AAT exclusive, Angola, Botswana, Grocery Retail Market Inquiry, Kenya, Nigeria, South Africa, Uncategorized

Key African Antitrust Highlights of 2019 and What to Keep Tabs on for 2020

The level of antitrust enforcement across Africa has increased markedly over the past decade and with more jurisdictions coming on stream and establishing competition law regimes, the role of antitrust laws and the risk of non-compliance is becoming more pronounced than ever before.

Pan-African competition lawyer, Michael-James Currie, says that the role and applicable standards relating to competition law enforcement in developing countries is more divergent from those established in the more developed jurisdictions. A one-size fits all approach to competition law compliance is becoming less feasible – particularly as the role of public interest or non-traditional competition law factors are increasingly being taken into account in competition policy and legislation. Likewise, the thresholds for establishing “dominance” is generally lower across many of the African jurisdictions than those generally utilised in the United States or Europe and firms’ therefore need to be mindful that the traditional assessments of welfare (whether it is total welfare or consumer welfare) is not necessarily the benchmark. The focus of addressing perceived high levels of concentration in the market and opening up the market to smaller players is hallmark of a number of the more developed African agencies – particularly South Africa and Kenya.

Primerio Director, John Oxenham, says that the next decade of competition law enforcement in Africa is likely to be particularly important as the continent moves closer towards establishing the African Continental Free Trade Agreement. The harmonisation between regional bodies and domestic regimes remains an important challenges facing many agencies and this will become all the more relevant as member states negotiate an appropriate competition law framework suitable for the Continent.

Africanantitrust has throughout 2019 provided our readers with updates, opinion pieces and articles capturing the key competition law developments across Africa as they occur and our editors are committed to continuing doing so in 2020.

To start off the year, the editors at AfricanAntitrust provide a snapshot of the key highlights of 2019 as well as some of the most important developments to be expected in 2020 (although there will no doubt be many more).

Nigeria’s new Commission and the recent release of foreign merger control guidelines

In January 2019 the Federal Competition and Consumer Protection Act (the “Act”) was signed into law in Nigeria.

Nigeria did not have a dedicated competition law regime until then. The Act, which is not too dissimilar from the South African Competition Act, will regulate inter alia merger control, cartel conduct, restrictive vertical practices and abuse of dominance.

The Act is not currently being enforced as the Federal Competition and Consumer Commission (the “Commission”) is yet to be formally established although this is expected to take place soon.

In relation to mergers, section 2(3)(d) of the Act empowers the Commission to have regulatory oversight over all indirect transfers/ acquisitions of assets or shares which are located outside of Nigeria, and which results in the change of control of a Nigerian business.

Pursuant to the above-mentioned clause, on 13 November 2019, the Commission published the “Guidelines on the Simplified Process for Foreign to Foreign Mergers with a Nigerian Component”. The Guidelines specifies the type of information which is required in respect of the merging parties, as well as the mandatory supporting documentation which should accompany a filing. Furthermore, the Guidelines assist parties to a foreign to foreign merger by providing explicit rules on how the merger is to be treated, notified as well as the simplified procedure with regards to the merger.

Primerio director, Andreas Stargard notes that the implementation of the Guidelines will be interesting as the Guidelines are the first of its kind in Africa and is largely influenced by the European merger control regime.

The Guidelines also provide information regarding filing fees – although the calculation of filing fees remains somewhat unclear and requires further clarification.

Kenya’s Buyer Power Provisions

In Kenya, the Competition Amendment Act (the Amendment Act) has provided a new provision, Section 24A, which deals with buyer power.

Abusive “buyer power” is now expressly prohibited and any person who engages in such conduct will be considered to have committed an offence. Such an offence carries the penalty of a fine not exceeding 10 million shillings or imprisonment not exceeding 5 years. The abuse of buyer power is, therefore, viewed as a serious offence.

The “abuse of buyer power” is defined in Section 24A (2) of the Amendment Act as the influence exercised by a purchaser to gain more favourable terms, or imposing:

long-term opportunity cost including harm or withheld benefit, which, if carried out, would be significantly disproportionate to any resulting long term cost to the undertaking or group of undertakings”.

In determining whether an abuse of buyer power exists, the Authority will take into account;

  • the nature and determination of contract terms between the concerned undertakings;
  • the payment requested for access to infrastructure; and
  • the price paid to suppliers as stated in section 24A (5) of the Amendment Act.

The above mentioned provision will likely have the effect of affording suppliers greater protection, particularly small suppliers who have a weak bargaining power in comparison to powerful and dominant purchasers. It is furthermore important to protect such suppliers as the negative effects of the abuse of buyer power are often transferred to consumers, for example high prices.

Most notably, as Michael-James Currie has previously pointed out when critically assessing the new buyer power provisions, it is not a prerequisite to prove that the respondent is “dominant” before the provisions of section 24A(2) may be applicable. Rather, the provision considers the bargaining power between a particular supplier and customer. This provision may be particularly harmful to consumer welfare if suppliers who negotiate favourable prices with suppliers which are passed on to consumers, are deterred from doing so due to the risks associated with contravening this provision.

Recent amendments in the Botswana competition landscape

The Botswana Competition Amendment Act recently came into force on 2 December 2019, and is expected to transform competition law in Botswana in various respects, particularly in terms of horizontal restrictive practices, abuse of dominance, exemptions and merger penalties.

Oxenham says that the previous Act did not provide for criminal liability in respect of cartel conduct, however, under Section 26 of the Amendment Act this position has changed. In terms of the Amendment Act, any director or employee who is found to have engaged in restrictive horizontal practices is liable to a fine not exceeding P100 000 or to a term of imprisonment not exceeding five years or to both.

With respect to abuse of dominance, the Act previously did not list particular conduct that was considered to be an abuse of dominance. The Amendment Act provides clarity on the type of conduct that is likely to be considered abusive. The clarification is welcomed and will hopefully ensure greater compliance since undertakings now have the tools to foster a better understanding of what constitutes abuse of dominance and are better placed to ensure that their conduct does not fall foul of the prohibition.

The Amendment Act also caters for exemptions. The terms and conditions of any exemptions will be determined by the Authority who will take both competition law and public interest factors into account when assessing whether to grant an exemption.

In relation to penalties for gun-jumping (i.e. merger implementation prior to approval), the Amendment Act provides much needed clarity. Section 58(3) of the Acts states that implementing a merger without prior approval by the Authority will attract a fine not exceeding 10% of the consideration or the combined turnover of the parties involved in the merger – whichever is greater. Merging parties are, therefore, advised to ensure timeous notification is made in respect of any merger which meets the thresholds for a mandatory filing to seek merger approval in Botswana.

The Amendment Act has also introduced a provision regarding the consideration of a rejected merger.  Parties can apply for reconsideration of a merger within 14 days from the date of rejection. Such a provision provides the parties with an additional opportunity to provide oral evidence which is also a positive development.

Angola’s competition regime coming on stream

The Competition Act in Angola is now fully in force. The Competition Regulatory Authority (the “CRA”) is responsible for prosecuting offences. Conduct which occurred prior to the establishment of the Authority may still be prosecuted in certain circumstances.

The Competition Act prohibits both horizontal and vertical agreements that restrict competition in the Angolan market. Accordingly, undertakings have to be cautious in relation to the types of agreements they enter into as it may result in liability and prosecution by the CRA. The Act does however provide for exemptions from the prohibitions with the exception of abuse of dominance and abuse of economic dependence. Exemptions are only available upon application and the parties must demonstrate that they comply with certain conditions in order to be granted an exemption.

Importantly, Angola’s Competition Act creates a formal merger control regime. Mergers will now be subject to prior notification to the CRA and they have to meet certain specified requirements. The thresholds requiring prior notification are the following:

  • the creation, acquisition or reinforcement of a market share which is equal to or higher than 50% in the domestic market or a substantial part of it; or
  • the parties involved in the concentration exceeded a combined turnover in Angola of 3.5 billion Kwanzas in the preceding financial year; or
  • the creation, acquisition or reinforcement of a market share which is equal to or higher than 30%, but less than 50% in the relevant domestic market or a substantial part of it, if two or more of the undertakings achieved more than 450 million Kwanzas individual turnover in the preceding financial year.

Mergers must not hamper competition and must be consistent with public interest considerations such as:

  • a particular economic sector or region;
  • the relevant employment level;
  • the ability of small or historically disadvantaged enterprises to become competitive; or
  • the capability of the industry in Angola to compete internationally.

The sanctions for non-compliance with the Act’s merger provisions could result in the impositions of fines of 1%-10% of a company’s turnover for the preceding year, as well as other conditions which the Authority deems appropriate. Should a party fail to comply with relevant sanctions or conditions imposed by the Authority or provide with false information, the Authority may levy periodic penalty payments of up to 10% of the merging party’s average turnover daily.

South Africa

  • Amendment Act

In February 2019, the Competition Amendment Act was signed into law and is widely regarded as the most significant amendments to the South African Competition Act in two decades.

The majority of the provisions contained in the Amendment Act have been brought into force. Those amendments – particularly those relating to buyer power, price discrimination and national security approval regarding foreign mergers are expected to be brought into effect in 2020.

Some important aspects of the Amendment Act include:Mergers involving foreign acquiring firms :

The President is to establish a Committee which will be mandated to consider the implementation of mergers which involve a foreign acquiring firm and the potential adverse effect of the merger on the national security interests of the Republic. Essentially this means that a foreign acquiring firm is required to notify both the Competition Commission, as well as file a notice with the Committee. Security interests are broadly defined.

Buyer power

The insertion of Section 8(4)(a) essentially prohibits a dominant firm from requiring or imposing unfair prices or other trading conditions on a supplier that is a small and medium business (“SMEs”) or a firm controlled or owned by historically disadvantaged persons (“HDPs”). This section also introduces a reverse onus on the dominant firm to prove that its trading terms or conditions are not unfair nor that there has been any attempt to refuse to deal with a supplier in order to circumvent the operation of this clause.

The regulations regarding Buyer Power are currently only applicable to the following sectors:

  • Agro-processing;
  • Grocery retail; and
  • Online intermediation services.

Price discrimination

In determining price discrimination by a dominant firm, the Amendment Act has created two parallel self-standing tests. The Act has retained the traditional test for price discrimination which requires proof of a substantial lessening of competition, but has also prohibited a dominant firm from engaging in price discrimination which impedes the ability of Small or Medium Enterprises (“SMEs”) or firms controlled by historically disadvantaged persons (HDPs) from “participating effectively” in the market. Dominant firms are also not allowed to avoid or refuse selling goods or services to SMEs or firms owned or controlled by HDPs to circumvent the section. Significantly, and unlike the traditional price discrimination provision, Section 9(1)(a)(ii) does not require a complainant to prove any anti-competitive effects or consumer welfare effects.

Penalties

The Amendment Act has removed the “yellow-card” principle and administrative penalties will be imposed for any contravention. Previously, penalties for first-time offences were only applicable to cartel conduct, minimum resale price maintenance and certain abuse of dominance conduct (such as excessive pricing or predation).

Mergers

The role of public interest factors in the merger control assessment has become more prominent by firstly elevating the standard of public interest factors to equal footing with traditional competition law factors (i.e. SLC tests) and also broadening the public interest grounds which must be taken into consideration to specifically include transformation objectives.

  • Important cases

In December 2019, the South African Competition Appeal Court heard the appeal from the Tribunal in relation to the “Banking Forex” Matter.

Oxenham says that this case raises a number of jurisdictional issues in relation to the scope and powers of the South African Competition Authorities to impose penalties on foreign firms for engaging in cartel conduct outside of South Africa. Both personal jurisdiction and subject matter jurisdiction is being contested.

  • Market Inquiries

In 2019, the Commission fully utilized its powers in Section 43A-G and 23 in initiating and conducting market inquiries as well as its duty to remedy adverse effects on competition. Three market inquiries were conducted in 2019, namely:

  • The Health Market Inquiry;
  • The Grocery Retail Market Inquiry; and
  • The Data Services Market Inquiry

The implementation of the Commission’s recommendations of the abovementioned market inquiries will likely be a controversial topic, and much push-back is expected from parties implicated in the recommendations.

 

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

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

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

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

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

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

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

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

For details on how to participate, please follow this Link

 

 

 

 

 

 

Standard
AAT exclusive, merger documentation, mergers, new regime, Nigeria

Plus ça change… Merging parties should continue as before in Nigeria

FCCPA in effect – but not quite, as FCCPC not yet fully operational

As AAT reported previously, the landmark Federal Competition & Consumer Protection Act (FCCPA) that suddenly went into effect in Nigeria earlier this year has not quite been operationalised.  Notably, the agency that is supposed to be tasked with enforcing the FCCPA, the Federal Competition & Consumer Protection Commission (FCCPC) is currently “undergoing construction”, so-to-speak.  An African competition-law practitioner with Primerio notes that “apparently there has been some political wrangling around the constituents of the FCCPC’s Board,” which is unsurprising, to say the least.  One might be inclined to say, Plus ça change, plus c’est la même chose…, as politics has always played a major role in Nigerian enforcement.

That said, the AAT editor does understand that, at a minimum, the Director General of the existing Consumer Protection Council, Babatunde Irukera, will serve in some capacity with the FCCPC — it is unknown whether the remaining 5 CPC commissioners will likewise continue to act for the FCCPC or not.  (Screenshots of his Twitter account below, indicating a full-blown transition from the CPC to the FCCPC).

One indication of the lack of the FCCPC’s operational status when it comes to mergers is that its web site (presumably soon to be http://fccpc.gov.ng/) still yields an error message.  Another is a recent joint statement issued by the SEC and its yet-to-be-established counterpart, which provides in relevant part as follows:

In order to ensure continuing and seamless commercial transactions and market operations, SEC and FCCPC have come to a mutual understanding with respect to these transactions within the transition period, which pursuant to this notice commences immediately, and shall remain in force until otherwise discontinued by further Advisory or Guidance.

During this transition period, starting today, May 3rd, 2019:

  • All notifications or fillings will be reviewed under existing SEC Regulations, Guidelines and Fees.
  • Notifications will be filed at FCCPC OR SEC/FCCPC Interim Joint Merger Review Desk at SEC.
  • All applicable fees will be paid to the FCCPC.
  • SEC and FCCPC will jointly review notifications and FCCPC will convey decisions with respect to the notifications.

Notifications previously received by SEC, but yet to be decided, will be subject to the interim process above and FCCPC will convey the decisions accordingly.

We will update AAT’s readership with new intel as soon as it becomes available.  For the time being, the status quo remains largely intact.  Says Andreas Stargard, an antitrust practitioner:

For now, merger parties should proceed as before, namely: analyse your transaction under the Investment & Securities Act (ISA), and file with either the SEC or the FCCPC — some advise to file with the SEC for the time being, if applicable, as the lack of full operational status of the FCCPC does not bode well for procedural thoroughness or guaranteed document retention in this early phase.  That said, if your transaction has a longer time horizon, with closing potentially several months down the road, your counsel should take into account the very real possibility of there being a notification under the FCCPA, even if none was required under the ISA.  I expect the FCCPC to set merger notification thresholds very soon.”

Osayomwanbor Bob Enofe, an academic and proponent of the Nigerian competition law notes, however, that the current interim arrangement “only suggests to me that the SEC currently leads, concerning merger enforcement in Nigeria, rather than clarifying that the FCCPC is not existent (especially given the transitional period established by the two Commissions).”  He continues: “The erstwhile CPC might be revamped to reflect a more competition-law cognisant staff base,” noting that “various competition law offences now exist in Nigeria,” of which cartel conduct is punishable not only my monetary fines but also criminally under the FCCPA.

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

Breaking News: Nigerian Competition Act Signed into Law

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Standard
CCC workshop participants
AAT exclusive, agriculture, cartels, COMESA, East Africa, event, Extra-judicial Factors, full article, Kenya, Media, mergers, monopsony, Nigeria, Uganda

COMESA competition workshops underway (#CCCworkshop)

Events focus on media & business community’s understanding of competition rules and practical workload of CCC

Media

For two days this week, COMESA will hold its 5th annual “Regional Sensitization Workshop for Business Reporters“, focussed on provisions and application of the COMESA competition regulations and trade developments within the 19-country common market.

Over 30 journalists from close to a dozen countries are expected to participate in the event, held in Narobi, Kenya, from Monday – Tuesday.

AfricanAntitrust.com will cover all pertinent news emerging from the conference.  We will update this post as the conference progresses.

Speakers include a crème de la crème of East African government antitrust enforcement, including the CCC’s own Willard Mwemba (head of M&A), the CCC’s Director Dr. George Lipimile, and the Director and CEO of the Competition Authority of Kenya, Francis Wang’ombe Kariuki.  Topics will include news on the rather well-developed area of of mergerenforcement, regional integration & competition policy, as well as the concept of antitrust enforcement by the CCC as to restrictive business practices, an area that has been thus far less developed by the Commission in terms of visibility and actual enforcement, especially when compared to M&A.  We previously quoted Director Lipimile’s statement at a 2014 conference that, since the CCC’s commencement of operations “in January, 2013, the most active provisions of the Regulations have been the merger control provisions.”

Andreas Stargard, a competition practitioner, notes:

“We have been impressed with the Commission’s progress to-date, but remain surprised that no cartel cases have emerged from the CCC’s activities.  We believe that the CCC has sufficient capacity and experience now, in its sixth year of existence, to pursue both collusion and unilateral-conduct competition cases.

Personally, I remain cautiously optimistic that the CCC will, going forward, take up the full spectrum of antitrust enforcement activities — beyond pure merger review — including monopolisation/abuse of dominance cases, as well as the inevitable cartel investigations and prosecutions that must follow.”

The media conference will conclude tomorrow evening, June 26th.

Business Community

COMESA Competition Commission logoThe second event, also held in Nairobi, will shift its focus both in terms of attendees and messaging: It is the CCC’s first-ever competition-law sensitization workshop for the Business Community, to take place on Wednesday.  It is, arguably, even more topical than the former, given that the target audience of this workshop are the corporate actors at whom the competition legislation is aimed — invited are not only practicing attorneys, but also Managing Directors, CEOs, company secretaries, and board members of corporations.  It is this audience that, in essence, conducts the type of Mergers & Acquisitions and (in some instances) restrictive, anti-competitive business conduct that falls under the jurisdiction of Messrs. Lipimile, Mwemba, and Kariuki as well as their other domestic African counterparts in the region.

The inter-regional trade component will also be emphasized; as the CCC’s materials note, “we are at a historical moment in time where the Tripartite and Continental Free Trade Area agreements are underway. The objective of these agreements is to realize a single market. Competition law plays a vital role in the realization of this objective, therefore its imperative that journalists have an understanding of how competition law contributes to the Agenda.”

#LiveUpdates from the #CCCworkshop

Kenya perspective

Boniface Kamiti, the CAK representative replacing Mr. Kariuki at the event, noted that Africa in general and including the COMESA region “has a weak competition culture amongst businesses — which is why cartels are continuing in Africa, and the level of M&A is not at the level one would expect.”  This is why media “reporting on competition advocacy is very important, to articulate the benefits of competition policy and how enforcement activities further its goals, so the COMESA countries may be able to compete with other countries, including even the EU members, at a high level.”

He also highlighted — although without further explanation — the “interplay between the COMESA competition laws and those of the member countries; most people are not aware of that!”  This comment is of particular interest in light of the prior jurisdictional tension that had existed between national agencies and the CCC in the past regarding where and when to file M&A deals.  These “teething issues are now fully resolved”, according to Dr. Lipimile, and there are neither de iure nor any de facto merger notification requirements in individual COMESA member states other than the “one-stop shop” CCC filing (which has, according to Mr. Mwemba, reduced parties’ M&A transaction costs by 66%).

On the issue of restrictive trade practices (RTP), the CAK reminded participants that trade associations often serve to facilitate RTP such as price-fixing cartels, which are subject to (historically not yet imposed, nor likely to be) criminal sanctions in Kenya. It also observed that (1) manufacturers’ resale price maintenance (RPM) would almost always be prosecuted under the Kenyan Competition Act, and that (2) since a 2016 legislative amendment, monopsony conduct (abuse of buyer power) is also subject to the Act’s prohibitions.

Concluding, the CAK’s Barnabas Andiva spoke of its “fruitful” collaboration with the CCC on ongoing RTP matters, noting the existing inter-agency Cooperation Agreement. Added Mr. Mwemba, “we have approximately 19 pending RTP cases.”

CCC leadership perspective:  Nudging Uganda and Nigeria towards competition enforcement

CCC_Director

George Lipimile, CEO, COMESA Competition Commission

Dr. Lipimile took up Mr. Kamiti’s “weak African competition culture” point, noting the peculiar regional issue that “between poverty and development lies competition” to enhance consumer welfare.

He took the audience through a brief history of antitrust laws globally, and encouraged journalists to explain the practical benefits of “creating competitive markets” for the population of the COMESA region at large.

He called on Uganda and Nigeria to — finally — enact a competition law.  (AAT has independently reported on Uganda and also the EAC’s emphasis on its member nations having operational antitrust regimes.  We observe that Uganda does have a draft Competition Bill pending for review; a fellow Ugandan journalist at the conference mentioned that there has been some, undefined, progress made on advancing it in the Ugandan legislature.)  Dangote — the vast Nigerian cement conglomerate (see our prior article here) — and Lafarge played exemplary roles in Lipimile’s discourse, in which he commented that “they do not need protecting, they are large”, instead “we need more players” to compete.

Importantly, Dr. Lipimile emphasized that protectionism is anti-competitive, that “competition law must not discriminate,” and that its goal of ensuring competitive market behaviour must not be confused with the objectives of other laws that are more specifically geared to developing certain societal groups or bestow benefits on disadvantaged populations, as these are not the objectives of competition legislation.

The CCC also called on the press to play a more active role in the actual investigation of anti-competitive behaviour, by reporting on bid rigging, unreported M&A activity, suspected cartels (e.g., based on unexplained, joint price hikes in an industry), and the like.  These types of media reports may indeed prompt CCC investigations, Lipimile said.  Current “market partitioning” investigations mentioned by him include Coca Cola, SABMiller, and Unilever.

He concluded with the — intriguing, yet extremely challenging, in our view — idea of expanding and replicating the COMESA competition model on a full-fledged African scale, possibly involving the African Union as a vehicle.

CCC workshop participants

2018 CCC workshop participants

COMESA Trade perspective

The organisation’s Director of Trade & Commerce, Francis Mangeni, presented the ‘competition-counterpart’ perspective on trade, using the timely example of Kenyan sugar imports, the cartel-like structure supporting them, and the resulting artificially high prices, noting the politically-influenced protectionist importation limitations imposed in Kenya.

Dr. Mangeni opined that the CCC “can and should scale up its operations vigorously” to address all competition-related impediments to free trade in the area.

CCC Mergers

Director of M&A, Mr. Mwemba, updated the conference on the agency’s merger-review developments. He pointed to the agency’s best-of-breed electronic merger filing mechanism (reducing party costs), and the importance of the CCC’s staying abreast of all new antitrust economics tools as well as commercial technologies in order to be able to evaluate new markets and their competitiveness (e.g., online payments).

As Mr. Mwemba rightly pointed out, most transactions “do not raise competition concerns” and those that do can be and often are resolved via constructive discussions and, in some cases, undertakings by the affected companies. In addition, the CCC follows international best practices such as engaging in pre-merger notification talks with the parties, as well as follow-ups with stakeholders in the affected jurisdictions.

Key Statistics

Year-to-date (2018), the 24 notified mergers account for approximately $18 billion in COMESA turnover alone. Leading M&A sectors are banking, finance, energy, construction, and agriculture.

In terms of geographic origination, Kenya, Zambia, and Mauritius are the leading source nations of deal-making parties, with Zimbabwe and Uganda closely following and rounding out the Top-5 country list.

The total number of deals reviewed by the CCC since 2013 amounts to 175 with a total transaction value of US $92 billion, accounting for approximately $73.7 billion in COMESA market revenues alone. (The filing fees derived by the Commission have totaled $27.9 million, of which half is shared with the affected member states.)

All notified deals have received approval thus far. Over 90% of transactions were approved unconditionally. In 15 merger cases, the CCC decided to impose conditions on the approval.

Standard
new regime, Nigeria, Uncategorized

Nigeria Competition Law – One More Signature Required

After numerous calls from various stakeholders both locally and internationally, Nigeria seems to be on the verge of finally adopting its long-awaited Federal Competition and Consumer Protection Bill (the Bill) which will introduce competition law in the country.

Moves to enact competition law had started in 2000 and several amendments to the initial proposal had been unsuccessfully presented to the Senate. The subsequent bills had either stalled at first reading stage, or disappeared from the legislative process. However, the Bill received its initial approval earlier in June this year and after being passed into law by the Senate, the Bill now faces the final hurdle of being assented by the President, by which it will become law. This is expected to be a mere formality.

AAT have closely monitored the development of the Bill from its infancy stages and although it has been in the making for some time, the introduction of competition law in Nigeria will be welcomed by most. For additional insights into the Bill, please see the following articles (here and here).

In summary, the Bill. once it comes into force, will replace the Consumer Protection Act and to create a new Federal Competition and Consumer Protection Commission and Tribunal to enforce the Federal Competition and Consumer Protection Act.

The Bill has largely followed the model of other African countries who have successfully implemented antitrust and consumer protection enforcement and seeks to address all areas of competition such as price fixing, market allocation, collusive tendering and abuse of dominance.  In addition hereto, the Bill would also seek to ensure and enhance product safety and consumer protection within Nigeria.

Notably, in line with the approach recently adopted in South Africa, the Bill includes criminal sanctions for individuals engaging in anticompetitive practices.  In this regard, see here for a detailed assessment from AAT guest author Osayomwanbor Bob Enofe.

[The AAT editors thank Charl van Merwe for his assistance with this AAT update]

Standard
AAT exclusive, Botswana, BRICS, COMESA, East Africa, Egypt, Mauritius, Namibia, Nigeria, South Africa, Tanzania, WRAP (the), Zambia

The African WRAP – JUNE 2017 edition

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.

Standard
cartels, collusion, COMESA, East Africa, Egypt, legislation, Mauritius, mergers, Nigeria, no antitrust regime, pay TV, sports, Tunisia, TV-Broadcasting-Cable, West Africa, Zimbabwe

Pan-African Antitrust Round-Up: Mauritius to Egypt & Tunisia (in)to COMESA

A spring smorgasbord of African competition-law developments

As AAT reported in late February, it is not only the COMESA Competition Commission (CCC), but also the the Egyptian antitrust authorities, which now have 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.  In addition, it has been reported that the Egyptian Competition Authority (ECA) has also initiated prosecution of seven companies engaged in alleged government-contract bid rigging in the medical supply field, relating to hospital supplies.

Nigeria remains, for now, one of the few powerhouse African economies without any antitrust legislation (as AAT has reported on here, here, here and here).

But, notes Andreas Stargard, an antitrust attorney with Primerio Ltd., “this status quo is possibly about to change: still waiting for the country’s Senate approval and presidential sign-off, the so-called Federal Competition and Consumer Protection Bill of 2016 recently made it past the initial hurdle of receiving sufficient votes in the lower House of Representatives.  Especially in light of the Nigerian economy’s importance to trade in the West African sphere, swift enactment of the bill would be a welcome step in the right direction.”

The global trend in competition law towards granting immunity to cartel whistleblowers has now been embraced by the Competition Commission of Mauritius (CCM), but with a twist: in a departure from U.S. and EU models, which usually do not afford amnesty to the lead perpetrators of hard-core antitrust violations, 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.

The Executive Director of the CCM, Deshmuk Kowlessur, is quoted in the official agency statement as follows:

‘The policy worldwide including Mauritius, regarding leniency for cartel is that the initiators of cartel cannot benefit from leniency programmes and get immunity from or reduction in fines. The amnesty for cartel initiatorsis a one-off opportunity for cartel initiators to benefit from immunity or up to 100% reduction in fines as provided for under the CCM’s leniency programme. The amnesty is a real incentive for any enterprise to end its participation in a cartel. In many cases it is not clear for the cartel participant itself as to which participant is the initiator. The participants being unsure whether they are an initiator finds it too risky to disclose the cartel and apply for leniency. The amnesty provides this unique window of 6 months where such a cartel participant can apply and benefit from leniency without the risk of seeing its application rejected on ground of it being an initiator.’

 

COMESA Competition Commission logoFinally, COMESA will grow from 19 to 20 member states, welcoming Tunisia at the upcoming October 2017 summit: the official statement notes that “Tunisia first applied for observer status in COMESA in 2005 but the matter was not concluded. In February, 2016 the country formally wrote to the Secretary General making inquiries on joining COMESA. This set in motion the current process towards its admission. once successfully concluded, Tunisia will become the 20[th] member of COMESA.”

This means that within 6 months of accession to the Common Market, Tunisia’s business community will be bound by the competition regulations (including merger control) enforced by the CCC.  Speaking of the CCC, the agency also recently entered into a Memorandum of Understanding with the Mauritian CCM on March 24, facilitating inter-agency coordination.  In addition, the Zimbabwean Competition and Tariff Commission (CTC) will host a national sensitisation workshop on COMESA competition policy on May 16, 2017 in Harare, purportedly as a result of “over 50 transactions involving cross-border mergers notified” to the CCC involving the Zimbabwean market.  “The main objective of the national workshop is to raise awareness among the key stakeholders and business community in Zimbabwe with regards to the provisions and implementation of COMEA competition law,” the CTC noted in a statement.

 
Standard
consumer protection, dominance, Nigeria, no antitrust regime, trade associations

Drastic price increase could be sign of collusion or dominance: Dangote in Nigeria

Close-knit trade group and dominant cement manufacturer prove to be (price-)explosive combination

 Our friends at Songhai Advisory, a business intelligence firm covering key parts of Africa, have released a brief market-intel note addressing the 44% price hike of cement in Nigeria, led by the country’s (and indeed soon also the continent’s) dominant manufacturer, the Dangote group.

Any discussion of Nigeria — still Africa’s largest economy measured by GDP — in the competition-law context must begin with the surprising fact that the country’s political leadership still has failed to institute any antitrust regime.  Says Andreas Stargard, an attorney with Africa-focused Pr1merio law group:

“As the continent’s economic leader, Nigeria is a lone beacon of failure to police anti-competitive practices, whereas a multitude of significantly smaller African jurisdictions have had competition laws for years or even decades.  The recent price developments of Nigerian concrete are merely one example of the negative impact on consumers where there are no antitrust rules in effect.  Notably, an industry trade association also appears to be involved here, so from the competition point of view, we are dealing not only with one dominant entity (Dangote) but also an efficient and time-tested mechanism of information-sharing among direct competitors (trade groups).

 

The price increase covered the entire Nigerian cement market, according to Songhai and other media reports: cement prices of the members of the Cement Manufacturers Association of Nigeria (CMAN) rose over the course of a month by 44% from US$5 to $7 per 50kg.  Adds Stargard, “any competent antitrust enforcer would look into such a price hike.  Given the absence of competition law enforcement in Nigeria, it is likely that no investigation will take place, and civil suits are highly unlikely, in light of the lack of antitrust laws and the political connections at play here.”  In the words of Songhai’s reporting: “When Dangote decides to push its price up or down, others tend to follow.”  Yet, the researchers also quote a source at Sokoto Cement, one of Dangote’s main rivals, as describing power generation costs and foreign-exchange fluctuations as the actual drivers behind the drastic recent cement price increases.

 

 

Standard
AAT, Big Picture, cartels, criminal AT, legislation, new regime, Nigeria, no antitrust regime

More Criminal Anti-Cartel Enforcement in Africa? Some Thoughts on Nigeria

By AAT guest author, Osayomwanbor Bob Enofe, Sutherland School of Law Doctoral Scholar, UCD.

We recently wrote about the landmark enactment of the new South African competition legislation that makes hard-core price-fixing a criminal offence, subjecting cartelists to up to 10 years imprisonment.  Nigeria is usually not on the radar of antitrust practitioners, however, and certainly not in the criminal sense, either.  As regular readers of AAT know, the Republic of Nigeria has featured occasionally in our posts despite not having a functioning antitrust regime, yet.  As editor and Pr1merio director Andreas Stargard wrote in an article entitled “Nigerian antitrust?“, scholars and political activists alike have promoted the idea of establishing an antitrust regime in West Africa’s dominant economy: ‘Today, AfricanAntitrust adds its voice to the steady, though infrequent, discussion surrounding the possibility of a Nigerian competition-law regime.  In our opinion, it is not a question of “if” but “when”, and perhaps more importantly, “how“?’

Today, contributing author Bob Enofe adds his voice to the mix, and we are publishing one of his articles that originally appeared on Robert Connolly’s cartel capers blog.

Criminal Antitrust in Nigeria?

nigeriaThe Federal Republic of Nigeria is currently in the process of enacting a competition law, including to criminalise cartel activity amongst competitors. While such is in line with moves made by various other jurisdictions and theories of ‘rational actor’, sanction and deterrence, on ground realities suggest that criminalisation where transplanted might be seriously flawed.

From the late 1990s, and particularly in the year 2000, the Federal Government of Nigeria commenced moves to enact a Competition Law. Under such law, business cartel activity defined as agreements between competitors, aimed at distorting the process of competition and generating monopolistic rents, would be criminalised. The ‘Federal Competition Bill, 2002’, an executive bill drafted by the Nigerian Bureau of Public Enterprises (BPE), was titled: “a Bill for an Act to provide necessary conditions for market competition and to stimulate creative business activities, protect consumers, and promote the balanced development of the natural economy, by prohibiting restrictive contracts and business practices that substantially lessened competition”. It was also to be a Bill to regulate “possible abuses of dominant positions by businesses, and anti-competitive combines, and to establish the Federal Competition Commission, for effective implementation and enforcement of all the provisions of the bill”.  According to relevant sections of the bill, cartel agreements amongst competitors, including price fixing, bid rigging and market division, were also to be expressly criminalised. Clearly a robust and comprehensive bill, 16 years after introduction to the Nigerian National Assembly, the bill remains to be passed into law. Several amendments have since been presented, together with other bills presented by lawmakers. In every case, such bills have either stalled at first reading stage, or in certain cases disappeared from the legislative process. In one of such instances, an amendment of the above bill (The Federal Trade and Competition Commission Bill, 2006) was “vehemently” objected to by distinguished Senators, prompting governmental withdrawal. Amongst reasons advanced for the reception accorded the bill included that there was no need for a distinct ‘competition commission’, in the face of an already existent consumer protection council in Nigeria; other legislators simply complained about a proliferation of “too many commissions” in the country. Commentators have alluded to overt ignorance and lack of particular inclination for the subject, on the part of Nigerian Senators, as in reality underlining the reception accorded the bill.

In a paper recently presented at the #SLSA2016, ‘Developing Countries, Nigeria, and Cartel Criminalisation: of Transplantation and Desirability’ I had outlined how Nigeria’s attempt to introduce a competition law, and in particular criminalise cartel activity, reveals a (marked) lack of societal inclination towards competition law and prior poor advocacy on the part of government. Social norms are crucial to the effectiveness of law reform. Desirable social norms ensures amongst other things that prohibited conduct will be reported and discovered, even without direct enforcement or investigativeBob Enofe intervention, thereby complementing stretched law enforcement efforts.[1] Such also imply that prosecutors will be willing to enforce and vigorously police provisions of the law where passed, and in the case of the judiciary, stringent sentences will also be applied—or at least not deliberately avoided—so as to facilitate the deterrence potential of the applicable law. Perhaps most crucially for Nigeria, existence of such norms also mean that law makers are incentivised to support reform efforts, while the chances of ‘hijack’ by private interests will be slim. Absent such norms the chances of Nigeria’s competition and cartel criminalisation law, even when passed, could be (remarkably) marginal.

Heightened advocacy, together with a careful selection of test cases once the law is enacted is advanced as capable of remedying the above situation. In the face of sub-par institutions characteristic of the Nigerian context however (including severe limitations in the operation of the rule of law), abilities to so ‘guide’ social norms will be in reality seriously limited. An online petition regarding corruption amongst Nigerian senators, for example, reflect in part difficulties that could frustrate transplantation of cartel criminalisation, absent independent, effective, anti-corruption reforms in the country.

Neoliberal theories of rational actors, sanction and deterrence, imply to large extents a similar existence of contexts as have underlined effectiveness in western societies. In many cases, on the ground realities suggest that theories where transplanted, could be seriously flawed.

As I have argued in another paper currently under review (details to be communicated soon, hopefully!), one size cannot fit all- with developing countries and cartel criminalisation, the point gains extra force. To the extent that fines and other administrative means of enforcement are limited in ability to effectively curtail cartel practices, suggests a need for continuation of relevant research. Criminalisation hardly represents the ‘Golden Fleece’.

Footnote:

[1] See Stephan, Andreas, ‘Cartel laws undermined: Corruption, social norms, and collectivist business cultures’ (2010) Journal of Law and Society 345-367, See Maher, Imelda, The Institutional Structure of Competition Law, in Dowdle, Gillespie and Maher (eds) Asian Capitalism and the Regulation of Competition: Towards a Regulatory Geography of Global Competition Law (Cambridge University Press, 2013) 55, See Gal, Michal  ‘The Ecology of Antitrust: Preconditions for Competition Law Enforcement in Developing Countries.’ (2004) Competition, Competitiveness and Development 20-38.

Standard