COMESA issues antitrust RFP for comment & review project, re-releases 5 draft Guidelines

COMESA Competition Commission logo

COMESA’s Competition Commission’s (“CCC”) has issued a Request for Proposal to conduct a comprehensive review of its previously-released five draft competition GuidelinesIn doing so, the CCC re-released the drafts for public review and comment a second time.

Yesterday (Aug. 26, 2013), the CCC published a Request for Proposal to help the agency hold workshops to aid in a comprehensive review of the key COMESA Competition Regulations and Rules / (2).  It will be interesting to see which consultancy submits the winning bid (and whether it will be one from within or outside COMESA!) and what its proposal for the review project will look like.

The topics covered by the Guidelines to be reviewed are:

  1. Mergers
  2. Art. 18 (Abuse of Dominance)
  3. Public Interest
  4. Art. 16 & 19 (horizontal and vertical practices)
  5. Market Definition

We commend the CCC for not only publishing its Guidelines in draft form prior to finalization, but for following international best practices by engaging in what promises to be a substantive and professionally-run review project, akin to the U.S. and EU enforcement agencies.

For what it’s worth, some of our observations on the Guidelines are below.

  • The CCC explicitly endorses a collective-dominance theory of harm in its Dominance Guideline.  A concept largely shunned in the United States (“shared monopoly”), collective dominance is rarely used but admittedly recognized by the EU courts and competition authorities.
  • The Merger Assessment Guideline gives the formal rationale underlying the mystifyingly low “zero-dollar threshold” problem that has plagued COMESA’s CCC since its inception: the threshold for notification has been set at zero “because different Member States are at different levels of economic development and hence a realistic threshold can only be determined after the Regulation has been tested on the market”.  Notably, the authority also predicts in this document that “the threshold shall be raised after a period of implementation of the Regulation” — a move that cannot come too soon and that should not come as any surprise to readers of this blog or to practitioners and parties, which have had to deal with outsized notification-fee demands by the agency for transactions with low to no revenues in the COMESA zone in the past.
  • Lastly, this “regional glue” of the 19-member state organization also underpins a key aspect of the CCC’s Public Interest Guideline , which emphasizes this element of unity across the COMESA region as an important factor in identifying the otherwise “amorphous” concept of public interest.  Rather commendably in this regard, the Competition Commission recognizes the presumption that competition / antitrust should be the “weightiest” of all the conceivable public interest criteria that may be raised by parties and/or member states in future proceedings.

As always, we welcome reader input in the comment section below.


“Your choice”: After Botswana and S.A., MultiChoice to be investigated by yet another antitrust authority?


MultiChoice has now appeared thrice in these blog pages… After having investigations into its alleged abuses of dominance opened in Botswana (reported here) and South Africa (here), the Naspers-controlled company MultiChoice (which owns DStv as well as SuperSport) has now been accused by Kenyan rivals Wananchi Group (Zuku TV) and StarTimes.

Their complaints reportedly focus on dominant MultiChoice locking up key football rights (U.S. readers need not worry: they mean “soccer”, of course).  As any good U.S. plaintiff would do as well, the Kenyan broadcasting competitors plan to lodge formal complaints not only with the Communication Commission of Kenya, but also with the Competition Authority of Kenya.  The focus is, therefore, on antitrust claims against giant MultiChoice.

In general, the monopolization/dominance complaints seem to mirror largely those of, for instance, the South African On Digital Media, which had previously complained to the South African Competition Commission about MultiChoice’s refusal to grant ODM’s “TopTV” subsidiary access to two of MultiChoice’s SuperSport channels.

Whether obtaining exclusive distribution rights to football gems such as the English Premier League and the “Tusker Premier League” constitutes monopolization under Kenyan law remains to be seen.

Namibian antitrust law revision will include consumer protection measures


As the Namibia Economist reports (via online journal AllAfrica), the revised Namibian Competition Act will include consumer protection legislation, in addition to the existing antitrust laws.

The current legislation dates back a decade to 2003 and is being overhauled (whether by the Namibian parliament or by the Commission is not entirely clear to us from the information provided).

The Namibian Competition Commission‘s head (their “CEO”, as the agency’s lead job title is formally called), Mihe Gaomab II, has reportedly stated in an interview with the publication of the country’s chamber of commerce that the revised law will contain new “enabling provisions on consumer rights“, e.g., regarding affordable pricing, fair promotion or advertising, contractual arrangements, and “shelving the right goods at the right place” (whatever that may mean in practice).  He is quoted as emphasizing the “enforcement of competition policy and law” not only with respect to “market failures associated with a substantial reduction of competition”, but also “addressing certain aspects … which are consumer protection related such as unfair deals and lack of information disclosures on consumers.”

We at are keen to see the proposed revisions in writing, as much as we are eager to learn how “unfair deals” for consumers are going to be defined in the NCC’s enforcement practice.

COMESA criticised for inflated merger notification fees

COMESA Competition Commission logo

As BDLive’s Amanda Visser reports online, the COMESA Competition Commission (“CCC”) has come under fire for inflating its deal-notification filing fees.

The Cipla / Cipla Medpro SA deal is reported in the article to have come in at 0.5% of turnover and cost the merging firms R4.5m in filing fees.

The online journal also notes that appeals to COMESA’s appellate body in Sudan (the COMESA Court of Justice) are unlikely in the case of high filing fees.  Notably, the CCC is prepared to listen to its stakeholders, says Willard Mwemba, head of mergers at the CCC: “The commission has heard the concerns and is engaging a consultant to come up with reduced notification fees.”

South African Competition Tribunal approves merger in record time of 4 hours


The South African Competition Tribunal received notice of, heard and approved the acquisition by construction firm, Stefanutti Stocks (Pty) Ltd, of Energotec, which is a division of First Strut (Pty) Ltd, and approved the merger within four hours of receiving the Competition Commission’s recommendation.

The Tribunal approved the deal on the basis that Energotec, and ultimately First Strut, are in a precarious financial condition (under liquidation).  The parties explained to the Commission and Tribunal that If the merger had not been approved the 667 staff employed by Energotec would have lost their jobs. The parties also relied on the failing firm jusitfication. As a condition for the approval of the merger however the Tribunal ordered that, for a period of 2 years from the date the merger is implemented, Stefanutti Stocks must limit retrenchments resulting from the merger to 16 employees.  This type of public interest condition has become common in South Africa.

It was stated by the parties that the deal will enable the acquirier to offer a more comprehensive service to its clients, making this an attractive opportunity for the construction firm.

The Competition Commission had concluded that the merger was unlikely to cause a substantial lessening of competition. The only customer affected by the transaction, Sasol, had provided support for the deal.

The matter provides useful precedent for future failing firm merger cases.

COMESA publishes explanation of first two merger approvals & receives 4th deal filing

COMESA Competition Commission logo

The COMESA Competition Commission (“CCC”) has finally shed some light on the substantive merger analysis it undertook in its first two notified (and now cleared) transactions.

The full text of the reasoning is just below…  Any light that COMESA sheds on its merger review process, which has thus far been shrouded in complete obscurity from the moment a deal is notified until the agency’s final decision, is a step in the right direction.  The CCC must strive to be transparent in its operations and review process, especially in light of the widespread criticisms of its high filing fees, opaque guidelines, and zero-dollar filing thresholds, which have plagued the CCC since it became operational in January 2013.

It is commendable that the CCC has published its reasoning behind clearing the first two notified mergers, and one should hope that the Commission will do likewise for all future matters.  That said, the CCC’s summary is not a detailed reasoned analysis that rises to the level of, for instance, a European DG COMP merger Decision, and it is thus presumably non-precedential.  In principle, we think that the CCC hits the right analytical notes in terms of defining markets, evaluating entry barriers, and estimating the competitiveness of each market.  However, the substantive market definitions as they are laid out by the Commission, such as “generic pharmaceuticals” or “home communications products,” appear unorthodox and, to say the least, rather broad.  That said, we are not privy to details of the transactions or the facts underlying them, so…

In other COMESA merger ews, the CCC published its 4th merger notification, filed by Cooper Tire (U.S.) and Apollo (India).


COMESA Competition Commission approves Mergers between:

  1. 1.      Koninklijke Philips Electronics N.V. and Funai Electric Company Limited and
  2. 2.      Cipla India and Cipla Medpro South Africa Limited.

The COMESA Competition Commission (‘the Commission’) on 22nd and 23rd July approved under the COMESA Competition Regulations (‘the Regulations’) the proposed merger between Koninklijke Philips Electronics N.V. and Funai Electric Company Limited (Philips/Funai) and the merger between Cipla India and Cipla Medpro South Africa Limited (Cipla India/Cipla Medpro) respectively.

  1. 1.      Merger between Koninklijke Philips Electronics N.V. and Funai Electric Company Limited

Funai, is a limited liability company incorporated in Japan and listed on the Tokyo stock exchange with its corporate seat in Osaka and address at 7-7-1 Nakagaito, Osaka, Japan. Funai is engaged in the development, manufacture, marketing and distribution of information and communication equipment, such as DVD and Blu-ray Disc-related products, LCD-television and receiver related products. Funai furthermore has a global sales system that consists of overseas subsidiaries in the United States, Europe and Asia. Funai and its subsidiaries did not have any business interests or assets of any nature whatever in the COMESA region. They accordingly had no market share or turnover in any market in the COMESA region.

Philips is organized into three main divisions: Philips Lifestyle, Philips Healthcare and Philips Lighting. Philips Consumer Lifestyle carries on a business consisting of designing, manufacturing and selling lifestyle entertainment products in the categories audio, video and multimedia, home communication and accessories. Philips’ Lifestyle Entertainment business group (“the Business”), which was the target for purposes of the merger, is headquartered in Hong Kong and forms part of the Philips Consumer Lifestyle Division. The Business designs, develops, manufactures and sells lifestyle entertainment products including audio video multimedia products (home audio, headphone, speaker and in-car audio), video related products (like portable audio players, portable video players and home media player), home communication products (DECT phone) and accessories (like batteries, cables/connectors, storage products, portable chargers for cell phones and antennae) (“Consumer Electronics”).

The Commission delineated the relevant product market into 3 namely Audio Multi-media Products, Video Multi-media Products and Home Communications Products. The relevant geographical market was determined as the Common Market[1]. The Commission determined that the relevant markets were very fragmented due to a large number of competing brands that were being sold in the Common Market. It was further realized that the relevant market had over the recent years exhibited insignificant entry barriers. The Commission further determined that the merger would not result in the removal of any competitor from the relevant market. This is because Funai and Philips had never competed in the relevant market pre-merger. Further it was observed that the transaction shall enhance the achievement of consumer needs and choice in the Common Market.

Based on the foregoing, the Commission determined that the acquisition of Philips by Funai was not likely to substantially prevent or lessen competition and it would not be contrary to public interest in accordance with Article 26 (1) and 26(3) of the Regulations respectively. Further, the assessment of the merger revealed that it was compatible with Article 55 of the COMESA Treaty in that it did not negate the objectives of free and liberalised trade. The COMESA Treaty is premised on the attainment of full market integration. Market integration means that there should be free movement of goods and services in the Common Market and the assessment of the merger revealed that the merger shall not lead to the frustration of free movement of goods and services. The merger was therefore approved unconditionally.

  1. 2.      Merger between Cipla India and Cipla Medpro South Africa Limited

Cipla India is primarily a generic pharmaceutical manufacturing company. Cipla India’s nature of business is in key therapy areas which include cardiovascular, children’s health, dermatology and cosmetology, diabetes, HIV/AIDS, infectious disease and critical care, malaria, neurosciences, oncology, ophthalmology, osteoporosis, respiratory, urology, and women’s health. Cipla India supplies (primarily through distributors) products to the Common Market. Cipla Medpro manufactures and distributes scheduled and over the counter human pharmaceutical products, various veterinary, agricultural and nutritional products and provides healthcare solutions and support and specialised consulting and actuarial services to both open and restricted medical schemes, medical scheme administrator and managed care organisations

The Commission determined the relevant market to be the supply of generic pharmaceutical products in the Common Market. The Commission determined that the same market concentration would remain post merger as the parties did not compete in the Common Market before the merger. The Commission further observed that import competition was very rife in this market as most of the drugs sold in this market were imported. This would therefore give competitive discipline to the merging parties and restrain them from behaving in an anti-competitive manner.

The Commission observed that the transaction would not result in the removal of any competitor from the relevant market as generally the parties were not competing pre-merger. The Commission however observed that the relevant market had both structural and regulatory barriers to entry. The main structural barriers to entry were the costs of establishing a distribution network and availability of funds for research and development. The regulatory barriers to entry included the various registration processes that a firm needed to undertake before it could supply the products in the Common Market.

The Commission concluded that the acquisition of Cipla Medpro by Cipla India was not likely to substantially prevent or lessen competition and it will not be contrary to public interest in accordance with Article 26 (1) and 26(3) of the Regulations respectively. Further, the assessment of the merger revealed that it was compatible with Article 55 of the COMESA Treaty in that it did not negate the objectives of free and liberalised trade. The COMESA Treaty was premised on the attainment of full market integration. Market integration means that there should be free movement of goods and services in the Common Market and the assessment of the merger revealed that the merger shall neither lead to the frustration of free movement of goods and services nor the foreclosure of the markets in the Common Market. The merger was therefore approved unconditionally.

[1] Common Market is composed of the 19 Member States of COMESA.

Pioneer Hi-Bred completes acquisition of South African seed company


South African seed business Pannar and DuPont seed unit Pioneer Hi-Bred finally overcame regulatory roadblocks to Pioneer’s majority stake acquisition in the pan-African seed business of Pannar.  They have completed the acquisition.

The world’s #2 seed producer, Pioneer, now owns 80% of Pannar after closing of the transaction.  The deal had been long in the making, as it was announced almost three years ago, in September 2010.  Yet, the parties failed to convince the South African Competition Commission of the neutrality of its competitive effects on the South African seed market, which is estimated at $450 million.  The Commission rejected the deal, sending the parties back to the drawing board (and to several rounds of appeals before the South African appellate courts and tribunals).

The business rationale for Pioneer is a three-way race with competitors: according to Pioneer’s deal statement, there are approximately 75 million acres (or 30 million hectares) available for corn / maize production on the African continent.  And with a rapidly growing population and economies, African nations, their cattle, and their consumers will constitute ready buyers for maize and corn-derivative products.

First 2 COMESA merger notifications unconditionally approved

COMESA old flag color

The COMESA CCC has approved (without any commitments) two notified mergers, as it announced on its web site today.  They are the first of their kind, with at least one additional notification currently pending.

The two deals, including the first-ever notification to the COMESA Competition Commission (“CCC”) of the Philips/Funai Electric transaction, lay the groundwork, in principle, for future COMESA merger reviews. That said, the approval notices (here and here) come without any elaboration of the reasoning or competitive & economic analysis undertaken to clear the mergers, unfortunately.  The second deal involved pharmaceutical companies Cipla Limited and Cipla Medpro South Africa (Proprietary) Limited.

We will report more later, as we learn additional facts surrounding these transactions and their CCC review procedure.

South Africa: Telkom fined again…


South Africa’s Competition Tribunal had a busy week last week tasked with considering the proposed penalties for the various construction companies and also confirming the second significant administrative penalty on South Africa’s incumbent provider of fixed line telecommunication services, Telkom.  In terms of the second order, Telkom has agreed to pay an administrative penalty of R200m and committed to separate its wholesale and retail divisions, in order to reduce the wholesale and retail prices of its products to the value of R875m over five years.

Telkom, was previously before the Tribunal in relation to a further abuse of dominance matter and was fined R449m.  Telkom had appealed the finding but recently withdrew its appeal against the fine which related to allegations of an abuse of dominance in the telecommunications market between 1999 and 2004, a period in which it was a monopoly provider of telecoms facilities in the country. The fine was much less than the R3bn that the commission had initially requested.

In relation to the second order, the Commission found (following receipt of a significant amount of information from Telkom’s downstream competitors) that Telkom had engaged in a so-called “margin squeeze” by billing licenced operators excessive fees for bandwidth and for a product called IPLC (international private leased circuit). The pricing was set at levels that precluded cost-effective competition with Telkom’s retail internet access and services available via a leased line or ADSL access.

In terms of the settlement, Telkom has agreed to reduce prices on specific product lines that had been implicated in the complaints before the commission over the next three financial years, with no increases in the final two years in which the agreement remains in place.

Telkom has also committed itself to a weighting of 70% price reduction in its wholesale division and 30% in its retail division to eliminate any margin squeeze while ensuring that wholesale products savings are passed on to the benefit of its consumers.

It will also embark on a roll-out of strategic points of presence in the public sector at its own cost and discuss the specific needs of state departments with the Department of Communications.

Botswana opens probe into pay-TV provider MultiChoice


According to Botswana publication Mmegi, the domestic competition authority** has opened a probe into business practices surrounding MultiChoice’s so-called “bouquets” of pay-TV programs.  (Personally, I’d call it a bundle or package.  Maybe the local euphemism authority could look into the “bouquet” moniker, as well).

The paper reports that MultiChoice has over 6 million Botswanan customers (one of whom purportedly filed the formal complaint with the competition authority) and “has maintained a stranglehold” on the pay-TV segment.  The complaint appears to focus on pricing and dominance abuses by the provider.  There is also a South African probe into MultiChoice’s alleged abuse of a dominant position, as we reported last month.

**That’s their official link, but it seems to be parked, or dead.  Ironically, the competition authority’s Facebook page (!) appears live and well.  Here’s a photo of, presumably, the staff.