COMESA Commission responds to our article on Kenya’s competition authority taking jurisdiction away from CCC

     kenya‘s prior reporting here (and also here, as well as the corresponding Nortons brief) on the jurisdictional dispute between the Competition Authority of Kenya (“CAK”) and COMESA has garnered the attention of the multi-national organisation’s Competition Commission (“CCC”).

After reporting on Kenyan Attorney General Githu Muigai’s actions, seemingly wresting jurisdictional power over the review of certain transactions that clearly affect the Kenyan geographic market, we reported briefly and neutrally on this interesting development, concluding as follows:

This power purports to shield, at least temporarily, local firms from the COMESA competition laws. Under the multi-state competition regime, firms engaging in certain mergers and acquisitions with an effect in two or more member states are required to seek clearance from COMESA’s Competition Commission, a process that comes with significant costs and time delays not expected to the same extent with the CAK procedure.

The CCC asked, in its letter, to set the record straight and “to put the situation in its right context.”  We are happy to oblige and publish below COMESA’s official position on the jurisdictional dispute with Kenya.

As to the cost point, the CCC had this to say in its letter (full reprint below):

Consequently you may also need to know that from our preliminary assessment the Commission’s fees are much lower than that of the national competition authorities and this has resulted in the cost of doing business (notifying using the COMESA route) being reduced by about 43.4%.

This is an interesting “preliminary assessment” and must be based on theoretical calculations of notification fees, as there had not been any substantial number of notifications made as of 22 March.  The first publicly known notification was that of Philips/Funai, made around the same time in March.  Indeed, the CCC itself writes in its letter to us that the Commission has not yet concluded any merger investigation for one to have a basis for any comparisons yet.”  Fair point.

All of this begs the quite pragmatic question, of course, which is: how are merging/acquiring parties dealing with the existence of the COMESA notification regime?

In our “Is COMESA being ignored” post, we postulated the hypothetical question whether publicly known deals that clearly meet the COMESA thresholds but are not apparently notified should be taken as an indication of the CCC being turned a cold shoulder by certain sophisticated parties.

Why would they?  Perhaps the filing fees are, after all, not that insignificant or even lower than filing domestically with African NCAs?  Or the uncertainty of a rather untested, as of yet, CCC staff team has the parties worried about (1) the length/duration, or (2) outcome of the CCC procedure?  We don’t know, but we look forward to further analysis, insight, and news in coming months.

Here is the original language of the letter (signed “COMESA Competition Commission”), dated 22. March 2013:

The COMESA Competition Commission (the Commission) wishes to respond to the above article as follows:

1.         The above article raises serious concerns especially coming from a Member State of the COMESA Treaty whose competition authority was one of the architects of the COMESA Competition Regulations (the Regulations).  The article and its undertones challenges the very existence of the Regulations and the institution mandated with their enforcement.

2.        With the adoption of the COMESA Competition Regulations and Rules, there are now two separate legal regimes which govern the enforcement of competition law and policy in the COMESA Member States, namely;

a)      The National Competition laws: these are the national legal orders comprising the respective bodies of legal rules within each of the COMESA Member States.

b)      The Regional Legal Framework: these comprise the body of legal rules created at COMESA level such as the COMESA Competition Regulations and Rules.

3.         Given the two legal orders, the national order shall apply to the enforcement of anti-competitive practices emanating at national level hence, enforced by the national competition authorities in the respective Member States. Whereas the regional framework shall be invoked generally where there is a cross border impact.

4.         In the first place, as far as we are concerned, there has never been a jurisdictional battle between the COMESA Competition Commission (the Commission) and any national competition authority on the control of mergers at national level.  The scope of application of the Regulations as provided for under Article 3 and more specifically on mergers under Article 23(3) is very clear that its limited to transactions with a regional dimension and not local transactions as stated in the Article.  The relevant Articles are quoted below for clarity:

“Article 3

Scope of Application

“These Regulations apply to all economic activities whether conducted by private or public persons within, or having an effect within, the Common Market, except for those activities as set forth under Article 4. These Regulations apply to conduct covered by Parts 3, 4 and 5 which have an appreciable effect on trade between Member States and which restrict competition in the Common Market.””[emphasis added]

Article 23

Merger Control


3.  This Article shall apply where:

a) both the acquiring firm and target firm or either the acquiring firm or target firm operate in two or more Member States; and

b) the threshold of combined annual turnover or assets provided for in paragraph 3 is exceeded”.

5.         It is important to note that the Regulations were initiated by the COMESA Member States who had competition authorities in the 1980s and 1990s namely Kenya, Zambia and Zimbabwe, when they realized that with globalization, markets continued to extend beyond national boundaries and the national laws and their enforcement institutions were no longer sufficient to deal with the new market problems of the region.  To address these problems of enforcing multi-jurisdictional competition cases, a regional approach to the competition cases with regional coverage was found to be the solution.  They were also of the view that cooperation and transparency in procedures was essential for business as they would not be subjected to excessive costs arising from multiple, parallel and poorly coordinated investigations.  In fact Mr Justus Kijirah the then Commissioner for the then Monopolies and Pricing Commission of Kenya (the predecessor of the Competition Authority of Kenya) was part of the team of Consultants who were involved in the formulation and drafting of the Regulations and the Rules in April 2002.

6.         The draft Regulations and Rules prepared by the consultants went through a rigorous legislative review which included their discussion by the Trade and Legal Experts from COMESA Member States in October 2002 in Mangochi (Malawi), and by the COMESA Trade and Customs Committee in October 2002 and February 2003 in Lusaka (Zambia).  The COMESA Legal Committee also discussed the draft texts in February 2003, again in Lusaka (Zambia), and the COMESA Ministers of Justice and Attorneys-General approved the drafts during the same month.  The COMESA Competition Regulations were adopted by the COMESA Council of Ministers in December 2004 and they became effective upon their publication in the COMESA Official Gazette Vol. 9 No.2 as Decision No. 43 in Notice No 2 of 2004.

7.         Please note that of importance is Article 10(2) of the Treaty which categorically states that: “A regulation shall be binding on all the Member States in its entirety.”  This means that Kenya as a COMESA Member State is bound by the Regulations and is obliged by Article 5(2)(b) “…..take steps to secure the enactment of and the continuation of such legislation to give effect to this Treaty and in particular to confer upon the Regulations of the Council the force of law and the necessary legal effect within its territory”.

8.         We appreciate that under the Vienna Convention on the Law of Treaties 1969, the consent of a state to be bound by a treaty and therefore for the treaty to apply to the state at an international plane may be expressed by way of signature, exchange of instruments constituting a treaty, ratification, acceptance, approval or accession.  The Convention does not address the question of how States may then bring about the domestic implementation of the treaties which they have made applicable to them internationally.  The Convention leaves this question to be settled by each State, in accordance with its legal system.  Thus, “domestication” of treaties is a matter of national law and is not governed by international law.  A different process altogether is necessary in order for a treaty to be applicable at a domestic level.  Unless a treaty accepted by any Member State is incorporated into the domestic laws of that state, the rights and obligations contained in such a treaty are inapplicable and unenforceable domestically in the state concerned.  Most Member States constitution are the ones that state the position of the relationship between the treaty law and domestic law in the state’s legal system.

9.         Two major approaches, and some variations of them, may be identified with respect to the question of the status of treaties in domestic legal systems.  Some States follow the dualist approach to this question, while others follow the monist approach.

10.       Under the dualist approach, treaties are part of a separate legal system from that of the domestic law: They do not form part of domestic law directly. Thus, under this approach, a treaty to which a State has expressed its consent to be bound does not become automatically applicable within that State until an appropriate national legislation has been enacted to give the treaty the force of law domestically.  This is the so-called “act of transformation”, which has several ways for bringing about.  One of them is the direct incorporation of the treaty rules through a drafting technique which gives the force of law to specified provisions of the treaty or indeed the whole treaty, usually scheduled to the transforming act itself.  This is the approach which was inherited by Kenya and other commonwealth countries from the British practice, as the prime example.[1]

11.       Under the monist approach, traditionally a legal system of a State is considered to include treaties to which that State has given its consent to be bound. Thus, certain treaties may become directly applicable in that State domestically (self executing) and do not rely on subsequent national legislation to give them the force of law once they have been ratified by the State. “Where a treaty is thus considered to be “directly applicable”, under this approach, it means that the domestic courts as well as other governmental bodies would look to the treaty language itself as a source of law.”[2]

12.       Kenya now has a new constitution that was promulgated on 27 August 2010 replacing the 1969 Constitution.  The 2010 revised Constitution of Kenya introduced a monist approach with respect to the question of the status of treaties in domestic legal system.  Section 2 of the Constitution which deals with the issue of supremacy of the Constitution provides that:

Supremacy of this Constitution

(1) This Constitution is the supreme law of the Republic and binds all persons and all State organs at both levels of government.

(2) No person may claim or exercise State authority except as authorised under this Constitution.

(3) The validity or legality of this Constitution is not subject to challenge by or before any court or other State organ.

(4) Any law, including customary law, that is inconsistent with this Constitution is void to the extent of the inconsistency, and any act or omission in contravention of this Constitution is invalid.

(5) The general rules of international law shall form part of the law of Kenya.

(6) Any treaty or convention ratified by Kenya shall form part of the law of Kenya under this Constitution.

13.       In essence, section 2(6) of the Constitution of Kenya means that the COMESA Treaty and the Regulations made under it form part of the law of Kenya and are directly applicable domestically.  Since the Regulations form part of the laws of Kenya which the Competition Authority of Kenya should uphold there is therefore no basis for any jurisdictional battle.  In fact, the Competition Authority of Kenya has all along been acting in compliance with the Regulations when it accepted the appointment of its then Acting and now Director General Mr Wang’ombe Kariuki as a Board Member for the COMESA Competition Commission established under the Regulations.  Mr Kariuki took part in the setting up of the COMESA Competition Commission Secretariat.  He also participated in the drafting and recommending for approval to the COMESA Council of Ministers, which met in Kampala, Uganda in November 2012, the COMESA Rules on Merger Notification Thresholds and on Revenue Sharing of Merger Filing Fees whose underpinnings was the transfer of jurisdiction of mergers with a regional dimension from the national competition authorities to the COMESA Competition Commission.  For him to now make the Competition Authority of Kenya wrestle the COMESA Competition Commission for the right to control mergers and acquisitions within the COMESA region boggles the mind to say the least.

14.       As far as the statement to the effect that “Kenyan Attorney-General Githu Muigai has given the CAK the authority to act as the sole agency with the mandate to administer and clear local mergers and acquisitions” is concerned, it is our considered view that CAK has failed to comprehend the advice by the Attorney-General which according to the article above specifically states that CAK shall continue to exercise its jurisdiction on local mergers and acquisitions.  It is our understanding from the above article that the Honourable Attorney-General has not referred to merger transactions with regional dimension.  This is the correct position.  It is also our view that the Attorney-General is not the right office to interpret the provisions of the Treaty but the COMESA Court of Justice.  We are however, always happy to be persuaded by such advice.

15.       It is in fact the COMESA Court of Justice, regardless of whether a Member State has ratified the Treaty or not, that has the mandate to ensure the adherence to law in the interpretation and application of the Treaty (Article 19(1)) and by inference the Regulations made under the Treaty.  If Kenya as a COMESA Member State has issues pertaining to the application of the Regulations on its nationals which implies a challenge to the legality of the Regulations, we recommend that the best course of action would be for Kenya to refer the matter for determination by the COMESA Court of Justice in terms of Article 24(2) of the COMESA Treaty.

16.       It is also premature to conclude that the Regulations’ requirement for firms engaging in certain mergers and acquisitions with an effect in two or more member states should seek clearance from Commission came with significant costs and time delays not expected to the same extent with the Competition Authority of Kenya.  With all due respect, the Commission has not yet concluded any merger investigation for one to have a basis for any comparisons yet.  There is therefore no empirical evidence to support such a bold and far reaching statement.

17.       You may further wish to know that the current schedule of merger notification fees was debated on and approved for presentation to Council by the COMESA Competition Commission’s Board of Commissioners which comprise of heads of competition authorities in Member States.  Consequently you may also need to know that from our preliminary assessment the Commission’s fees are much lower than that of the national competition authorities and this has resulted in the cost of doing business (notifying using the COMESA route) being reduced by about 43.4%.

From the foregoing, we implore your good offices to put the situation in its right context.

COMESA Competition Commission


[1] Dr.A.O.Adede,Chairman, Constitution of Kenya Review Commission, “Domestication Of International Obligations”, An Abstract, 15-09-2001.

[2] Ibid.

COMESA old flag color


ArcelorMittal, Telkom, now Sasol? “Excessive pricing” case going to trial in South Africa


Settling the South African Competition Commission’s case against alleged collusion in the polypropylene market [for no less than R111 million] back in 2010 was not to be the end of Sasol‘s long antitrust journey in the polymers world.

The S.A. Competition Tribunal is hearing the excessive-pricing portion (which was not settled) of the Commission‘s claims against the refining & steel giant this month.  The relevant legal underpinning of the case is the provision against excessive pricing by a dominant firm.  Precedent has declared prices excessive that “bear no reasonable relation to the economic value of the good or service” at issue.  Pheeew.  Facts.  Economics.  Nice.  Looks like a coming battle of the experts to me…

By comparison, in the U.S., antitrust law of course does not forbid “excessive pricing.”  While setting and reaping apparently high prices may be indicative of monopoly power, such acts are not in themselves anti-competitive or illegal in the States.  In Verizon v. Trinko, the U.S. Supreme Court held famously that:

The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system. The opportunity to charge monopoly prices—at least for a short period—is what attracts “business acumen” in the first place; it induces risk taking that produces innovation and economic growth.

Interestingly, there is a notable history of failures in the area of ‘excessive pricing’ complaints in South Africa, as well, despite the statutory legitimisation of the cause of action.  In the prior ArcelorMittal and Telkom cases, the Commission and/or Tribunal lost in the end, either at trial or on appeal to the Competition Appeal Court.  That Court had found, in the ArcelorMittal case, that the antitrust watchdogs could not use the ‘excessive pricing’ provision of the statute to combat perceived anti-competitiveness in the “market structure rather than price level.”

We will, of course, report on the ongoing trial and ultimate outcome of this high-profile case, as it unfolds.

S.A. dominance in the Nigerian mobile telecom market? MTN concerned.

nigeriasouth_africa reports that South African telecom giant MTN is in discussions with Nigeria’s Communications Commission (“NCC”) (again, note that Nigeria doesn’t have a competition law regime) relating to its 44% market share in mobile telephony in the country.

The NCC published its report in PDF format on its web site. The report, entitled “Determination of Dominance in Selected Communications Markets in Nigeria“, states in relevant part:

Nigeria is the fastest growing telecommunications market in Africa, rising from a meagre 500,000 telephone subscribers in 2001 to over 108 million as at December 2012 …

As the news report states, MTN is not accused of any abuse of its market power — that is, the hallmark of a unilateral / dominance case, abuse of dominance, is apparently yet absent from the NCC’s phantom case against the provider. What the NCC is worried about inter alia, however, is the preferential treatment given to MTN’s own customers and calls amongst that group. That’s interesting, because many providers across the world have similar “in-network” call rates (indeed, often even free allowances for in-network calls) without triggering antitrust review. The NCC does not perceive dominance issues in fixed voice or mobile data market segments. Rather than relying on the investigated operators’ submissions (proposing, among other things, to use a simple Herfindahl-Hirschman Index determination to see if the market segments were ‘concerntrated’), the NCC’s report lays out quite nicely how it used a “Structure‐Conduct‐Performance (SCP) model”.

The SCP model postulates that the structure of a market determines to large extent the conduct of the participants in the market, which in turn, influences the performance of the firms within the market with respect to profitability and efficiency.

We’ll see where this one goes. Perhaps it simply serves to reinforce our prior question: Is it not time for Nigeria to have its own, proper competition-law regime?

South Africa targets private healthcare sector in CC’s ‘market investigation’


As reported today by Reuters and SA MoneyWeb, the South African government has announced that the South African Competition Commission will launch an investigation into the private healthcare sector. This is part of a larger initiative to conduct so-called “market inquiries,” on which we previously reported here and here, and which are a direct consequence of the March 2013 effective date of the South African Competition Amendment Act of 2009.

The Economic Development Minister Ebrahim Patel said that “[v]arious stakeholders have raised concerns about pricing, costs and the state of competition and innovation in private healthcare.”

Likely affected companies are all major players in the healthcare industry, including providers such as Life Healthcare, Mediclinic International and Netcare Ltd.

Parties turn a cold shoulder: Is COMESA’s CCC being ignored … ?

COMESA old flag colorZambia

A pressing question on many COMESA observers’ minds is this: do corporations (and their legal advisers) consciously ignore the CCC‘s jurisdiction and essentially flaunt the supra-national organisation’s merger-notification regime?

As reported by us yesterday, there may be an interesting test case coming up in the Uganda telecommunications sector, which may help clarify whether parties to known merger deals are simply ignoring the notification mandate of COMESA.

Today, we noticed what appears to have been two recent deals in the poultry sector in Zambia (yet another COMESA member state).  As the Zambian newspaper The Times reports, there were two transactions** that have been approved by the Zambian Competition and Consumer Protection Commission (CCPC) Board of Commissioners — seemingly unilaterally and without involvement of COMESA’s CCC.

Again, as with the potential Ugandan test case we discussed, the question now becomes: were the conditions to notifiability at the COMESA level met (likely yes), and if so, did the parties intentionally fail to notify the deal to the CCC … ?  To date, only one deal (Philips/Funai) is known to have been notified to the CCC, as reported here.  We would love to hear from a representative of the CCC itself to get their view on the current state of affairs.

One possible explanation of the apparent lack of COMESA notification is that the transactions pre-dated the January 2013 effective date of the COMESA competition regime, but that seems unlikely at this late stage, given that it’s already May and the CCPC is only now giving its green light to the deals.


** The names of some of the parties are entertaining, no less, as they are Zamchick and Rainbow Chicken.  Presumably, the merged entity might adopt Rainbow Zamchick?

Dutch suit against “paraffin mafia” cartel moves forward


A Dutch district court has set what some believe may be a new landmark precedent in the area of private cartel enforcement in the European Union, including against South African company Sasol.

The case is what appears to be a fairly straight-forward “follow-on” civil action, i.e., a complaint brought in civil court by injured parties (or those who acquired those parties’ rights to sue) that is based entirely on a European Union Commission decision condemning illegal cartel activity within the common EU market.

My neighbors on the Avenue Louise here in Brussels, CDC (Cartel Damages Claims), had bought the rights to sue from various purchasers of paraffin wax and lodged the complaint against the “paraffin mafia” (Shell’s words, quoted by Neelie Kroes – also see here) in September 2011. The 13-year cartel (1992-2005)** may well result in sizeable civil damage awards (Sasol’s reduced EC fine alone was 318 million €) once the procedural and jurisdictional hurdles have been cleared. And this most recent ruling goes a long way in doing so. The key “procedural issues” that had to be resolved first were whether all of the cartel members could be sued in the Netherlands, even though not all of them operated in that country, and whether the pending EU court appeals against the 2008 Commission decision effectively stayed the parallel civil proceedings in the Dutch court.

The court ruled in favour of the plaintiff group on both accounts, holding that all cartelists could be sued together for damages in the jurisdiction in which any one of their fellow co-conspirators has its seat [here, that would notably be Royal Dutch Shell, ironically the cartel’s whistle-blower that escaped the EC ruling with a zero-€ fine] . That is, even though purported ring-leader Sasol or any of the other [non-Dutch] alleged cartelists may not have had any operations in the Netherlands, they can still be subject to a full-blown civil lawsuit there. In effect, the ruling says that the European Union’s antitrust decisions, combined with the civil protections afforded EU companies and citizens, creates a de facto long-arm statute, reaching beyond the traditional geographic jurisdictional boundaries.

In addition, it held that a pending appeal against an EC cartel decision should not result in an automatic stay of any civil proceedings, as this would unduly curtail the fundamental right to seek compensation of injured parties under EU law.

While I don’t read Dutch — and therefore cannot analyse the actual decision of the NL royal court — I trust that CDC summarised its findings accurately, even though the company clearly has a stake in this and thus a likely bias.

** According to Neelie Kroes’s speech, the cartelists initially met at the “Blue Salon” at a Hamburg hotel bar (my home town, coincidentally). I have a feeling it was this place — it’s always fun to visualise cartel activity in the flesh, just like “The Informant” did for moviegoers in 2009…:

Blauer Saal Kempinski Hamburg

Ugandan telecoms merger may test COMESA regime

COMESA old flag colorUganda

The announced merger between Warid Telecom and Airtel in Uganda (a COMESA member state) may become an interesting test case for the COMESA Competition Commission‘s merger-notification regime.  At least we here at think so.

Not only does this deal present the opportunity for outsiders to watch whether, and if so, when the parties will notify the transaction to the CCC (the thresholds and conditions to notifiability are almost certainly met, given the pan-African activities of Bharti, Airtel’s Indian parent company) — it also may raise substantive concerns from a competition-law and merger-enforcement perspective, in light of the fact that the reported fusion of the #2 and #3 players in the Ugandan mobile telecoms market would result in a de facto 3-to-2 merger.

It will also show how the Ugandan authorities deal with COMESA’s claim to supranational jurisdiction over transactions such as this.  (Kenya had not taken well to it previously, as we reported on this blog…)  That said, aside from any NCA (since there is none in Uganda…), the Uganda Communications Commission (UCC) has already backed the deal as apparently pro-competitive, as The Independent reports. The reasoning there seems to be that a stronger #2 player will present more competitive challenges to the #1, which is MTN Uganda. Not necessarily orthodox antitrust doctrine, but it also comes from a non-competition body, so there…

Details of $2.9 billion bid-rigging come to light in South African parliament


As SAcommercialPropNews reports, the South African Parliament heard testimony from the chairman of the Construction Industry Development Board (CIDB), Mr. Bafana Ndendwa, on the developments and results of the South African Competition Commission’s investigation into the building industry at large.

The investigation into the potential 26 billion Rand collusion had begun when building budgets related to the 2010 FIFA soccer world cup in South Africa were plagued with cost overruns.  Since then, it appears that well over 40 construction companies have been investigated by the Commission.  We had previously reported on antitrust settlements in the S.A. building industry here.

Even with some settlements underway, the building-industry antitrust saga appears far from over, though.  Creating a spectre of double jeopardy, Mr. Ndendwa stated that leniency from the Commission may not yield similar treatment by other investigating bodies.  The cited article also quotes members of the ‘Portfolio Committee’ of the Parliament as pressing for criminal charges to be filed.  This is an interesting development, as the South African competition law (as it is currently in effect) does not [yet] provide for criminal sanctions against individuals.  While the law had been amended to include such a provision, the amendments have not yet been ratified and put into effect.

South Africa: Telkom agrees to penalty

South Africa’s incumbent telecommunications infrastructure provider, Telkom Limited, has agreed to pay R449 million ($49m) to the South African Competition Commission (the “Commission”) to settle allegations that Telkom had abused its dominant market position. The company statement can be found here.

In August 2012, the Competition Tribunal (the “Tribunal“) levied the R449 million fine against Telkom for abusing its dominant position between 1994 and 2004, after the Commission received complaints from, inter alia, the South African Value Added Networks Services.

Telkom subsequently appealed the Tribunal’s decision to the Competition Appeal Court (“CAC“) which the Commission followed with its own appeal to the CAC seeking to increase the fine to R3 billion ($327m). The settlement agreement will effectively result in the parties withdrawing their appeal and/or cross-appeal and cover their own costs. In terms of the agreement, Telkom will pay 50% of the fine within six months and the balance within 18 months.

What a Valentine’s Day Letter: Kenyan Authorities Question Effect of COMESA’s Regulations

COMESA old flag colorkenya

In an illuminating Valentine’s Day letter to the Head of the COMESA CCC, the Competition Authority of Kenya has stated its view that the CCC’s Competition Regulations may not have become effective yet, due to an allegedly improperly followed publication and public-comment procedure.

Very intriguing.  This provides a helpful factual and analytical backdrop to the other Kenya vs. COMESA-CCC stories we have reported elsewhere here and here.