draft, legislation, South Africa

S.A. considers non-binding advisory opinions (again)

The South African Competition Act and the re-emergence of non-binding advisory opinions: Draft regulations published for comment

By Jemma Muller and Estelle Naude

After the suspension of the Competition Commission’s (“Commission”) advisory service in 2018, following the Constitutional Court’s decision in Hosken Consolidated Investments Limited v The Competition Commission, the regulation of non-binding advisory opinions is once again on the Commission’s agenda.

On the 23rd of March 2021, the Proposed Regulations on Non-Binding Advisory Opinions (“Proposed Regulations”) were published for comment by the Department of Trade, Industry and Competition (“DTIC”) in Gazette 44310 GoN 248. The public have been afforded until 23 April 2021 to provide their comment on the Proposed Regulations.

These Draft Regulations are centered around three important aspects of non-binding advisory opinions, namely:

  • How one can request a non-binding advisory opinion from the Commission;
  • The legal status of a non-binding advisory opinion; and
  • The fees payable if one requests a non-binding advisory opinion.

When requesting a non-binding advisory opinion, the requesting party will have to provide the Commission with a fairly comprehensive set of information, including, inter alia, the requesting party’s name, the market(s) in which it operates, the reasons for seeking a non-binding advisory opinion, the nature of the legal advice requested, appropriate information to allow the Commission to determine whether the requesting party falls within one of the entities exempt from paying a fee, and any other facts, information and documents which would enable to the Commission to provide a non-binding advisory opinion.

The Proposed Regulations serve as a vital tool for parties to receive guidance from the Commission pertaining to their compliance with the Competition Act No. 89 of 1998, as amended (the “Act”). Obtaining guidance from the Commission, for example on whether a proposed merger is notifiable, could not only prevent the party concerned from facing penalties for contravening the Act, but also save time and resources and negate the need for paying a filing fee (although requesting a non-binding advisory opinion does attract a fee in certain circumstances, which is discussed more fully below).

Notwithstanding the above, the information that the requesting party is required to disclose to the Commission may have the unintended consequence of discouraging parties from utilizing the advisory function for fear of confidentiality concerns. In this respect, section 44 of the Act is relevant and states the following:

1(a) A person, when submitting information to the Competition Commission or the Competition Tribunal, may identity information that the person claims to be confidential information.

(2) The Competition Commission is bound by that a claim contemplated in subsection (1), but may at any time during its proceedings refer the claim to the Competition Tribunal to determine whether or not the information is confidential information(our emphasis)

On the 23rd of March 2021, the DTIC also published for comment amendments to forms, rules and regulations of the Commission in Gazette 44309 GoN 247 (available at https://www.gov.za/sites/default/files/gcis_document/202103/44309gon247.pdf) which deals with, inter alia, an amended Rule 15A which pertains to access to confidential information submitted to the Commission. Rule 15A states:

“(1) Before the Commission makes the determination contemplated in section 44(3) of the Act in respect of information submitted to the Commission under a confidentiality claim, the Commission must:

(a) issue a Notice of intention to make a determination in Form CC 23 to the claimant and the Respondent; and

(b) allow the claimant and the Respondent 5 business days to make representations to the Commission.

(2) Within 5 business days after the Commission makes its determination in terms of section 44(3), an aggrieved person may refer the Commission’s decision to the Tribunal in accordance with the Tribunal’s rules.” (our emphasis)

According to the Proposed Regulations, the Commission is permitted, upon receipt of a request for a non-binding advisory opinion, to determine whether the issues subject to the request should be dealt with in an investigation or any other process under the Act. Additionally, a non-binding advisory opinion cannot fetter the discretion of the Commission while it exercises its functions in terms of the Act. As with the information the requesting party is required to disclose to the Commission, this provision may serve to deter businesses from utilizing this advisory function for fear that information disclosed may later be used by the Commission in an investigation. In this regard, section 45A of the Act states:

1(a) When making any decision in terms of this Act, the Competition Commission, subject to paragraph (b), may take confidential information into account in making its decision.”

This also raises the question on the status of confidential information submitted to the Commission pursuant to a non-binding advisory opinion, which the Commission later declines to issue an opinion on. According to the Proposed Regulations, if the Commission declines to issue an opinion, it must refund the fee paid by the requesting party if it appears the issues underpinning the advisory opinion will undermine the objectives of the Act.

Importantly, a request by medium enterprises and other market participants for a non-binding advisory opinion must be accompanied by a fee of R20 000 and R50 000 respectively. This is a notable increase from the fees the Commission previously charged under Rule 10.4 of the Conduct of Proceeding in the Competition Commission, which was a fee of R2500 payable by the requesting party.

While the proposed fee structure is a noticeable increase from the fees previously payable under Rule 10.4, the penalties for contravening the Act as well as merger filing fees prescribed by the Act can be far more costly than the cost of requesting a non-binding advisory opinion. It is also noteworthy that the Proposed Regulations expressly exclude certain entities from paying a fee, namely:

  • Constitutional institutions;
  • Departments;
  • Major public entities;
  • Micro enterprises;
  • Non-profit organizations;
  • Other public entities; and
  • Small enterprises.

It could be argued that the exclusion of the abovementioned entities from paying a fee may open the floodgates for requests for non-binding advisory opinions to the Commission, which could overburden an already inundated Commission.

In terms of the legal status of non-binding advisory opinions, the Proposed Regulations make it clear that the opinion has no binding legal effect on the Commission, the Competition Tribunal or the Competition Appeal Court.

The Proposed Regulations, while still in draft form, represent an important competition law development in South Africa and provide parties with much needed guidance, particularly in light of the complexities and legal nuances brought about by the recent amendments to the Act. Furthermore, the Proposed Regulations are largely in line with recent trends in promoting competition law compliance through competition advocacy as opposed to enforcement mechanisms.

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East Africa, ECONAfrica, ECOWAS, Egypt, Extra-judicial Factors, jurisdiction, Kenya, legislation, Meet the Enforcers, mergers, new regime, Nigeria, no antitrust regime, Patel, predatory pricing, Price fixing, Protectionism, public-interest, South Africa, Tanzania, Uncategorized, Unfair Competition

Beyond Pure Competition Law – Is Africa Leading the Way Forward in Antitrust Enforcement?

To all our Africanantitrust followers, please take note of the upcoming American Bar Association webinar on 2 July 2019 (11amET/4pmUK/5pm CET) titled:

“Beyond Pure Competition Law – Is Africa Leading the Way Forward in Antitrust Enforcement?”

In what promises to be a highly topical (telecon) panel discussion, Eleanor Fox, Andreas Stargard, John Oxenham, Amira Abdel Ghaffar and Anthony Idigbe will:

  • provide critical commentary of the most recent developments in antitrust policy across the African continent;
  • highlight the most significant legislative amendments and enforcement activities in Africa; and
  • analyze some of the key enforcement decisions.

South Africa, Nigeria, Egypt, COMESA and Kenya are among the key jurisdictions under the microscope.

Practitioners, agency representatives, academics and anyone who is an antitrust enthusiast will find this webinar to be of great interest. Not to mention companies actually active or looking to enter the African market place.

For details on how to participate, please follow this Link

 

 

 

 

 

 

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AAT exclusive, legislation, Morocco, Telecoms

Moroccan telecom sector gets competition regulation

AAT has learned that the fledgling Moroccan antitrust regime, which has never quite come off the ground, is now being supplemented in a sector-specific regulation, namely the recently gazetted Droit [Law] no. 121.12.

The new law supplements the competition guidance specifically for telecommunications carriers, including high-speed internet and fibre-optic cable service providers, without repealing the main piece of antitrust legislation (Law no. 104.12 on the Freedom of Prices and Competition), whose key regulatory body — the Competition Council (Conseil de la Concurrence) — only recently became active in December 2018.  Law 121.12 now confers full investigative authority to the National Telecommunications Regulatory Agency (ANRT), which it enables to review complaints of anti-competitive behaviour, roaming agreements between competitors, and the like.

Andreas Stargard, a competition practitioner with Primerio, notes that “the law is primarily focussed on conduct issues and does not cater for any transactional / merger regulation, which remains the province of Law 104.12 and its crucial (and much debated) ‘40% domestic market share’ hurdle for notifications in the Kingdom.”  Stargard notes that the Competition Council’s web site is still — despite the agency’s recent personnel appointments — merely an “empty store-front of a site, without any substantive content.”

The new telecom-specific regulation is likely to have an impact on, and was influenced by, the limited state of play in the sector, which has been dominated for decades by state monopoly Maroc Telecom, whose would-be competitors such as Orange and Inwi have recently filed complaints against the dominant firm, mostly for refusals to deal, being denied access to indispensable networks, roaming agreements, and the like.

Says Stargard: “The new law will take such disputes out of the lengthy judicial process in court and allow the ANRT to investigate and render decisions on its own, including the power to fine up to 5% of a company’s turnover.

We will update AAT once further details become available.

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AAT exclusive, legislation, new regime, Nigeria, Unfair Competition, West Africa

Breaking News: Nigerian Competition Act Signed into Law

Nigerian President Muhammadu Buhari has signed the Federal Competition and Consumer Protection Bill into law (the “Competition Act”).

nigeriaAfter years of deliberations, the legislative process is now complete, and with the establishment of a Competition Commission and Competition Tribunal, Nigeria is the latest African jurisdiction to establish a dedicated antitrust authority.

From a merger-control perspective, the Competition Act and the Commission’s jurisdiction will ultimately supersede the ‘placebo antitrust’ role historically played by the Securities and Exchange Commission (SEC), which has thus far received and assessed merger notifications above certain turnover thresholds, pursuant to the Investments and Securities Act.  The Act repeals the Consumer Protection Act, which did not contain stand-alone antitrust provisions.

Michael-James Currie, a competition lawyer advising clients across Africa, says the new Competition Act applies broadly to all commercial activities within Nigeria, but also to conduct outside of Nigeria (if the person or company is a Nigerian resident or incorporated in Nigeria or products are sold into Nigeria).  Furthermore, any acquisition or change of control of a business or asset outside of Nigeria which results in the change of control of an asset or business in Nigeria will also fall within the jurisdiction of the Competition Act.

The Commission has substantial powers, including considering and approving mergers, declaring business practices as amounting to abuse of dominance, prohibiting price discrimination or declaring unlawful any agreement which is in contravention of the Competition Act.

From an investigatory perspective, the Commission may subpoena witnesses or, upon obtaining a search warrant, conduct dawn raids, consistent with international best practices.

Any reviews or appeals in relation to a decision taken by the Commission may be made to the Competition Tribunal.

In relation to prohibited conduct, any agreement which has the effect or likely effect of preventing, restricting or distorting competition in any market is unlawful. Currie notes that the Act in particular prohibits collusive arrangements but also various forms of unilateral conduct include tying or bundling or limitations on the production or distribution of goods. John Oxenham, director at Primerio, echoes these sentiments and confirms that the Act provides for a rule-of-reason analysis.  He notes further that, in addition to the above general prohibitions, the Act also prohibits minimum resale price maintenance.

Fellow Primerio Director, Andreas Stargard, notes that the “monopolisation” prohibition against abuse of dominance mirrors those typically found in most jurisdictions; the wording of the Act appears to be influenced largely by the South African Competition Act.  That said, the test for dominance is essentially whether a firm is able to exert market power and, unlike South Africa, cannot be based on market-share thresholds alone.  In sum, he concludes:

“This latest piece of competition legislation was first introduced in 2011 by Rt. Hon. Yakubu Dogara from Bauchi State, who perhaps not surprisingly happens to be an attorney, and co-sponsored by Sen. Ahmed Lawan (Yobe North).

Its now final — and successful — iteration that was signed into law this week brings Africa’s largest economy into the fold of modern antitrust jurisdictions.  Many have called for this to happen for years [see hereand here).  Our firm’s West Africa team is eager to work on matters arising under the Act.”

The Bill's sponsor, Rt. Hon. Yakubu Dogara

One of the Bill’s sponsors, Rt. Hon. Yakubu Dogara

In terms of penalties, an antitrust violation attracts both a potential administrative penalty (capped at 10% of the respondent’s annual turnover) and criminal liability for directors who commit an offence, notes Currie, pointing to a  maximum of three years imprisonment as a fairly severe white-collar sentence potential.  It remains unclear to-date whether the turnover calculation for purposes of the administrative penalty determination refers to local or worldwide revenues, observes Stargard.

In relation to merger control, Oxenham notes that the Competition Act provides further clarity as to the type of transactions which require mandatory notification, notably including joint ventures, which were previously not identified by name under the SEC’s legislative regime.  The Act has introduced both de facto and de jure forms of control as potential triggers for merger notification. The Commission has not yet published Regulations which will prescribe turnover thresholds for “small” and “large” mergers. Both Oxenham and Currie point out that based on the wording of the Act, there seems to be a substantial amount of similarity between the Nigerian Act and the merger control process in South Africa including time frames involved and the introduction of public interest assessment in merger control.

This is not surprising, as the South African Competition Commission (SACC) has, through the African Competition Forum, been instrumental in advocating a robust competition regime. Furthermore, Oxenham suggests that there may be substantial amount of cooperation and assistance provided by the SACC to their Nigerian counterparts.

[AfricanAntitrust will provide further updates in relation to the Nigerian Competition Act and appreciates the input from leading antitrust practitioners and the on-going support of the Primerio team. To contact a Primerio representatives, please click here ]

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draft, Ghana, legislation, new regime, no antitrust regime, politics

Ghana slowly inches towards antitrust law

As one of two key West African nation states (the other being Nigeria), Ghana still lacks functioning competition legislation at the close of 2018.  Adding to the chorus of calls for the introduction of a Ghanaian antitrust act, the local branch of the global advocacy group CUTS (“Consumer Unity and Trust Society”), has now asked the government to ensure a currently pending draft competition bill becomes law in 2019.  The bill is, at present, before the Ministry of Justice and the Attorney General’s Department for further consideration, prior to being presented to Parliament.

ghana

Speaking on the topic of “Competing Without Market Rules” at the annual U.N. World Competition (Antitrust) Day, CUTS’ local director is quoted as deploring the absence of any competition policy or law, allowing unscrupulous firms to engage in conduct that would be deemed illegal virtually anywhere else and impeding the proper functioning of the Ghanaian market in the process.

Notably, Ghana’s Minister of Trade and Industry, Alan Kyeremanten, provided a written statement, noting that the country’s government was formulating its approach to competition policy with an eye toward enacting a law that would go beyond the relatively ineffectual Protection Against Unfair Competition Act, dating back to 2000 (Act 589).  Goals of enacting a more effective competition legislation would be to promote private sector development, economic growth, poverty reduction and increasing Foreign Direct Investment.

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BRICS, Extra-judicial Factors, legislation, public-interest, South Africa

SA Competition Act officially amended – serious consequences for businesses

South Africa has amended its antitrust laws, first introduced to the country in 1998 via its Competition Act.  Parliament ratified the amendments (which still have to be rubber-stamped by the National Council of Provinces, a mere formality) yesterday over the serious objections of the opposition parties.  The new law will give significant interventionist powers to the Minister for Economic Development, Ebrahim Patel, as well as introduce lower (or even reversed) burdens of proof for the Competition Commission (SACC) to make its case, after a long-running string of court losses and appellate defeats has seen the SACC’s track record weakened, observers say.

As reported on AAT Monday, a panel of Africa-focussed competition specialists had just recently convened in Johannesburg, warning the South African business community about the high probability of the Bill’s passage, as well as addressing the adverse effects the Bill will have on doing business in South Africa as a medium to large size market player (measured in market share, not merely revenue) or simply as a foreign-owned corporate.

Minister Patel speaks

Minister Patel

Interviewed yesterday in Cape Town, where the Amendment Act was ratified by South Africa’s Parliament, Primerio competition practitioner Andreas Stargard commented: “As we foreshadowed at our conference less than a week ago, the likelihood of the Bill passing was high.  Political, populist pressure was simply too strong for this amendment — which had been introduced as a so-called ‘prioritised bill’ that could be fast-tracked — not to pass.  We view the likely effects of it as a serious departure from commonly accepted best practices in the international world of antitrust law, as we outlined to our clients at the Johannesburg conference.  I will be curious to hear what Commissioner Bonakele’s comments on these critiques will be at Friday’s conference at New York University“, referring to an event sponsored by NYU and Concurrences, at which the SACC Commissioner is expected to deliver a panel speech later this week.

Commenting on the purported social transformational goals, South African competition partner John Oxenham adds: “There is a relentless push from government (not only Mr. Patel) to use the Competition Act as a tool to speed up its broader social and transformation goals.  The underlying reasons for this Amendment are rather straightforwardly conceded by the current, and arguably presently fluctuating, administration: the Bill was ostensibly designed not to enhance competitiveness in the traditional antitrust sense, but rather to address so-called market concentration and perceived unequal ownership patterns in the SA economy.”

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AAT exclusive, COMESA, commissioners, legislation, new regime, Uganda

COMESA news: Uganda gets on board, fields new CCC Board Chair

For the small but growing segment of COMESA Competition Commission observers in the world, some recent developments relating to a key member state may have gone unnoticed: the CCC held a training workshop for Ugandan officials, including over 110 ministerial District Commercial Officers, in sensitizing them to competition-law issues, spotting antitrust offences, and catalysing the enactment of robust competition legislation in the East African nation, whose GDP exceeds $25 billion and has exhibited consistent growth over the past several years.

CCC’s Uganda training workshop

Says Andreas Stargard, a competition partner with African boutique firm Primerio Ltd.:

This development of the CCC supporting domestic antitrust enforcement and legislative efforts is not only affirmatively required by the COMESA Treaty, obligating member states to enact legislation comporting with the CCC Regulations, but has long been foreshadowed by CCC officials.

For example, at this year’s region-wide sensitization workshop held by the CCC in Nairobi, Kenya, the agency’s leadership assured me personally that they would undertake these capacity-building programmes throughout COMESA member states, especially those with less-developed competition-law regimes, including Uganda.

CCC Board Chair Patrick Okilangole (Uganda)

Uganda is a key COMESA country that does not have a functioning antitrust enforcement body or underlying legislation.  Mr. Stargard adds that “the CCC’s choice of Uganda as a target jurisdiction may, in addition, also have been influenced by the fact that the current CCC Board Chairman is Patrick Okilangole, a Ugandan national,” whose appointment to the Commission’s Board was recently renewed in July.

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AAT exclusive, legislation, minerals, new regime, Oil & Gas, public-interest

Angola does Antitrust: Latest addition to world’s competition-law regimes

After its 2017 administration change, the Republic of Angola is eager to join other African nations with nascent competition-law enforcement regimes: Having been approved by a unanimous majority of 183 votes in parliament, the new Angolan competition act is expected to be enforced by the also newly-established “Competition Regulatory Authority” (“ARC”) in short order, before year’s end, according to experts.

According to reports, the Angolan law (comprising 56 articles across 8 chapters) prominently includes principles such as the public-interest criterion and “rules of sound competition in morality and ethics.”

Says Andreas Stargard, an antitrust/competition and white-collar attorney with Primerio Ltd.: “These are concepts often deemed non-traditional in the antitrust laws in the Western hemisphere.  Yet, public-interest considerations are increasingly common in African competition-law legislation and indeed often form the basis for otherwise difficult to justify pragmatic enforcement decisions we now encounter more frequently across the continent, both in merger and non-merger cases.”

Angola is a member of the African Union and the SADC (Southern African Development Community), whose most prominent member, the Republic of South Africa, has a comparatively long history of including public-interest considerations in its two decades of antitrust enforcement.  As to the general concept of Angola finally adopting a competition-law regime, it appears that a key driver was the anticipated diversification of the domestic economy:

“A functioning Angolan competition regime (meaning not only the statute but also including an effective enforcement agency) is long overdue, as recognised by the recently elected Angolan president, João Lourenço,” says attorney Stargard. “By supporting enactment of the Competition Bill, Mr. Lourenço has made good on his campaign promise from 2017 to incentivise foreign direct investment, increase domestic business growth, and — importantly for the population — encourage price competition in local consumer goods markets, as the cost of living in Angola is among the highest on the African continent”.

One of the drivers of the new government’s push for FDI and organic GDP growth is the desire to de-link the Angolan economic dependence from oil prices and production, and possibly also from China (which remains the country’s largest trading partner by far). Angolan fossil fuel and diamond exports — together by far the largest sectors of the economy, and as commodity industries, quite naturally subject to collusion risk and/or monopolistic practices, according to Mr. Stargard — have yielded at best inconsistent benefits to the country’s population at-large, and President Lourenço’s pro-competition intitiative appears to support the diversification of his country’s lopsided economy historically focused on mining and resource extraction.

 

 

 

 

 

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agriculture, Burundi, COMESA, Kenya, legislation, Rwanda, Uganda, Zimbabwe

Harmonising agricultural seed regulations across COMESA: COMSHIP Certification

COMSHIP advances bloc’s Certification Programme to next level

Announced in Lusaka by COMESA’s Assistant Secretary General in charge of Programmes, the long-awaited Regional Seed Certificates will be issued by member states’ national seed authorities, in an attempt to level the competitive playing field and establish guaranteed performance and yields of otherwise unpredictably performing seed products.  The COMESA programme requires verification that a registered seed lot in the region’s “Variety Catalogue” has been inspected to field standards and laboratory analysis.

Andreas Stargard

Andreas Stargard

“The COMESA Competition Commission (CCC) having approved no less than three major agricultural mergers over the past year (Bayer/Monsanto, Dow/DuPont, and Syngenta/ChemChina) — all of which involved significant seed production and R&D elements — the Regional Seed Certificate programme represents the next step in bringing to fruition the COMESA Seed Harmonisation Implementation Plan (COMSHIP), designed to align seed regulations within the trading bloc,” says Andreas Stargard, a competition lawyer with Primerio Ltd.  “The Secretariat’s stated goal of COMSHIP is not only to assure product quality and grow intra-bloc commerce, but also increase the extra-regional competitiveness of the trade group’s substantial seed industry,” in line with COMESA’s Seed Trade Harmonization Regulations of 2014.

COMESACCAccording to its own statements, whilst only five member countries (Burundi, Rwanda, Kenya, Uganda and Zimbabwe) have fully modelled their national seed laws on the COMESA Seed System, the group’s Seed Certification system is the first such “use and distribution of seed labels and certificates as a way of improving access to quality seeds in the region” anywhere in the world, based on a model suggested by the OECD.  The system will “impact virtually all of the approximately 130 million COMESA inhabitants, who stand to benefit, according to the group, from assured-quality improved seed production and usage, as well as a de-fragmentation of the historically rather localised, national markets for seeds,” commented Stargard.

Practically speaking, the seed certification labels will incorporate machine-readability, traceability, and security features, and will be printed in the COMESA official languages: English, French and Arabic.

COMESA to Introduce Seed Labels and Certificates to Boost regional Trade

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AAT exclusive, East Africa, Kenya, legislation, RPM

Seeking exemptions from Resale Price Maintenance rules

Kenya’s RPM regime of exemptions to floor price-fixing regulations

The Kenya Ships Contractors Association (KSCA) recently became the latest in a long line of industry associations that have approached the Competition Authority of Kenya (CAK) for an exemption to set minimum prices.  Other recent applicants include the Law Society of Kenya (LSK); the Institute of Certified Public Accountants of Kenya (ICPAK), the Institute of Certified Public Secretaries of Kenya (ICPSK) and the Institute of Surveyors of Kenya.

kenyaSection 21 of the Kenyan Competition Act 12 of 2010 (the Act) prohibits firms or associations from entering into any agreement that “involves a practice of minimum resale price maintenance” (‘RPM’).

Under sections 25 and 26 (read jointly), however, firms or associations may apply to the CAK to be exempted from this prohibition by way of an application to the CAK in the prescribed form, especially in instances where they believe there are exceptional and compelling reasons (of public policy) justifying setting such resale price floors.

In evaluating requests for exemption, the CAK will consider whether the granting of an exemption will promote exports, bolster declining industries or, more generally, the potential benefits outweigh the cost of a less competitive environment due to the RPM conduct.

Kenyan competition lawyer Ruth Mosoti, with Primerio Ltd., notes that, “although each exemption will be considered on its own merits, the CAK’s recent decisions in applications of a similar nature seem to have created a precedent unfavourable to the KSCA’s request being approved.” In this regard, the CAK in the ICPAK application rejected the application and stated that the “[i]ntroduction of fee guidelines will decrease competition, increase costs, reduce innovation and efficiencies and limit choices to customers and is in fact likely to raise the cost of accountancy services beyond the reach of some consumers”.

The CAK’s Director General, Mr. Wang’ombe Kariuki has now issued a notice requesting input from the public regarding the application.

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