AAT exclusive, new regime, no antitrust regime, public-interest, South Africa

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

For details on how to participate, please follow this Link

 

 

 

 

 

 

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

Ghana slowly inches towards antitrust law

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

ghana

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

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

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AAT exclusive, EAC, East Africa, new regime, no antitrust regime

EAC poised to pressure remaining members into antitrust enforcement

By AAT staff

On the heels of the COMESA Competition Commission launching its first-ever “failure-to-file” merger investigation, the East African Community (EAC) Competition Authority is poised to dip its toes into the waters of being operational — but it will require its member states to have active enforcement programmes of their own, says the agency head.

There are hurdles to the regional body of the African Great Lakes, as Andreas Stargard, a competition lawyer with a focus on Africa, points out: only two out of the EAC’s six member states — namely Kenya and Tanzania — currently have working antitrust enforcement authorities.  Having only one-third of a supra-national organisation’s members being versed in competition enforcement is a hindrance to the EAC Authority’s competence and pragmatic effectiveness, said chairman of the Board of Commissioners, Sam Watasa at the agency’s 2nd meeting at the organisation’s Arusha headquarters.  He is quoted as saying:

“Kenya and Tanzania have operational National Competition Agencies, Rwanda and Burundi had enacted laws but are yet to be operationalised. In Uganda there was a draft Competition Bill.”

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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.

 
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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.

 

 

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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.

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