9 months make a baby – but no antitrust authority!

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mozambique

Almost nine months later… and still no signs of the Mozambique Competition Authority

By Sofia Ranchordas, Tilburg University (Law School)

On April 11, 2013, the Mozambique Competition Act was passed.  We wrote a piece on the potential advent of competition law in Mozambique here, brusquely entitled: Antitrust in Mozambique? …could have stayed in COMESA.

The law constitutes an important milestone for the country’s economy since it establishes an independent competition regulatory authority (‘CRA’), is applicable to most economic activities, and introduces a legal framework for competition in Mozambique. The Mozambique Competition Act addresses anti-competitive practices and merger control. This act came into force on July 10 and should have been implemented by October 8, 2013. It ‘should have’ but its thorough implementation, including the approval of the Statute of the CRA, leniency program and the definition of exact thresholds for the notification of mergers to the CRA, is still out of sight.

In 2007, the Mozambique Competition Policy (Resolution n.º 37/2007, 12.11) was approved. The adoption of this policy document was a step towards the modernization of this country’s framework for business conduct and improvement of competition conditions. It was also an attempt to tackle existing anticompetitive practices taking place in different economic sectors, including predatory pricing, refusals to deal, and horizontal agreements. In 2007, the Council of Ministers acknowledged the need for stricter competition rules and the establishment of an independent competition authority. At the time, Mozambique already knew multiple sectoral dispositions prohibiting anti-competitive practices that were (and still are) enforced by sectoral regulators. However, an all-embracing competition act was still missing. In 2009, the endorsement of the Southern African Development Community (SADC) Declaration on Regional Cooperation in Competition and Consumer Policies increased the pressure for the enactment of a competition act. Mozambique was seriously lagging behind the other members of this regional community, where some countries had effective competition laws and operating competition authorities for years. This was the case of South Africa, Zimbabwe, Tanzania and Malawi.

On April 11, 2013 the long-awaited Mozambique Competition Act (‘MzCA’) was adopted. An attentive reader shall rapidly find the similarities between this act and the 2003 Portuguese Competition Act (replaced in 2012). The MzCA has a comprehensive scope and is applicable to both private and State-owned undertakings, including most economic activities (see the exceptions listed in article 4). This act prohibits both horizontal and vertical agreements and practices susceptible of substantially impeding, distorting or restricting competition (articles 15-18). This act provides however that the mentioned prohibited practices may notably be justified if they generate economic efficiencies, promote the competitiveness of small and medium enterprises, promote innovation, exportations, or result in other pro-competitive gains (article 21 and 22). Although the text of the MzCA is unclear, it appears that the drafting of a leniency policy is one of the elements which shall be regulated in the context of the implementation process of this act.

The prohibition of abuse of dominant position, as defined in article 20, appears to be one of the priorities of this law. Mozambique is characterized by a highly concentrated market and the dominance of previously state-owned companies, which have been recently liberalized.

The MzCA introduces merger control rules in Mozambique, defining mergers as ‘an acquisition of shareholdings, an acquisition of ownerships or the right of use of assets, IP rights, or any agreements granting a decisive influence on the composition or resolution of corporate bodies. Mergers that meet certain thresholds must notify the operation to the CRA within seven working days after the agreement. These thresholds remain until now unknown since their definition has been left to the further regulations which should have been adopted in October this year.

As far as sanctions are concerned, the violation of the prohibitions contained in the MzCA may result in the application of fines up to 5% of a company’s turnover in the previous year. Additional sanctions such as the exclusion of participation in public tenders for a period of up to five years may equally be applied.

The implementation of the MzCA is expected to be gradual and to take into account the characteristics of the Mozambican economy. Considering the dispositions of the MzCA and particularly the extensive powers vested in the CRA, this act, if correctly implemented, may produce a strong impact on most Mozambican economic sectors and compel companies to rethink some of their practices. There is only one small detail: almost nine months have passed and it is still unknown when and how the implementation process of the MzCA will start.  If experience from other new competition jurisdictions can be used as a guideline, one may expect the MZ government to hire a law firm or other experts to draft the implementation rules that are still missing, but this – as much else – remains to be seen.

More antitrust? Calls for competition legislation in Ghana

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ghana

Former Ghanaian Supreme Court Justice calls for competition law

According to online reports, Mr Samuel Date-Bah, retired Justice of the Ghanaian Supreme Court and Council Chairman of the University of Ghana, made some strong public comments on the economic necessity of creating a new West-African antitrust regime at a conference on December 5, 2013, also known as “World Competition Day”.  The event was the “Policy Roundtable Discussion on Competition Reforms in Ghana,” organized by CUTS International, held in the capital of Accra.

The article reports that Justice Date-Bah, who has held visiting academic positions at Oxford and Yale Law School, deplored the legislature’s previously failed attempts of enacting a comprehensive competition law, calling for the country to do so to ensure proper market dynamics.

Other panelists, such as Dr Edward Brown, Director of Policy Advisory Services at the African Centre for Economic Transformation (ACET), reportedly supported the Justice’s position on the need for a Ghanaian competition-law regime and called for its integration into the regional supranational bodies of ECOWAS and UEMOA.

Mobile Telecom and Payments sector getting boost from state in Kenya

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kenya

See PDF reprint of this article (published by “e-competitions“) here.
According to a release by the Kenyan Communications Commission (CCK), the CCK is cooperating with the country’s Competition Authority (CAK) to enhance the mobile telecoms sector in Kenya.

The CCK is aiming for 90% of all Kenyans to have access to mobile communications devices within five years, thereby seeking to double the telecoms sector’s contribution to the country’s GDP to a total of 5%.  It is noteworthy that Kenya – a comparatively technologically advanced East African nation that currently already has 76% mobile penetration among its residents – is not only relying on the telecom authority to achieve these goals, but the agency is actively collaborating with the competition watchdog CAK.

An article in HumanIPO quotes the CCK director general, Francis Wangusi, as saying: “We are working with the Competition Authority to ensure that all the mobile money transfer platforms are transparent in order to promote competition.”  The official CCK press release is available here.

Other interesting statistics are the planned increase in internet penetration from the current 41.6% to 70% and that of mobile money services from 58.9% to 70% by the end of the 5-year plan.

Mobile payments have been described as “the epicenter of mobile commerce. The merger of the social, mobile, and payment industries has created incredible business growth opportunities for start-ups, social media, banks, retailers, payment networks, and other companies.”

Use of a mobile device such as a cell phone with SMS or internet capability is particularly widespread in many African countries, where brick-and-mortar banks are scarce and not widely used by the vast majority of the population, whereas mobile phones are omnipresent and relatively easily accessible (see the 76% current penetration rate, which rivals that of developed European economies).

Kenya itself is considered by many to be at the forefront of the African mobile-payments universe, with its M-Pesa mobile-currency system often touted as the most developed mobile-payment system in the world.  The Economist asked rhetorically: “Why does Kenya lead the world in mobile money?”, pointing out that roughly 25% of Kenya’s GDP flows through the mobile service, with over 17 million users in Kenya alone.  The WorldBank has commented that “Mobile payments go viral [with] M-PESA in Kenya.”  M-Pesa was originally launched in March 2007 by Vodacom/Safaricom in Kenya and is now jointly operated with other carriers offering services in Tanzania, South Africa, Afghanistan, India and other nations.

Public Interest Factors in African Competition Policy

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Author and economist Patrick Smith recently published “Public Interest Factors in African Competition Policy“ in The African and Middle Eastern Antitrust Review 2014.  The consideration of public interest factors in competition law inquiries has generated much debate over the past few years. Several high profile cases have illustrated the potential for competition decisions,
and in particular merger inquiries, to be significantly affected by non-competition public interest issues.

Our readers have free access to the full PDF.

The Review is published by Global Competition Review and is available online at: http://globalcompetitionreview.com/reviews/59/the-african-middle-eastern-antitrust-review-2014

This year’s issue of the Review also features two other AfricanAntitrust.com writers: contributing author, Chabo Peo, whose piece on competition law in Botswana is available at the GCR web site, as well as editor John Oxenham‘s piece on cartels in South Africa, available here.

A full list of contributors to our site can be found at: https://africanantitrust.com/about/

In-house competition counsel joins leading African antitrust blog

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We are pleased to present the latest addition to the ranks of AAT authorship: Mark Griffiths.

Mark Griffiths is Competition Counsel for Barclays Africa Group and is accountable for competition risk management across the African continent for Barclays.  Mark is heavily involved in antitrust and merger matters across twelve African jurisdictions with active competition authorities.  He has been involved in a number of pivotal developments across the region.

Prior to his appointment with the Barclays Group in 2007, he was a senior associate (admitted as a solicitor of the Senior Courts of England and Wales) in the EU and Competition practice of Clifford Chance (London).  He also previously worked for DG Competition at the European Commission as well as being specialist legal advisor to the House of Lords EU Select Committee on the EU Financial Services Action Plan.

Mark is a regular contributor to a range of legal journals as well as a regular speaker on African competition law at local and international conferences. Mark has attended meetings of the International Competition Network as a NGA. He has an LLB (University of Southampton, UK) and an LLM in European Law (College of Europe, Bruges, Belgium).

A full list of contributors to our site is available here: https://africanantitrust.com/about/

Balancing Public Interest Merger Considerations with the Quest for Certainty

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AAT editor John Oxenham‘s paper on “Balancing Public Interest Merger Considerations with the Quest for Multi-Jurisdictional Merger Control Certainty” in the “US-China Law Review.”

Our readers have free access to the full PDF.

Abstract:

The growing importance of public interest considerations, and the uncertainty that it creates, in South Africa and other sub-Saharan jurisdictions, including Zambia, Namibia and Botswana, pose an additional challenge for merging entities attempting to coordinate multi-jurisdictional merger notifications. These difficulties were, most recently, brought to the fore during the much publicized and highly opposed proceedings involving Wal-Mart’s takeover of the South African listed retailer Massmart. While the growing importance of public considerations increases the complexity and cost of multi-jurisdictional merger filings, the author suggests that these challenges can be countered by addressing public interest considerations as an integral part of submissions in support of merger filings in the sub-Saharan African region

Competition economist joins panel of AfricanAntitrust.com blog authors

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Patrick Smith is a partner at RBB Economics.  Previously a chemical engineer, Patrick applies economics, econometrics and industrial expertise to competition policy, litigation and arbitration.

He has testified and consulted to parties, agencies and interveners in high-profile, complex and multi-jurisdictional proceedings over the past decade.  These include leading roles in cases such as:

Syniverse/MACH, Bread, Universal/EMI, Gold Circle/Kenilworth Racing, Thaba Chueu/SamQuarz, First Quantum v DRC, Pioneer/Pannar, Sun Capital/DSP, Dow/Rohm & Haas, InBev/Anheuser Busch, ABF/GBI, Polymers and Inco/Falconbridge.

Patrick is a regular speaker on antitrust economics at conferences and seminars around the world.

We look forward — as do you, we expect — to reading Patrick’s insightful takes on competition law & economics!

Patrick Smith, RBB, author
Patrick Smith, RBB, author (South Africa)

A full list of contributors to our site is available here: https://africanantitrust.com/about/

COMESA merger rules to change in April 2014 at the earliest

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COMESA Competition Commission logo

Breaking news: A senior source at the COMESA Competition Commission (“CCC”), has confirmed that the CCC is currently finalising proposed amendments to the Regulations.

The amendments being debated seek to change, crucially, the applicable thresholds for merger notifications to the CCC and to clarify the definition and (potentially lower?) amount of the administrative notification fees.

For the amendments to come into force, they require approval from the COMESA Council of Ministers.  The Council convenes once a year, now likely in February.  The source adds that, as the amendments will only be finalised toward the end of February, an extraordinary session of the Council of Ministers will likely need to be convened to consider the amendments to the Regulations.  Such an extraordinary session may take place in April 2014.  The amended Regulations will only become enforceable upon approval by the Council.

That is, the way things are looking today, any change to the COMESA merger rules will occur in half a year at the earliest…

In practical terms, this means that the dual dilemma of the “zero-threshold contagion” and the inordinately high filing fees currently affecting the CCC’s merger-control regime (and resulting in rather low merger-notification statistics of less than one per month) will continue to hamper the young agency and its customers for the foreseeable near-term future.

We will report back once we have additional details on the precise language of the proposed amendments.

Quo vadis? Political interventionism in South African competition law

Posted on by oxenhamjmj
There has been a somewhat startling demonstration of diverging views regarding interventionism in competition matters between emerging and established jurisdictions.

During the recent BRICS international competition conference, held in New Delhi over the last few days, FTC chairwoman Edith Ramirez had sought to steer emerging economies away from mixing industrial policy with antitrust law. She indicated that “proper goals of competition law were best solved when a competition authority is focused on competition effects and consumer welfare, and when its analysis is not “interrupted to meet social and political goals.” (Ramirez cited the well-known case of the Wal-Mart / Massmart merger during which a number of South African government departments had intervened and extracted significant non-competition centric conditions from the merging parties as an example of permitting non-competition factors to intervene in the merger-review process to an undue degree).

Juxtapose this with the comments made at the very same conference, by the newly appointed interim South African Competition Commissioner, Tembinkosi Bonakele. Bonakele had the following to say during an interview regarding the independence of the competition authorities in South Africa:

“In a country which suffers from 35 per cent unemployment, there are increasingly calls for the authority to consider job creation and the development of local industries in its investigation and merger reviews. This is not an unreasonable call. While competition authorities should not be beholden to the government neither can they be loose cannons who claim independence without accountability. Competition policy cannot exist in isolation and each BRICS enforcer faces the need to balance competition law with its government’s political and economic policies. Competition authorities cannot afford to shy away from the debate.”

ppt

A number of practitioners have keenly been awaiting Bonekele’s views on the independence of the Competition Commission in the light of the untimely and suspicious departure of the previous commissioner, Shan Ramburuth (in what many commentators have described as evidence of pure uninterrupted interventionism by the Department of Economic Development). It is, particularly, in light of the cloud surrounding (and possible political element involved in) his predecessor’s removal, that these comments of the South African competition commissioner are all the most startling. It is worrying that the prevalent view in developing economies (after all, the venue at issue here was a BRICS conference) appears to open the door for greater non-antitrust intervention rather than less government meddling.

It is certainly the view of the author of this piece — a presentation given this fall at the Inaugural Global Mergers Conference in Paris (Concurrences/Paul Hastings) — that the South African competition authority should rather seek to assert its independence rather than tolerate what appears to be an ever increasing amount of political interventionism.

New author joins leading African competition blog

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We are pleased to report that Luke Kelly has joined AfricanAntitrust.

Our newest contributing author, Luke Kelly, is an advocate of the High Court of South Africa and member of the Cape Bar.  He holds a masters degree in competition law from King’s College London and currently teaches competition law on a part-time basis at the University of Cape Town.

We look forward — as do you, we expect — to reading Luke’s insightful takes on competition law in South Africa and elsewhere on the continent.

Luke Kelly, Advocate of the High Court of South Africa and member of the Cape Bar, author
Luke Kelly, author

A full list of contributors to our site is available here: https://africanantitrust.com/about/