*Compiled by Jemma Muller and Tyla Lee Coertzen

Introduction

On 25 November 2021, Primerio International hosted an online “fireside chat” with representatives from the newly established Nigerian Federal Competition and Consumer Protection Commission (the “FCCPC”). The discussion, led by Michael-James Currie (Director at Primerio International), shed light on the FCCPC’s practices and focus points which were highlighted by Eme David-Ojugo (Chief Legal Officer at the FCCPC) and Yemisi Oluyode (FCCPC merger’s analyst).

[If you would like to access the full discussion, click here]

The importance of the newly established FCCPC in Nigeria is undisputed. Nigeria’s GDP is the largest economy on the African continent. As such, good competition law policy is of significant importance not only locally but across the continent more generally. As the African Continental Free Trade Agreement and competition policy in Africa is being negotiated, it is critical that there are strong voices from a variety of national territories and agencies, particularly from those economies which are more developed. This will ensure balanced policy and effective competition enforcement which prioritises free trade.

This Primerio fireside discussion with the FCCPC provided great insight into the current state of play with reference to policy and enforcement trends in Nigeria.

The Status of the Agencies

The FCCPC and the Competition and Consumer Protection Tribunal (the “CCPT”) were established by the Federal Competition and Consumer Protection Act, 2018 (the “FCCPA”) in March 2021 and are the  competition and consumer protection authorities in Nigeria. The authorities were established in order to promote fair, efficient and competitive markets in the Nigerian economy.

The FCCPA is, in many respects, similar to the South African Competition Act,1998 (as amended) (the “SACA”). Furthermore, Ojugo noted that the FCCPC is fortunate to have experience from across the world to utilize and that international antitrust precedent serves as a guide to the FCCPC.

Currently, the FCCPC is active in both merger control and in the enforcement of restrictive practices and has played a proactive role in pursuing its objectives. Ojugo described the FCCPC as having an “open door policy” whereby it encourages parties to engage directly with the FCCPC to assist the FCCPC in developing and improving its practices accordingly.

In 2021, The FCCPC published various Draft Regulations and Guidelines which it is in the process of finalising. Among these are the:

• Restrictive Agreements and Trade Practices Regulations [Click here to access];
• Abuse of Dominance Regulations [Click here to access]; and
• Notice on Market Definition [Click here to access].

Restrictive Practices Enforcement – the FCCPC’s use of Dawn Raids

During the “fireside chat”, the FCCPC emphasized the use of dawn raids in its investigative processes in accordance with section 27 of the FCCPA. Dawn raids are generally unannounced and provide the authority with various powers to inspect, search and make seizures. In this regard, the FCCPC has received specialist training from the Federal Trade Commission (the “FTC”). The FCCPC has made use of dawn raids, particularly in the freight forwarding industry.

Prior to conducting dawn raids, the FCCPC is required to obtain a warrant from the Judge of the Nigerian Federal Court of Appeal. Under section 29 of the FCCPA, such a warrant permits the FCCPC to:

• enter and search the place or premises specified on one occasion within 30 days of issue at a reasonable time;
• use reasonable assistance to do so;
• use as much force as is necessary to gain entry or breaking open any article or thing;
• search and remove documents or anything that may be considered relevant to the investigation;
• make copies of documents that may be considered relevant to the investigation; and
• to require any person to reproduce or assist in providing relevant information.

The FCCPC is only permitted to conduct a search without a warrant if it has reason to believe that an entity has contravened the FCCPA or any related Regulations. In this instance, a sworn affidavit from the Executive Vice Chairman will be required.

During the “fireside chat”, Currie explored the FCCPC’s due process and procedural fairness standards that would ordinarily be followed by the FCCPC during such investigations. In response, Ojugo mentioned how the FCCPC will either institute investigations on its own initiative or following receipts of third party complaints. With regards to the latter, Ojugo noted that the FCCPC will usually carry out surveillance in order to verify the intel they receive. Ojugo explained that the FCCPC makes use of these types of procedures, as opposed to requesting information or documents, as the FCCPC is well aware that market participants will not generally be willing to provide relevant materials that would assist the FCCPC in its investigations.

Ojugo noted that while the FCCPC is given wide investigative powers, it must obtain authorisation by a Judge of the Federal High Court, and moreover that industries and firms can be assured that the FCCPC will not come in as a “bull in a China shop”. Rather, the FCCPC is intent on developing its capacity and understanding relevant markets before taking drastic interventionist measures. The FCCPC aims to maintain order, inform firms of their rights (particularly to legal representation) and aims to maintain coordination and cooperation in executing a search warrant. Furthermore, while the FCCPC is entitled to search personal items, it will only utilise information that is relevant to its investigations. In this regard, Ojugo pointed out that it is a criminal offence to obstruct the FCCPC’s investigation and the FCCPC may choose to prosecute in this instance. Moreover, refusal to cooperate with the FCCPC will serve as an aggravating factor when the FCCPC considers and calculates any resultant administrative penalties.

Overall, the approach the FCCPC has adopted in relation to restrictive practices enforcement encapsulates sophisticated investigative tools and is commendable. One potential risk foreseen in this regard is that the FCCPC retains possession of all information as opposed to a third party.

Leniency Policy, Penalty Guidelines, Criminal Sanctions

An important discussion point during the fireside chat related to the FCCPC’s approach in relation to leniency, penalties and criminal sanctions.

• Leniency Policy

According to regulation 26 of the FCCPC Restrictive Agreements and Trade Practices Regulations (the “RATPR”), any party which is involved in a restrictive agreement or trade practice which is in contravention of the FCCPA may apply for immunity from sanctions or for reduced sanctions under the FCCPC’s Leniency Rules. While the RATPR refer to Leniency Rules, it is to be noted that these are not yet available. It is expected that the FCCPC will introduce a formal set of rules with regards to leniency in due course. Currently, the FCCPA does cater for leniency albeit on an informal basis. In this regard, the FCCPC has the discretion to grant immunity and does so to a party who is the first to submit evidence that will assist the FCCPC in its investigation. Moreover, cooperation with the FCCPC may result in it deciding to lessen the administrative penalty which is ultimately levied against the infringing but disclosing party. Furthermore, the FCCPC requires an infringing party to make a full disclosure and admit their liability by way of a written undertaking. However, Ojugo notes that even if a party enters into cooperation with the FCCPC, it does not necessarily mean that such a party is free from prosecution. Ojugo suggested that the FCCPC would require an admission of guilt and full disclosure from alleged offenders in order for the FCCPC to consider providing such an offender with leniency. However, the FCCPC retains discretion in deciding whether leniency is provided. There is a foreseen risk in this regard. Parties who allegedly contravene the FCCPA would have to provide a full disclosure of their conduct if they wish to be granted immunity but immunity is not guaranteed and parties may still be liable for criminal prosecution.

• Penalty Guidelines

With regards to penalties, the FCCPA includes penalties for specific offences, namely price-fixing, conspiracy and bid-rigging. As mentioned above, the FCCPC recently published Regulations regarding the calculation of administrative penalties. Oluyode confirmed that the formula for calculating administrative penalties is complicated and cannot be done by parties alone. When deciding on a penalty, the FCCPC will utilise mitigating and aggravating factors in order to determine a party’s liability, and ultimately retains the discretion when deciding on the ultimate administrative penalty to be levied. As such, it is imperative that parties cooperate fully with the FCCPC as this will likely work in their favour, depending on the nature of the offence. Oluyode also noted that whether a global firm or a local firm is fined will depend on the circumstances of each case and which firm has caused the violation. The FCCPC will likely fine a firm on its worldwide turnover in an instance where it is the global firm who engages in or causes contraventions of the FCCPA. Local turnover is to be used when the local firm engages in or causes a contravention.

• Criminal Sanctions

The FPPCA does make provision for criminal offences for competition related violations. In this regard, the FCCPC will exercise its discretion in deciding whether to prosecute criminal offences per section 113(2) of the FFCPA wherein the FCCPC is given powers to prosecute or to refer violations of criminal offences under the FCCPA to the Attorney-General of the Federation and the Minister for Justice. It is, however, the Nigerian courts who are tasked with convicting the crime.

Merger Control

The FCCPC is responsible for analysing merger transactions to prevent any negative impacts on competition arising as a result thereof. It has implemented a suspensory merger regime. Currently, the FCCPC has not rejected any mergers but has approved various mergers subject to structural and behavioural conditions. Currie commended the FCCPC on the implementation of its online merger notification portal which it implemented as a result of the Covid-19 pandemic. It allows parties to notify their mergers and take part in pre-consultation notifications with the FCCPC in an efficient and sophisticated manner. Oluyode noted that since its implementation, the running of the portal has been smooth and merger notifications have been received through the portal.

In the past year, the FCCPC has made significant development in merger control by publishing the various Regulations and Guidelines, which are accessible here on the FCCPC website. The FCCPC has also catered for a Negative Clearance procedure allows merger parties to ascertain clarity on whether their transaction will meet the definition of a merger and whether it must be notified to the FCCPC. The FCCPC recognises that consumer protection requires a joint responsibility by different regulators and agencies. It intended to provide for regulatory overlap in order to ensure complete coverage and protection of consumers. As such, while the FCCPC bears the responsibility of overall oversight over consumer protection, it intends to develop strategic alliances and encourages collaboration with different sector regulators.

 Section 92 of the FCCPA provides that a merger occurs when “one or more undertakings directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another undertaking” and may occur through the purchase or lease of shares; an interest in assets of an undertaking; the amalgamation or other combination with the undertaking; or a joint venture. Notifiable mergers must meet the above mentioned definition of a merger as well as meet the relevant merger thresholds set by the FCCPC. Mergers will be notifiable either where the parties to the merger in Nigeria have an annual turnover of above NGN 1 billion in the year preceding the merger; or where the annual turnover of the Nigerian target firm was more than NGN 500 million in the year preceding the merger. Mergers which do not meet the above threshold are classified as small mergers and need not notify their transaction, although section 95(3) of the FCCPC provides that within six months of the implementation of the merger, the FCCPC may require notification if it is of the opinion that the merger may substantially prevent or lessen competition in the market.

Mergers that meet the thresholds must obtain the FCCPC’s permission prior to implementation of the merger. As mentioned above, small mergers may be implemented without prior permission unless otherwise stipulated by the FCCPC. Oluyode clarified that while previously there was some confusion regarding the filing fees of foreign-to-foreign mergers, the FCCPC requires only the Nigerian local turnover to be used to calculate a filing fee.

In this regard, foreign-to-foreign merger approval is required by the FCCPC where a transaction taking place outside of Nigeria will have the effect of altering the control of a business, any part of a business or any asset of a business existing in Nigeria.

Of increasing importance in African antitrust law is the consideration of public interest factors in merger notifications. While the FCCPC representatives noted that the conditions the FCCPC has already imposed have related mainly to competition-based concerns, as opposed to public interest concerns, this does not mean that the FCCPC does not regard public interest concerns as important. The FCCPA prescribes that the FCCPC will consider whether a transaction can be justified on substantial public interest grounds. In this regard, the FCCPC will consider the factors in section 94(4) of the FCCPA, namely: the effect on a particular industrial sector or region; employment; the ability of national industries to compete in international markets; as well as the ability of small and medium scale enterprises to become competitive. Oluyode confirmed that the Minister of Trade, Industry and Investment may, at any point in time during a merger analysis, make his own representations concerning substantial and merger-specific public interest concerns which will be considered by the FCCPC.

Currently, the FCCPC has not published any of its decisions, however, it intends to begin publishing  its decisions on its website in the course of 2022 for public access.

What to expect going forward:

The FCCPC is set out for success, particularly having regard to the wide range of precedent available to it. As previously mentioned, the FCCPA was modeled off of South African competition legislation and the FCCPC intends to use the precedent of well-established jurisdictions such as those in Europe, the US and South Africa. Currently, the FCCPC is working on finalising its draft regulations and it is important that this is done timeously for the purposes of attaining clarity.

With regards to the extent to which parties who want to attain immunity from the FCCPC must admit their liability,  Currie noted that in many jurisdictions there is question on whether an admission of guilt is required or whether parties should be permitted to pay a penalty without a formal admission of guilt in their settlement. Often, the latter is a preferred option as parties usually prefer to pay a penalty to avoid the costs of litigation and civil follow-on damages. In response, Ojugo noted that as it stands, the FCCPC currently insists that parties take absolute responsibility for their actions. As a result, admission is an absolute requirement if a violating party wishes to benefit from the FCCPC’s leniency program. It remains to be seen whether an admission of guilt will continue to remain an absolute requirement. This will likely be addressed in the FCCPC’s Leniency Rules once they are published.

[Michael-James Currie is a competition lawyer and Director at Primerio. He serves as the Global Law Expert for Competition Law in Nigeria and is considered a leading competition lawyer across Africa including Best Lawyers for Competition Law in South Africa. He can be contacted at m.currie@primerio.international]