Category: price discrimination

Zambia: New Board of Commissioners Signals Possible End of Increased Enforcement

Posted on by Editor

By Joshua Eveleigh and Shivaan Naicker

The Board of Commissioners of the Zambian Competition and Consumer Protection Commission (“CCPC”) recently fined Airtel Money and Avian Ventures Ltd (trading as Farm Depot Zambia) each 3% of their annual turnovers in Zambia.

The CCPC’s investigation found that Airtel Money had increased its cash collection and cash disbursement fees among different sports betting companies, in contravention of section 16 of the Competition and Consumer Protection Act (the “Act”). Airtel was found to have imposed differing transaction conditions to differing parties for identical transactions, a type of price discrimination akin to U.S. Robinson-Patman Act violations that may be falling back into favor across the pond.

Additionally, Farm Depot Zambia was found to have contravened sections 15 and 16 of the Act by engaging in product tying by requiring customers to purchase certain brands of chicken feed when they intended on only purchasing Day-Old Chicks, with the Board of Commissioners of the CCPC emphasising that product typing places a particular strain on small and medium-sized businesses.

More recently, the Zambian Minister of Commerce, Trade and Industry, Chipoka Mulenga, announced a new Board of Commissioners comprised of:

  1. Mrs. Angela Kafunda;
  2. Mr. Fredrick Imasiku;
  3. Mr. Stanford Mtamira;
  4. Mr. Sikambala M. Musune;
  5. Mr. Emmanuel M. Mwanakatwe;
  6. Mrs. Sambwa Simbyakula Chilembo; and
  7. Mr. Derrick Sikombe.

While the sanctions against Airtel Money and Farm Depot Zambia may have emphasised the steady investigation of, and enforcement against, anti-competitive conduct under the previous Board of Commissioners, the new Board of Commissioners does not appear to consist of any competition law practitioners. Various local counsel in Zambia have raised concerns in this regard for the future of the CCPC’s competition enforcement initiatives.

South Africa News Alert: Price Discrimination and Buyer Power Provisions brought into effect.

Posted on by Editor

On 13 February 2020, exactly a year since the price discrimination and buyer power provisions were signed into law, President Ramaphosa and Minister Patel have brought into effect the operation of the amended section 9 of the South African Competition Act (price discrimination) as well as section 8(4) (buyer power provisions) together with the respective Regulations.

Both provisions are aimed at ensuring that small or medium owned businesses or firms controlled by historically disadvantaged persons are able to “participate effectively” in the market.

While the buyer power provisions are largely consumer protection provisions – which require large firms to impose fair trading terms vis-a-vis their smaller customers, the amended section 9 of the Act has material ramifications not only for large suppliers but consumers as well.

At the heart of section 9, is a prohibition of volume based rebates/trading terms. While the Act permits for certain efficiency based pricing differentials (provided they are proportionate and reasonable), suppliers are prohibited from competing purely based on quantities. Low margins high volume type strategies would in many instances be prohibited – with the concomitant imposition of administrative penalties.

The motivation behind the amendments is to assist smaller players participate in the market. A noble objective. Although it seems quite apparent that those in support of the amendments have not fully recognized, appreciated or cared about the unintended consequences which are likely to flow from section 9.

Pro-consumer welfare pricing strategies may, under the amended Act, be outlawed. So while the counter factual is that certain small businesses may benefit, is this an industrial policy victory if consumer welfare is diminished? Hardly.

Although section 9 and section 8(4) where brought into effect on the eve of President Ramaphosa’s State of the Nation Address – certainly not coincidental – a challenge to the rationality of section 9 seems most likely.

The Competition Commission’s price discrimination draft guidelines expressly preclude any considerations to the level of efficiency of downstream customers or any impact (good or bad) on consumer welfare).

Seriously concerning stuff and large suppliers (across all industries) should take note of these amendments with urgency.