Category: East Africa

COMESA Settlement Procedure Alive & Well: a Football Retrospective

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Decision of the appeals board on the appeal lodged by Confederation Africaine de Football and beIN Media Group LLC

By Olivia Sousa Höll

Introduction

In a landmark decision dated 28 March 2025, the Appeals Board of the Common Market for Eastern and Southern African Competition Commission (“CCC”) delivered its ruling on the consolidated appeal by the Confederation Africaine de Football (“CAF”) and beIN Media Group LLC (“beIN”). The appeal challenged the findings of the Committee Responsible for Initial Determinations (“CID”) concerning alleged anti-competitive practices in the award of media rights for CAF competitions.[1] The ruling marks a significant development in the regulation of sports broadcasting within the Common Market for Eastern and Southern African (“COMESA”).

Background of the dispute

The dispute arose from two Memoranda of Understanding (“MOUs”), a 2014 and a 2016 agreement, between Lagardère Sports and beIN, granting the latter exclusive media rights to broadcast CAF competitions.[2] Following an investigation by the COMESA Competition Commission, the CID found that these agreements contravened Article 16(1) of the COMESA Competition Regulations due to their long-term duration, lack of competitive tendering, and bundling of rights across platforms.[3] As a result, the CID ordered that the agreements be terminated by 31 December 2024, imposed fines of USD 300,000 on each party, and directed CAF to adopt a new framework for awarding media rights in the future.[4] CAF and beIN lodged separate appeals, which were consolidated and heard by the Appeals Board in February 2025.[5]

Legal framework

The central legal provision at issue was Article 16(1) of the COMESA Competition Regulations, which prohibits agreements that may affect trade between Member States and have as their object or effect the prevention, restriction, or distortion of competition.[6]

In their defence, CAF and beIN invoked Article 16(4), which allows an exemption where restrictive agreements can be shown to yield efficiency benefits.[7] Specifically, the exemption requires proof that:

  1. The agreement improves the production or distribution of goods or promotes technical or economic progress;
  2. Consumers receive a fair share of the resulting benefits;
  3. The restrictions are indispensable to achieving those benefits; and
  4. The agreement does not eliminate competition in a substantial part of the market.[8]

The CCC argued that these justifications are cumulative, and that each one must be satisfied for the exemption to apply.[9] It maintained that CAF and beIN failed to discharge their burden of proof, particularly by not showing that the restrictions were indispensable or that consumers benefited proportionately from the arrangement.[10] According to the CCC, the claimed efficiencies, such as increased investment and improved broadcast quality, could be achieved through less restrictive means, such as open and transparent tendering processes.[11]

This interpretation reflects COMESA’s strict approach to Article 16(4), as further explained in its Restrictive Business Practices Guidelines.[12]

The appeals process 

Following the CID’s decision on 22 December 2023, the appellants filed their Notices of Appeal in April 2024, arguing that the CID’s conclusions were flawed both factually and legally.[13] Key arguments raised included:

  1. The absence of actual evidence of foreclosure or harm to competition;
  2. Inappropriate market definition that excluded substitutable football content;
  3. Overreliance on stakeholder interviews lacking methodological rigour;
  4. Failure to consider the pro-competitive benefits of the agreements; and
  5. Imposition of fines without due process.[14]

The CCC responded by defending the findings of the CID and highlighting that the exclusive and bundled nature of the agreements had the potential to restrict competition, even if actual foreclosure was not demonstrated.[15] The CCC also refuted the claim that the SSNIP test (Small but Significant Non-transitory Increase in Price) was a required tool for market definition, noting that qualitative and contextual factors could be equally relevant.[16]

Decision of the appeals board

Rather than deliver a ruling on the merits of each legal issue, the Appeals Board opted to confirm a Commitment Agreement negotiated between the parties.[17] The Board emphasized that the agreement allowed for an efficient and proportionate resolution and noted that its authority to confirm such commitments is provided under Article 15(1) of the Regulations and Article 3(2) of the Appeals Board Rules.[18]

The terms of the Commitment Agreement included the following:

  1. The 2016 beIN Agreement would remain in force until 31 December 2028, to avoid disruption of broadcasts;
  2. CAF and beIN would each pay USD 300,000 to the Commission on a non-admission of liability basis;
  3. CAF committed to conduct future tenders for broadcasting rights through open, transparent, and competitive processes in line with recent commitments made in other cases.[19]

Importantly, the Appeals Board found that maintaining the current agreement until 2028 would not hinder competition due to the additional behavioural safeguards included in the Commitment.[20]

Implications for African Football

The outcome of this appeal will have far-reaching implications for the governance of sports media rights across Africa. By endorsing a settlement that preserves the current arrangement in the short term but introduces future-oriented competition safeguards, the Appeals Board has sent a clear message that long-term exclusive deals without competitive processes will no longer go unchallenged.

This decision aligns COMESA with global best practices, such as those adopted by the European Commission and FIFA/UEFA and provides a blueprint for other African sports bodies seeking to commercialize rights while respecting regional competition law.[21] For broadcasters, it opens new opportunities to participate in tender processes. For viewers, it promises greater access and potentially more diverse coverage of African football events.

Conclusion

The Appeals Board’s decision represents a balanced and pragmatic resolution of a complex legal and economic dispute. While avoiding a full ruling on the disputed legal questions, the confirmation of the Commitment Agreement underscores COMESA’s dual priorities: promoting competition and preserving market stability. The legacy of this case will likely be seen in a more open and competitive broadcasting landscape for African football in the years to come

[1] Appeals Board Decision, COMESA Competition Commission, 28 March 2025, p.2.

[2] (n 1 above) paras 4-5.

[3] (n 1 above) para 6.

[4] (n 1 above) para 8.

[5] (n 1 above) para 3. 

[6] COMESA Competition Regulations, Art. 16(1)

[7] (n 6 above) Art. 16(4)

[8] (n 6 above) Art. 16(4).

[9] (n 1 above) para 51.

[10] (n 1 above) para 51.

[11] (n 1 above) para 51. 

[12] COMESA Restrictive Business Practices Guidelines (2019), para 52.

[13]  (n 1 above) paras 1-2.

[14] (n 1 above) paras 10-11, 34-36.

[15] (n 1 above) paras 13-16, 34-36.

[16] (n 1 above) paras 20-21.

[17] (n 1 above) para 59.

[18] (n 6 above) Art. 15(1); Appeals Board Rules, Art. 3(2).

[19] (n 1 above) paras 64-65.

[20] (n 1 above) para 65. 

[21] (n 1 above) paras 45-46.

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.

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.

“So Much Abuse”: Overhaul of Competition Law Shifts from ‘Buyer Power’ to ‘Superior Bargaining Position’ Abuse

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AAT discusses how the Kenyan antitrust watchdog, CAK, is seeking input on its recently released draft amendments

By Joshua Eveleigh

On 28 May 2024, the Competition Authority of Kenya (“CAK”) published a request for public comment on its ‘Draft Competition (Amendment) Bill, 2024’ (the “Amendment Bill”). The Amendment Bill seeks, most notably, to broaden the scope of the Competition Act to include ‘digital activities’ and to replace the recently included ‘abuse of buyer power’ prohibition with an ‘abuse of superior bargaining position.

Digital Activities

The Amendment Bill defines ‘digital activities’ as:

“the provision of a service by means of the internet, or provision of digital content, for the benefit of business consumers or other consumers (whether paid for or otherwise and whether or not such activity is multisided), and may include —

  • online intermediation services, including online marketplaces and app stores;
  • online search engines;
  • online social networking services;
  • video-sharing platform services;
  • independent interpersonal communication services;
  • operating systems;
  • cloud computing services; and
  • online advertising services”

Moreover, the new law would broaden the assessment for effects on competition or a firm’s dominance provided for in the Competition Act to include the following:

  • in the context of digital activities, where dominance can be established even with market shares below forty percent, the Authority shall consider factors that typically grant significant market position, whether they arise from the digital activity being performed in one or multiple markets;
  • direct and indirect network effects and the entry barriers arising in connection with those network effects;
  • economies of scale and scope enjoyed by the undertaking, including with regard to the undertaking’s access to data relevant for competition;
  • switching costs for users and the ability and propensity for users to multihome; and
  • competitive pressure driven by innovation;
  • the importance of the intermediary services provided by the undertaking for accessing supply and sales market, including with reference to the size of the undertaking and the number of business and individual users it has and the period over which that level of importance has been held.

Says Andreas Stargard, a partner in Primerio’s competition-law group, “[e]vidently, the CAK is joining the global trend in regulating online marketplaces and firms. Our Kenyan colleagues expect more enforcement against firms that are active within the digital space – particularly given the CAK’s focus on the online sector in its past market studies and investigations.”

The inquiries mentioned include:

Abuse of Superior Bargaining Position

The Amendment Bill also seeks to remove the ‘abuse of buyer power’ prohibition, despite it only being included subsequent to recent amendments to the Competition Act in 2019. Interestingly, this change also comes after the CAK’s recent success in enforcing the newly-implemented buyer power provision, including:

  • the CAK’s announcement that it was able to recover reneged payments worth KES38 million from twenty motor vehicle repairers and five motor vehicle assessors in favour of 1, 000 Kenyans;[1]
  • its settlement with Unilever Kenya Limited resulting in the revision of payment terms for a number of its suppliers; and
  • the High Court of Kenya’s recent finding that Majid Al Futtaim Hypermarkets Limited had abused its buyer power in respect of its commercial relationship with Orchards Limited, confirming the finding of Kenya’s Competition Tribunal.

Now, in lieu of the perhaps more narrowly perceived Buyer-Power clause, the Amendment Bill seeks to include an entirely new section 40A to the Competition Act, prohibiting the abuse of a ‘superior bargaining position’, defining it as:

“the ability of an undertaking to control, direct, define or determine the conditions of business operations with counterparties which are favourable to itself without reference to the undertaking’s dominant market position or market power in the relevant market;” (our emphasis)

While the proposed definition is clear in that a firm need not be dominant or have market power to have a ‘superior bargaining position’, the Amendment Bill provides that the CAK must consider the following factors in determining whether a superior bargaining position in fact exists:

  • the degree of dependence by the affected undertaking or undertakings on transactions with the party under investigation;
  • the position of the undertaking in the market;
  • the possibility of the affected undertaking to change its business counterpart; and
  • whether the party under investigation is an unavoidable trading partner or a critical business partner in the relevant market.

Additionally, the Amendment Bill looks to broaden the conduct which would trigger an abuse of a superior bargaining position from what is already included in what may trigger an abuse of buyer power. These additional categories include, inter alia:

  • unilateral variation of contractual terms, conditions, or other rules associated with the transaction or service without prior notification to the counterparties;
  • unreasonable collection and/or processing of data of the counterparty;
  • imposing unduly difficult conditions for the termination of service; and
  • obstruction of business activities or interference in the counterpart’s management of its business.

Notably, an abuse of superior bargaining position attracts the same penalties as the current abuse of buyer power provision, that being a period of imprisonment not exceeding five years or a fine not exceeding KES 10 million shillings, or both.

Looking Ahead

“It is clear that the CAK is looking to broaden the ambit of its enforcement initiatives. In this regard, we note that the ‘abuse of superior bargaining position’ is largely identical to the current abuse of buyer power framework. It is likely, therefore, that the CAK is looking to translate its recent success against ‘buyers’ to firms at all levels of the supply chain, irrespective of whether they in a position of supplier or purchaser,” says Mr. Stargard.

Following this approach, it appears to us that the abuse of dominance provisions in the Competition Act have been given something of a ‘downgrade’. Specifically, it is not apparent to the author why a disgruntled firm (or the investigating CAK) would rely on the existing abuse of dominance provisions (and thereby needing to actually establish a firm’s dominance) when the would-be plaintiff could rely solely on the incredibly broad superior bargaining position provision — which notably does not require a showing of dominance or market power.

We are also interested to see whether the proposed superior bargaining provision will have an ‘opening the floodgates’ type effect if and when implemented. In this regard, it appears that an economic dependence argument would be relevant in determining whether a firm has a superior bargaining position. Absent a dominance requirement, the CAK may well be inundated with complaints from disgruntled contracting parties. 

[1] CAK, Newsletter Issue No.9 (2022), at 3. Available at: https://cak.go.ke/sites/default/files/2022-06/CAK%20Newsletter%20Issue%209.pdf

A New Dawn for African Antitrust in Uganda

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By Guest Author, Simon M. Mutungi, Ph.D.

Competition law first emerged in 19th century North America where it was known as antitrust law. Back then, large companies entered legal arrangements where they formed a trust that would hold and consolidate their property. They would then cooperate as a single group in various ways to maximize their profits at the expense of customers. To better understand the impact of such an arrangement, imagine you are a kid again back in kindergarten, preparing for a tag-of-war match and you have chosen the biggest and strongest colleagues as your teammates to compete with other students. That team is going to win that competition before the whistle even blows.

Enter John D. Rockefeller, one of modern history’s richest men, who formed a trust that consolidated a large number of petroleum companies under a single board of trustees. Through this trust called Standard Oil, he controlled about 90 percent of America’s oil refining capacity at its peak. Consequently, he could price the oil as he wished, and he did not need to produce quality petroleum products as there was no strong competition against his trust. Seeing the negative effect of such an arrangement on consumers and the economy at large, neighbouring Canada would pass the world’s first competition law in 1889 followed by the U.S in 1890 to break up such trusts hence the name ‘Antitrust’ law.

Now, 134 years later, Uganda has finally caught up following this month’s presidential assent of the Competition Act 2023, a very late yet equally very welcome endeavour. Till then we had mostly relied on sectoral laws such as Uganda Communications Act and regional laws like COMESA’s Competition Protocol. More recently, the Africa Continental Free Trade Area Competition Protocol was also promulgated. Competition law is basically a policy designed to promote fair market competition by regulating anti-competitive conduct by companies. Uganda’s introduction of a Competition Act marks a significant stride in its economic legislative framework, aiming to create a fair business environment and improve consumer welfare. This editorial highlights the ABCs of competition law tailored for businesses and individuals who might be unfamiliar with the concept, in the context of Uganda’s new law.

Levelling the playing field

Imagine a marketplace in Uganda where only one seller has maize to sell. Without competition, this seller can charge high prices, and buyers have no choice but to pay up if they need maize. That seller would also have no incentive to produce good quality maize products since there would be no other alternatives to his products. Competition law levels the playing field by preventing such monopolies and ensuring that no single company can dominate a market to the detriment of consumers and competitors. It encourages innovation, fair pricing, and quality through healthy competition. By regulating anti-competitive practices, such as price-fixing and market sharing, competition law keeps markets open and accessible, allowing new entrants and fostering an environment where businesses of all sizes can thrive. This ensures consumers benefit from a wider choice of products and services, improved quality, and better prices.

 The Ugandan Competition Act 2023

President Museveni signed this law into effect on 2nd February 2024.and it addresses various practices as explained below:

 Prohibition of anti-competitive agreements.

The Act in effect, for instance prevents MTN and Airtel from agreeing on a deal to fix airtime or data prices at a certain level. It prevents Nile Breweries and Uganda Breweries from agreeing on a deal to limit the production of beers to cause a shortage and increase the price of Nile Special or Tusker Lite respectively. Under the Act, NTV cannot coordinate with NBS TV to divide the tele-broadcasting market by region, where one channel exclusively airs content in one area while the other operates in a different region, thereby avoiding direct competition. These are all examples of a horizontal agreement between competitors. The Act also prevents vertical arrangements such as tying arrangements where for example City Tyres would contract with Cafe Javas to only serve food to clients that used services of the former. Another example of vertical arrangements prohibited under the Act is resale price maintenance agreements where Unilever Uganda Limited for example would enter a contract with Akiki’s Retailer Shop to sell Geisha soap at a specific price, preventing her from offering discounts or altering the price. A deal forcing Akiki’s retail shop to only sell Unilever products under an exclusive supply/distribution agreement is also illegal under the new law. This position was earlier provided by the commercial court in Ezee Money v. MTN Uganda, where court found that MTN’s use of illegal exclusivity agreements on mobile money agents and intimidation tactics in the market; restricted competitors from rendering beneficial services to the public and thus constituted unfair competition in violation of the Communications (Fair Competition) Regulations, 2005.

However, the Act’s limitation lies in the genius nature of companies, which typically avoid explicit collusion agreements, opting instead for subtle coordination through mutual adjustments in their actions without documented interactions. For instance, Mogas and CityOil may observe each other’s pricing and adjust their own prices accordingly without any direct communication. If one station raises its prices and the others follow suit, maintaining higher prices collectively, they are indirectly coordinating to benefit from higher profits at the expense of consumers, despite not having an explicit agreement to do so. While the law addresses this issue in price fixing and tendering exercises, it leaves other media open and as such it ought to address not just overt but also covert forms of collusion, ensuring it encompasses both explicit and implicit conspiracies to ensure market fairness.

Abuse of dominant position

Dominant position is defined under the Act as a firm commanding 30 percent of the market or where a group of three or more has a 60 percent market share. Such a firm(s) are not allowed to use this position to the detriment of their competition or consumers for instance through predatory pricing. This is a concept where, hypothetically, Kinyara significantly lowers sugar prices below cost to outcompete and drive Kakira out of the sugar market and once the latter has left the market, the former raises prices again, taking advantage of its now dominant market position.

Another example of abuse of dominant position is the refusal of access to an essential facility.  The Act does not define what an essential facility is but it is basically a facility/asset/infrastructure that is owned and controlled by a dominant firm or monopolist which facility a third party needs access to, to offer its own product or service. This doctrine is applied when the facility in question is something competitors cannot feasibly replicate due to legal, economic, or technical barriers, and where denying access to this facility would hinder competition.

Essentially, it ensures that no company can use control over a crucial resource to lock out competition and maintain its dominance, thereby promoting a more competitive marketplace. This doctrine has proved controversial and Ugandan courts have dealt with this issue before and will likely deal with it again. For example, can MTN commanding a dominant position in the mobile money market deny any third-party fintech aggregators access to its mobile money platform? This issue was at play again in the 2013 Ezee Money v MTN matter where the court determined that MTN had unjustly prevented Ezee Money from connecting with the aggregator, Yo! Uganda Limited, to its network. As a result, Ezee argued that it incurred substantial financial losses.

The court rejected MTN’s flimsy response that the law only protected licensed persons and held that its activities unfairly prevented, restricted or distorted competition in the communications sector contrary to the Uganda Communications Act and the Communications (Fair Competition) Regulations, 2005. MTN was ordered to pay general damages of USD 235,000 as well as punitive damages to the tune of USD 441,000, though this was appealed. This verdict, in my opinion, was the catalyst for the emergence of the hundreds of Ugandan fintech start-ups that have leveraged the essential infrastructure provided by MTN and Airtel. This development has led to the creation of a robust national payment system, ultimately and significantly benefiting us, the consumers. This will also be critical as Uganda ventures into the open banking sphere.

Mergers, acquisitions and joint ventures

The Act requires that for all mergers, acquisitions and joint ventures to be consummated, there must be authorization from the Minister of Trade. Firstly, the Minister should immediately prescribe a threshold for the kind of mergers and acquisition that will require ministerial approval lest Frank’s Auto Shop acquisition of Amara’s Garage in downtown Kisenyi require clearance which can cause a mountain load of paperwork headache for both the minister and these SMEs. Only acquisitions that can alter competition on a large scale should require ministerial approval. For example, MTN can never be allowed to acquire Airtel in this current market under the new law.

Another type of arrangement the Act indirectly prohibits is “killer acquisitions” This refers to a strategy where a dominant firm acquires a potential competitor, not necessarily for the value of its existing operations, but to prevent future competition. Imagine a large pharmaceutical company, like Quality Chemicals Ltd that dominates the market for a specific class of HIV/AIDS medication “ARVx,”. Now imagine a small start-up, Ankole Pharma Ltd, develops a promising new HIV/AIDS drug “AnXX” that could potentially revolutionize treatment in this category, posing a competitive threat to Quality Chemical’s ARVx. Before Ankole Pharma can bring AnXX to the market, Quality Chemicals Ltd acquires Ankole Pharma.

However instead of further developing and marketing Ankole Pharma’s ground-breaking drug AnXX, Quality Chem shelves or kills the project altogether. This move effectively eliminates a potential competitor, ensuring Quality Chemical’s market dominance remains unchallenged, preventing the innovative drug from reaching patients who could benefit from it. This scenario exemplifies a “killer acquisition” in the pharmaceutical industry, where the primary motive is to stifle competition and innovation rather than enhance the acquirer’s product portfolio.

Such are the practices that competition law seeks to prevent. In a free capitalistic market, parties tend to place profits ahead of the consumer welfare and government intervention is welcome to this extent. This intervention is however a costly venture as the government would need to train/hire economists and lawyers to add some bite to its bark. Noting that there is also no competition authority despite the law being passed, the country still has challenges ahead in this regard.

The author, Dr. Mutungi

(c) Dr. Simon Mutungi

Kenyan competition watchdog launches inquiry into Animal Feeds Value Chain

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By Joshua Eveleigh

On 29 September 2023, the Competition Authority of Kenya (“CAK”) announced that it will be conducting a market inquiry into the Kenyan animal feeds market (“Animal Feeds Market Inquiry”) to assess the various factors affecting competition in the animal feeds value chain.

The animal feed market is particularly important due to its impact on the pricing of essential food items, such as chicken. In this respect, the recent Essential Food Price Monitoring Report published by the South African Competition Commission found:

“The poultry industry is also the largest consumer of animal feed in the local market. Any shocks in the feed market, therefore, have a tangible and direct effect on broiler and chicken production costs and ultimately prices paid by consumers.”

Provided that there ought to be differences between the South African and Kenyan markets, the economic principles would be largely identical in that the increase of animal feed products would have an adverse impact on farmers and, ultimately, on the consumer welfare as a result of reduced supply and/or increased purchase prices.

In light of the above, the CAK has identified the following objectives of the Animal Feeds Market Inquiry:

  • the prices, costs and quantities produced, supplied and purchased at different levels from inputs supply to production and sale of different animal feed products;
  • the market shares, concentration, ownership relationships, joint ventures and marketing agreements for the different products and services related to animal feeds and its inputs;
  • different terms and conditions of supply for feed producers of different sizes;
  • barriers to entry and growth of smaller feed producers;
  • information availability, information sources, and any information exchange practices by companies, associations, and other formal or informal groupings relating to animal feed and its inputs;
  • arrangements, including licensing and other supply terms, which may affect the sourcing and supply of animal feed including breeding stock and animal feed;
  • trade flows of feed constituents, including maize, soybeans and derived products, and what may be affecting the flows from other countries in the Common Market for Eastern and Southern Africa (“COMESA”) and East African Community (“EAC”) regions, taking into account standards, permits, and other requirements in light of the existing trade agreements; and
  • the flows of demand and supply of products and services along the value chain for the main animal feed products.

In conducting the market inquiry and to gain an understanding of the above items, the CAK shall arrange and hold meetings and Key Informant Interviews (“KIIs”) and may also receive oral and/oral submissions from industry stakeholders. Importantly, section 18(6) of the Competition Act provides that “every person, undertaking, trade association or body shall be under an obligation to provide information requested by the [CAK] in fulfilment of its statutory mandate for conducting an inquiry.”

Upon the conclusion of a market inquiry by the CAK, its findings shall be used to inform policy considerations. In this respect, however, the policy recommendations of the CAK are non-binding and are handed to the Minister for appropriate legislative action.

Industry stakeholders may submit their oral or written submissions to the CAK by 20 October 2023.

Michael-James Currie, Partner at Primerio, noted: “Market inquiries are powerful investigative tools available to competition authorities and are becoming increasingly utilised across the continent. For instance, South Africa’s Competition Commission has announced its intention to conduct three market inquiries in three separate sectors in 2023 alone. While market inquiries may be disruptive for industry stakeholders, they are undoubtedly necessary for competition authorities to understand the structure, functioning and nuances of particular markets before initiating protracted and complex investigations into allegations of anticompetitive conduct”

Competition Authority of Kenya exempts MSMEs from merger control provisions to stimulate economy

Posted on by Editor

Competition Authority adds exemptions to boost economic activity

By Joshua Eveleigh and Katia Lopes

In a recent speech by Kenya’s Minister of Finance, Professor Njuguna Ndung’u, it is clear that the Competition Authority of Kenya (“CAK”) will take active steps in promoting micro, small and medium-sized enterprises (“MSMEs”) in the local economy.

Firstly, to facilitate their growth and contribution, Professor Ndung’u, noted that government plans to ease the cost of doing business and to minimize compliance costs for MSMEs.  Specifically, the CAK will exempt MSMEs from having to notify otherwise mandatorily notifiable mergers to the CAK. By removing the significant regulatory hurdle of obtaining prior merger approval, and its associated costs, it is hoped that Kenya will see a promotion of start-up and digital businesses. This development is particularly important considering that Kenyan startups ranked second, in Africa, in terms of funding raised but fell behind other African jurisdictions when it came to acquisitions of MSMEs.  Fidel Mwaki, legal practitioner based in Nairobi, observes that “this is a positive move from the CAK that should hopefully bode well for MSME’s, many of whom are battling under the strain of increased taxation, inflation, and licensing requirements and will certainly benefit from the proposed waiver on merger notification fees.”  His Primerio colleague, attorney Diana Wariara, adds that “regulating buyer power remains a challenge for the agency.  A greater emphasis on audits and investigations may help strengthen the CAK’s enforcement mandate and ensure a level playing field and fair competitive practices within these sectors.”

In addition to merger exemptions and emphasising the CAK’s position as Eastern Africa’s lodestar in the enforcement of abuses of buyer power, the CAK will monitor and conduct surveillance audits, specifically in the manufacturing and agro-processing sectors, to further protect MSMEs from incidences of abuses of buyer power. Professor Ndung’u also noted that the CAK will implement codes of practice to ensure MSMEs in the retail and insurance sectors are protected from powerful buyers.

Lastly, Professor Ndung’u highlighted that the CAK will take measures to address the issues of price fixing by professional services, ensuring that fees and the quality of professional services remain competitive.

Given the pivotal role that MSMEs play in the Kenyan economy, comprising 98% of all local business entities and contributing approximately 24% of Kenya’s GDP, their promotion will be a welcome development among the local business community. In this respect, Professor Ndung’u’s speech demonstrates the CAK’s commitment towards ensuring a competitive marketplace that is free from abuses of dominance.

COMESA @ 10: CCC Keynote address by Bill Kovacic

Posted on by andreasstargard

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.

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.

“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.