Category: new regime

Criminalisation of antitrust offences: not on short-term horizon

Posted on by andreasstargard

south_africa

Competition Commission not ready to pursue antitrust cases criminally – plus: AAT‘s recommendations

The newly (permanently) appointed Competition Commissioner, Tembinkosi Bonakele, has referred to a “phased” implementation of the 2009 Competition Amendment Act.  The legislation technically criminalised hard-core antitrust offences such as bid-rigging or price-fixing cartels.  However, it has not yet been implemented or effectively signed into law.

According to a MoneyWeb/ZA report, both he and his boss, Economic Development Minister Ebrahim Patel, had discussions on how and when to implement “to ensure that the necessary institutional capacity is available to apply the amendments.”  The initially effective provisions (relating to the SACC’s market-inquiry powers) went into effect last year, while the criminalisation provisions remain unimplemented.

In a somewhat remarkable and prudent self-assessment, the minister and SACC have now admitted that the Commission currently lacks “the institutional capacity needed to comply with the higher burden of proof in criminal cases,” according to the report.

One notable aspect of potential discord lies in not only in the different standard of proof in civil vs. criminal matters (“more probable than not” vs. “beyond a reasonable doubt”), but perhaps more importantly can be found on the procedural side, preventing rapid implementation of the law: There has been historic friction between various elements of the RSA’s police forces and (special) prosecutorial services, and the power to prosecute crimes notably remains within the hands of the National Prosecuting Authority, supported in its investigations by the South African Police Service.

Historical and Legislative Background – and a bit of Advice

Starting in the spring and summer of 2008, the rumoured legislative clamp-down on corrupt & anti-competitive business practices by the government made the RSA business papers’ headlines.

During a presentation I gave at a Johannesburg conference in September that year (“Criminalising Competition Law: A New Era of ‘Antitrust with Teeth’ in South Africa? Lessons Learned from the U.S. Perspective“), I quoted a few highlights among them, asking somewhat rhetorically whether these were the words of fearmongers or oracles?

  • “Competition Bill to Pave Way for Criminal Liability”
  • “Tough on directors”
  • “Criminalisation of directors by far most controversial”
  • “Bosses Must Pay Fines Themselves”
  • “New leniency regime to turn up heat on cartels”
  • “New era in the application of competition policy in SA”
  • “Likely to give rise to constitutional challenges”
  • “New Bill On Cartels is a Step Too Far”
  • “Fork out huge sums or face jail time if found guilty”
  • “Disqualification from directorships … very career limiting”

I also quoted international precedent-setting institutions and enforcers’ recommendations, all of which tended towards the positive effect of criminal antitrust penalties:

OECD, 3rd Hard-Core Cartel Report (2005):

  • Recommends that governments consider the introduction and imposition of criminal antitrust sanctions against individuals to enhance deterrence and incentives to cooperate through leniency programmes.

U.S. Department of Justice, Tom Barnett (2008):

  • “Jail time creates the most effective, necessary deterrent.”
  • “[N]othing in our enforcement arsenal has as great a deterrent as the threat of substantial jail time in a United States prison, either as a result of a criminal trial or a guilty plea.”

While the presentation contained a lot more detail, the key recommendations that I summarised would seem to continue to hold true today, and may serve as guide-posts for Commissioner Bonakele and the EDD ministry:

Cornerstones of a successful criminal antitrust regime
  • Crystal-clear demarcation of criminal vs. civil conduct
  • Highly effective leniency policy also applies to individuals
  • Standard of proof must be met beyond a reasonable doubt
  • No blanket liability for negligent directors – only actors liable
  • Plea bargaining to be used as an effective tool to reduce sentence
  • Clear pronouncements by enforcement agency to help counsel predict outcomes
Demarcation of criminal vs civil antitrust conduct in U.S.
Demarcation of criminal vs civil antitrust conduct in U.S.

COMESA news of the day: web site down again; 5 “exemption” letters granted

Posted on by Editor
COMESA Competition Commission logo

Site down – 5 “comfort letters in 5 months – Guidelines revision by June

In an almost farcical repetition of its information-technology woes, the COMESA Competition Commission’s web site (http://www.comesacompetition.org/) is off-line, yet again, after having been successfully hacked multiple times.  Whether the latest outage is due to a similar attack or simply (and hopefully) due to its webmaster’s shoring up the competition enforcer’s IT security measures remains to be seen.  (We have not yet heard back from the agency’s leadership on our request for information on the online data safety of parties’ submissions.)

In more substantive news, IFLR reports that the CCC has issued five so-called “Comfort Letters” since December 2013, exempting otherwise notifiable transactions from the duty to file (as well as the concomitant payment of the (high) filing fees), where the actual nexus to the COMESA region was negligible or non-existent.  This may help explain some of the lackluster filing statistics on which we reported previously.

The report also quotes the CCC’s head of mergers, Mr. Willard Mwemba, as saying that the revision of the Competition Guidelines should be finalised by the end of June 2014.

Slow-going M&A statistics in COMESA before anticipated threshold revision

Posted on by Editor
COMESA Competition Commission logo

Strong numbers from early 2014 did not hold up

After posting a record three merger notifications in January, the COMESA Competition Commission has seen its M&A filing statistics decline to zero in February and merely one in March.

As we have reported here (optimistic for 2014) and here (pessimistic on 2013 statistics), COMESA’s notified M&A deals have seen erratic ups & downs.  Not surprising, perhaps, if one considers the exquisite confusion that has reigned since the inception of the young antitrust authority about filing thresholds and fees.

The current ebb in notified deals (despite the record set in January) reflects, in our view, the impending end of the current “zero-threshold” regime in COMESA, which was foreshadowed by The CCC’s head of mergers, Willard Mwemba, back in late February 2014.  Quite understandably, parties to ongoing transactions are willing to risk “flying under the radar” if the agency has de facto admitted that the zero-dollar filing threshold is unworkable in practice.

We are curious to see what impact the vacuum of the pending revision to the COMESA merger rules will have on filing statistics going forward, until a more sensible threshold is set by the agency.  For now, with the latest notification #4/2014 (fertilizer and industrial products acquisition by Yara International ASA of OFD Holdings Inc.*) the stats look like this:

* we note that in the notice, the CCC erroneously set the deadline for public comment prior to the notice date itself, namely as “Friday, 28th February, 2014.”

competition law antitrust Africa
COMESA CCC M&A filing statistics as of March 2014

The end of the zero-threshold contagion?

Posted on by Editor
COMESA Competition Commission logo

COMESA Competition Commission‘s head of mergers foreshadows end of zero-threshold regime

Will the Commission soon find a cure to the contagion that has made the agency’s merger control the subject of heavy criticism by antitrust practitioners and and even ridicule by fellow enforcers? Willard Mwemba claims the agency has – after over a year of operating under the zero-threshold rule – “set the wheels in motion for the threshold to be raised.”  The Commission is reportedly working with the World Bank’s International Finance Corporation to determine what the proper notification thresholds should be.

We previously had this to say in November of last year:

[T]he dual dilemma of the “zero-threshold contagion” and the inordinately high filing fees currently affecting the CCC’s merger-control regime (and resulting in rather low merger-notification statistics of less than one per month) will continue to hamper the young agency and its customers for the foreseeable near-term future.

Depending on how swiftly the agency and its advisors at the IFC get things done – and the amendments actually get approved – it appears that our timing forecast was fairly accurate  (“COMESA merger rules to change in April 2014 at the earliest“).

Innovation, competition and IP in developing countries: convergence or customization?

Posted on by Editor

Innovation, competition and IP in developing countries: convergence or customization?

Advance africanantitrust.com publication of working paper

By: Sofia Ranchordás (Tilburg Univ. Law School)

new multi-part series
new multi-part series on Innovation & Antitrust

Innovation: a path to long-term economic growth,[1]hope for economic recovery,[2] and a vital opportunity for economies in developing countries.[3] Innovation is the Holy Grail we would all like drink from. Individuals dedicate their lives to its pursuit, governments invest significant amounts of money in R&D, but despite decades of research on ‘the wealth of nations’, we remain with a poor perception of innovation as a ‘complex and mysterious phenomenon’[4] that should be stimulated, although no one knows very well how.[5]

Government intervention in itself is insufficient and it might rather have costly results, if incorrectly targeted.[6] This is particularly true when it comes to the inevitable relationship between legal conditions and innovation since the lack of an effective legal framework is in the poorest countries the main obstacle to innovation and consequently to economic growth.[7] In this context, during many years, law was simply told to stay away and admire it from a distance to avoid impeding innovation. However, beyond laboratories, laborious inventions and serendipitous discoveries, law can play a greater role than a mere walk-on in the ‘innovation film’. In fact, law can act as a ‘brakeman’ or ‘a driver’ of innovation.[8] Competition and IP law have been competing for the supporting role of ‘drivers of innovation’. Here this ‘innovation film’ does not take place in the EU or in the US, but in developing countries trying to promote domestic innovation while adopting competition laws and being forced to respect IP rights that incentivize innovation in the Western world. In such context, and before the audition starts, five questions must be posed: (i) What is innovation and what type of innovation do governments aim to promote? (ii) Should and can law in general interfere in the regulation of innovation? (iii) How can competition law play a role in the promotion of innovation? (iv) Should competition law not remain in the shadow of Intellectual Property (IP’) laws that are already designed to provide innovators with incentives or should it be the other way around? (v) Last but not the least, in the context of the problematic trichotomy antitrust/IP/innovation, should a customized approach be conceived for developing countries characterized by different socioeconomic conditions or should one plea for convergence?

In this article (and subsequently, expanded paper), I reflect upon the role of law, and particularly competition laws, in the promotion of innovation in developing countries and the problematic relationship between IP, competition laws and innovation. Up until now, (competition) law’s potential to drive innovation has been either closely associated with patent law[9] or analyzed on a mere casuistic basis in the setting of specific antitrust or mergers cases.[10] However, the enforcement of competition laws against unlawful monopolizing conduct plays in general an undeniable role in the promotion of innovation.[11] Competition law promotes innovation by removing barriers to freedom of choice, trade and market access and prevents the formation of monopolies or conditions in the marketplace susceptible of stifling the development of new products. This implies however analyzing the connection between the market structure and the ability to influence undertakings to innovate:[12] while in some cases, a large number of companies on the market may slow down innovation, in others, the lack of competitive pressure may reduce the incentives to innovate (e.g. international market of derived financial products).[13]

Although the debate on the promotion of innovation has been restricted to developed countries, the promotion of innovation is equally vital for developing countries, notably in Africa.[14] These countries are looking up to the EU and US and trying to adopt similar competition laws and policies.[15] What’s more, a number of developing countries have been deriving their antitrust legal frameworks from Western countries, as a result of trade agreements. Globalization appears to push developing countries in the sense of convergence, but is this tendency beneficial for these countries quest for innovation? Absolute convergence of antitrust enforcement might not suit the current economic stage of most developing countries, particularly in Africa. A ‘Western’ design of antitrust laws and policies might not fit the socioeconomic conditions of these countries. This might be particularly problematic when governments are struggling to promote local innovation but face inevitable IP constraints.

Reconciling the difficult relationship between antitrust and patent law can be particularly complex in African countries since patent policy has a significant impact on development. Although one might at first think that developing countries should emphasize patent policy, as they are considerably behind the global technological frontier and are craving domestic innovation, they cannot afford the short-term consumer welfare loss that must be incurred to generate patentee reward.[16] Some African countries like South Africa have been developing a solid IP regulatory framework so as to incentivize innovation,[17] but many lack the technological and financial capacity to invest in R&D. In such cases, access to protected technologies on reasonable terms may be the key to more domestic innovation. What does this mean for the trichotomy innovation-IP-competition? Although developing countries urgently require innovation,[18] should their competition authorities look less up to Western models and rather question whether they should sacrifice consumer welfare by upholding patent exploitation practices?

Instead of pushing developing countries toward convergence of global competition policy, the specific socioeconomic conditions of these countries should be taken into consideration. Thomas Cheng argues, rightly so one might say, that ‘antitrust principles and doctrines need to be tailored to domestic economic circumstances. Markets and economies function differently in developing countries and antitrust laws should reflect these differences.[19] This is a particularly important lesson for African countries as they are prone to imitate the approaches of developed countries without the required customization. Different suggestions have been advanced in the literature, such as the reduction of patent protection in developing countries, allowing even the imitation of foreign technology so that domestic innovators possess a technological basis they can further develop,[20] or the expansion of compulsory licensing beyond certain drugs for developing countries.[21]

This contribution aimed to draw attention to the challenging role of law as the driver (or at least guardian) of innovation in developing countries. Competition and IP laws both wish to share a supporting role in this ‘innovation film’ taking place in developing countries. Should they be granted this part in a context of convergence of laws and policies or should IP remain in the shadow in order to ensure that the innovation film can successfully be produced and released in the theaters? You decide who gets the part at this audition; however, recalling Eleanor Fox’ words ‘antitrust should not be used to protect David from Goliath, but it may be used to empower David against Goliath’.[22]

To be continued…

[1] Richard S. Whitt, ‘Adaptive Policymaking: Evolving and Applying Emergent Solutions for U.S. Communications Policy’ (2009) 61(3) Federal Communications Law Journal 485.

[2] BERR, ‘Regulation and Innovation: evidence and policy implications’, BERR Economics Paper No.4, 2008, iv.

[3] Jean-Eric Aubert, ‘Promoting Innovation in Developing Countries: A Conceptual Framework’ (2004) World Bank Institute, available at http://siteresources.worldbank.org/KFDLP/Resources/0-3097AubertPaper[1].pdf

[4] D. Augey, ‘Les mystères de l’innovation: le regard contemporain de l’économie et de la gestion’ (2013) In J. Mestre, & L. Merland, Droit et Innovation (Aix-en-Provence: Presses Universitaires d’Aix-Marseille) 89, 91.

[5] Joshua D. Sarnoff, ‘Government choices in Innovation Funding (with Reference to Climate Change)’ (2013) 62 Emory Law Journal, 1087.

[6] B. Frischmann, ‘Innovation and Institutions: Rethinking the Economics of U.S. Science and Technology Policy’ (2000) 24 Vermont Law Review, 347.

[7] Robert Cooter, ‘Innovation, Information, and the Poverty of Nations’ (2005) 33 Florida State University Law Review 373.

[8] W. Hoffmann-Riem, ‘Zur Notwendigkeit rechtswissenschaftlicher Innovationsforschung’, in D. Sauer, Christa Lang (Eds.), Paradoxien der Innovation: Perspektiven sozialwissenschaftlicher Innovationsforschung (Campus Verlag 1999). Wolfgang Hoffmann-Riem, ‘Rechtswissenschaftliche Innovationsforschung als Reaktion auf gesellschaftlichen Innovationsbedarf’, überarbeite Fassung eines Vortrages aus Anlass der Überreichung der Universitätsmedaille am 19.12.2000 in Hamburg, available at <http://www2.jura.uni-hamburg.de/ceri/publ/download01.PDF>.

[9] Atari Games Corp. v. Nintendo of Am., Inc., 897 F.2d 1572, 1576 (Fed. Cir. 1990). See Christine A. Varney, ‘Promoting Innovation Through Patent and Antitrust Law and Policy’ (2010), Department of Justice, Remarks as Prepared for the Joint Workshop of the U.S. Patent and Trademark Office, the Federal Trade Commission, and the Department of Justice on the Intersection of Patent Policy and Competition Policy: Implications for Promoting Innovation, available at http://www.justice.gov/atr/public/speeches/260101.pdf.

[10] David Bosco, Marie Cartapanis, ‘Droit de la concurrence et innovation’ (2013) in Jacques Mestre, Laure Merland (Eds.), Droit et Innovation (Presses Universitaires d’Aix-Marseille), 69. Pierre Larouche, ‘The European Microsoft Case at the Crossroads of Competition Policy and Innovation’ (2009) 75 (3) Antitrust Law Journal 933. François Lévêque, ‘Innovation, Leveraging and Essential Facilitaties: Interoperability Licensing in the EU Microsoft Case’ (2005) 28 World Competition 71.

[11] Douglas Rosenthal, ‘Do Intellectual Property Laws Promote Competition & Innovation?’ (2006) 7 Sedona Conference Journal 143.

[12] David Bosco, Marie Cartapanis, ‘Droit de la concurrence et innovation’ (2013) in Jacques Mestre, Laure Merland (Eds.), Droit et Innovation (Presses Universitaires d’Aix-Marseille), 69.

[13] COMP/M.6166, NYSE Euronext / Deutsche Börse.

[14] Smita Srinivas, Judith Sutz, ‘Developing countries and innovation: Searching for a new analytical approach’(2008) 30 Technology in Society 129.

[15] Thomas K. Cheng, ‘A Developmental Approach to the Patent-Antitrust Interface’ (2012) 33 Northwestern Journal of International Law and Business 1.

[16] Thomas K. Cheng, ‘A Developmental Approach to the Patent-Antitrust Interface’ (2012) 33 Northwestern Journal of International Law and Business 1, 3.

[17] Alexis Apostolidis, ‘IP Law in South Africa: Key Cases and Issues’ (2009) ASPATORE WL 2029096.

[18] There is a significant body of literature arguing that IP does not necessarily promote innovation. For an overview, see, e.g., B. Frischmann, ‘Innovation and Institutions: Rethinking the Economics of U.S. Science and Technology Policy’ (2000) 24 Vermont Law Review, 347. Julie E. Cohen, ‘Copyright, Creativity, Catalogs: Creativity and Culture in Copyright Theory’ (2007) 40 U.C. Davis L. Review 1151.

[19] Thomas K. Cheng, ‘A Developmental Approach to the Patent-Antitrust Interface’ (2012) 33 Northwestern Journal of International Law and Business 1’, 79.

[20] Thomas K. Cheng, ‘A Developmental Approach to the Patent-Antitrust Interface’ (2012) 33 Northwestern Journal of International Law and Business 1’, 4.

[21] Colleen Chien, ‘ Cheap Drugs at What Price to Innovation: Does the Compulsory Licensing of Pharmaceuticals Hurt Innovation?’ (2003) 18 Berkeley Technology Law Journal 853.

[22] Eleanor M. Fox, ‘ Economic development, Poverty and Antitrust: the Other Path’ (2007) 13 Southwestern Journal of Law and Trade in the Americas 211.

Competition policy: economic necessity vs. budgetary constraint

Posted on by andreasstargard
Prof. Flavien TCHAPGA (Versailles)
Prof. Flavien TCHAPGA (Versailles)

Competition policy: economic necessity vs. budgetary constraint

Professor Flavien TCHAPGA (Economics, University of Versailles, France) published an intriguing paper on developing effective competition policies in Africa and on the inherent tension this effort faces: their economic necessity on one hand vs. the realpolitik of budgetary constraints on the other hand.  His analysis — available in full PDF to our valued [francophone] readers here — focuses on the member countries of CEMAC and WAEMU.

Abstract:

Because of the promises of efficient markets (protection of consumer interests, reduction of poverty, innovation and economic dynamism), competition policy is an attractive issue for Central African Economic and Monetary Community (CEMAC) and West African Economic and Monetary Union (WAEMU) countries. However, appropriate financial resources are essential for its effectiveness. This paper assesses the competition policy implementation in these two regions. In particular, it focuses on the balance between the issues at stake and dedicated financial resources since this could signal governments’ commitment to ensure effective implementation of competition legislation for better market outcomes.

NOTE: This article was originally published in HORIZONS / Concurrences Law Journal (vol. 01-2013) Institute of Competition Law, re-published here under author’s licence.  Original title (in French): “La politique de la concurrence dans la CEMAC et l’UEMOA  : Entre urgences économiques et contraintes budgétaires“

Due process arguments come to the fore as the Botswana Competition Authority gears itself for enforcement

Posted on by mpgriffiths

By Mark Griffiths (@markgjhb) and Wiri Gumbie

image

In September and October, the Botswana Competition Commission (Commission) took its first two rulings on cartel enforcement. Both rulings have a keen (if not almost exhaustive) focus on due process. Given that due process arguments have tended to be prominent only after a wave of cartel enforcement in more established jurisdictions, the cases demonstrate how developing competition jurisdictions are setting their own learning curves by absorbing the lessons from elsewhere.

Having been set up in 2011, the Botswana Competition Authority (Authority) has been primarily active in merger control and has taken a number of prominent decisions, in particular, on the issue of the relevance and scope of public interest considerations in merger control decisions. Unlike other young authorities across the Africa continent, the Authority has also been keen to pursue cartel enforcement as a priority area. While it has undertaken a number of dawn raids in a range of sectors and is in the final stages of adopting a leniency programme, the Authority is only now taken its first steps to establish a clear enforcement record with alleged cartels in the public procurement of food rations and also the panel beating sector.

The first ruling concerns alleged bid-rigging in relation to the supply of food rations to the Botswana government. Super Trading, a food supplier, provided the Authority with details of how one of its directors allegedly provided its competitor,Ya Raheem, with commercially sensitive information which enabled Ya Raheem to win tenders during a sustained period. Following a raid by the Authority, Ya Raheem opted to settle with the Authority and admitted to bid rigging as well as providing details of its involvement.

Notwithstanding Ya Raheem’s admission, on 17 September 2013, the Commission refused to confirm the settlement on the basis that it considered that the Authority had failed to provide any evidence of Ya Raheem’s involvement in the alleged bid rigging. Evidence of payments allegedly received by Super Trading’s director from Ya Raheem did not, in the Commission’s opinion, substantiate any finding of an agreement between competitors. To put it mildly, the Commission was scathing of the Authority’s approach regarding the lack of evidential or material information. Moreover, the Commission dismissed the significance of the joint undertaking between the Authority and Ya Raheem, labeling it “as simply a report that did little to cure the defects in the main application…”

The key question arising from the Commission’s ruling is whether or not due process requires additional evidence (over and above an admission) to support a settlement in a cartel case? Given that Ya Raheem’s involvement in bid rigging was not in dispute, was it necessary for the Commission to insist on further evidence? Moreover, given that Ya Raheemadmitted to and gave details of its involvement in the alleged bid rigging as part of its settlement with the Authority, it is not clear what additional evidence the Commission required to satisfy itself that alleged bid rigging had taken place.

One would expect that an undertaking with a clear statement of the facts and nature of the offence would have satisfied the procedural requirements of the South African settlement procedure, a pertinent observation given the Commission’s reliance on South African precedent on the treatment of evidence in this case.

It could be questioned whether the Commission’s implicitly categorized the settlement as a ‘contested’ proceeding (as opposed to an ‘uncontested’ consent order), which would have inevitably led them to require the Authority to provide sufficient evidence of Ya Raheem’s involvement in bid rigging. Should the significance of this ruling be dismissed asa teething problem regarding the first settlement procedure or does it reflect a fundamental difference in how settlement proceedings will be treated in Botswana? If the latter, it may hamper the Authority’s ability to expeditiously conclude settlement proceedings, a tool that has proved spectacularly successful in South Africa.

The second ruling relates to an alleged concerted practice between panel beaters. Following the referral of the matter to the Commission, the alleged cartelists raised a number of due process issues prior to the substantive hearing of the facts. In particular, it was argued that the Commission was incompetent to rule in the matter as, given its role as both referee and player in the dispute, the parties under investigation were not guaranteed a fair hearing. The parties sought the relief that the matter be stayed pending the establishment of an independent and impartial body.

In sharp contrast to the tone and substance of its previous cartel ruling, on 30 October 2013, the Commission dismissed the procedural challenges in their entirety. Irrespective of the fact that the Commission is formally located within the Authority and also functions as a governing Board for the Authority, the Commission stressed that the roles and functions are clearly delineated in the Competition Act, with the Authority authorized to carry out investigations and then refer matters for adjudication to the Commission.

The Commission emphasized that due process was furtherguaranteed by the jurisdiction of the High Court over rulings of the Commission whereby it can remit matters back to theCommission, revoke, increase or reduce any financial penalty, give any direction of its own in substitution for that of the Commission and make any decision as it sees fit.

Underpinning the Commission’s ruling is an implicit acknowledgement of the fact that the institutional design of a competition regime is a policy decision relative to the best fit for a given jurisdiction (taking into account international best practice). Acknowledging that the Botswana model is a hybrid between the integrated (e.g. European Commission) and bifurcated model (e.g. South Africa), the Commission appeared uncomfortable with second-guessing the legislature’s view as to what model was most suitable for Botswana’s current circumstances.

The ruling demonstrates a welcomed openness to international precedence. The Commission makes explicit reference to ICN guidelines on institutional design, while there is implicit reference to the “full jurisdiction” jurisprudence of the European Court of Human Rights relating to the application of due process to administrative proceedings when the Commission emphasizes the full extent of the High Court’s review of the Commission’s rulings. This review process will be further probed in this case given that the parties have appealed the ruling.

These two recent rulings illustrate how in the relatively short period since their inception, both the Authority and the Commission have absorbed the lessons from more established jurisdictions and are forging their own path in the enforcement of the Competition Act. Both the Authority and the Commission are already grappling with complex issues of due process on par with those confronting their more established counterparts. For example, by contrast, it has taken decades to obtain an arguably definitive ruling on the application of Article 6 of the European Convention of Human Rights to the competition proceedings before the European Commission.

9 months make a baby – but no antitrust authority!

Posted on by andreasstargard

mozambique

Almost nine months later… and still no signs of the Mozambique Competition Authority

By Sofia Ranchordas, Tilburg University (Law School)

On April 11, 2013, the Mozambique Competition Act was passed.  We wrote a piece on the potential advent of competition law in Mozambique here, brusquely entitled: Antitrust in Mozambique? …could have stayed in COMESA.

The law constitutes an important milestone for the country’s economy since it establishes an independent competition regulatory authority (‘CRA’), is applicable to most economic activities, and introduces a legal framework for competition in Mozambique. The Mozambique Competition Act addresses anti-competitive practices and merger control. This act came into force on July 10 and should have been implemented by October 8, 2013. It ‘should have’ but its thorough implementation, including the approval of the Statute of the CRA, leniency program and the definition of exact thresholds for the notification of mergers to the CRA, is still out of sight.

In 2007, the Mozambique Competition Policy (Resolution n.º 37/2007, 12.11) was approved. The adoption of this policy document was a step towards the modernization of this country’s framework for business conduct and improvement of competition conditions. It was also an attempt to tackle existing anticompetitive practices taking place in different economic sectors, including predatory pricing, refusals to deal, and horizontal agreements. In 2007, the Council of Ministers acknowledged the need for stricter competition rules and the establishment of an independent competition authority. At the time, Mozambique already knew multiple sectoral dispositions prohibiting anti-competitive practices that were (and still are) enforced by sectoral regulators. However, an all-embracing competition act was still missing. In 2009, the endorsement of the Southern African Development Community (SADC) Declaration on Regional Cooperation in Competition and Consumer Policies increased the pressure for the enactment of a competition act. Mozambique was seriously lagging behind the other members of this regional community, where some countries had effective competition laws and operating competition authorities for years. This was the case of South Africa, Zimbabwe, Tanzania and Malawi.

On April 11, 2013 the long-awaited Mozambique Competition Act (‘MzCA’) was adopted. An attentive reader shall rapidly find the similarities between this act and the 2003 Portuguese Competition Act (replaced in 2012). The MzCA has a comprehensive scope and is applicable to both private and State-owned undertakings, including most economic activities (see the exceptions listed in article 4). This act prohibits both horizontal and vertical agreements and practices susceptible of substantially impeding, distorting or restricting competition (articles 15-18). This act provides however that the mentioned prohibited practices may notably be justified if they generate economic efficiencies, promote the competitiveness of small and medium enterprises, promote innovation, exportations, or result in other pro-competitive gains (article 21 and 22). Although the text of the MzCA is unclear, it appears that the drafting of a leniency policy is one of the elements which shall be regulated in the context of the implementation process of this act.

The prohibition of abuse of dominant position, as defined in article 20, appears to be one of the priorities of this law. Mozambique is characterized by a highly concentrated market and the dominance of previously state-owned companies, which have been recently liberalized.

The MzCA introduces merger control rules in Mozambique, defining mergers as ‘an acquisition of shareholdings, an acquisition of ownerships or the right of use of assets, IP rights, or any agreements granting a decisive influence on the composition or resolution of corporate bodies. Mergers that meet certain thresholds must notify the operation to the CRA within seven working days after the agreement. These thresholds remain until now unknown since their definition has been left to the further regulations which should have been adopted in October this year.

As far as sanctions are concerned, the violation of the prohibitions contained in the MzCA may result in the application of fines up to 5% of a company’s turnover in the previous year. Additional sanctions such as the exclusion of participation in public tenders for a period of up to five years may equally be applied.

The implementation of the MzCA is expected to be gradual and to take into account the characteristics of the Mozambican economy. Considering the dispositions of the MzCA and particularly the extensive powers vested in the CRA, this act, if correctly implemented, may produce a strong impact on most Mozambican economic sectors and compel companies to rethink some of their practices. There is only one small detail: almost nine months have passed and it is still unknown when and how the implementation process of the MzCA will start.  If experience from other new competition jurisdictions can be used as a guideline, one may expect the MZ government to hire a law firm or other experts to draft the implementation rules that are still missing, but this – as much else – remains to be seen.

More antitrust? Calls for competition legislation in Ghana

Posted on by andreasstargard

ghana

Former Ghanaian Supreme Court Justice calls for competition law

According to online reports, Mr Samuel Date-Bah, retired Justice of the Ghanaian Supreme Court and Council Chairman of the University of Ghana, made some strong public comments on the economic necessity of creating a new West-African antitrust regime at a conference on December 5, 2013, also known as “World Competition Day”.  The event was the “Policy Roundtable Discussion on Competition Reforms in Ghana,” organized by CUTS International, held in the capital of Accra.

The article reports that Justice Date-Bah, who has held visiting academic positions at Oxford and Yale Law School, deplored the legislature’s previously failed attempts of enacting a comprehensive competition law, calling for the country to do so to ensure proper market dynamics.

Other panelists, such as Dr Edward Brown, Director of Policy Advisory Services at the African Centre for Economic Transformation (ACET), reportedly supported the Justice’s position on the need for a Ghanaian competition-law regime and called for its integration into the regional supranational bodies of ECOWAS and UEMOA.

COMESA merger rules to change in April 2014 at the earliest

Posted on by andreasstargard

COMESA Competition Commission logo

Breaking news: A senior source at the COMESA Competition Commission (“CCC”), has confirmed that the CCC is currently finalising proposed amendments to the Regulations.

The amendments being debated seek to change, crucially, the applicable thresholds for merger notifications to the CCC and to clarify the definition and (potentially lower?) amount of the administrative notification fees.

For the amendments to come into force, they require approval from the COMESA Council of Ministers.  The Council convenes once a year, now likely in February.  The source adds that, as the amendments will only be finalised toward the end of February, an extraordinary session of the Council of Ministers will likely need to be convened to consider the amendments to the Regulations.  Such an extraordinary session may take place in April 2014.  The amended Regulations will only become enforceable upon approval by the Council.

That is, the way things are looking today, any change to the COMESA merger rules will occur in half a year at the earliest…

In practical terms, this means that the dual dilemma of the “zero-threshold contagion” and the inordinately high filing fees currently affecting the CCC’s merger-control regime (and resulting in rather low merger-notification statistics of less than one per month) will continue to hamper the young agency and its customers for the foreseeable near-term future.

We will report back once we have additional details on the precise language of the proposed amendments.