and appeared before the Specialised Commercial Crimes Court facing dozens of counts, before being released on bail; the NPA has indicated that further prosecutions arising from the three identified syndicates are to follow. On the civil side, the Asset Forfeiture Unit has obtained substantial forfeiture orders against assets linked to the alleged networks, and the SIU continues to pursue recovery of the diverted funds.

The logic of this route is straightforward. The ordinary criminal law reaches the corrupt heart of the scheme, which competition law cannot; its offences are broader and well established; it requires no prior finding by the Tribunal as a precondition to charging individuals; and it allows the various enforcement agencies to coordinate a single, faster response.

The route the Commission has not taken

Even if the criminal cartel offence is seen to be ill-suited to Tembisa, the Act’s civil prohibition is not. Section 4(1)(b), enforced by the Commission and the Tribunal, catches the collusive tendering described above directly, and without the features that make section 73A difficult to utilise. It does not depend on the NPA, on the criminal burden of proof, or on the outstanding subsections of section 73A, and it is directed at the firms rather than at the individuals. On a finding of contravention, it carries an administrative penalty of up to 10% (ten per cent) of a firm’s annual turnover, which on contracts of this value would be substantial.

Prosecuting cartel conduct with the goal of administrative penalties is a financial route the Commission can pursue independently of both the NPA’s prosecutions and the Asset Forfeiture Unit’s proceedings under the Prevention of Organised Crime Act. An administrative penalty differs from recovering the specific proceeds of the fraud, since it is calculated on turnover rather than on the amount looted, and it is paid into the National Revenue Fund rather than restored to the hospital. It is not, therefore, asset recovery in the sense that forfeiture is, but it is a substantial financial consequence for the very firms that profited. It operates alongside rather than instead of the forfeiture the State is already pursuing.

On this front, Tembisa is close to an ideal case for the Commission. The NPA is already going forward with prosecutions arising from the same collusive bidding; the conduct has been investigated in exhaustive detail; and the sums involved are vast. It is therefore difficult to understand why the Commission, as the regulator charged with enforcing the very prohibition in question, has not itself moved to secure a finding and the administrative penalties that would follow. Delay is the obvious objection, since a referral to the Tribunal could take years; but that is a reason for the Commission to begin now having its prosecution running alongside the criminal one. The penalty does not turn on the criminal outcome, and the passage of time weakens neither the turnover figures on which it is based nor the public interest in imposing it. A parallel referral would not compete with the criminal prosecutions but complement them and would signal that rigged public tenders attract a competition-law response as well as a criminal one.

What Tembisa means going forward

Tembisa is a revealing test of the criminal cartel offence precisely because it was never invoked. It shows that section 73A is unlikely to become the vehicle for the headline procurement-corruption cases that draw national attention, for the reason that corruption is the core issue the NPA wish to prosecute rather than cartel cases, and the ordinary criminal law is better fitted in this regard.

However, the more pointed lesson of Tembisa concerns the Commission rather than the NPA. The same conduct that supports the criminal charges is also a civil contravention of section 4(1)(b) that the Commission can pursue in its own right. That route asks none of the questions that make section 73A so hard to use. The weight of the administrative penalty alone is justification for the Commission pursuing prosecution in its own right. Over and above the administrative penalties, the message it would send to firms participating in public procurement would be that uncompetitive conduct will not go unpunished by the competition authorities.

Where a genuine horizontal cartel sits behind a public tender, section 73A remains available, and a future consent order or Tribunal finding could still open the door to the prosecution of the directors and managers responsible. The real test of the criminal offence will arise when the Commission secures a clear finding under section 4(1)(b) and the NPA elects to prosecute an individual on the strength of it. Until then, the deterrent value of the offence will remain largely theoretical, depending as it does on the interface between the Commission and the NPA being made to work, on the dormant provisions being brought into operation, and, above all, on a prosecution finally being brought.

The more immediate lesson, however, concerns not the dormant criminal offence but the civil route beside it. The administrative penalty route requires only a civil referral against the firms; it can be pursued by the Commission alone, and it is available now. That is why Tembisa speaks less to an untested criminal provision than about the unused civil one.

Scrap Under Scrutiny: SACC Raids Scrap Metal Firms over Alleged Price-Fixing

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By Tyla Lee Coertzen and Courtney Kaplan

On 13 February 2026, the South African Competition Commission (“SACC”) released a Media Statement (the “Statement”) indicating that it had carried out several search and seizure operations at four scrap metal purchasing companies in Germiston, Nigel, Vanderbijlpark, and Hammanskraal.

The SACC initiated the dawn raid investigations upon grounds of reasonable suspicion that the four companies – namely, Scaw South Africa (Pty) Ltd (“Scaw”), Cape Gate (Pty) Ltd (“Cape Gate”), Shaurya Steel (Pty) Ltd t/a Force Steels (“Force Steels”), and Unica Iron and Steel (Pty) Ltd (“Unica”) – were involved in fixing purchasing prices of shredded or processed scrap metal, used in the manufacturing of steel products, which may amount to a contravention of section 4(1)(b)(i) of the Competition Act 89 of 1998 (the “Act”).

Section 4(1)(b)(i) of the Act prohibits agreements made between competitors, or concerted practices by competitors, including directly or indirectly fixing purchase prices or trading conditions. Firms who are found to be in contravention of section 4(1)(b)(i) may be liable to pay penalties of up to 10% of their annual turnover.

In terms of the Statement, the companies are suspected of having announced their price adjustments of the same prices, to be executed around the same time. The SACC alleges that this conduct amounts to a contravention of section 4(1)(b)(i) of the Act, which prohibits hardcore cartel conduct. The SACC’s investigation is said to have been brought about by a complaint submitted by a third-party in 2023, as well as a complaint initiated by the SACC in February 2026.

Section 48 of the Act empowers the SACC to conduct search and seizure operations and collect documents which concern an ongoing investigation. In respect of the scrap metal dawn raids that took place on 13 February, SACC provided that it received a search warrant from the North Gauteng (Pretoria) High Court authorising it to carry out these operations. The SACC further indicated that documents and electronic data will be seized and analysed with other relevant information to establish whether the companies are engaged in conduct which contravenes the Act.

Search and seizure operations are also known as “dawn raids” and are often initiated at the start of an investigation, usually before the respondents are aware they are under investigation, to enable the SACC to obtain the information before it might be destroyed. These inspections often come as a surprise to parties and are done in an effort to obtain evidence of potential infringements of the Act. The SACC, often accompanied by the South African Police Service, is provided wide powers for search and seizure through dawn raids, and would be entitled through a warrant to inspect company records, employee records, and both company and personal electronic devices.

Cape Gate responded to the allegations stating that it believes the search warrant is unlawful and that it plans on instituting legal proceedings to have the warrant set aside. The warrant was granted ex parte, meaning it was granted in the absence of the affected parties, and thus Cape Gate believes it has the right to institute proceedings against it. Cape Gate alleges that the SACC did not disclose all the necessary information to the Court when it applied for the warrant. Dorothea Ziegenhagen, the CEO of Cape Gate, stated that the company denies any wrongdoing and asserts that its operations fully adhere to competition law.

Interestingly, in 2025, the Competition Tribunal found Cape Gate guilty of being involved in the fixing of prices in the scrap metal market. Cape Gate denied this and has stated that the calculation was decided on in terms of transparent negotiations between buyers and merchants and has maintained that the SACC and Department of Trade and Industry knew of the negotiations and failed to acknowledge such. Cape Gate lodged an appeal with the Competition Appeal Court which is expected to be heard by the end of March 2026.

Commissioner of the SACC, Doris Tshepe, had indicated in a statement that the scrap metal market forms part of industrial intermediary products, one of the priority sectors monitored by the SACC, and thus false coordination of purchase prices may materially interfere with pricing in the downstream steel value chain. Commissioner Doris Tshepe further provided that dismantling any alleged price-fixing cartel in the scrap metal market would significantly assist in getting rid of artificial barriers to entry and foster a favourable environment for all firms, especially small firms and businesses owned by historically disadvantaged persons to contribute to the market.

The dawn raid comes as a surprise, particularly given that while dawn raids are certainly an effective investigative tool that may be utilised by the SACC as part of its enforcement efforts, the use of dawn raids has been significantly limited in recent years, with the last dawn raid conducted in 2022 on a number of insurance firms. The dawn raids, however, indicate the SACC’s continued commitment to enforcement in the metal sector.

Kenya Tribunal Upholds CAK’s Steel Cartel Sanction on Appeal

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By Michael Williams

Kenya’s Competition Tribunal (the “Tribunal”) has upheld the Competition Authority of Kenya’s (the “CAK”) steelcartel decision, dismissing individual appeals brought by seven manufacturers and affirming the penalties and remedies imposed in 2023. The Tribunal rejected appeals by Tononoka Rolling Mills, Blue Nile Wire Products, Devki Steel Mills, Accurate Steel Mills, Nail & Steel Products, Corrugated Sheets and Jumbo Steel Mills, cementing the CAK’s finding of price-fixing, coordinated price adjustments and output/ import restrictions in the steel value chain. 

This ruling was handed down in two tranches: on 9 July 2025 (Accurate, Blue Nile, Devki, Nail & Steel, Tononoka) and on 11 September 2025 (Corrugated Sheets, Jumbo Steel), each time siding with the Authority. In total, the Tribunal affirmed KES 287.9 million in penalties for the seven appellants. The Tribunal further held that the CAK had afforded the parties due administrative process under Article 47 of the Constitution, the Fair Administrative Action Act and the Competition Act. 

The decision handed dawn on 15 October 2025 is a natural sequel to the CAK’s 23 August 2023 decision, when the CAK imposed record penalties of KES 338.8 million on nine steel producers for a cartel that, per the CAK, distorted construction-input pricing. Five firms reached settlements with the CAK, while the seven above pursued and have now lost their appeals. 

Notably, during the appeal phase Doshi & Company (Hardware) Ltd and Brollo Kenya Ltd concluded out-of-court settlements with the CAK, illustrating the CAK’s willingness to resolve matters via settlement and compliance undertakings, even mid-litigation. 

For context, the AfricanAntitrust 2023 coverage highlighted that the CAK’s original fines constituted the highest cartel penalties in the CAK’s history to that date, following a twoyear investigation that drew on search-and-seizure and market-intelligence evidence. With the Tribunal now endorsing the CAK’s analysis and process, the core liability findings stand, and the fine levels (for the seven appealing firms) are confirmed. 

Why this matters:

i) The Tribunal’s decisions strengthen precedent on price-fixing/ output restrictions in Kenya’s construction-inputs sector and validate CAK’s investigative toolkit and evidence assessment. 

ii) Appellants remain bound to cease collusion and implement internal competition-law compliance programmes.

iii) The CAK links steel-cartel conduct to higher housing and infrastructure costs, this outcome supports the CAK’sbroader enforcement narrative across the building materials market

The breakdown of the KES 287,934,697.83 penalties, as concurred by the Tribunal are as follows: 

Corrugated Sheets (86,979,378.53); Tononoka Rolling Mills (62,715,074.03); Devki Steel Mills (KES 46,296,001.25); Jumbo Steel Mills (KES 33,140,459.40); Accurate Steel Mills (KES 26,826,344.31); Nail & Steel Products (KES22,816,546.01); Blue Nile Wire Products (KES9,160,894.30). 

What’s next

Unless pursued further on points of law, the Tribunal’s decision bring this enforcement chapter close to closure. Penalties, compliance obligations remain, and CAK’s leniency and Informant Reward Schemes continue to beckon for future cartel detection. 

In conclusion, and by quoting the CAK’s Director-General, Mr. David Kemei, “The Tribunal’s findings affirm the CAK’s unwavering commitment to protect Kenyan consumers and businesses from the damaging effects of cartel conduct, and the veracity and completeness of our evidence-gathering, analysis and decision-making processes.”

Safeguarding Market Integrity and Consumer Welfare: Reflections on the CCC’s 2024 Annual Report

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By Megan Armstrong

The COMESA Competition Commission (“CCC”), released its 2024 Annual Report on 23 July 2025, outlining a narrative of both increased institutional maturity and a growing assertiveness in market regulation. This, against a backdrop of economic turbulence such as regional inflationary pressures, tightened global credit conditions and slowing GDP growth in Member States, the CCC pressed forward, making notable strides in their enforcement, policy advocacy and institutional development.

M&A Activity and a shift in sectoral dynamics

Dr. Willard Mwemba, COMESA Competition Commission Chief Executive

A notable metric from the year under review is the number of merger notifications, the CCC recorded receiving 56 transactions, a 47.4% increase from the previous year (2023). This spike may, in part, be a response to post-COVID19 economic restructurings and macroeconomic volatility prompting consolidation across various sectors. It is also likely that it points to a growing awareness among firms of their obligations to notify under the COMESA Competition Regulations, alongside the CCC’s increasing presence in regulatory enforcement within the region.

A large portion of these notified mergers in 2024 came from the banking and financial services sector, at 7 notified mergers, followed by energy and petroleum with 6 notified mergers, and ICT and agricultural sectors having 4 notified mergers each. Notably, each of these sectors can be linked to economic resilience and infrastructure development across the Member States. Countries like Kenya and Zambia showed the highest levels of enforcement with respect to mergers, affirming their roles as key economic nodes within the COMESA region.

The CCC continued to apply the subsidiarity principle in their merger assessments, deferring to national authorities where appropriate. With this, there were still 43 determinations finalised within stipulated time frames, unconditionally cleared with no mergers being blocked or subject to conditions. This contrasts with 2023, where four such interventions occurred. This unblemished record may suggest procedural compliance and benign effects, it does raise the question of whether these competitive harms are being sufficiently interrogated or whether transactions are being proactively structured to avoid scrutiny.

Restrictive Practices: Building a Hard Enforcement Reputation

Here, the CCC pursued 12 investigations in 2024, increased from 9 in 2023. These investigations touched sectors ranging from beverages, to wholesale and retail, ICT, pharmaceuticals and transport and logistics. The CCC’s increasing use of ex officio powers, particularly in the transport and non-alcoholic beverages sectors is noteworthy, reflecting a strategic pivot from a reactive enforcement regime to a more intelligence-led and proactive regime.

The CCC bolsters this enforcement strategy with an acknowledgement that behavioural change often requires more than deterrence. It maintains research and advocacy at its core focus for market engagements. The CCC’s involvement in collaboration with the African Market Observatory project in the food and agricultural sector highlights the market and policy failures that arise in these areas. This research has spurred dialogue at both national and international levels, including involvement from the OECD and International Competition Network.

Reform and Capacity Building

The CCC has initiated a long-overdue review of its legal framework, seeking to modernise its 2004 Regulations and Rules. These revised instruments, once adopted, are expected to cover emerging regulatory concerns, which includes climate change, and digital markets. These are areas where the intersection between competition and broader public policy goals are becoming more pronounced.

 The CCC has scaled up technical assistance across the region, including providing support to legal reform processes in jurisdictions such as Eswatini, Egypt and Djibouti. The CCC also presented training for competition authority officials in Member States such as Comoros, Zimbabwe and Zambia. These capacity building efforts are critical for the CCC to realise its vision of a harmonised and integrated regional competition regime.

The Year Ahead: A Cartel Crackdown and Consumer-Centric Focus

Looking ahead to 2025, the CCC has signalled a decisive focus on cartel enforcement. There has been a growing recognition that undetected and entrenched cartel operations remain one of the most damaging forms of anti-competitive conduct in the Common Market, resulting in raised priced, limitations to innovation and a stifling of regional integration. The CCC intends to ramp up their detection tools, build cross-border enforcement partnerships, and enhance leniency and whistleblower frameworks. This is a complex undertaking, but does provide the potential to yield transformative results should it be executed effectively.

Alongside this, the CCC intends to intensify its efforts on the consumer protection front, particularly in those sectors that have been flagged through its market intelligence efforts. The digital economy is one such priority sector, the CCC has received anecdotal evidence of exploitative practices in this sector and is positioned to clarify its understanding of the competitive dynamics at play in this sector. Similarly, product safety in the fast-moving consumer goods sector is expected to receive closer scrutiny. 

Conclusion

If 2024 was the year of consolidation, 2025 promises to be the year of forward momentum. The CCC has shifted its weight towards deeper enforcement, increased research and the implementation of a regulatory framework that has the ability to meet and address modern market realities. From cartel detection to digital market fairness and food sector resilience, the CCC has an ambitious agenda for the year ahead.

As regional integration efforts gather pace under the AfCFTA, the CCC’s role as a guardian of market fairness and consumer protection within Member States will only become more central. With this groundwork having been laid, it is time for the harder, but more rewarding task: “building markets that work for everyone”.

The Morocco Competition Council takes action to ensure fairness in Morocco’s fuel market with a settlement of 1,840,410,426 Moroccan Dirhams

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By Gina Lodolo

In a move towards ensuring fair competition in Morocco’s fuel market, the Morocco Competition Council (“MCC”) recently took decisive action. This decision followed amendments to the legal framework governing competition in Morocco, aligning it with Laws No. 40.21 and No. 41.21, which amended and supplemented Law No. 104.12 related to freedom of prices and competition, and Law No. 20.13, which pertains to the Competition Council, along with their implementing decrees and their entry into force. In this regard, in June 2023, the MCC initiated an investigation into potential practices that contravened competition rules within the fuel market.

The complaints were filed against nine companies operating in the supply, storage, and distribution of gasoline, along with the professional organisation representing these companies (the “Companies”).

In response to the investigation, the Companies expressed their willingness to engage with the new legal framework, particularly the settlement procedure outlined in Article 37 of Law No. 104.12, as amended and supplemented.

The MCC considered and approved the requests submitted by the Companies to enter into discussions. The General Rapporteur was tasked with initiating official discussions with each company and its professional organisation separately. The result of these discussions was the signing of reconciliation minutes, documenting the approval of the reconciliation proposals.

On 23 November 2023, the MCC issued a report detailing reconciliation agreements that had been entered into with the Companies, stipulating that the Companies would collectively pay an amount of 1,840,410,426 Moroccan dirhams as a reconciliatory settlement. In addition to the financial commitment, the Companies made a set of pledges aimed at improving the competitive functioning of the fuel market and preventing anti-competitive practices.

These commitments are legally binding and include:

  1. Developing competitive risk maps within the Companies.
  2. Establishing effective internal warning systems.
  3. Appointing an internal official responsible for overseeing the conformity program.
  4. Providing detailed reports on supply, storage, and distribution activities every three months for a period of three years.
  5. Ensuring that price changes align with market dynamics.
  6. Allowing independent service stations to change prices without prior approval.
  7. Not linking discount programs to service stations with compliance with recommended prices by the Companies, directly or indirectly.

The commitments also emphasised the importance of preventing anti-competitive practices related to the exchange of sensitive information. In this regard, the Companies committed to adopting best practices regarding the collection, exchange, or sharing of information, especially in the management of shared infrastructure for storage and distribution.

To ensure the effective implementation of these commitments, the MCC will be closely monitoring and evaluating compliance. In this regard, the Companies are required to provide periodic evaluation reports, demonstrating their commitment to the agreed-upon measures.

The MCC’s proactive approach in addressing potential anti-competitive practices in Morocco’s fuel market through reconciliation agreements is a significant step forward and signifies robust and increased enforcement activity in Morocco.

The full MCC Report is accessible here.

CAK imposes highest-ever cartel fine on 9 steel producers

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After about a two-year-long investigation, the Competition Authority of Kenya (CAK) has determined guilt and imposed record fines on nine steel manufacturing companies for their joint role in a price-fixing and output-restriction cartel. The fine — the highest-ever imposed by the CAK to date — was set at Ksh. 338,849,427 million (approx. U.S. $2.3m) in total.

Back in June 2022, Construction Kenya news outlet reported that the offices of 10 Kenyan steel suppliers had been ‘dawn-raided’ by the CAK on suspicion of price-fixing. “A number of senior officials at the companies, including chief executives, have been interrogated as part of the investigation triggered by builders who complained about excessive pricing of steel.” These raids in Nairobi, Mombasa and Kisumu had taken place in the preceding December, and in secret, the CAK’s investigation into the steel sector had already begun in August 2020, when the Authority conducted a sua sponte nationwide “covert field screening,” which indicated the presence of illegal coordination by the steel producers.

In their defense, the manufacturers initially claimed innocence and blamed the pandemic input-price increases, via their trade group’s spokesman, Kenya Association of Manufacturers Steel Sector Chair, Bobby Johnson: “We are bearing a huge cost to cushion consumers. The prices of billets have shot up because of the supply disruptions as well as fuel for heating the furnaces.”

However, CAK enforcement and compliance manager, Mr. Mokaya, was quoted as stating that the agency had received specific and clear evidence “of certain concerted practices including agreements on pricing. We conducted market screening and launched raids in December targeting over ten companies and the investigation is ongoing.”

Andreas Stargard, an antitrust attorney with Primerio Ltd. who frequently works on COMESA-region competition matters including Kenya with his local Nairobi colleagues, noted that “this cartel case comes on the heels of the CAK’s successful prosecution of the ‘paint cartel,’ which it brought to conclusion also during COVID, in February 2021, fining Crown Paint, Basco Products Ltd., Kansai Plascon and Galaxy Paints for price-fixing. It will not be interesting to see whether firms engaged in the construction industry — that is: direct purchasers of steel products from the cartelists — will attempt to recover any of the overcharges they were burdened with by the infringers…“

In theory, a person found guilty of the offence is liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten million shillings, or both. Kenyan billionaire Narendra Raval, whose steel firm Devki is among those found guilty of cartel conduct, will not have to see a (steel?) jail cell from the inside, however. As of now, only monetary fines have been imposed by the CAK.

Dr. Adano Wario, the CAK’s Acting Director-General, noted that these financial penalties were in proportion to the harm done by the offense: artificial increases in the cost of steel products harmed consumers by inflating construction costs of homes and state and local infrastructure projects, thus contributing further to the already high cost of living in the country:

“Cartels are conceived, executed, and enforced by businesses to serve their commercial interests, and to the economic harm of consumers. In this matter, the steel firms illegally colluded on prices and margins as well as output strategies. In a liberalized market like ours, the forces of supply and demand should signal prices, free from manipulative business practices. Agreements between competitors seek to defeat this fundamental facet of a free economy.”

Whether or not a “leniency” request was involved is unclear, but doubtful according to attorney Stargard: “We have seen conflicting reports as to the origins of this investigation: some sources point to construction firm, or developer, complaints that led to the CAK’s action. The Authority itself claims it conducted the industry investigation fully on its own accord, without prompting. Either way, there is no indication that one of the price-fixing group members cheated on its fellow cartelists by seeking amnesty from prosecution, which is most frequently the case in modern cartel cases.” He adds that the COMESA Competition Commission (“CCC”) may also find interest in the ongoing price hikes in various markets, as the agency had previously made cautionary remarks in the paints cartel (see article above) and was almost certainly apprised by the CAK of its ongoing investigation into the steel sector during the pendency of that matter: “We know for a fact that the CAK and the CCC are working hand-in-glove when in comes to investigating anti-competitive conduct. Indeed, this statement can be expanded to include not only East-African competition enforcement agencies, but all African authorities, and in fact many international antitrust watchdogs as well, with whom the COMESA enforcer has bi- and multi-lateral cooperation agreements and MOUs. Competition-law enforcement truly has become global, and escaping the watchful eye of the agencies is getting more difficult by the day.”

The affected companies are Devki Steel Mills, Doshi & Hardware Limited, Corrugated Steel Limited, Jumbo Steel Mills, Accurate Steel Mills Limited, Nail and Steel Products Limited, Brollo Kenya Limited, Blue Nile Wire Products Limited, and Tononoka Rolling Mills Ltd.

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

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

By Joshua Eveleigh

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

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

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

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

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

“We won’t compete on price!” — Telco CEO makes blatant antitrust admission

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Today, the East African reported on a stunning admission by the Chief Executive Officer of Kenyan mobile telco heavyweight Safaricom (itself no stranger to AAT telco competition reporting and proprietor of the massive M-Pesa mobile money network across East Africa). In the article, fittingly entitled “Safaricom rules out price war in Ethiopian market“, the business report quotes Mr. Peter Ndegwa as saying:

“From a pricing perspective, our pricing strategy is generally to be either in line or just slightly at a premium, but not to go for any price competition. The intention is actually generally to be closer to what the main operator is offering, especially on voice.”

Safaricom’s senior exec made his curious confession on a recent investor call. Says Andreas Stargard, a competition attorney with Primerio: “On these investor conference calls, there are usually several analysts and reporters on the line, listening in, and they commonly are also recorded. This would mean there exist clear prima facie evidence and several witnesses to these statements, as reported by the East African source.” He adds: “It remains to be seen whether any of the several competent authorities will investigate Safaricom’s express statement of a de facto ‘non-compete’ between the Ethiopian incumbent and the Kenyan upstart,” with the former (Ethiotel) boasting 54m subscribers, as opposed to the latter’s mere 1m users in-country.

POSSIBLE INVESTIGATIONS

When asked which government authorities would be authorized to investigate Safaricom’s “no price war” policy expressed by Mr. Ndegwa, according to the newspaper, Mr. Stargard noted that, beyond the domestic Ethiopian telecoms regulator, there existed at least two (2) competent antitrust bodies with jurisdictional authority: “For any potentially anti-competitive conduct occurring in Ethiopia that may have a cross-border effect (as mobile telephony usually does — especially with a foreign, here Kenyan, operator involved as well), I could see either the Ethiopian Trade Competition and Consumer Protection Authority (“TCCPA”) or the supra-national COMESA Competition Commission (“CCC“) under Dr. Mwemba’s reinvigorated leadership stepping in.”

As the latter has made clear in several public pronouncements recently, the CCC is poised to continue its non-merger enforcement streak, that is: investigating and prosecuting restrictive business practices, such as cartels and cartel-like behaviour. “We call it, CCC 2.0,” Stargard adds half-jokingly. He notes that both the TCCPA and CCC have all the necessary legislative instruments in hand to proceed with a preliminary investigation on the basis of the above quotes published by the East African:

In Ethiopia, the TCCPA could argue that “expressly avoiding a price war” is possibly in violation of Article 7(1) of the Ethiopian Trade Competition and Consumer Protection Proclamation (“Article 7(1)”), which provides that “(1) An agreement between or concerted practice by, business persons or a decision by association of business persons in a horizontal relationship shall be prohibited if:…(b) it involves, directly or indirectly, fixing a purchase or selling price or any other trading condition, collusive tendering or dividing markets by allocating customers, suppliers territories or specific types of goods or services”.

For COMESA, the CCC has conceivably two legislative tools at its disposal: First, Art. 16 of the Regulations (“Restrictive Business Practices”) prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices which (i) may affect trade between member states, and (ii) have as their object or effect the prevention, restriction or distortion of competition. Provision is then made (in Art. 19(4)) for the Article to be “declared inapplicable” if the agreement, decision or concerted practice gives rise to efficiencies and the like. Importantly, even though Art. 16 also applies to by-object practices, provision is made for an efficiency defence. Second, the CCC could resort to Art. 19 (“Prohibited Practices”), which focusses on “hard-core” cartel-like practices. Art. 19(2) provides that Art. 19 applies to agreements, arrangements and understandings, while sub-sections (1) and (3) provide that it is an offence for (actual or potential competitors) to fix prices, to big-rig or tender collusively, to allocate markets or customers, and the like. 

DEFENCES

Safaricom and its domestic competitor (the government-owned, former absolute monopolist, Ethiotel) may of course offer — preemptively or otherwise — a pro-competitive explanation for their alleged “non-compete” agreement. However, in attorney Stargard’s view, such defences must be well-founded, non-pretextual, and they would be well-advised to have contemporaneous business records supporting any such defences at the ready, should an antitrust investigation indeed ensue.

“Indeed, it may appear to the authorities that Mr. Ndegwa’s quoted concession of ‘We won’t compete on price’ may be a sign of capitulation or at least a ‘truce’ between Safaricom and Ethiotel,” he surmises, “because as recently as mid-December [2022], the incumbent monopolist [Ethiotel] had threatened legal action against the Kenyan newcomer, claiming that Safaricom had ‘harrassed’ the incumbent’s customers and caused loss of service due to its actions.” An incoming competitor’s attempt at avoiding a civil lawsuit between it and would-be competitors would, of course, not constitute a legal defence to forming a (formal or informal) non-compete agreement on pricing, he adds.

“We have extensive experience counseling clients on how to successfully — and aggressively — defend against accusations of price-fixing, whether the allegations involve tacit collusion or express price or market-allocation cartel behaviour. While the parties here would likely not have a formalistic statute-of-limitations argument at their disposal, given the recent nature of the conduct at issue, I could imagine there being eminently reasonable ways of showing the harmless nature of the conduct underlying the, perhaps misleading, investor-call statements made by the executive,” he concludes.

Insurance companies raided by antitrust agency for alleged rate-setting collusion

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PRICE-FIXING ALLEGATIONS LEAD TO THURSDAY’S DAWN RAIDS AT MAJOR SOUTH AFRICAN INSURANCE COMPANIES

By Michael-James Currie and Joshua Eveleigh

On 25 August 2022, the South African Competition Commission (“SACC”) announced that it was conducting so-called ‘dawn raids’ as part of an ongoing investigation into the industry, initiated in 2021. The raid took place simultaneously at 8 of South Africa’s major insurance firms: Discovery Limited; Hollard Insurance Group (Pty) Ltd; Momentum, a division of MNI Limited; Old Mutual Limited; BrightRock Life Limited; FMI, a division of Bidvest Life Limited; Professional Provident Society Limited, and South African National Life Assurance Company (Pty) Ltd (together, the “Insurance Firms”).

Notably, all of the Insurance Firms operate within the long-term insurance market.

The SACC’s decision to raid the premises of the Insurance Firms comes as the result of suspicions that the they had agreed to fix prices and/or trading terms in relation to certain investment products in contravention of section 4(1)(i) of the Competition Act, 89 of 1998 (“Competition Act”). Specifically, the SACC stated that it was in possession of information implicating the Insurance Firms in a scheme to share information regarding premium rates on risk-related products and fees for other investment products.

Says John Oxenham, a lawyer with Primerio Ltd., “[a]lthough dawn raids form part of the SACC’s ordinary evidence gathering procedure and is not indicative of the guilt of the Insurance Firms, the sharing of information would enable the coordination of increased prices.” Given that the clients of the Insurance Firms include both natural and juristic persons, the effect of the alleged conduct would have far-reaching and adverse effects on consumers, particularly where those consumers are sensitive to price increases.  Continues attorney Oxenham: “In this respect, it would be unsurprising if the SACC were to continue on its path of highlighting ‘public-interest‘ objectives by pursuing the investigation against the Insurance Firms and seeking the maximum penalty in respect of a contravention of section 4(1)(b)(i) – 10% of the Firm’s annual turnover in and from South Africa, for first-time offenders.”

Mr. Oxenham’s colleague, Andreas Stargard, notes the size of the RSA insurance market, and points out that the dawn raids occurred across the entire geography of the Republic of South Africa: “South Africa alone makes up over two-thirds of all African insurance premiums continent-wide! Today, the SACC’s spokesperson Sipho Ngwema confirmed today that 5 sites were raided in Gauteng, 2 in the Western Cape, and 1 in KwaZulu-Natal. This simultaneous and unannounced action is testament to the Commission’s bench strength, no doubt assisted by local provincial law-enforcement authorities, as is usually the case across in antitrust raids across the globe, where the actual evidence-gathering procedure is not only undertaken by government competition lawyers, but rather significantly assisted by local police, sheriffs, or similar enforcement agencies”. Finally, Stargard notes, “it remains to be seen whether this raid occurred as a result purely of the agency’s prior sector investigation, or whether there was (or were) any whistleblower(s) seeking leniency for their participation in the alleged cartel conduct, thus enabling the SACC to pursue a targeted and well-founded raid.”

Interestingly, a U.S. consulting firm, McKinsey, which has been involved with several South African government agencies and quasi-governmental entities, recently published an article entitled “Africa’s insurance market is set for takeoff“, noting that the “African insurance market’s immaturity points to significant scope for growth”:

Africa’s insurance industry is valued at about $68 billion in terms of GWP and is the eighth largest in the world—although this is not equally distributed across the continent. Markets are inconsistent in terms of size, mix, growth, and degree of consolidation, with 91 percent of premiums concentrated in just ten countries. South Africa, the largest and most established insurance market, accounts for 70 percent of total premiums. Outside of South Africa, we see six primary insurance regions in Africa. In the Southern Africa region, 54 percent of premiums are for life insurance. Nonlife insurance, however, plays a larger role in anglophone West Africa, North Africa, East Africa, and even more so in francophone Africa

It remains to be seen whether the effect of today’s raids in the RSA will hinder the predicted “takeoff” of the insurance industry, or assist in its growth within permissible, lawful boundaries.

South Africa: Motor vehicle finance institutions referred to the Competition Tribunal for alleged collusion

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By Gina Lodolo

On 3 February 2022, the South African Competition Commission (“SACC”), released a press statement confirming that the SACC has made a referral to the Competition Tribunal (“Tribunal”) to prosecute FirstRand Bank Limited (“First Rand”), Wesbank, and Toyota Financial Services South Africa Limited (“TFS”) (jointly “Motor Vehicle Finance Institutions”) for allegations of a violation of Section 4(1)(b)(ii) of the Competition Act 89 of 1998, as amended (“Act”).

In this regard, Section 4(1)(b)(ii) of the Act provides that :

“an agreement between, or concerted practice by, firms, or a decision by an association of firms, is prohibited if it is between parties in a horizontal relationship and if-(b) it involves any of the following restrictive horizontal practices: (ii) dividing markets by allocating customers, suppliers, territories, or specific types of goods or services”

Generally, once the SACC has initiated a complaint and found that a prohibited practice has  been established, it must refer the complaint to the  Competition Tribunal. Wesbank (as a division of FirstRand) and TFS allegedly prevented competition by entering into a shareholders agreement containing non-compete clauses. The SACC press statement provides that the Motor Vehicle Finance Institutions allocated markets because they are ‘suppose to compete’, which means that they are firms in a horizontal relationship.  In particular, the shareholders agreement included clauses ‘that prohibit[ed] WesBank from offering vehicle finance to customers seeking to purchase vehicles at authorised Toyota dealerships’. Further, Wesbank was also prohibited from financing specific vehicles, being ‘the “new” TOYOTA, LEXUS and HINO vehicles and any “used” vehicles sold through any authorised Toyota dealership, except McCarthy Group’.

Should the Competition Tribunal indeed find that the Motor Vehicle Finance Institutions violated the Act, Section 59 of the Act provides that the Competition Tribunal can impose an administrative penalty of up to 10% of the firm’s annual turnover for engaging in a prohibited practice. Further, if the same firms are found to repeat the conduct, an administrative penalty for a repeat offence can be up to 25% of the firm’s annual turnover.  

Primerio Director Michael-James Currie notes that cartel conduct in South Africa constitutes a criminal offence and respondents found liable are also potentially at risk of follow-on civil damages.

To view the full press statement click here