Category: new regime

Malawi Revamps its Antitrust Laws: Suspensory Merger Control and More

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Not only did the Malawian government revise its 26 year-old competition law, but it effectively repealed the old statutory regime under the “Competition and Fair Trading Act”, and it has now enacted its replacement, the so-called “Competition and Fair Trading Act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

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

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

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

 ENTERING INTO FORCE OF THE NEW COMPETITION AND FAIR TRADING ACT 

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

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

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

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

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

i. Competition Regulation 

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

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

ii. Consumer Protection 

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

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

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

 improper or insufficient labelling of products; 

 failure to disclose material information about the products supplied; 

 engaging in excessive or exploitative pricing of the products. 

 imposition and implementation of unfair terms in consumer contracts. 

iii. Abuse of Buyer Power 

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

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

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

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

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

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

 demands for preferential terms unfavourable to the suppliers; 

 demanding limitations on supplies to other buyers; 

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

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

iv. Penalties for Violations 

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

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

v. Suitability and Independence of Commissioners for the CFTC 

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

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

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

LLOYDS VINCENT NKHOMA 

CHIEF EXECUTIVE OFFICER 

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

Gun-jumping in Morocco, Switzerland-style

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In a relatively rare northwestern excursion on the continent, we are reporting today that the Moroccan competition authority (the Competition Council, or “CC”) based in Fez, which has operated only since late 2018, issued its first-ever gun-jumping fine to Swiss construction/chemicals firm Sika Aktiengesellschaft. Sika will have to pay (unless it exercises its right to a judicial appeal of this inaugural MCC decision, which it appears the company has waived and agreed to pay the) approx. $1m in fines, per the recent Article 19 fining decision made on April 28, 2022.

The underlying conduct consisted of Sika’s May 2019 acquisition of 100% of the capital and voting rights of its French competitor, Financière Dry Mix Solutions SAS, with business activities in and economic ties to Morocco, via its “Sodap” in-country subsidiary. Sika – the largest construction chemicals firm worldwide, according to its own marketing materials – likewise conducts business in Morocco, in addition to 100 other countries globally.

According to the MCC, the parties purportedly failed to notify the transaction pursuant to the mandatory provisions in Arts. 12-14 of the Moroccan competition act (Loi no. 104-12 of 2014) and thus caused the MCC to open its first gun-jumping investigation, leading to this — not insignificant — fine that has now been issued by the Council. The original liability finding was made previously, in MCC decision n°134/D/2021 (dated 6th December 2021).

Under the domestic merger-control regime, a notifiable transactions exists when:

  1. two or more previously independent undertakings merge;
  2. one or more persons, already controlling at least one undertaking, acquire, directly or indirectly, whether by purchase of securities or assets, by contract or by any other means, control of the whole or parts of one or more undertakings; and
  3. one or more undertakings acquire, directly or indirectly, whether by purchase of securities or assets, by contract or by any other means, control of the whole or parts of one or more other undertakings.

To avoid similar mishaps from happening in the future, the MCC — in collaboration with the General Confederation of Moroccan Enterprises (CGEM) — held a conference and issued a legal compliance guide for businesses active in Morocco in January 2022. The MCC’s president, Ahmed Rahhou, expressed his hope that the Guidebook would “allow companies to avoid being in breach of the law and to know their rights and duties especially in terms of competition law.”

Nigerian competition authorities finally established

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The Federal Government of Nigeria inaugurates the Federal Competition & Consumer Protection Commission (“FCCPC”) and the Competition & Consumer Protection Commission Tribunal (“CCPT”) 

By Gina Lodolo

The Federal Government inaugurated the governing board of the FCCPC together with that of the CCPT, in order to ensure that consumer protection is placed at the forefront in giving effect to Nigeria’s developmental goals.  The board was inaugurated by the Minister of Industry Trade and Investment, Otunba Adeniyi Adebayo on the 4th of March 2021.

Section 4 of the Federal Competition and Consumer Protection Act, 2018 (“Act”) provides that in the establishment of a Governing Board charged with the administration of affairs of the Federal Competition and Consumer Protection Commission, the Board shall “consist of 8 Commissioners made up of a Chairman, a Chief Executive who shall also be the Executive Vice Chairman, two executive Commissioners and four non-executive commissioners”.

According to Section 5 of the Act, the Board members are appointed by the President from the six geo-political zones in the country, subject to confirmation by the Senate. Each Commissioner shall serve for a term of 4 years. The term may only be renewed by the President for a further term of 4 years.

The responsibilities of the FCCPC will be, inter alia, to monitor staff performance, financial reporting and to ensure accountability.  The FCCPC has been established as a policy-making body as gleaned from Minister Adebayo who stated that the agency “as the highest policy-making body, [… is] expected to ensure that the Federal Government’s mandate is achieved”.  Mr. Emeka Nwankpa, Chairman of FCCPC’s board, said that “the board was the first of its kind in the commission [and] appealed to the government to give the team the necessary support in order to function effectively”. Hajia Sharatu Shafi, Chairman of the CCPT board, said “the tribunal would ensure thorough and timely adjudication to ensure that Nigerians get value for their money and enjoy all privileges and protection”.

Minister Adebayo stated that the “present administration has zero tolerance for any form of corruption and this stance must not be compromised in any way”.  Further, “government will punish any corrupt practices perpetrated  by any board members as well as the management team.”

Chief enforcer departs CCC, Mwemba takes on role

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February 17th, 2021: TODAY, the COMESA Competition Commission (“Commission”) released the following statement, wishing “to inform the general public that the tenure of office of Dr George Lipimile who was the Director and Chief Executive Officer of the Commission for the past ten years, came to an end on 31st January 2021.“

Dr Lipimile was appointed by the COMESA Council of Ministers as the first Director and Chief Executive Officer of the Commission in February 2011. He served in this capacity at the Commission for ten years during which time he played a pivotal role in the establishment of the Commission as the first fully operational regional competition authority in Africa and the second fully functional regional competition authority in the world after the European Commission. Dr Lipimile tirelessly worked towards the enforcement of the COMESA Competition Regulations and Rules. He dedicated his time at the Commission in strengthening the institution with but not limited to:

  • Growth in its staff compliment;
  • Creating sound legal framework;
  • Processes and Procedures for enforcement of the Regulations;
  • Advocacy and technical assistance to COMESA Member States; and
  • Setting up the necessary corporate governance systems.

Further, the Commission wishes to announce to the general public that Dr Willard Mwemba has been appointed as the Acting Director and Chief Executive Officer of the Commission from 1st February 2021 until such time the substantive Director of the Commission is recruited. The Commission wishes to congratulate Dr Mwemba on his appointment as the Acting Director and Chief Executive Officer of the Commission.

Incoming Mwemba & outgoing Lipimile

Andreas Stargard, a Primerio competition lawyer who knows both men from having notified transactions to the CCC as well as socially, says that “an era is now concluded — namely the ‘Genesis Era’ of the CCC, as George was its very first, and thus formative, leader. That said, I am deeply assured by the appointment of Dr. Mwemba to his post as acting Director, as he is of utmost competence and I have no doubt will guide the Commission in the right direction in this new ‘CCC 2.0 Era’ after Dr. Lipimile’s departure.”

COMESA seeks replacement for CCC’s Dr. Lipimile

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The COMESA Competition Commission has announced that it is accepting applications for the position of Director of the CCC until the end of October.  Says Andreas Stargard, an antitrust practitioner with Primerio Ltd.:

“The post is currently held by Dr. George Lipimile, the agency’s first and, therefore by definition, most influential chief.  Dr. Lipimile has certainly steered the comparatively young Commission into the right direction during its formative years, notably overseeing a complete makeover of the merger-notification procedure early on in the process, after much criticism of the initial system.

We are curious to see who will replace him in March 2021, as Dr. Lipimile’s term expires at the end of February.  Will it be a true competition-law expert, or will it be a politically-motivated appointment made by the COMESA Secretariat, pushing for someone who is more of a trade lawyer or, worse, economic protectionist.  What the CCC needs now to continue gaining international recognition and respect (from its peer agencies, as well as from commercial parties!) is a qualified antitrust attorney who understands the law & economics aspect of competition practice, and who will apply these principles neutrally throughout the COMESA region!”

Dr. Lipimile
George Lipimile, CEO, COMESA Competition Commission

Back in 2015, we quoted Mr. Stargard as follows, suggesting a path forward for the agency:

“If the CCC steps up its enforcement game in the non-transactional arena, it could become a true force to reckon with in the West.  I can envision a scenario where the CCC becomes capable of launching its own cartel matters and oversees a full-on leniency regime, not having to rely on the ‘follow-on enforcement’ experience from other agencies abroad.  The CCC has great potential, but it must ensure that it fulfills it by showing principled deliberation and full transparency in all of its actions — otherwise it risks continued doubt from outsiders.”

It remains to be seen who the Director’s replacement will be and which of these topics will dominate her or his agenda, if any.  The Director’s term is for 5 years, offering a salary of between $70,000 and $83,000.  Details on the opening can be found here.  Only Member State nationals can apply.  Interestingly, COMESA member states’ antitrust enforcers likewise posted the announcement on their individual web sites:

Book Review: “Making Markets Work for Africa: Markets, Developments and Competition Law in Sub-Saharan Africa” by Eleanor M. Fox and Mor Bakhoum

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Thanks to the diverse and on-going commitments by our contributors, AfricanAntitrust is considered the leading resource tracking competition law developments across the continent. AfricanAntitrust has, over the past number of years published numerous articles, updates and expression pieces by numerous contributors both in an effort to ensure our readership remains up to date on all regulatory developments in Africa, and also to stimulate robust debate on competition policy and enforcement across the continent.

Developing countries have unique socio-economic issues and market dynamics which many have argued justify a unique approach to the role competition law policy should play.

The editors at AfricanAntitrust were, therefore, particularly interested in the book authored by well-known Professor, Eleanor Fox and co-author Mor Bakhoum . AAT is honoured to have been requested to provide a book review and indebited to John Oxenham, Andreas Stargard and Michael-James Currie for their commentary below.

The book’s title Making Markets Work for Africa: Markets, Developments and Competition Law in Sub-Saharan Africa provides significant insight into its subject matter and the topics covered. As an introductory remark, the content provides a concise but necessary introduction to the social, political and economic challenges which underpin most sub-Saharan jurisdictions. Readers who may not be familiar with the jurisdictions covered in the book will find this useful for purposes of contextualising the competition policy debate and the nuances which underpin this debate.

After sketching an overview of the economic and political background, the authors go on to detail the relevant competition laws and the application thereof across the sub-Saharan jurisdictions.

The authors have, usefully, selected certain key enforcement activities in each of the jurisdictions covered in an effort to demonstrate the robustness of the respective agencies’ enforcement activities.

The authors then do a neat job of teeing up the crux of the debate, should competition law in developing countries converge towards a ‘global standard’ (which in this context refers primarily to US and EU precedent) or rather, do market and socio-political challenges which are often unique to most sub-Saharan countries, require a different set of rules, benchmarks or policy outlooks to competition policy and enforcement. In this regard, the authors provide a useful platform for debate among competition lawyers, economists, academics and law makers alike.

The book was not intended to provide a complete and robust assessment of the multitude of policy options available when developing competition law. Further, the authors have elected not to engage in a highly technical critique or assessment of the key decisions which have shaped competition policy across the African continent. Rather, the authors highlight the need to consider and debate different policies.

The authors correctly highlight South Africa as the “golden standard” insofar as competition law enforcement in developing countries is concerned – particularly in relation to the role of public interest enforcement in merger reviews. The authors discuss the seminal case in this regard, namely the Walmart/Massmart merger, as the foundation from which numerous subsequent mergers have been approved subject to public interest related conditions.

While the Walmart/Massmart merger was finally approved in 2013, the authors may consider, in subsequent editions, whether the substantial litigation and interventionist risks which are inherent in assessing public interest factors in competition law enforcement (particularly merger control) can be quantified. A departure from traditional competition law standards and precedent, particularly with the introduction of subjective considerations, is likely to increase the scope for litigation and interventionist strategies which may hinder the very objectives sought to be advanced.

The authors do, however, recognise that when assessing competition policy, one must consider the objectives of the policy against its practical enforcement – particularly in light of the principle of rule of law and sound economic analysis. The book certainly does not profess to ignore these and at numerous instances expressly or implicitly acknowledges that a transparent and objective competition enforcement regime is critical.

With the “hipster antitrust” movement ostensibly gaining traction in the US and EU, South Africa (and indirectly Africa more generally) it would appear there is a more mainstream deviation from traditional competition law enforcement. It certainly suggests a uniform standard in competition policy may become even more difficult to sustain. Alternatively, it may be the inherent complexity and trade-offs which are always at play in developing competition policy which may in fact necessitate a form of convergence. The authors give some insight into these trade-offs and the various factors which legislators and practitioners should take into account.

The authors also raise a number of issues which are often left out of the policy debate, yet play a crucial role in the efficacy of competition law enforcement in developing countries.

Factors such as political interference, corruption (as an overarching concern) and the limited resources available to many African competition agencies contribute to certain markets remaining inaccessible to new entrants and preclude efficiencies from materialising to the benefit of consumers. The authors point out, quite correctly, that judgments or decisions by agencies are often entirely devoid of substantive reasons let alone robust economic analysis.

The above recognition further reinforces the need for objectivity and transparency in developing competition enforcement regime.

Finally, readers will find the authors’ discussion on the regional blocs in Africa (COMESA, SADC, EAC) and explore the level of harmonisation between these regional blocs and their respective members states.

The timing of the book in this regard could not be more apposite in light of the current negotiations regarding a uniform African competition policy as contemplated by the African Continental Free Trade Agreement.

We congratulate the authors on this important and well researched text.

 

CRESSE CONFERENCE GREECE 2019: SOUTH AFRICAN AMENDMENT ACT

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Africanantitrust regular contributors John Oxenham, Michael-James Currie and Stephany Torres (Primerio and Nortons Inc) authored and presented a paper on the role of non-competition law factors in competition law enforcement at the 2019 CRESSE Conference in Rhodes Island, Greece in early July 2019.

Motivated by the recent, but significant, amendments to South Africa’s Competition Act, the timing of the authors’ paper could not have been better scripted. The Amendment Act was brought into effect on 12 July 2019 – a week after presenting the paper to an esteemed delegation of competition law practitioners and economists.

The paper, titled “South African Competition Law – The role of non-competition factors in enforcing unilateral conduct: Forging ahead or falling behind?” explores the socio-economic context and objectives which underpin the recent amendments to South Africa’s legislation and highlights the expansion of what is often termed “public interest” considerations in competition law enforcement beyond merger control.

Most notably, the authors contextualise the policy debate before providing an in-depth discussion of the new thresholds and standards against which certain abuse of dominance conduct will now be assessed.

The Amendment Act introduces a public interest standard, namely what the effect of certain conduct by dominant entities will have on the ability of “small, medium businesses and businesses owned by previously disadvantaged persons” to participate effectively in the market”.

Looking specifically at the price discrimination and buyer power provisions, the paper notes that, notwithstanding the noble objectives of the Amendment Act, there are potentially a number of unintended consequences which require further deliberation so as not to dampen pro-competitive conduct.

In relation to the price discrimination provisions, the authors conclude that:

“Accordingly, in light of:

  • the low market share threshold applicable to “dominant” entities;
  • the uncertainty regarding the threshold that must be met in order to sustain a case of prohibited price discrimination;
  • the evidentiary burden on a respondent to essentially prove a negative in relation to section 9(3); and
  • the threat of an administrative penalty for a first-time offence (potentially on both the South African business and its parent),

the price discrimination provisions pose a material risk to companies in South Africa who have a market share above 35%.”

As part of the presentation of the paper, it was noted that competition policy globally is constantly evolving. Issues such as “big data” and “data protection” have called on antitrust commentators to question whether the existing laws remain adequate to address broader consumer harm concerns. In South Africa, the authors point out that while the South African competition agencies have traditionally turned to European and US precedent in relation to antitrust enforcement, the socio-economic factors which have shaped competition policy in South Africa (at least from Government’s perspective) is unique and constitutes a substantial departure from more established jurisdictions.

Competition policy globally is, therefore, likely to be more divergent than convergent in the next few years.

In concluding, the authors point to the inordinate responsibility placed on the shoulders of the competition agencies in South Africa to exercise their discretion and develop a body of precedent as soon as possible that would hopefully provide practitioners and business with a more objective and transparent benchmark against which to assess their conduct. A task which could prove highly complex as the authorities will inevitable need to develop an objective basis for quantifying public interest considerations – an inherently subjective exercise.

To obtain a copy of the paper, please email the AAT editor by following the contact link below.

 

 

 

 

 

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

Posted on by Editor

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

 

 

 

 

 

 

ECOWAS creates functional antitrust commission

Posted on by Editor

While the ECOWAS competition regime is not new in and of itself (it was adopted in 2008), the actual operationalization of the ECOWAS Regional Competition Authority (ERCA) is — its inaugural ceremony in took place this past Tuesday in The Gambia, 11 years after its technical launch (although it was established jointly with the adoption of the ECOWAS competition legislation, it remained non-operational for over a decade).  Its mission is to enforce the multi-national body’s Regional Competition Policy Framework (RCPF).

ERCA’s efforts will be supported by the twin launch of the ECOWAS technical committee meeting of national  trade and competition representatives to assist in implementing the RCP, including both its competition/antitrust as well as consumer protection mandates.

ERCA is a specialized, autonomous quasi-judicial body designed to help promote regional economic growth and competitiveness in the ECOWAS common market.

Andreas Stargard, a competition law practitioner with a focus on African antitrust issues, noted that the ECOWAS rules, while not enforced in practice until now, will reflect more of a European approach to competition regulation, as “they include provisions to evaluate and render invalid certain types of governmental support for domestic champion companies and industries, akin to the EU model of ‘state aid’ rules, which do not always form part of antitrust regimes globally.  This makes sense, in our view, in the African context, however, as most domestic economies on the continent have long been subject to state-owned monopoly enterprises and so-called national champions — one need not look further than the various large African state-owned airlines, for example.”

He concluded that two key issues remain to be seen, once ERCA launches its first investigations and brings enforcement actions: “First, with the increasing number of regional enforcers, how will jurisdictional overlaps be resolved, both regional/national, as well as regional/regional, conflict?  Many ECOWAS members are also part of other African multi-national organizations that have some form of competition or consumer protection regulations as part of their mandate, such as the west African monetary union.  Second, what will the be the degree — if any — of ‘public interest’ considerations that may be in play for the 15-member state body’s antitrust enforcement, perhaps copying many of its African sister commissions’ approach…”

Time will tell…