Category: Namibia

And you thought attorneys were above the (antitrust) law…?

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Namibian Competition Watchdog Probes Alleged Collusion Between Law Firm and Bank

Namibia’s Competition Commission (the “NaCC”) has begun a Section 33 investigation into the alleged exclusive-dealing arrangement in relation to property conveyancing between Bank Windhoek and the domestic law firm of Dr Weder, Kauta and Hoveka, which has offices in 4 cities and touts itself as being “widely respected and recognised for its professionalism and excellence in service provision.”

The purported deal requires those applying for a loan from Bank Windhoek to use the law firm’s conveyancing services, thereby allegedly excluding other attorneys, according to the NaCC’s formal statement announcing the investigation, which resulted from an apparent private complaint brought to the NaCC: “The agreement and its maintained exclusivity is said to limit competition and forecloses other independent service providers in the relevant market, which is provisionally defined as the provision of conveyancing services to Bank Windhoek-financed property transactions,” in violation of section 23 of the Namibian Competition Act. It is reported that the law firm has denied knowledge of the existence of any such agreement with the banking institution and has sought a copy of the document.

Apres webinar – “Calling out COVID corruption…”

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Thank you to our panelists for putting on a spectacle that gripped the audiences attention, breathing life into what it seems has quickly become a somewhat de rigeur medium. The commoditizing of the WEBINAR surely has come about due to expedience and the overlooking of a crucial point – the passion of the speakers.

John, Bill, Johannes, Mary and Khadiya (sadly Glynnis could not attend), effortlessly shepherded by moderator Andreas, effused on a topic that is by no means brand new but this time sublimely unpacked by experts.

The plea for urgent updating of legislation governing whistleblowing came through strongly, with several speakers advocating the inclusion of a whistleblower reward a la the SEC reward scheme. Johannes’ recount of his harrowing experiences after blowing

the whistle in the now notorious “Fishrot” case only served to re-affirm the vagaries surrounding legislation to adequately protect whistleblowers. Amazingly still not priority in developing and many developed countries. And there is more of course!

A quick request, please leave us your details and if you have another spare moment please leave a message about the webinar or anything whistle blower related!

Namibia: High Court declares Competition Commission’s search and seizure unlawful

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On 9 November 2018, the High Court in Namibia declared a dawn raid conducted by the Namibian Competition Commission (NaCC) in September 2016 to be unlawful. The NaCC raided the premises of PUMA Energy on the basis of alleged abuse of dominance conduct in relation to the sale of aviation fuel at two airports in Namibia.

namibiaPUMA Energy challenged the validity of the search warrant and successfully argued that there was no basis for granting the search warrant. Consequently, the NaCC is obliged to return all documents seized during the raid to PUMA Energies.

In June 2018, the South African Competition Commission also lost a High Court challenge where the validity of a search warrant was at issue. The Pietermaritzburg High Court set aside the search warrant on the basis that the SACC failed to demonstrate that there was a bona fide “reasonable belief” that a prohibited act had been engaged in by the respondents in that case.

Competition lawyer, Michael-James Currie says that the use of search and seizure operations as an enforcement tool is being increasingly used across a number of African jurisdictions. Dawn raids have recently been conducted in Egypt, Kenya and Zambia in addition to Namibia and South Africa.

Currie says while dawn raids have been used effectively by well-established antitrust agencies, search and seizure operations are particularly burdensome on the targets and should only be used in those instances were no other less intrusive investigative tools are available. If competition authorities’ powers are not kept in check there is a material risk that search and seizure powers may be used as “fishing expeditions”.

Primerio director, John Oxenham, points out that the evidentiary threshold required in order to obtain a search warrant is relatively low. It is, therefore, concerning if enforcement agencies subject respondent parties to such an intrusive and resource intensive investigative tool without satisfying the requirements for obtaining a search warrant.

Despite these recent challenges to search warrants, Andreas Stargard, also a partner at Primerio, corroborates Oxenham and Currie’s view that the South African and Namibian competition agencies will continue utilising dawn raids as an investigative tool and in light of the increasingly robust enforcement activities, particularly by the younger competition agencies, companies should ensure that they are well prepared to handle a dawn raid should they be subjected to such an investigation.

 

Namibian Competition Commission Investigates Pharmacies for Cartel Conduct

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The Namibian Competition Commission (NaCC) recently announced that it is investigating the pharmacy sector for allegedly fixing prices. The investigation is focused on the Pharmaceutical Society of Namibia (PSN) and over 200 of its members.

The allegations include, inter alia, that the PSN requires its members to impose a 50% mark-up on the dispensing of medicines and that the PSN disciplines members for deviating from the mark-up.

The investigation follows closely on the heels of an earlier announcement that the NaCC is investigating short term insurance companies for allegedly agreeing to cap maximum mark-up rates and maximum labour rates which panel beaters may charge for repairing vehicles.

The Namibian Competition Act prohibits agreements or concerted practices between competitors which have as their object or effect the prevention or lessening of competition in the market.

The recent activity by the NaCC is indicative of the NaCC’s intention to increase competition enforcement in the region and firms doing business in Namibia are increasingly required to self-assess their conduct to ensure compliance with domestic competition laws not only in Namibia but in most sub-Saharan countries.

Competition Enforcement Update – Eastern & Southern Region

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COMESA

The COMESA Competition Commission (CCC) has vowed to develop a system which will allow the CCC to have better oversight (to in turn ensure effective enforcement) over anti-competitive behaviour in member states.

This follows extensive research conducted by the CCC’s which indicates that anti-competitive practices are increasingly prevalent throughout its member states and is causing consumer harm.

George Lipimile, CEO of the CCC says that while protective measures put in place by national governments (aimed at shielding their companies from competition) is a serious threat to the region as cartels are prevalent is almost all sectors of the economy.

The CCC has also singled out the banking sector, stating that: “[w]e [CCC] have seen quite a lot of abuse in terms of non-disclosure of critical information to consumers”.

Andreas Stargard, antitrust lawyer at Primerio Ltd., attributes the increase in anti-competitive behaviour in the region to a lack of awareness of consumers’ rights groups to recourse under competition laws. “Antitrust is a comparatively new and developing phenomenon in most of the COMESA member states, and it will take time for local authorities to increase public awareness around the benefits of antitrust to consumers”, he says. “One way to increase such awareness is, of course, closer engagement of private legal consultants as well as media, whether online, print, or radio and television.”

The CCC has vowed to intensify efforts to increase awareness within member states and to ensure effective and robust enforcement of competition laws in the region.

KENYA
The Competition Authority of Kenya (CAK) has rejected a study (presented at the National Assembly Committee on Communication, Information and Innovation) by the Communications Authority which aims to introduce price capping in the telecommunications sector as a means to ‘remedy’ high concentration in the market.

In dismissing the study, the CAK Director General Kariuki Wang’ombe stated that “[i]t is important to highlight that dominance is not an illegality. What is an illegality is the abuse of dominance position. The intervention of a regulator should be informed by abuse of dominance position.”

Ruth Mosoti, a leading Kenyan competition practitioner, notes that the CAK, in an effort to steer clear of being considered a pricing regulator, “proposed that the Communications Authority focus on ensuring the sharing of resources by dominant firms (so as to ease barriers to entry and reduce switching costs so as to facilitate the entry and participation of competitors in the market) as opposed to setting a price cap.”

The CAK further urged the Assembly Committee to facilitate co-operation between the CAK and the Communications Authority in order to ensure effective regulation in the sector. “I request this committee to come up with a way of compelling the regulators to work together for the betterment of this sector. It might not be easy for only one regulator to regulate this sector. This issue is more of personal relationship,” Kariuki said.

Safricom Kenya CEO, in response, expressed his concerns stating that “[t]he operators who are seeking these interventions today will have been taught not to invest but instead to rely upon the infrastructure that is built by others. They will have been taught not to innovate as innovations will be served to them on a silver platter”.

NAMIBIA

Following an announcement by the Namibia Taxi and Transport Union (NTTU) that taxi fares will increase (following approval of its members at a joint meeting), the Namibia Competition Commission (NCC) warned the taxi operators to follow due process in seeking to introduce joint price increases to avoid falling foul of the Namibia Competition Act (Competition Act).

In terms of the Namibia Road Traffic and Transport Act (Transport Act), the Transport Board may endorse a collusive price increase in the industry (of not more than 10%). The NTTU has, however, announced that despite their understanding that the Transport Act stipulates that any fare increase should not be more than 10%, they will continue to implement the 50% price increase, with or without approval.

The NCC has, therefore, warned taxi operators that any collusive price increase (which is contrary to the Transport Act) will amount to a contravention of the Competition Act. The NNC released a statement saying “[t]axi operators who collusively and intentionally impose fixed taxi fare increases without following the due process set out in the Road Transport Act will render themselves liable in terms of the Competition Act and thereby attract a formal investigation which may lead to punitive civil and/or criminal sanctions”.

The NCC has previously resolved not to investigate Bus and Taxi Associations for price fixing, provided that such conduct was authorised under the Transport Act.

John Oxenham, also a director at Primerio Ltd. notes that the passenger transport is sector is increasingly considered a priority sector in Africa with Namibia’s neighbouring country, South Africa, having commenced a market inquiry into the public passenger transport sector which, inter alia, will assess the impact of ride-hail apps such as Uber on competition in the traditional taxi sector.

Namibian Competition Commission Seeks N$ 51 million penalty imposed on Namib Mills for Abuse of Dominance

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By Sr. Contributor Michael-James Currie

The Namibian Competition Commission (NaCC) recently referred Namib Mills to the Windhoek High Court for the imposition of a N$ 51 million (approx. USD 3.5 million) administrative penalty following the NaCC’s finding that Namib Mills has abused its dominance in the market by contractually requiring 54 bakeries to exclusively procure flour from Namib Mills.

In terms of the contractual arrangements, Namib Mills loaned capital to the bakeries for, inter alia, purchasing baking equipment. The tying provisions in the contractual arrangements at the heart of the dispute essentially preclude the respective bakeries from acquiring flour from any flour supplier other than Namib Mills for a period of 5 years. Any breach of this provision enables Namib Mills from calling for the immediate repayment of the loan amount in full (including repossessing the baking equipment if required).

The NaCC has alleged that this contractual restriction precludes other flour suppliers from entering into the market due to Namib Mills’ high market share.

The penalty which the NaCC has requested the High Court impose translates to approximately 2.6% of Namib Mill’s turnover for the previous financial year.

The case is unlikely to be finalised this year. It will, however, be a landmark judgment in relation to the assessment of the abuse of dominance provisions in terms of the Namibian Competition Act (Act).

namibmillsAndreas Stargard, an antitrust attorney with Primerio Ltd. points out that, to date, there has been a “dearth of precedent in Namibia relating to the manner in which the provisions of section 24 of the Act should be interpreted and specifically what thresholds and criteria the authorities should consider in determining whether a dominant firm has in fact ‘abused’ its dominance or monopolised any relevant market.”  He notes that the company is in fact the largest grain processor in Namibia, with a reported market share of well above 60%, a fact that will “almost certainly play a determinative role in the ultimate decision in the matter.  Foreclosure of rivals, which is clearly the main theory of harm here, requires a degree of market power that the NaCC appears to have found exists in this market, and a two-thirds share is generally accepted in antitrust law as sufficient to establish a risk of foreclosure, when taken together with anti-competitive acts, such as those alleged by the Commission here.”

Unlike its South African counterpart, the Namibian Competition Act does not clearly permit for a rule of reason defence for abuse of dominance conduct (unless specifically excluded, the South African Competition Act does permit for a rule of reason defence). In other words, it is not clear to what extent a complainant must demonstrate actual anti-competitive effects (i.e. foreclosure or consumer welfare effects) and whether pro-competitive, technology or other efficiency arguments are taken into consideration. Furthermore, as John Oxenham, director of Primerio points out, “it is also not clear who bears the onus and what level of proof is required to make a successful showing of an anti-competitive effect”.

Section 24 of the Act expressly prohibits dominants firms from:

  • “directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; or
  • “limiting or restricting production, market outlets or market access, investment, technical development or technological progress”

Without a clear framework in place, the abuse of dominance provisions could be extremely far reaching. For instance, a dominant firm would clearly need to, from time to time, place certain restrictions on third parties, particularly if the dominant firm has invested or assumed a certain amount of risk on behalf of that third party. Ensuring that a firm is able to safeguard and recoup its investment is inherently pro-competitive as this ensure continuous investment which brings with it innovation, better quality and ultimately lower prices for consumers.

In terms of the broad wording of the Act, however, a key challenge which the authorities face is assessing where one draws the line between exclusionary conduct which is justified by rule of reason arguments and at what point such exclusionary practices constitutes an abuse.

As a general observation, Andreas Stargard notes that “abuse of dominance cases are particularly challenging from an evidentiary point of view and typically require robust economic evidence when grappling with the various theories of harm and rule of reason justifications”.

Accordingly, a further difficulty which both Namib Mills and the NaCC face is that to the extent the High Court permits evidence to be led demonstrating the pro versus anti-competitive effects of the alleged conduct, the High Court may not be best placed to assess the evidence.

Regardless, the outcome of this case will be likely have far reaching consequences for firms who may be considered to be dominant in the Namibian market.

 

[Michael-James Currie is a practicing competition lawyer assisting clients with competition related matters in a number of African jurisdictions. Should you wish to contact Michael-James or any of the AAT contributors, kindly contact us at editor@africanantitrust.com and the AAT team will put you in touch with the relevant individuals]

The African WRAP – JUNE 2017 edition

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The first half of 2017 has been an exciting one from a competition law perspective for a number of African countries. As certain agencies have taken a more robust approach to enforcement while others have been actively pursuing or developing their own domestic competition law legislation. Further, there is an increasingly prevalent interplay between domestic laws with regional competition law and policy in an effort to harmonise and promote regional integration.

In this addition of the WRAP, we highlight some of the key antitrust developments taking place across the continent. The editors at AAT have featured a number of articles which provide further insight and commentary on various topics and our readers are encouraged to visit the AAT Blog for further materials and useful updates.

AAT is indebted to the continuous support and assistance of Primerio and its directors in sharing their insights and expertise on various African antitrust related matters. To contact a Primerio representative, please see the Primerio brochure for contact details. Alternatively, please visit Primerio’s website

 

Kenya

Grocery Market Inquiry

On 27 January 2017, the Competition Authority of Kenya (CAK) exercised its powers in terms of section 18 (1) (a) of the Competition Act, 2010, to conduct a market inquiry into the branded retail sector.

The key issues which the CAK’s will focus on during the inquiry include:

  1. the allocation of shelf space and the relative bargaining power between retailers and their suppliers;
  2. the nature of and the extent of exclusive agreements at one stop shop destinations and their effects on competition;
  3. the pricing strategies retailers employ especially in regards to responding to new entrants;
  4. whether there are any strategic barriers to entry created by incumbent firms to limit entry in the market; and
  5. the effect of the supermarkets branded products on competition

Legislative amendments

The Kenya Competition Act (Act) has undergone a number of amendments in the past year.

Most notably, however, section 24 of the Act, which deals with abuse of dominance generally, has been amended to also cater for an abuse of “buyer power”.

Without being exhaustive, a number of practices which would typically constitute an abuse of dominance include:

  1. imposing unfair purchasing or selling prices;
  2. limiting or restricting output, market access or technological advancements;
  3. tying and/or bundling as part of contractual terms; or
  4. abusing intellectual property rights.

In terms of the definition of “dominance” in the Act, a firm will be considered dominant if that firm has greater than a 50% market share.

The amendment, as drafted, raises a number of concerns as previously noted on AAT.

Botswana

Merger control – Prior Implementation

On 17 February 2017, the Competition Authority of Botswana (CA) prohibited a merger between Universal House (Pty) Ltd and Mmegi Investment Holdings (Pty) Ltd.

The CA prohibited the merger on the grounds that the transaction was likely to lead to a substantial prevention or lessening of competition in the market. In particular, the CA held that the “market structure in the provision of commercial radio broadcasting services will be altered, and as such raises competition and public interest concerns”.

At the stage of ordering the divestiture, a suitable third party had not yet been identified and the merging parties were obliged to sell the 28.73 shares to a third party “with no business interests affiliated in any way with the acquiring entity”. The divestiture was also to take place within three months of the CA’s decisions and, should the thresholds be met for a mandatorily notifiable merger, the CA would require that the proposed divestiture also be notified.

South Africa

Follow-on Civil Liability

A second civil damages award was imposed in 2017 on South Africa’s national airline carrier, SAA, following the Competition Tribunal’s finding that SAA had engaged in abuse of dominance practices, in favour of Comair. This award comes after the first ever successful follow-on civil damages claim in South Africa (as a result of competition law violation) which related to Nationwide’s civil claim against SAA.  In the Nationwide matter, the High Court awarded, (in August 2016) damages to Nationwide in the amount of R325 million.   Comair claim for damages was based on the same cause of action as Nationwide’s claim. The High Court, however, awarded damages in favour of Comair of R554 million plus interest bring the total award to over a R1 billion (or about US$ 80 million).

Please see AAT’s featured article here for further insights into this case.

Market Inquiries

The SACC published a notice in the Government Gazette on 10 May 2017, indicating that it will conduct a market inquiry into the Public Passenger Transport sector (PPT Inquiry) which is scheduled to commence in June 2017.

The PPT inquiry, is expected to span two years and will involve public hearings, surveys and meetings with stakeholders which will cover all forms of (land-based) public passenger transport. The SACC indicated in its report that “…it has reason to believe that there are features or a combination of features in the industry that may prevent, distort or restrict competition, and / or to achieve the purpose of the Competition Act”.

Legislative amendments

The South African Competition Commission (SACC) recently published draft guidelines for determining the administrative penalty applicable for prior implementing a merger in contravention of the South African Competition Acts’ merger control provisions (the Draft Guidelines).

In terms of the penalty calculations, the Draft Guidelines prescribe a minimum administrative penalty of R5 million (USD 384 615) for the prior implementation of an intermediate merger and a R20 million (USD 1.5 million) penalty for implementing a large merger prior to being granted approval. The Draft Guidelines cater further for a number of aggravating or mitigating factors which may influence the quantum of the penalty ultimately imposed.

Egypt

Investigations

The Egyptian Competition Authority (ECA), has also referred the heads of the Confederation of African Football (CAF) to the Egyptian Economic Court for competition-law violations relating to certain exclusive marketing & broadcasting rights. This follows the COMESA Competition Commission also electing to investigate this conduct.

In addition, it has been reported that the ECA has initiated prosecution of seven companies engaged in alleged government-contract bid rigging in the medical supply field, relating to hospital supplies.

Mauritius

Minimum resale price maintenance

In a landmark judgment, the Competition Commission of Mauritius (CCM) recently concluded its first successful prosecution in relation to Resale Price Maintenance (RPM), which is precluded in terms of Section 43 of the Mauritius Competition Act 25 of 2007 (Competition Act).

The CCM held that Panagora Marketing Company Ltd (Panagora) engaged in prohibited vertical practices by imposing a minimum resale price on its downstream dealers and consequently fined Panagora Rs 29 932 132.00 (US$ 849,138.51) on a ‘per contravention’ basis. In this regard, the CMM held that Panagora had engaged in three separate instances of RPM and accordingly the total penalty paid by Pangora was Rs 3 656 473.00, Rs 22 198 549.00 and Rs4 007 110.00 respectively for each contravention.

Please see AAT’s featured article here for further information.

Leniency Policy

The global trend in competition law towards granting immunity to cartel whistleblowers has now been embraced by the Competition Commission of Mauritius (CCM). The CCM will also grant temporary immunity (during the half-year period from March 1 until the end of August 2017) not only to repentant participants but also to lead initiators of cartels, under the country’s Leniency Programme.

COMESA

The COMESA Competition Commission (CCC) announced early 2017 that it will be investigating allegations of exclusionary conduct in relation to the Confederate of African Football’s (CAF) decision to extend an exclusive marketing of broadcasting rights and sponsorship agreement with Lagardère Sports in relation CAF tournaments.

Please see AAT’s featured article here for more information.

What to look out for?

Zambia

Guidelines

The Competition and Consumer Protection Commission (CCPC) published series of guidelines and policies during 2016. These included adopting a formal Leniency Policy as well as guidelines for calculating administrative penalties.

In addition, the CCPC also published draft “Settlement Guidelines” which provides a formal framework for parties seeking to engage the CCPV for purposes of reaching a settlement. The Settlement Guidelines present a number of practical challenges as currently drafted. One example is that the guidelines don’t cater or seem to recognise “without prejudice” settlement negotiations.

It is anticipated that the draft Settlement Guidelines will be formally adopted this year.

Please click here to read the feature article on AAT.

Namibia

In April 2017, the CEO of the Namibian Competition Commission (NCC), Mr. Mihe Gaomab II, announced that the NCC has made submissions to the Minister of Trade and Industry in relation to proposed legislation which will regulate franchise models in Namibia.

While recognising the benefits of franchise models, the NCC is, however, concerned that there are a number of franchises in Namibia which may be anti-competitive in that the franchisor-franchisee relationship creates certain barriers to entry.

The NCC has specifically identified the practice, by way of an example, whereby certain franchisors deliberately ensure that there is a lack of competition between franchisees in the downstream market. The rationale behind this commercial strategy is allegedly so that the franchisor may extract greater royalties or franchise fees from the respective franchisees, as the franchisee is assured of a lack of competition.

The NCC views this practice as well as a various similar practices as potentially anti-competitive as the structure of certain franchise models may result in collusion between franchisees.

For further commentary on this development, please see AAT’s featured article.

Nigeria

Nigeria remains, for now, one of the few powerhouse African economies without any antitrust legislation. The Federal Competition and Consumer Protection Bill of 2016, however, recently made it past the initial hurdle of receiving sufficient votes in the lower House of Representatives.  The Bill is, therefore, expected to be brought into effect during the latter part of 2017 or early 2018.

South Africa

Market inquiries

The Minister of the Department of Economic Development, who has fulfills the oversight function of the South African Competition Authorities, has announced that a market inquiry will be conducted in relation to the “high costs of Data” in South Africa.

This would be the fifth formal market inquiry since the Competition Act was amended to afford the Competition Commission with formal powers to conduct market inquiries.

Complex monopoly provisions

Both Minister Patel and the President have announced that the Competition Act will undergo further legislative amendments in order to address perceived high levels of concentration in certain industries.

In this regard, it is likely that the competition amendment act’s provisions relating to abuse of dominance and complex monopolies, which was drafted in 2009, will be brought into effect.

In terms of the provisions, as currently drafted, where five or less firms have 75% market share in the same market, a firm could be found to have engaged in prohibited conduct if any two or more of those firms collectively act in a parallel manner which has the effect of lessening competition in the market (i.e. by creating barriers to entry, charging excessive prices or exclusive dealing and “other market characteristics which indicate coordinated behavior”).

Please see AAT’s feature article here for further commentary.

Namibia Competition Commission: New Franchise Laws to Address Anti-Competitive Concerns

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By AAT Senior Contributor, Michael-James Currie

The CEO of the Namibian Competition Commission (NCC), Mr. Mihe Gaomab II, recently announced that the NCC has made submissions to the Minister of Trade and Industry in relation to proposed legislation which will regulate franchise models in Namibia.

Currently, there is no specific ‘franchise law’ in Namibia and moreover, franchisees are not required to apply to the Minister of Trade and Industry for registration of an ‘approval’ licences. Accordingly, there is minimal regulatory oversight in respect of franchise models.

While recognising the benefits of franchise models, the NCC is, however, concerned that there are a number of franchises in Namibia which may be anti-competitive in that the franchisor-franchisee relationship creates certain barriers to entry.

The NCC has specifically identified the practice, by way of an example, whereby certain franchisors deliberately ensure that there is a lack of competition between franchisees in the downstream market. The rationale behind this commercial strategy is allegedly so that the franchisor may extract greater royalties or franchise fees from the respective franchisees, as the franchisee is assured of a lack of competition.

The NCC views this practice as well as a various similar practices as potentially anti-competitive as the structure of certain franchise models may result in collusion between franchisees.

Unlike a number of jurisdictions, including South Africa, however, collusive conduct is not prohibited per se and a franchise agreement or model will, therefore, only amount to a contravention of the Namibia Competition Act if there is (or likely to be) an anti-competitive effect which cannot be justified or outweighed by other pro-competitive or efficiency arguments (i.e. rule of reason arguments).

The rule of reason analysis also extends to ‘minimum resale price maintenance’ (MRPM) under Namibian competition law. Again, unlike the position in South Africa, MRPM is not a per se prohibition (i.e. there is rule of reason defence available to a respondent). MRPM in terms of the South African Competition Act is a controversial topic as in many instances, the very success of a franchise model is dependent on uniformity in pricing across all franchisees. Furthermore, issues such as protecting brand reputation are also generally acceptable commercial practices which may amount to a contravention due to the strict application of the MRPM provisions under South African law.

In Namibia, franchisors therefore have somewhat more flexibility when recommending minimum resale prices than their South African counterparts. It should be noted, however, that the NCC is monitoring franchise models closely to ensure that franchisors do not overstep the mark by implementing a franchise model which has as its object or effect, the lessening of competition in the market.

Notifying African M&A – balancing burdens & costs

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Merger filings in Africa remain costly and cumbersome

By AAT guest contributor Heather Irvine, Esq.

The Common Market for Eastern and Southern Africa Competition Commission (COMESA) recently announced that it has received over US$3 million in merger filing fees between December 2015 and October 2016.

heatherirvineAbout half of these fees (approximately $1.5 million) were allocated to the national competition authorities in various COMESA states. However, competition authorities in COMESA member states – including Kenya, Zambia and Zimbabwe – continue to insist that merging parties lodge separate merger filings in their jurisdiction. This can add significant transactional costs – the filing fee in Kenya alone for a merger in which the merging parties combined generate more than KES 50 billion (about US $ 493 million) in Kenya is KES 2 million (nearly US $ 20 000). Since Kenya is one of the Continent’s largest economies, significant numbers of global transactions as well as those involving South African firms investing in African businesses are caught in the net.

Merging parties are in effect paying African national competition authorities twice to review exactly the same proposed merger. And they are not receiving quicker approvals or an easier fling process in return. Low merger thresholds mean that even relatively small transactions, often with no impact on competition at all, may trigger multiple filings. There is no explanation for why COMESA member states have failed to amend their local competition laws despite signing the COMESA treaty over 2 years ago.

Filing fees are even higher if a proposed cross-border African merger transaction involves a business in Tanzania or Swaziland– the national authorities there have recently insisted that filing fees must be calculated based on the merging parties’ global turnover (even though the statutory basis for these demands are not clear).

The problem will be exacerbated even further if more regional African competition authorities, like the Economic Community of West African States (ECOWAS) and the proposed East African Competition authority, commence active merger regulation.

Although memoranda of understanding were recently signed between South Africa and some other relatively experienced competition regulators on the Continent, like Kenya and Namibia, there are generally few formal procedures in place to harmonise merger filing requirements, synchronise the timing of reviews or align the approach of the regulators to either competition law or public interest issues.

The result is high filing fees, lots of duplicated effort and documents on the part of merging parties and the regulators, and slow merger reviews.

If African governments are serious about attracting global investors, they should prioritise the harmonisation of national and regional competition law regimes.

Namibian Competition Commission Conducts Dawn Raid in the Oil & Gas sector

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namibiaBy AAT Senior Contributor, Michael-James Currie.

Dawn raids are gaining significant traction throughout the African agencies following the Namibian Competition Commission (NaCC) very recent (16 September 2016), raid conducted at the operations at Puma Energy in Windhoek. The raid follows the NaCC having received numerous third party complaints alleging that Puma Energy was abusing its dominance by engaging in excessive pricing practices in the aviation fuel supply market.

The NaCC had recently published Guidelines in relation to Restrictive Practices. The Guidelines focus primarily on the NaCC’s investigative powers and in particular, search and seizure operations. Africanantitrust suspected that the Guidelines would result in a move by the agency to be more proactive in its efforts to detect, prosecute and ultimately combat anti-competitive practices.

Africanantitrust had noted that search and seizure operations by competition law agencies across Africa were on the rise. The South African Competition Commission has drastically increased its utilisation of dawn raids as an investigative tool in its arsenal. The SACC has, furthermore, provided guidance and training to a number of other African jurisdictions respective agencies on search and seizure operations and how to conduct effective dawn raids under the auspices of the African Competition Forum.  Says John Oxenham, competition practitioner with Pr1merio: “2016 saw Kenya conduct its first dawn raid in the fertiliser sector as well as Zambia increasing the number of dawn raids conducted.”

The South African Competition Commission’s advocacy efforts should be considered in light of the number of recently concluded Memoranda of Understanding which the SACC has entered into with other regional agencies as well, including the NaCC.

In terms of the MoU with Namibia, it is envisaged that there will be greater cooperation in relation to information exchanges and assistance with common investigations between the NaCC and the SACC.

The NaCC is yet to prosecute an abuse of dominance case and we will ensure that Africanantrust continues to monitor this case and provide our followers with timeous updates should any significant further developments take place.