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Nigerian Competition Law: FCCPC Publishes Penalty Guidelines

By Michael-James Currie and Jemma Muller

Nigeria is quickly emerging as one of the more important antitrust regimes on the African continent. Not only because it is a significant market, but largely due to a raft of recent legislative developments. The Federal Competition and Consumer Protection Commission (“FCCPC”) has been formally established and is fully operational with the legislative tools to tackle and prosecute the traditional spread of competition law violations including restrictive horizontal practices, abuses of market power and conduct robust analysis in relation to its merger control regime.

The most recent publication by the FCCPC is its Administrative Penalties Regulations, 2020 (“Penalty Regulations”). The publication of these Penalty Regulations not only serve as stark reminder of the risks of non-compliance with the competition laws but also signals the start of an active enforcement regime.

The Penalty Regulations provide for a largely mechanical calculation for purposes of quantifying an administrative penalty. In essence, however, the Penalty Regulations provide for a prescribed “base amount” (which is either fixed fee or calculated as a percentage of turnover) and this base amount is increased (or decreased) based on aggravating and mitigating factors as well as taking the duration of the infringement into account.

Importantly, the penalties are calculated with reference to annual turnover. This is not qualified by local or Nigerian derived turnover only. There is a risk that when calculating administrative penalties a firms’ total worldwide turnover is taken into account. This poses a significant risk for foreign entities who might only have a relatively negligible presence in Nigeria but are significant players on the global market.

Failure to notify a mandatorily notifiable merger (i.e., gun-jumping or prior implementation) attracts a base penalty of 2% of the parties’ annual turnover. This includes a pure foreign-to-foreign merger (i.e. where parties are domiciled outside of Nigeria) but have a nexus to Nigeria by virtue of having a subsidiary in Nigeria or derive turnover in or from Nigeria.

The good news for foreign firms is that parties to a foreign-to-foreign merger (or to a merger which raises no overlapping business relationships) may apply to have their transaction assessed under an expedited review regime. The expedited regime envisages reducing the review period of a phase 1 merger by up to 40%. It is advisable to engage the FCCPC by way of the pre-merger consultation process in order to confirm whether a proposed transaction qualifies for an expedited review.

Over and above administrative penalties, firms operating in Nigeria should also note that the FCCPC has the powers to pursue criminal prosecution against firms and individuals who violate certain provisions of the legislation. These include provisions dealing with, inter alia, price fixing, conspiracy, bid-rigging, obstruction of an investigation or inquiry of the Commission, providing false or misleading information, the failure to give evidence or appear before the Commission, and the failure to comply with a compliance notice or order issued by the Commission.

Like most jurisdictions which adopt a new, novel or revamped competition law regime, there are several aspects of Nigeria’s legislation which would benefit greatly from precedent. But in relation to the primary obligations of firms operating in Nigeria, the fundamentals are clear and the consequences for contraventions are of sufficient import to ensure that Nigeria is placed on the compliance radar.

[Michael-James Currie is a partner at Primerio and specializes in competition law in several African jurisdictions including Nigeria. Please feel free to get in touch with Michael-James by sending an email to m.currie@primerio.international]  

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settlement, South Africa, Telecoms

South Africa: Telkom agrees to penalty

south_africa
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.

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