Category: COVID-19

Competition Commission makes good on its promise to clamp down on excessive pricing amid COVID-19 outbreak

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Despite the overwhelming amount of excessive pricing complaints being referred to the South African Competition Commission (“the Commission”), it has remained unwavering in its commitment to prioritize and follow-through on bringing the full might of the law down on suppliers and retails who have used the prevailing circumstances to take advantage of consumers by increasing prices on essential goods and services with no cost increase justification.

This is illustrated in a media statement released by the Commission on 15 April 2020, wherein the particulars of the Commissions first referral to the Competition Tribunal (“the Tribunal”) for price gouging on facial masks was expanded upon, and which is due to be heard on 24 April 2020.

Babelegi Workwear Overall Manufacturers and Industrial Supplies CC (“Babelegi”) allegedly engaged in price gouging through its 500% mark-up on facial masks, which is considered as an essential good, for the period 31 January 2020 to 5 March 2020. Babelegi’s supplier is also under investigation by the Commission for allegedly engaging in excessive pricing after it subsequently came to light that the said supplier purportedly increased its input prices.

In a media statement issued on 31 March 2020, the Commission aired its concerns  in and prioritization on suppliers and retailers who charge excessive prices on COVID-19 essentials, as well as complainants who are considered essential service professionals (such as doctors, policemen etc). The Commission also outlined the expedited preliminary investigations it will undertake in complaints. In this respect, respondent firms have 48 hours in which to confirm or rebut the allegations brought against it. Importantly, the Commission has showed that some complaints may indeed be justified where firms provide a valid cost increase justification. Accordingly, not all acts of price increases will be condemned as price gouging.

As highlighted by the Commission, firms can expect to see a wave of prosecutions in the coming days. The Commission has already concluded (but not yet referred) numerous price gouging complaints, to name a few:

  • A pharmacy has increased its mark-up on face marks and sanitizers by more than 300%;
  • A hardware store has allegedly increased the price of surgical gloves from R99.99 to R170.00 within one week absent any cost increase justification; and
  • A wholesaler of chicken has marked-up chicken pieces by up to 50%, also absent any cost increase justification.

It is important to keep in mind that firms engaging in excessive pricing, price fixing, allocation of markets and market shares and bid rigging risk facing a fine of up to 10% of their annual turnover, and risk a fine of up to 25% of their annual turnover in respect of repeat offences. Furthermore, complaints regarding price fixing, the allocation of markets and market shares and bid rigging could result in certain directors who engage in or initiate such contraventions with imprisonment of up to 10 years.

The spike in competition law contraventions amidst the COVID-19 outbreak is not unique to South Africa, the Ministry of Trade in Rwanda has itself imposed fines on 178 companies to the amount of RwF of 15 850 000 to date. Furthermore, the Competition Authority of Kenya (“CAK”) has shown its determination in prosecuting exploitative conduct during the outbreak in the remedial order it issued to Cleanshelf Supermarkets for unconscionably adjusting prices of sanitizers.  Cleanshelf was ordered to find and refund all consumers who purchased the sanitizers above the usual selling price.

There is little doubt that the Commission will continue its endeavor in prosecuting COVID-19 related competition complaints, it may very well be slowed down due to the sheer explosion of complaints, but firms should not be quick to translate this voluminous burden as a gap in competition law enforcement that can be taken advantage of. Akin to his observation, Tembinkosi Bonakele, Commissioner of the Competition Commssion said “The Commission has now gone past the stage of moral suasion and appeals to patriotism to stop abuse of market power by those seeking to exploit consumers at the worse possible time – the law must take its course – we will see a wave of prosecution of firms in the next coming days.”

 

FREE — Two upcoming Africa-focused telephone seminars

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Primerio is hosting two telephone conferences:

Wed. 15 April (9 a.m. Eastern time / 14:00h CET) — on the different standards used for assessing force majeure clauses and other commercial implications relating to COVID-19 issues across key Southern and East African jurisdictions (South Africa, Kenya and Mauritius in particular).
Tue. 21 April (9 a.m. Eastern time / 14:00h CET) — on competition-law developments across Africa.  The panel will discuss the most important legislative developments, enforcement decisions and policy direction to take note of, as well as how the agencies across the continent are responding to COVID-19 related issues.
Attendees are invited to send their questions in advance of the sessions which they would like the diverse panel to consider and address.

There are no registration fees, but please RSVP by clicking here and you will receive the dial-in (& Zoom link) information.

COMESA retains 30-day merger notification requirement during COVID pandemic, but loosens some rules

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The COMESA Competition Commission (CCC) has, along with several other competition-law enforcers on the African continent, issued new guidance on timing and other implications relating to the COVID-19 pandemic.  The text of the official announcement is below:  

CCC-Notice-4-of -2020

NOTICE OF INTERIM MEASURES IN MERGER REVIEW OF THE COMESA COMPETITION COMMISSION DUE TO THE COVID-19 PANDEMIC

The COMESA Competition Commission (the Commission) is aware that these are unprecedented, uncertain and challenging times for undertakings and other stakeholders. In view of this, the Commission wishes to notify the general public and all interested parties that as a result of the global Covid-19 pandemic it has issued the following interim processes for merger reviews under the COMESA Competition Regulations (the Regulations) and the COMESA Competition Rules (the “Rules”).

  1. Receipt of Merger Notifications

Parties to a Merger are encouraged to submit all notifications and filing of mergers and acquisitions electronically including certified copies of filings. This therefore means that the parties shall not be expected to submit the hard copies within the specified 7 days under the COMESA Merger Assessment Guidelines. The hard copies may still be submitted by the parties at a later date when it is possible under the circumstances.

  1. Notification of a Merger following a Decision to Merge by the Parties

Pursuant to Article 24 (1) of the Regulations, parties to a merger should notify the Commission within 30 days of the decision to merge. The Commission takes cognizant that due to restrictions of movements and lockdowns in most countries as a result of the CoVID-19 Pandemic, some parties may not be able to gather all the information to enable them complete the notification within the 30 days period provided under Article 24(1) of the Regulations. The Commission is cognizant that section 5 of the Guidelines provides for the notification process and gives guidance to what amounts to a complete notification. During this temporal period, the Commission shall consider the initial engagement with the parties as the beginning of the notification process which shall be considered complete once all the information is submitted. It follows therefore that as long as the parties have engaged the Commission on the notification process, they shall not be penalized for failure to submit complete information within 30 days of the parties’ decision to merge.

  1. Consultations and Meetings

The Commission has suspended onsite investigations and face-to-face meetings with regard to merger investigations. However, consultations and meetings shall continue to be held through teleconferencing facilities until the situation normalises.

  1. Investigation Period of 120 Days

The Commission observes that under the current situation, it may not be able to complete its assessment of mergers and acquisitions that has been notified and yet to be notified in accordance with the 120 days stipulated under Article 25 (1) of the Regulations. This is due to travel bans and lockdowns in most Member States. These conditions shall affect the Commission’s engagements with various relevant stakeholders who are essential in the consultative process adopted by the Commission pursuant to Article 26 of the Regulations. Therefore, the merging parties should take note that the 120 days investigation period may be extended in some cases pursuant to Article 25 (2) of the Regulations as it may not be practicable to complete the assessment within 120 days under the circumstances.

If you wish to seek further details and/or clarifications on any aspect of this Notice, you may get in touch with Mr. Willard Mwemba, Manager, Mergers and Acquisitions, on +265 (0) 1 772 466 or via email at compcom@comesa.int and/or wmwemba@comesa.int.

Further, note that the Commission may update and revise this notice from time to time.

 

George K Lipimile

Director & Chief Executive Officer