Category: COMESA

Lots of C’s: CCC(C) investigates Coca-Cola Contracts in COMESA

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Coca-Cola is suspected of having engaged in anti-competitive conduct in the common market region via unlawfully restrictive distribution agreements — much is at stake, including a chance for the respondent to justify its contract provisions, and for the CCC to provide more detailed objective reasoning for its ultimate decision than it previously did in its 2018 RPM case against the soft drink giant.

By Joshua Eveleigh & Henri Rossouw

On 14 October 2024, the Common Market for Eastern and Southern Africa Competition Commission (“CCC”) announced that it will investigate The Coca-Cola Company (“Coca-Cola”) for potentially violating the current Article 16 of the COMESA Competition Regulations (the “Regulations”). The Regulations are due to be amended prior to year’s end.

The alleged conduct relates to supposedly restrictive bottler and distribution agreements considered to affect trade between COMESA Member States, thereby falling under the jurisdiction of the regional competition watchdog, akin to the European Union’s DG COMP enforcing antitrust rules across the EU.

Article 16 prohibits agreements that may affect trade between Member States of COMESA, with the main object of these agreements being to prevent, restrict, distort competition in the Common Market.  The present investigation provides an example of how one of the CCC’s primary objectives is the detection and prevention of any restrictions to trade in and across the Common Market, such as the suspected “absolute territorial restrictions” at issue here.  This is notably different from a prior run-in between Coca-Cola and the CCC back in 2017-2018: the CCC’s first soft-drink salvo dealt with so-called “Resale Price Maintenance” (“RPM”) in Coke’s distribution agreements. RPM is a generally frowned-upon practice in antitrust law globally. During that case, the then-still fledgling agency had issued a curt decision, resolving the case without fines but with an injunction against the practice and a mandatory Coke compliance programme.

This new matter arises out of entirely different legal issues and with a distinct factual background. Moreover, it is now being investigated by a notably matured and dramatically advanced enforcement agency compared to the 2018 case. Says Andreas Stargard, a Primerio attorney practising before the CCC:

“The Commission is doing what COMESA was designed for — a ‘territorial-restriction’ prosecution is nothing new for a regionally-integrated community. It lies at the heart of the concept of a unified, free market area. Territorial restrictions within such an area an inimical to the entire concept of COMESA. Just look at the EU: its antitrust rules have given the European Commission a similar mandate for decades, enforcing prohibitions against sellers’ territorial limitations that impinge on the free distribution and sale of their goods across the EU. Here, in the current COMESA investigation, it appears that we are notably dealing with restrictive conduct that may be justified by the parties in the end, as opposed to a pure prohibition ‘by object’, such as a cartel agreement. So if Article 16(1)-(4) applies, a prohibition with ‘rule-of-reason’ caveats, Coca-Cola may provide arguments as to why and how the restrictive agreements benefit end-consumers.”

Interestingly, the CCC previously assessed the distribution agreements between Anheuser-Busch InBev (“ABI”) and its third-party distributors and found that the distribution agreements contained clauses that restricted distributors from selling outside of their allocated territories, infringing upon the principle of “absolute territorial protection”. Accordingly, ABI remedied the infringing provisions. “The difference there, however, was that ABI had affirmatively and preemptively applied to the CCC for an authorization under Art. 20 — it was not the subject of an investigation after the fact, as is the case with Coca-Cola,” says attorney Stargard.

“Moreover, once the case is resolved, I am curious to see whether the CCC will take into account the prior compliance programme mandate from the 2018 case against Coca-Cola. It will be interesting to read whether or not the Commission refers to this condition of the prior non-fining resolution against Coke’s RPM conduct, and if so, where the failure point was? Was the programme either inefficient, entirely scrapped, or how did it otherwise fail to avoid further violative conduct on the part of the respondent…? We will have to wait and see, but other global enforcers, such as the DOJ, have certainly used the existence or non-existence of an effective compliance programme in their ultimate fining decisions to date.”

Regardless of outcome, it will also be interesting to learn how the CCC approaches the topic of exclusive distribution agreements across the Common Market. In this regard, it is widely accepted that exclusive agreements are likely to give rise to a range of efficiencies that may be passed down to customers and end-consumers, which Coca-Cola will, of course, need to establish by objective economic evidence if it seeks to justify its contracts vis-à-vis the CCC.

The CCC has been known to be deliberate and fair in its proceedings, especially in recent years of maturity and advancements in its team strength and econometric evaluation capabilities. Mr. Stargard observes that “[e]xamples of this nuanced approach and the due process being granted to parties in distribution cases include the most recent CAF soccer cases (see, e.g., here), in which the CCC spent extensive time and clarifying documentation on why certain, but not all, practices of the affected parties were harmful to consumer welfare in the Common Market.” That said, if the CCC were to adopt an overly protective stance here, however, it may have a concomitant effect on the consumer welfare and will have significant consequences for multinationals distributing into Africa.

The case is still in its investigatory phase, and thus all interested stakeholders are invited to submit representations by 14 November 2024 and can enquire further from Mr. Boniface Makongo (Director Competition Division) at +265 (0) 111 772 466 or at bmakongo@comesacompetition.org.

Eswatini’s new chief antitrust enforcer hails from COMESA body

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AAT notes that Eswatini, a member nation of COMESA, has appointed its new Director of Competition and Consumer Protection at the Eswatini Competition Commission (“ESCC”), namely Ms. Siboniselizulu Simelane Maseko. According to the Commission, her background in economics and law will help ensure the agency is prepared for continuing its path ‘towards fairer markets and consumer welfare’. Her previous role within the ESCC as an analyst, and senior analyst, and her experience at the COMESA Competition Commission are set to equip her to spearhead the ESCC’s efforts to maintain a competitive and transparent market environment within eSwatini.

“The Commission’s portfolio has expanded since I left. We now have a Policy and Research Department as well as a fully staffed Consumer Protection Department. With young, energetic teams, the commission is well-positioned to support the national development goals and positively impact Eswatini’s economy.”

In her new role, Maseko will oversee competition enforcement, mergers and consumer protection. She emphasizes the importance of preventing anti-competitive outcomes and promoting innovation to safeguard economic stability.

Eswatini’s economy is facing several structural challenges, including slow growth, high unemployment, poverty, and fiscal pressures. While there are opportunities for improvement through reforms and diversification, the country needs to address both domestic and external challenges to achieve sustainable economic growth in the long run. The recent appointment of leaders like Maseko to impactful regulatory roles may signal a focus on creating a fairer, more competitive economic environment, which could contribute to long-term recovery and growth.

Maseko’s international experience, including her exposure to African regional competition authorities and work with global regulatory bodies, positions her well to drive the ESCC’s competition law policies. She has underscored the need for robust enforcement mechanisms and active collaboration with regional and international bodies such as COMESA and the African Continental Free Trade Agreement (“AfCFTA”) to foster fair competition practices.

“I have had the privilege of working with enforcement agencies beyond the COMESA region, including those from South Africa, the European Commission and the United States. These networks are crucial, particularly as the Commission participates in regional and continental competition enforcement initiatives.”

Observers of Eswatini’s regulatory landscape note that her leadership, and the support by a talented team, is set to bolster the ESCC’s efforts in ensuring markets remain fair and beneficial to consumers while encouraging business innovation.

Says Andreas Stargard, a competition practitioner with Primerio, “I know Siboni from her longe time working at the COMESA Competition Commission, where she assisted greatly in getting that agency off the ground, helping Willard Mwemba and his staff to catapult the CCC from a fledgling entity to an antitrust enforcer one must reckon with across Africa. This experience will be of value to Siboni’s coming leadership in Eswatini, and I wish her the best!”

Ms. Maseko echoed the description of her career trajectory in her statement: “After having been at regional level for 8.5 years, I have come full circle – back to where I started my journey as a young analyst in 2011. I’m delighted by the opportunity to share what I’ve learnt at regional level and support the Commission’s mandate to contribute to economic growth through fair competition!”

4th CCC diplomatic conference on competition law places focus on inflation, food security, and poverty eradication 

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Senior diplomats from the COMESA region gathered in Livingstone, Zambia, for the fourth in a series of diplomatic antitrust-focused conferences that began in 2016 but were halted due to the coronavirus pandemic in 2019.

At today’s formal resumption of the recurring event, Dr. Willard Mwemba, CEO of the COMESA Competition Commission, introduced the conference session by calling out the importance of the agricultural sector to the people residing in the region, especially the very poorest of citizens.

He stated in unmistakable terms that his agency would prioritize this and related markets for heightened antitrust enforcement, to ensure the sector operates efficiently and competitively. “Accessibility (and affordability) of food is one of the most fundamental human rights. $2 per day are spent by the poorest people on average, and the majority of those two dollars is spent on food,” noted Mwemba.

Says Andreas Stargard, who attended the session, “it is clear that the view of the Commission is that agricultural markets in COMESA are not functioning as they should, based on studies the agency has undertaken with outside assistance.  The massive foodstuffs price inflation levels COMESA residents have suffered in recent years are not merely natural consequences of irreversible climate change but rather represent mostly economic profit to the manufacturers and traders, to the detriment of consumers, based on what Dr. Mwemba presented today.”

COMESA Secretary General, Chileshe Mpundu Kapwepwe, summarized the stark importance of the AG sector to the region, its people, and the economic zone in sobering statistical terms: “The agriculture sector is one of the key sectors for most Member States as it contributes more than 32% to the Gross Domestic Product of COMESA, provides a livelihood to about 80% of the region’s labour force, accounts for about 65% of foreign exchange earnings and contributes more than 50% of raw materials to the industrial sector.”

In light of this crucial importance of the agricultural and food markets, food security is high on the list of action items that COMESA must address practically and effectively, she concluded.  COMESA evaluates supply and demand levels across all 21 member states to assist with market assessment and planning.

The Diplomatic Conference’s guest of honour, Zambian Minister of Commerce, Trade and Industry, Hon. Chipoka Mulenga, noted in prepared remarks delivered by his deputy and permanent secretary to COMESA that, while “food production must be profitable for farmers, it must not be exploitative.”

In this regard, the famous Adam Smith quote referenced by Dr. Mwemba at a prior antitrust session comes to mind: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.”

Beyond the immutable wisdom of the Wealth of Nations from two and a half centuries ago, the (1) CCC’s increased competition law enforcement in the agricultural and food sectors, as well as (2) national member states are assisting the effort of ensuring wide and secure availability to all COMESA residents by creating and strengthening cross-border value chains in the food sectors with overlaps across member state borders, the Zambian minister observed.

Dawn of the “QUAD-C”: COMESA antitrust evolves

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Meet the “CCCC”: the 4th Estate Covers the 4th “C” of the COMESA Competition Commission During its Second Press Conference, and More

The second annual COMESA Competition Commission press conference, taking place in Livingstone, Zambia, revealed not only news, but also the extensive improvements to the agency being made, and information about ongoing market studies and case investigations.  It was an opportunity to allow business journalists obtain a glimpse, if not indeed a full deep-dive overview, into the future of the triple-C – which is soon to be the “Quad-C”, in fact, as Dr. Mwemba, the head of the Commission, announced at today’s event.  That is, the CCC will add a fourth “C” to its name, so as to include expressly the concept of Consumer protection.  AAT notes that this is similar to several other national competition authorities, for example the Nigerian FCCPC or even the U.S. FTC, both of which also have an existing mandate covering consumer-protection issues, besides their jurisdiction over pure competition-law matters.

Name Change

Dr. Mwemba clarified that the now-express inclusion of this “4th C“ in the Commission’s name going forward is to highlight the fact that the Commission will enhance its focus on consumer-protection issues, and to ensure that the average consumer (as opposed to competition experts) in the COMESA region can better understand their rights and recourse to the CCC(C).

Public-Interest Factors

This renewed consumer-protection emphasis also goes hand-in-hand, AAT believes, with the increased importance of so-called “public-interest“ factors in the CCC’s merger analysis. Dr. Mwemba highlighted, by way of example, environmental factors and job creation numbers, as potential considerations to be taken into account by the Commission under the amended regulations, which will likely come into effect by December 2024.

New Competition Regulations

These newly amended COMESA Competition Regulations, which have been in the making since the May 2021 inception of the Commission’s efforts to revise the regional competition law, will culminate in the imminent clearance by the COMESA Legal Drafting committee, and ultimately (by the end of the year, we anticipate), its adoption by the regional committees of the COMEAS Attorneys General, of the Justice Ministers, and eventually the Council of Ministers of all 21 COMESA member states.  Of course, as AAT has discussed before, these Regulation Amendments carry with them extensive revisions to antitrust law (e.g., the creation of a leniency programme for cartel offenders; the change-over to a suspensory merger notification regime; adding ‘transaction value’ to the concept of deal-notification thresholds, amending their definition from being purely asset- and revenue-based; and the creation of certain market-power presumptions based on share thresholds, just to name a few here).

Dr. Mwemba clarified in vivid terms that neither life nor law must be stagnant. Hence the import of the revision of the Regulations, which (in their current form) are by now two decades old.  “The original 2004 COMESA law simply was no longer up to the task of helping the Commission to regulate modern markets as they stand in 2024 and beyond,” according to the CCC.  Examples given by the senior staff present included the rapid rise of artificial intelligence, environmental changes to the economy, and digital platform evolution – all of which have proceeded faster than virtually all existing antitrust laws globally.  The view of the executive of the Commission is that it is well-positioned to be at the forefront of adapting to these challenges of imminent change.

The former CEO Dr. George Lipimile and AAT Editor Andreas Stargard
With the CEO of the Commission, Dr. Mwemba
Dr. Mwemba being interviewed by KBC

Merger Regulation

As both the past Director (Dr. George Lipimile) and the current CEO (Dr. Willard Mwemba) highlighted: the Commission does not exist to prohibit mergers.  Instead, its purpose, from a merger-control perspective, is to ensure that any deals that may distort competitive markets is structured in such a way that the distortion ceases to exist or risk to the functioning of effective markets.

Answering one of the questions posed by africanantitrust.com, Dr. Mwemba confirmed that the Commission is continually engaged in ex post analysis and reviews of past mergers that were approved, sometimes with conditions, by the then-triple-C. In the ATC/Eaton Towers case, for example, it observed that the parties were found not to be complying with the obligations imposed by the contingent approval decision, therefore resulting in fines imposed by the CCC post-closing of the approved deal.

Beyond Mergers: Anti-Competitive Practices

The Commission has moved on from being a pure merger regulator long ago, however. This was a key theme throughout the multi-day conference.  “We have moved on from just doing mergers, and have now been covering the terrible, always-hidden, and always-nefarious, anti-competitive practices found across the region for years,” says Dr. Mwemba about the more than 45 ACP matters the agency has handled so far.  Case examples he gave in this respect include the CAF licensing of football rights (a veritable trilogy of matters at all levels of the intellectual property distribution chain regarding an important pastime in Africa, soccer).

Other instances of the CCC pursuing anti-competitive practices within the region include multiple investigations into the beer and alcoholic beverage markets, and a now concluded case against Uber (resulting in significant changes to the ride-sharing company’s contract terms in the COMESA region, namely removing a denial of vicarious liability clause, changing the choice of law provision from the Netherlands to local jurisdictions in COMESA, as well as changing the pricing and termination of services provisions of the contract of adhesion that Uber utilizes in its app.).  Finally, the agency is deeply engaged in ongoing agricultural and food price studies, which will likely yield further enforcement actions going forward, in the words of the CCC.

Closing Thoughts: Due Process, Procedural Rights, and Deepening Collaboration with NCAs

Even though one of the identified CAF cases remains pending on appeal, Dr. Mwemba said that the Commission welcomes the parties’ exercise of their due process rights, noting that the CID review and appellate process provide valuable insights and that everyone stands to gain by the recognition and exercise of such due process under the rules and the law.  Indeed, appeals have increased from just 1 in 2023 to 3 in 2024. The Commission also provided statistics on the collaboration it engages in with national competition authorities, including capacity building in Mauritius, the Democratic Republic of Congo, Uganda, and other member states.  Finally, the statistics provided for the past 11 years show the transformation of the early period (which AAT had initially covered graphically for several years with its informal merger-stats analysis, now long-abandoned due to the CCC’s improved transparency and web presence): The CCC has handled over 430 merger reviews and more than 45 anti-competitive practice investigations.

Honoring ongoing excellence and recognizing past accomplishments

Malawi Revamps its Antitrust Laws: Suspensory Merger Control and More

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Not only did the Malawian government revise its 26 year-old competition law, but it effectively repealed the old statutory regime under the “Competition and Fair Trading Act”, and it has now enacted its replacement, the so-called “Competition and Fair Trading Act of 2024.”

Says Andreas Stargard, who practices competition law with Primerio Intl., “the new regime had been in the works for several years, with input from the broader international and pan-African competition communities, both private and academic, as well as from fellow antitrust enforcers across the globe. We are pleased to see this revision effort come to fruition in the form of the CFTA 2024, which notably introduces a suspensory merger-control provision — meaning companies that meet the Malawian thresholds for notifying their M&A activity must put on hold the closing of their deal until it is cleared by the authority, the CFTC.”

Parties considering entering into transactions affecting the Malawian market should note, Stargard observes, that Malawi is part of the COMESA competition-law area, “which would require firms to consider whether or not there is a COMESA community dimension to their transaction, thereby possibly negating one or more domestic filings with [National Competition Authorities], and instead making a ‘one-stop-shop’ notification to the CCC.” Coincidentally, the COMESA Competition Commission is also headquartered in the Malawian capital, Lilongwe, so “parties can expect there to be extensive collaboration between the supra-national CCC enforcement teams and the CFTC’s domestic-focussed antitrust lawyers,” Mr. Stargard surmises.

The in-depth text of the Malawian press release is as follows:

 ENTERING INTO FORCE OF THE NEW COMPETITION AND FAIR TRADING ACT 

You will recall that the Competition and Fair Trading Commission (CFTC) has been reviewing the Competition and Fair Trading Act (CFTA) of 1998 in order to fill the existing gaps and enhance its effective enforcement. The CFTC is pleased to announce that the process of repealing the CFTA of 1998 was completed and it has been replaced with a new legislation, the Competition and Fair Trading Act of 2024. 

The new legislation was passed by Parliament on 5th April, 2024, and was assented to by the State President, His Excellency, Dr Lazarus Chakwera on 19th May 2024. In accordance to Section 1 of CFTA of 2024, The new Act shall come into force on a date to be appointed by the Minister, by notice published in the Gazette. The Competition and Fair Trading Act of 2024, therefore, comes into force today, 1st July, 2024, following the gazetting of the notice, signed by the Minister of Trade and Industry, Hon. Sosten Gwengwe, MP, which appoints this date. 

CFTC is extremely pleased with this development as it signals an end to some of the enforcement challenges the institution was facing with regard to the enforcement of the old Act due to the gaps in some of the key provisions in the law. In addition, the CFTA needed to be aligned with the recent developments in the enforcement of competition 

and consumer protection law, reflective of the current market dynamics in the economy. Furthermore, the CFTA required to be aligned with international best practices in the enforcement of competition and consumer protection. 

In order to address these gaps, there are several changes that have been made to the CFTA of 2024. Below is a highlight of some of the key changes: 

i. Competition Regulation 

The major change that has been brought in is on Suspensory Merger Notification. The 1998 CFTA provided for voluntary notification of mergers and acquisitions; which meant that mergers having potential harm to competition process and consumer welfare could be effected without seeking authorisation from the CFTC. The new CFTA has made notification of mergers and acquisitions mandatory, based on determined thresholds. 

The new Act has also expanded on the provisions on anticompetitive business practices, to make it very encompassing but also effective to regulate and enforce. These areas include: restrictive business practices; collusive conducts (cartels); abuse of market power; but also mergers and acquisitions. 

ii. Consumer Protection 

The CFTA of 1998 narrowly defined the term “Consumer”. The definition under the old Act left out some stakeholders that are equally affected by unfair trading practices, which include: consumers of technology, consumers of digital products, beneficiary consumers, but also other users of goods or services for purposes of production of other goods or services. For this reason, various vulnerable groups that did not fall within that narrow definition were not effectively protected from unfair trading practices 

The CFTA of 2024 has also brought in several types of unfair trading practices that were not included in the CFTA of 1998. Among others, these include the following: 

 failure to give warranty or guarantee on goods for long term use; 

 improper or insufficient labelling of products; 

 failure to disclose material information about the products supplied; 

 engaging in excessive or exploitative pricing of the products. 

 imposition and implementation of unfair terms in consumer contracts. 

iii. Abuse of Buyer Power 

The CFTC of 1998 focused on abuse of supplier (seller) power and not the abuse that may arise from powerful or dominant buyers. This made it difficult to deal with malpractices by buyers, including those involved in buying farm produce from farmers. 

The CFTA of 2024 has included various provisions to redress malpractices resulting from abuse of buyer power. The Act has expressly prohibited the powerful and dominant companies that purchase agriculture produce from the farmers not to engage in any anticompetitive and exploitative conducts. For example, the Act prohibits, among others, the following conducts: 

 delays in payment of suppliers, without justifiable reason, in breach of agreed terms of payment; 

 unilateral termination or threats of termination of a commercial relationship, without notice or on an unreasonably short notice period, and without an objectively justifiable reason; 

 refusal to receive or return any goods or part thereof without justifiable reason, in breach of the agreed contractual terms; 

 transfer of commercial risks meant to be borne by the buyer to the suppliers; 

 demands for preferential terms unfavourable to the suppliers; 

 demanding limitations on supplies to other buyers; 

 reducing prices by a small, but significant, amount where there is difficulty in substitutability of alternative buyers or reducing prices below competitive levels; or 

 bidding up prices of inputs by a buyer enterprise with the aim of excluding competitors from the market. 

iv. Penalties for Violations 

Under the CFTA of 1998, when the Commission found a business enterprise in breach, it had been imposing fines, which were provided for under Section 51. However, in 2023, in the matter of CFTC v Airtel Malawi Plc, the Court ruled that the said provision does not empower the CFTC to impose fines, on the grounds that the violations were designated as being criminal in nature. Specifically, under section 51 of the CFTA of 1998, the provision for imposing the fines was combined with sanctioning of an imprisonment sentence of up to 5 years. The ruling in the CFTC v Airtel Malawi Plc case, thus weakened the regulatory mandate of the CFTC. In addition, the 1998 CFTA did not provide for aggravating and mitigation factors for the Commission to consider in coming up with fines and/or orders. 

The CFTA of 2024 gives express powers to the CFTC to issue Administrative Orders, which include imposing fines on errant enterprises. Under the new Act, the fines to be imposed will be (i) up to 5% of annual turnover if it is an individual; or (ii) up to 10% of annual turnover if it is a company. The determination of the fines will depend on the applicable aggravating and mitigating factors. There are also various Orders that the CFTC can impose which are meant to redress the malpractices. These include orders to: give refunds, return or exchange defective products, withdraw false advertisements, supply the advertised/promised goods and services, and cancel unfair and exploitative contracts. 

v. Suitability and Independence of Commissioners for the CFTC 

As adjudicators of cases, the Commissioners of the CFTC are required to be sufficiently scrutinized for their qualification and suitability for their functions, but also guarantee utmost independence. Under the provisions of the CFTA of 1998, the Commissioners were not thoroughly subjected to scrutiny of Parliament once appointed, to determine their qualification and suitability for their office. Similarly, the Commissioners independence as adjudicators was not guaranteed under the old law. The CFTA of 2024 has provided that, as a way of ascertaining the Commissioners’ suitability and ensuring independence, their appointment and removal from office will be subjected to the scrutiny of the Public Appointments Committee of Parliament. 

In view of the foregoing, the CFTC would like to call upon business enterprises, consumers and the general public to take notice of the new legislation, and particularly take consideration of the provisions that have been brought into the CFTA of 2024. Furthermore, the CFTC would like to advise the business enterprises to adopt voluntary compliance with competition and fair trading laws at all times, so as not to be found in breach of the law. 

For media enquiries on this statement, contact Innocent Helema on 0880725075 or email innocent.helema@cftc.mw. 

LLOYDS VINCENT NKHOMA 

CHIEF EXECUTIVE OFFICER 

Prohibiting a Merger Long in the Making: CCC’s First M&A Prohibition

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The COMESA Competition Commission Issues Its First Partial Refusal to Grant Merging Parties Permission to Consummate Merger

By Tyla Lee Coertzen

On 2 September 2023, the COMESA Competition Commission released its decision to prohibit the proposed acquisition by Akzo Nobel N.V (“AkzoNobel”) of Kansai Plascon East Africa Proprietary Limited (“KPEA”) and Kansai Plascon Africa Limited (“KPAL”) (the “Target Firms”). The CCC’s decision in this merger represents the first merger prohibition it has issued since its inception in 2013.

In terms of the proposed acquisition, AkzoNobel was set to acquire 83.31% of the issued share capital of KPAL and 100% of the issued share capital of KPEA from Kansai Paint Co. Ltd.

AkzoNobel is a Dutch multinational company active in the manufacture and sale of paints and coatings, with a presence in Egypt, Mauritius, Tunisia and Zambia and Zambia. In addition, AkzoNobel supplies paints to the Democratic Republic of the Congo, Eswatini, Ethiopia, Kenya, Libya, Madagascar, Rwanda, Sudan and Zimbabwe.

The Target Firms are also active in the manufacture and supply of coating products. KPEA maintains a presence in Burundi, Kenya, Tanzania, Uganda and Zanzibar and operates five manufacturing plants, four of which are located within the Common Market (namely in Burundi, the Democratic Republic of the Congo, Malawi, Rwanda and Zambia). KPAL also has manufacturing plants in the Common Market, namely in Malawi, Zambia and Zimbabwe and derives turnover in Eswatini.

This would-be transaction has a somewhat convoluted history and was, by some observers’ interpretations, many years in the making.  As Andreas Stargard notes regarding our prior reporting, “this very publication has analysed the COMESA competition troubles of the merging paints makers of the recent past.  These have included failure-to-file mandatory notifications (and also here), as well as a paints cartel-conduct inquiry by the CCC, after Akzo and Kansai’s acquisitive hunger had initially begun in 2013 with disputes over use of the Sadolin brand in Uganda and elsewhere — coincidentally the same year the CCC became functional.”

In addition, notably, the same transaction was prohibited by the South African Competition Commission in late 2022 (which decision is currently being determined by the South African Competition Tribunal). The merger is also currently being assessed by the Namibian Competition Commission.

In its assessment of the market for the manufacture and supply of decorative paints, the CCC identified several competition concerns arising from the proposed merger. Specifically, it identified that the merger would result in a combination of two strong paint brands (namely Plascon and Dulux) and that there were no effective competitors present who would pose a real ability to counter the undue market power and unilateral conduct arising thereof.

While the merging parties proffered a number of commitments, the CCC found that such commitments would not sufficiently remedy the decrease in competition in the market (particularly in Eswatini, Zambia and Zimbabwe). The CCC thus outright prohibited the merger in these three Member States.

The CCC approved the merger in certain other jurisdictions subject to conditions proffered by the parties. Specifically, the parties are obliged to divest the Sadolin brand owned by AzkoNobel to an independent third-party competitor in Uganda within 6 months of the date of the CCC’s decision. In Malawi, the CCC approved the merger subject to a condition that the merging parties continue productions in the Malawi manufacturing plant for a period of three years after the CCC’s decision, in order to remedy the plant’s potential closure and job losses resulting thereof.

The CCC’s decision over this merger is a clear indication of the approach it will take to mergers which it believes will pose significant anti-competitive harm and competitive loss within the Common Market. Thus, the decision is an indication of CCC’s powers, adjudicative authority as well as its willingness to enforce its powers.

COMESA @ 10: CCC Keynote address by Bill Kovacic

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The booming voice of eminent antitrust scholar and GW Law professor Bill Kovacic easily surmounted the small technical microphone glitches at COMESA’s celebration of its Competition Commission’s first 10 years in Malawi (#CCCat10years), giving the keynote address.

His accessible speech, given in front of a diverse audience comprised of senior ministers and policy makers, lawyers, enforcers, and media representatives, focused on practical examples covering three key topics of public expenditures, subsidies, and the removal of entry barriers.

On state spending, he noted the attendant “global epidemic of collusion and corruption”, in areas as simple, but important to development, as transportation infrastructure. “We don’t always need to debate ‘digital markets’ or ‘big tech’, we can also highlight the importance of basic road-building on increasing trade and measurably growing economies” across Africa. But these areas of public expenditures are invariably hampered by corrupt or collusive tendering and similar cartel conduct — important focus areas for the COMESA CCC to enforce.

In the area of public subsidies, Kovacic proposed a future collaborative working relationship between antitrust enforcers, legislators, and those ministries that allocate state subsidies, ideally to non-incumbents (giving the NASA vs. Space-X example to make his point) so as to enhance market entry.

The CCC should enhance market access by making barriers to entry “more porous” for newer small competitors, with Kovacic using the famous 1982 Bell Telephone/AT&T U.S. antitrust precedent to highlight the practical value of competition law to society and innovation of new, better, and cheaper products and services.

Breaking: COMESA expected to become suspensory merger regime by 2024

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At today’s CCC Business Reporter Workshop, Senior M&A Analyst Sandya Booluck presented major plans to amend the regional trading bloc’s merger-control regime.

The most notable part of this “complete overhaul” of the CCC regime will be the likely change from the current non-suspensory to a suspensory merger notification scheme.

Says Primerio Ltd. antitrust counsel Andreas Stargard: “This change is, of course, still subject to approval by the CCC Board and the COMESA Secretariat Council of Ministers, but it is likely to pass in my personal opinion. This is especially true since, as former CCC Head Lipimile pointed out at today’s session, this change was in fact demanded by several of the NCAs of the COMESA member states, also in view of the Art. 24(8) referral procedure. It thus presumably enjoys broad support from the bloc’s leadership and will obtain a passing vote before the end of 2023!”

Ms. Sandya Booluck, Senior Analyst M&A

COMESA stats update: 367+ M&A deals, yielding a healthy revenue stream for the CCC’s operations

Posted on by andreasstargard

A brief note from the “front lines” of the COMESA Competition Commission’s 10-year anniversary event: Isaac Tausha, chief economist for research policy and advocacy, provides the following statistics — notably for the entire duration of the CCC’s life decade so far.

In short: Gone are the meager days of fledgling notifications to the CCC.

Statistics Since Inception

369 mergers and acquisitions assessed. (Total COMESA revenues of merging parties: US$210bn)

Over 40 Restrictive Business Practices assessed

Over 44 Consumer Protection cases handled

More than 12 market screenings and studies undertaken

3 businesses fined for non-compliance with the Regulations

Doing a “back of the envelope” estimate, we at AAT are calculating the total merger filing fees resulting from those 367 notified deals to be possibly north of $75 million $65 million, so on average $6.5m “income” for the CCC per year (half of which goes to the 21 member states, of course, under the Regulations). This is notably without taking into account fines, e.g., a recent $102,000+ fine for failure to notify (as in our reporting on the Helios Towers / Malawi case).

Dr. Chris Onyango (Dir. Trade, Customs and Monetary Affairs, COMESA)
Dr. Lipimile (former CCC CEO). Mary Gurure (Head of Legal, CCC). Andreas Stargard (Editor, AAT).

CCC Celebrates ’10’ — a Decade of COMESA Competition Law

Posted on by Editor

Anniversary of CCC’s 2013 Creation to be Celebrated, Developments Discussed

Next week, African heads of state, ministers of trade and commerce, the secretary general of the 21-member state COMESA organization, Commissioners, and several heads of various competition agencies across the region, from Egypt to Eswatini & from Mauritius to Malawi, will join antitrust practitioners, legal experts, business people, and journalists in celebrating the occasion of the 10-year anniversary of the COMESA Competition Commission in Lilongwe, where the agency is headquartered.

Of course, AAT will be there to cover it.

As leaders of this august publication will know by now, our authors have followed the development of the CCC since its very beginning: from the nascent stages of having only a rudimentary staff and foundational rule documents, lacking sufficient guidance for practitioners and businesses alike, to the significant developmental stage under its first chief executive officer, Dr. Lipimile, who built out his enforcement team to coincide with the stellar growth of the CCC’s “one-stop-shop” merger notification statistics and attendant agency reviews (hiring economists and lawyers alike from across COMESA member nations) — and culminating, so far at least, in what we have come to call “CCC 2.0”: the latest iteration of the vastly successful multi-jurisdictional antitrust body, now led by its long-term member Dr. Willard Mwemba.

Under Mwemba’s aegis, the Commission has advanced well beyond a mere ‘rubber-stamping’ merger review body, as some had perceived the fledgling agency in its very early years (approx. 2013-15). The triple-C has since then begun to launch serious investigations into price-fixing, monopolization, attempted monopolization, gun-jumping, as well as market allocation schemes and secretly implemented transactions that parties had failed to notify.

While ‘antitrust is on our minds’, we note here for the record that, beyond its “competition” ambit that mostly remains in our focus at AAT, the CCC’s enforcement mission also includes a fairly large “consumer protection” brief, and the agency’s dedicated unit has investigated areas of consumer concern as broad as airline practices, imported faulty American baby powder, online ‘dark’ practices, pay-TV, and agricultural product quality disputes (milk and sugar come to mind) between Uganda and Kenya, to name only a few…

Our publication, together with several of the business journals and newspapers across the southeastern region of Africa, will report in great detail on the events, and possible news, to take place next week. Says Andreas Stargard, a competition practitioner with Primerio International:

“I look forward to hearing from these leaders themselves what they have accomplished in 10 years, and more importantly what they wish to accomplish in the near to mid-term future. In addition, I have a feeling that we may be treated to some truly newsworthy developments: I could imagine there being either confirmation or denials of the circulating rumour that the COMESA merger regime will soon become not only mandatory, but also suspensory. As most attorneys practicing in this arena know by now, the current Competition Regulations are not suspensory, which may be deemed too restrictive by the group’s Secretariat and its agency leadership in terms of its enforcement powers. After all, it is much more difficult to unscramble the egg than to never let it drop in the pan from the get-go!

Also, the CCC may reveal its plans in relation to a leniency programme for cartel conduct, which is plainly in order!”

Beyond that, Stargard surmises, participants at the almost week-long event may be treated to news about the CCC’s thoughts on digital markets, sectoral investigations, and the Commission’s upcoming “beyond-mere-merger” enforcement activities.