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AFRICA GUIDE – COMPETITION

Contents

04 Introduction

06 OurCompetitionPractice

08 Botswana

16 Burundi

21 COMESA

28 Ghana

35 Kenya

48 Malawi

57 Mauritius

67 Mozambique

74 Namibia

84 Nigeria

94 Seychelles

106 SouthAfrica

118 Swaziland

126 Tanzania

132 Uganda

142 Zambia

150 Zimbabwe

156 KeyContacts

Africa Guide - Competition

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Introduction to the Bowmans Competition Law Africa Guide 2018

TheCompetitionLawAfricaGuideprovidesanswerstofrequentlyaskedquestions

relatingtocompetitionlawregimesinvariousAfricanjurisdictions.

IthasbeenpreparedbycompetitionlawspecialistsinourSouthAfrican,Kenyan,TanzanianandUgandanofficesandlocallawyersacrosstheAfricancontinent.

RECENT AFRICAN COMPETITION LAW DEVELOPMENTS

CompetitionlawpresentsvariouschallengesforcompaniesdoingbusinessinAfrica.ThenumberofcompetitionlawregimesacrossAfricahasincreasedsignificantlyinrecentyearsandnationalregulatorsacrossthecontinentarebecomingincreasinglyactive.

Therearealsoanumberofregionalorganisationsregulatingcompetition,suchastheCOMESACompetitionCommission,whichregulatesmergersandanti-competitiveconductinthe19MemberStatesofCOMESA1.WhiletheCOMESACompetitionCommissioninitiallyfocusedonmergers,enforcementactivitiesinrespectofrestrictivepracticesisincreasing.

Co-operationbetweenregulatorsacrossthecontinentisalsoincreasingsteadily.Duringthecourseof2017,threeadditionalmemorandaofunderstanding(MoU)weresignedbycompetitionregulatorsinAfricaandBRICS,tofacilitatetheco-operationbetweencompetitionregulatorsonissuesofcompetitionpolicyandenforcement.

Therearenowmorethan20MoUsinexistencebetweencompetitionregulatorsinAfricaandBRICS.Regularcontactbetweencompetition

agenciesoccursand,insomeinstances,dedicateddeskofficersco-ordinatecommunication.

CompetitionlegislativedevelopmentsinAfricaareongoing.Duringthecourseof2017,variousauthoritiesintroducedneworamendedcompetitionlaws,regulations,guidelinesand/orpolicies.AlawestablishingtheRwandaInspectorateandCompetitionAuthoritywasenactedinJuly2017andtheBotswanaCompetitionBillNo.22of2017wasalsopublishedinJuly2017.

InSouthAfrica,on1December2017,theMinisterofEconomicDevelopmentpublishedtheCompetitionAmendmentBill2017(thedraftBill)forpubliccomment.Accordingtothebackgroundnote,thedraftBillaimstostrengthentheprovisionsoftheCompetitionActaimedataddressingstructuralchallengesintheSouthAfricaneconomy,inparticularconcentrationofownershipandtheraciallyskewedspreadofownershipintheeconomy.ThedraftBillalsoseekstoenhancethepolicyandinstitutionalframework,andproceduralmechanismsfortheadministrationoftheCompetitionAct.Theproposedamendmentsaddressfivepriorities:

• strengtheningtheprovisionsoftheActrelatingtoprohibitedpracticesandmergers;

• emphasisingtheimpactofanti-competitiveconductonsmallbusinessesandfirmsownedbyhistoricallydisadvantagedpersons;

• strengtheningtheprovisionsoftheActrelatingtomarketinquiries;

• thealignmentofcompetition-relatedprocessesanddecisionswithotherpublicpolicies,programmesandinterests;and

• enhancingtheadministrativeefficacyandprocessesofthecompetitionregulatoryauthorities.

1. Burundi,Comoros,DemocraticRepublicofCongo,Djibouti,Egypt,

Eritrea,Ethiopia,Kenya,Libya,Madagascar,Malawi,Mauritius,Rwanda,

Seychelles,Sudan,Swaziland,Uganda,ZambiaandZimbabwe.

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Inaddition,theMinisterofEconomicDevelopmentpublishedGovernmentNotices1003and1005on15September2017,reflectingrevisedthresholdsforintermediatemergersandrevisedfilingfeesforintermediateandlargemergers,effective1October2017.

InNamibia,inearly2017,themethodofcalculatingfilingfeespayableinrespectofmergersnotifiedtotheNamibianCompetitionCommissionwasamended,resultinginanoverallincreaseinfilingfeespayable.

KenyahasmadeprogressinitseffortstostrengthencompetitionregulationwiththeintroductionofrulesthatwillgoverntheworkofthenewlyestablishedCompetitionTribunal.

InGhana,theMinistryofTradeandIndustryhasindicatedthatcompetitionlegislationwillbeenactedin2018,withtheBillandpolicydocumentcurrentlybeingreadyforsubmissiontocabinetafterhavingbeendevelopedtwoyearsagoandhavingundergonestakeholderconsultation.

Competitionregulatorsarealsobeingproactiveintheirenforcementintermsofprohibitedpractices.TheCompetitionandConsumerProtectionCommissioninZambiahaslaunchedinvestigationsintoexcessivepricinginrespectofthesuddenincreaseinpricesofdisinfectants,specificallychlorine,inthewakeofthecholeraoutbreak.TheCompetitionCommissioninSouthAfricahasbeenproactiveinitsinvestigativerolebyconductinganumberofmarketinquiriesacrossvariousindustriesincludingbanking,healthcare,theretailgrocerysector,transportandthemarketfordatainthetelecommunicationsector.TheNamibianCompetitionCommissionisstillpursuingabuseofdominancecasesincludinginthewheatflour,financialservicesandaviationfuelsectors.


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BOWMANS

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Our Competition Law Practice

BowmansisaleadingPan-Africanlawfirm,employingmorethan400specialisedlawyersandprovidingdomesticandcross-borderlegalservicesinthefieldsofcorporatelaw,bankingandfinancelaw,anddisputeresolutionforoveracentury.Bowmansisdifferentiatedbyitsgeographicalreach,independenceandthequalityoflegalservicesitprovides.

ThefirmdeliversintegratedlegalservicestoclientsthroughoutAfricafromsixoffices(CapeTown,DaresSalaam,Durban,Johannesburg,KampalaandNairobi)infourcountries(Kenya,SouthAfrica,TanzaniaandUganda).BowmansalsoworkscloselywithleadingNigerianfirm,UdoUdoma&Belo-Osagie,whichhasofficesinAbuja,LagosandPortHarcourt,andhasstrongrelationshipswithotherleadinglawfirmsacrosstherestofAfrica.ItisarepresentativeofLexMundi,aglobalassociationwithmorethan160independentlawfirmsinallthemajorcentresacrosstheglobe.

Bowmansexpertiseisfrequentlyrecognisedbyindependentresearchorganisations.ThefirmhasbeennamedAfricanLegalAdviserbyDealMakersforthelastthreeconsecutiveyearsandSouthAfricanLawFirmoftheYearfor2016bytheWho’s Who Legal.

TheBowmansCompetitionpracticecontinuestobeattheforefrontofdevelopmentsinAfricancompetitionlaw,providingafullrangeofcompetitionandanti-trustlawservicestolocalandinternationalbusinessesoperatinginandaroundAfrica.Theseservicesrelatetomergercontrol,cartelsandmarkets,abuseofdominanceandotherrestrictivepractices,andtradeissues.Thepracticeoftenprovidescompetitionlawcompliancetrainingtoourclients.Ourinternationallyrecognisedcompetitionlawexpertsalsoparticipateinspecialcommitteesoncompetitionlaw;activelycommentondraftlegislationinavarietyofAfricancountries;andregularlycontributetocompetitionlawpublications.

Lastyear,the2017ChambersGlobalrankingratedourcompetitionteaminBand1andweadvisedonthreemattersthatwererecognisedaswinnersatthe7thAnnualGlobal

Competition Review(GCR)AwardsheldinWashingtonon28March2017.TheGCRAwardsrecognisethebestcompetitionandantitrustmattersoftheyearbasedonvotesbymembersoftheinternationalcompetitioncommunity.

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Botswana

BOOKBINDER BUSINESS LAW

Jeffrey Bookbinder | Chabo Peo

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1. What is the relevant competition legislation and who are the enforcers?

TherelevantcompetitionlegislationistheCompetitionAct,[Cap46:09](theAct)togetherwiththeCompetitionRegulations,2011(theRegulations),beingtheregulationspromulgatedintermsoftheAct.TheActestablishedtheCompetitionAuthority(theAuthority).TheActisenforcedbytheAuthority,theBotswanaCompetitionCommission(theCommission),whichisthegoverningbodyoftheAuthority,andtheHighCourtofBotswana.

2. Are there any proposed amendments or new regulations expected to come into force?

TheCompetitionBill,2017(theBill)waspublishedon12July2017.TheobjectoftheBillistorepealandre-enacttheActwithamendments.Amongstotherchanges,theBillestablishestheCompetitionandConsumerBoardwhichshallbethegoverningbodyoftheAuthority.3. Is the law actively enforced?

TheActisactivelyenforcedbytheAuthority,bothinrespectofmergersandinrelationtoprohibitedpractices.SincethecommencementoftheActinOctober2011,theAuthorityhasdealtwithover400cases.Themajorityofthesecasesaremergersbuttherehavebeenasubstantialnumberofabuseofdominancecasesandcasesofrestrictivebusinesspractices.Asatthetimeofwriting,theAuthorityhadrecentlyinstitutedproceedingsagainstfourwholesalersallegingtheoccurrenceofresalepricemaintenance.ThemattersarebeingadjudicatedbeforetheCommission.TheAuthorityhasaskedtheCommissiontolevyapenaltyinasumequivalentto10%oftherespectivewholesalers’annualturnoverforathree-yearperiod.Thepenaltybeingsoughtby

theAuthorityisthemaximumamountpermittedundertheAct.Infixingtheamountofafine,theCommissionmayhaveregardtospecificfactorsincludingthegravityoftheinfringementandtherecurrenceordurationoftheinfringement.

4. What are the current priorities or focus areas of the competition authorities?

ThefocusareasoftheAuthorityoverthepastyearhavebeen:

• mergercontrol;• cartelenforcement;and• actingasanadvisorybodytothe

GovernmentofBotswanainrespectofstatutorymonopoliesandhowbesttoalignthemwiththeAct.

5. What kind of transaction constitutes a notifiable merger?

ItisrequiredtonotifytheAuthorityofatransactionifit(i)constitutesamerger(asdefinedintheAct);and(ii)meetstherelevantthresholdsprescribedformandatorynotification.ForthepurposesoftheAct,amergeroccurswhenoneormoreenterprisesdirectlyorindirectlyacquireorestablishdirectorindirectcontroloverthewholeorpartofthebusinessofanother.Thereisnoclosedlistofhow‘control’maybeachieved.Controlmaybeachievedinanymanner,including:

• thepurchaseorleaseofshares,aninterest,orassetsoftheotherenterpriseinquestion;or

• theamalgamationorothercombinationwiththatenterprise.

Broadly,apersoncontrolsanotherfirmifthatperson,inter alia:

• beneficiallyownsmorethanone-halfoftheissuedsharecapitalofthefirm;

• isentitledtovoteamajorityofthevotesthatmaybecastatageneralmeetingofthefirm,


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orhastheabilitytocontrolthevotingofamajorityofthosevotes,eitherdirectlyorthroughacontrolledentityofthatperson;

• isabletoappointorvetotheappointmentofamajorityofthedirectorsofthefirm;

• isaholdingcompany,andthefirmisasubsidiaryofthatcompanyascontemplatedintheCompaniesAct;

• hastheabilitytocontrolthemajorityofthevotesofthetrusteesortoappointthemajorityofthetrusteesortoappointorchangethemajorityofthebeneficiariesofthetrust,inthecaseofanenterprisebeingatrust;

• ownsthemajorityofthemembers’interestsorcontrolsdirectlyorhastherighttocontrolthemajorityofmembers’votesintheclosecorporation,inthecaseoftheenterprisebeingaclosecorporation;or

• hastheabilitytomateriallyinfluencethepolicyofthefirminamannercomparabletoapersonwho,inordinarycommercialpractice,canexerciseanelementofcontrolreferredtointhebulletpointsabove.

6. What are the thresholds for mandatory merger notification (e.g. assets, turnover and/ or market share)?

Amergerisnotifiableifitmeetsthefollowingthresholds:

• theturnoverinBotswanaoftheenterpriseorenterprisesbeingtakenoverexceedsBWP10million;

• theassetsinBotswanaoftheenterpriseorenterprisesbeingtakenoverhaveavalueexceedingBWP10million;or

• theenterprisesconcernedwould,followingimplementationofthemerger,supplyoracquire20%ofaparticulardescriptionofgoodsorservicesinBotswana.Inrelationtothisrequirement,theAuthorityhasconfirmedthatevenwhereanacquiringfirmhasnopresenceinBotswanabutacquirescontrolofatargetfirmwithamarketshareof20%ormoreinarelevantmarket,themergerthresholdswillbetriggeredas,onastrictreadingofthelegislation,themergedentitywillhaveamarketshareof20%ormore.Putdifferently,thereisnoneedforanaccretioninmarketshareinorderforthenotificationobligationtobetriggered.

7. Is there a prohibition on the pre-implementation of a merger? If so, does the legislation make provision for a penalty?

Partiestoanotifiablemergermaynotimplementthemerger(i)beforeobtainingtherequisiteapproval;or(ii)priortotheperiodfortheAuthority’sreviewhavingelapsedwithouttheAuthorityhavingmadeadeterminationinrelationtothemerger.WheretheAuthorityformsareasonablesuspicionthatamergerisbeing,orhasbeen,implementedincontraventionoftheAct,theAuthoritymaygivedirectioninwritingtotheenterprise(s)concernedtotheeffectthat,interalia,implementationofthemergerbesuspendedpendingtheAuthority’sinvestigation.

Therearenoexpresspunitiveprovisionsinrespectoffailuretopre-notifytheAuthoritybutwheretheAuthoritydeterminesthatamergerhasbeenimplementedincontraventionoftheAct,itmaygivefurtherdirectiontotheenterprise(s):

• nottocompleteorimplementthemerger;• tosellorotherwisedisposeofanyassets

orsharesorotherinterestacquiredinthemerger;

• toterminateanyagreementstowhichthemergerwassubject;or

• totakesuchfurthermeasuresasmaybenecessarytorestoretheconditionsofcompetitionexistingpriortothemerger.

ShouldtheAuthoritydeterminethattherehasbeenafailuretocomplywithadirectiongivenwheretheAuthorityhaddeterminedthatamergerhadbeenimplementedincontraventionoftheAct,itmaygivenoticetotheenterprise(s)concernedofitsintentionsandconsideranyrepresentations.ItmaythereafterapplytotheHighCourtforanorderrequiringtheenterprise(s)tomakegoodthedefault.

8. What filing fees are required?

Thefilingfeeis0.01%ofthemergingenterprises’combinedturnoverorassetsinBotswana,whicheverishigher.

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9. Is it necessary to obtain approval for foreign-to-foreign mergers?

TheActappliesto“alleconomicactivitywithin,orhavinganeffectwithin,Botswana”.Accordingly,foreign-to-foreignmergersarenotifiableifthemergerinvolveseconomicactivitywithinorhavinganeffectwithinBotswanaandtheprescribedthresholdsaremet.

10. Are pre-notification contacts with the authorities permitted and are pre-notification meetings normal practice?

AlthoughtheActdoesnotspecificallyprovideforpre-notificationmeetings,inBotswanatheyarebothpermittedandnormalpractice.

11. To what extent are non-competition factors relevant to the assessment of a merger?

TheActspecificallyprovidesforpublicinterestconsiderationstobetakenintoaccount.AspartoftheassessmentthattheAuthorityisrequiredtomakeintermsoftheAct,theAuthoritymaytakeintoaccountanyfactoritconsidersrelevanttothebroaderpublicinterest,including:

• theeffectthatamergerwillhaveonaparticularindustrialsectororregion;

• employment;• theproductionordistributionofgoodsor

theprovisionofservices;• exports;• citizenempowerment;and• theabilityofnationalindustriestocompete

ininternationalmarkets.

TheAuthorityhastakenintoconsiderationnon-competitionfactorssuchaspublicinterest,employmentandcitizenempowermentintheassessmentofmergers.Forexample,inadecisionbytheAuthorityinlate2012,theAuthorityapprovedaproposedmergeronconditionthatthemergedentitywouldnotretrenchanyBotswana-basedemployeesforaperiodofthreeyearsfromthedateofthemerger.Inothermergersnotifiedsincethen,employment-relatedconditionshavebeenimposed.

12. Do the authorities contact customers and competitors of the merging parties as part of the merger review process? To what extent are the submissions of customers and competitors influential?

TheAuthoritymaycontactthecustomersandcompetitorswhosedetailsareprovidedbythefilingentityand,whereapplicable,thosealreadyknownbytheAuthority.ThesubmissionsaresourcedfortheAuthority’sinvestigativepurposesonlyanddonotdetractfromtheAuthority’sindependentassessmentofthemerger. 13. Who else can make submissions to the authorities when a merger is being considered? Are employees contacted as part of the process and can employees make submissions?

Anyperson,includingemployees,maymakevoluntarysubmissionstotheAuthorityeventhoughtheAuthoritydoesnotcontactemployeesortheirrepresentativesforsubmissions.

14. Are merging parties given an opportunity to make representations before a decision is issued where the authority intends to prohibit a merger or impose conditions?

IntermsoftheAct,theAuthoritymay,ifitconsidersitappropriate,determinethatoneormorehearingsshouldbeheldinrelationtoaproposedmerger.InsuchcasestheAuthorityisrequiredtogivereasonablenoticeinwriting.ThepartiesarethenrequiredtosubmittotheAuthority,within30daysofreceiptofthenotice,anyrepresentationsthattheymaywishtomakeinrelationtotheproposedaction.WhiletheActdoesnotincludeadefinitionofdays,basedonthecalculationoftimeperiodsundertheInterpretationAct,anyreferencetodaysmustbeinterpretedtomeancalendardays.

15. What are the opportunities for judicial appeal or review of a decision in respect of a merger that the parties are dissatisfied with?

MergersareinvestigatedbytheAuthorityandreferredtotheCommissionforadjudication.AlldeterminationsmadeanddirectionsgivenbytheCommissionaresubjecttoappealtotheHighCourtofBotswana.


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16. Does the legislation apply to joint ventures?

Thelegislationdoesnotspecificallyrefertojointventures.JointventuresthatareclassifiedasmergersfalltobenotifiedtotheAuthorityiftheymeetthethresholdsformandatorynotification.

17. Does the legislation specifically prohibit cartel conduct? If so, are there examples of the authorities pursuing firms for engaging in cartel conduct?

TheActregulatesprohibitedpracticesandspecificallyprohibitscertainhorizontalrestrictivepractices(unlawfulcompetitionbetweencompetitors).TheActstipulatesthatanenterpriseshallnotenterintoahorizontalagreementwithanotherenterprisetotheextentthatsuchagreementinvolvescertainpractices,suchas:

• price-fixing(eitherdirectorindirect);• dividingmarkets(byallocatingcustomers,

suppliers,territoriesorspecifictypesofgoodsorservices);

• bid-rigging(exceptwherethepersonrequestingthebidsortendersisinformedofthetermsoftheagreementbeforethetimethatthebidsortendersaremade);

• restraintsonproductionorsale,includingrestraintbyquota;

• aconcertedpractice;or• acollectivedenialofaccess,ofanenterprise,

towhichisanarrangementorassociationcrucialtocompetition[sic].

OtherhorizontalagreementsmaybeprohibitedbytheAuthorityif,followinganinvestigationbytheAuthority,suchagreementisfoundtohavetheobjectoreffectofpreventingorsubstantiallylesseningcompetitioninamarketforanygoodsorservicesinBotswana.TheAuthoritymaycarryoutaninvestigationtodeterminewhethertheprohibitionshouldbeappliedifitissatisfiedthatthepartiestotheagreement,inthecaseofahorizontalagreement,togethersupplyoracquire10%ormoreofthegoodsorservicesinanymarketinBotswana.TheAuthoritymayprohibitanyhorizontalagreementwhich(i)limitsorcontrolsproduction,marketoutletsoraccess,technicaldevelopmentorinvestment;(ii)appliesdissimilarconditionstoequivalenttransactionswithothertradingparties,therebyplacingthematacompetitiveadvantage;and(iii)makestheconclusionofcontractssubjecttoacceptancebyotherpartiesofsupplementary

conditionswhich,bytheirnatureoraccordingtocommercialusage,havenoconnectionwiththesubjectofsuchcontracts.

TheAuthorityhasinvestigatedcartelactivityamongstsuppliersofgovernmentfoodrations,medicalaidschemesandlocalpanel-beatingcompanies.

18. What are the authorities’ powers of investigation in relation to cartel conduct and other prohibited practices?

TheActconfersbroadinvestigativepowersontheAuthority.Notably,theActempowerstheAuthoritytosubpoenaanypersonconsideredbytheAuthoritytoberelevanttotheinvestigation.PartVIIoftheActstipulatestheinvestigativepowersoftheAuthorityinrespectofprohibitedhorizontalandverticalagreements.Section35toSection37oftheActempowerstheAuthority,eitheronitsowninitiativeoruponreceiptofinformationoracomplaintfromanyperson,tostartaninvestigationintoanypracticethatitreasonablysuspectsconstitutesacontraventionoftheprohibitedhorizontalorverticalagreementsprovisionsoftheAct,oramountstoanabuseofadominantpositioninthemarket.

Writtennoticeoftheinvestigationmustbeservedassoonaspracticableoneveryenterprisethatissuspectedtobeapartytothepractice,indicatingthenatureoftheinvestigationandinvitingtheenterprisetomakerepresentationsinthatregardiftheysowish.WheretheAuthorityconsidersthatitwouldmateriallyprejudicetheinitialstagesoftheinvestigationtogivesuchnotice,itmaydeferfromgivingnoticeuntilitspowersofsearchandentryareexercised.

TheAuthorityhasbroadpowersofsearchandseizure,includingthepower:

• toenterandsearchanypremisesduringnormalbusinesshoursbyadulyappointedandauthorisedinspectorinpossessionofawarrantauthorisingsuchentryandsearchofthepremises;and

• toenterandsearchanypremisesotherthanaprivatedwellingbyadulyappointedandauthorisedinspectornotinpossessionofawarrantauthorisingthesearchiftheowner,oranypersonincontrolofthepremises,consentstotheentryandsearchofthepremises.

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Notwithstandingthesebroadpowersofinvestigation,theAuthorityisnotempoweredtodemandtheproductionordisclosureofinformationordocumentswhichwouldbesubjecttolegalprofessionalprivilegeinacourtoflaw.However,theAuthorityisempoweredtodemandandbeprovidedwiththenamesandaddressesofanundertaking’sclientswhererequired.Further,theActempowerstheAuthoritytoconductdawnraidswithorwithoutawarrant.RecentlytheAuthorityconductedfourdawnraidsinthemedicalaidandmotorvehicleindustriesaswellasfoodsupplyforgovernmenttenders.

AninvestigationintermsoftheActmayonlycontinueforaperiodof12months,afterwhichtheAuthoritymusteitherreferthemattertotheCommissionforprosecutionorissueacertificateofnon-referraltothecomplainant.

However,the12-monthinvestigationperiodmaybeextendedbyagreementbetweentheAuthorityandthecomplainant.

19. What are the penalties for cartel conduct? Is there a leniency policy in place? Does the legislation impose criminal sanctions?

IntermsoftheAct,financialpenaltiesforprohibitedrestrictiveconductmaybeappliedonlywheretheCommissionhassatisfieditselfthatthebreachoftheprohibitionwascommittedintentionallyornegligently.Insuchcases,theamountofapenaltyimposedshallnotexceed10%oftheturnoveroftheenterpriseduringthebreachoftheprohibitionuptoamaximumofthreeyears.Infixingtheamountofaparticularfine,theCommissionmayhaveregardtospecificfactorsincludingthegravityoftheinfringementandtherecurrenceordurationoftheinfringement.

Anactionfordamagesorothersumofmoneybyanypersonorfirmmaybemadeonlyinrespectof:

• price-fixing(eitherdirectorindirect);• dividingmarkets(byallocatingcustomers,

suppliers,territoriesorspecifictypesofgoodsorservices);

• bid-rigging(exceptwherethepersonrequestingthebidsortendersisinformedofthetermsoftheagreementbeforethetimethatthebidsortendersaremade);

• restraintsonproductionorsale,includingrestraintbyquota;

• aconcertedpractice;or• acollectivedenialofaccess,ofanenterprise,

towhichisanarrangementorassociationcrucialtocompetition[sic],subjecttotheconducthavingbeenestablishedbyadeterminationoftheCommissionor,followinganappealagainstthedetermination,byajudgmentoftheHighCourtofBotswana.

TheAuthorityhasnoleniencypolicyinplaceatpresent.However,theAuthorityhasconductedworkshopstosensitisethebusinesscommunitytoadraftleniencypolicy.TheActdoesmakeprovisionforanyenterprisetoofferanundertakingtotheAuthoritytoaddressanyanti-competitiveconcernthathasarisen,ormaybeexpectedtoarise,priortoorduringaninvestigationofanyagreementinrespectofrestrictiveordominantconduct.

WhilsttherearenocriminalsanctionsexpresslyprovidedintheActforengagingincartelconduct,theActprovidesforcriminalsanctions,primarilyforindividualswhoarefoundtohaveinterferedinaninvestigation.

20. Is there a provision in the legislation providing for a mechanism to apply for exemption from certain parts of the legislation?

TheActprovidesthatanyagreement,otherthanarestrictiveagreementspecificallyprohibitedbytheAct,maybeexemptfromapplicationoftheActifitcanbereasonablyexpectedthattherewillbebenefitsforthepublicthatoffsettheanti-competitiveeffects,suchas:

• themaintenanceoflowerprices,higherqualityorgreaterchoiceforconsumers;

• thepromotionormaintenanceoftheefficientproduction,distributionorprovisionofgoodsandservices;

• thepromotionoftechnicaloreconomicprogressintheproduction,distributionorprovisionofgoodsandservices;

• themaintenanceorpromotionofexportsfromBotswanaoremploymentinBotswana;

• thestrategicornationalinterestofBotswanainrelationtoaparticulareconomicactivitybeingadvanced;


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• theprovisionofsocialbenefitswhichoutweightheeffectsoncompetition;

• theagreementoccurringwithinthecontextofacitizenempowermentinitiativeofgovernment;or

• theagreementinanyotherwayenhancingtheeffectivenessofthegovernment’sprogrammesforthedevelopmentoftheeconomyofBotswana,includingtheprogrammesofindustrialdevelopmentandprivatisation;providedthatthepreventionorlesseningofcompetitionisproportionatetothebenefitsforthepublicanddoesnotallowtheenterpriseconcernedtoeliminatecompetitioncompletely.

TheAuthoritymaygrantanexemptionwheretheagreementsareunlikelytoleadtoasubstantiallesseningofcompetition,orwhereoneormoreofthecircumstancesspecifiedinthelastfourbulletpointsaboveexistorarereasonablyexpectedtoexist,inrelationtothoseagreements.

WithregardtoexemptionsfromprovisionsoftheActdealingwithmergercontrol,theMinisterofTradeandIndustrymay,byregulation,specifycategoriesofmergersexemptfromtheapplicationoftheActbyreferencetothecommercialorindustrialsectorinvolved,thenatureoftheactivitiesinwhichtheenterprisesareengaged,orsomeaspectofthegeneralpublicinterest.

21. Is minimum resale price maintenance prohibited?

Subjecttocertainexemptions,theActprohibitsanyagreementinvolvingresalepricemaintenance.However,asuppliermayrecommendaresalepriceprovidedthat(i)thesuppliermakesitclearthatthepriceissimply‘recommended’andisnotbinding,andthat(ii)theproductlabellingmakesitclearthatthepriceis’recommended’.

22. In what circumstances are exclusive agreements unlawful? If exclusive agreements raise concerns in specific circumstances, what factors are relevant to their lawfulness or unlawfulness?

AnexclusiveagreementmaybeprohibitedbytheAuthorityif,followinganinvestigationbythe

Authority,suchagreementisfoundtohavetheobjectoreffectofpreventingorsubstantiallylesseningcompetitioninamarketforanygoodsorservicesinBotswana.Thefactorstobeconsideredare,interalia,whethertheagreementinissuelimitsorcontrolsproduction,marketoutletsoraccess,technicaldevelopmentorinvestment.

23. Does the legislation prohibit the abuse of a dominant position? If so, what is the threshold for dominance and what conduct amounts to an abuse?

TheActprohibitstheabuseofadominantposition.ForthepurposesoftheAct,adominantpositionreferstoasituationinwhichoneormoreenterprisespossesssucheconomicstrengthinamarketsoastoallowtheenterprisetoadjustpricesoroutputwithouteffectiveconstraintfromcompetitorsorpotentialcompetitors.

TheAuthoritywillconsideradominantpositiontoexistinthesupplyofgoodsorservicesif(i)25%ofthosegoodsorservicesaresuppliedbyoneenterprise,orareacquiredbyoneenterprise;or(ii)50%ofthosegoodsorservicesaresuppliedbythreeorfewerenterprises,orareacquiredbythreeorfewerenterprises.

TheActprovidesthat,indeterminingwhetheranabuseofadominantpositionhasoccurred,theAuthoritymayhaveregardtowhethertheagreementorconductinquestion:

• maintainsorpromotesexportsfromBotswanaoremploymentinBotswana;

• advancesthestrategicornationalinterestofBotswanainrelationtoaparticulareconomicactivity;

• providessocialbenefitswhichoutweightheeffectsoncompetition;

• occurswithinthecontextofacitizenempowermentinitiativeofgovernment,orotherwiseenhancesthecompetitivenessofsmall-andmedium-sizedenterprises;or

• inanyotherwayenhancestheeffectivenessofthegovernment’sprogrammesforthedevelopmentoftheeconomyofBotswana,includingtheprogrammesofindustrialdevelopmentandprivatisation.

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24. Are there examples of the authorities pursuing firms for abusing a dominant position?

ByOctober2013,33%ofthecasesinvestigatedbytheAuthoritywerecasesofabuseofdominancewhichincludedpredatorypricing,refusaltodealandexclusiveagreements.AcomplaintofpredatorypricingintheUHTlong-lifemilkmarketwaslodgedbyDeltaDairies(Pty)Limitedagainstachainstoresupermarket.FollowinginvestigationsitwasfoundthatthesupermarketchainstorewasnotadominantplayerasallegedanditsmarketshareintheUHTlong-lifemilkmarketwasonly2%(significantlybelowthe25%dominancethreshold).

Further,in2014adecisionwastakenbytheAuthoritytoorderamergedenterprise(Jack’sGym)todivest,inordertoreduceitsmarketconcentration.Themergerassessmentshowedthatthereweresubstantivecompetitionconcernsthatwouldariseinthemarketasthemergerresultedinthemergedentityacquiringadominantposition(asseenfrompre-mergermarketshareestimates).

25. Does the legislation impose penalties on firms for the abuse of a dominant position?

TherearenopunitivesanctionsimposedbytheActfortheabuseofadominantposition.TheActisaimedatremedying,mitigatingorpreventingthedetrimentaleffectsthatmayresult,haveresultedorwillresultfromtheadverseeffecton,orabsenceof,competition.Inpursuingtheseaims,theCommissionmayissueadirectiontoanenterpriserequiringitto:

• terminateoramendanagreement;• ceaseoramendapracticeorcourse

ofconduct,includingconductinrelationtoprices;

• observespecifiedconditionsinrelationtothecontinuationofanagreementorconduct;

• supplygoodsorservices,orgrantaccesstofacilities,eithergenerallyortonamedparties;

• separateitselffromordivestitselfofanyenterpriseorassets;or

• providetheCommissionwithspecifiedinformationonacontinuingbasis.

26. Are there rules in relation to price discrimination?

Yes.WhiletheActdoesnotcontainexpressprovisionsinrespectofpricediscrimination,theAuthorityreliesontheprohibitionintheActagainstanyagreementwhichenvisagestheapplicationofdissimilarconditionsinequivalenttransactionswithothertradingparties,tocontrolpricediscriminationwhichplacesentitiesatacompetitivedisadvantage.

27. Does the authority publish its decisions and, if so, is there a website where such decisions are available?

Yes.TheAuthoritypublishesmergernoticesandmergerdecisionsonitswebsite,whichcanbeaccessedatwww.competitionauthority.co.bw

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Burundi

RUBEYA & CO-ADVOCATES Willy Rubeya

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TherelevantcompetitionlegislationisLawNo.1/06of25March2010(theAct).NoministerialordershavebeenissuedtoassistwiththeapplicationoftheActatthisstage.

InaccordancewiththeAct,aCompetitionCommissionshallbeestablished(theCommission)astheindependentregulatortoenforceit.TheCommissioncanconductinvestigationsinitiatedbytheMinistryofTrade,interestedpartiesoronitsowninitiative.TheCommissionwillberequiredtohandoveramattertotheAttorneyGeneralwherecriminalsanctionsaretobeappliedtoapartybeinginvestigatedorhavingalreadybeeninvestigated.TheCommissionhasnotyetbeenestablished.However,itisreferredtoinArticle12oftheAct.


TherearenoproposedamendmentsornewregulationsasatthetimeofwritingandtheActisstillinforce.

3. Is the law actively enforced?

TheActisnotactivelyenforcedatthisstagebecausetheCommissionhasnotyetbeenestablished.


TheCommissionhasnotyetbeenestablished.


ConcentrationsaresubjecttomergercontrolandmustbenotifiedtotheCommission.

Aconcentrationisdeemedtoarisewhere:

• twoormoreundertakingsunitethroughmergeroracquisitionoranyotherformofhorizontal,verticalorheterogeneoustakeover(basedonArticle46oftheAct);

• thereisatransferofownershiporuseofallorpartoftheproperty,rightsorobligationsofacompany(basedonArticle47,paragraphoneoftheAct);or

• thetransactionhastheeffectorpurposeofallowingacompanyoragroupofcompaniestodirectlyorindirectlyexerciseadominantinfluenceintherelevantmarket.

WheretheCommissionfindsthattheconcentrationwillmateriallyreducecompetition,itcanmakeanorderfortheconcentrationtobeprohibitedorfortheundertakingsconcernedtodisposeofassetsorsharesinordertoalleviatethedamagetocompetition.TheCommissionmayauthoriseconcentrationsthathavetheeffectofmateriallyreducingcompetitioniftheyresultinefficiencygainsforthenationaleconomythatoutweighthedetrimentaleffecttocompetition intherelevantmarket.However,thegainmust nothavebeenachievablewithouttheconcentrationtakingplace(basedonArticle48,paragraphoneoftheAct).


ThethresholdsformandatorynotificationaretobeprescribedbytheMinistryofTradeuponrecommendationbytheCommission.Itisprovidedthatproposedconcentrations,wheretheindividualandcombinedturnoveroftheundertakingsconcernedexceedthethresholdprescribedbytheMinistryofTrade,mustbenotifiedtotheCommission.SuchproposedconcentrationscannotbeimplementedforaperiodofthreemonthscommencingonthedateofnotificationtotheCommission.


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ProposedconcentrationswheretheindividualandcombinedturnoveroftheundertakingsconcernedarebelowthethresholdsprescribedbytheMinistryofTrademustbenotifiedtotheCommissionwithin15daysoftheircompletion(basedonArticle49oftheAct).


TheActestablishesatieredstructurewherebytheabilitytopre-implementaconcentrationiscontingentuponthethresholdbeingexceeded.ConcentrationscategorisedasfallingbelowthethresholdmaybeimplementedpriortotheirnotificationtotheCommissionprovidedthattheCommissionisnotifiedwithintheprescribedperiodaftercompletionoftheconcentration.ConcentrationscategorisedasexceedingthethresholdsshallnotbeimplementedpriortonotificationandapprovalbytheCommission.Therearenopenaltiesforpre-implementationbuttheCommissionhastherighttocancelthemerger.


Notapplicable.


Notapplicable.


Pre-notificationcontactswiththecompetitionauthoritiesarenotdealtinthelegislation.


TheCommissionwillconsiderapplicationsbasedoncircumstancesrelevanttothemerger,butsincetheCommissionisnotyetoperationaltherearenoexamplesatthisstage.


Notapplicable.

13. Who else can make submissions to the authorities when a merger is being considered? Are employees contacted as part of the process and can employees make submissions?

Intermsofthecurrentposition,onlytheMinistryofTradecanmakesubmissions.WhentheCommissionbecomesoperational,theMinistryofTrade,anybusinessentity,oranyinterestedpartywillbeallowedtomakesubmissions.

14. Are merging parties given an opportunity to make representations before a decision is issued where the authority intends to prohibit a merger or impose conditions?Notapplicable.


Article16oftheActprovidesforthepossibilityofreview.TheCommissionwillconsiderapplicationsforreviewofitsdecisionswherecircumstanceshavechanged.Decisions,whichwillneedtobemotivatedandmadepubliclyavailable,willbecapableofbeingappealed.Suchanappealwillhavenosuspensiveeffect.


ThemergercontrolaspectsoftheActapplytojointventureswherethereisanacquisitionofcontrolbyoneormoreundertakings.


RestrictiveagreementsandpracticesareregulatedbyArticle37oftheAct,whichprohibitsconcertedpractices,

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agreementsandalliances,expressorimplied,between undertakingswhichhaveastheirobjectormayhaveastheeffectoftheirconduct,theprevention,restrictionordistortionofcompetitioninamarketand,inparticular,thosewhich:

• limitaccesstothemarket;• interferewithpricesettingthrough

marketforces,byartificiallyincreasingordecreasingprices;

• distortthemarket,distributionchannelsandsourcesofsupply;

• limitorcontrolproduction,markets,investmentortechnicaldevelopment;

• distortorfixconditionstoatenderwithoutinformingthetenderer;or

• amounttoarefusaltosell.


TheMinistryofTradehas,andinfuturetheCommissionwillhave,thepowertoinvestigatecartelconductandotherprohibitedpractices.


TheCommissionmayimposeawiderangeofsanctionspenalisingcartelconductandotherformsofrestrictiveagreementsandpractices.TheCommissionmay,eitherattherequestofaninterestedpartyorofitsownaccord:

• issueaprohibitoryinjunctionstoppingtheanti-competitivepractice;

• makeanorderfordamages;and• orderpenaltypaymentsfortheperiodduring

whichtheoffendingundertakingwasindefault.

Moreover,wheretheanti-competitivepracticeadverselyaffectstheeconomyorrelevantsector,theCommissionmaytakemeasurestoimposeinteriminjunctiverelief.Wheretheoffendingundertakingdoesnotcomplywiththeprohibitoryinjunction,theCommissioncanimposeafinancialpenaltyofupto50%oftheprofitsor20%ofthenationalturnoverachievedinthefinancialyearinwhichthepracticeswereimplemented.Thefinesareproportionatetotheseriousnessofthechargesandthescaleofthedamagetotheeconomy.Thefinesmaybedoubledintheeventthattheoffenceisrepeated.

Theundertakingmustpaythepenaltywithinaperiodof60days,commencingonthedateofnotificationofsuchpenalty.Wherethereisadelayinpayingthepenalty,theundertakingisliableforfurtherpaymentwherebyadailyamountisimposed,equivalenttoahundredthoftheoriginalpenalty.Uponthenon-paymentofapenalty,theCommissionmayorderthetemporaryclosureoftheundertaking.Wheretheundertakingproducesavarietyofproducts,theclosureaffectstheproductssubjecttotheanti-competitivepractice(s).

Anundertakingthatsufferslossesordamagesasaresultofanti-competitivepracticesmayapplytotheCommissionforanorderfordamagesifitcanestablishacausallinkbetweentheanti-competitivepracticesandanydamagesufferedbyit.

TheActdoesnotprovideforcriminalsanctionstobeimposedforthecontraventionofprovisionsrelatingtorestrictiveagreementsandpractices.Criminalsanctionsareapplicableonlytooffencesincidentaltoaninvestigationorproceedings,assetoutinArticle73oftheAct.


ConcentrationscanbeallowedifpreviouslynotifiedtotheCommission,orwherethepartiestotheconcentrationcanshowthattheconcentrationhasbroughtabout,orwillbringabout,netgainstoeconomicefficiencybyreducingthepriceofgoodsorservices,orwherethereisasignificantimprovementinthequalityortheefficiencygainsintheproductionordistributionofthiscommodity.

21. What powers of investigation does the legislation confer on the competition authorities to investigate cartels, if any?

OffencesprovidedforbytheActarewithinthecompetenceoftheofficersoftheJudicialPolice,swornofficersoftheMinistryofTrade,customsagentsandswornagentsoftheCommission.Theinvestigatorsareempoweredtosubpoenadocumentsrelevanttotheinvestigation.

Further,theinvestigatorsmaybegrantedsearchorders allowingthemtoaccesstheundertaking’spremises,vehicles,aswellastheprivatedwellingsoftheindividualsconcerned.Thesearchorderspermittheinvestigatorstoseizedocumentsand


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productsrelevanttotheinvestigation,evenifsuchdocumentsandproductsareconfidential.Tofacilitatethis,undertakingsareunderadutytoensurethatalldocumentsrelevanttotheiractivitiesarekeptsafeforaminimumof10years.

Theofficialsinvolvedareboundbyadutyofprofessionalsecrecy.Oncetheinvestigatorshavecompletedanofficialreport,theydivestthemselvesoftheirinvolvementintheprocedureandtheenquiryiscontinuedbytheCommission.


IntermsofArticle31oftheAct,minimumresalepricemaintenanceisprohibited,saveinthecaseofbooks,newspapersoranyotherpublicationsorwherethesaleofaparticularproductisspecificallyregulated.


TheActprohibitsconcertedpractices,agreementsorpartnerships,whetherexpressorimplied,whichhavetheobjectoreffectofrestrictingordistortingfreecompetitionwithinthenationalmarketorasubstantialpartthereof.


TheActprohibitstheabuseofadominantpositiononthenationalmarketorasubstantialpartthereof.Inparticular,abuseofdominancemayinvolve:

• preventingtheestablishmentofacompetingundertaking;

• requiringorinducingasuppliernottodealwithacompetingundertaking;

• theterminationofanestablishedcommercialrelationshiponthegroundsthatabusinesspartnerrefusestosubmittounjustifiedcommercialconditions;

• limitingproduction,themarketortechnicaldevelopmenttotheprejudiceofconsumers;

• refusaltosell; • discriminatorysalesconditions;or • salestying.

However,iftheundertakingcanestablishthatthepracticesconcernedareaimedatorresultinanincreaseinthequalityofgoodsorservices,ortheimprovementinproductionorthereductionofcosts,inadditiontoanimprovementinthetechnical,technologicaloreconomicprocesses,thepracticesmentionedabovewillbedeemedtofalloutsidethescopeoftheabuseofdominance.Thepracticesmustnotresultinanyanti-competitiveeffectgoingbeyondwhatisstrictlyrequiredtoachievethegains.Furthermore,thepracticesmustnoteliminateallformsofcompetitioninasubstantialpartoftheparticularsector.


Notapplicable.


TheCommissionmayimposethesamesanctionsfortheabuseofdominanceasthosewhichmaybeimposedforrestrictiveagreementsandpractices.Seequestion7.


Yes,thelawprovidesrulesinrelationtopricediscrimination.TheAct,inArticles59and60,providesforupperandlowerceilingpricestobeset.


Notapplicable.

RUBEYA & CO-ADVOCATES 28Ruedel'industriePOBox202Bujumbura,BurundiT:+25722248910

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BOWMANS

Tamara Dini | Xolani Nyali | Sivuyise Lutshiti

COMESA


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TheCommonMarketforEasternandSouthernAfrica(COMESA)isaregionalorganisationwhosemissionistopromoteeconomicintegrationthroughtradeandinvestmentinEasternandSouthernAfrica(theCommonMarket).

COMESAcomprises19memberstates:Burundi,Comoros,theDemocraticRepublicofCongo,Djibouti,Egypt,Eritrea,Ethiopia,Kenya,Libya,Madagascar,Malawi,Mauritius,Rwanda,Seychelles,Sudan,Swaziland,Uganda,ZambiaandZimbabwe.

Asatthetimeofwriting,fiveoftheCOMESAmemberstates(namelytheDemocraticRepublicofCongo,Djibouti,Eritrea,LibyaandUganda)havenodomesticcompetitionlawregimesinplace.

TheCOMESAcompetitionlawregimebecameoperativeon14January2013.TherelevantcompetitionlegislationcomprisestheCOMESACompetitionRegulationsandtheCOMESACompetitionRules,2004(asamended),whichwereamendedinMarch2015.TheenforcerofthelegislationistheCOMESACompetitionCommission,whichisestablishedunderArticle6oftheRegulationsandisbasedinLilongwe,Malawi.

TheCommissionisresponsiblefor,interalia,mergercontrolandtheenforcementoftheprohibitionsagainstanti-competitivebusinesspractices.

ByvirtueoftheCOMESATreaty,theRegulationsarebindingonallCOMESAmemberstates.


Asatthetimeofwriting,therearenoproposedamendmentsornewregulationsexpectedtocomeintoforce.


Thelawisactivelyenforced.AsatJanuary2018,morethan100mergershadbeenreportedtotheCommissionsinceitwasestablishedinJanuary2013.Thesehavelargelybeenapprovedunconditionallybutapproximatelyeightmergershavebeenapprovedsubjecttoconditions.

Todate,thereisnorecordofconcludedenforcementactioninrelationtoprohibitedpractices.TheCommissionpublishedanoticeinJune2016invitingcompaniesoperatingintheCommonMarkettoself-assesswhethertheywerepartytoagreementswhichcouldbeconstruedasamountingtoaprohibitedpractice.SuchcompanieswereinvitedtoseekauthorisationfromtheCommissionforthepotentiallyoffendingagreements. ItalsopublishedanoticeinMarch2017notifyingthepublicthatithadinitiatedaninvestigationintothecommercialisationofmediaandmarketingrightsforAfricanfootballtournamentagreementsenteredintobetweentheConfédérationAfricainedeFootball(CAF)andLagardèreSportsSAS,asportmarketingagencyandmemberoftheLagardèreGroup,basedinParis,France.ThisisthefirstinvestigationbytheCommissioninrespectofpotentiallyanti-competitiveconduct.


Sinceitbecameoperational,theCommission’spriorityhasbeendealingwithapprovalapplications(inparticular,mergernotifications,applicationsforauthorisationandapplicationsforexemptionorders).


A‘merger’isdefinedintheRegulationsasthedirectorindirectacquisitionorestablishmentofacontrollinginterestbyoneormorepersonsinthewholeorpartofthebusinessofacompetitor,supplier,customerorotherperson,whetherthatcontrollinginterestisachievedasaresultof:

• thepurchaseorleaseofthesharesorassets;• theamalgamationorcombinationwitha

competitor,supplier,customerorotherperson;or

• anymeansotherthanthosespecifiedinthe• firsttwobulletpoints.

Amergerwhereeithertheacquiringfirm,orthetargetfirm,orboth,operateintwoormorememberstates(i.e.amergerwitharegionaldimension)andwherecertainthresholdsofcombinedannualturnoverorassetsareexceeded,

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constitutesanotifiablemergerandmustintheordinarycoursebenotifiedtotheCommission.TherequirementthatfirmsoperateintwoormorememberstatesismetwherethefirmsconcernedhaveapresenceorgenerateturnoverintheCommonMarket.

Thethresholdsfornotifiablemergersare1:

• thecombinedannualturnoverorvalueofassets(whicheverishigher)ofthemergingpartiesintheCommonMarketequalsorexceedsUSD50million;and

• eachofatleasttwoofthemergingpartieshasannualturnoverorassetsintheCommonMarketofUSD10millionormore.

Incircumstanceswhereeachofthemergingpartiesgeneratestwo-thirdsormoreoftheirannualturnoverinoneandthesamememberstate,aCOMESAfilingwillnotberequired.Instead,nationalnotificationobligationswillapply.

IntermsoftheRegulations,whereamemberstateattainsknowledgeofamergernotificationsubmittedtotheCommission,thememberstatemayrequesttheCommissiontoreferthemergerforconsiderationunderthememberstate’snationalcompetitionlawifthememberstateissatisfiedthatthemerger,ifcarriedout,islikelytodisproportionatelyreducecompetitiontoamaterialextentinthememberstateorinanypartofthememberstate(Article24(7)oftheRegulations).

TheCommissionmustthendecidewhethertodealwiththemergeritselfortoreferthemerger(inwholeorinpart)tothecompetentauthorityofthememberstateconcerned,withaviewtothatmemberstate’snationalcompetitionlawbeingapplied(Article24(8)oftheRegulations).

AbenefittobusinessisthatasingleCOMESAfilingmayreplacemultiplefilingsundernationallegislation.However,thereareafewjurisdictionsinEasternandSouthernAfricathatarenotmembersofCOMESA,includingthelargestandmostdiversifiedeconomyinAfrica,SouthAfrica.Thismeans,forexample,thataBelgianentityacquiringcontrolofaSouthAfricanentitywithsubsidiariesinSwazilandandMalawimayneedtoobtainapprovalfromtheSouthAfricancompetitionauthorities(ifthethresholdsformandatory

notificationinSouthAfricaaremet)andfromtheCommission(asSwazilandandMalawiarememberstates).


Asnotedabove,inorderforamergertobenotifiabletotheCommission:

• eithertheacquiringfirm,orthetargetfirm,orboth,mustoperateintwoormorememberstates;

• thecombinedturnoverorassets(whicheverishigher)ofthemergingpartiesintheCommonMarketmustbeUSD50million ormore;and

• eachofthemergingpartiesmusthaveturnoverorassetsintheCommonMarketofatleastUSD10million.

Further,whereeachofthemergingpartiesgeneratestwo-thirdsormoreoftheirannualturnoverinoneandthesamememberstate,thepartiesneednotfilewithCOMESA.Insuchinstances,nationalnotificationobligationsapplyinstead.


ApartytoanotifiablemergermustnotifytheCommissionoftheproposedmergerwithin30daysoftheparties’decisiontomerge(theguidelinesindicatethat‘days’referstocalendardays).TheguidelinesprovidethattheCommissionconsidersthatadecisionisevidencedby(i)theconclusionofalegallybindingagreementtocarryoutthemerger(whichmaybesubjecttoconditionsprecedent);or(ii)theannouncementofapublicbidinthecaseofpubliclytradedsecurities.

TheRegulationsdonotstatethatamergermaynotbeimplementedpriortoclearance.TheCommissionhasconfirmedthatpartiestoanotifiablemerger,whohavefiled,mayimplementamergerpriortoapprovalbeinggranted,althoughtheyruntheriskoftheirmergerhavingtobeunbundledatalaterstage

1. SeeamendmenttotheCOMESACompetitionRulesontheDetermination

ofMergerNotificationThresholdsandMethod

ofCalculation,2015.


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if,forexample,theCommissionweretoprohibitthemerger.ImplementationofamergerincontraventionoftheRegulationswillresultinthemergerhavingnolegaleffect,inwhichcaserightsorobligationsimposedonthemergingpartiesbyanyagreementwillnotbelegallyenforceableintheCommonMarket.

Inaddition,theCommissionmayimposeapenaltyofupto10%ofeitherorbothofthemergingparties’annualturnoverintheCommonMarket,asreflectedintheaccountsofanypartyconcernedfortheprecedingfinancialyear,forfailuretonotifyamerger.

8. What filing fees are payable?

Currently,filingfeespayableare0.1%ofthemergingparties’combinedannualturnoverorcombinedassets(whicheverishigher)intheCommonMarket,subjecttoacapofUSD200000.


TheRegulationsapplyto“alleconomicactivities...withinorhavinganeffectwithin”theCommonMarket.Foreign-to-foreignmergersarenotifiableiftheyhavearegionaldimensionandifthethresholdsaremet.Seequestion5.


TheCommissionhaspermittedandencouragedpre-notificationcontactswherenecessary.Intheordinarycourse,pre-notificationcontactsarenotrequiredbutcanbehelpfultoclarifyandagreewiththeCommissiontheapproachthatwillbetakeninaparticularmergerfilingandthespecificinformationthattheCommissionwillrequire.


TheRegulationsprovidethatwhencalledupontoconsideramerger,“theCommissionshallinitiallydeterminewhetherornotthemergerislikelytosubstantiallypreventorlessencompetition”(byassessingarangeofcompetitionand

market-relatedfactors),andifitappearsthatthemergerislikelytosubstantiallypreventorlessencompetition,theCommissionmustthendetermine:

• whetheranytechnological,efficiencyorotherpro-competitivegainwillbegreaterthanandoffsettheanti-competitiveeffects;and

• whetherthemergercanbejustifiedonsubstantialpublicinterestgrounds.

Indeterminingthelatter,theCommissionisrequiredtotakeintoaccountallmattersthatitconsidersrelevantinthecircumstancesandtohaveregardtothedesirabilityof:

• maintainingandpromotingeffectivecompetitionbetweenpersonsproducingordistributingcommoditiesandservicesintheregion;

• promotingtheinterestsofconsumers,purchasers,andotherusersintheregion,withregardtotheprices,qualityandvarietyofsuchcommoditiesandservices;

• promotingthroughcompetition,thereductionofcostsandthedevelopmentofnewcommodities;and

• facilitatingtheentryofnewcompetitorsintoexistingmarkets.

TheRegulationsfurtherprovidethatamergershallbecontrarytothepublicinterestiftheCommissionissatisfiedthatthemerger:

• haslessenedsubstantially,orislikelytolessensubstantially,thedegreeofcompetitionintheCommonMarketoranypartthereof;or

• hasresultedin,orislikelytoresultin,orstrengthen,apositionofdominancewhichisorwillbecontrarytothepublicinterest.


TheCommissionmayconductanenquiryforthepurposesofdeterminingwhetherornottoapproveamerger(Article26(5)and26(6)oftheRegulations).Beforeembarkingonanenquiry,theCommissionshalltakeallreasonablestepstonotifyalltherelevantmemberstates.Thenoticeshallin

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relationtotheenquiry:(i)includethenatureoftheproposedenquiry;and(ii)calluponanyinterestedpersonswhowishtosubmitwrittenrepresentationstotheCommissioninrelationtothesubjectmatteroftheenquiry.Inaddition,themergernotificationformsforanotificationtotheCommissionrequirethecontactdetailsoftheparties’competitorsandcustomers.TheCommissiontypicallycontactscompetitorsandcustomerseitherdirectlyorthroughnationalregulators.


Employeesarenottypicallycontactedaspartofthemergerreviewprocess.Pleasealsoseetheresponsetoquestion12.


Article26oftheRegulationsprovidesasfollows:“BeforemakinganorderunderthisArticle,theCommissionshallensurethateverypersonaffectedtherebyisinformedofthegeneralcontentoftheorderitproposestomakeandisgivenanadequateopportunitytomakerepresentationsinthematter.”

WheretheCommissionhasconcernsaboutaparticularmerger,itwillinformthemergingpartiesbeforeadecisionismadetoprohibitthemergerorimposeconditions.Asatthetimeofwriting,theCommissionhasnotprohibitedanymergersalthoughithasapprovedcertainmergerssubjecttoconditions.


AnypersonaggrievedbyadecisionbytheCommissionmayappealtotheBoardofCommissioners.TheBoardmayhearappealsfrom,orreviewanydecisionbytheCommissionthatmay,intermsoftheRegulations,bereferredtoitandmaymakeanyrulingorordernecessaryorincidentaltotheperformanceofitsfunctionsintermsoftheRegulations.DecisionsoftheBoardofCommissionersmaybeappealedtotheCOMESACourtofJusticebasedinKhartoum,Sudan.


TheRegulationsdonotspecificallyrefertojointventures.JointventuresthatareclassifiedasmergersfalltobenotifiedtotheCommissioniftheyconstituteamergerasdefinedandhavearegionaldimension.TheGuidelinesprovidethatforajointventuretobeamerger,itmustbeafull-functionjointventureandmustperformallthefunctionsofanautonomouseconomicentity.


Yes.TheRegulationsprohibitthefollowingpracticeswhereundertakingsareengagedinthemarketinrivalorpotentiallyrivalactivities:

• agreementsfixingprices,whichagreementshinderorpreventthesaleorsupplyorpurchaseofgoodsorservicesbetweenpersons,orlimitorrestrictthetermsandconditionsofsaleorsupplyorpurchasebetweenpersons,orlimitorrestrictthetermsandconditionsofsaleorsupplyorpurchasebetweenpersonsengagedinthesaleofpurchasedgoodsorservices;

• collusivetenderingandbid-rigging;• marketorcustomerallocationagreements;• allocationbyquotaastosalesandproduction;• collectiveactiontoenforceagreements;• concertedrefusalstosupplygoodsorservices

toapotentialpurchaser,ortopurchasegoodsorservicesfromapotentialsupplier;or

• collectivedenialsofaccesstoanarrangementorassociationwhichiscrucialtocompetition.

TherearenoexamplesofcartelcasesatthisstageastheCommissionhasnotyetproceededagainstanyfirmsforengagingincartelconduct.


Inconductingitsinvestigations,theCommissionmay,inaccordancewiththeRegulationsandinkeepingwiththeprinciplesofnaturaljustice,orderanypersontoappearbeforeittogiveevidence,requirethediscoveryorproductionofanydocumentorpartthereof,andtakeanyotherreasonableactionwhichmaybenecessarytofurthertheinvestigation.


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BOWMANG

IntermsoftheapplicationoftheRegulationsanddomesticcompetitionlawofthememberstates,itisstipulatedthattheRegulationshaveprimaryjurisdictionoveranindustryorasectorofanindustrywhichissubjecttothejurisdictionofaseparateregulatoryentity,regardlessofwhetherdomesticorregional.Theonlyfurtherexemptionsarethosemadebynationallegislation.


IntermsofRule79,themaximummonetarypenaltyforeachcontraventionofArticle19is750000unitswhichisequivalenttoUSD750000.TheRegulationsdonotprovideforaleniencypolicyanddonotspecifycriminalsanctionsforcartelconduct.However,theCommissionhaspreparedaDraftCorporateLeniencyPolicydocumentwhichhasbeencirculatedforcomment.


TheCommissionmay,uponapplicationbyoronbehalfofanundertaking,grantanauthorisationtotheundertakingtoenterintoand/orgiveeffecttocontracts,arrangementsorunderstandingseveniftheyareanti-competitive,iftheCommissiondeterminesthattherearepublicbenefitsoutweighingtheanti-competitivedetrimentofthecontract,arrangementorunderstanding.

Whiletheauthorisationremainsinforce,nopartytothecontract,arrangementorunderstandingwillbeinbreachoftheapplicableArticlesoftheRegulationsbyenteringintoorgivingeffecttothecontract,arrangementorundertaking.Theauthorisationmaybegrantedtocoverthosewhosubsequentlybecomepartiestothecontract,arrangementorunderstanding.Theundertakingconcerned,oranyotherpersonwithasubstantialfinancialinterestaffectedbyadecisionoftheCommissioninthisregard,mayappealthatdecisiontotheBoardofCommissionersinthemannersetoutintheRegulationsandtheRules.

TheCommissionhastodatepublishedonlyoneapplicationforexemption/authorisationbyEvereadyEastAfricaLimitedinrelationtoagreementsthatithaswithfourdifferentmultinationalsuppliersforthesupplyof,interalia,writinginstruments(pens,etc.),carbatteries,

lightingproductsincludingincandescentandenergy-savingbulbs,andhomecarefast-movingconsumergoods.


TheRegulationsdonotstatethatminimumresalepricemaintenanceisprohibited.


Anexclusiveagreementbetweenundertakings(likeanyotheragreementbetweenundertakings)shallbeprohibitedifitmayaffecttradebetweenmemberstatesandhasasitsobjectoreffecttheprevention,restrictionordistortionofcompetitionwithintheCommonMarket.Thisisapplicableonlyifanagreementis,orisintendedtobe,implementedwithintheCommonMarket.


TheabuseofdominanceisprohibitedbytheRegulations.Anundertakingisconsidereddominantinamarketifbyitselfortogetherwithaninterconnectedcompany,itoccupiessuchapositionofeconomicstrengththatwouldenableittooperateinthemarketwithouteffectiveconstraintsfromitscompetitorsorpotentialcompetitors.AdominantpositionreferstotheabilitytounilaterallyinfluencepriceoroutputintheCommonMarketoranypartofit.

AnyabusebyoneormoreundertakingsofadominantpositionwithintheCommonMarketorinasubstantialpartofitshallbeprohibitedasincompatiblewiththeCommonMarketinsofarasitmayaffecttradebetweenmemberstates,ifit:

• restricts,orislikelytorestrict,theentryofanyundertakingintoamarket;

• preventsordeters,orislikelytopreventordeter,anyundertakingfromengagingincompetitioninamarket;

• eliminatesorremoves,orislikelytoeliminateorremove,anyundertakingfromamarket;

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• directlyorindirectlyimposesunfairpurchaseorsellingpricesorotherrestrictivepractices;

• limitstheproductionofgoodsorservicesforamarkettotheprejudiceofconsumers;

• asapartytoanagreementmakestheconclusionofsuchagreementsubjecttoacceptancebyanotherpartyofsupplementaryobligationswhich,bytheirnatureoraccordingtocommercialusage,havenoconnectionwiththesubjectoftheagreement;or

• engagesinanybusinessactivitythatresultsintheexploitationofitscustomersorsuppliers,soastofrustratethebenefitsexpectedfromtheestablishmentoftheCommonMarket.


Therearenoexamplesatthisstage.


Withregardtopenaltiesforcontraventionoftheprovisionsagainstabuseofdominance,Rule79providesthatthemaximummonetarypenaltyforeachcontraventionis500000units.Currently500000unitsisequivalenttoUSD500000.


TheRegulationsdonotspecificallyprohibitpricediscrimination.


Yes.TheCommission’swebsiteiswww.comesacompetition.org.


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Ghana

AB & DAVID Isabel Boaten | Benjamin Kpakpo Sackar

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Inthecontextofageneralanti-trustorcompetitionregulation,thereisnogeneralanti-trustorcompetitionlawinGhana.Adraftbill,theCompetitionandFairTradePracticesBill(theCompetitionBill),hasbeeninexistencesince2004.ThereisnoindicationastowhentheCompetitionBillwillbecomelaw.

Currently,thelegislationwhichisofageneralcharacterandmakesexpressreferenceto“competition”inGhanaistheProtectionAgainstUnfairCompetitionAct,2000(Act589)(theUnfairCompetitionAct).However,theUnfairCompetitionActdoesnotapplyinthesamewayasanti-trustorcompetitionlegislationinotherjurisdictionsinthecontextofmergersand/oracquisitions.Itisageneralmechanismfortheprotectionofbusinessgoodwilland

reputation,proprietaryinformation,whetherornotitisregisteredandthepreventionofactsthatcauseorarelikelytocauseconfusionwithrespecttoanotherperson’senterprise.

TheUnfairCompetitionActdoesnotcreateanyregulatorybodyoradministrativeprocessforthepurposeofenforcement.Rather,itprovidesthatanaggrievedpersonmayseekcommonlawremediesinacompetentcourt.Thecourtmayawardinjunctiveorotherequitableremedies,compensatorydamages,oranyotherremedythatitdeemsfit.

Inaddition,notethat,althoughthereisnogeneralanti-trustorcompetitionlegislation,varioussectorallawsandregulatorsareresponsibleforthepromotionoffaircompetitionand,incertainsectors,mergercontrolaswell.Themostnotableoftheseare:

SECTOR LAW REGULATOR

BankingBanksandSpecialisedDeposit-TakingInstitutionsAct,2016(Act930)

BankofGhana

MiningMineralsandMiningAct,2006(Act703)(MiningAct)

MineralsCommission

EnergyEnergyCommissionAct,1997(Act541)

EnergyCommission

AviationGhanaCivilAviationAct,2004(Act678)

GhanaCivilAviationAuthority

TelecommunicationElectronicCommunicationsAct,2008(Act775)(ECA)

NationalCommunicationAuthority

PensionsNationalPensionsAct,2008(Act766)

NationalPensionsRegulatoryAuthority

InsuranceInsuranceAct2006,(Act724)(InsuranceAct)

NationalInsuranceCommission

Publicutilities:electricityandwater

PublicUtilitiesRegulatoryCommissionAct,1997(Act538)

PublicUtilitiesandRegulatoryCommission

Petroleum,OilandGasPetroleum(ExplorationandProduction)Act,2016(Act919)

PetroleumCommission

PetroleumCommissionAct,2011(Act821)


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MergercontrolprovisionsinrelationtopubliccompaniesarecontainedintheSecuritiesIndustryAct,2016(Act929)(theSECRules)withtheSecuritiesandExchangeCommissionbeingmandatedtoreview,approveandregulatetakeovers,mergersandacquisitionsofpubliccompanies.

GhanaisalsoamemberoftheEconomicCommunityofWestAfricanStates(ECOWAS).TheECOWASCompetitionAuthorityisresponsibleforregulatingmergersandacquisitionswitharegionaldimensionandaimstofunctioninasimilarwaytoCOMESA.TheECOWASSupplementaryActonCompetitionRules,2008(theECOWASCompetitionRules)prohibitanti-competitivebusinessconductwhichprevents,restrictsordistortscompetitionwithinthecommonmarketofECOWAS.Prohibitedactsincludeagreements,decisionsandconcertedpracticeswhich,forinstance,fixpricesortradingconditions,limitorcontrolproduction,sharemarkets,customersandsourcesofsupply.PleasenotetherearenopubliclyrecordeddecisionsrelatingtoGhanawheretheECOWASCompetitionRuleshavebeenapplied.


Currently,therearenoproposedamendmentsornewregulationsinrespectofanti-trustapplicabletomergers,takeoversandacquisitions.Asnotedinquestion1,thereisnoindicationastowhentheCompetitionBillwillbecomelaw.


Theindustry-sectorregulatorsarereasonablyactive.However,logisticalconstraintsandmorepressingprioritiesmay,attimes,reducetheireffectivenessandefficiency.


EntitiesseekingtomergehavetheresponsibilitytocomplywithGhanaianlaw,whichincludestheUnfairCompetitionAct.UndertheUnfairCompetitionAct,anyactorpracticeinthecourseofindustrialorcommercialactivitywhich

iscontrarytohonestpractices,isanti-competitiveorconstitutesunfaircompetition.Notethatanactorpracticeincludesanomission.However,‘honestpractices’isnotdefined.TheUnfairCompetitionActfocusesonthefollowingspecificareas:

• anyconductoractivitywhichcausesconfusionwithrespecttoaperson’sbusiness,productsorservices.Theconfusionmaybeinconnectionwithatrademark,atradename,orsomethingwhichidentifiesabusiness;

• anyconductoractivitywhichdamagesthegoodwillorreputationofaperson’sbusiness,productsorservices;

• anyconductoractivitywhichmisleadsorislikelytomisleadthepublicinrespectofaperson’sbusiness,productsorservices.Thismayarisefromtheadvertisementorpromotionofgoodsorservicesinconnectionwith,forinstance,themanufacturingprocessofaproduct,thequalityofaproductorservice,orthegeographicaloriginofaproductorservice;

• anyconductoractivitywhichdiscreditsaperson’sbusiness,productsorservices.Thismayarisefrommakingafalseorunjustifiableallegationduringtheadvertisementorpromotionofgoodsorservices;

• theacquisition,disclosureoruseofsecretinformationwithouttheconsentoftherightfulownerandinamannercontrarytohonestbusinesspractices.Theacquisition,disclosureoruseofsecretinformationmayresultfromconductoractivitysuchasindustrialorcommercialespionage,breachofcontractorbreachofconfidence;and

• anyconductoractivitywhichresultsinthebreachofalawofGhana,aninternationalobligationoraregionalobligationtowhichapersonissubject,inamannercontrarytohonestbusinesspractices.TheinternationalobligationsincludeWorldTradeOrganisationprotocolsandagreementssuchasthoseonanti-dumpingissuesandsubsidies.

ItisunclearfromtheUnfairCompetitionActwhethertheprocessesorstepstoimplementmergersortoembarkonacquisitionsqualifyas“actorpractice”forwhichtheUnfairCompetitionActbecomesapplicabletoregulate.Inpractice,mergersandacquisitionshavebeendonewithoutexpressreferencetocompliancewiththeUnfairCompetitionAct.

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Asageneralpolicyconsiderationintermsofthesectorialregulators,thepriorityofthesectoralregulatorsispremisedonthenationalinterest,primarilythegrowthanddevelopmentoftheeconomy.Bywayofexample,undertheMiningActsharetransactionsaretightlyregulatedinthenationalinterest.TheMiningActfurtherprovidesthatnomineralrightorinterestshallbetransferred,assignedordealtwithinanyothermannerwithoutthepriorapproval,inwriting,ofthesectorminister.Theministerisempoweredtorestrictapersonfrombecoming thecontrollerofaminingcompanyifitwillbeprejudicialtothenationalinterest.


Thesector-specificlawsreferredtoearlierrequirenotificationandapprovalofcertainmergers.Examplesofnotifiabletransactionsunderthevarioussectorallegislationaresetoutbelow.UndertheBanksandSpecialisedDeposit-TakingInstitutionsAct,2016(Act930),thefollowingtransactionsrequirenotificationtoandapprovalbytheBankofGhana:

• achangeinthecontrolofabankoritsholdingcompany;

• asale,disposalortransferofthewholeorapartofthebusinessofabank;

• theamalgamationormergerofabankwithanyotherbankorinstitution;and

• thereconstructionofabank.

NotethattheBankofGhanamaynotapproveashareacquisitionormergerifthetransfereemayexerciseinfluencetothedetrimentofthebankandultimatelytoitsconsumers.UndertheInsuranceAct,aschemeoftransferoramalgamationofaninsurancebusinessmustfirstbenotifiedtotheNationalInsuranceCommission(NIC)andapprovalobtainedpriortoimplementation.UndertheECA,ifatransferofsharesinalicenseecompanyresultsinachangeofcontrolormaycausethatcompanytobreachlicencetermsrelatingtoitsownershipstructure,thentheNationalCommunicationsAuthority(NCA)mustfirstapprovethetransfer.Ifnochangeincontrolornobreachresultsfromthetransfer,merelynotifyingtheNCAofthetransactionwillbesufficient.Intheminingsector,therecannotbeamergerwithoutthepriorwrittenconsentoftheMinisterofMines.‘Merger’isnot

definedintheMiningActnorintheCompaniesAct1963(Act179)asamended(theCompaniesAct).

ThegeneraldescriptionthatappliestoallcompaniesundertheCompaniesActis‘amalgamation’.Amalgamationisdefinedas:“amergeroftheundertakingorapartoftheundertakingoftwoormorecompaniesoroftheundertakingsorpartoftheundertakingsofoneormorecompaniesandoneormorebodycorporates".Seequestion6forabriefdiscussionofwhatconstitutesamergerintermsoftheSECRules.

6. What are the thresholds for mandatory merger notification (e.g. assets, turnover and/ or market shares)?

Generally,therearenothresholdswhenitcomestothenotificationofmergers.Therelevantsectoralregulatormay,however,needtobenotifiedofamergerpriortoitsimplementation(asdiscussedinquestion5).Bywayofexample:

• Inthebankingandinsurancesectors,amergerrequirestheapprovaloftheBankofGhanaortheNIC,respectively.

• TheSECRules(TakeoverandMergersCode)governsmergers,substantialacquisitions,takeoversandschemesofarrangement.

Withrespecttolistedcompanies,acquisitionsof30%ormoreofthesharesofapubliclylistedcompany(oritsholdingcompany)triggeramandatorytakeoverofferandrequiretheapprovaloftheSEC.


Generally,thepre-implementationofmergersrequiringapprovalisprohibited.Theconsequencesfornon-complianceincludetheannulmentofmergers,prohibitionoftheexerciseofvotingrights,andprohibitionofthepaymentofdividendsandbonussharesorrightsissues.


Generally,filingfeesarepaidforeachregulatoryorsectoralfilingrequired.However,forthemostpart,thesearenominal.Notethattherearenofeespayableinrespectofanapplicationforthe


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priorapprovaloftheBankofGhanainrespectofmergersortakeoversinbanksandfinancialinstitutions.Wherethestatedcapitalincreasesasaresultofamerger,astampdutyispaidontheincreaseinthestatedcapitalofthemergedcompany.


TherearenospecificlawsandregulationsthatapplyinGhanatoforeign-to-foreignmergers.However,itisnotinconceivablethataforeign-to-foreignmergermighttrigger themergercontrolprovisionsofthesectorallegislationdiscussedabove.Therearenospecificexamplesofthis,however.


Formalorinformalguidancemaybesoughtfromtherelevantsectoralregulatorybodiespriortonotification.Pre-notificationfilings,dialoguesormeetingsarenotexpected,buttheregulatorybodieswouldnotbeadversetotheseortoprovidingguidancewhererequired.


Regulatorshavethediscretiontoconsidernon-competitionfactorsinamergerreviewprocess.Suchfactorsincludepromotionofthenationalinterest,impactonemployment,promotingcompetitivenessofnationalfirmsininternationalmarkets,equitabledistributionofownershiporwealthandpromotionof‘nationalchampions’.

Notethat,undertheLabourAct,2003(Act651):

• Whereamergerislikelytoresultinredundancies,theemployerisrequiredtonotifythechieflabourofficerinadvanceoftheintendedredundancyandalsofurnishtherelevanttradeunionwithinformationontheredundancy.

• Theemployermustalsoconsultthetradeuniononmeasurestobetakentoavertorminimiseanytermination,aswellastheeffectsofterminationontheemployees.

• Thequantumofredundancypaymentsandtheirtermsandconditionsmustbe

negotiatedbetweentheemployerandtheemployeesorthetradeunion.

• Inrespectofthequantumofredundancypaymentsandthetermsandconditionsofredundancypayments,anaggrievedemployeemaysubmitapetitiontotheNationalLabourCommissionforredress.


Asectoralregulatorhaswidediscretioninthemergerreviewprocessandmaywellcontactthirdpartiesduringthisprocess.


Sectoralregulatorsconsideremployeeissuesaskey,andwillgenerallyrequirethatanadequateplanhasbeenputinplacetoaddressanyemploymentissues,includingretrenchments(seetheresponsetoquestion11).Approvalmaybegrantedconditionallysubjecttocompliancewithcertainemployment-relatedobligations.


Inpractice,whereasectoralregulatorintendstoprohibitamerger,itwillmeetwiththepartiesandrelevantstakeholdersforpurposesoftakingsubmissionsastowhythemergershouldnotbeprohibited.


Generally,wherepartiesaredissatisfiedoraggrievedwiththedecisionofaregulator,theymayseekredressbeforethecourts.UndertheInsuranceAct,forexample,whereapartyisdissatisfiedwithadecisionoftheNIC,itmayappealtotheHighCourt.

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Locallegislationdoesnotapplytojointventures.However,theECOWASCompetitionRules,subjecttoitsimplementationcomingintoforce,couldbeapplicabledependingonthecircumstances.NotethattotheextentajointventureviolatestheECOWASCompetitionRules,thismayconstituteabreachoftheUnfairCompetitionAct,andthuswillbedeemedanti-competitiveconductintermsoftheActandtheapplicablesanctionswillapply.


AlthoughtheUnfairCompetitionActdoesnotexpresslyprohibitcartelconduct,itgenerallyprohibitsanactorpracticewhichiscontrarytohonestbusinesspractices.Withregardto thesectorallegislation,therearenospecificprohibitionsoncartelconductandtherearenoexamplesofregulatorspursuingfirmsforcartelconduct.However,asdiscussedunderquestion18,regulatorsaregenerallyvestedwithpowerstoprohibitandinvestigateanyconductincludingthosethatmaybeanti-competitiveinnaturewhichwillextendtocartelconduct.

Bywayofexample,undertheECA,alicenceissuedtoanetworkoperatormustincludeaconditionthatthelicenceissubjecttothelicenseenotengaginginanti-competitiveconduct.Additionally,theNCAisauthorisedtopreventandsanctionanti-competitivebehaviour.

Further,theECOWASCompetitionRules,whichareregionalobligations,specificallyprohibitcartelconductwithintheCommonMarketofECOWAS.


Asnoted,thesectoralregulatorsaregenerallyvestedwithpowerstoinvestigateandpreventprohibitedpractices,whichmayincludecartelconduct.Theregulatorsaremandatedtorequestrelevantinformationand,inappropriatecases,

mayembarkoninspectionsincasesofsuspectednon-compliance.Regulatorsmayalsoseektheassistanceofthecourttointervenefurther,whereappropriate,andtosubpoenarelevantdocumentsandwitnesses.


TheUnfairCompetitionActgenerallydoesnotprovideforpenaltiesorcriminalsanctionsforunfairoranti-competitiveconduct.However,sincebreachoflawispartofconductprohibitedundertheUnfairCompetitionAct,adefaultingentitymaybeliableforanyconsequentialcriminalsanctionapplicableforbreachofarelevantlaw.Anaggrievedpersongenerallymayseekcivilremediesincourt.

Intermsofcertainsectorallegislation:anyacttendingtoamounttoanti-competitiveconductmayresultinactionsbeingtakenbytheregulator,includingtherevocationofthelicenceoftheguiltyparty(e.g.inthetelecommunicationssector)andwithdrawalofadvantagesorstatesupport.

Therearenocriminalsanctionsforanti-competitiveconductintermsoftheUnfairCompetitionAct.Thereisnoleniencypolicyinplace.


Generally,whereanti-competitiveconductisprohibited,therearenostatedexemptions.


Minimumresalepricemaintenanceisnotexpresslyprohibitedunderanylaw.However,minimumresalepricemaintenancewillbeprohibitedundertheUnfairCompetitionActifitisshowntobecontrarytohonestbusinesspractices.Alsonotethatsectoralregulatorsaregenerallygivenpowerstomakeregulationsprovidingguidelinesandrulesontariffs.Forexample,theNCAhasthepowertoestablishregulationregimes,whichmayincludethesetting,reviewandapprovalofpriceswhereitdetectsanti-competitivepricingoractsofunfaircompetition.


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Exclusiveagreementsarenotexpresslyprohibited.Exclusiveagreementsmay,however,beanti-competitivetotheextentthattheyareshowntoresultinuncompetitivepricing,poorqualitygoods,orservicesorgenerallycontrarytohonestbusinesspractices.


AlthoughboththesectorallegislationandtheUnfairCompetitionActhavenospecificorexpressprohibitionsagainstabuseofadominantposition,theECOWASCompetitionRulesspecificallyprohibittheabuseofadominantpositionacquiredthroughthepossessionofasubstantialshareofthemarketwhichenablesthecontrolofprices.Furthermore,ifapracticeisshowntobecontrary tohonestbusinesspractices,itwillcontravenetheUnfairCompetitionAct.


Therearenoexamplesofauthoritiespursuingfirmsforabusingdominantpositions.


No.Anaggrievedpartymayseekcivilremediesincourt.


TherearetypicallynospecificrulesonpricediscriminationinthesectorallegislationandintheUnfairCompetitionAct.However,anyallegationofpricediscriminationcouldbepotentiallyassessedintermsofwhethertheconductiscontrarytohonestbusinesspractices.

Withregardtothesectorallegislation,theECAprovidessomelimitedexamplesofaprovisiononpricediscrimination.Underthe

ECAforexample,operatorsareenjoinednottodiscriminateamongsimilarlysituatedusers.Specifically,callstoruralareasshallnotbepricedhigherasaresultofaspecialinterconnectionagreement.UndertheECOWASCompetitionRules,theECOWASCompetitionAuthorityhasthepowertoinjunctdiscriminatorypricingpractices.


Thepublicationofdecisionsmayvaryamongregulatorsandthesemayormaynotbepublished.Wheretherehasbeenajudicialrevieworappealofadecisionbyacourt,itbecomesamatterofpublicrecordandthusaccessibletothepublicattheregistryofthecourts.TheJudicialServiceofGhanahasawebsitewhereitpublishessomeselectedcourtdecisionswhichmightincludecompetition-relateddecisions.Thejudiciary’swebsiteiswww.judicial.gov.gh

AB & DAVID 8DrIsertRoad,NorthRidgePOBoxTF330AccraGhanaT:+233302253073/+233302253074/+233307012129

www.abdavid.com

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http://www.judicial.gov.gh

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Kenya

BOWMANS

Joyce Karanja-Ng’ang’a | Michelle Kimonye


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TherelevantlegislationistheCompetitionActNo.12of2010(theAct)whichcameintoforceon1August2011.TheActrepealedtheRestrictiveTradePractices,MonopoliesandPriceControlAct(Chapter504oftheLawsofKenya).

TheActestablishestheCompetitionAuthorityofKenya(theAuthorityortheCAK)whoseprincipalfunctionsincludeapplying,promotingandenforcingcompliancewiththeAct.TheActalsoestablishestheCompetitionTribunal(theTribunal)whichhearsappealsfromdecisionsoftheAuthority.

TheActempowerstheCabinetSecretaryofNationalTreasury(theCS)(inconsultationwiththeCompetitionAuthorityofKenya)tomakerulestogivebettereffecttotheprovisionsoftheAct.However,noruleshavecurrentlybeenissuedbytheCS.


2.1 Recent amendments to the ActTHE STATUTE LAW (MISCELLANEOUS AMENDMENTS) ACT OF 2017

TheStatuteLaw(MiscellaneousAmendments)Actof2017(theMiscellaneousAmendmentAct2017)amendedtheActbysubstitutingparagraph3,sub-paragraph4oftheSchedule.ThenewprovisionnowindicatesthattheChairmanoftheAuthorityshallpresideoverallmeetingsinwhichheorsheispresent.IftheChairmanoftheAuthorityisnotpresent,thenoneofthememberspresentmaybeappointedtopresideoverthemeeting.

THE COMPETITION AMENDMENT ACT 2016

TheCompetitionAmendmentAct2016(theAmendmentAct)madecertainchangestotheAct.TheAmendmentActwasassentedtoon23December2016andtookeffecton13January2017.Itssalientprovisionsaresummarisedasfollows:

DEFINITIONS IN THE ACT

Local authorityThetermlocalauthorityisdefinedintheActashavingthesamemeaningassignedintheLocalGovernmentAct(Cap.265).TheActhadnodefinitionofcountygovernment.TheAmendmentActdeletesthedefinitionoftheterm“localauthority”andsubstitutesitwiththedefinitionoftheterm“countygovernment”.CountygovernmentwillmeancountygovernmentasestablishedbyArticle76(1)oftheConstitution.

UndertakingAnundertakingwaspreviouslydescribedintheCompetitionActas“anybusinessactivityintendedtobecarriedon,orcarriedon,forgainorrewardbyaperson,apartnershiporatrustintheproduction,supplyordistributionofgoodsortheprovisionofanyservices".

TheAmendmentActprovidesthefollowingdefinitioninstead.“Undertakingmeansanybusinessactivityintendedtobecarriedonorcarriedonforgainorrewardbyaperson,apartnershiporatrustintheproduction,supplyordistributionofgoodsorprovisionofanyservice,andincludesatradeassociation.”

Thisamendmentisaimedatincludingtradeassociationsinthedefinitionofundertakings.AtradeassociationisdefinedintheCompetitionActasabodyorperson(whetherincorporatedornot)whichisformedforthepurposesoffurtheringtheinterestsofitsmembersorpersonsrepresentedbyitsmembers.

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ABUSE OF BUYER POWER

TheAmendmentActintroducesnewprovisionsthatprohibitabuseofbuyerpower. Theprovisionsrelatingtoabuseofbuyerpowerareasbelow:

• Buyerpowermeans“theinfluenceexertedbyanundertakingorgroupofundertakingsinthepositionofapurchaserofaproductorservice toobtainfromasuppliermorefavourableterms,ortoimposealong-termopportunitycostincludingharmorwithheldbenefitwhich,ifcarriedout,wouldbesignificantlydisproportionatetoanyresultinglong-termcosttotheundertakingorgroupofundertakings”.

• AnyconductthatamountstoabuseofbuyerpowerinamarketinKenya,orasubstantialpartofKenya,isprohibited.

• Indeterminingbuyerpower,theAuthorityshalltakeintoconsiderationthenatureanddeterminationofcontractterms,thepaymentrequestedforaccessinfrastructureandthepricepaidtosuppliers.

• TheAuthority,inconsultationwiththeCSandotherrelevantgovernmentagenciesandstakeholders,shalldeveloprulesforthebettercarryingoutofthesectionoftheCompetitionActthatrelatestoabuseofbuyerpower.

MERGERS

Definition of controlTheAmendmentActamendsthedefinitionoftheterm‘control’byaddingthatapersonwillbeseenascontrollinganundertakingifheorsheownsmorethanone-halfofitsbusinessassets.

Control of mergersTheAmendmentActnowallowstheAuthority(inconsultationwiththeCS)tosetthresholdsforanyproposedmergertobeexcludedfromtheprovisionsofPartIVoftheAct(PartIVoftheActisthepartthatdealswithmergercontrol).TheinclusionofthisamendmenttotheCompetitionActwillenabletheCAKtoissuethresholdsthatcouldsignificantlyaltermergerregimeinKenya,i.e.itwillnolongerbethatallmergersarenotifiableandsomemergerscouldoutrightlybeexcludedfromPartIVoftheAct.

Revocation of approval of proposed mergerTheCAKisempoweredtorevokeadecisionapprovingtheimplementationofaproposedmergerifthedecisionwasbasedonmateriallyincorrectormisleadinginformationfromapartytothemergerorifanyconditionattachedtothemergerisnotcompliedwith.TheAuthorityisrequiredtoprovidewrittenreasonsforsuchadecision.

Inthesecircumstances,theAmendmentActallowstheCAKtoimposeafinancialpenaltyofupto10%oftheprecedingyear’sannualgrossturnoveroftherelevantpartytoamerger,wheretheCAK’sapprovalofsuchmergerwasbasedonmateriallyincorrectormisleadinginformationfromthatpartyorifanyconditionattachedtothemergerisnotcompliedwith.Italsobuildsincriminalsanctionsforpersonswhoarepartytoamergerandprovidemateriallyincorrect/misleadinginformationorfailtocomplywithanyconditionattachedtothemerger’sapproval:afinenotexceedingKES10millionorimprisonment,foratermnotexceedingfiveyears,orboth.

FINANCIAL PENALTIES FOR INFRINGEMENT OF PROHIBITIONS

TheAmendmentActraisesthefinancialpenaltiesthatmaybeimposedbytheAuthority,grantingtheAuthoritypowertoimposeafinancialpenaltyofupto10%ofanundertaking’simmediatelyprecedingyear’sgrossannualturnoverinKenya,wheretheundertakingisfoundtohaveinfringedtheprohibitionsonrestrictivetradepractices,restrictivetradepracticesapplicabletotradeassociationsandtheabuseofdominantposition,followingtheconclusionofaninvestigation.

GENERAL POWERS OF THE AUTHORITY

Power to hold enquiriesAlthoughtheAuthoritywasempoweredtoconductenquiriesorsectoralstudiesonmattersaffectingcompetitionandconsumerwelfare,therewasnostatutoryobligationplacedonotherpersonstoprovideinformationtotheAuthorityinthisregard.TheAmendmentActmakesitmandatoryforallpersons,undertakings,tradeassociationsorbodiestoprovideinformationrequestedbytheAuthority.ItisimportanttonotethattheActalreadygrantedCAKthepowertocompelanypersontoprovide


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itwithinformationinrespectofaninvestigationitwasconducting.Thispowerhas,however,nowbeenextendedtoenquiriesandsectoralstudies.

Proposed decision of the AuthorityUponconclusionofaninvestigation,theActrequirestheAuthoritytoprovideawrittennoticeformakingadecisionthattheprohibitionsonRestrictiveTradePractices(PartA)orRestrictiveTradePracticesApplicabletoTradeAssociations(PartB)hadbeeninfringed.TheAmendmentActextendsthisobligationtoincludePartCoftheAct,whichrelatestoAbuseofDominantPosition(PartC).

Action following investigationUndertheAct,theAuthorityisinteraliaempoweredtodeclareconductthatisthesubjectmatteroftheAuthority’sinvestigationasconstitutinganinfringementoftheprohibitionsonRestrictiveTradePractices(PartA)orRestrictiveTradePracticesApplicabletoTradeAssociations(PartB).TheAmendmentActextendsthispowertoincludeAbuseofDominantPosition(PartC).

Interim reliefUndertheAmendmentAct,thepowerstomakeinterimorders(i.e.directinganundertakingtostopanddesistfromprohibitedconduct)willnotonlyapplytoundertakingsthathaveinfringedtheprohibitionsrelatingtoRestrictiveTradePractices(PartA)orRestrictiveTradePracticesApplicabletoTradeAssociations(PartB),butextendstoundertakingsfoundtobeabusingtheirdominantpositions(PartC).

Consumer welfare offence investigationsTheAmendmentActgrantstheAuthoritythepowerstoinvestigate,conductdawnraids,holdconferences,hearingsandpublishdecisionsinrespectofconsumercomplaints(itmirrorsthepowersandproceduralprovisionsthatarealreadyinplaceinrespectofinvestigatingrestrictivetradepracticesandabuseofdominancewhichwerepreviouslylackinginrelationtoconsumercomplaints).

THE STATUTE LAW (MISCELLANEOUS AMENDMENTS) ACT OF 2015

TheStatuteLaw(MiscellaneousAmendments)Actof2015(theMiscellaneousAmendmentsAct)amendedtheActbyinsertinganewsubsection

underSection93.Section93(nowSection93(1)),gavetheCS,inconsultationwiththeAuthority,thepowertomakerulestoeffecttheprovisionsoftheAct.

TheMiscellaneousAmendmentsActaddedinanewsubsection(subsection(2))expoundingonthepowersunderSection93(1)byprovidingthattherulestobemadebytheCSshallbemadewithrespecttoanythingthatmayrequireprescriptionundertheAct.

2.2 Proposed Regulations

PROPOSAL FOR MERGER THRESHOLDS

Asmentionedabove,theAmendmentActallowstheAuthority(inconsultationwiththeCS)tosetthresholdsforanyproposedmergertobeexcludedfromtheprovisionsofPartIVoftheAct,whichdealswithmergercontrol.TheCAKhasnotyetpublishedproposedthresholdsbelowwhichmergerswillnotbenotifiablebutthisisexpectedtooccurduringthecourseof2018.

GuidelinesAlthoughnoregulationsareinplace,theAuthorityhasissuedanumberofguidelines,whichmerelyindicatetheAuthority’sthinkingandintendedapplicationoftheprovisionsoftheAct,butwhicharenotlegallybinding.SomeoftheseguidelineshavebeenreconsolidatedbytheAuthorityforeaseofreferenceandincludethefollowing:

• PublicInterestTestinMergerDeterminationsGuidelines;

• GuidelinesonRelevantMarketDefinition(MarketDefinitionGuidelines);

• GuidelinesforSection42(guidelinesontheExclusionofProposedMergersfromProvisionsofPartIVoftheAct,No.12of2010)(theExclusionGuidelines).(ItisimportanttonotethattheExclusionGuidelinesmaynolongerbeapplicableoncethresholdsformergernotificationsaresetandpublished);GuidelinesontheControlofUnwarrantedConcentrationofEconomicPowerunderPartVoftheCompetitionAct;

• ConsumerprotectionguidelinesissuedunderPartVIoftheAct,June2014;

• ConsolidatedGuidelinesontheSubstantiveAssessmentofRestrictiveTradePracticesundertheCompetitionAct;

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• ConsolidatedGuidelinesontheSubstantiveAssessmentofMergersundertheCompetitionAct(theMergerGuidelines);

• Guidelinesonengagingwithconsumerorganisations,June2014;

• ExemptionguidelinesfromSection21(1)oftheAct(onrestrictivetradeagreements);

• ExemptionguidelinesforHorizontalPractices,2012;and

• TheLeniencyProgrammeGuidelinesunders.89AoftheAct.

Reconsolidation of formsTheAuthorityhasalsoreconsolidateditsprescribedformsforeaseofreference.ThefollowingformsarenowreadilyavailableontheAuthority’swebsite:

• Exemptionforminrespectofintellectualpropertyrules;

• Exemptionforminrespectofprofessionalrules;

• Exemptionformforcertainrestrictivepractices;

• Confidentialityclaimform;• Mergernotificationform(asdescribedabove);• Mergerwithdrawalforms;• Consumercomplaintform;• Specialcomplianceprocessdeclaration

formfortradeassociations;and• Self-evaluationreportingtemplateforspecial

complianceprocessfortradeassociations.


AlthoughtheAuthorityhashistoricallybeenfocusingmoreonmergercontrol,itnowappearskeentobecomemoreactiveintheenforcementofrestrictivetradepracticesincludingtheabuseofdominanceandunwarrantedconcentrationsofeconomicpower.

In2017,theAuthoritycommencedinvestigationsontherestockingofNakumattSupermarketbyTuskysSupermarket,followingaproposedmergerdealbetweenthesupermarketchains.

InMarch2016,theAuthorityconducteditsfirstdawnraidontwofertiliserfirmssuspectedofpricefixing.TheAuthorityalsoannouncedthatitintendstocarryoutinvestigationsintoanti-competitivebehaviourinKenya’sfinancialservicesandagro-processingsectorsparticularlyontheissueofpricefixingbyfirmsinthesesectors.

OtherareaswheretheAuthorityhascarriedoutinvestigationsincludetheabuseofdominanceinthepaytelevisionsector,pricefixinginthetelecommunicationssectorandunwarrantedconcentrationofeconomicpowerinthecementindustry.


InitsStrategicPlanfortheperiodfrom2013/14to2016/17,theAuthorityhasindicatedthatitsfocuswillbeon:

• Enforcementofcompetitionandprotectionofconsumers,whichincludesmergercontrol,controlofunwarrantedconcentrationofeconomicpower,regulatingrestrictivetradepracticesandenhancingenforcementofcompetitionandconsumerwelfare;

• Research,advocacyandawarenesscreation,includingcarryingoutmarketenquiries/researchinanyidentifiedprioritysectors;

• Mobilisationandoptimalutilisationofresources,suchasdevelopingmechanismstogeneraterevenueinternallyandtoattractexternalfunding;

• Infrastructureandhumancapitaldevelopment,whichincludesensuringoptimalstaffinglevels,deepeningofstaffskillsandadequatephysicalinfrastructure,servicesandgeneralsupplies;

• Visibilityandcorporateimage,namelytoenhanceitsvisibilityandtopromoteitscorporateimage.

PursuanttoanewsletterpublishedbytheAuthorityonitswebsite(IssueNumber1of2017),theAuthorityalsoindicatesthat:

• Itwillprioritisetheissuanceofadvisoriestocountygovernmentsastheydeveloppoliciesandlawsaffectingmarketsintherespectivecounties.

• TheAuthority,pursuanttoitsmandateofconsumerprotectionasoutlinedinPartVIoftheAct,hasintensifiedconsumerawarenesscampaign,whichisfocusedonmattersofconsumerwelfare.


TheActcontainstwodefinitionsoftheterm‘merger’.


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Section2oftheActdefinesa‘merger’as“anacquisitionofshares,businessorotherassets,whetherinsideoroutsideKenya,resultinginthechangeofcontrolofabusiness,partofabusinessoranassetofabusinessinKenyainanymannerandincludesatakeover”.

Notably,atransactionconstitutesanotifiablemergerwhenitfallswithinthemergerdefinitionsetoutinSection41oftheAct(ratherthanthedefinitioninSection2oftheAct).Section41(1)oftheActstatesthatamergeroccurswhenoneormoreundertakings,directlyorindirectly,acquiresorestablishesdirectorindirectcontroloverthewholeorpartofthebusinessofanotherundertaking.Section41(2)statesthatamerger,asdefinedinSection41(1),maybeachievedinanymannerincluding:

• thepurchaseorleaseofshares,acquisitionofaninterestorpurchaseofassetsoftheotherundertakinginquestion;

• theacquisitionofacontrollinginterestinasectionofthebusinessofanundertakingcapableofitselfbeingoperatedindependentlywhetherornotthebusinessinquestioniscarriedonbyacompany;

• theacquisitionofanundertakingunderreceivershipbyanotherundertakingeithersituatedinsideoroutsideKenya;

• acquiringbywhatevermeansthecontrollinginterestsinaforeignundertakingthathasacontrollinginterestinasubsidiaryinKenya;

• inthecaseofaconglomerateundertaking,acquiringthecontrollinginterestofanotherundertakingorasectionoftheundertakingbeingacquiredcapableofbeingoperatedindependently;

• verticalintegration;• exchangeofsharesbetweenoramong

undertakingswhichresultsinsubstantialchangeinownershipstructurethroughwhateverstrategyormeansadoptedbytheconcernedundertakings;or

• amalgamation,takeoveroranyothercombinationwiththeotherundertaking.


UndertheCompetitionAct,whetherornotmergingpartiesaresupplyingsimilargoodsorservices,anotificationtotheCAKisrequiredwhereachangeincontroloccursandthedefinitionofamergerintheCompetitionActismet.

Asmentionedpreviously,however,theAmendmentActallowstheCAKtosetthresholdsforanyproposedmergertobeexcludedfromtheprovisionsofPart4oftheCompetitionAct(Part4oftheCompetitionActcontainstheprovisionsthatdealwithmergersandmergercontrol).TheCAKhasyettosetandpublishsuchthresholds.

Untilsuchthresholdsarepublished,mergingpartiescanapplyforexclusionpursuanttotheGuidelinesforExclusionofMergers(theExclusionGuidelines)publishedbytheCAK.TheExclusionGuidelinesarenotbindingastheyhavenotbeenpassedintolaw.Theyare,however,indicativeoftheCAK’sinternalpolicyonhowitexercisesitsdiscretiontoexcludemergersfromtheprovisionsoftheCompetitionAct.

TheExclusionGuidelinesprovideinteraliathatthefollowingtypesoftransactionsmaybeconsideredforexclusionfromtheprovisionsoftheAct:

General

CombinedturnoverofthemergingpartiesisbetweenKES100millionandKES1billion.

Healthcaresector

CombinedturnoverofthemergingpartiesisbetweenKES50millionandKES500millionshillings.

Carbon-basedmineralsector(firmsengagedinupstreamproductionandsupplyofoil,naturalgasorcoal)

Ifvalueofthereserves,rightsandassociatedexplorationorproductionassets(includingequipment,machinery,fixtures,etc.)tobeheldasaresultofthemergerisbelowKES4billion.

Carbon-basedmineralexplorationandprospecting(butnotproductionofoil,naturalgasand/orcoal)

Undertakingsunderthissector(whichisdefinedastheExcludedSectorunderthedefinitionsintheExclusionGuidelines)mayalsoapplyforexclusion.

AwrittenapplicationintheprescribedformmustbemadetotheAuthorityrequestingexclusion.

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TheActexpresslyprohibitstheimplementationofamergerpriortoreceiptofapprovalfromtheAuthorityand,wheretheapprovalisconditional,implementationofthemergerissubjecttothestatedconditions.AnymergerwhichisimplementedintheabsenceofanauthorisingorderfromtheAuthorityisofnolegaleffect.

Paymentofthefullpurchasepriceisdeemedasimplementationwhereaspaymentofamaximumamountnotexceeding20%oftheagreedpurchasepriceisnotdeemedtoconstituteimplementation.AnypersonwhoimplementsamergerincontraventionoftheActcommitsanoffenceandisliableonconvictiontoimprisonmentforaperiodnotexceedingfiveyears,ortoafinenotexceedingKES10million,orboth.

Inadditiontotheabovesanctions,theAuthoritymayimposeapenaltyofanamountnotexceeding10%ofthegrossannualturnoverinKenya(duringtheprecedingyear)oftheundertakingorundertakingsinquestion.


TheAuthorityintroducedmergerfilingfeeswitheffectfrom1August2014,requiringmergingpartiestoprovideevidenceofpaymentofthefilingfeesaspartofthemergernotificationinorderforanapplicationtobedeemedcomplete.Thefeespayableareasfollows:

COMBINED TURNOVEROF THE MERGING PARTIES

FILING FEE PAYABLE

ExclusionapplicationNofilingfeepayable(exclusionfilingisstillrequired)

KES500milliontoKES1billion(healthcaresector)

KES500000

KES1billiontoKES50billion KES1million

AboveKES50billion KES2million

Nofeeispayableforanexclusionapplication.


TheActrequiresthatanymergerswhichtakeplaceoutsideKenyaandwhichresultinthechangeofcontrolofabusiness,partofabusiness,oranassetofabusinessinKenyainanymanner,mustbenotified.

Inaddition,Section6oftheActmakesprovisionforextraterritorialapplicationoftheActandinteralia,providesthattheActshallapplytoconductoutsideKenyaby:

• acitizenofKenyaorapersonordinarilyresidentinKenya;

• abodycorporateincorporatedinKenyaorcarryingonbusinesswithinKenya;

• anypersoninrelationtothesupplyoracquisitionofgoodsorservicesbythatpersonintoorwithinKenya;or

• anypersoninrelationtotheacquisitionofsharesorotherassetsoutsideKenyaresultinginthechangeofcontrolofabusiness,partofabusinessoranassetofabusiness,inKenya.


TheActissilentonpre-notificationmeetings.However,inpractice,theAuthorityiswillingtohavepre-notificationmeetingsuponrequestfromthemergingparties.Pre-notificationmeetingswiththeAuthorityareadvisable,particularlyinrespectofcomplicated,highprofileortime-sensitivematters.


Section46(2)oftheActallowstheAuthority,inmakingitsdeterminationinrelationtoaproposedmerger,totakeaccountofanycriteriawhichitconsidersrelevanttothecircumstancesinvolvedintheproposedmerger.Assuch,theAuthorityhasthediscretiontotakenon-competitionfactorsintoaccount.ThefactorsstipulatedintheAct,whichmaybeconsideredbytheAuthorityinclude:

• theextenttowhichtheproposedmergerwouldbelikelytoresultinabenefittothepublic,whichwouldoutweighanydetrimentwhichwouldbelikelytoresultfromanyundertaking,includinganundertakingwhichisnotapartytotheproposedmerger,


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acquiringadominantpositioninamarketorstrengtheningadominantpositioninamarket;

• theextenttowhichtheproposedmergerwouldbelikelytoaffectaparticularindustrialsectororregion;

• theextenttowhichtheproposedmergerwouldbelikelytoaffectemployment;

• theextenttowhichtheproposedmergerwouldbelikelytoaffecttheabilityofsmallundertakingstogainaccesstoanymarket;and

• anybenefitslikelytobederivedfromtheproposedmergerrelatingtoresearchanddevelopment,technicalefficiency,increasedproduction,efficientdistributionofgoodsorprovisionofservicesandaccesstomarkets.

TheMergerGuidelinesalsohighlightpublicinterestfactorsaskeytomakingadeterminationinrelationtoaproposedmerger.Theseincludejoblossesandefficiencies,impactofthemergeronsmall-andmedium-sizeenterprisesandtheimpactofforeigndirectinvestment.TheMergerGuidelinesprovidethattheAuthoritywillconductapublicinterestassessmentregardlessoftheoutcomeofthecompetitionassessment.


TheActdoesnotcontainaspecificprovisionempoweringtheAuthoritytocontactcustomersandcompetitorsofthemergingpartiesaspartofthemergerreviewprocess.However,theActdoesallowanypersonincludingapersonnotinvolvedasapartyintheproposedmergertovoluntarilysubmittoaninvestigatorortheAuthorityanydocument,affidavit,statementorotherrelevantinformationinrespectofaproposedmerger.TheMarketDefinitionGuidelinesprovidethat,whereappropriatewithregardtotheproductandgeographicmarket,theAuthoritywillcontactthemaincustomersandcompetitorsofthepartiesinitsenquiries.ThepurposeofthecontactisfortheAuthoritytogatherviewsontheboundariesofthemarketsaswellasthefactualinformationthattheAuthoritymayrequiretoreachaconclusiononthescopeofthemarket.

Withregardtotheextenttowhichsubmissionsbycustomersandcompetitorsareconsidered,

theMarketDefinitionGuidelinesprovidethatsubmissionsbycustomersandcompetitorswillbeusedforpurposesofmarketdefinitiononlywheretheyaresufficientlybackedbyfactualevidence.


TheActstipulatesthatanyperson,includingapersonnotinvolvedasapartyintheproposedmerger,mayvoluntarilysubmittotheAuthorityanydocument,affidavit,statementorotherrelevantinformationinrespectofaproposedmerger.

Withregardtosubmissionsbyemployees,theActdoesnotspecifythatemployeesofthemergingentitiesmaymakesubmissionstotheAuthoritybut,asindicatedabove,theywouldbeentitledtodoso.


TheActdoesnotrequire,butdoesgenerallyempower,theAuthoritytogivethemergingpartiesanopportunitytomakerepresentationsbeforeissuingitsdecisiontoapproveorprohibitamerger.UndertheAct,wheretheAuthoritydecidestoprohibitorconditionallyapproveaproposedmerger,itmustissuewrittenreasonsforitsdeterminationtothemergingparties.TheAuthority’sdecisioncanbechallengedthroughanapplicationforreviewintheTribunal,asdiscussedfurtherinquestion15below.


TheActmakesprovisionforpartiesdissatisfiedwiththeAuthority’sdecisiononamergertoappealtotheTribunal,whichisestablishedunderSection71oftheAct.Section48oftheActprovidesthatnolaterthan30daysafternoticeisgivenbytheAuthorityintheKenyaGazetteofitsdeterminationonaproposedmerger,apartytothemergermayapplytotheTribunalforthe

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Authority’sdecisiontobereviewed.TheTribunalhasitsownrulesofprocedureandtiming.Within30daysafterreceivingtheapplicationtoreviewtheAuthority’sdecision,theTribunalshallbynoticeintheKenyaGazetteissueanoticeoftheapplicationandinviteinterestedpartiestomakesubmissionstotheTribunalinregardtothematterbeingreviewed.

Withinfourmonthsofthedateonwhichanapplicationforreviewismade,theTribunalisrequiredtomakeadeterminationeither:

• overturningthedecisionoftheAuthority;• amendingthedecisionoftheAuthorityby

orderingrestrictionsorincludingconditions;• confirmingthedecisionoftheAuthority;or• referringthematterbacktotheAuthorityfor

reconsiderationonspecifiedterms.

Section73oftheActprovidesthatthepersonswhoareentitledtoappealtotheTribunalincludeanypersonwho,byanordermadeunderSection46oftheAct(beingtheAuthority’sdeterminationofthemerger),isenjoinedfromproceedingwithaproposedmergerorauthorisedtoproceedwithaproposedmerger,subjecttoconditionsprescribedbytheorder.

IfapartyisaggrievedbythedecisionoftheTribunal,afurtherrightofappealliestotheHighCourtofKenya,whichmustbemadewithin30daysofthenoticeoftheTribunal’sdecisionbeingfiledonthatparty.ThedecisionoftheHighCourtisfinal.

Itisimportanttonote,however,thatincaseswherecompetitionlawclaimsoriginateintheHighCourt(asjudicialreviewwritsorconstitutionalpetitions),decisionsoftheHighCourtcanbeappealedattheCourtofAppeal.DecisionsoftheCourtofAppealcanbeappealedattheSupremeCourt,whichisfinal.


TheActappliestojointventuresonlyinsofarasajointventureconstitutesanotifiablemergerasdefinedundertheAct.TheMergerGuidelinesalsoprovidesomefurtherguidanceontheextenttowhichjointventuresarenotifiablemergers,whichincludesthatthejointventurewouldneedtobeafull-functionjointventure.


UndertheAct,theAuthorityisempoweredtoregulatecartelconduct,includinganyagreementsorconcertedpracticeswhichhavetheobjectoreffectofpreventing,distortingorlesseningcompetitioninanygoodsorservicesinKenya.

ThefollowingdefinitionsintheActinthisrespectareworthnoting:

• ‘agreement’whenusedinrelationtoarestrictedpracticeincludesacontract,arrangementorunderstanding,whetherlegallyenforceableornot;and

• ‘concertedpractice’meansco-operativeorco-ordinatedconductbetweenfirms,achievedthroughdirectorindirectcontact,thatreplacesindependentaction,butwhichdoesnotamounttoanagreement.

TheActspecificallyprohibitscertainhorizontalrestrictivepractices(unlawfulconductbetweencompetitors)aswellascertainverticalrestrictivepractices(unlawfulconductbetweenanundertakinganditssupplierorcustomer,orboth).

TheActalsoprohibitsdirectorindirectpricefixing;dividingmarketsbyallocatingcustomers,suppliers,areasorspecifictypesofgoodsorservices;distorting,restrictingorpreventingcompetitionandcollusivetendering.

PartiestoanyagreementmayapplytotheAuthorityforanexemptionfromtheapplicationoftheprovisionsoftheActwhichprohibitrestrictivetradepractices.

TheAuthoritymaygrantanexemptionifitissatisfiedthatthereareexceptionalandcompellingreasonsofpublicpolicyastowhytheagreement,decision,concertedpracticeorcategoryofthesame,oughttobeexcludedfromtheapplicationoftheAct.TheAuthoritymaygranttheexemptionforaspecifiedperiodandsubjecttocertainterms.

TheAuthorityisalsoempoweredtograntblockexemptionsforanycategoryofdecisions,practicesoragreementsbetweenfirms.ThispoweristobeexercisedsubjecttotheapprovaloftheCS,bynoticeintheKenyaGazette.


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TherecentlypublishedLeniencyGuidelinesalsopointtotheAuthority’sshiftoffocusfrommergerstotheregulationofcartelconduct.

BywayofexampleoftheCAK’sactionsoncartels,in2016,theCAKconducteditsfirstdawnraidattheofficesoffertiliserproducersMeaLimitedandYaraEastAfrica,bothofwhicharemembersoftheFertiliserAssociationofKenya(FAK),ontheallegationofpricecollusionbetweenthetwocompanies.

Recently,theCAKrefusedtograntanexemptiontotheEastAfricanTeaTradersAssociation(EATTA)tobeexemptedfromthepricefixingprovisionsoftheAct.


TheAuthorityisempoweredtoinvestigaterestrictiveandprohibitedtradepractices,whichincludecartelconduct,eitheronitsowninitiative,oronreceiptofinformationfromanyperson,governmentagencyorministry.

Inconductingitsinvestigations,theAuthoritymay,bynoticeinwritingtothepersonbeinginvestigated:

• requiretheperson(ordirectororothercompetentofficerinthecaseofabodycorporate)toprovideinformationrelatingtotheinvestigationwithinthetimeandinthemannerspecifiedinthenotice;

• requirethepersontoappearbeforetheAuthoritytogiveevidenceorproduceanydocuments;

• requirethepersontoproducecertaindocumentstotheAuthorityortoapersonspecifiedinthenoticetoactontheAuthority’sbehalf;and

• requestthepersoninpossessionofcertainrecordstogivecopiesoftherecordstotheAuthority.

TheAuthorityalsohassearchandseizurepowersundertheAct,theenforcementofwhichcanbecarriedoutwiththeassistanceofpoliceofficersandotherlawenforcementagencies.


Anypersonwhocontravenestheprovisionsprohibitingcartelconductisliableonconvictiontoimprisonmentforaperiodnotexceedingfiveyears,orafinenotexceedingKES10million,orboth.

TheAuthorityisempoweredbytheActtooperatealeniencyprogrammeandtothisend,in2017,theAuthorityissuedtheLeniencyProgrammeGuidelines,whichoperationaliseSection89AoftheAct.Undertheleniencyprogramme,anyfirmthatvoluntarilydisclosestheexistenceofanyagreementorpracticewhichisprohibitedbytheActandco-operateswiththeAuthorityinitsinvestigationsmaybegrantedleniencybytheAuthorityandsparedfromallorpartofanyfinesthatwouldotherwiseapplytoitundertheAct.

Anapplicationforleniencycanbemadeonlywhen:

• theCAKhasnoknowledgeofthecontravention;or

• theCAKhasknowledgeofthecontraventionbutlackssufficientinformationtobegininvestigation;or

• theCAKhascommencedinvestigationsbutneedsfurtherevidencetopenalisetheoffenders.

Eligibleapplicantsareawardedleniencyasfollows:

• Thefirstthroughthedoorshallreceive100%immunity.

• Thesecondmaybegrantedupto50%reductioninpenaltiesapplicable.

• Thethirdmaybegrantedupto30%reductioninpenaltiesapplicable.

• Anyothersubsequentapplicantwhoprovidesusefulinformationbeforecompletionofinvestigationmaybegrantedupto20%reductioninpenaltiesapplicable.

FurtherdetailsoftheleniencyprogrammearesetoutintheLeniencyProgrammeGuidelines.

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TheAmendmentActallowstheCAKtosetthresholdsforanyproposedmergertobeexcludedfromtheprovisionsofPart4oftheCompetitionAct(Part4oftheCompetitionActcontainstheprovisionsthatdealwithMergersandMergercontrol).Thesethresholdsareyettobeset.

TheActalsomakesprovisionforexemptionofcertainformsofrestrictivetradepractices.

Section25oftheActprovidesthatanyundertakingorassociationofundertakingsmayapplytotheAuthoritytobeexemptedfromtheprovisionsoftheActwithrespecttorestrictiveagreements,practicesanddecisions.Theseprovisionsmaybeinrespectof:

• anyagreementorcategoryofagreements;• anydecisionorcategoryofdecisions;or• anyconcertedpracticeorcategoryof

concertedpractices.

Onceanapplicationforexemptionismade,theAuthorityisrequiredtopublishnoticeoftheapplicationintheKenyaGazette.ThenoticeshouldindicatethenatureoftheexemptionsoughtbytheapplicantandcalluponinterestedpersonstosubmittotheAuthority,within30daysofthepublicationofthenotice,anywrittenrepresentationswhichtheymaywishtomakeinregardtotheapplication.

TheActalsoempowerstheAuthoritytoissueblockexemptionsforanycategoryofdecisions,practicesoragreementsbetweenfirms,subjecttotheapprovaloftheCS,bynoticeintheKenyaGazette.

Inadditiontotheexemptionsprovidedforabove,theActalsomakesprovisionforexemptionswithrespecttointellectualpropertyrightsandprofessionalrules.


Section21(1)oftheActprovidesthatagreementsbetweenundertakings,decisionsbyassociationsofundertakings,decisions

byundertakingsorconcertedpracticesbyundertakings,whichhaveastheirobjectoreffecttheprevention,distortionorlesseningofcompetitionintradeinanygoodsorservicesinKenya,orapartofKenya,areprohibited,unlesstheyareexemptinaccordancewiththeprovisionsoftheAct.

Section21(3)(d)expresslyprohibitsanyagreement,decisionorconcertedpracticewhich,interalia,involvesapracticeofminimumresalepricemaintenance.

However,Section21(4)oftheActprovidesthattheprohibitiononmaintenanceofminimumresalepricesstatedaboveshallnotpreventasupplierorproducerofgoodsorservicesfromrecommendingaresalepricetoare-sellerofthegoodsoraprovideroftheservice,providedthat:

• itisexpresslystipulatedbythesupplierorproducertothere-sellerorproviderthattherecommendedpriceisnotbinding;and

• ifanyproduct,oranydocumentorthingrelatingtoanyproductorservice,bearsapriceaffixedorappliedbythesupplierorproducer,thewords‘recommendedprice’appearnexttothepricesoaffixedorapplied.


Exclusiveagreementsareunlawfultotheextentthattheyhavetheobjectoreffectofpreventing,distortingorlesseningcompetitionintradeinanygoodsorservicesinKenya,orapartofKenya,unlesstheyareexemptedinaccordancewiththeAct.

TheprohibitionisgeneralandtheActdoesnotexpresslystipulatethefactorstobetakenintoaccountindeterminingwhethertheexclusiveagreementhastheobjectoreffectofpreventing,distortingorlesseningcompetitionintheKenyanmarket.However,theActparticularlyprohibitsanyagreementwhich,amongotherthings,limitsorcontrolsproduction,marketoutletsoraccess,technicaldevelopmentorinvestment.Asexclusiveagreementsmayhavetheeffectoflimitingorcontrollingproduction,marketoutletsoraccess,theywould,onthefaceofit,likelybedeemedtobeunlawfulunlessexempted.


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TheAuthoritymaygrantanexemptionifitissatisfiedthatthereareexceptionalandcompellingreasonsofpublicpolicyastowhytheagreementoughttobeexcludedfromtheprohibitionscontainedintheActonrestrictivetradepractices.

Inmakingadeterminationonanexemption,theAuthoritywilltakeintoaccounttheextenttowhichtheagreementcontributesto,orresultsin,orislikelytocontributetoorresultin:

• maintainingorpromotingexports;• improving,orpreventingdeclineinthe

productionordistributionofgoodsortheprovisionofservices;

• promotingtechnicaloreconomicprogressorstabilityinanyindustry;and

• obtainingabenefitforthepublicwhichoutweighsorwouldoutweighthelesseningincompetitionthatwouldresult,orwouldbelikelytoresult,fromtheagreement,decisionorconcertedpracticeorthecategoryofagreements,decisionsorconcertedpractices.


TheActprohibitstheabuseofadominantpositionanddefinesadominantundertakingasanundertakingthatproduces,supplies,distributesorotherwisecontrolsnotlessthanhalfofthetotalgoodsorservicesproduced,suppliedordistributedinKenyaoranysubstantialpartthereof.

Firmsthat,althoughnotdominant,controlbetween40%and50%ofthemarketshare(unlesstheycanshowthattheydonothavemarketpower)orcontrollessthan40%ofthemarketsharebuthavemarketpowerarealsoconsideredtobedominant.Forthesepurposes,marketpowerisdefinedasthepowerofafirmtocontrolprices,excludecompetitionorbehave(toanappreciableextent)independentlyofitscompetitors,customersorsuppliers.

Conductthatamountstoabuseofadominantpositionincludes:

• directlyorindirectlyimposingunfairpricesortradingconditions;

• limitingorrestrictingproduction,marketoutletsormarketaccess,investment,distribution,technicaldevelopmentortechnologicalprogressthroughpredatoryorotherpractices;

• applyingdissimilarconditionstoequivalenttransactionswithothertradingparties;

• makingtheconclusionofcontractssubjecttoacceptancebyotherpartiesofsupplementaryconditionswhichbytheirnatureoraccordingtocommercialusagehavenoconnectionwiththesubjectmatterofthecontracts;and

• theabuseofintellectualpropertyrights.


ItisinthepublicdomainthattheAuthorityhasbeenconductinginvestigationsonfirmsoperatinginthecementsector,telecommunicationssectorandpayTVsub-sector,pursuanttocomplaintsfiledagainstthefirmsfor,interalia,abuseofdominance.


Yes.Currently,anypersonwhoabusestheirdominantpositionisliableonconvictiontoimprisonmentforaperiodnotexceedingfiveyears,orafinenotexceedingKES10million,orboth.Notehowever,asmentionedabove,theAmendmentActalsopermitstheAuthoritytoimposeafinancialpenaltyofupto10%oftheimmediatelyprecedingyear’sgrossannualturnoverinKenyaoftheundertakinginquestion.


Asatthetimeofwriting,therearenorulesexpresslyrelatingtopricediscrimination.However,theActdoesprohibitagreements,decisionsorconcertedpracticeswhichapplydissimilarconditionstoequivalenttransactionswithothertradingparties,therebyplacingthematacompetitivedisadvantage.


TheAuthorityisrequiredtopublishitsdecisionsintheKenyaGazette,althoughthisislimitedtothefinaldecisionoftheAuthority.TheAuthorityalsopublishesasummaryofthedecisionsithasmadeduringtherelevantyear,initsannualreport.TheAuthorityisnotrequiredto,nordoesitpublishitsdetailedreasoneddecisions.However,ithasindicatedthatitmayconsiderdoingsointhefutureinordertocreateprecedents.

TheAuthority’swebsiteiswww.cak.go.ke

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PFI PARTNERSHIPS Elton Jangale

Malawi

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TheprimaryrelevantlegislationistheCompetitionandFair-TradingAct(No.43of1998oftheLawsofMalawi),whichiscomplementedbytheCompetitionandFair-TradingRegulations(GN20/2006).ThecoreobjectiveoftheActistopromotecompetitioninMalawi.TheActisenforcedbytheCompetitionandFair-TradingCommission(theCommission)whichisestablishedundertheAct.TheCommissioncomprisesaBoardofCommissionersandaSecretariat.TheBoardhastheultimatemandateforcompetitionenforcementinMalawi.

EffectiveAugust2016,anewCompaniesAct(No.15of2013),whichreplacedtherepealedCompaniesAct(No.19of1984),providesfortheregulationoftheprocedureandmannerthroughwhichmergersinvolvingacompanyorcompaniesthatarelistedontheMalawiStockExchange(MSE)orcompaniesnotlistedonMSEbutwithmorethan10shareholders.Byregulatingtheprocedureandmannerthroughwhichmergersareconducted,theActseekstoprotecttheinterestsofshareholdersofthecompanywhosesharesaretargetedforacquisition.

IntermsoftheCompaniesAct2013,theCommissionhasbeendesignatedasapanelontakeoversandmergerswhichisrequiredtoregulatetakeoverbids,mergertransactionsandothertransactionsthathaveormayhave,directlyorindirectly,aneffectontheownershiporcontrolofcompanies.ThismandateeffectivelyempowerstheCommissiontoassessalloffersfortakeover,acquisitionorexchangeownershipofsharesonMSEtoensurethatthereisfairandequaltreatmentofallshareholdersinatargetcompanyandtoensurethatshareholdersarenotdeniedanopportunitytomakeaninformeddecisiononthemeritsofanoffer.Thiswillbeapplicabletoanyofferforacquisitioninvolvingmorethan30%shareholdinginalistedcompanyoracompanywithmorethan10shareholders.


DraftregulationswereissuedforpubliccommentinJanuary2014.Thedraftregulationsarestillundergoinginternalgovernmentprocesses.InSeptember2015,theCommissionissueda

publicnotice,whichwaspublishedinthelocalnewspapers,indicatingthattheStatePresidentofMalawihadapprovedreformstothecompetitionandconsumerprotectionregime,including(i)amendingtheActtoeliminatecertaingapsinthelegislation;(ii)amendingtheConsumerProtectionActtoharmoniseitwiththeAct;and(iii)aligningsectorallawsandtheActtocreatecomplementarityandreduceconflictbetweentheselaws.Todate,therehasbeenslowprogressonthereforms,whichhavenotyetbeenissuedoutforpubliccommenting.


Yes,thelawisactivelyenforcedbytheCommissionwhichdrawsitsmandatefromtheAct.TheActseekstopromotecompetitionbyprohibitinganti-competitiveconduct.Asageneralrule,theActprovidesthatanyagreementorbusinessconductwhichhasorwouldlikelyhavenegativeeffectoncompetitionisprohibited.TheActenumeratesexamplesofbusinesspracticeswhichhaveorwouldlikelyhavenegativeeffectsoncompetitionandare,therefore,prohibited.Theseinclude:cartels,suchaspricefixingormarketallocationagreementsamongcompetingfirms;bidrigging;resalepricemaintenance;predation;abuseormisuseofmarketpower;and,exclusivearrangementsoragreements.

TheroleoftheCommissionistoensurethatmarketplayersarenotengagedinanti-competitiveconductandanyotherbusinesspracticesthathaveorwouldlikelyhavenegativeeffectsoncompetition.ThemandateoftheCommissioncoversanyactivitythathascommercialvalue.TheCommissionusesatwo-prongedapproachtodischargeitsmandate.OnonehandisthepreventiveapproachwhichseekstoassistmarketplayerstovoluntarilycomplywiththeprovisionsoftheAct;and,ontheotherhandistheenforcementapproachwhichseekstoassistmarketplayerscorrectanyoffendingconduct.TherearesanctionsprescribedforanyinfringementoftheprovisionsoftheAct.Nonetheless,theCommissionmayexercisediscretionandissuereformatoryorders.AnyactiontakenbytheCommissionundertheenforcementapproachisbasedonthoroughinvestigationswhichinvolvesolicitinginformationfromthemarketandgettinginformationfromthepartiesunderinvestigationsandotherstakeholders.Theresultsoftheinvestigations


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submitanyrelevantdocumentsthatcanhelptheCommissiontoaccessthelikelyimpactofthetransactiononcompetition.Thedocumentsmayincludereportsofmarketstudiesconductedbythepartiesorotherauthoritiesintheindustry.

TheHighCourtofMalawiintheStateandtheCompetitionandFair-TradingCommission,miscellaneouscaseno.1of2013(applicationforjudicialreview),confirmedthattheActdoesnotcreateanobligationforanyonetoseekauthorityfromtheCommissionforamergerortakeover.Inaddition,theCourtconfirmedthatundertheActtheonlyoffencethatpartiescanbechargedwithinthiscontextistheoffenceofparticipatinginamergerortakeoverwhichislikelytolessencompetitionintherelevantmarket.SimplyparticipatinginamergerortakeoverwithoutauthorisationisnotsufficienttoconstituteacontraventionoftheAct.

Notwithstandingthis,theCommissionappearstoconsiderthatanymergerbetweentwoormoreindependententerprises,ortakeoverofoneormoresuchenterprise,requiresauthorisation.TheCommissionhasindicatedthattheassessmentofwhetherthemergerresultsinasubstantiallesseningofcompetitionisanassessmentthatisintendedtobeconductedbytheCommissionafterpartieshavenotifiedthemergerandthisisnotanassessmentthatshouldbeconductedbythepartiesinordertodeterminewhethertonotifyornot.

ForthepurposesoftheAct,‘merger’meanstheacquisitionofacontrollinginterestin:

• anytradeinvolvedintheproductionordistributionofanygoodsorservices;

• anassetwhichis,ormaybeutilisedinconnectionwith,theproductionordistributionofanycommodity,wherethepersonwhoacquiresthecontrollinginterestalreadyhasacontrollinginterestinanyundertakinginvolvedintheproductionordistributionofthesamegoodsorservices;or

• theacquisitionofacontrollinginterestinanytradewhosebusinessconsistswhollyorsubstantiallyin(i)supplyinggoodsorservicestothepersonwhoacquiresthecontrollinginterest;or(ii)distributinggoodsorservicesproducedbythepersonwhoacquiresthecontrollinginterest.

aresubmittedtotheBoardinareportthatisbasedonlegalandeconomicanalysesoftheevidencegathered.ThereportformsthebasisfordeliberationsanddeterminationbytheBoard.


Recently,therehavebeencompetitioninvestigations,includingcartels,intothefollowingsectors:insurance,banking,airandroadpassengertransportservices,poultry,maize,education,healthcareandwaterservice.InMay2017,theCommissionconsideredandadjudicatedoveratotalof25casesofwhich19wereonunfairtradingpracticeswhiletherestwereonanti-competitivetradepractices.

TheCommissionhasadoptedanapproachthatfocusesonencouragingvoluntarycompliancewiththelaw,asopposedtoaprosecutorialapproach.Anextensiveeducationandadvocacyprogrammehasbeenlaunched.


TheActdoesnotcreateamandatorymergernotificationregime.AnytransactionwhichislikelytoresultinsubstantiallesseningofcompetitioninamarketinMalawiisrequiredtobenotifiedtotheCommissionforapproval.TheCommissiontakestheviewthatallmergersarenotifiable.

MergernotificationscanbenotifiedtotheCommissionbeforeorafterclosureofamergertransactionorconsummationofthemerger.TheCommissionacceptsnotificationsatanytime.Ifnotifiedafterconsummated,itisadvisablethatthenotificationbemadewithoutdelay.Partiesthatnotifythetransactionafterthemergerhasalreadybeenconsummatedriskbeingrequiredtounwindthetransactionintheeventthatthemergerisfoundtobeanti-competitive.Anotificationofamergercanbemadebyanyofthepartiesorbyapersondesignatedbytheparties.

Tonotifyamergertransaction,partiesneedtocompleteanapplicationformwhichisobtainablefromtheofficesorwebsiteoftheCommission.Inadditiontotheforms,partiesarerequiredto

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Thereisnoclosedlistofhowcontrolmaybeachieved.Broadly,acontrollinginterest,inrelationto(i)anyundertaking,meansanyinterestwhichenablestheholdertoexercise,directlyorindirectly,anycontrolwhatsoeverovertheactivitiesorassetsoftheundertaking;and(ii)anyasset,meansanyinterestwhichenablestheholdertoexercise,directlyorindirectly,anycontrolwhatsoeverovertheasset.

Inthe2014/2015financialyear,theCommissionreviewed13mergernotifications,representinga150%increasefromthepreviousyear’scases.Ofthese13cases,sevenwerenotifiedtotheCOMESACompetitionCommission.Oftheremainingsixcases,fiverelatedtomergersthatinvolvedapartywithnocommercialpresenceinMalawiandonlyonewasfoundtolikelyresultinsubstantiallesseningofcompetitionintherelevantmarket(themergerwasapprovedsubjecttocertainundertakings).TheCommissionregistered42allegedviolationsoftheAct,representinga61.5%increasefromthepreviousfinancialyear,andprocessed76consumercomplaints.

On4September2015,theCommissionconcludedamemorandumofunderstandingwiththeCOMESACompetitionCommission,toensureco-operationbetweenthetwoauthorities.Itincludesagreementsrelatingto:

• notificationofeitherparty’senforcementactivitieswhichmayaffectimportantinterestsoftheotherparty;

• exchangeofinformationregardinganti-competitivebusinesspracticeswhicheitherpartybelievesisrelevantto,ormaywarrant,enforcementactivitybytheotherparty;

• co-operationininvestigationswherebybothpartieswillrenderassistancetooneanotherintheirinvestigations;and

• advancingtechnicalassistanceandcapacity-buildingprogrammesthroughintegratedstrategies.

On29March2016,anewstrategicplanfortheCommissionwaslaunched.ThecurrentStrategicPlan(2015-2020)hasasitsaspiredstrategicoutcomethattheCommissionwillhavecreatedahighlycompetitiveandfair-tradingenvironmentinMalawiforconsumerwelfareandbusinessprosperitybytheendof2020.


Therearenominimumthresholdsformergernotifications.Basically,allmergersarenotifiable.

Inassessinganymerger,theCommissionwillconsiderwhetherthetransactionwill(i)resultineliminationofacompetitorfromthemarket;(ii)leadtoanewcompanycreatedafterthemergertoincreaseitsmarketpowerwhichcanbeabused;(iii)leadtocrowdingoutofcompetitorsfromassessinginputsordistributionchannels;or(iv)createanenvironmentthatwouldlikelyforceothercompetitorstoengageinanti-competitivebusinesspractices.

Additionally,theCommissionassessesthebenefitsthatthemergerwillcreate.Adecisionwhetherornottoauthoriseamergerisbasedonanassessmentofwhetherthebenefitsofthemergeroutweighitsanti-competitiveeffects.


Asthemergernotificationregimeisnotmandatory,thereisnoprohibitiononthepre-implementationofamerger.Itis,however,anoffencetoeffectamergerthatislikelytoresultinsubstantiallesseningofcompetitioninthemarketwithouttheapprovaloftheCommission.Ifthepartiesdecidetoseekauthorisationforthemergerortakeover,itisadvisablethatthepartiesawaitclearancebeforeconsummatingthemerger.

Thereisnostatutorypenaltyspecificallyorexpresslyattributabletocontraventionofmergernotificationstatutoryrequirements.Thereis,however,ageneralprovisionintheActwhichstatesthatanypersonguiltyofanoffenceforwhichnospecificpenaltyisprovided(e.g.asisthecaseinrespectofmergers)shallbeliableforafineofMWK500000oranamountequivalenttothefinancialgaingeneratedbytheoffence,ifsuchamountisgreater,ortoimprisonmentforfiveyears.Intheeventofaconvictionforcontraveningthemergernotificationstatutoryprovisions,itismostlikelythatcourtswouldorderfinesinsteadofcustodialsentences;andanyorderofcustodialsentencewouldbeasalastresortasaresultoffailuretopayafine.


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Further,anymergerortakeover,whichisheldtoresultinsubstantiallesseningofcompetitionintheMalawimarket,shallnothaveanylegaleffect;andnorightsorobligationsimposedontheparticipatingpartiesbyanyagreementinrespectofthemergerortakeovershallbelegallyenforceable.


Thefilingfeepayableforamergeris0.05%ofthecombinedturnoverortotalassets,whicheveristhehigher,oftheenterprisesproposingtoeffectthemergerortakeover.


Yes,itisnecessarytoobtainapprovalforforeign-to-foreignmergerswhicharelikelytoresultinsubstantiallesseningofcompetitionintheMalawimarket.


AlthoughtheActdoesnotrequirepre-notificationmeetings,theCommissionencouragespartiestohaveapre-notificationmeetingwiththeCommissiontodiscusshowthetransactionmaybenotifiedandgetclarificationontheinformationthatneedstobesubmitted.


Non-competitionfactorsconsideredbytheCommissioninevaluatingamergerincludetheextenttowhichamergerislikelytoresultin(i)increaseinemployment;(ii)accelerationintherateofeconomicdevelopment;(iii)specialattributesofaparticular(industrial)sectororregion;or(iv)theabilityofsmallbusinessesortheinformalsectororthesociallydisadvantagedandpersonswithdisabilitiestobecomecompetitive,i.e.impactinexpandingthebaseofentrepreneurshipandhumandevelopment.

Forexample,intermsofspecialattributesofaparticularindustrialsector,inassessmentofarecentmergerbetweenNationalBankofMalawi(NBM)andIndeBank,theCommissionfoundthat,whilethetransactionwouldresultinareductioninthenumberofbanksinMalawiandthatthe

marketshareofNBMastheacquirerwouldincreasefurtherafterthemerger,thebenefitsofthetransactionoutweigheditsnegativeeffects.TheCommissionreachedaconclusionthatthetransactionsavedIndeBankfromstatutoryclosurewhichwouldhaveresultedinlossofsavingsbyIndeBankcustomersandnegativelyaffectedthebankingindustry.However,tomitigatethenegativeeffectsthatthetransactionwouldlikelycreate,theCommissionrequiredNBMtocommittoundertakingswhichincludedarequirementthatthebankwouldnotabuseitsincreasedmarketshare.

12. Do the authorities contact customers and competitors of the merging parties as part of the merger review process?

TheCommissioncontactscustomersandcompetitorsiftheyareconsideredtobeaffectedbythemerger.


Suppliers,governmentministries,departmentsandagenciesoranyotherinterestedstakeholdersmaybecontactedbytheCommissiontomakesubmissions.IftheCommissionembarksonapublicenquiry,awideconsultationprocesswithstakeholdersisfollowed.Employeesareabletomakesubmissions;however,inpracticetheCommissiondealswithtradeunions,notusuallywithindividualemployees.Submissionsonbehalfofemployeesareimportanttothemergerassessmentprocess.TheCommissionisempoweredtorequireanyparticipantinthemarketwithinwhichamergerortakeoverisproposedtogranttheCommissionaccesstorecordsrelatingtopatternsofownershipandpercentagesofsalesaccountedforbyenterprisesintherelevantsector.


Thereisnoformalprocesstomakerepresentationsbeforeadecisionisissued(suchasapublichearing).Oncethemergingpartieshavemadetheirinitialsubmissions,theCommissionisrequiredunder

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theActtocomebacktothepartieswithadecisionwithin45days.However,theCommissionmayaskforadditionalinformationregardingthemerger,thepartiesortheirbusinesses.IftheCommissionasksfortheadditionalinformation,the45daysstartrunningfromthedatetheCommissionreceivestherequestedinformation.TheCommissionthenmakesitsordertoapproveorrejecttheapplication,oritmayapprovetheapplicationonconditionthatcertainstepsbetakentoreducenegativeeffectsofthemergerortakeoveroncompetition.


AfindingoftheCommissioncanbeappealedtoajudgeinchamberswithin15daysofthedateofthefinding.Thejudgeinchambersmayconfirm,modifyorreversetheCommission’sfindingsoranypartthereof,ordirecttheCommissiontoreconsiderthematter,inwholeorinpart.TheCommission’sfindingsremaininforcependingtheoutcomeoftheappeal,unlessthejudgeordersotherwise.

Extensionofthe15-dayperiodwasconsideredbytheHighCourtofMalawiinthecontextofanapplicationforauthorisationofanexclusivityagreementwhichwasdeterminedundersection44oftheAct.Inacommercialcasenumber2of2014,AirtelMalawiLtdversusTheCompetitionandFair-TradingCommission,theCourtheldthatitdidnothavethepowertograntanextensiontothe15-dayperiod.Althoughthiscasedidnotdealwithamergerspecifically,itislikelytobeapplicableinmergercases.


Thelegislationdoesnotspecificallyrefertojointventures.AjointventurethatisclassifiedasamergerortakeoverisnotifiabletotheCommission.


Yes,theActregulatesprohibitedpracticesandspecificallyprohibitscertainhorizontalrestrictivepractices(i.e.unlawfulconductbetweencompetitors).Anycategoryofagreements,

decisionsorconcertedpracticeslikelytoresultintheprevention,restrictionordistortionofcompetitiontoanappreciableextentinMalawiorinanysubstantialpartofMalawi,isprohibited.Section33(3)oftheActenumeratesexamplesofbusinesspracticeswhichhaveorwouldlikelyhavenegativeeffectsoncompetitionandare,therefore,prohibited.Theseinclude:cartels,suchaspricefixingormarketallocationagreementsamongcompetingfirms;bidrigging;resalepricemaintenance;predation;abuseormisuseofmarketpower;andexclusivearrangementsoragreements.

TheCommissiontakesproactiveactiontoidentifymarketplayerswhicharepotentiallyinvolvedincartelconspiracyormarketswhichmaybeaffectedbycartelisation.CarteldetectiontoolsusedbytheCommissioninvolveanalysesofobservableeconomicdataandfirmbehaviour,systematicmonitoringofmediaaswellastrackingfirmsandindividualstodetectbehaviourwhichisinconsistentwithahealthycompetitiveprocess.

InOctober2014,theCommissiondeterminedthattheInsuranceAssociationofMalawi(IAM)engagedinacartelandorderedIAMtoceaseanddesistfromthepractice;andmakepublicwithdrawalofanyrecommendedpremiumratesthatmightbeinforce.TheCommissionlaunchedinvestigationsfollowingtheinformationitcameacrosswhichallegedthatIAMengagedinsettingofpremiumratesandrecommendingthesametoitsmemberscontrarytoSections32(1)and34(1)oftheAct.Also,theCommissionorderedIndependentSchoolsAssociationofMalawi(ISAM)toceaseanddesistfromengaginginanti-competitivebusinesspractices.ThisfollowedinvestigationsthatconfirmedthatISAMhadbeenengaginginprohibitedpricefixingbysettingfeesinordertoreducecompetitionamongmembers.Apartfromsettingthefees,theAssociationwasalsoinvolvedindevelopingacodeofconductaimedatregulatingtheconductofmemberswithregardtowheretoopenschools,whotoadmitasstudentsandwhotorecruitasteachers.TheCommissionhasalsoissuedsimilarordersagainstMinibusOwnersAssociationofMalawiandTravelAgentsAssociationofMalawi.


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TheActconfersbroadpowersofinvestigationontheCommission,includingthepowerto(i)summonandexaminewitnesses;and(ii)callforandexaminedocuments.

ThefunctionsoftheCommissionincludecarryingout,onitsowninitiativeorattherequestofanyperson,investigationsinrelationtotheconductofbusinesssoastodeterminewhetheranyenterpriseiscarryingonanti-competitivetradepracticesorunfairtradingpracticesandtheextentofsuchpractices,ifanyandtodoallsuchactsandthingsasarenecessary,incidentalorconducivetothebettercarryingoutofitsfunctionsundertheAct.

TheActempowersaninvestigatingofficerwhoisinpossessionofawarranttosearchandinspectallthingsuponthepremisesofthesuspectedenterprise.TheCommissionisempoweredtoobtainallinformationitconsidersappropriate,andforsuchpurposesitisempowered,interalia,tohearanyinterestedpartyandtoholdpublicmeetings.


Thereisnospecificpenaltyforcartelconduct.However,itisanoffencetoengageinanyformofcartelconductassetoutundersection33(3)oftheAct.ApersonwhoisguiltyofanoffenceundertheActforwhichnospecificpenaltyisprovided,isliableforafineofMWK500000oranamountequivalenttothefinancialgaingeneratedbytheoffence,ifsuchamountisgreater,andtoimprisonmentforfiveyears.

Further,anypersonwhosuffersinjury,lossorharmasaresultofanyagreement,arrangement,undertaking,actoromissionwhichisprohibitedbytheActmayrecoverdamagesbywayofcivilproceedingsintheHighCourtofMalawifromthepersonresponsibleforanysuchagreement,arrangement,undertaking,actoromission.Thereisnoleniencypolicyinplace.


TheActspecificallypermitstheCommissiontoauthoriseanyact,agreementorunderstandingwhichisnotprohibitedoutrightbytheAct(i.e.anact,agreementorunderstandingwhichisnotnecessarilyillegalunlessabused)ifthatact,agreement,orunderstandingisconsistentwiththeobjectivesoftheActandtheCommissionconsidersthat,onbalance,theadvantagestoMalawioutweighthedisadvantages.

However,theCommissionisprohibitedfromauthorisingacts,agreementsorunderstandingsofakinddescribedascartelconductandabuseofdominanceundersections33(3)and41(1)respectively.AnexampleofanapplicationforauthorisationisthecaseofChibukuProductsLtd(CPL)inwhichanapplicationbyCPLwasmadetotheCommissionintermsofsection44oftheAct,forauthorisationtodistributeCPL’sproductsthroughappointedexclusivedistributors.AlthoughtheCommissiondeterminedthattheproposeddistributionarrangementhadthelikelyeffectofrestrictingcompetitioninthedistributionofCPL’sproducts,theCommissionauthorisedthearrangementsubjecttocertainamendmentsofrestrictiveclausesinthedistributionagreement.Thearrangementhadpositiveelementswhichoutweighedtheanti-competitiveeffects.Inparticular,itensuredtheavailabilityofCPL’sproductsinremoteareasatreasonableprices.


TheActdoesnotdistinguishbetweenminimumandmaximumresalepricemaintenance.Resalepricemaintenanceisprohibitedifitlimitsaccesstomarketsorotherwiseundulyrestrainscompetitionorhas,orislikelytohave,anadverseeffectontradeortheeconomyingeneral.

IntermsoftheRegulations,anenterprisemayapplytotheCommissionforauthorisationtoengageinresalepricemaintenanceifitisoftheviewthattheconductwillnot(i)limitaccessto

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markets;(ii)undulyrestraincompetition;or(iii)haveanadverseeffectontradeortheeconomyingeneral.


Exclusivedealingarrangements,insofarastheymakethesupplyofgoodsorservicesdependentontheacceptanceofrestrictionsonthedistribution,manufactureorprovisionofcompetingorothergoodsorservices,areprohibitediftheylimitaccesstomarketsorotherwiseundulyrestraincompetitionorhave,orarelikelytohave,anadverseeffectontradeortheeconomyingeneral.

IntermsoftheRegulations,anenterprisemayapplytotheCommissionforauthorisationtoenterintoanexclusivedealingarrangementofthisnatureifitisoftheviewthattheconductwillnot(i)limitaccesstomarkets;(ii)undulyrestraincompetition;or(iii)have,orbelikelytohave,anadverseeffectontradeortheeconomyingeneral.


TheActaddressesthemisuseofmarketpower,providingthatanypersonwhohasadominantpositionofmarketpowershallnotusethatpowerforthepurposeof(i)eliminatingordamagingacompetitorinthatmarketoranyothermarket;(ii)preventingtheentryofapersonintothatmarketoranyothermarket;or(iii)deterringorpreventingapersonfromengagingincompetitiveconductinthatmarketoranyothermarket.

TheActandRegulationsdonotprovideathresholdordefinitionofdominance,howevertheCommission’swebsiterecordsthatanenterprisewouldbedeemedtobedominantwhenitpossessessuchsignificantmarketpowertoadjustpricesoroutputsortradingtermswithouteffectiveconstraintfromcompetitorsorpotentialcompetitors.

TheActalsoprohibitspredatorybehaviourtowardscompetitorsincludingtheuseofcostpricingtodamage,hinderoreliminatecompetition,ifthebehaviourlimitsaccesstomarketsorotherwiseundulyrestrainscompetition,orhas,orislikelytohave,adverseeffectsontradeortheeconomyingeneral.


InAugust2017,theCommissiondismissedallegationsofabuseofdominanceagainstCPFeedsLimited.Specifically,itwasallegedthatCPFeedsweresellingchickensatapricewhichundercutsmallscalepoultryproducers.ThisfollowedinvestigationswhichtheCommissionconductedwhichshowedthatCPFeedswasverticallyintegratedsuchthattheirproductioncostsforchickensweremuchlowerthanthatofsmallscalepoultryproducers.Thisallowedthecompanytosellatmuchlowerprices.TherewasnoevidencetoprovethatCPFeedswasabusingitsmarketpower.TheCommissionheldthatthesmall-scaleproducersweredemandingprotectionfromlegitimatecompetitionfromcompaniesenjoyingeconomiesofscaleandscope.

In2013,theCommissioninvestigatedanddismissedacaseinwhichFasaProductsLtdwasaccusedofengaginginanti-competitivebusinesspractices.ItwasallegedthatFasahadappointedexclusivedistributorsforsoyapiecesandwasrefusingtoallowotherwholesalerstopurchasetheproductdirectlyfromthefactoryshop.

TheCommissionhasalsoreferredamattertotheReserveBankofMalawi,asafinancialservicessectorregulator,tocomeupwithappropriateregulationstoleveltheplayingfieldforcreditreferencingbusinesses,afteritfoundthattheconductbymembersoftheBankingAssociationMalawicreatedananti-competitivebusinessenvironmentincreditreferencing.


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Thereisnospecificpenaltyforabuseofdominance;however,itisanoffenceforanypersonwhohasadominantpositionofmarketpowertomisusethatpower.ApersonguiltyofanoffenceundertheActforwhichnospecificpenaltyisprovidedmaybeliableforafineofMWK500000oranamountequivalenttothefinancialgaingeneratedbytheoffence,ifsuchamountisgreater,andtoimprisonmentforfiveyears.Further,anypersonwhosuffersinjury,lossorharmasaresultofanyagreement,arrangement,undertaking,actoromissionwhichisprohibitedbytheActmayrecoverdamagesbywayofcivilproceedingsintheHighCourtfromthepersonresponsibleforanysuchagreement,arrangement,undertaking,actoromission.


TheActrequiresenterprisestorefrainfromengagingindiscriminatorypricinganddiscriminationintermsandconditions,inthesupplyorpurchaseofgoodsorservices,includingbymeansofpricingpoliciesintransactionsbetweenaffiliatedenterpriseswhichoverchargeorunderchargeforgoodsorservicespurchasedorsuppliedascomparedwithpricesforsimilarorcomparabletransactionsoutsidetheaffiliatedenterprises,iftheactorbehaviourlimitsaccesstomarketsorotherwiseundulyrestrainscompetition,orhasorislikelytohaveanadverseeffectontradeortheeconomyingeneral.

Thisprohibitiondoesnotonlyapplytodominantfirms,buttoanycategoryofagreements,decisionsandconcertedpracticeswhichislikelytoresultintheprevention,restrictionordistortionofcompetitiontoanappreciableextentinMalawiorinanysubstantialpartofit.


SomedecisionsareavailableontheCommission’swebsitewww.cftc.mwunder‘Media/PressRelease’.However,notalldecisionsappeartobepublished.

AmongthoserecentlypublishedareshortsummariesofthemergersconsideredforauthorisationbytheCommission,suchas:

• AcquisitionofSABMillerplcbyAnheuser-BuschInBevSA/NV(ABInBev);and

• AcquisitionofshareholdinginCharterInsuranceCompanybyLibertyHoldingsLtdandLibertyNominees(Proprietary)Ltd.

PFI PARTNERSHIPSCompetition,PPP&BusinessLawConsultants5GardenCourt,ChimutuRoad,offChilembweRoad,Area11P.O.Box30556Lilongwe3MalawiT:+2651776813E:[email protected]

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APPLEBY

Malcolm Moller

Mauritius


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TheCompetitionActof2007(theAct)istherelevantcompetitionlegislationinMauritius.TheCompetitionCommission(theCommission),setupbytheAct,isanindependentstatutorybodythatenforcesthelegislationandhasthefollowingfunctions:

• toconductanyhearingswithinterestedpersonsorparties;

• todeterminewhetherarestrictivebusinesspracticeisoccurringorhasoccurred;

• toinvestigatemergers;and• todeterminesuchpenaltyorotherremedy

asitconsidersfittoimposeinresponsetoanidentifiedanti-competitivepracticeandtodeterminetheactionanenterpriseisrequiredtotaketoensurecompliancewiththepenaltyorremedy.


Therearenoproposedamendmentsornewregulationsthatareexpectedtocomeintoforce.However,asrequiredbytheAct,theCommissionhaspublisheddocumentssettingout:

• guidelinesontheeconomicandlegalanalysiswhichshallbeusedforthedeterminationofcasesundertheAct;

• guidelinesontheprincipleswhichshallbeusedforthedeterminationofpenaltiesorremediesimposedundertheAct,andonthemannerinwhichturnoveristobecalculatedforthepurposesofSection59;and

• itsrulesofprocedure.

AsstatedontheCommission’swebsite,inNovember2009,theCommissionpublisheditsfinalversionsofthefollowingguidelines,followingapublicconsultationondraftversions:

• CCM1–CompetitionCommissionRulesofProcedure2009andCompetitionCommission(Amendment)RulesofProcedure2011

• CCM2–Marketdefinitionandthecalculationofmarketshares

• CCM3–Collusiveagreements• CCM4–Monopolysituationsand• non-collusiveagreements• CCM5–Mergers• CCM6–RemediesandPenalties• CCM7–Guidelinesgeneralprovisions


WhereastheActwaspassedon20December2007,PartsIandIIoftheAct,whichsetout,interalia,theshorttitleandinterpretationoftheActalongwiththedutiesoftheexecutivedirectoroftheCommission,havebeenproclaimedintoforcewitheffectfrom24October2008,andPartsIIItoIX,whichsetout,interalia,theinvestigationsanditsproceduresdonebytheexecutivedirector,theproceedingsbeforetheCommissionanddisclosuresmadetotheCommissionandconfidentiality,havebeenproclaimedintoforcewitheffectfrom25November2009.

TheCommissionisaparastatalbody,undertheaegisoftheMinistryofFinancialServices,GoodGovernanceandInstitutionalReforms.However,theCommissionisindependentofthelocalgovernmentinitsdecision-making.TheCommissionwasestablishedin2009,andithasbeenveryactiveinmeetingitsstatutoryfunctions.

AccordingtotheCommission’smostrecentpubliclyavailableannualreport,beingfortheyear2014-2015,during2014,28enquirieswereinitiated.Addedtothat,therewere12ongoingenquirieswhichwerelaunchedfromtheprecedingyear,resultinginthetheCommissionadministering40enquiriesinallduring2014.In2015,theCommissioninitiated20enquirieswhilst30wereclosed.FortheyearendingDecember2014,theCommissionreceived76complaintsoutofwhich28proceededtoenquiry.During2015,atotalof69issueswerereportedtotheCommission.Followingascreeningprocess,20matterswerereferredforenquiry.Theseenquiriescutacrossavarietyofmarketsandindustriesrangingfromtheagriculturalsectortotheinformationandtechnologysectors.

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AmergerisdefinedundertheActasthebringingtogether,undercommonownershipandcontrol,oftwoormoreenterprises,ofwhichatleastonecarriesonactivitiesinMauritius,orthroughacompanyincorporatedinMauritius.ThedeterminationofwhetheramergerexistsforthepurposesoftheActisbasedonbothqualitativeandquantitativecriteriafocusingonboththeconceptofcontrolandmarketshare.

Enterprisesshallberegardedasbeingundercommoncontrolwheretheyare:

• enterprisesofinterconnectedcorporateentities;

• enterprisescarriedonbytwoormorecorporateentitiesofwhichonepersonhas,orgroupsofpersonshave,control;or

• twodistinctenterprises,onecarriedonbyacorporateentityandtheothercarriedonbyapersonhavingcontrolofthatcorporateentity.

Anypersonmayberegardedasbringinganenterpriseunderhisorhercontrolwhere:

• thatpersonbecomesabletocontrolormateriallyinfluencethepolicyoftheenterprise,withouthavingacontrollinginterestinthatenterprise;

• thatpersonisalreadyabletocontrolormateriallyinfluencethepolicyoftheenterpriseandacquiresacontrollinginterestinthatenterprise;or

• thatpersonisalreadyabletomateriallyinfluencethepolicyoftheenterpriseandbecomesabletocontrolthatpolicy.

TheActprohibitsmergersituationswhichresultinarestrictivebusinesspracticeasdefinedtherein.ThereisnorequirementtonotifytheCommissionwherethereisamergerundertheAct(subjecttothediscussionunderquestion6),buttheexecutivedirectoroftheCommission(theExecutivedirector)hasthepowertoinvestigateorcausetobeinvestigatedsuchmergersituationwhereheorshehasreasonablegroundstobelievethatsuchmergeramountsorwouldamounttoarestrictivebusinesspractice.


TheprimaryfunctionoftheCommissionistopromotecompetitionbyenforcingtheActintheinterestofconsumers,businessesandtheMauritianeconomy.ItsmainroleundertheActistopreventbusinessesfromengaginginrestrictivebusinesspracticeswhichfallwithinthetermsofPartIIIoftheAct.TheCommissionaimstobetheleadingcompetitionauthorityintheregion,recognisedforitsintegrity,professionalismandcontributiontoeconomicgrowth.

InordertoencouragecompliancewiththeprovisionsoftheActandbringResalePriceMaintenance(RPM)toanend,theCommissionhasputinplaceaone-offandtime-limitedamnestyofferforenterprisesinvolvedinRPMconduct.RPMqualifiesasa‘collusiveagreement’andisprohibitedbyvirtueofSection43oftheAct.RPMisgenerallyunderstoodtomeananypracticebywhichthesuppliersandresellerscometoanunderstandingthatplacesrestrictionsonthepricesthatresellerschargewhenresellingthesuppliers’goods/services(OECD,2008).ThemostcommonformofRPMoccurswhenasupplieragreeswithitsdealersontheminimumpricelevelatwhichtosellthesupplier’sgoodsorservices.Boththesupplierandhisreseller,engaginginRPM,areliableforafinancialpenaltyofupto10%oftheirrespectiveturnoverinMauritiusduringtheperiodofthebreach,foruptoamaximumoffiveyears.

TheRPMAmnestyisavailabletoallenterpriseswhohaveengagedinRPM,providedthat,amongotherthings,theyrevealtheirconducttotheCommission,makeanapplicationforRPMbythesetdeadlineandundertaketoamendtheirconducttoceasetheRPM.ByapplyingfortheRPMamnesty,theriskofbeingseverelyfinedbytheCommissionisconsiderablyreduced.TheRPMAmnestythusoffersaone-offopportunityforenterprisestoredressanyillegalRPMconductwithoutincurringfinancialliabilityandprovidesenterpriseswiththeopportunitytobringtheircommercialpracticesintocompliancewiththelaw.


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TheActalsoprovidesthatwheretwoormoreenterprisesintendtomerge,anyoneoftheenterprisesmayapplytotheCommissionforguidanceastowhethertheproposedmergerislikelytoresultinasubstantiallesseningofcompetitioninanymarketforgoodsorservices.


IntermsoftheAct,a‘mergersituation’shallbesubjecttoreviewbytheCommissionwhere:

• allthepartiestothemergersupplyoracquiregoodsorservicesofanydescription,andfollowingthemerger,themergedentitywillsupplyoracquire30%ormoreofallthosegoodsorservicesinthemarket;

• priortothemerger,oneofthepartiestothemergeralonesuppliesoracquires30%ormoreofgoodsorservicesofanydescriptiononthemarket;and

• theCommissionhasreasonablegroundstobelievethatthecreationofthemergersituationhasresultedin,orislikelytoresultin,asubstantiallesseningofcompetitionwithinanymarketforgoodsorservices.

However,inpractice,itisdeemedoptionalformergingpartiestonotifytheCommission.Onlymergersthatsubstantially,orarelikelytosubstantially,lessencompetitionwillbesubjecttoremedyundertheAct.Weunderstand‘remedy’tobetheconditionsplacedonamergeraswellastheguidanceprovidedtothemergingpartiesbytheCommissionwherethereisapossibilityofthemergersubstantiallylesseningcompetition.

IftheCommissionersdeterminethatanenterprisehasbeenpartytoamergersituationwhich“hasresulted,orislikelytoresult,inasubstantiallesseningofcompetitionwithinamarketforgoodsorservices”,theCommissionmaygivetheenterprisesuchdirectionsasitconsidersnecessary,reasonableandpracticableto“mitigate,restrictorpreventanysubstantiallesseningofcompetitionorlikelysubstantiallesseningofcompetitionanditseffects”.

Inthecaseofacompletedmerger,adirectionmayrequireanenterpriseto:

• divestitselfofsuchassetsasarespecifiedinthedirectionwithintheperiodsospecifiedinthedirection;or

• adopt,ortodesistfrom,suchconduct,includingconductinrelationtoprices,asisspecifiedinthedirectionasaconditionofmaintainingorproceedingwiththemerger.


Thereisnoprohibitionagainstthepre-implementationofamerger.However,asstatedabove,theexecutivedirectorhasthepowerto,interalia,investigateorcausetobeinvestigatedsuchmergersituationwhereheorshehasreasonablegroundstobelievethatarestrictivebusinesspracticeisoccurringorabouttooccurwhichwouldinvolvesubstantiallesseningofcompetitionwithinanymarketforgoodsorservices.Wheretwoormoreenterprisesintendtomerge,anyoneoftheenterprisesmayapplytotheCommissionforguidanceastowhethertheproposedmergersituationislikelytoresultinasubstantiallesseningofcompetitionwithinanymarketforgoodsorservices.


Nofilingfeesarepayableforthefilingofamerger.


TheCommissionandtheActdrawnodistinctionbetweenMauritian-ownedandforeign-ownedenterprises.Assuch,thereisnospecificrequirementtoobtainapprovalforforeign-to-foreignmergersbuttheordinarycriteriasetoutinresponsetoquestion5apply,inparticular,whereatleastoneoftheforeignentitiescarriesonbusinessinMauritius.

AnyoneoftheenterprisesmayapplytotheCommissionforguidanceastowhethertheproposedmergersituationislikelytoresultinasubstantiallesseningofcompetitionwithinthemarket.

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Wheretwoormoreenterprisesintendtobeinamerger,anypartymayapplytotheCommissionforguidanceastowhetheraproposedmergersituationislikelytoresultinasubstantiallesseningofcompetitionwithinthemarketandamounttoarestrictivebusinesspractice.

Althoughitcannotbesaidthatpre-notificationmeetingsarenormalpractice,theCommissionhasreceivedandacceptsapplicationsforguidancefrompartiestomergers.


Asstatedabove,thestandardunderwhichamergerisassessediswhetherithasresultedin,orislikelytoresultin,asubstantiallesseningofcompetition.Thistestisabouttheeffectsofthemerger,notthemotives.However,theCommissiontakesintoconsiderationotherelementsinassessingamerger,suchastheidentificationoftherelevantmarketsaffectedbythemergersituation,andwhetheroff-settingpublicbenefitsarepresent.

TheActdoesnotspecificallydefinetheconceptof‘publicbenefit’forcurrentpurposes.Itisthereforearguedthatthegeneralunderstandingofpublicbenefitorpublicinterestshouldbeadopted.Differentconsiderationsmaybegivenmoreorlessweight,dependingonthefactsofagivencase.


Inassessingwhetheramergerislikelytoorhasresultedinasubstantiallesseningofcompetition,theCommissionwillconsiderarangeofevidence,bothquantitativeandqualitative.Suchevidencemayincludethatfromcustomerinterviewsandsurveys.


Itisunclearwhether,inthecontextofamerger,theCommissionconsidersotherpartiessuchastheemployeesduringitsinvestigation.


WearenotawareofmergingpartiesbeingforewarnedthattheCommissionintendstomakeanegativefindingregardingtheirmerger(beitacompleteprohibitionoraconditionalapproval).However,mergingpartiesmayrequesttheCommissiontoconveneahearingatwhichtheycanmakerepresentationsandwheretheCommissioncanheartheirviews.TheCommissionmayconvenesuchahearinguponreceiptoftheexecutivedirector’sinvestigationreport.


AnypersonaffectedbyanorderordirectionoftheCommissioncanappealtotheSupremeCourtofMauritius,underSection67oftheAct,bylodgingawrittennoticeofappealwiththeRegistryoftheSupremeCourtandtheCommissionwithin21daysofthedateoftheorderordirection.


Yes.Thelegislationappliestoanyperson,firm,partnership,corporation,company,associationorotherjuridicalperson,engagedincommercialactivitiesforgainorrewardandincludestheirbranches,subsidiaries,affiliatesorotherentitiesdirectlyorindirectlycontrolledbythem.


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17. Does the legislation specifically prohibit cartel conduct? If so, are there examples ofthe authorities pursuing firms for engaging in cartel conduct?

TheActspecificallyprohibitscollusion,alsoknownascartelconduct.Section41oftheActstatesthatanagreement,orprovisionofanagreement,shallbecollusiveif:

• itexistsbetweenenterprisesthatsupplygoodsorservicesofthesamedescription,oracquiregoodsorservicesofthesamedescription;

• ithastheobjectoreffect,inanyway,offixingthesellingorpurchasepricesofthegoodsorservices;

• sharingmarketsorsourcesofthesupplyofthegoodsorservices;or

• restrictingthesupplyofthegoodsorservicesto,ortheacquisitionofthemfrom,anyperson;and

• itsignificantlyprevents,restrictsordistortscompetition.

Anyagreementorprovisionofanagreementwhichiscollusiveshallbeprohibitedandvoid.Collusiveagreementscanalsotaketheformofbid-riggingandresalepricemaintenance.Anagreementoraprovisionofbid-riggingshallbeconsideredcollusive,ifonepartyagrees(i)nottosubmitabidortender;or(ii)agreesupontheprice,termsorconditionsofabidortender.ResalePriceMaintenance(RPM)isalsoaformofcollusiveagreement,andisdescribedas“anagreementbetweenasupplierandadealerwiththeobjectoreffectofdirectlyorindirectlyestablishingafixedorminimumpriceorpriceleveltobeobservedbythedealerwhenresellingaproductorservicetohiscustomers".

AnexamplewheretheCommissioncarriedoutaninvestigationonapossiblecartelwasinthebeermarket.TheexecutivedirectorlaunchedaninvestigationinMarch2014intoapotentialcollusiveagreementbetweentwocompanieswiththeobjectand/oreffectofsharingthemarketforbeerinMauritiusorofrestrictingthesupplyofbeerinMauritius,inbreachoftheprovisionsofSection41oftheAct.

TheagreementbetweenthetwocompanieswasfoundtobeinbreachofsaidSection41oftheAct.TheCommissionpublisheditsdecisioninSeptember2014wherebytheyalsoimposedfinancialpenaltiesonthecompaniesinvolved.

Inthisinstance,oneofthepartieswasorderedtopayafineofapproximatelyMUR20million,andtheotherpartyafineofapproximatelyMUR6.5million.

TheCommissionmadealandmarkdecisionin2017whichinvolvedafineofRs30million,asdetailedbytheCommissionbelow:

“Thefirstsemesterof2017wasmarkedbythefirstdecisionoftheCommissiononaresalepricemaintenancecase.On16March,theCommissionfinedPanagoraMarketingCoLtd(Panagora)nearlyRs30mforbreachingsection43oftheActbyengaginginRPM.TheCommissionalsoimposedvariousdirectionsonPanagoratoensurethatanyresalepricemaintenancepracticeswhichwerefoundarestoppedcompletely.

Panagorasupplies‘Chantecler’chickentosupermarkets,hypermarketsandsmallretailshops,whichsellthoseproductstoconsumers.Chanteclerisavailablebothchilledandfrozenandindifferentcutsandpackaging.GoingbythedefinitionofRPMundertheAct,asanagreementbetweenasupplierandadealerwiththeobjectoreffectofdirectlyorindirectlyestablishingafixedorminimumpriceorpriceleveltobeobservedbythedealerwhenresellingaproductorservicetohiscustomers,theCommissionfoundthatPanagorahadsubjectedthesalesofChantecler,tothreesuchtypesofagreementswithvariousresellers.

TheCommissionagreedwiththeexecutivedirectorwhofoundthatPanagorawashinderingtheabilityofresellerstoindependentlysetthepriceforChanteclerproducts.Thiseffectivelypreventedresellersfromcompetingamongthemselvesintermsofpriceandservicetoattractclients.Inturn,consumersweredeniedbenefitsintermsofmorecompetitivepricesamongothercompetitivevariables.

Overandabovefinancialpenalties,theCommissionhasalsoimposeddirectionsonPanagora.ThedirectionsincludeobligationstogiveresellersthefreedomtosetownpricesonChanteclerproducts,toaffixthewords‘recommendedprice’wherePanagoraaffixesapriceasdeterminedbyitselfontheproducts,andtoensurethatresellersarenotawareofpricesofferedtoeachother,amongothers.PanagorahasappealedagainstthedecisionoftheCommissionandthelatternowawaitsthefirstinterventionoftheSupremeCourtonthemeritsofacasebroughtbeforeit.”

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TheActprovidestheexecutivedirectorwithverystronginvestigatorypowers.Theexecutivedirectormay,forthepurposesofanyinvestigationundertheAct,doanyofthefollowing:

• requireanypersontoproduceanybook,document,recordorarticleortoprovidespecifiedinformationinawrittenstatement,whichrelatestoanymatterrelevanttotheinvestigationincludingmarketshareinformationoradescriptionofaparticularmarket.Anysuchrequestshallbeexercisedbyserviceofawrittennoticesignedbytheexecutivedirectorandthelattermayalsorequireapersontoproducefurtherinformationafterconsideringthematerialproducedinresponsetoanearliernotice;

• orderanypersontofurnishastatementinwritingmadeonoathoraffirmationsettingoutallinformationwhichmayberequiredunderthenotice;

• orderanypersontoattendataspecifiedtimeandplace,forthepurposeofbeingexaminedorallyinrelationtoanymatter;

• enterandsearchthepremisesofanypersonandtakepossessionofdocumentsorcopiesofthemwithawarrantsignedbyamagistrate;or

• seizeanddetainitemswhichmayberequiredasevidence.


AnyenterprisewhichhasintentionallyornegligentlyinfringedtheActforcartelconductfacesafinancialpenaltywhichshallnotexceed10%oftheturnoveroftheenterpriseinMauritiusduringtheperiodofthebreachoftheprohibition,uptoamaximumperiodoffiveyears.TheCommissionmayalsogivetheenterprisesuchdirectionasitconsidersappropriatetoensurethattheenterpriseceasestobeapartytotherestrictiveagreement.TheCommissionmay,inparticular,requiretheenterprisetoterminateormodifytheagreementwithinsuchperiodasmaybespecified.TheCommissionhasaleniencypolicyinplace.ItiscontainedintheCompetitionCommissionGuidelinesonCollusiveAgreements.

EnterprisesthatcomeforwardwithinformationwhichenablesorassiststheCommissiontodeterminetheexistenceofcartelconductmayreceivesubstantialreductionsin,orcompleteimmunityfrom,financialpenaltiesleviedbytheCommissionforthatconduct.Applicationsforleniencymaybemadeeitherorallyorinwriting.TheActdoesnotprovideforanycriminalsanctionsforcartelconduct.


Thereisnoprovisioninthelegislationprovidingforamechanismtoapplyforexemptionfromcertainpartsofthelegislation.However,petroleumproductsandliquidpetroleumgasareexcludedfromtheAct,andthefollowingagreementsorpracticesareexcludedfromtheAct:

• anypracticeofemployersoranyagreementbywhichemployersarepartiesinsofarasitrelatestotheremuneration,termsorconditionsoremploymentofemployees;

• anyagreementinsofarasitcontainsprovisionsrelatingtotheuse,licenceorassignmentofrightsunderorexistingbyvirtueoflawsrelatingtocopyright,industrialdesign,patents,trademarksorservicemarks;and

• anypracticeoragreementapprovedorrequiredunderaninternationalagreementtowhichMauritiusisaparty.


MinimumresalepricemaintenanceisprohibitedunderSection43oftheAct.However,asupplierorproducermayrecommendaminimumresalepricetoare-sellerprovidedthattherecommendationisnotbinding.


Anyagreementthathastheeffectofsignificantlypreventing,restrictingordistortingcompetitionwithinMauritiusisprohibited.Exclusiveagreementsarenotinthemselvesprohibited,butmightbeiftheyareexpectedtoresultinanti-competitiveforeclosureby,forinstance,preventingcompetitors


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fromsellingtocustomersthroughtheuseofexclusivepurchasingobligationsorrebates.

Indeterminingthelawfulnessorunlawfulnessofanagreement,theCommissionwillhaveregardtothedesirabilityofmaintainingandencouragingcompetitionandthebenefitstobegainedinrespectoftheprice,quantity,varietyandqualityofgoodsandservices,andshallfirstdeterminewhethercompetitioninanymarketisadverselyaffectedandwhethertheagreementhastheobjectoreffectofpreventing,restrictingordistortingcompetition.


Amonopolysituationshallexistinrelationtothesupplyofgoodsorservicesofanydescriptionwhere:

• Thirtypercentormoreofthosegoodsorservicesaresupplied,oracquiredinthemarket,byoneenterprise;or

• Seventypercentormoreofthosegoodsorservicesaresupplied,oracquiredinthemarket,bythreeorfewerenterprises.

Itisnotinitselfabreachofthelawforanenterprisetobeinamonopolysituation.However,intermsofSection46(2)oftheAct,enterpriseswhichholdmonopolypositionsmaybeinbreachoftheActwheretheyareabusingorexploitinganymarketpowerthispositionconfersuponthemand/orareengagedinconductwhichrestricts,preventsordistortscompetitionorotherwiseexploitsthemonopolysituation.Section46(2)providesthatamonopolysituationshallbesubjecttoreviewbytheCommissionwheretheCommissionhasreasonablegroundstobelievethatanenterpriseinamonopolysituationisengaginginconductthat:

• hastheobjectoreffectofpreventing,restrictingordistortingcompetition;or

• inanyotherwayconstitutesexploitationofthemonopolysituation.

Inreviewingamonopolysituation,theCommissionshalltakeintoaccount:

• theextenttowhichanenterpriseenjoysoragroupofenterprisesenjoy,suchapositionofdominanceinthemarketsoastomakeitpossibleforthatenterpriseorthoseenterprisestooperateinthatmarket,andtoadjustpricesoroutput,withouteffectiveconstraintfromcompetitorsorpotentialcompetitors;

• theavailabilityornon-availabilityofsubstitutablegoodsorservicestoconsumersintheshortterm;

• theavailabilityornon-availabilityofnearbycompetitorstowhomconsumerscouldturnintheshortterm;and

• evidenceofactionsorbehaviourbyanenterprisethatis,oragroupofenterprisesthatare,partytothemonopolysituationwheresuchactionsorbehaviourshaveorarelikelytohaveanadverseeffectontheefficiency,adaptabilityandcompetitivenessoftheeconomyofMauritius,orarelikelytobedetrimentaltotheinterestsofconsumers.

Furthermore,theguidelinesonmonopolysituationsissuedbytheCommissionsetoutsomeadditionalconsiderationstheCommissionwilltakeintoaccount,whendecidingwhethertoinvestigateandwhethertotakeactionregardingmonopolysituations.


TheCommissionhascarriedoutseveralinvestigationsinthepastyearswhereithadreasonablegroundstobelievethatsomeenterpriseswereabusingtheirdominantposition.SummariesofsomeoftheinvestigationsthathavebeencarriedoutbytheCommissionfollow.

OPENING OF INVESTIGATION ON MONOPOLY SITUATION IN RELATION TO MOBILE TELEPHONY SECTOR

TheexecutivedirectoroftheCommissionhasopenedaninvestigationonanallegedmonopolysituationsubjecttoreviewundersection46oftheAct,pertainingtothemobiletelephonysector.Theexecutivedirectorisconcernedthattwomobiletelephonyoperators,whichmaybeinamonopolysituation,couldbeengaginginboth

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exclusionaryandexploitativeconductinrelationtotheirpricingpolicyforvoicecallingservices.

Atthisearlystageoftheinvestigation,theunderlyingconcernisthattwomobiletelephonyoperatorscouldbediscriminatingbetweentariffsforvoicecallsplacedwithinthesamenetwork(referredtoas‘onnetworkcalls’or‘on-netcalls’)andcallsplacedtoothernetworks(referredtoas‘offnetworkcalls’or‘off-netcalls’).Thispricediscriminationcouldbepreventing,restrictingordistortingcompetitioninthelocalmobiletelephonysector,whichultimatelycoulddeterorslowinvestment,innovationandgrowthinthesector.Additionally,thepricediscriminationbetweenon-netandoff-netcallscouldmeanthatsubscribersarepayingrelativelymoreforoff-netvoicecallsforreasonswhichmaypotentiallybeunrelatedtocostdifferentials.

Noconclusionhasbeenreachedatthisstageandafirmconclusioncanbedrawnonlyaftercompletionoftheinvestigation.

Atthisstage,theexecutivedirectorhasconcludedthathehasreasonablegroundstobelievethatsuchconductonthepartofbothmobileoperatorsmayconstituterestrictivebusinesspractices.Uponcompletionoftheinvestigation,theexecutivedirectorwillreporthisfindingstotheCommission.IftheCommissionconcludesthattheobjectoreffectoftheconductistorestrict,preventordistortcompetitioninanymarket,orinanywayconstitutestheexploitationofamonopolysituation,itmaytakenecessarystepstoremedythesituation.Alternatively,theinvestigationmightfindnoinfringementoftheAct,inwhichcasetheinvestigationwouldbeclosedwithoutfurtheraction.NofinancialpenaltiescanbeleviedforabreachofthemonopolyprovisionsoftheAct;thefocusinsteadisontakingmeasurestorestorecompetition.

BUNDLING OF INSURANCE AND CREDIT PRODUCTS IN THE BANKING SECTOR

Followinganenquiry,theCommissionlaunchedaninvestigationintothebankingsectorinAugust2010todeterminewhetherbanksthatofferhousingloansareinamonopolysituationandwhetherbytyingtheirhousingloanstodecreasingtermassurance(DTA),theyareactingtoprevent,restrictordistortcompetitionintheprovisionofDTAforthepurposeofcontractingahousingloan.

TheCommissionwasconcernedthatthenatureofthecommercialarrangementsbetweenbanksandinsurancecompaniesmightnotsecurethebestdealforborrowers,e.g.insomecasesbanksmightbefavouringinsurancecompanieswithwhichtheyhaveinstitutionallinks.Moreover,byexploitingthemonopolysituationstheyenjoyduetothepointofsaleadvantagetosellinsurance,bankscouldbesellinganinsurancepolicythatismoreexpensivethanthehousingloanborrowerscouldhaveboughtfromanotherinsurancecompany,whilethebanksearnacommission.

TheCommissioncarriedoutinvestigationson13banksandissueditsdecisionsinrespectofeachbankinNovember2012.Inthisregard,theCommissionconcludedthatsomeofthebankswereinbreachofSection46(2)(a)oftheActbyengaginginanexclusionaryabuseofamonopolysituationthathastheeffectofpreventing,restrictingordistortingcompetitionintheDTAmarket.TheCommissionproposedsomeremediesandgaveananalysisoftheremediesproposed.TheCommissionfurtherstressedinitsreportthatremediesshouldnotbeseenaspenaltiesandthat,byimposingremedies,theCommissionaimstomakemarketsworkbetterthantheywouldotherwisehavedone.

ALLEGED MONOPOLY ABUSE IN THE SUPPLY OF SECONDARY SCHOOL BOOKS IN MAURITIUS

TheexecutivedirectoroftheCommissionlaunchedaninvestigationinJanuary2012,underSection51oftheAct,intoanallegedabuseofamonopolysituationinthesupplyofsecondaryschoolbooksbyEditionsLePrintempsLtd(ELP)basedonananonymouscomplaintreceived.TheCommission’sdecisionwasissuedinSeptember2014,wherebytheyfound,interalia,thatELPwasnotincontraventionoftheAct.

INVESTIGATION INTO IMAGE-BASED CLEARING SOLUTIONS PROVIDED TO COMMERCIAL BANKS

TheCommissionlaunchedaninvestigationinMarch2013intoimage-basedclearingsolutionsprovidedbyanenterprisetocommercialbanksinMauritius.DuringtheCommission’sinvestigation,theenterpriseofferedcertainundertakingstoallaytheconcernsraisedbytheCommission.Followinganassessmentintotheefficacyoftheundertakings,theExecutivedirectorconcludedthattheundertakings,asofferedbytheenterprise,


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wouldsatisfactorilyaddressthecompetitionconcernsraisedbytheCommission.TheCommissionacceptedtheenterprisesundertakingsandthematterwassettledaccordingly.


WheretheCommissiondetermines,afterreview,thatanenterpriseisinvolvedinamonopolysituation,andthatinrelationtoamonopolysituation,anyconductoftheenterprise(i)hastheobjectoreffectofpreventing,restrictingordistortingcompetition;or(ii)inanyotherway,constitutesexploitationofthemonopolysituation,theCommissionmaygivetheenterprisesuchdirectionasitconsidersnecessary,reasonableandpracticableto:

• remedy,mitigateorpreventtheadverseeffectsoncompetitionthattheCommissionhasidentified;or

• remedy,mitigateorpreventanydetrimentaleffectsonusersandconsumerssofarastheyhaveresultedfrom,orarelikelytoresultfrom,theadverseeffectson,ortheabsenceof,competition.

Suchdirectionmayinclude,butisnotlimitedto,arequirementthattheenterprisetowhichitisgivenshall:

• terminateoramendanagreement;• ceaseoramendapracticeorcourseof

conduct,includingconductinrelationtoprices;

• supplygoodsorservices,orgrantaccesstofacilities;

• separateordivestitselfofanyenterpriseorassets;or

• providetheCommissionwithspecifiedinformationonacontinuingbasis.

Anypersonwhofailswithoutreasonableexcusetocomplywitharequirementimposedonhimorhershallcommitanoffenceandshall,onconviction,beliabletoafinenotexceedingMUR500000andtoimprisonmentforatermnotexceedingtwoyears.


Therearenospecificrulesinrelationtopricediscrimination.Pricediscriminationisnotinitselfanti-competitiveandtheCommissiondoesnotregarditasanabuse.However,pricediscriminationmaybepartofastrategythatisanabusesuchaschargingpredatoryprices,andsuchabusivepricingbehaviourwouldbeinvestigatedbytheCommission.


TheCommissionhasawebsite,www.ccm.mu,whereitpublishesitsdecisions.ThewebsitealsoliststhecurrentinvestigationsthatarebeingundertakenbytheCommissionandthereportsofcompletedinvestigations.

APPLEBY9thFloor,MedineMewsLaChausséeStreetPortLouisMauritiusT:+2302034300

www.applebyglobal.com

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HENRIQUES, ROCHA & ASSOCIADOS

Fabrícia Almeida Henriques

MORAIS LEITÃO, GALVÃO TELES,SOARES DA SILVA & ASSOCIADOS

Pedro Gouveia e Melo

Mozambique


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ThemainpieceofcompetitionlegislationisLaw10/2013of11April2013(theCompetitionLaw).FurtherimplementingrulesarecontainedintheCompetitionLawRegulation,approvedbyDecree-Law97/2014,of31December2014.

MinisterialDiploma79/2014,of5June2014,establishesthefeesapplicable,inparticular,tomergercontrolnotificationsandrequestsforexemptionofrestrictiveagreements.

TheadministrativeauthoritywithexclusivejurisdictiontoenforcetheCompetitionLawistheAutoridadeReguladoradaConcorrência(CompetitionRegulatoryAuthority;theAuthority),anindependententityendowedwithadministrativeandfinancialautonomyandbroadsupervisory,regulatory,investigatoryandsanctioningpowers.TheStatuteoftheAuthoritywasapprovedbyDecree37/2014,of1August2014.


TheCompetitionLawforeseesthatanumberofimplementingregulationsaretobeapproved(e.g.settingouttheapplicableformstosubmitmergernotificationsandestablishingaleniencyprogramme),butnodraftsorproposalsarepubliclyavailable.


TheAuthorityisnotyetoperational,butitisexpectedtobecomesointhenearfuture.SincetheAuthorityhasexclusivejurisdictiontoenforcetheCompetitionLaw,theprohibitionsofanti-competitiveconductandthemergercontrolprovisionsoftheCompetitionLawarenotyetapplicableinpractice.


Notapplicable


TheCompetitionLawappliestotransactionsthat(i)areconsideredtobe‘concentrationsbetweenundertakings’,and(ii)meetthejurisdictionalthresholds.

Thefollowingoperationsaredeemedtoconstituteaconcentrationbetweenundertakings:

• amergerbetweentwoormorehithertoindependentundertakings;

• theacquisitionofcontrol,byoneormoreundertakings,overotherundertaking(s)orpart(s)ofotherundertakings;and

• thecreationofajointventureperforming,onalastingbasis,allthefunctionsofanautonomouseconomicentity(i.e.afull-functionjointventure).

Theconceptofanundertakingencompassesallentitiesconductingeconomicactivitythroughtheofferofgoodsorservicesinthemarket,regardlessoftheirlegalstatus.

ThefollowingexceptionsdonotconstituteaconcentrationinthemeaningoftheCompetitionLaw:

• thetemporaryortransitionalacquisitionofcontroloveranundertaking;

• theacquisitionofshareholdingsorassetsbyaninsolvencyadministratorwithininsolvencylegalproceedings;

• theacquisitionofashareholdingmerelyasaguarantee;

• thetemporaryacquisitionbyfinancialinstitutionsorinsurancecompaniesofshareholdingsincompaniesactiveoutsidethefinancialsector,insofarasthesecuritiesareacquiredwithaviewtotheirresale,iftheacquirerdoesnotexercisethecorrespondingvotingrightswithaviewtodeterminethecompetitivebehaviourofthetarget(oronlyexercisesthemwithaviewtopreparethesale),andifthedisposalofthecontrollinginterestoccurswithinoneyear;and

• twoormoreconcentrationsbetweenthesameundertakingsinaperiodoffiveyearsthatindividuallydonotmeetthejurisdictionalthresholds.However,iftheconcentrationresultingfromthe

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conclusionofthelastagreementmeetsthejurisdictionalthresholds,itshouldbenotifiedtotheAuthoritybeforeclosing.


Notificationismandatorywhenevertheconcentrationmeetsatleastoneofthefollowingthresholds:• Thecombinedturnoverofalltheundertakings

concernedinMozambiqueintheprecedingyearisequaltoorexceedsMZN900million.

• Thetransactionresultsintheacquisition,creationorreinforcementofashareof,orabove50%ofthenationalmarketofagivengoodorservice,orinasubstantialpartthereof.

• Thetransactionresultsintheacquisition,creationorreinforcementofashareof,orabove30%ofthenationalmarketofagivengoodorservice,orinasubstantialpartthereof,aslongaseachofatleasttwooftheundertakingsconcernedachievedintheprecedingyearaturnoverofatleastMZN100millioninMozambique.

TheCompetitionLawprovidesthat,evenwhentheconcentrationdoesnotmeetthejurisdictionalthresholds,theAuthoritymaynevertheless,withinsixmonthsofitbecomingpublicknowledge,openexofficioaninvestigationandrequestthenotificationoftheconcentration,incaseitisdeemedtoappreciablyimpede,distortorrestrictcompetitionanddoesnotbenefitfromapublicinterestexemption.Partiesinvolvedinanon-reportabletransactionmayvoluntarilysubmitafilingtotheAuthority,whichmaywellbeadvisableifthereisanychancethattheAuthoritywillinterveneexofficio.


AconcentrationmeetingthejurisdictionalthresholdsissubjecttomandatorynotificationtotheAuthoritywithinsevenworkingdaysfromtheconclusionoftheagreementoracquisitionproject,andcannotbeimplementedbeforeanon-oppositiondecisionis(expresslyortacitly)adoptedbytheAuthority.

Failuretofileanoticeofconcentrationwithinthestatutorydeadlinesubjecttomandatorynotificationexposesthemergingpartiestoseriousnegativeconsequences.Inparticular:

• thebreachofthenotificationdeadlinemakestheundertakingsconcernedliabletofinesofupto1%ofthepreviousyear’sturnoverforeachoftheparticipatingundertakings;and

• thevalidityofanylegalinstrumentrelatedtothetransactionisdependentupontheexpressortacitclearancebytheAuthority.

IncaseswheretheAuthorityopensanexofficioinvestigationoftheconcentration,thestatutorydecisiondeadlinesdonotapply.

TheearlyimplementationofaconcentrationsubjecttomandatoryfilingwithoutexpressortacitclearancefromtheAuthority,orinbreachofaprohibitiondecision,makestheundertakingsconcernedliabletofinesofupto5%ofthepreviousyear’sturnoverforeachoftheparticipatingundertakings.


PursuanttoMinisterialDecree79/2014,of5June2014,theeffectivenessofthenotificationisdependentonapaymentofafilingfeebythenotifyingpartiesof5%oftheturnoverofthepreviousyear.

Asthevalueofthefilingfeeissignificantlyhigherthanthemaximumfineforuntimelynotification(1%ofturnover),andequaltothemaximumfineapplicableforimplementationbeforeclearanceandprohibitedanti-competitivepractices(5%ofturnover),itishopedthatthisvalueresultsfromatypingerrorandwillberectifiedbeforetheAuthoritybeginsoperation.


Foreign-to-foreignmergersarecaughtbytheCompetitionLawtotheextentthattheyhave,ormayhave,effectsintheterritoryofMozambique.Therefore,foreign-to-foreignmergersmaybesubjecttomandatoryfilingwheneverbothpartiesorthetargetaloneachieve,directlyorindirectly,salesinMozambique(despitethefactthatneitherof


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theundertakingsconcernedisestablishedinthecountry),andthejurisdictionalthresholdsaremet.


TheCompetitionLawRegulationprovidesforconfidentialandinformalpre-notificationcontacts.AstheAuthorityisnotyetoperational,thereisnoindicationofwhetherpre-notificationmeetingswillbecomestandardpractice.


Initssubstantiveanalysis,theAuthorityisboundtotakeintoaccountpublicinterestreasonswhichmayjustifyanyimpedimentsorrestrictionstocompetitionresultingfromthenotifiedconcentration.Inparticular,theAuthority’spublicinterestassessmentshouldconsidertheeffectofthetransactionon:

• aspecificsectororregion;• employment;• thecapacityofsmallenterprises,orenterprises

controlledbyhistoricallydisfavouredpersons,tobecomecompetitive;and

• thecapabilityofnationalindustrytocompeteinternationally.


FollowingpublicationofanoticeofthenotificationbytheAuthorityintwonationalnewspapers(whichshouldbemadewithinfivedaysoffiling),anyinterestedthirdpartymaysubmitcommentsonthetransactionwithinthedeadlineestablishedbytheAuthority,whichcannotbelessthan15workingdays.CompetitorsshouldbealsoheardwhentheAuthoritytakesintoaccountnon-competitionpublicinterestreasons(seequestion11).

Inaddition,priortotheadoptionofafinaldecisionintheprocedure,theAuthoritymustholdahearingofthenotifyingparties,aswellasof

thirdpartiesthathavealreadyintervenedintheprocedureandexpressedanadverseopiniononthemerger.ThehearingsuspendsthetimeperiodsfortheadoptionofadecisionbytheAuthority.


WhilethereisnospecificreferenceintheCompetitionLawtoemployees,theAuthoritycanrequestinformationfromanyrelevantundertakingorindividual.Itmayalsobearguedthatemployeescanbeconsidered‘interestedthirdparties’andbeallowedtointerveneintheprocedure(seequestion12above).


Asmentionedinquestion11,priortotheadoptionofafinaldecisionintheprocedure,theAuthoritymustholdahearingofthenotifyingparties,aswellasofanyinterestedthirdpartiesthathaveshowntobeagainstthetransaction.Ifnosuchthirdpartieshavecomeforwardandifthedecisionisanunconditionalclearance,theAuthoritycanwaivethehearingofthenotifyingparties.


AlloftheAuthority’sdecisionsonmergercontrol,eitherclearingorprohibitingamerger,aresubjecttojudicialreview.

TheStatuteoftheAuthoritydeterminesthattheAuthority’sdecisionsmaybeappealedincourt,namelytotheJudicialCourtoftheCityofMaputo,inthecaseofproceduresleadingtotheapplicationoffinesandothersanctions,andtotheAdministrativeCourt,withregardtomergercontrolproceduresandrequestsforexemptionsrelatingtorestrictiveagreements.


Yes.Thecreationof,ortheacquisitionofcontrolover,ajointlycontrolledundertakingconstitutesaconcentrationwheneverthejointundertakingfulfils

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thefunctionsofanindependenteconomicentityonalastingbasis(i.e.afull-functionjointventure),andissubjecttothemergercontrolrulesoftheCompetitionLawifthejurisdictionalthresholdsaremet.

Wherethecreationofthejointventurehastheobjectoreffectofco-ordinatingthecompetitivebehaviourofundertakingsthatremainindependent,suchco-ordinationisassessedundertherulesapplicabletoprohibitedagreementsandpractices(seeArticles15to18oftheCompetitionLaw).


TheCompetitionLawspecificallyprohibits,interalia,agreementsandconcertedpracticesbetweencompetingundertakingsresultingintheadoptionofauniformorconcertedcommercialconduct,infixingdirectlyorindirectlypricesorotherbusinessconditions,limitingproductionordistributionofproductsandservices,andpartitioningmarketsorsupplysources.

Asmentionedabove,theCompetitionLawprohibitionshavenotyetbeenenforced.


Intheenforcementofitssanctioningandsupervisorypowers,theAuthorityisabletointerviewanyrelevantpersons,requestdocuments,conductsearchesandseizuresinthepremisesoftheundertakingsconcernedand,whennecessary,proceedtothesealingofbusinesspremises.Searchesandseizuresatbusinesspremisesmustbeconductedwithawarrantofthecompetentjudiciaryauthority.TheAuthoritymayrequesttheassistanceofthepoliceforcewhennecessary.


Partiesinvolvedinprohibitedanti-competitivepractices(includingcartels,otherhorizontalandverticalagreements,abuseofdominantposition

andabuseofeconomicdependence)areliableforfinesofupto5%oftheirconsolidatedturnover.

Thefollowingancillarysanctionsmayalsobeapplied:(i)publicationofthesanctionintheofficialjournaland/orinanationalorlocalnewspaper;(ii)theinterdictionoftheinfringingcompanyfromparticipationinpublictendersforaperiodoffiveyears;and(iii)thebreakupofthecompany,transferofshareholdercontrol,saleofassets,partialterminationofabusinessentity,andanyotheractnecessaryfortheeliminationoftheharmfuleffectstocompetition.

NocriminalsanctionsareforeseenintheCompetitionLaw.

TheCompetitionLawforeseesthataleniencyprogrammeistobeestablishedbyaregulationoftheAuthority,butnodrafthasyetbeenmadepublic.


TheCompetitionLawestablishesanadministrativeprocedurefortheissuancebytheAuthorityofanexemptiontotheprohibitionsinthelaw.Therequestforexemptionshouldbesubmittedbyoneormoreoftheundertakingsthatarepartytoanagreement,accordingtoaformtobeapprovedbytheAuthority.

Theconditionsforexemptionareasfollows:

(i)Theagreementshouldpursueoneofthefollowingobjectives:

• contributingtoimprovingtheproductionordistributionofgoodsandservices;

• reducingpricestoconsumers;• acceleratingeconomicdevelopment;• incentivisingthetechnologicaldevelopment

ofMozambicancompanies;• enablingabetterallocationofresources;• promotingnationalgoodsorservices;• promotingexports;• promotingthecompetitivenessofsmall-and

medium-sizednationalcompanies;• contributingtotheconsolidationofnational

companies;and• promotingtheprotectionofintellectual

property.


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(ii)Theagreementmustnoteliminatecompetitionorcontainrestrictionsthatarenotindispensabletotheattainmentoftherelevantobjectivesabove.

Professionalassociationsrecognisedbythegovernmentmayalsorequestexemptionfortheirinternalrulesthathavetheeffectofappreciablyrestrictingcompetition.Theexemptionisgrantedwhentherulesinquestionareessentialtomaintaintheprofessionalstandardsorthespecificitiesoftheprofession.


OneoftheprohibitedverticalrestraintsexpresslylistedintheCompetitionLawistheimpositionondistributorsofresaleprices,discounts,paymentconditions,profitmarginsoranyothercommercialconditionsintheirdealingswiththirdparties.


AgreementswithexclusivityprovisionsarenotexpresslyprohibitedbytheCompetitionLaw,butoneoftheexamplesofprohibitedverticalconductistheimpositionofminimumormaximumquantitiesondistributorsintheirpurchasesofcontractualproducts.Thisprohibition,givenitsbroadwording,isalsolikelytocoverobligationstopurchasealloracertainpercentageofthebuyer’srequirementsofsuchproducts.Suchrestrictionsmaybenefitfromexemptionifallthelegalcriteriaaremet.


TheCompetitionLawprohibitstheabusiveexploitation,byoneormoreundertakings,ofadominantpositioninthenationalmarketorinasubstantialpartthereof,havingasobjectoreffecttheimpediment,distortionorrestrictionofcompetition.

TheCompetitionLawRegulationestablishesarebuttablepresumptionofdominanceforanundertaking,orcollectivelyfortwoormoreundertakings,whosemarketshareequalsorexceeds50%.

TheCompetitionLawsetsoutanextensivebutnon-exhaustivelistofbehavioursconsideredabusive,suchas:

• refusingtoprovideaproductorserviceortograntaccesstoessentialinfrastructurewithoutcause;

• terminatingacommercialrelationshipwithoutjustification;

• forcingorinducingasupplierorconsumernottodealwithacompetitor;

• sellingbelowcostwithoutjustification;• importinggoodsbelowtheircostinthe

exportingcountry;• pricediscrimination;• tying;• excessivepricing;and• anyotherconductlistedinArticles17

and18asprohibitedhorizontalorverticalagreements.

TheCompetitionLawalsoprohibitstheabusiveexploitation,byoneormoreundertakings,ofthestateofeconomicdependenceofanysupplierorclientwhichdoesnothaveanequivalentalternative.AbusiveconductmaytaketheformofanyoftheverticalagreementsandpracticesprohibitedbytheCompetitionLaw.


AstheAuthorityisnotyetoperational,theCompetitionLawprohibitionsarenotcurrentlyenforced.


Partiesinvolvedinabuseofdominantpositionandabuseofeconomicdependenceareliableforfinesofupto5%ofconsolidatedturnover,aswellastotheancillarysanctionsreferredtoinquestion19.


Pricediscriminationislistedasaprohibitedpracticeinthecontextofverticalagreements,theabuseofadominantpositionandtheabuseofeconomicdependenceofasupplierorclient.

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Pricediscriminationisconsideredanabuseofadominantpositionwhereit:

• islikelytoprevent,distortorrestrainfreecompetition;

• relatestoequivalenttransactionsofgoodsandservicesofthesametypeandquality;and

• referstosaleprices,discounts,paymentconditions,grantedcreditorotherservicesrenderedthatrelatetothesupplyofgoodsandservices.


DecisionsoftheAuthoritywillbepublishedintheofficialjournalofMozambique(BoletimdaRepública).Inaddition,theStatuteoftheAuthorityprovidesthatdecidedcasesarepublishedontheAuthority’swebsite,butthisisnotyetoperational.

HENRIQUES, ROCHA & ASSOCIADOS EdifícioJATV-1RuadosDesportistas,833,6º,fracçãoNN5MaputoMoçambiqueT:+25821344000

www.hrlegalcircle.com

MORAIS LEITÃO, GALVÃO TELES, SOARES DA SILVA & ASSOCIADOSRuaCastilho,1651070-050LisboaPortugalT:+351213817400


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KOEP & PARTNERS

Josias Andries Agenbach | Meyer van den Berg | Marko Himmel

Namibia

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InNamibia,competitionlawisregulatedbytheCompetitionAct2of2003andtherulespassedintermsofthisAct.TheCompetitionActandtheRulesareenforcedbytheNamibianCompetitionCommission.

TheHighCourtofNamibiahasjurisdictiontohearanddetermineanymatterarisingfromproceedingsinstitutedintermsoftheCompetitionAct.


Noamendmentshavebeenenactedtodate,butitisunderstoodthatthethresholdsareunderreview.


CompetitionlawinNamibiaisactivelyenforcedinrespectofmergercontrol.Becauseofthecurrentrelativelylowmergerthresholds,alargenumberoftransactionsfalltobenotified.IntermsoftheAct,theCommissionisrequiredtomakeadeterminationonaproposedmergerwithin30daysafterreceiptofthemergernotification.However,theActprovidesthatthisperiodmaybeextendedbyafurther30daysiftheCommissionrequestsadditionalinformationorifaconferenceisconvened.Theperiodsreferredtoabovecanbeextendedduetothecomplexityoftheissues,iftheCommissiondeemsitappropriatetodoso,bynoticeinwritingtotheundertakingsinvolved,byaperiodnotexceeding60days.

WhiletheActdoesnotincludeadefinitionofdays,theCommissioninterpretsanyreferencetodaysasbusinessdays.

Thelawrelatingtorestrictivebusinesspracticeshasnotbeenasactivelyenforcedasmergercontrolatthisstage.Someallegedrestrictivepracticeshavebeeninvestigatedandinmostinstances,settlementshavebeenreachedwiththeallegedoffendersbeforeactionwasinstitutedthroughtheNamibiancourts.Unfortunately,thegeneralpublichasnotbeenmadeawareoftheseinvestigations.TheCommissionhasalsoconductedmarket

enquiriesintheautomobileindustry,theretailsector,thecementandthepoultryindustriesinpartnershipwiththeAfricanCompetitionForum.


TheNamibiancompetitionauthoritiesplacestrongemphasisonthepromotionoflocalcontentandemploymentretention.


TheCompetitionActprovidesthatamergeroccurswhenoneormoreundertakingsdirectlyorindirectlyacquireorestablishdirectorindirectcontroloverthewholeorpartofthebusinessofanotherundertaking.IntermsoftheAct,amergermaybeachievedinanymannerincludingthroughthepurchaseofshares,aninterest,orassetsoftheotherundertakinginquestion;oramalgamationorothercombinationwiththeotherundertaking.

TheActdoesnotmakeexpressprovisionfortheexclusionofcertaintransactionsfromthemergerdefinition(e.g.wherearestructuringoccurswithinthesameeconomicentity).However,theCommissionhasindicatedthatitdoesnotregardinternalrestructuringsasrequiringnotification.Acautiousapproachisneverthelessadvisable.

Thetriggerfornotificationisachangeofcontroland,morespecifically,whetheratransactionfallswithintheambitofSection42(3)oftheAct,whichsetsoutthevariouswaysinwhichcontrolmayexist.

Intermsoftheseprovisions,apersoncontrolsanundertakingifthatperson:

• beneficiallyownsmorethanone-halfoftheissuedsharecapitaloftheundertaking;

• isentitledtovoteamajorityofthevotesthatmaybecastatageneralmeetingoftheundertaking,orhastheabilitytocontrolthevotingofamajorityofthosevotes,eitherdirectlyorthroughacontrolledentityofthatundertaking;

• isabletoappoint,ortovetotheappointment,ofthemajorityofthedirectorsoftheundertaking;


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• isaholdingcompany,andtheundertakingisasubsidiaryofthatcompanyascontemplatedintheNamibianCompaniesAct;

• inthecaseoftheundertakingbeingatrust,hastheabilitytocontrolthemajorityofthevotesofthetrusteesortoappointthemajorityofthetrusteesortoappointorchangethemajorityofthebeneficiariesofthetrust;

• inthecaseoftheundertakingbeingaclosecorporation,ownsthemajorityofthemembers’interestorcontrolsdirectlyorhastherighttocontrolthemajorityofmembers’votesintheclosecorporation;or

• hastheabilitytomateriallyinfluencethepolicyoftheundertakinginamannercomparabletoapersonwho,inordinarycommercialpractice,canexerciseanelementofcontrolasmentionedintheprecedingbulletpoints.

TheCompetitionActfurtherprovidesthatitistheCommissionthatmustmakeadeterminationinrespectofamergerand,indoingso,willevaluatethecriteriawhichitconsidersrelevanttothecircumstancesapplicabletotheproposedmerger,includingwhethertherewillbeaneffectoncompetition.Itisnottheroleofthemergingpartiestoevaluateanyeffectoncompetitionand,onthebasisoftheirevaluation,decidewhetherornottonotifyamerger;thisevaluationisthetaskoftheCommission.


RecentdevelopmentsinNamibiancompetitionlawsawthepublicationofmonetarymergernotificationthresholds.ThepublicationofthesethresholdslimitstheclassofmergersrequiringnotificationtoandapprovalfromtheCommission.Thenewthresholdstakeatwo-stepapproach.

Step1:thefirststepistolookatthecombinedvalueoftheparties.TheActdoesnotapplywherethecombinedvalueoftheassetsand/orturnoveroftheacquirerandtargetequalsordoesnotexceedthevaluessetoutbelowinsub-paragraphs(a)to(d):

(a)thecombinedannualturnoverin,intoorfromNamibiaoftheacquirerandtargetisequaltoorvaluedbelowNAD30million;

(b)thecombinedassetvalueinNamibiaoftheacquirerandtargetisequaltoorvaluedbelowNAD30million;

(c)theannualturnoverin,intoorfromNamibiaoftheacquirerplustheassetsinNamibiaofthetargetisequaltoorvaluedbelowNAD30million;

(d)theannualturnoverin,intoorfromNamibiaofthetargetplustheassetsinNamibiaoftheacquirerisequaltoorvaluedbelowNAD30million.

Step2:thesecondstepistolookatthevalueofthetargetonly.Ifthecombinedvalueof(a)to(d)aboveallfallbelowNAD30million,thenthemergerisnotnotifiable.However,ifoneofthecombinationsexceedNAD30million,thenextstepistolookattheassetandturnovervaluesofthetargetonly.IfthevalueoftheassetsandturnoverofthetargetfallbelowNAD15million,themergerwillnotbenotifiable(evenifacombinedvaluein(a)to(d)aboveexceedsNAD30million.

Thenewthresholdnoticereferstotransferredundertakinginsteadoftarget.Theamendedthresholdsspecificallydefineatransferredundertakingasthetotalofalltheundertakingsthataretransferredundertakingsinrespectofamergerwhichincludeanyundertaking,orthebusinessorassetsoftheundertakingthat,asaresultofatransactioninanycircumstancessetoutinsection42oftheAct:

(a)wouldbecomecontrolledbyanotherundertaking;and

(b)anyotherundertakingthatiscontrolledby,orthedirectorindirectcontroloverthewholeorpartofitsbusinessisheldby,anundertakingwhichwouldbecomecontrolledbyanotherundertaking.

Further,wheretheCommissionconsidersitnecessarytodealwithamergerintermsoftheAct,itmaycalluponmergingpartiestosubmitamergernotificationtoitwithin30daysofreceiptofwrittendemand,inrespectofmergersinwhichthevaluefallsbelowthethresholdamountssetout.ThemethodofcalculationoftheassetorturnovervalueisprescribedandasageneralpropositionmustbedeterminedinaccordancewithNamibianGenerallyAccepted

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AccountingPracticesorInternationalFinancialReportingStandards.Inlightoftherelativelylowthresholdvalues,thismayresultinmanymergersinvolvingcomparativelysmallbusinessenterprisestriggeringthemergernotificationobligations.


Nopartytoanotifiablemergermayimplementthemergerbefore:

• ithasobtainedtherequisiteapprovalfromtheCommission;or

• theCommission’sreviewperiodinrelationtotheproposedmergerhaslapsedwithouttheformerhavingmadeadeterminationinrelationtotheproposedmerger.

IntheeventthatamergerhasbeenimplementedincontraventionoftheprovisionsoftheCompetitionAct,theCommissionmaymakeapplicationtotheHighCourtfor:

• aninterdictrestrainingthepartiesinvolvedfromimplementingthemerger;

• anorderdirectinganypartytothemergertosellorotherwisedisposeofanyshares,interestorotherassetsithasacquiredpursuanttothemerger;

• declaringvoidanyagreementorprovisionofanagreementtowhichthemergerwassubject;or

• theimpositionofapecuniarypenalty,whichtheCourtconsidersappropriate,butnotexceeding10%oftheglobalturnoveroftheundertakingduringitsprecedingfinancialyear.

TheCommission,however,recognisesthatmergersinmultiplejurisdictionsmaybesubjecttostaggeredapprovalsinthevariousjurisdictionsandallowcarvingoutorring-fencinginrespectoftheNamibianapproval,providedthatduenoticebegiveninadvance.


Thefeesforfilingamergernoticeareasfollows:• NAD10000ifthecombinedfigureis

valuedbelowNAD50million;• NAD25000ifthecombinedfigureis

valuedatoraboveNAD50million,butlessthanNAD65million;

• NAD50000ifthecombinedfigureisvaluedatoraboveNAD65million,butlessthanNAD75million;

• NAD75000ifthecombinedfigureisvaluedatoraboveNAD75million,butlessthanNAD100million;

• NAD125000ifthecombinedfigureisvaluedatoraboveNAD100million,butlessthanNAD1billion;

• NAD250000ifthecombinedfigureisvaluedatoraboveNAD1billion,butlessthanNAD3.5billion;or

• NAD500000ifthefigureisvaluedatoraboveNAD3.5billion.

Forthesepurposesthecombinedfiguremeansthegreaterofthe:

• combinedannualturnoverin,intoandfromNamibiaoftheacquirerandthetarget;

• combinedassetsinNamibiaoftheacquirerandthetarget;

• annualturnoverin,intoandfromNamibiaoftheacquirerplustheassetsinNamibiaofthetarget;or

• assetsinNamibiaoftheacquirerplustheannualturnoverin,intoandfromNamibiaofthetarget.

Whendeterminingthecombinedfigure,theacquireristakentorefertoalltheundertakingsthatareacquiringundertakingsinrespectofthemerger.An‘acquiringundertaking'isdefinedas:(i)anyundertakingthat,asaresultofatransactioninanycircumstancessetoutinSection42oftheAct,wouldacquireorestablishdirectorindirectcontroloverthewholeorpartofthebusinessofanotherundertaking;(ii)anyotherundertakingthathasdirectorindirectcontroloverthewholeorpartofthebusinessofanundertakingreferredtoin(i);and(iii)anyotherundertakingthatiscontrolledby,orhasdirectorindirectcontroloverthewholeorpartofthebusinesswhichisheldby,anundertakingreferredtoin(i)or(ii).


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Whendeterminingthefilingfee,itisnecessarytoconsidertheassetsinNamibiaandtheturnoverinNamibiaoftheentiregroupofcompaniestowhichtheacquirerbelongs.


IntermsoftheCompetitionAct,itwouldbenecessaryforundertakingstonotifyandobtainapprovalfromtheCommissionintheeventofforeign-to-foreignmergers,ifthemergerinquestionconstituteseconomicactivityinNamibiaorwillhaveaneffectinNamibia,inadditiontomeetingthestatutorythresholdsformandatorynotification.

TheconceptsofeconomicactivityinNamibiaandaneffectinNamibiaareunclearandnostatutorydefinitionsareavailableatpresent.Foreignprecedentmaybepersuasiveinevaluatingtheseconcepts.


TheCompetitionActdoesnotprovideforpre-notificationcontactsorpre-notificationmeetings,althoughtheCommissioniswillingtoholdpre-notificationmeetingsorotherwiseenterintopre-notificationdiscussions.


TheCompetitionActprovidesthattheCommissionmaybaseitsdeterminationofaproposedmergeronanycriteriawhichitconsidersrelevanttothecircumstancesinvolvedintheproposedmerger.Thesecriteriamayincludethefollowing,namely,theextenttowhichtheproposedmergerwouldbelikelyto:

• preventorlessencompetitionortorestricttradeortheprovisionofanyserviceortoendangerthecontinuityofsuppliesorservices;

• resultinanyundertaking,includinganundertakingnotinvolvedasapartyintheproposedmerger,acquiringadominantpositioninamarketorstrengtheningadominantpositioninamarket;

• resultinabenefittothepublicwhichwouldoutweighanydetrimentwhichwouldbe

likelytoresultfromanyundertaking,includinganundertakingnotinvolvedasapartyintheproposedmerger,acquiringadominantpositioninamarketorstrengtheningadominantpositioninamarket;

• affectaparticularindustrialsectororregion;• affectemployment;• affecttheabilityofsmallundertakings,in

particularsmallundertakingsownedorcontrolledbyhistoricallydisadvantagedpersons,togainaccesstoortobecompetitiveinanymarket;

• affecttheabilityofnationalindustriestocompeteininternationalmarkets;or

• resultinlikelybenefitstobederivedfromtheproposedmergerrelatingtoresearchanddevelopment,technicalefficiency,increasedproduction,efficientdistributionofgoodsorprovisionofservicesandaccesstomarkets.


TheCommissionmay,ifitconsidersitappropriateanduseful,holdaconferenceinrelationtoaproposedmerger.TheCommissionmayalsoinvitepartiesotherthanthenotifyingpartiestomakerepresentationsatsuchaconference.Further,theCompetitionActempowerstheCommissiontorefertheparticularsofaproposedmergertoaninspectorforinvestigation.Anyperson,includingapersonotherthanthenotifyingparties,maysubmittosuchinspector(ortheCommission)anydocument,affidavitorotherinformationinrespectoftheproposedmerger.ThepracticeoftheCommissionistomakeenquiriesandcontactcustomers,competitorsandevenotherregulators,inthecaseofaregulatedindustry.


Asnotedabove,anyperson,includingemployees,maybeinvitedtomakesubmissionstotheCommissionorprovideinformationoftheirownvolition.Aspartofthemergernotification,partiesarerequestedtostatewhateffectthemergerwillhaveonemployment.

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TheCommissionmay,ifitconsidersitappropriateanduseful,conveneconferencesbetweenpartieswheretheycanmakerepresentationsbeforeadecisionisissuedbytheCommission.Asarule,however,mergerfilingsshouldfromtheoutsetbeascompleteandcomprehensiveaspossible.

However,theCompetitionActmakesprovisionforpre-determination(butpost-notification)conferencesattherequestoftheCommission.TheCommissionmayalsoappointaninspectorduringthedeterminationphasetoinvestigatethemergerandconsultwiththepartiesand/oranythirdpartythatmayhaveaninterestinthemerger.


IntermsoftheCompetitionAct,apartytoaproposedmergermay,within30daysfromthedeterminationbytheCommission,inthefirstinstance,applytotheMinisterofTradeandIndustrytoreviewsuchdetermination.

Oncetheinternalreviewappealprocesshasbeenexhausted,anapplicationforreviewtotheHighCourtintermsoftheprinciplesofadministrativelawandprocedureisalsoavailable.


TheCompetitionActdoesnotspecificallyprovidefor,orevendefine,jointventuresbutspecificallyincludesanyamalgamationorcombinationbetweenundertakingsandaccordinglytheambitofthelegislationseekstoencompassallbusinessforms.Therefore,anyjointventurewhichconstitutesanundertakingandinvolvesitselfinamergerasdefinedwouldfalltobenotifiedtotheCommission.Dependingonthecircumstances,oneormoreundertakingsseekingtoformajointventuremayberequiredtocomplywiththeprovisionsoftheActregulatingmergers.JointventuresarealsosubjecttotheprovisionsoftheActthatprohibitanti-competitiveconduct.


TheCompetitionActprohibitsrestrictivepracticesand,inparticular,contemplatesandincludesinitsambitagreementsconcludedbetweenpartiesinahorizontalrelationship,beingundertakingstradingincompetition.Agreementsbetweenundertakings,decisionsbyassociationsofundertakingsorconcertedpracticesbyundertakingswhichhaveastheirobjectoreffectthepreventionorsubstantiallesseningofcompetitionintradeinanygoodsorservicesinNamibia,orapartofNamibia,areprohibited.Inparticularlegislationprohibitsanyagreement,decisionorconcertedpracticewhich:

• directlyorindirectlyfixespurchaseorsellingpricesoranyothertradingconditions;

• dividesmarketsbyallocatingcustomers,suppliers,areasorspecifictypesofgoodsorservices;

• involvescollusivetendering;• involvesapracticeofminimumresale

pricemaintenance;• limitsorcontrolsproduction,marketoutletsor

access,technicaldevelopmentorinvestment;• appliesdissimilarconditionstoequivalent

transactionswithothertradingparties,therebyplacingthematacompetitivedisadvantage;or

• makestheconclusionofcontractssubjecttoacceptancebyotherpartiesofsupplementaryconditionswhichbytheirnatureoraccordingtocommercialusagehavenoconnectionwiththesubjectofthecontracts.

InAugust2016,afteraninvestigationbytheCommission,SanlamNamibiaandPPSInsuranceLtdagreedtopayNAD15million(approximatelyEUR990000)forallegedlydividingthemarketthroughajointventuremarketingagreementandadmittedcontraveningtheAct.Thiswasthefirstpenaltypaidforacontraventionandthefirstadmissionofguiltintermsofsection23oftheAct.ThesettlementfollowedaseriesofnegotiationsbetweentheCommissionandtherespondentsandwasthereforeanegotiatedoutcomeratherthanamattertestedonitsmerits.Therespondentshave


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sincefiledanapplicationforexemptionwiththeCommissioninrelationtotheparticularconduct.


TheCommissionhasbroadinvestigativepowersandmay,eitheronitsowninitiativeoruponreceiptofinformationoracomplaintfromanyperson,launchaninvestigationintoanyconductorproposedconductwhichisallegedtoconstituteormayconstituteaprohibitedpractice.Investigationmustbeinstitutedwithinthreeyears.IftheCommissiondecidesthatanyoftheprohibitionsonrestrictivebusinesspracticeshavebeeninfringed,itmustgivewrittennoticeoftheproposedinvestigationtoeachundertakingwhichmaybeaffectedbythatdecision.Thenoticemust,interalia,informeachundertakingthatitmaysubmitwrittenrepresentationstotheCommission.ThenoticemustalsorequesttheundertakingtoindicatewhetheritrequiresanopportunitytomakeoralrepresentationstotheCommission,inwhichcasetheCommissionwillconveneaconference.

Afterconsiderationofanywrittenrepresentationsandofanymattersraisedataconference,theCommissionmayinstituteproceedingsintheCourtagainsttheundertakingorundertakingsconcernedforanorder:

• declaringtheconductwhichisthesubjectmatteroftheCommission’sinvestigation,toconstituteaninfringementoftheprohibitiononrestrictiveagreements,practicesanddecisionsorabuseofdominantposition;

• restrainingtheundertakingorundertakingsfromengaginginthatconduct;

• directinganyactiontobetakenbytheundertakingorundertakingsconcernedtoremedyorreversetheinfringementortheeffectsthereof;

• imposingapecuniarypenalty,whichmaynotexceed10%oftheglobalturnoveroftheundertakingduringitspreviousfinancialyear;or

• grantinganyotherappropriaterelief.

TheCompetitionActprovidestheCommissionwithrelativelywidepowersofsearchandseizureand

thetakingofevidence.Inspectors(appointedbytheCommission)areempoweredundertheActto:

• searchanypremises;• searchanypersononthepremisesifthere

arereasonablegroundsforbelievingthatthepersonhaspersonalpossessionofanydocumentorarticlethathasabearingontheinvestigation;

• examineanydocumentorarticlefoundonthepremisesthathasabearingontheinvestigation;

• requestanyinformationaboutanydocumentorarticlefoundonthepremises;

• takeextractsfrom,ormakecopiesof,anybookordocumentfoundonthepremisesthathasabearingontheinvestigation;

• useanycomputersystemonthepremisestosearchanydatacontainedinoravailabletothatcomputersystem,reproduceanyrecordfromthatdataandseizeanyoutputfromthatcomputerforexaminationandcopying;and

• attachandremovefromthepremisesforexaminationandsafekeepinganythingthathasabearingontheinvestigation.

Aninspectormaynotenteruponandsearchanypremisesunlessheorsheobtainsawarrantauthorisingsuchentryandsearch,unlesstheowner,oranyotherpersonincontrolofthepremisesconsentstotheentryandsearchofthepremises,ortheinspectoronreasonablegroundsbelievesthatawarrantwouldbeissuedifappliedfor,andthatthedelayinobtainingawarrantwoulddefeattheobjectoftheentryandsearch.

TheCommissionmayalsoreceiveinevidenceanystatement,document,informationormatterthatmayinitsopinionassisttodealeffectivelywithaninvestigationconductedbyit,whetherornotsuchstatement,document,informationormatterwouldotherwisebeadmissibleinacourtoflaw.


TheCommissionmaynotbyitselfimposeanypenaltiesbuthastoapproachtheHighCourtofNamibiatodoso.TheCourtmayimposeapecuniarypenaltyforanyamountwhichitconsidersappropriatebutnotexceeding10%oftheglobal

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turnoveroftheundertakingduringitsprecedingfinancialyear.Indetermininganappropriatepenalty,theCourtmusthaveregardtoallrelevantmattersconcerningthecontravention.

TheCommissionmayalsoatanytime,duringorafteraninvestigationintoanallegedinfringementpertainingtoprohibitedpractices,enterintoanagreementofsettlementwiththeundertaking(s)concerned,settingoutthetermstobesubmittedbytheCommissionbyapplicationtotheCourtforconfirmationasanorderoftheCourt.Suchanagreementmayinclude,withtheconsentofanypersonwhosubmittedacomplainttotheCommissioninrelationtotheallegedinfringement,anawardofdamagestothecomplainant,and/oranyamountproposedtobeimposedasapecuniarypenalty.

AcontraventionorfailuretocomplywithaninterimorfinalorderoftheCourtgivenintermsoftheCompetitionActconstitutesanoffence.Uponconviction,theperpetratorisliabletoafinenotexceedingNAD500000,ortoimprisonmentforaperiodnotexceeding10years,ortoboth.InthecaseofanyothercontraventionoftheCompetitionAct,aconvictedpersonisliabletoafinenotexceedingNAD20000,ortoimprisonmentforaperiodnotexceedingoneyear,ortoboth.

20. Is there a provision in the legislation providing for a mechanism to apply for exemption from certain parts of the legislation? TheCompetitionActallowsanyundertakingorassociationofundertakingstoapplytotheCommissiontobeexemptfromtheprovisionsrelatingtorestrictivebusinesspracticesinrespectofanyagreementorcategoryofagreements,anydecisionorcategoryofdecisions,oranyconcertedpracticeorcategoryofconcertedpractices.

TheCommissionmay,uponsuchapplicationandonsuchconditionsastheCommissionmaydetermine,grantanexemptioninrelationtoanyagreementorpracticerelatingtotheexerciseofanyrightorinterestacquiredorprotectedintermsofanylawrelatingtocopyright,patents,designs,trademarks,plantvarietiesoranyotherintellectualpropertyrights.

Ifaprofessionalassociation’srulescontainarestrictionthathastheeffectofpreventingorsubstantiallylesseningcompetitioninamarket,theassociationmayapplytotheCommissionforanexemption.


Yes.


Agreementsbetweenundertakings,decisionsbyassociationsofundertakingsorconcertedpracticesbyundertakingswhichhaveastheirobjectoreffectthepreventionorsubstantiallesseningofcompetitionintradeinanygoodsorservicesinNamibia,orapartofNamibia,areprohibitedunlesstheyareexemptinaccordancewiththeprovisionsoftheCompetitionAct.

Agreementsandconcertedpracticescontemplatedaboveincludeagreementsconcludedbetweenpartiesinahorizontalrelationship,beingundertakingstradingincompetition,orpartiesinaverticalrelationship,beinganundertakinganditssuppliersorcustomers,orboth.

Inparticular,legislationprohibitsanyagreement,decisionorconcertedpracticewhich:

• directlyorindirectlyfixespurchaseorsellingpricesoranyothertradingconditions;

• dividesmarketsbyallocatingcustomers,suppliers,areasorspecifictypesofgoodsorservices;

• involvescollusivetendering;• involvesapracticeofminimumresale

pricemaintenance;• limitsorcontrolsproduction,marketoutletsor

access,technicaldevelopmentorinvestment;• appliesdissimilarconditionstoequivalent

transactionswithothertradingparties,therebyplacingthematacompetitivedisadvantage;or

• makestheconclusionofcontractssubjecttoacceptancebyotherpartiesofsupplementaryconditionswhichbytheirnatureoraccording


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• makingtheconclusionofcontractssubjecttoacceptancebyotherpartiesofsupplementaryconditionswhichbytheirnatureoraccordingtocommercialusagehavenoconnectionwiththesubjectmatterofthecontracts.


Yes.Forexample,inApril2016,theCommissioninitiatedproceedingsintheHighCourtagainstNamcars(Pty)Ltd,adominant,onlineadvertisingwebsite,foranorderdeclaring,amongothers,thatNamcarshasabuseditsdominantpositionincontraventionofsection26(1),readwithsection26(2)(b)oftheAct.TheallegationisthatNamcarsimposedapolicyprohibitingautomotivedealerswhoadvertisewithNamcarsfromadvertisingitsusedvehiclesoncompetingwebsites.TheCommissionhasrecordeditswillingnesstoengagewiththerespondentinanendeavourtosettlethismatterwiththeobjectofavoidingcourtproceedings.


FollowinganinvestigationintotheconductofoneormoreundertakingsbytheCommission,theCommissionmayinstituteproceedingsincourtagainsttheundertakingorundertakingsconcernedforanorderimposingapecuniarypenalty,amongothers.

Thecourtmayimposeapecuniarypenaltyforanyamountwhichthecourtconsidersappropriate,butnotexceeding10%oftheglobalturnoveroftheundertakingduringitsprecedingfinancialyear.Indetermininganappropriatepenalty,thecourtmusthaveregardtoallrelevantmattersconcerningthecontravention.

TheCommissionmayatanytime,duringorafteraninvestigationintoanallegedinfringement,enterintoanagreementofsettlementwiththeundertaking(s)concernedsettingoutthetermstobesubmittedbytheCommissionbyapplicationtothecourtforconfirmationasanorderofthecourt.

Suchanagreementmayinclude,withtheconsentofanypersonwhosubmittedacomplainttotheCommissioninrelationtotheallegedinfringement,

tocommercialusagehavenoconnectionwiththesubjectofthecontracts.


Abuseofdominanceisprohibited.Forpurposesofdeterminingwhetheranundertakinghas,ortwoormoreundertakingshave,adominantposition,theCommissionhas,bywayofRule36,prescribedthefollowingcriteria,namelywhereanundertakinghas,ortwoormoreundertakingshave:

• atleast45%ofthatmarket;• atleast35%,butlessthan45%,ofthatmarket,

unlessitcanshowthatitdoesnot,ortheydonot,havemarketpower;or

• ithas,ortheyhave,lessthan35%ofthatmarket,buthasorhavemarketpower.

Forthepurposesofthisrule‘marketpower’isdefinedtomeanthepowerofanundertakingorundertakingstocontrolprices,toexcludecompetitionortobehavetoanappreciableextentindependentlyofitscompetitors,customersorsuppliers.

TheMinister,withtheconcurrenceoftheCommission,hasdeterminedbynoticeinthegazette,thattheabuseofdominantpositionprovisionsoftheActdonotapplytoanundertakingwhoseannualturnoverin,intoorfromNamibiaisequaltoorvaluedbelowNAD10million,orwhoseassetsinNamibiaareequaltoorvaluedbelowNAD10million.

AnyconductonthepartofoneormoreundertakingswhichamountstotheabuseofadominantpositioninamarketinNamibia,orapartofNamibia,isprohibited.Abuseofadominantpositionincludes:

• directlyorindirectlyimposingunfairpurchaseorsellingpricesorotherunfairtradingconditions;

• limitingorrestrictingproduction,marketoutletsormarketaccess,investment,technicaldevelopmentortechnologicalprogress;

• applyingdissimilarconditionstoequivalenttransactionswithothertradingparties;or

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anawardofdamagestothecomplainant,and/oranyamountproposedtobeimposedasapecuniarypenalty.

Anorderimposingapecuniarypenaltyhastheeffectof,andmaybeexecutedasifitwere,aciviljudgmentgrantedbythecourtinfavouroftheGovernmentofNamibia.

ApecuniarypenaltypayableintermsoftheCompetitionActispaidintotheStateRevenueFund.


TheCompetitionActprohibitsrestrictivepracticesandtheabuseofadominantposition.Suchprohibitedconductmayinclude,directlyorindirectly,imposingunfairpurchaseorsellingpricesorotherunfairtradingconditionsandapplyingdissimilarconditionstoequivalenttransactionswithothertradingparties.


ThedecisionsoftheCommissionarepublishedintheGovernmentGazette,whichisunfortunatelynotavailablewithoutasubscription.Asatthetimeofwriting,theCommissionhadnotpublisheddecisionsonitswebsitewww.nacc.com.na

KOEP & PARTNERS 33SchanzenRoadPOBox3516WindhoekNamibiaT:+26461382800/+26461382803

www.koep.com


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UDO UDOMA & BELO-OSAGIE Dan Agbor | Ozofu Ogiemudia | Faridah Orimobi

Nigeria

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Nigeriacurrentlydoesnothaveanydedicatedcompetitionlegislation.However,adraftFederalCompetitionandConsumerProtectionBill(theFCCPBill)hasbeenpassedbytheNigerianSenateandtheHouseofRepresentatives.TheFCCPBill,whichseekstocreatealevelplayingfieldforallbusinessesacrossvarioussectors,ispresentlybeingharmonisedbythetwohousesbeforeitispresentedforPresidentialAssent.Itisnotclear,however,whenPresidentialAssentwillbeissued.HighlightsoftheFCCPBillareprovidedinsection2onthefollowingpage.

UntiltheFCCPBillbecomeslaw,thecurrentpositionofthelawisthattheprovisionsoftheInvestmentsandSecuritiesAct,2007(theISA)andtheRulesandRegulationsoftheSecuritiesandExchangeCommission(theSEC)madepursuanttotheISA(theSECRules)empowertheSECtodeterminewhetheranymerger,acquisitionorbusinesscombinationislikelytosubstantiallypreventorlessencompetition.Section118(1)oftheISAprovidesthateverymerger,acquisitionorbusinesscombinationbetweenoramongcompaniesissubjecttopriorreviewandapprovalbytheSEC.

Therearealsocertainsector-specificlaws,guidelinesandprovisionsthatdealwithcompetition-relatedissues,including:

• TheNigerianCommunicationsCommission(theNCC),whichistheregulatorfortheNigeriantelecommunicationssector,issuedtheCompetitionPracticesRegulation(theNCCRegulations)in2007toaddresscompetitionissuesinthetelecommunicationssector.TheNCCRegulationsapplyinadditiontotheanti-competitionprohibitionprovisionsoftheNigerianCommunicationsAct,(ChapterN97)LawsoftheFederationofNigeria,2004.

• ThePointofSaleCardAcceptanceServicesGuidelines2011(CBNPOSGuidelines),publishedbytheCentralBankofNigeria,containprovisionsprohibitingcardassociationsorcardschemesfromengaginginanti-competitiveactivitiesoranyactthatwillleadtotheabuseofadominantposition,monopolyorunfaircompetition.Itfurtherprohibitscollusionbetweentwoormorecardassociations,cardschemesorpaymentschemesinrespectofissuing,acquiring,processingorswitchingofpaymentcards.

• GuidelinesonMobileMoneyServicesinNigeriaissuedbytheCentralBankofNigeriain2009containsprovisionsthatprohibitMobileMoneyOperatorsfromengaginginanyconductwhichhastheeffectofanti-competitioninanyaspectofmobilemoneyservices.

• TheOperationalRulesandRegulationsfortheNigeriaCentralSwitchhasextensiverulesfortheprohibitionofanti-competitiveactivities,includingexclusivityagreements,tie-inagreements,refusalstodeal,predatoryfeesoranyotheractivitieslikelytohaveanadverseeffectoncompetitioninNigeria.

• TheElectricPowerSectorReformAct,2005(EPSRA)enablestheNigerianElectricityRegulatoryCommission(NERC)topromote(wherefeasible)competitionandprivatesectorparticipation.

• ThePublicProcurementAct,2007expresslyprohibitssuppliers,contractorsandconsultantsfromenteringorattemptingtoenterintoanycollusiveagreements,whetherenforceableornot,wherethepricesquotedintheirrespectivetenders,proposalsorquotationsareorwouldbehigherthanwouldhavebeenthecasehadtherenotbeencollusionbetweenthepersonsconcerned.ThisActalsoforbidsbid-rigging,whichitdefinesasanagreementbetweenpersonswherebyofferssubmittedhavebeenpre-arrangedbetweenthem;or


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TheFCCPBillhasnotbeenpassedintolawandisnotinforceinNigeria.Theprovisionsofthelegislationreferredtoinquestion1,however,areinforce.Withrespecttomergersandacquisitions,theSECseekstoensurecompliancewiththeprovisionsoftheISAanditsrulesingrantingitsapproval.TheNCChasbeenproactiveinenforcingitsregulationswithrespecttocompetition-relatedissues.


ThereiscurrentlynocompetitionauthorityinNigeria.However,themonitoringofcompetitionissuesiscarriedouttosomeextentthroughsector-specificregulationsbytherelevantregulators.TheSECisprimarilyfocusedoncompetitionissuesarisingfrommergersoracquisitionsacrossallsectorsoftheeconomy.


Section119(1)oftheISAdefinesa‘merger’asanyamalgamationoftheundertakingsorpartoftheundertakingsorinterestoftwoormorecompanies,ortheundertakingsorpartoftheundertakingsofoneormorecompaniesandoneormorecorporateentities.

UndertheISA,mergersarecategorisedassmall,intermediateorlarge.IntermediateandlargemergersconstitutenotifiablemergersundertheISA.AsmallmergerisnotifiableonlyifsorequiredbytheSEC.TheSECmayrequirenotificationofasmallmergerif:

• withinsixmonthsafterimplementationofthesmallmerger,theSECisoftheopinionthatthesmallmergermaysubstantiallypreventorlessencompetition;or

• themergercannotbejustifiedonpublicinterestgrounds.

Notably,however,themergingentitiestoasmallmergerarerequiredtoinformtheSECofthesmallmergerattheconclusionofthemerger.

wheretheirconducthashadtheeffectofdirectlyorindirectlyrestrictingfreeandopencompetition,distortingthecompetitivenessoftheprocurementprocessoranescalationorincreaseincostsorlossofvaluetothenationaltreasury.

• Section30(4)(i)oftheCivilAviationAct,2006veststheNigerianCivilAviationAuthority(NCAA)withthepowertoinvestigateanddetermineuponitsowninitiative,oruponthereceiptofacomplaintbyanyaircarrier,airtravelagent,consumerofairtransportservicesorotheralliedaviationserviceprovider,whetheranyairserviceproviderhasbeenorisengagedinunfairordeceptivepracticesorunfairmethodsofcompetitioninairtransportationorinthesaleofticketsorintheprovisionofotheralliedaviationservices;andthepowertoordersuchairserviceprovidertodesistfromsuchpracticesormethodofcompetition.TheRegulationsissuedpursuanttothislegislationalsorestrictcertainanti-competitiveconductintheaviationindustry.


TheFCCPBillwhichiscurrentlybeingharmonisedbytheNationalAssembly,aimstocreatealevelplayingfieldforallbusinessesacrossvarioussectors.Essentially,theobjectivesoftheFCCPBillareto:

• establishaFederalCompetitionandConsumerProtectionCommissionforthepurposeofcarryingoutthefunctions,dutiesandresponsibilitiesoftheproposedFCCPBill;

• establishaCompetitionandConsumerProtectionTribunaltoadjudicateoverconductprohibitedundertheAct;

• prohibitagreementsbetweenoramongfirmsrestrictingoreliminatingcompetitioninagivenmarket;

• prohibittheabuseofdominantpositionormarketpowerofacompany;

• regulatemergersandacquisitionstoensurethatcompetitionintherelevantmarketisnoteliminatedbythemergingoftwoormorecompanies;and

• evaluatepricefixingbyadominantfirmoranumberoffirmsinconcert.

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MergerthresholdsarecalculatedonthecombinedannualturnoverorassetsofthepartiesinNigeriaasfollows:

• smallmergers—thecombinedannualturnoverorassetsofthepartiesinNigeriaislessthanNGN1billion;

• intermediatemergers—thecombinedannualturnoverorassetsofthepartiesinNigeriaisbetweenNGN1billionandNGN5billion;and

• largemergers—thecombinedturnoverorassetsofthepartiesinNigeriaismorethanNGN5billion.


PartiestoasmallmergermayimplementthemergerwithoutthepriorapprovaloftheSECunlesstheSECrequiresotherwise.WheretheSECrequeststhatpartiestoasmallmergernotifytheSECofthetransaction,thepartiesareprohibitedfromtakinganyfurtherstepstoimplementthemergeruntilthemergerhasbeenapprovedbytheSEC.

Section123(3)oftheISAexpresslyprohibitspartiestoanintermediateorlargemergerfromimplementingthemergerwithoutthepriorapproval(withorwithoutconditions)oftheSEC.PartiesthatfailtonotifytheSECofintermediateandlargermergersruntheriskofthemergerbeinginvalidatedordissolvedastheSECreservesabreakuppowerunderSection128oftheISAandSECRule432.

TheISAdoesnotprescribespecificpenaltiesforafailuretoobtaintheSEC’sapprovalofamerger.TheSECRules,however,imposedifferentfinesdependingonwhetherthemergeramountstoanintermediateorlargemerger.ForintermediatemergersafineofnotlessthanNGN1.5millionisprescribed,andNGN5000foreverydayofcontinuingdefaultornullificationofthesaidtransactionfromthedateoftheconsummationofthetransaction.Forlargemergers,theSECRulesimposeafineofnotlessthanNGN2million,andNGN5000foreverydayofcontinuingdefaultornullificationofthesaidtransactionfromthedateoftheconsummationofthetransaction.

TheSECmayalsomakeordersdirectinganypersoninbreachoftheISAtocompensateanyotherpersonwhomayhavesuffereddirectlossasaresultofsuchbreach.Penaltiesmaybeimposedontheerringcompaniesaswellastheirrespectiveofficers.

Public companies

TheSEC’sfeesarecomputedonthebasisofthevalueofthesharesissuedbythesurvivingcompanyasfollows:

•FirstNGN500million–0.3%•NextNGN500million–0.22%•Anysumthereafter–0.15%

Private companies

TheSEC’sfeesarecalculatedonthebasisofthetotalvalueoftheconsiderationofthetransaction,inthesamemanneraspubliccompaniesabove.


TheSECMergerRulesstipulateaprocessingfeeapplicabletotheregistrationofsecuritiesbytheSEC(intheamountofNGN50000permergingcompany)forintermediateandlargemergers.


ThereiscurrentlynorequirementundertheISAortheSECRulestoobtainapprovalforforeign-to-foreignmergers.WhendeterminingwhetheranacquisitionoramergerhasoccurredforNigerianlawpurposes,theformoftheNigerian(domestic)companypost-transactionisrelevant.Ifthedomesticcompanytobeacquiredwillcontinuetoexistinitscurrent(pre-transaction)formpost-transaction,withoutachangeintheshareholdersofrecordofthedomesticlegalentity,thetransactiondoesnothavetobenotifiedtotheSEC.

ThetestthathascustomarilybeenappliedindeterminingwhethertheSEC’sapprovalisrequiredisthatthetransactionisrequiredtobenotifiedtotheSECifitisanacquisitionofcontrolofaNigeriancompanythatresultsinachangeintheshareholdersofrecordofthedomesticcompany.


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tofileanydocument,affidavit,statementorotherrelevantinformationinrespectofamergerandpermitstheSEC,incarryingoutitsassessmentofthetransaction,torelyonsuchinformation.


Foranintermediateoralargemerger,theprimaryacquiringcompanyandtheprimarytargetcompanyarerequiredtoprovideacopyofthenotificationtoSEC,toanyregisteredtradeunionthatrepresentsasubstantialnumberofitsemployeesor,intheabsenceofsuchregisteredtradeunions,totheemployeesconcernedortheirrepresentatives.However,therearenoexpressrequirementsforemployeestobecontactedaspartofthemergerassessmentprocess.Asnotedinquestion10,theSEChaspowerstomakesuchcontactandtoreceiveanysubmissions.


ThereisnoexpressobligationorrequirementinlawfortheSECtoprovidemergingpartieswithanopportunitytomakerepresentationsbeforeitissuesitsdecisiontoeitherprohibitamergerorimposeconditions.TheSECispermittedinSection124(2)oftheISAtorequireadditionalinformationfromanyofthemergingparties,whileSection124(3)allowsanypersontovoluntarilyfileadditionalinformationwiththeSECinrespectofthemerger.InpracticetheSECwill,afterreviewingtheapplication,setoutitsqueriesinaletterwhichwillserveasthebasisuponwhichthepartieswouldprovideadditionalinformationinordertoadequatelyaddresstheSEC’squeries.

WheretheSECexercisesitspowerstoorderthebreak-upofthecompanybecauseitisoftheopinionthatthebusinesspracticeofsuchcompanysubstantiallypreventsorlessenscompetition,thepartiestothemergerareentitledtomakerepresentations.Priortothebreak-upordertakingeffect,thefollowingprocessmustbefollowed:

• TheSECwillnotifytheaffectedcompanyinwritingofthegroundsfortheproposedbreak-up.


Whilethereisnostatutoryrequirementforpre-notificationcontactwiththeSEC,itisusualforpartiestohavepre-notificationcontactswiththeSECbeforetheformalapplicationismade.

Thisisusuallydonewherethepartiesrequireagreaterdegreeofclarityonvariousrequirementscontainedintheregulationsandlawsthatcouldapplytotheproposedtransaction.


Inadditiontoconsideringcompetitionissues,theISArequirestheSEC(inassessingthemerger)toconsiderwhether:

• themergerisjustifiableonsubstantialpublicinterestgrounds;

• allshareholderswouldbefairly,equitablyandsimilarlytreated;and

• shareholdershavebeengivensufficientinformationaboutthemerger.

12a. Do the authorities contact customers and competitors of the merging parties as part of the merger review process?

TheSECisempoweredtocontactcustomersandcompetitorsofthemergingparties.However,wearenotawareofinstanceswheretheSEChasexercisedthispower.

Rule426oftheSECRulesprescribesthatanotifyingpartytoamergershouldprovidealistofitsmajorcompetitorsinitsproductmarketandmarketpositionormarketshareoftheseplayers.TheSECmayalsorequestthatthenotifyingpartyidentifyandprovidecontactdetails,foreachidentifiedproductorservice,forfivecustomersofthemergingentitiesineachoftheidentifiedgeographicalareaswiththelargestaggregatepurchasesinvalueduringthelastfinancialyear.

12b. To what extent are the submissions of customers and competitors influential?

TheISAgrantstheSECthepower,inassessingamergerapplication,toinvestigateorappointanypersontocarryoutinvestigationsregardingthemerger.TheISAalsoexpresslypermitsanyperson

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• Theaffectedcompanyisgiven30days(fromdateofreceiptoftheletter)withinwhichtoforwardtheirresponsetotheSEC.

• Ifafterreviewingthecompany’sresponse,theSECfindsthatcompetitionisrestrained,seniorofficersofthecompanyshallbeinvitedtofurtherdefendtheirposition.

TheSEChasnotyetexercisedthispowerandassuchtherearecurrentlynoprecedentsinthisregard.


TheISAestablishedtheInvestmentsandSecuritiesTribunal(theIST)andhasvesteditwithexclusivejurisdictiontohearanyquestionoflaworanydisputeinvolvingadecisionordeterminationoftheSECintheoperationandapplicationoftheISA,ajurisdictionwhichincludesdecisionsinrespectofmergers.PartieshavearightofappealtotheCourtofAppealiftheyaredissatisfiedwiththedecisionoftheIST.


TheISAisgenerallylimitedinitsapplicationtocompanies,andisnotapplicabletounincorporatedjointventures.Thisnotwithstanding,partXIIoftheISA(whichprovidesformergers,takeoversandacquisitions)extendsthedefinitionofcompanytoincludepartnerships,firmsorassociationsofindividuals.Thus,whereunincorporated,jointventuresenterintomergersthatmeetthethresholdsformandatorynotificationorapproval,notificationofsuchmergersmustbemadetotheSECortheSEC’sapprovalmustbesought(asthecaserequires).


Although,thereisnodedicatedcompetitionlawinNigeria,cartelconductisprohibitedbyarangeofstatutesinvarioussectors,asdiscussedinquestion1.Inrelationtothecommunicationssector,theCommunicationsActexpresslyprohibitscartelconduct.

In2011,therewasaninvestigationundertheCivilAviationActastowhetherthesimultaneousimpositionofthefuelsurchargebyBritishAirwaysandVirginAtlanticAirwayswasdeceptive,unfair,andanunfairmethodofcompetition.Theresultoftheinvestigationwasafindingthatbothairlinesjointlycontrolled90%ofthepassengertrafficbetweenLagosandLondon,andthatthetwoairlinescommunicatedandagreedontheleveloffuelsurchargeonpassengerstobeassessedpriortointroducingsuchfareincreases.Thiswasfoundtoamounttocollusion.TheinvestigativecommitteeoftheNCAArecommendedfinesandpenalties,aswellascompensationtoaffectedpassengers.


Asmentioned,thereisnosingleauthorityinNigeriathatisvestedwiththeresponsibilityofactingasthecompetitionwatchdogforNigeria.

Withrespecttosector-specificcompetitionregulation,suchregulatorsmayutilisetheirgeneralinvestigativepowerswithrespecttocompetition-relatedinvestigations.Inthecontextofthetelecommunicationssector,Section61oftheCommunicationsActempowerstheNCCtoinvestigateanymatterpertainingtotheadministrationoftheCommunicationsActoritssubsidiarylegislationiftheNCChasgroundstobelievethataninfringement,civilorcriminal,oftheprovisionsoftheCommunicationsActoritssubsidiarylegislationwas,isorwillbecommitted.

Forpurposesofconductinganinvestigation,theNCCmayappointinspectorswhoshallhavethepowertoenterthepremisesofpersonsunderinvestigationwithoutnotice,andtoinspectandtakecopiesofanyrecordsconsideredrelevanttotheinvestigation.Inconductingitsinvestigations,theNCCmustnotifyanypersonsorentitiesthatarethesubjectofinvestigation,andmustgivethemtheopportunitytomakerepresentationsinwritingorinpersonbeforeanyadversedecisionisreached.

Inthecontextofthepowersector,Section82(5)oftheEPSRAstatesthattheNERCisresponsibleforconsidering(inrelationtoservicesincompetitivemarkets)howtopreventandmitigatetheabuseof


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marketpowerwhenitisestablishingtariffsandapprovingmergersandacquisitions.Inordertoaccomplishthis,theNERChasthepowertorequireinformationfromitslicensees,undertakeenquiriesandestablishorhireanindependentcomplianceassessortomonitortheactivitiesofitslicensees.


NospecificpenaltiesareprescribedintheCommunicationsActforcartelconduct.Section140oftheCommunicationsAct,whichsetsoutpenalties,generallyprovidesthatpersonsguiltyofanoffenceundertheCommunicationsActshallbeliableforafinenotexceedingNGN100000,ortoimprisonmentforaperiodnotexceedingoneyear,ortoboth.Inthecaseofasubsequentconviction,personsguiltyofanoffenceundertheCommunicationsActshallbeliableforafineofNGN500000,orimprisonmentforaperiodnotexceedingthreeyears,orboth.Furthermore,theNCCoranypersonaggrievedmayseekinterimorinterlocutoryinjunctionsagainsttheconductofalicenseethatisengagingincartelconduct.ThereisnocorporateleniencypolicyinplaceinNigeria.

Withrespecttothepowersector,iftheNERCdeterminesthatsection82(5)oftheEPSRAhasbeenviolated,itmaylevyfinesuptoNGN50millionorissueceaseorders.


Section309oftheISAprovidesthat,iftheMinisterofFinance,afterconsultationwiththeSEC,isoftheopinionthatitisnecessaryorexpedientintheinterestofthepublic,heorshemayexemptanypersonorclassofpersonsbuyingorsellingsecuritiesorotherwisedealingwiththesecuritiesmarketfromtheoperationoftheprovisionsoftheISAbyanorderpublishedinthegazette.SuchexemptioncouldincludepartXIIoftheISA,whichcontainsthecompetition-relatedprovisions.Section121oftheISAalsogivestheSECthepower,ifitappearsthatthemergerislikelytosubstantiallypreventorlessencompetition,todetermineifamergerislikelytoresultinanytechnologicalefficiencyorpro-

competitivegainwhichwillbegreaterthan,andoffsettheeffectsof,anypreventionofcompetition.

Furthermore,Section93oftheCommunicationsActgrantstheNCCthepowerstoauthoriseconductthatmaybeconstruedtohavethepurposeoreffectofsubstantiallylesseningcompetitioninanyaspectoftheNigeriancommunicationsindustry.TheNCCmay,beforeauthorisingtheconduct,requirethelicenseetosubmitanundertakingregardinghisorherconductinanymatterrelevanttotheauthorisation.

Inthepowersector,Section82(2)oftheEPSRAprovidesthattheNERC,afterconsultingwiththeMinisterofPoweranddeterminingthatitisinthepublic’sinterest,maydeterminewhen,andunderwhatconditions,aregulatedservicemaybeexemptfromtariffregulation.


Minimumresalepricemaintenanceisnotexpresslyprohibited.ThePriceControlActChapterP28LawsoftheFederationofNigeria,2004(PriceControlAct)providesthat,theMinisterofCommercemay(ontherecommendationofthePriceControlBoard)grantanorderapprovinganyresalepricemaintenanceagreementorarrangemententeredintobythemanufacturer,importerordistributorofacommodityontheonehand,andtheseller(whetherawholesalerorretailer)ofthatcommodity,ontheother.ThePriceControlActfurtherprovidesthat,wheresuchanorderisinforce,itshallbeunlawfulforanypersontosell,agreetoselloroffertosellanycommoditytowhichanapprovedresalepricemaintenanceagreementorarrangementrelatesotherthaninaccordancewiththetermsoftheagreementorarrangement.ItappearsthatthePriceControlBoardiscurrentlydormantinNigeria.

Regulation13(d)oftheNCCRegulationsempowerstheNCCtoreviewallagreementsandpracticeswhichmayconstituteresalepricemaintenance.ThepurposeofthereviewistodeterminewhethertheagreementorpracticemayhavethepurposeoreffectofsubstantiallylesseningcompetitioninNigeria.

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UnderNigerianlaw,contractsinwhichapartycovenantstorestricthisorherfuturelibertytoexercisehisorhertrade,businessorprofessioninacertainmannerare,primafacie,void.However,injustifiedcircumstances,theexclusivityclauseswillbevalidandbinding.

Thereiscurrentlynoclearauthorityonwhatwillamounttojustifiablecircumstances’.TheSupremeCourtofNigeriahasheldthat,asageneralrule,eachcasemustbedecidedonitsownfactsandmerit.Consequently,whetherornotaclauseinarestraintoftradeagreementisjustifiablewilldependonthecircumstancesoftheparticularcase.InthecaseofNissan(Nig.)LtdvYoganathan[2010]4NWLR,theCourtofAppealheldthata“restraintinacontractmerelytopreventcompetitionwillnotbeenforcedbythecourts”.Inthatcase,however,thecourtfoundthattherestraintoftradeinquestionwasenforceable.

Regulation13(e)oftheNCCRegulationsempowerstheNCCtoreviewallagreementsandpracticeswhichconstituteexclusivedealingagreements,intermsofwhichalicenseereachesandagreeswithanotherpartyforthesupplyofproductsorservicesonanexclusivebasis.Thepurposeofthereviewistodeterminewhethertheexclusivityobligationhas,ormayhave,theeffectofsubstantiallylesseningcompetitioninrelatedcommunicationsmarkets.

Section71(6)oftheEPSRAprovidesthat,unlessexpresslygranted,alicencegrantedbytheNERCwillnotbeexclusive.TheNERCmayallowalicensedactivitytobeexclusiveforallorpartoftheperiodofthelicenceprovidedthatsuchlicenceisforaspecificpurpose,forageographicalareaorforsomecombinationofboth.


Rule432oftheSECRulesempowerstheSECtoorderthebreak-upofacompanywheretheSEC

findsthatthecompanyconstitutesarestrainttocompetitionorcreatesamonopolyinaparticularindustry.TheSECRulesfurtherprovidethatanabuseofdominantpositionisoneofthecircumstancesthatconstitutesarestrainttocompetition.TheimplicationoftheRulesisthat,whereacompanyisfoundtohaveabuseditsdominantposition,theSECcouldorderthebreak-upofthecompany.UndertheSECRulesanabuseofdominantpositionmay,inparticular,consistof:


• limitingproduction,marketsortechnicaldevelopmenttotheprejudiceofconsumers;

• applyingdissimilarconditionstoequivalenttransactionswithothertradingparties,therebyplacingthematacompetitivedisadvantage;and

• makingtheconclusionofcontractssubjecttoacceptancebytheotherpartiesofsupplementaryobligationswhich,bytheirnatureoraccordingtocommercialusage,havenoconnectionwiththesubjectofthecontracts.

Withrespecttothetelecommunicationssector,adominantpositionisdescribedinRegulation18oftheNCCRegulationsasapositionofeconomicstrengthinoneormorespecificallydefinedcommunicationsmarkets,suchthat,alicenseeinthatpositionhastheabilitytounilaterallyrestrictoutput,raiseprices,reducequalityorotherwiseactindependentlyofcompetitorsorconsumers.

Indeterminingwhetheralicenseewithinthecommunicationsmarketisinadominantposition,theNCCconsidersthefollowing:

• themarketshareofthelicensee,determinedbyreferencetorevenues,numbersofsubscribersorvolumesofsales;

• theoverallsizeofthelicenseeincomparisontocompetinglicenseesparticularlyanyresultingeconomiesofscaleorscopethatpermitthelargerlicenseetoproduceproductsorservicesatalowercost;

• controlofnetworkfacilitiesorotherinfrastructure,accesstowhichisrequiredbycompetinglicenseesandthatcannot,forcommercialortechnicalreasons,beduplicatedbyacompetinglicensee;


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• theabsenceofbuyingpowerornegotiatingpositionofcustomersorconsumers,includingsubstantialbarrierstoswitchingserviceproviders;

• easeofmarketentry,andtheextenttowhichactualorpotentialmarketentryprotectsagainsttheexerciseofmarketpowersuchasraisingprices;and

• therateoftechnologicalorotherchangeinthemarket,andrelatedeffectsformarketentryorthecontinuationofadominantposition.

Subjecttotheforegoingindicesfordeterminingwhetheralicenseeisinadominantposition,Regulation20oftheNCCRegulationsestablishesapresumptionofdominancewherealicensee’sgrossrevenuesinaspecificcommunicationsmarketexceeds40%ofthetotalgrossrevenueofalllicenseesinthatmarket.


Yes.In2013,theNCCcarriedoutadeterminationofdominantpositionsinthevarioussegmentsoftheNigeriantelecommunicationsmarket.ThatstudyresultedinthedeclarationofMTNNigeriaasthedominantoperatorinthemobilevoicesegmentofthemarket.Furthertothisdetermination,in2014,theNCCcarriedoutroutinecompliancechecksonapprovedtariffplansofnetworkoperators.ItdiscoveredthatMTNNigeriawaschargingitssubscribersontheMTNiPulse,atariffofonekobopersecondor60koboperminute,whichwasbelowtheMobileTerminationRateofNGN6.40perminuteatthetime.ItwasdiscoveredthattheMTNtariffofferinghadnoregulatoryapprovalandwasalsoinbreachofitsobligationasadominantoperatorinthevoicesegmentoftheNigeriantelecommunicationsmarket.Asaresultofthebreach,theNCCcommencedanenforcementprocessagainstMTN.

AsaresultofMTN’sconduct,theNCCplacedcertainobligationsonMTNwhichincluded,amongothers,thatMTNshouldnotofferanydifferentialpricinginitson-netandoff-netmobilevoiceservice.MTNwasdirectedtocollapseitson-netandoff-nettariff.

Alsoin2014,theNCCcarriedoutcompliancechecksonregulatoryobligationswhichrevealedvariouscasesofviolationsofthedominanceobligationsbyMTN.FollowingtheNCC’sfindings,

MTNwasinvitedtoprovideexplanationsfortheobservedviolations.MTN’sexplanationswerefoundtobeunacceptabletotheNCC.TheNCCissuedafinalwarningtoMTNanddirectedthat:

• MTNshouldimmediatelycollapsetheon-netandoff-nettariffonitsnetworkandstrictlycomplywithallobligationsplacedonMTNunderthe2013DeclarationofDominance;

• MTNshouldnotifytheNCCofcompliancewiththeCommunicationsActwithin10daysofreceiptofthedirective;and

• MTNshoulddiscontinueandwithdrawallunapprovedpromotions,includingbutnotlimitedto‘MTN100%DailyOn-netPromo’,‘MTN200%rechargebonus’,‘On-netBonusSMSPromo’,and‘MTNAlldayWOWPromo’.


Section92(4)oftheCommunicationsActempowerstheNCCtodirectthatalicenseeinadominantpositiondiscontinueanactivityinthecommunicationsmarketwhichhasormayhavetheeffectofsubstantiallylesseningcompetitionandtoimplementappropriateremedies.Inaddition,theRegulationsprovidethatwheretheactivitiesofalicenseeconstituteanabuseofitsdominantposition,orananti-competitivepractice,theNCCmayissueanorderthatsuchlicenseepaycompensationtopersonsaffectedbysuchabuseaswellaspublishanacknowledgementandapologyforsuchactions.IntermsofSection140oftheCommunicationsAct,wherenospecificpenaltyisprescribedforanyoffence,apersonfoundguiltyoftheoffenceshallbeliableforafinenotexceedingNGN100000,ortoimprisonmentforaperiodnotexceedingoneyear,ortoboth.Intheeventofasubsequentconviction,personsguiltyofanoffenceundertheCommunicationsActshallbeliableforafineofNGN500000,orimprisonmentforaperiodnotexceedingthreeyears,orboth.


Therearenogenerallyapplicablerulesinrelationtopricediscrimination.TheCBNPOSGuidelines,however,containprovisionstotheeffectthatamerchantshallundernocircumstanceschargeadifferentprice,surchargeacardholderorotherwisediscriminateagainstanymemberofthepublicwho

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choosestopaywithacardorbyotherelectronicmeans.TheNigeriaInter-BankSettlementSystemOperationalGuidelinesalsoprovidethatpartiestoswitchingservicesshallnotabusetheirdominantpositionsbydirectlyorindirectlyimposingunfairordiscriminatoryconditionsandfeesintheprovisionoftheirservices.

TheNCCRegulationsprohibitthepracticeofdeliberatelyreducingtheprofitmarginthatmaybeachievedbyacompetinglicenseethatrequireswholesalecommunicationsservicesfromthelicenseeinquestion,byincreasingthepricesforthewholesalecommunicationsservicesrequiredbythatcompetinglicenseeorbydecreasingthepricesofcommunicationsservicesinretailmarketswheretheycompete,orboth.


TheISArequirestheSECtopublishanoticeofitsdecisionsinrelationtotheapprovalofmergersinthegazette.ThereisnolegalrequirementfortheSECtopublishitsdecisionsonitswebsite.TheNCC,however,publishesitsdecisionsonitswebsite.

UDO UDOMA & BELO-OSAGIE10thand13thfloorsStNicholasHouseCatholicMissionStreet,LagosPOBox53123(Ikoyi)NigeriaT:+23414622307/+23414622308/+23414622309/+23414622310

www.uubo.org


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APPLEBY Malcolm Moller

Seychelles

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• topreventtheabuseofadominantpositionbyanenterprise;

• toeliminateanti-competitivepractices;and• topreventorcontrolanti-competitivemergers.• tomakeavailabletoconsumersandpersons

engagedinbusiness,generalinformationwithrespecttotheirrightsandobligationsundertheLaws;

• toassistanationalbodyindevelopingandpromotingtheobservanceofstandardsofconductforthepurposeofensuringgoodbusinesspractice;

• toreceiveandevaluateconsumercomplaints;• toassistconsumersinresolvingcomplaints;• toinvestigatewhetherenterprisesare

engagedinrestrictivebusinesspractices;• todetermineandmonitorthestandardsof

servicessuppliedbyserviceproviderstoensurecompliance;and

• toperformsuchotherfunctionstogiveeffecttotheFTCA.

THE FAIR COMPETITION ACT

TheFairCompetitionAct(FCA)wasenactedinNovember2009andcameintooperationon5April2010toensurethatthebenefitsofthecompetitionprocessinSeychellesareunhinderedbyanti-competitiveactivity.TheobjectivesoftheFCAare:

• topromote,maintainandencouragecompetition;

• toprohibittheprevention,restrictionordistortionofcompetitionandabuseofdominantpositionsintrade;and

• toensurethatenterprisesirrespectiveofsize,havetheopportunitytoparticipateequitablyinthemarketplace.

TheFCAappliestoallindividualsandbusinesses,tradeandprofessionalassociations,andtheStateandpublicbodiesinsofarastheyarecarryingoncommercialactivities.TheFCAgenerallyoutlawsanyagreements,businesspracticesandconduct


• TherelevantlegislationinSeychellesistheFairCompetitionAct2009,theFairTradingCommissionAct2009andtheConsumerProtectionAct2010(together,theLaws).

• TheFairTradingCommissionisestablishedundertheFairTradingCommissionAct(FTCA)astheenforcertoensurethatindividualsandbusinessescomplywiththeLaws.TheCommissionisrequiredundertheFTCAtoissuerulesandguidelinesontheeconomicandlegalanalysiswhichshallbeusedforthedeterminationofcasesundertheFTCA.TheCommissionhasthefollowingdutiesandpowers:• topromotetheeducationofconsumers

andbusinessesthroughadvocacyandpublications;

• thepromotionandmaintenanceoffairandeffectivecompetition;

• tocarryoutonitsowninitiativeorattherequestofanypersonorenterprisethathasaninterestinamatter:• suchinvestigationsinrelationto

conductoftradeaswillenableittopreventtheuseofbusinesspracticesincontraventionoftheLawsorasitmayconsidernecessaryordesirableinconnectionwithanymattersfallingwithintheprovisionsoftheLaws;

• anysuchenquiryintothepracticesofanyprofessionalassociationtoensurethatsuchpracticesarenotcontrarytoanyoftheLaws;

• anystudies;and• publishsuchreportsandinformation

regardingmattersaffectingtheinterestsofconsumersandenterprises.

• tokeepunderreviewcommercialactivitiestoensurethatpracticesthatmayadverselyorunfairlyaffecttheinterestsofconsumersandbusinessesarepreventedorterminated;

• totakesuchactionasitconsidersnecessary:


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whichhaveadamagingeffectoncompetitioninSeychelles.TheFCAmoreindicativelyprohibitsarrangementsbetweenundertakingsthatimpedecompetition,orareintendedtodoso,e.g.agreeingtofixprices,cartelagreements,orbid-rigging;theabusebyoneormoreundertakingsofadominantpositioninamarket;andcertainmergersandacquisitions,unlesspriorapprovalisobtainedfromtheCommission.

THE CONSUMER PROTECTION ACT

TheConsumerProtectionAct(CPA)wasenactedon29November2010.TheCPAaimsatprotectingconsumers’rightsbyimposingcertaindutiesonproducersandsuppliersofgoodsandservicesintheSeychelles.

TheCommission,inadministeringtheCPA,shallpromoteandadvancetheeconomicwelfareofconsumersby:

• theachievementandmaintenanceofaconsumermarketthatisfair,accessible,efficient,sustainableandresponsibleforthebenefitofconsumers;

• reducinganydisadvantagesexperiencedbyconsumers;

• promotingfairbusinesspractices;• promotingfaircontractterms;• protectingconsumersfrommisleading,

deceptiveorfraudulentconduct;and• improvingconsumerawareness

andinformation.

TheCPAappliestoanygoodsandservicespromotedorsuppliedinSeychellesintheordinarycourseofthesupplier’sbusiness.TheFCAprovidesforasystemofenforcementthroughcompliancenotices.Assuch,theCommissionmay:

• initiateorreceivecomplaintsconcerningallegedprohibitedconduct;

• investigateandevaluatecomplaintsorallegedcontraventionsoftheFCA;

• conducthearingsandissuenotices,giveordersanddirections;and

• imposeremediesorfinancialpenalties.


TheCommissionconcludedstakeholders’consultationontheproposedamendmentsand

consolidationoftheFairTradingAct,2009,theConsumerProtectionAct,2010andtheFairCompetitionAct,2009inOctober2016,whichpertaintothecreationoftheFairTradingTribunalwhichwillbetheadjudicatingbody,separatefromtheFairTradingCommission.Therolesandresponsibilitiesofsectorregulatorsvis-à-vistheCommissionwerealsodiscussedatlength,aswerewaystoimprovethecurrentprovisionsoftheConsumerProtectionAct,2010andtheFairCompetitionAct,2009.


TheLawsareactivelyenforcedbytheCommission,whichaimstosafeguardtheinterestsofconsumers,promotecompetitionandfairtradeinSeychellestobenefitconsumers,businessesandtheeconomy.

TheFairTradingCommissionfollowsapatternofatwiceweeklyinspectionschedule.ThescheduledinspectionsaspertheCommission’sstandardpracticefocusesoncompliancewiththefollowingsectionsoftheCPA:

• Section19:toensureinformationisinalanguageSeychelloiscanunderstand.

• Section20:toensurepricesaredisplayedclearlytoconsumers.

• Section21:toensuregoodsarenotbeingsoldabovepricesorthatsuppliersarenotengagedindualpricing.

• Section22:toensureproductsonofferforsalearelabelledproperly.

• Section24:toensuregoodsonofferforsalehavenotexceededtheirexpirydates.

• Section25:toensuresuppliersofgoodsareprovidingreceiptsafterpurchaseandthatreceiptscomplywithCPArequirements.

Inadditiontotheabove,theDepartmentremainsavailableforurgentinspectionswithinthefirst30minutesofarequestbeingmadetotheCommission(onMahe)subjecttotherequestfulfillingthecriteriaforsuch.Thelatterreferstosituationscompromisingconsumerinterest;forinstance,inthecaseofasignificantnumberofexpiredgoodsonofferforsaleinaparticularoutletthattheCommissionisalertedtoeitherbyastaffmemberoftheCommissionoramemberofthepublic,includingabusiness.

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itintendstoeffectthemerger,islikelytocontrol40%ormoreofamarket,orsuchotheramountsastheMinisterresponsiblefortrademayprescribe.NotifiablemergersareprohibitedunlesspermittedbytheCommission.Forsuchamergertotakeplace,theCommission’sapprovalisrequired.


Proposedmergerswherebytheentityresultingfromthemergerislikelytocontrol40%ormoreofthemarketareprohibitedunlesspermittedbytheCommission.Inthisregard,itismandatoryforsuchproposedmergerstobenotifiedtotheCommission.

TheCommissionmaygrantitspermissioninthefollowingcircumstances:

• themergerislikelytobringaboutgainsinreal(asdistinctfrompecuniary)efficienciesthataregreaterthan,orarelikelytooffset,theeffectsofanylimitationsoncompetitionthatresultorarelikelytoresultfromthemerger;or

• oneofthepartiestothemergerisfacedwithactualorimminentfinancialfailure,andthemergerrepresentstheleastanti-competitiveoftheknownalternativeusesfortheassetsofthefailingbusiness.


TheFCAprovidesthatwhereanenterprisewishestoestablishamerger,itshallapplytotheCommissionforpermissiontoeffectthemerger.Theapplicationismadethroughtheprescribedapplicationformwhichshouldcontaintheprescribedinformation.WheretheCommissiondeterminesafterinvestigationthatenterpriseshaveeffectedamerger(asdefinedintheFCA)withouttheCommission’spermission,theCommissionmaybynoticeinwritingdirecttheenterprisesconcernedsothatthemergermaybedeterminedwithinsuchtimespecifiedinthedirection.Anenterpriseseekingpermissiontoeffectamergershalldemonstratethatifthemergerwasnotcompleted,itisnotlikelythattherelevantefficiencygainswouldberealisedbymeansthatwouldlimitcompetitiontoalesserdegreethanthemerger;ordemonstratethatreasonablestepshavebeentakenwithintherecent

Inthescenarioexplainedabove,inspectionsarespecifictothealertand/orcomplaintreceivedbutthisdoesnotprecludeathoroughinspectionbeingconductedsoonafter.

In2016,theCommissionreceived342complaints,whichrepresentsasignificantincreasecomparedtothesameperiodin2015(166complaints).

Weeklyroutineinspections,compliancevisitsandtip-offsundersection33(j)oftheConsumerProtectionAct,2010havebeenvigorouslycarriedoutbytheMarketSurveillanceteamoftheCommission,inbusinessoutletssuchaselectronicshops,householdshops,supermarkets,retailers,bottlingplants,pharmacies,hotelsandrestaurants.Duringtheyearunderreview,theCommissioncarriedout116routineinspections,asignificantincreaseof61%ascomparedtothepreviousyear(72inspections).


TheCommission’sobjectiveistopromoteefficiencyandcompetitivenessamongbusinessenterprisesandserviceprovidersandtoimprovethestandardsofservice,qualityofgoodsdistributedandservicessuppliedbybusinessenterprisesandserviceprovidersoverwhichithasjurisdiction.

TheFairTradingCommissionhasrecentlyinitiatedresearchaimedatidentifyingthelapseintheconstructionindustryintheSeychellesthatcanpossiblyleadtomarketfailures.ThiswillenabletheCommissionalongwithotherauthoritiestocreateawarenesswithregardtorightsandresponsibilitiesofboththeconsumerandserviceproviderswherethereisagap,therebyimprovingconsumerwelfareandimprovingservicequality.TheCommissionisconductingthesurveytoobtaininformationthatwillallowittounderstandthelevelofknowledgeofthegeneralpublic(18yearsandabove)inrelationtoconstruction.


AccordingtotheFCA,anotifiablemergerisonewhichinvolvesanenterprisethatbyitselfcontrolsor,togetherwithanyotherenterprisewithwhich


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pasttoidentifyalternativepurchasersfortheassetsofthefailingbusiness,anddescribeindetailtheresultsofthesearchforalternativepurchasers.

TheFCAcontainsageneralprovisionrelatingtotheimpositionofpenalties.OneofthepowersoftheCommissionistoimposeremediesorfinancialpenaltiesonanenterprisewhichconductsitsbusinessinbreachoftheFCA.ItappearsthatthisprovisionappliestotheimplementationofmergerswithouttheCommission’spermission.


Anon-refundablefeeofSCR1500ispayableonsubmissionofacompletedmergerapplicationform.WheretheCommissionacceptsthemerger,thepartiesarerequiredtopayafee(assetoutbelow)basedonapercentageoftheircombinedturnoverfortheirprecedingfinancialyear.Wherethemergerinvolvesafailingfirm,theCommissionwilluseitsdiscretiontodeterminetheappropriatefeepayable.

THRESHOLDS COMBINED TURNOVER/ASSET VALUE

Lower 0.1%ofSCR0-SCR500000

Higher 0.5%ofSCR501000andabove.


TheFCAdoesnotspecificallycaterforforeign-to-foreignmergers.However,theFCAmentionsthatwhereanenterprisewishestoeffectamerger,itshallapplytotheCommissionforpermission.ThisprovisionoftheFCAdoesnotmakeadistinctionbetweenSeychelles-registeredentitiesandforeignentities.Anypracticeoragreement,whichisapprovedorrequiredunderaninternationalagreementtowhichSeychellesisaparty,isexcludedfromtheprovisionsoftheFCA.


Pre-notificationcontactspriortothesubmissionofamergerapplicationarenotrequiredintermsoftheFCAandpartiesmaysimplysubmitamergerapplicationformwiththerequisiteinformation.


UndertheFCA,theCommissionshallassessthefollowingbeforegrantingpermissionforamerger,namely:

• thestructureofthemarketlikelytobeaffectedbytheproposedmerger;

• thedegreeofcontrolexercisedbytheenterprisesconcernedinthemarket,andparticularlytheeconomicandfinancialpoweroftheenterprises;

• theavailabilityofalternativestotheservicesorgoodssuppliedbytheenterprisesconcernedinthemerger;

• thelikelyeffectoftheproposedmergeronconsumersandtheeconomy;and

• theactualorpotentialcompetitionfromotherenterprisesandthelikelihoodofdetrimenttocompetition.

12. Do the authorities contact customers and competitors of the merging parties as part of the merger review process? To what extentare the submissions of customers and competitors influential?

Inordertounderstandthescopeofthemarketinrelationtotheproposedmerger,itisregardedasnecessaryfortheCommissiontocontactthecustomersandcompetitorsofthemergingparties.Aspartofthereviewprocess,customersandcompetitorsmaybeinterviewedbytheCommissioninordertounderstandtheeffectofamergerontherelevantmarket.TheCommissionpublishesanoticeinthegazetteandinatleastonedailynewspaperinformingthepublicoftheapplicationandadvisingthatanypersonwhohasaninterestinthemattermaysubmitwrittenobjectionstothegrantoftheauthorisationwithinthetimespecifiedinthenoticeandtheCommissionwillconsiderallobjectionsreceivedandsatisfyitselfthatitisreasonableinthegivencircumstancestogranttheauthorisation.

13. Who else can make submissions to the authorities when a merger is being considered? Are employees contacted as part of the process and can employees make submissions?ThelegislationdoesnotspecifywhetheremployeesmaymakesubmissionstotheCommission.

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otherentitiesdirectlyorindirectlycontrolledbythem.Assuch,thelegislationappearstoapplytojointventures.Moreover,theinvestigativepowersoftheCommissionmayextendtoajointventuretoensurethatthereisnoexistenceofadominantposition.AnexampleofthisisthecaseofZilAir(Pty)Ltd(ZilAir)andHelicopterSeychellesLtd(HelicopterSeychelles).InJuly2010,followingspeculationofacommercialjointventurebetweenZilAirandHelicopterSeychelles,theCommissionmadeanenquirytoZilAirregardingthenatureoftheventureinquestion.

Inlinewiththis,theCommissionsoughtfurtherinformationfromHelicopterSeychelles.TheCommissioneventuallyassessedthatHelicopterSeychellesheldadominantpositioninthehelicopterservicesmarket.ThisassessmentwassupportedbyHelicopterSeychelles’largemarketshare.ItwasthereforeadvisedthatanapplicationtoeffectthemergerinquestionwouldhavetobemadetotheCommissioninaccordancewithSection22oftheFCA.Section21oftheFCAprovidesthatallmergersinvolvinganenterprise,whichbyitself,orjointlywithanotherenterprise,controls40%ormoreofamarket,areprohibitedunlesspermittedbytheCommission.


TheFCAprohibitscartelconductintheformofagreementsbetweenenterprises,tradepracticesordecisionsofenterprises,orundertakingsorconcertedpracticesofenterprisesthathaveorarelikelytohaveastheirobjectoreffecttheprevention,restrictionordistortionofcompetitionwhenthey:

• directlyorindirectlyfixpurchaseorsellingprices,ordetermineanyothertradingconditions;

• limitorcontrolproduction,markets,technicaldevelopmentorinvestment;

• providefortheartificialdividingupofmarketsorsourcesofsupply;

• affecttenderstobesubmittedinresponsetoarequestforbids,forexample:• apartyagreesnottosubmitabidin

responsetoacallorrequestforbidsortenders;or

However,theFCAprovidesthateverypersonaggrievedbyanactofanenterprisemaymakeacomplainttotheCommissionagainstthatenterprise.


WhereitappearsduringtheCommission’sinvestigationofamergerthatsomeconcernshavearisen,orarelikelytoariseduetothemerger,theenterprisemayofferawrittenundertakingtotheCommissiontoaddressthoseconcerns.ThewrittenundertakingmaybesubmittedtotheCommissionbeforeorduringitsinvestigation.Iftheundertakingaddressesalltheconcerns(basedonthelesseningofcompetition,forexample)satisfactorily,theCommissionwillaccepttheundertaking.

15. What are the opportunities for judicial appeal or review of a decision in respect of a merger that the parties are dissatisfied with?IfanenterpriseisdissatisfiedwithanorderordecisionmadebytheCommission,itmayappealtotheTribunal.IftheenterpriseisdissatisfiedwiththedecisionoftheTribunal,theenterprisemayappealtotheSupremeCourt.

Onappeal,theSupremeCourtmay:

• affirm,reverse,amendoralteranorderordirectionoftheTribunal;

• remitthemattertobefurtherdeterminedbytheTribunalwithitsopiniononthematter;or

• makesuchorderasitdeemsfit.

NotethattheCommissionemphasisesmediationasafirststepinprovidingredresstoconsumers.


Thelegislationdoesnotspecificallyrefertojointventures.However,thelegislationappliesto‘enterprises’whicharedefinedas“anyperson,firm,partnership,corporation,company,associationorotherjuridicalperson,engagedincommercialactivitiesforgainorreward”.Thisincludestheirbranches,subsidiaries,affiliatesor


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• biddingpartiessubmit,inresponsetoacallorrequest,bidsortendersthatarereachedbyagreementbetweenoramongthemselves,unlesstheenterprisesarenotabletosubmittheirbidsindividually;

• applydissimilarconditionstoequivalenttransactionswithotherpartiesengagedinthesametrade,therebyplacingthoseotherpartiesatacompetitivedisadvantage;or

• maketheconclusionofanagreementsubjecttoacceptancebytheotherpartiesofsupplementaryobligations,which,bytheirnatureoraccordingtocommercialusage,havenoconnectionwiththesubjectofsuchagreement.

Anenterpriseshallnotconspire,combine,agreeorarrangewithanotherpersonto:

• limitthefacilitiesfortransporting,producing,manufacturing,storingordealinginanygoodsorsupplyinganyservice;

• prevent,limitorundulylessenthemanufactureorproductionofanygoodstounreasonablyenhancethepricethereof;

• undulylessencompetitionintheproduction,manufacture,purchase,sale,supply,rentalortransportationofanygoods;

• undulylessen,limitorpreventcompetitionintheprovisionofinsuranceonpersonsconcernedinorpropertyrelatedtotheproduction,storage,transportationordealinginanygoodsortheprovisionofservices;or

• otherwiseundulyrestrainorinjurecompetition.

AnexampleoftheCommission’senforcementistheDanImportsandExportscase.In2012,theCommissionreceivedacomplaintregardinganadvertisementbyDanImportsandExportsforthesaleofSunCool.Theadvertisementread“RS.6inallshopsonMaheandPraslin”.Itwasallegedthattheadvertisementconstitutedorindicatedpricefixing(whichconstitutesaprohibitedpracticeundertheFCA)inthesupplyofSunCooltoretailersandconsumers.TheCommissionfoundthattheadvertisementconstitutedacontraventionoftheFCA.

TheCommissionacknowledgedtheco-operationofDanImportsandExports,whichhadaccepteditsbreachoftheFCAandhadceasedtopublishtheadvertisementandagreedthatretailerswerefreetoselltheproductattheirchosenprice.TheCommissionrecommendedthatthe

managementofDanImportsandExportsattendatwo-houradvocacysessionontheFCAinordertobetterunderstandtherequirementsoftheFCA.TheadvocacysessionwaswellreceivedbytherepresentativeofDanImportsandExports.

AmorerecentexampleiswithregardtotheretailpriceofHeinekenBeerinSeychelles.UponreviewingthelocalnewspaperstoensurethatadvertspublishedbybusinessesareinconformitywiththeConsumerProtectionAct(CPA)2010and/ortheFairCompetitionAct(FCA)2009theFairTradingCommissioncameacrossanadvertpublishedbyISPCSeychelles.ThisadvertindicatedthepriceatwhichHeinekenbeerin25clbottlesweretobesold.AccordingtotheFCA2009,itisunlawfulforasuppliertoimposeormaintainaminimumpriceatwhichitssuppliesaretobesoldbyretailers.

Followingtheinspectionsconducted,theCommissionestablishedthatthemajorityofretailerswhoseshopswereinspectedwereobligedtochargetheretailpriceadvertisedbyISPCSeychelles.TheyhadaccordinglyengagedinresalepricemaintenancethusmaintainingthatthepriceofHeinekenbeerwillbethesameacrossMaheIsland.

FurthermoreduringthemeetingheldwiththerepresentativesfromISPCSeychelles,theydidnotdisputethefactthattheCommissionperceivedthemtobeincontraventionoftheFCA2009.Onthecontrary,theyoptedforanundertakingwiththeCommission.ItwasthereforeconcludedthatISPCSeychelleshadcontravenedtheFairCompetitionAct2009.


TheCommissionhastheabilitytoinvestigatewhetherenterprisesareengagedinrestrictivebusinesspractices.Forthispurpose,theCommissionmay:

• holdenquiries;• administeroaths;• summonandexaminewitnesses;• compeltheproductionofsuchbooks,records,

papersanddocumentsasitmayconsidernecessaryorproperforanyproceeding,investigationorhearingheldbyit;

• examineanydocumentsproduced;

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madeundertheFCAisliableonconvictiontoafinenotexceedingSCR400000and,inthecaseofacontinuingoffence,toafurtherfineofSCR10000foreachdayorpartthereofduringwhichtheoffencecontinues.WhereitisprovedthatanenterprisehasfailedtoobeyanorderoftheCommissionmadeundertheFCA,everydirectorandofficeroftheenterpriseisliableonconvictiontoafinenotexceedingSCR100000,ortoimprisonmentforatermnotexceedingtwoyears,ortoboth,unlessthatindividualprovesthatallnecessaryandpropermeansinhisorherpowerweretakentoobeyandcarryouttheorderoftheCommission.

ThereisnocorporateleniencypolicyinSeychelles.However,thelawiscurrentlyunderreviewandacorporateleniencypolicyisbeingconsidered.However,itshouldbenotedthatthereductionofapenaltyorimmunityfromtheimpositionofafinancialpenaltyisatthediscretionoftheCommission,whichshallweighuptherelevanceandimpactofthefactsprovided.


TheFCAprovidesforanenterprisetoapplytotheCommissionforauthorisationtoenterintoorcarryoutanagreementortoengageinabusinesspractice,whichinitsopinion,isanagreementorpracticeaffectedorprohibitedundertheAct.TheCommissionisauthorisedtoapprovetheapplicationwhereitissatisfiedthattheagreementorpracticeisreasonableandislikelytoresultinapublicbenefit.

TheCommissionmayapprovetheexemptionsubjecttoconditionsandtimeframes,whichitconsidersappropriateinthecircumstances.Beforeapprovingtheexemption,theCommissionmust:

• publishanoticeinthegazetteinformingthepublicoftheapplication;and

• adviseinterestedpersonsthattheymaysubmitwrittenrepresentationswithintheprescribedtimeperiod.

TheCommissionmustconsiderallwrittenobjectionssubmittedandsatisfyitselfthatit

• requirethatanydocumentsubmittedtotheCommissionbeverifiedbyaffidavit;

• seizedocuments;• adjourninvestigations;• maketestpurchases;• inspectgoods;and• doallnecessaryandproperactsinthe

lawfulexerciseofitspowersortheperformanceofitsfunctions.

Inaddition,theCommissionhasthepowertohearanypersonwhomayhaveinformation,whichmayassistaninvestigation.

Regardingseizures,iftheCommissionhasreasontobelievethattheLawshavebeenviolated(whetherintermsofconsumerprotection,faircompetitionoranyotherprovisionsoftheFCA)andthatanybook,documentorarticlerelatingtotheoffenceisbeingkeptorconcealedinabuildingorplace,theCommissionshallapplytoamagistrateforasearchwarranttosearchandseizethatbook,documentorarticle.


WheretheCommissiondeterminesthatanenterprisehasenteredintoanagreementthathastheeffectofpreventing,restrictingordistortingcompetition(cartelconduct),theCommissionmayinstructtheenterpriseasfollows,inordertoremedy,mitigateorpreventtheadverseeffectsoncompetition:

• terminateoramendanagreement;• ceaseoramendapracticeorcourse

ofconductinrelationtoprices;• supplygoodsorservicesor

grantaccesstofacilities;• separateordivestitselfofany

enterpriseorassets;or• providetheCommissionwithspecified

informationonacontinuingbasis,withinsuchtimeasmaybespecifiedbytheCommission.TheCommissionmay,onacase-by-casebasis,insteadofgivinginstructions,imposeafinancialpenalty.

Alternatively,theCommissionmayprovidebothinstructionsandafinancialpenalty.Additionally,regardingsanctions,everyenterprisethatfailsorrefusestoobeyanorderoftheCommission


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isreasonableinthecircumstancestoapprovetheexemption.Subsequenttograntingtheexemption,theCommissionisempoweredtorevoketheexemptionif:

• theCommissionissatisfiedthattheexemptionwasgrantedonthebasisoffalseormisleadinginformation;

• theenterprisehasbreachedtheconditionsuponwhichtheexemptionwasgranted;or

• amendtheexemptionifitissatisfiedthatthemarketconditionsnecessitateanamendment.

TheCommissionisrequiredtonotifytheenterpriseinwritingoftheproposedamendmentorrevocationpriortoimplementationthereof.

AgreementsorpracticesexcludedfromtheFCA:

• Anypracticeofemployersoragreementtowhichemployersarepartiesinsofarasitrelatestotheremuneration,termsorconditionsofemploymentofemployees.

• AnypracticeoragreementapprovedorrequiredunderaninternationalagreementtowhichSeychellesisaparty.


Yes.Seequestion17forexamples.

22. In what circumstances are exclusive agreements unlawful? If exclusive agreements raise concerns in specific circumstances, what factors are relevant to their lawfulness or unlawfulness?SubjecttotheFCA,anyconductonthepartofanenterpriseamountingtoanabuseofadominantpositionisprohibited.Exclusiveagreementsformpartoftheconduct,whichgivesrisetoanabusivedominantpositionasdefinedbytheFCA.Forexample,adominantsuppliermighthaveaseriesofexclusivepurchasingagreementswithdealersinaparticulargeographicalmarket.Thismighthinderothersuppliersoperatinginand/orwishingtoenterthatmarket.

However,suchanagreementwouldnotbeunlawfulifthedominantenterpriseisabletoobjectivelyjustifyitsconductandshowthatithasbehavedinaproportionatemannerindefendingitslegitimatecommercialinterestandshowthebenefitsarisingoutofthatdominantposition.

However,iftheprimarypurposeoftheconductistocurbcompetition,itshallbeprohibitedbytheCommission.


ItshouldbenotedthattheFCAmakesthedistinctionbetweenadominantpositionandabuseofadominantposition.Anenterpriseisdeemedtoholdadominantpositionifthatenterpriseoccupiessuchapositionofeconomicstrengththatenablesittooperateinthemarketindependentlywithouteffectivecompetitionfromcustomers,competitorsorpotentialcompetitors.

Conductwhichamountstoanabuseofadominantpositionisprohibitedifitadverselyorunfairlyrestrictstradewithinthejurisdiction.Conductspecificallylistedasconstitutinganabuseofadominantpositionconsistsof:

• restrictingtheentryofanyenterpriseintothatoranyothermarketthatsupplies,orislikelytosupply,asubstituteforthegoodsorservicessuppliedinthatmarket;

• preventingordeterringanyenterprisefromengagingincompetitiveconductinthatoranyothermarket;

• eliminatingorremovinganyenterprisefromthatoranyothermarket;

• directlyorindirectlyimposingunfairpurchaseorsellingpricesorotherunfairtradingconditionsthatareexcessive,unreasonable,discriminatoryorpredatory;

• limitingproduction,marketsortechnicaldevelopmenttotheprejudiceofconsumers;

• applyingdissimilarconditionstoequivalenttransactionswithothertradingparties,therebyplacingthematacompetitivedisadvantage;

• makingtheconclusionofagreementssubjecttoacceptancebytheotherpartiesofsupplementaryobligationswhich,bytheirnatureoraccordingtocommercialusage,havenoconnectionwiththesubjectofsuchagreements;or

• exclusivedealing,marketrestrictionortiedselling.

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However,theCommissionwillnottreattheenterpriseasabusingadominantpositionif:

• itisshownthatitsbehaviourwasexclusivelydirectedatimprovingtheproductionordistributionofgoodsorpromotingtechnicaloreconomicprogress,andconsumerswereallowedafairshareoftheresultingbenefit;

• theeffectorlikelyeffectofitsbehaviourinamarketistheresultofitssuperiorcompetitiveperformance;or

• theenterpriseenforcesorseekstoenforceanyrightunderorexistingbyvirtueofanycopyright,patent,registereddesignortrademarkexceptwheretheCommissionissatisfiedthattheexerciseofthoserights:• hastheeffectoflesseningcompetition

substantiallyinamarket;and• impedesthetransferanddissemination

oftechnology.


Yes.Forexample,in2010,theCommissionreceivedacomplaintfromHuntDeltelLtd(HDL)againstLandMarineLtd(LML)foranallegedabuseintheportsectorbyLMLwhichenjoyedexclusiverightsintheshorehandlingandstevedoringmarketattheCommercialPortofVictoria.HDLarguedthatapartfromcarryingoutstevedoringandshore-handlingactivities,LMLalsoengagedininlandtransportationofcargowithinSeychellesandwasadirectcompetitorofHDLinthatactivity.HDLallegedthattheexclusivityenjoyedbyLMLallowedittodistortfaircompetitionamongallenterprisesprovidingcargotransportationservices.

Inparticular,HDLcomplainedthatLMLabuseditspositioninthefollowingmanner:

• LMLrefusedtoallowotherenterprisestoperformtheirownloadingandunloadingactivities,onthegroundsthatithadexclusivityinprovidingshore-handlingservices;and

• LMLimposedsevereandrestrictivetimeframeswithinwhichHDLhadtooperateattheport,unloadcargoorcompleteitstasks.LML’sconductresultedinHDL’sservicestoitscustomersbeinggreatlyconstrained,resultinginalossofclientsforHDL.

AfterassessingHDL’scomplaint,theCommissionfoundthatLMLheldadominantpositioninboththeupstreamanddownstreammarkets.ItconcludedthatLMLenjoyedexclusivityinessentialportservicesatthecommercialportandthattherewasnocompetitioninthesemarkets.

TheCommissionthenconsideredwhetherLML’sconductamountedtoanabuseofdominance.TheCommissionfoundthatLMLhadabuseditsdominantpositionbyapplyingdissimilarconditionstoequivalenttransactionsinfavourofthedownstreammarket.TheCommissionconsideredthefactthatthecommercialportisanessentialfacility,withoutaccesstowhichmarketoperatorsoperatinginthedownstreammarketcouldnotprovideservicestotheircustomers.Byrefusingtograntcompetitorsaccess,orbygrantingaccessonlessfavourabletermsthanthoseofitsownservices,LML’sconductamountedtoanabuseofdominancebyimposingacompetitivedisadvantageonitscompetitor.

Followingitsinvestigationandanalysis,theCommissionconcludedthatLMLinfringedtheFCAbyadoptingconductthatledtoabuseofitsdominantposition.

LMLprovidedanundertakingtotheCommissionaddressingtheseconcerns,whichtheCommissionfoundsatisfactory.

Amorerecentexampleisthe2014caseofFTCvFeroxAbattoir(Pty)Ltd,inwhichtheBoardofCommissionersreceivedacomplaintfromoneMrJeanagainstFeroxAbattoir(Pty)Ltdtotheeffectthatthecomplainantwasrefusedthesupplyofbroilerchicksatthehatcheryfacilitywhenheorshecametobuysomechickstorear,duetoanoutstandingbillowedbythecomplainanttotheabattoirfacility.

Bothfacilities–theabattoirandthehatchery–wereownedandmanagedbytherespondent.

AformalinvestigationwaslaunchedanditwasrecordedthroughatelephonecalldocumentedbytheCommissionthatthecomplainanthadbeencategoricallyrefusedthesupplyofbroilerchicksbythehatcheryfacility.


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Thecomplainantclaimedthatheorshehadsufferedlossofrevenueduetothenon-realisationoftwopotentialbroilercyclesandhadtoceasethebroilerfarmingbusiness,whichcausedadecreaseinhisorherfarmingbusinessearningsasawhole.

Beingunabletomediatethematterfurther,theCommissiondeemeditnecessarytobringacaseagainstFeroxAbattoir(Pty)Ltd(HatcheryFacility)beforetheBoardofCommissionersfordetermination.

DuringitsinvestigationtheCommissiondeterminedthatthehatcherywasanessentialfacilityastherewerenoviablesubstitutesfortheessentialinputbeingthesupplyofbroilerchicks.TheCommissionarguedthatgiventhattherespondentisthesoleproviderofbroilerchicksinthecountrytherespondentisconsideredthedominantserviceprovider;henceinrefusingtosupplybroilerchickstothecomplainant(anessentialinputinbroilerfarmingactivities),therespondentisdeemedtohaveabusedandwasstillabusingitsdominantposition.

Therespondentarguedthattheabattoirandthehatcheryformpartofonecompany,beingFeroxAbattoir(Pty)Ltd.Hence,thedebtowedbythecomplainantwasattributabletoboththehatcheryandtheabattoir,suchthatifthecomplainantpaidhisdebt,thecompanywouldbewillingtosellchickstohim.Assuchdenialofservicesbythehatcheryfordebtsowedattheabattoirshouldbemaintainedandifthatisallowedthenthebreachofsection7(3)(b)oftheFairCompetitionAct,2009shouldfall.

TheBoardofCommissionersultimatelyrejectedtherespondent’sargumentsandconcludedthattherespondenthadabuseditsdominantpositionincontraventionofSection7oftheFairCompetitionAct,2009.


TheFCAempowerstheCommissiontoprovideremediestocompetitionissuesfollowingan

investigation,andinsomecases,theCommissionisempoweredtoimposefinancialpenalties.WheretheCommissiondeterminesthatanyconducthasconstitutedanabuseit:

• shallnotifytheenterpriseofitsfindingaccompaniedbyacopyofthereport;

• shalldirecttheenterprisetoceasetheabusiveconductwithinaspecifiedperiod;and

• mayrequiretheenterprisetotakesuchfurtheractionasinitsopinionisnecessary.

WheretheCommissionimposesafinancialpenalty,thefinancialpenaltyshallnotexceed10%oftheturnoveroftheenterpriseinSeychellesduringtheperiodofthebreachoftheprohibition,uptoamaximumperiodoffiveyears.


Yes.Pricediscriminationmayconstituteanabuseofdominance.PricediscriminationisregardedasabusiveifafterinvestigationbytheCommission,ithasbeenestablishedthatsuchconducthasharmedcompetition.


TheCommissionpublishesitsdecisionsonitswebsite:www.ftc.sc.However,itistobenotedthatnotalldecisionsareimmediatelyavailable.

APPLEBYSuite2022ndfloor,EdenPlazaEdenIslandMahe,POBox1352SeychellesT:+2484295281

www.applebyglobal.com

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BOWMANS

Tamara Dini | Xolani Nyali | Sivuyise Lutshiti

South Africa

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TherelevantcompetitionlegislationistheCompetitionAct,89of1998,asamendedandtheregulationspromulgatedintermsoftheAct.TheActisenforcedbytheCompetitionCommission,theCompetitionTribunalandtheCompetitionAppealCourt(theCAC).


TheCompetitionAmendmentAct,1of2009(theAmendmentAct)waspassedintolawin2009buthasnotcomeintoeffectwiththeexceptionofSection6,relatingtomarketenquiries,andcertainpartsofSection12andSection13,relatingtothecriminalisationofcartelconduct.ThelatterrelatetocriminalliabilityforindividualsinrelationtocontraventionsoftheCompetitionAct.Inparticular,theyallowfordirectorsandmanagerstobeheldcriminallyliableforcausingacompanytoengagein,or“knowinglyacquiescing”to,acompany'sinvolvementincartels.IndividualsmayfacepersonalpenaltiesofuptoZAR500000and/or10years’imprisonment.TheCommissionanticipatesthattheprovisionsintheAmendmentActrelatingtocomplexmonopoliesandconcurrentjurisdictionwillbeimplementedby2020.

On1December2017,theMinisterofEconomicDevelopment(whoisassignedresponsibilityfortheAct)publishedtheCompetitionAmendmentBill2017(thedraftBill)forpubliccomment.AccordingtotheBackgroundNote,thedraftBillaimstostrengthentheprovisionsoftheActaimedataddressingtwokeystructuralchallengesintheSouthAfricaneconomy,namely(i)concentrationandtheraciallyskewedspreadofownershipoffirmsintheeconomy;and(ii)toenhancethepolicyandinstitutionalframework,andproceduralmechanisms

fortheadministrationoftheAct.Theproposedamendmentsaddressfivepriorities:

• strengtheningtheprovisionsoftheActrelatingtoprohibitedpracticesandmergers;

• emphasizingtheimpactofanti-competitiveconductonsmallbusinessesandfirmsownedbyhistoricallydisadvantagedpersons;

• strengtheningtheprovisionsoftheActrelatingtomarketenquiries;

• thealignmentofcompetition-relatedprocessesanddecisionswithotherpublicpolicies,programmesandinterests;and

• enhancingtheadministrativeefficacyandprocessesofthecompetitionregulatoryauthorities.

Somekeyproposedamendmentsinclude:

• theinclusionoftheallocationofmarketsharesasacollusiveactivityundersection4(1)(b)(ii)oftheAct;

• theintroductionofadditionalexclusionaryacts,i.e.prohibitingadominantfirmfrombuyinggoodsorservicesonconditionthattheselleracceptsanunreasonableconditionunrelatedtotheobjectofacontract;engaginginamarginsqueeze;orrequiringasuppliertosellatexcessivelylowprices;

• withrespecttomergercontrol,theintroductionofadditionalfactorsforassessingamerger,aswellasadditionalpublicinterestconsiderationsincludingtheabilityofsmallbusinessestoenterinto,participateinorexpandwithinthemarket;

• empoweringthecompetitionauthoritiestoconductimpactstudies;

• enhancingtheprovisionsregardingmarketenquiries;and

• imposingadministrativepenaltiesforallcontraventionsoftheAct,evenoffencesinrespectofnon-specificcontraventions.


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theproportionofLPGinSouthAfrica’senergymixinordertomeetthecountry’sobjectiveofasustainableenergysupply.TheLPGmarketenquirystartedinSeptember2014.Theenquiryhasbeenconcludedandthefinalreportwaspublishedon24April2017.Basedonthefindings,theCommissionhasmaderecommendationstointroducenewmeasurestoimprovecompetitionintheLPGsectortobeimplementedbetween2017and2019.

Athirdmarketenquiryisbeingconductedinrelationtothegroceryretailmarket.Theenquirywasinitiatedonthebackofconcernssurroundingthedisappearanceofthesmallandinformalretailsectorsintownships.Giventherelationshipbetweenthedecreaseininformaltradersandtheriseofshoppingcentres,theenquiryseekstoaddressboththeformalandinformalsectorsofthemarket.InJuly2016,theCommissionpublisheditsfinalstatementofissues.Atthetimeofwriting,theCommissionwasstillholdingpublichearingsinkeymetropolitanareasinSouthAfrica.

AfourthmarketenquiryinitiatedbytheCommissionrelatestothepublicpassengertransportsectorandfollowsnumerouscomplaintsreceivedbytheCommissionrelatingtopublictransportinthecountry.Thescopeoftheenquiryincludespricesettingmechanisms,priceregulation,transportplanning,allocationofsubsidies,routeallocation,licensingrequirements,etc.TheCommissionpublisheditsguidelinesforparticipationintheenquiryanditscallforsubmissionson13July2017.

ThemostrecentenquiryannouncedtodateistheDataServicesMarketInquiry,whichwasinitiatedbytheCommissionattherequestoftheMinisterofEconomicDevelopment.TheenquirywasestablishedinthecontextofconcernsthatperceivedhighdatacostsinSouthAfricaareconstrainingthefullpotentialofadata-driveneconomy,withanadverseimpactonusersofcellphonesandlaptops,aswellasbusinessesthatrequirehighvolumesofdata.Theenquirycommencedon18September2017andisexpectedtobeconcludedon31August2018.


AtransactionisrequiredtobenotifiedtotheCommissionifit(i)constitutesamerger(asdefinedintheAct);(ii)meetstherelevantthresholds;and


Thelawisactivelyenforced,bothinrespectofmergersandprohibitedpractices(includingabuseofdominance).


TheCommission’sprioritysectorsare(i)foodandagro-processing;(ii)healthcare;(iii)intermediateindustrialinputs;(iv)constructionandinfrastructure;(v)bankingandfinancialservices;(vi)informationandcommunicationtechnology;and(vii)energy.AccordingtotheCommission,thesesectorswereselectedtakingintoaccountSouthAfrica’seconomicpolicies,thevolumeofcomplaintsreceivedinthesectorandmarketfailureswhichtheCommissionhasidentifiedthroughpastinvestigationsandscopingexercises.Bothmergersandprohibitedpracticesinthesesectorsattractclosescrutiny.

AnotherareaofconcernfortheCommissionistheprivatehealthcaresector,inwhichtheCommissionisconductingitsfirstformalmarketenquirytodeterminethefactorsthatrestrictcompetitionandunderlieincreasesinprivatehealthcareexpenditureinSouthAfrica.TheCommissionhasbeenconductingtheenquirythroughaninquisitorialprocessofpublichearingsandthereviewofsecondarymaterialobtainedfrominformationrequests,consultationsandsummons.Theenquiryisledbyapanelcomprisingindustryexperts,undertheleadershipofpanelchairperson,formerChiefJusticeSandileNgcobo.TheenquirybeganinJanuary2014andinNovember2016,theCommission’sprivatehealthenquiryboardreleasedthreereportsinrelationtoitsinvestigationintheprivatehealthcaresector.ThereportshavebeenpublishedontheCommission’swebsiteinordertoprovideinformationtostakeholdersandtesttheanalysisandfindingsbeforeaconclusionisdrawn.Stakeholderswereinvitedtoprovidetheircommentsonthereportby19December2016.Atthetimeofwriting,aconclusivereportoftheenquiryhadnotbeenpublished.

Aseparatemarketenquirywasconductedintotheliquefiedpetroleumgas(LPG)market.LPGhasbeenrecognisedasbeingofstrategicimportanceasanalternativesourceofenergyforSouthAfricabyvariousgovernmentpolicies.Forexample,theNationalDevelopmentPlanalludestoincreasing

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(iii)constituteseconomicactivitywithin,orhavinganeffectwithin,SouthAfrica.ForpurposesoftheAct,a‘merger’occurswhenoneormorefirmsdirectlyorindirectlyacquireorestablishdirectorindirectcontroloverthewholeorpartofthebusinessofanotherfirm,whethersuchcontrolisachievedasaresultofthepurchaseorleaseoftheshares,aninterestorassetsoftheotherfirm,byamalgamationoranyothermeans.Thereisnoclosedlistofhowcontrolmaybeachieved.Broadly,apersoncontrolsanotherfirmifthatperson,interalia:

• beneficiallyownsmorethanone-halfoftheissuedsharecapitalofthefirm;

• isentitledtovoteamajorityofthevotesthatmaybecastatageneralmeetingofthefirm,orhastheabilitytocontrolthevotingofamajorityofthosevotes,eitherdirectlyorthroughacontrolledentityofthatperson;

• isabletoappointortovetotheappointmentofamajorityofthedirectorsofthefirm;

• isaholdingcompany,andthefirmisasubsidiaryofthatcompanyascontemplatedinSection1(3)(a)oftheCompaniesAct;or

• hastheabilitytomateriallyinfluencethepolicyofthefirminamannercomparabletoapersonwho,inordinarycommercialpractice,canexerciseanelementofcontrolreferredtointhefirstfourbulletpointsabove.

TheseexamplescitedintheActarenotaclosedlistofwhatconstitutescontrol.Forexample,theacquisitionofcontroloverabusiness,ortheassetsofabusiness,pursuanttoasaleofbusinessorsaleofassetsagreement,isnotspecificallyenumeratedasaclassofcontrol,butwillalwaysbeacceptedastheacquisitionofcontrolforthepurposesoftheAct.

Thefirstfourbulletpointsabovesetoutwhatarereferredtoasinstancesof‘brightline’or‘legal’control.Thelastbulletpointprovidesacatch-alltotheeffectthatapersoncontrolsafirmifthatperson“hastheabilitytomateriallyinfluencethepolicyofthefirminamannercomparabletothepersonwho,inordinarycommercialpractice,canexerciseanelementofcontrol,”referredtointhefirstfourbulletpoints.Thiscoversinstancesinwhichafirm,withoutacquiringbrightlinecontrol,mayacquiredefactocontrolbybeingabletomateriallyinfluencethepolicyofanotherfirminamannercomparabletoapersonwho,inordinarycommercialpractice,canexerciseanelementofbrightlineorlegalcontrol.

6. What are the thresholds for mandatory merger notification (e.g. assets, turnover and/ or market shares)?

Intheordinarycourse,onlyintermediateandlargemergersrequirepriornotificationandapproval.Intermediatemergersarethosethatmeetthefollowingthresholds:

• thecombinedannualturnoverin,intoorfromSouthAfricaoftheacquiringfirm/sandthetargetfirm/sarevaluedatZAR600millionormore;orthecombinedassetsinSouthAfricaoftheacquiringfirm/sandthetargetfirm/sarevaluedatZAR600millionormore;or

• theannualturnoverin,intoorfromSouthAfricaoftheacquiringfirm/splustheassetsinSouthAfricaofthetargetfirm/sarevaluedatZAR600millionormore;or

• theannualturnoverin,intoorfromSouthAfricaofthetargetfirm/splustheasset/sinSouthAfricaoftheacquiringfirmsarevaluedatZAR600millionormore.

Inaddition,theannualturnoverin,intoorfromSouthAfricaortheassetvalueofthetargetfirm/smustbeZAR100millionormore.

Alargemergerisonewhereoneofthefourcalculationsgivenaboveresultsinafigurethatisequalto,orexceeds,ZAR6.6billionandtheannualturnoverorassetvalueofthetargetfirm/sequals,orexceeds,ZAR190million.Theturnoverandassetsarecalculatedwithreferencetothepreviousfinancialyearoftheparties.

TheActdefinesanacquiringfirmbroadly,referringtotheentiregroupofwhichtheacquirerformsapart,whileatarget(ortransferring)firmisdefinednarrowly,referringtotheactualbusinessbeingacquired.


Partiestoanotifiablemergermaynotimplementthemergerbeforeobtainingtherequisiteapproval.ImplementinganotifiablemergerpriortoapprovalbeingobtainedorfailingtonotifytheCommissionofamergerisacontraventionoftheAct,andexposesthepartiestoadministrativepenaltiesofupto10%ofturnover,aswellaspotentialinjunctionsonimplementation.Penaltieshavebeen


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arrangedwiththeCommissionshortlyafterfiling,whenacaseteamhasbeensetup.


TheActspecificallyprovidesforpublicinterestconsiderationstobetakenintoaccount,inadditiontothebusinessandeconomicefficiencycriteriawhichareusedtoassesstheeffectthatamergerwillhaveoncompetition.AspartoftheassessmentthatthecompetitionauthoritiesarerequiredtomakeintermsoftheAct,theauthoritiesmustdeterminewhetherthemergercanorcannotbejustifiedonsubstantialpublicinterestgroundsbyassessing:

• theeffectthatamergerwillhaveonaparticularindustrialsectororregion;

• employment;• theabilityofsmallbusinesses,orfirms

controlledbyhistoricallydisadvantagedpersons,tobecomecompetitive;and

• theabilityofnationalindustriestocompeteininternationalmarkets.

TheCommissionhasshownconcernforissuessuchasemploymentwithregardtobothmergersandcomplaintsofprohibitedpractices.Insomerecentmergerdecisions,theCommissionhasbeenunwillingtoacceptmerger-relatedjoblosses.

Further,theCommissionhasrecentlyindicatedthatitrequirescertaintyfrommergingpartiesastowhetherjoblosseswilloccurasaresultofamergerornot.Notwithstandingtheabove,inthevastmajorityofcases,competitionargumentsaretheCommission’sfocusandthebasisonwhichdecisionsaremade.However,publicinterestconsiderationsremainsignificant.


TheCommissioncasehandlerappointedtoinvestigateamergercontactsthelargestcustomersandcompetitorsofthemergingpartiesduringthecourseoftheCommission’sreview.Generally,thesepartieswillbeaskediftheyhaveanyconcernswiththeproposedmergerand,ifso,thebasisfortheseconcerns.Shouldtheywishtodoso,thecustomers

appliedbytheauthoritiesforpriorimplementation.Thelevelofpenaltiesappliedhasvaried,dependingonthecircumstances.


FilingfeespayableforalargemergerareZAR500000.FilingfeespayableforanintermediatemergerareZAR150000.Therearenofilingfeespayableforsmallmergers.


TheActappliesto“alleconomicactivitywithinorhavinganeffectwithin”SouthAfrica.However,insofarasthenotificationofmergersisconcerned,thethresholdsarecalculatedinrelationtocombinedturnoverorassetsinrelationtoSouthAfricaonlyandinpractice,notificationisrequiredifacompany’sSouthAfricanassetsorSouthAfrican-derivedturnovermeetsthethresholds.Assuch,theActisapplicabletoforeign-to-foreignmergersonlytotheextentthatthepartieshaveassetsinSouthAfricaorturnovergeneratedin,intoorfromSouthAfrica.TheCommission’sapproachisthatneitherpartyrequiresapresenceinSouthAfricaandthatitwillsufficeifthetargetalonehasturnoverinSouthAfricasoastomeetthethresholds.Arguablythisgoestoofarandisagainstthelegalprinciplethatstatutesdonotapplyextraterritorially.However,sincetheActcameintoeffectin1999,theTribunalhasconsideredandapprovedmanyforeign-to-foreigntransactionsand,asamatterofgeneralpractice,foreign-to-foreignmergers,wherethetargethasasubsidiaryorbusinessactivitiesinSouthAfrica,arenotifiedtotheauthoritiesiftherelevantthresholdsaremet.


Thevastmajorityofmergersarenotifiedwithoutpre-notificationcontacts.However,theCommissionpermitspre-notificationmeetingsandapractitioner’snoticeissuedbytheCommissionmentionsthatifmergingpartieswishtoengageinapre-notificationmeetingtodiscussmergerfilingrequirementsforaspecificproposedmerger,therelevantcontactpersonisthemanageroftheMergersandAcquisitionsDivision.Inpractice,pre-notificationcontactstendtobeheldinrelationtocontentiousmergersonly.Meetingscanalsobe

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andcompetitorsmayclaimconfidentialityinrespectoftheirwrittensubmissionstotheCommission.Theirsubmissionsareinfluential,althoughtotheextentthattheirconcernsarenotrelevanttotheassessmentthattheCommissionisrequiredtomake,theCommissionwillgenerallydisregardsuchinput.ThesubmissionswillneverthelessformpartoftheCommission’srecordandremainonfile.


IntermsofSection13A(2)oftheAct,thepartiestoamergermusteachprovideanon-confidentialversionofthemergernotificationtoanyregisteredtradeunionthatrepresentsasubstantialnumberofitsemployees,ortheemployeesconcernedorrepresentativesofsuchemployees,intheabsenceofaregisteredtradeunion.

TheActrequiresproperserviceonthetradeunionsand/oremployeerepresentatives.Proofofservicemustbesubmittedaspartofthenotification,failingwhichthenotificationwillnotberegardedascomplete.Notably,thetimeperiodfortheCommission’sreviewdoesnotcommenceuntilserviceofthemergernotificationiscomplete.

AnypersonmayvoluntarilysubmitinformationtotheCommissioninrelationtoamerger.However,tradeunionsand/oremployeerepresentativesareaffordedamoreprominentroleinthemergerreviewprocessthanotherthirdpartiesandtheyareentitledbylegislationtoparticipateinmergerproceedings.Atradeunionoremployeerepresentative,uponwhomanon-confidentialversionofthemergerfilingisrequiredtobeserved,maynotifytheCommissionofitsintentiontoparticipateinmergerproceedingswithinfivebusinessdaysafterreceivingnoticeofthemerger.

Inadditiontotherightsoftradeunionsandemployeerepresentativestointervene,anypersonwhohasamaterialinterestinamergermayapplytointerveneinTribunalproceedingsbyfilingaNoticeofMotion.TheNoticeofMotionmustincludeaconcisestatementofthenatureoftheperson’sinterestintheproceedings.AnapplicationtointervenemustbeservedonallpartiestotheproceedingsandtheTribunalisrequiredtodeterminewhetherornotthepersonassertingamaterialinterestispermittedtointervene.

Althoughtradeunionsand/oremployeerepresentativesareaffordedamoresignificantplaceinthemergerreviewprocess,thegovernmentandotherinterestedpartieshaveintervenedincertainsignificantmergercases.


TheActdoesnotrequirethattheCommissiongrantmergingpartiesanopportunitytomakerepresentationsbeforeadecisionisissuedwheretheauthorityintendsto(i)prohibitamergerorimposeconditions(inthecaseofintermediatemergers);or(ii)recommendaprohibitionorconditionalapproval(inthecaseoflargemergers).However,intheordinarycourse,theCommissioncasehandlerappointedtoinvestigatethemergerwillcontactthelegalrepresentativesofthemergingpartiestodiscussanypreliminaryconcernsthattheCommissionmayhaveidentifiedduringitsinvestigation.Intheordinarycourse,theCommissionwouldinvitethemergingparties’legalrepresentativestomakesubmissionsontheconcernsithaswiththeproposedmergerand,ifappropriate,toofferanybehaviouralorstructuralremediestoaddresstheCommission’sconcerns.


TheCommission’sdecisionsmaybeappealedtotheTribunal.TheTribunal’sdecisions,whetheratfirstinstanceorinappealsfromdecisionsoftheCommission,maybetakenonrevieworappealtotheCAC.

TheActmakesitclearthatthepartiestoamerger,interveninggovernmentbodies,tradeunionsandthirdparties(asthecasemaybe)whohaveestablishedthattheyhaveamaterialinterestinthemergerhavearighttoappealthedecisionsoftheTribunal.

TheMinisterofEconomicDevelopmentmayparticipate,intheprescribedmanner,inmergerproceedingsbeforetheCommission,theTribunalortheCAC,inordertomakerepresentationsonanyofthepublicinterestgroundslistedintheAct.AtradeunionoremployeerepresentativemayappealadecisionoftheTribunaltotheCAC,


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providedthatthetradeunionoremployeerepresentativewasaparticipantintheTribunalproceedings.Further,subjecttotheprovisionsoftheActandtherulesoftheCAC,apersonaffectedbyadecisionoftheTribunalmayappealagainst,orapplytotheCACtoreviewtheTribunal’sdecision.Thisallowscompetitors,customersandotherthirdpartiestoappealdecisionsoftheTribunal.

TheissueofwhetherornottheCommissioncanappealaTribunaldecisionhasbeenraisedanddiscussedbythecourts.ThiswasconsideredbytheCACforthefirsttimeinCommission/DistillersCorporation(SA)LtdandStellenboschFarmersWineryGroupLtd.ThemergerhadbeenapprovedbytheTribunalconditionally.TheCACreferredtoSection17oftheAct,whichregulateswhomayappealagainstmergerproceedings,andprovidesthatanappealtotheCACmaybemadeby(i)anypartytothemerger;or(ii)apersonwho,intermsofSection13A(2),isrequiredtobegivennoticeofthemerger,providedthepersonhadbeenaparticipantintheproceedingsoftheTribunal.Section13A(2)relatestotheregisteredtradeunionsrepresentingasubstantialnumberofemployeesoftheacquiringortargetfirms,ortheemployeesconcernedorarepresentativeoftheemployeesconcerned,iftherearenosuchregisteredtradeunions.TheCACnotedthatitisclearfromthiswordingthatonlytwocategoriesofpersonsarepermittedintermsoftheActtoappealagainstdecisionsbytheTribunalinmergerproceedingsandthattheCommissiondoesnotfallwithineitherofthesecategories.

TheCommissionhadreliedonSection61(1)oftheAct,readwithSection37(1)(b)(i).TheCACstatedthatSections61(1)and37oftheActshouldnotbereadasalteringorderogatingfromtheprovisionsofSection17inrespectofappealsagainstTribunalmergerdecisions.ItfollowsthatthecategoriesofpersonswhichmayappealagainstTribunalmergerdecisionsarethoselimitedcategoriesspecificallysetoutinSection17(1)andnottheclassof‘affected’personsreferredtoinSection61(1).

Thepartieswhomayparticipateinmergerproceedingsare(i)anypartytothemerger;(ii)theCommission;(iii)anypersonwhowasentitledtoreceiveanoticeintermsofSection13A(2)andwhoindicatedtotheCommissionanintentiontoparticipate,intheprescribedmanner;(iv)theMinisterofEconomicDevelopment,iftheministerhasindicatedanintentiontoparticipate;and(v)any

otherpersonwhomtheTribunalhasrecognisedasaparticipant.TheCACfoundthatnotalltheseparticipantsmayappealagainstadecisionoftheTribunal.ThosewhomayappealarespecificallyreferredtoinSection17(1)oftheAct.TheCACheldthattheomissionoftheotherparticipantsisclearlyindicativeofthelegislature’sintention.

ThereremainsuncertaintyastotheCommission’spositioninrespectofappeals.InthePioneerHi-Bred/PannarSeedmerger,whichwasprohibitedbyboththeCommissionandtheTribunal,themergingpartiesappealedtheTribunal’sdecisiontotheCACandtheCACoverturnedtheTribunal’sprohibition,approvingthemergersubjecttoanumberofconditions.However,in2012,theCommissionfileditsleavetoappealagainsttheCAC’sdecision.TheSCA,however,deniedtheCommission’sapplicationforleavetoappeal.


Thelegislationdoesnotspecificallyrefertojointventures.JointventuresthatareclassifiedasmergersfalltobenotifiedtotheCommissioniftheymeetthethresholdsformandatorynotificationand,iftheyfallbelowthethresholds,mayinanyeventbenotifiedvoluntarily.TheCommissionhaspublishedanon-bindingpractitioners’notetohelpdeterminewhetherajointventureshouldbenotified.Totheextentthatajointventureisnotamerger,theprohibitedpracticesprovisionsoftheActmayneverthelessapply.


TheActregulatesprohibitedpracticesandspecificallyprohibitscertainhorizontalrestrictivepractices(unlawfulconductbetweencompetitors).TheActprohibitsprice-fixing(eitherdirectorindirect,andwhichmayrelatetoapurchaseorsellingpriceoranyothertradingcondition);dividingmarkets(byallocatingcustomers,suppliers,territories,orspecifictypesofgoodsorservices);andcollusivetendering.

TheCommissionhasprosecutedfirmsacrossawiderangeofindustriesforengagingincartelconduct,includingtheconstruction,cement,concrete,bread,milling,glassandairlineindustries.

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Chapter5:PartBoftheActconfersbroadinvestigativepowersontheCommission,includingthepowertosummonanypersonwhoisbelievedtobeabletofurnishinformationortobeinpossessionorcontrolofanyinformation,documentorobjectthatmayassisttheCommissioninperformingitsfunctions.Apersonwhoissosummonsedisrequiredtoanswereachquestiontruthfullyandtothebestofthatperson’sabilityexcepttotheextentthatansweringanyonequestionmaybeself-incriminating.Intheordinarycourse,theCommissionrequiresthatapersonwhohasbeenrequestedtoappearbeforeitforquestioning,orwhohasbeensummoned,providehisorherresponsesunderoath.

TheCommissionalsohasbroadpowersofsearchandseizureandhasconductedanumberofdawnraids.Sections46and47oftheActauthorisetheCommissiontoenterpremises(withorwithoutawarrant,respectively)forthepurposeofconductingasearchandseizureoperation.TheCommissionisnotrequiredtonotifythepersoninpossessionorcontrolofthepremisestobesearchedpriortoobtainingasearchwarrantorpriortoarrivingatthepremises.Intheordinarycourse,theCommissionconductssearchandseizureoperationsonasurprisebasisandhasconducteddawnraidsoncompaniesinvariousindustries,includingcement,furnitureremoval,scrapmetal,tyres,LPG,vehicleglass,particleboard,fibreboard,packagingmaterial,cargoshipping,edibleoilsandmargarine.


Cartelconductisperseunlawfulandafirmengagingincartelconductisexposedtoapenaltyforafirstinfringement.TheCommission’spursuitofcartelsisvigilant.Administrativepenaltiesofupto10%ofturnovermaybeimposedonthefirmconcerned.TheCommissionhasinplaceacorporateleniencypolicy(theCLP)forcartelwhistleblowers.UndertheCLP,aself-confessingcartelmember(CLPapplicant)canobtainimmunityfromprosecutionforitsinvolvementincartelactivity.

Whereanapplicationismadeforleniency,theCLPapplicantmustco-operatefullywiththeCommissioninordertobenefitfromtheleniencypolicybyprovidingtheCommissionwithallinformationinrespectofthecartel,includinginformationaboutthoseinvolved.OncetheCommissionreceivesanapplicationforleniencyitwillinitiateaninvestigationand,inconductingitsinvestigation,maysubpoenaanypersonforquestioning.

TheActprovidesforcriminalliabilityofdirectorsandotheremployeeshavingmanagementauthoritywheretheyhavecausedthecompanytoengageincartelconductorwheretheyhaveknowinglyacquiescedtotheconduct.


Yes.IntermsofSection10oftheAct,andSchedule1PartAoftheAct,afirmmayapplytotheCommissionforexemptionfromtheapplicationofChapter2oftheAct,whichdealswithprohibitedpractices.Thecircumstancesinwhichexemptionsmaybegrantedarelimited.IntermsofSection10oftheAct,theCommissionmaygrantanexemptioniftheagreementorpracticeconcernedcontributesto(i)themaintenanceorpromotionofexports;(ii)thepromotionoftheabilityofsmallbusinesses,orfirmscontrolledbyhistoricallydisadvantagedpersons,tobecomecompetitive;(iii)changeinproductivecapacitynecessarytostopdeclineinanindustry;or(iv)theeconomicstabilityofanindustrydesignatedbytheMinisterofEconomicDevelopmentafterconsultingtheministerresponsibleforthatindustry.Further,anyrestrictionimposedonthefirmsconcernedbytheagreementorpracticemustberequiredtoattaintheobjectiveinquestion.IntermsofSchedule1PartAoftheAct,tradeassociationsmayapplytotheCommissionforexemptionif,havingregardtointernationallyappliednorms,anyrestrictioncontainedintherulesoftheassociationsisreasonablyrequiredtomaintainprofessionalstandardsortheordinaryfunctionoftheprofession.Exemptionapplicationsarepermittedforbothagreementsandconductandmaybegrantedconditionallyorunconditionally.


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Minimumresalepricemaintenanceisperseunlawful.Section5(2)theActspecificallyprovidesthat“thepracticeofminimumpricemaintenanceisprohibited”.Section5(3)oftheActprovidesthatdespitesection5(2),asupplierorproducermayrecommendaminimumresalepricetothere-sellerofagoodorservice,providedthat(i)thesupplierorproducermakesitcleartothere-sellerthattherecommendationisnotbinding;and(ii)iftheproducthasitspricestatedonit,thewordsrecommendedpricemustappearnexttothestatedprice.


WithintheframeworkoftheAct,exclusiveagreementstypicallyfallwithintheambitofSection5,whichappliestoagreementsbetweenpartiesinaverticalrelationship(i.e.afirmanditscustomers,itssuppliers,orboth).Section5(1)prohibitsagreementsbetweenpartiesinaverticalrelationshipiftheagreementhastheeffectofsubstantiallypreventingorlesseningcompetitioninarelevantmarket,unlessthepartiestotheagreementcanshowtechnological,efficiencyorotherpro-competitivegainsoutweightheanti-competitiveeffect.Whereanexclusiveagreementhasananti-competitiveeffect,factorstypicallyrelevantinassessingthelawfulnessoftheagreementincludethedurationoftheagreement,thedegreeofforeclosureresultingfromtheagreementandthelevelsofconcentrationinthemarket.

Inaddition,whereoneofthepartiesisdominantintherelevantproductmarket,exclusivearrangementsmayalsofalltobeinvestigatedundertheabuseofdominanceprovisionsoftheAct,particularlyiftheexclusivearrangementconstitutesan‘exclusionaryact’.Anexclusionaryactisdefinedasanactthatimpedesorpreventsafirmenteringinto,orexpandingwithin,amarket.


TheActprohibitstheabuseofadominantposition.Afirmisconsideredtobedominantinamarketif(i)ithasatleast45%ofthatmarket;(ii)ithaslessthan35%ofthatmarket,buthasmarketpower(asdefinedintheAct)or(iii)ithasatleast35%butlessthan45%ofaparticularmarket,unlessitcanshowthatitdoesnothavemarketpower.‘Marketpower’isdefinedintheActasthepowerofafirmtocontrolprices,ortoexcludecompetitionortobehavetoanappreciableextentindependentlyofitscompetitors,customersorsuppliers.

TheActincludesperseprohibitionswhichpreventadominantfirmfrom(i)charginganexcessiveprice(asdefinedintheAct)tothedetrimentofconsumers;or(ii)refusingtogiveacompetitoraccesstoanessentialfacility(asdefinedintheAct)whenitiseconomicallyfeasibletodoso.

Withregardtoprohibitionsthatarenotperseunlawful,adominantfirmisprohibitedfromengaginginanyexclusionaryact(asdefinedintheAct)iftheanti-competitiveeffectofthatactoutweighsitstechnological,efficiencyorotherpro-competitivegain.

Further,theActprohibitsafirmfromengaginginthefollowingexclusionaryacts,unlessthefirmcanshowtechnological,efficiencyorotherpro-competitivegainsthatoutweightheanti-competitiveeffect:

• requiringorinducingasupplierorcustomertonotdealwithacompetitor;

• refusingtosupplyscarcegoodstoacompetitorwhensupplyingthosegoodsiseconomicallyfeasible;

• sellinggoodsorservicesonconditionthatthebuyerpurchasesseparategoodsorservicesunrelatedtotheobjectofacontract,orforcingabuyertoacceptaconditionunrelatedtotheobjectofthecontract;

• sellinggoodsorservicesbelowtheirmarginaloraveragevariablecost;

• buying-upascarcesupplyofintermediategoodsorresourcesrequiredbyacompetitor;and

• discriminatingbetweenpurchasersinrelationtoequivalenttransactionsofgoodsorservicesoflikegradeandquality.

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AnexampleofanabuseofdominancecaseinthetelecommunicationsectoristhatfollowingacomplaintbytheSouthAfricanVANSAssociation(SAVA)againstSouthAfrica’sincumbenttelecommunicationscompany,TelkomLtd(Telkom).Afterinvestigatingthecomplaint,theCommissionfoundthatTelkomhadabuseditsmonopolypositioninthefixedlinetelecommunicationmarketbyexcludingcompetingvalue-addednetworkservice(VANS)providersfromthedownstreamVANSmarket.TheTribunalsupportedtheCommission’sfindingand,in2012,ruledthatTelkom’spracticesofi)refusingtosupplyaccesstoessentialfacilitiestoindependentVANSproviders;ii)inducingcustomersnottodealwiththem;iii)chargingcustomersexcessivepricesforaccessservices;andiv)discriminatinginfavourofitsowncustomersbygivingthemadiscountondistance-relatedchargeswhichitdidnotadvancetocustomersoftheindependentVANSproviders,constitutedanabuseofdominance,whichresultedinasubstantiallesseningandpreventionofcompetitionintheVANSmarket.

TheTribunalfoundthatthepracticaleffectofTelkom’sstrategyofnotcompetingonmeritwiththeindependentVANSprovidersbutclaiminginsteadthattheindependentVANSproviderswereconductingbusinessillegallyandtherebyjustifyingitsactionsoffreezingtheirnetworks,impededthegrowthofTelkom’scompetitorsandretardedinnovationinthemarket.Theharmtocompetitionwaslikelytobeexacerbatedinanindustrycharacterisedbynetworkeffects.Further,theTribunalagreedwiththeCommissionthatTelkomhadrefusedtosupplyessentialfacilitiestoindependentVANSprovidersandhadinducedcustomersnottodealwiththem.


AnumberofabuseofdominancecaseshavebeenadjudicatedbytheSouthAfricancompetitionauthorities.Forexample,in2001,NationwideAirlineslodgedacomplaintagainstSouthAfricanAirways(SAA).Afterinvestigatingthecomplaint,theCommissionfoundthatSAAwasabusingitsdominantpositionandreferreditsfindingstotheTribunal.In2005,theTribunalruledthatthetwoincentiveschemesthatSAAhadusedtocompensatetravelagentsfortheirservicesprovidedacompellingcommercial

incentivefortravelagenciestosellSAAticketsinpreferencetothoseofitsrivals,andthatSAA’sExplorerscheme—asystemofrewardingtravelagencystaffwithSAAticketsonthebasisofthenumberofSAAticketstheysold—reinforcedtheexclusionaryeffectsoftheincentiveschemes.TheTribunalconcludedthatthepracticaleffectoftheincentiveschemeswastoinducesuppliersnottodealwithSAA’scompetitorsandSAAwasfinedZAR45millionfortheabuseofitsdominantposition.

IntheTelkomcasereferredtoabove,TelkomwasfinedZAR449millionfortheabuseofitsdominantpositionbetween1999and2004,whenitwasamonopolyprovideroftelecommunicationsservices.

Ina2015decisionbytheCAC,theCACupheldanappealbySasolChemicalIndustriesLtd(SCI)againstadecisionbytheTribunalthatSCIhadchargedexcessivelyforpropyleneandpolypropylenebetween2004and2007.

Duringthecourseof2010,theCommissionhadpursuedSCIbeforetheTribunalforallegedexcessivepricingintwoverticallyrelatedmarketsoveraperiodoffouryearsfromJanuary2004toDecember2007.TheCommissionallegedthatSCIhadchargedexcessivepricestodomesticcustomersofpurifiedpropyleneandpolypropyleneincontraventionofSection8(a)oftheActwhichprovidesthat“[i]tisprohibitedforadominantfirmto—(a)chargeanexcessivepricetothedetrimentofconsumers”.TheTribunalfoundthatSCIhadcontravenedSection8(a)oftheActinthat:

“[i]npurifiedpropyleneithasbeenabletochargeitsonlycustomer,Safripol,acompetitorinthedownstreampolypropylenemarket,apricethatcounter-intuitivelyincreaseswithincreasesinvolumeandhasalsobeenabletorestrictthemonthlyvolumeofthelowerpriced‘Tier1’purifiedpropylenesoldtoSafripol.Inthepolypropylenemarket,SCIhassegmentedthemarketbetweenthehigh-pricedlocal(domestic)andthelower-pricedexportmarketbysellingexportsonadeliveredbasis,thuspreventingarbitrageinthedomesticmarketbyre-entryofitscheaperpolypropylene".


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TheTribunalfoundthatSCI’sexcessiveprices,maintainedbyanexerciseofmarketpowerbySCI,resultedinamissedopportunityforinnovationanddevelopmentforthedomesticmanufactureofdownstreamplasticgoods.Cheaperpolypropylenepricesforlocalplasticconverterscouldenhancelocalproductiontherebyenablingthemtocompetemoreeffectivelywithimportedfinalplasticproducts,manufacturelocallyratherthanoverseasandintroducenewproductstoSouthAfricanconsumers.

TheTribunalsentencedSCIasfollowsforitscontraventionsrelatingtopurifiedpropylene:

• SCIwasrequiredtopayanadministrativepenaltyofZAR205.2million;

• SCImaynotdiscriminatebetweenthepurifiedpropylenepricechargedinternallywithinSasolandthepricechargedtothird-partycustomers;and

• SCIandtheCommissionmustsubmitaproposedpricingremedytotheTribunalwithin90daysofthedecisionoftheTribunal.

Inrelationtopolypropylene,SCIwassentencedasfollows:

• SCIwasrequiredtopayanadministrativepenaltyofZAR328.8million;and

• SCIwasrequiredtosellpolypropyleneonanex-worksbasiswithoutdiscriminatinginpricebetweenanyofitscustomersnomatterwheretheyarelocated.

InJune2015,theCACpublisheditsjudgmentinwhichitupheldSCI’sappealagainsttheTribunal’sdecision.

Inreachingitsdecision,theCACemphasised:

• thateveryexcessivepricingcasewouldhavetobedeterminedonitsownfacts;

• asthefactsoftheappealdifferedsignificantlyfromtheMittaldecision,theappropriatetestwasnotwhetherornotthepricewasexcessive,butrathertheproductioncosttoSCI;and

• ifthecostofanessentialcomponentoftheproduct,whosepricesareunderscrutiny,canbejustifiedonrationalgrounds,thisshouldbetheyardstickagainstwhichthecomplaintisassessed.

TheCommissionsoughtleavetoappealtheCAC’sdecisiontotheConstitutionalCourt.However,inNovember2015,theCommission’sapplicationwasdismissedbytheConstitutionalCourt.

MorerecentandongoingabuseofdominancecasesincludeinvestigationsintheconstructionsectorwheretheCommissionhasinitiatedcomplaintsagainstAfrimatLtdanditssubsidiaryforallegedexcessivepricingofclinkerashaggregate,BlurockQuarries(Pty)LtdandProconPrecastCCforallegedabuseofdominanceinthesupplyofcrusherdustandthemanufactureandsupplyofbricksandblocks.AcomplainthasalsobeeninitiatedagainstTransnetSOCLtdforallegedexcessivepricingandpricediscriminationintheprovisionoffreightrailservicesandexcessivepricingintheprovisionofportservices.TheCommissionalsoallegesthatTransnethasengagedinexclusionaryconductintheprioritisationofcargoandberthingatportterminals.


Yes.Conductwhichisunlawfulattractsapenaltyforafirstinfringement.Conductwhichisnotperseunlawfulissubjecttoa‘ruleofreason’analysis,intermsofwhichtheanti-competitiveeffectsofafirm’sconductareweighedupagainstthepro-competitivegainsandthelattermustbegreaterthan,andoff-set,theanti-competitiveeffects.Conductwhichisnotperseunlawfulattractsapenaltyonlyforarepeatofconductinrespectofwhichthefirmwaspreviouslyfoundguilty.TheTribunalmayimposeanadministrativepenaltyonfirmsfortheabuseofadominantpositionwhichmaynotexceed10%ofthefirm’sannualturnoverinSouthAfricaanditsexportsfromSouthAfricaduringthefirm’sprecedingfinancialyear.


Yes.However,pricediscriminationisprohibitedonlywhereafirmisdominantinarelevantmarketandonlywherespecificcriteriaareestablished.Section9oftheActsetsouttheelementsofprohibitedpricediscrimination,aswellas

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certainjustificationsthatmayberelieduponbyadominantfirm,evenwherealltheelementsofprohibitedpricediscriminationarepresent.

Inordertoestablishthatadominantfirm’sactionsconstituteprohibitedpricediscrimination,theCommission(oracomplainant,asthecasemaybe)isrequiredtoshowthattheconduct:

• relatestothesale,inequivalenttransactions,ofgoodsorservicesoflikegradeandqualitytodifferentpurchasers;or

• islikelytohavetheeffectofsubstantiallypreventingorlesseningcompetition;and• involvesdiscriminatingbetweenthose

purchasersintermsofthepricecharged;• anydiscount,allowance,rebateorcredit

givenorallowed;• theprovisionofservicesinrespectof

thegoodsorservicesinquestion;or• thepaymentforservicesprovidedin

respectofthegoodsorservices.

Wherethesecriteriaaremet,certainjustificationsmayneverthelessberaisedbythedominantfirmasadefencetotheallegationofunlawfulpricediscrimination.Specifically,thedominantfirm’sconductwillnotbeunlawfulifthefirmcanestablishthatthedifferentialtreatment:

• makesonlyreasonableallowancefordifferencesincostorlikelycost;

• isconstitutedbydoingactsingoodfaithtomeetapriceorbenefitofferedbyacompetitor;

• isinresponsetochangingconditionsaffectingthemarketforthegoodsorservices,including:• anyactioninresponsetoactualorimminent

deteriorationofperishablegoods,• anyactioninresponsetotheobsolescence

ofgoods;• asalepursuanttoaliquidationor

sequestration;or• asaleingoodfaithindiscontinuance

ofbusinessinthegoodsorservicesconcerned.


TheTribunal’sdecisionsareavailableonitswebsite(www.comptrib.co.za).TheCommissionisthedecision-makerinrespectofintermediatemergersandisrequiredbylawtopublishintheGovernmentGazettereasonsfortheprohibitionorconditionalapprovalofmergers.InformationismadepubliclyavailableontheCommission’swebsiteinrespectofmergersthathavebeennotifiedtotheCommission.Italsopublishesmediastatementsinrespectofsignificantdecisionsandotherdevelopmentsonitswebsite.

TheCommission’swebsiteiswww.compcom.co.za


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HENWOOD & COMPANY

John Earl Henwood

Swaziland

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TherelevantcompetitionlegislationistheCompetitionAct,8of2007andtheCompetitionCommissionRegulationsof2010,promulgatedintermsoftheAct.TheActandtheRegulationscameintoforceon1April2008andJune2010,respectively,andareenforcedbytheSwazilandCompetitionCommission(theComission)andtheHighCourtofSwaziland.


TherearenoproposedamendmentstotheAct,noraretherenewRegulationswhichareeitherbeingdebatedbyParliamentorexpectedtocomeintoforce.However,theCommissionhasdevelopedExternalMergerGuidelines,availableontheCommission’swebsite(www.compco.co.sz),toamplifywhatisprovidedintheActandRegulationsaswellastogiveapracticalperspectiveonwhatisrequiredofpartieswhensubmittingmergernotificationstotheCommission.ThereisanewCartelConductandCorporateLeniencyPolicythathasbeenadoptedbytheCommissionandisnowinforce.ThepolicyhasnotbeentestedorchallengedinCourtorappliedonapracticalcasebytheCommission.

TheCommissionhasindicatedthattherewillbeanamendmenttotheActinordertodoawaywithanumberofconflictingprovisions.TheseprovisionshavebeenhighlightedinapaperpublishedbytheCommissiontitled:DomesticationoftheCOMESACompetitionRegulationsbyAmendingtheSwazilandCompetitionActof2007andAssociatedCompetitionRegulationsNoticeof2010(thePaper).

InthePaper,theCommissionrecognisedthatanumberofamendmentshadtobeeffected

inaccordancewiththeCOMESARegulationsstartingwiththeneedtoamendanumberofdefinitions,includingthedefinitionof:

i) Jointventure;ii) Merger;iii) Dominantposition;iv) SecretariatandCommission;v) Person;andvi) Enterprise

ThePaperalsorecognisesthattheActandRegulationsthereofdonotexplicitlyconsiderjointventuresastransactionsthatmayaffectcompetitionasthoseareknowntohavecompetitiveconsequences.

Proposalsinthepaperalsorelatetointellectualproperty,andhowsuchshouldnotbewhollyexemptfromtheAct’sapplication,thatthelegislationshouldbebroadenedsothatconfidentialinformationisalsocoveredoutsideofthemergercontext,thatpricefixingandothercartelbehaviourshouldbedeemedillegalwithoutextrinsicproofofanysurroundingcircumstancessuchaslackofscienter(knowledge)orotherdefencesandwithoutanyneedfordiscussionofeconomiceffect.

ThePaperalsoseekstorecognisetheeffectoflackofthresholdsinSwazilandasthatislikelytoaffectinvestmentintheKingdom,andalsothatthefinesthatmaybeimposedundertheActarenotlikelytoproducethedesiredeffect.Theauthorshaveproposedthatafinebeimposedandcalculatedfromthedateonwhichthetransactionisimplemented.

ThePaperismerelyaproposalofchangestotheActanddoesnotentailthatthechangeswillbeeffectedasproposed.


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andenforcementofmergercontrol,curtailmentofcartelsandabuseofdominanceaswellasotheranti-competitivepracticesprohibitedundertheAct.Thedocumentsetsout,interalia,aproposedstrategythattheCommissionintendstoadoptinidentifyingprioritymarketsthatrequiretheCommission’sinterventioninordertoensuretheprotectionofconsumerwelfare.


AtransactionisrequiredtobenotifiedtotheCommissionifit(i)constitutesamerger(asdefinedintheAct);and(ii)constituteseconomicactivitywithin,orhavinganeffectwithin,Swaziland.Currently,therearenothresholdsinplace,whichmeansthatanyacquisitionofcontrol,includingrestructuringandre-organising,thatfallswithinadefinitionofamergermustbenotified.However,theCommissionhasstatedthatthereisnoneedtonotifyatransactionwhereneitherpartyhasapresenceinSwaziland.

ForthepurposesoftheAct,a‘merger’isdefinedastheacquisitionofacontrollinginterestin:

• anytradeinvolvedintheproductionor distributionofanygoodsorservices;or

• anassetwhichis,ormaybe,utilisedfororinconnectionwiththeproductionordistributionofanycommodity.

TheActdoesnotdefinewhatacontrollinginterestis,buttheRegulationsprovidethatapersonwillbedeemedtohaveacontrollinginterestifthatperson:

• beneficiallyownsmorethanone-halfofthevotingrightsand/ormorethanhalfoftheeconomicinterestofthetargetfirm;

• isentitledtovoteamajorityofthevotesthatmaybecastatageneralmeetingofthefirm;

• isabletoappointorvetotheappointmentofamajorityofthedirectorsofthefirm;or

• hastheabilitytoexercisedecisiveinfluenceoverthepoliciesofthefirmanditsstrategicdirection.

Anyoftheaboveelementsqualifiesasacontrollinginterestandwillthereforeconstituteanotifiablemergerandcapturehorizontal,verticalandconglomeratemergers.Atransactionconstitutingajointventure,saleofbusinessoranyotherarrangementwhichresultsintheacquisitionofdefactoordejurecontrolofafirm,constitutesanotifiablemerger.


CompetitionlawenforcementisveryrobustatpresentinSwaziland.SincetheappointmentofthefirstBoardofCommissionersin2008,theCommissionhasdevelopeditsownpoliciesandguidelinessuchastheExternalMergerGuidelines,LeniencyPolicy,guidanceonmarketenquiries,SCCInternationalguidelines—complaintsandinvestigations,andcontinuestodevelopitselfinlinewithregionalandinternationalbestpracticeincompetitionenforcementandpolicy.Eachyear,theCommissionrecordsasignificantincreaseinthenumberofmergernotificationsreceivedvaryingbothinsizeandcomplexity.

EnforcementisatitspeakwithtwomatterstakenuptotheHighCourt(NgwaneMills(Pty)LtdvSwazilandCompetitionCommissionandOthers:HighCourtCivilCaseNo.2589/2011)andtheSupremeCourt(EaglesNestandFiveOthersvSwazilandCompetitionCommissionandAnother:SupremeCourtCaseNo.1/2014)levelwherecompetitionlawandpolicyhavebeenchallenged.Inbothcases,theCommissionhasbeensuccessfulindefendingitsapplicationandinterpretationofthecompetitionlawsinSwaziland.


GenerallytheCommissiondoesnotmakeknowntothepublicitspriorityareas;however,theydofromtimetotimeinformthepublicofcertainsectorsthatareunderinvestigation.Therehavebeeninvestigationsinthemedicalandhealthsectorswithparticularreferencetomedicalaidschemes,theinsurancesectorwithspecificreferencestoexclusivityclauses,aswellasthepoultryandanimalfeedmillingindustries.

Theseinvestigationshavebeeninstitutedfromanumberofdifferentavenuesrangingfromconsumercomplaints,competitorsandindustryplayerstogeneralpublicconcerns.ItisdifficulttoascertainhowfartheseinvestigationshavebeencarriedoutinlightofthefactthattheCommissiondoesnotissueclearandconcisereportsinthatregard.

TheCommissionhas,however,entrencheditspositiononexclusivityclausesasexpoundedintheAct.TheCommissionpublishedadocumenttitledGuidanceonMarketEnquiriesinFebruary2015togiveinternalstakeholderssomeguidanceonhowtheCommissionconductsmarketenquiries,inordertocomplementtheCommission’sfunction

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TheActandRegulationscouchthedefinitionofamergerinwidetermswiththeresultthatanyeconomicactivitywhichfallswithinthedefinitionofamergerwithinthecountry,orhavinganeffectinthecountry,requirespriornotificationtoandapprovaloftheCommission.Therearecurrentlynofinancialthresholdsinplace.


PartiestoanotifiablemergermaynotimplementthemergerbeforeobtainingtherequisiteapprovaloftheCommission.AnimplementationofanotifiablemergerpriortoobtainingapprovalfromtheCommissionisviewedasaseriouscontraventionoftheActandanypartyfoundtohavesocontravenedtheAct,attractspenalandcriminalsanctionsofafinenotexceedingSZL250000,orimprisonmentforatermnotexceedingfiveyears,orboth.

TheActfurtherprovidesthatwheretheoffenceiscommittedbyabodycorporate,everydirectorandofficerofsuchbodycorporateor,ifthebodyofpersonsisafirm,everypartnerofthatfirm,shallbeguiltyofthatoffence,providedthatsuchdirector,officerorpartnershallnotbeguiltyoftheoffenceifheorsheprovesonabalanceofprobabilitiesthatsuchoffencewascommittedwithouthisorherknowledgeorconsentor,thatheorsheexercisedallduediligencetopreventtheoffence.Theliabilityextendstoagentsorattorneysrepresentingthecorporateentitiesinthetransaction.

TheCommissionnowadoptsastrictapproachtowardsentitiesthatimplementnotifiabletransactionswithoutthepriorapprovaloftheCommissionandinadditiontoissuingademandfornotificationtotheentities;theCommissionfurtherimposesafineagainsttheentitiesinaccordancewithSection35(1)oftheCompetitionAct.


Thefilingfeeforamergerisbasedonthevalueofthecombinedannualturnoverorassetsofthemergingenterprises.Forthepurposesoffees,mergersfallintotwocategories:small

andlarge.Asmallmergerisonewheretheparties’combinedassetsorturnoverisvaluedatSZL8millionorless.Smallmergersarenotifiablebutareexemptfromthepaymentofnotificationfees.IntermsofArticle11oftheRegulations,thefilingfeeforallothermergersbetweenentitieswhoseassetsorrevenueoverSZL8millionis0.1%ofthecombinedannualturnoverorassetsoftheentities,whicheverisgreater,accordingtoArticle11(8)oftheCompetitionRegulations,2010.

Putdifferently,theRegulationsdonotenvisagethecombinationoftheannualturnoverofonefirmandtheassetsoftheotherfirmtodeterminethefilingfee.TheamountchargedfornotificationofamergeriscappedatSZL600000foranysinglemergernotified.


Ifaforeign-to-foreignmergerconstituteseconomicactivitywithinorhavinganeffectwithinSwaziland,notificationisrequired.IntermsoftheRegulations(Regulation21),themergingpartiesarerequiredtoring-fencethetransactionandsetoutintheirfilinghowtheirinterestinSwazilandwillbeinsulatedfromtheimplementationoftheworldwidetransaction.TheyarealsoexpectedtomakelegallyenforceableundertakingsthatwillensurethattheirinterestinSwazilandwillnotbeaffectedbytheclosingofthetransactioninotherjurisdictions.Thering-fencingprocedureisnotpersedoneinapplicationformrequestingauthorisationfromtheCommissiontoring-fence.Rather,itismoreofaninformativepositioncommunicatedtotheCommissionbythepartiesfornotice.


TheCommissionhasadoptedandencouragespre-notificationmeetings,thepurposeofwhichisfirstlytoguidethepartiesonthefilingwherethepartiesseeksuchdirection;andsecondly,toascertainifalltherequirementsoftheActandRegulationshavebeencompliedwithbythenotifyingpartiesbeforetheCommissionacceptsthefilingandsignsaCompletenessofFilingform(Form6,oranaffidavit,asprovidedforinRegulation24)withtheappointedrepresentativeoftheparties.Thereisnoobligationonthepartiestoholdapre-notificationmeetingforguidance,


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atanytimebeforetheconclusionofthemergerinvestigation.Regulation26alsoprovidesforthird-partyinterventions,whichmaybemadeorallyorinwriting.Onrareoccasions,employeesofthemergingentitiesareallowedtomakesubmissionsontheproposedmergerand,ifvalidemploymentconcernsarise,theLabourCommissionisrequiredtointerveneandlookintothese.


Regulation28makesprovisionfororalhearings.Apartytoamergermayrequestanoralhearingaftertheinvestigatorhasfinalisedthereportonthemergerinvestigation,butbeforetheCommissionhastakenadecisiononthemerger.


Section40oftheActprovidesthatapartywhoisaggrievedbythedecisionoftheCommissionmadeundertheActortheRegulationscanappealtotheHighCourt.IntermsoftheConstitutionofSwaziland,theHighCourtisempoweredtoreviewdecisionsoftheCommission.Theappealmustbelodgedwithin30daysofserviceofnoticeofthatdecisiontotheparty.AnappealagainstadecisionoftheCommissiondoesnotautomaticallystaythedecisionoftheCommissionunlesssuchstayisgrantedbytheHighCourt.


TheCompetitionActisnotclearaboutjointventures;however,transactionsconstitutingajointventure,saleofbusinessoranyotherarrangementwhichresultsintheacquisitionofdefactoordejurecontrolofafirm,constitutesanotifiablemerger.Accordingly,theActcoversallagreementsorarrangementsbetweenpartiesinaverticalmerger,suchas:

• jointventures;• distributionarrangements;• franchiseagreements;and• exclusivesupplyarrangements.

butitisnowmandatorytomeetwiththeCommissionandsigntheCompletenessofFilingformbeforetheCommissionwillacceptthatatransactionhasbeennotified.


WhiletheCommission’sfocusisonanti-competitivepracticeswhichhave,astheirobjectoreffect,theprevention,restrictionordistortionofcompetitiontoanappreciableextentinthecountry,non-competitionfactorsarerelevant.TheCommissionhaspreviouslyconsideredissuesofpublicinterestandpolicysuchasemployment(i.e.whetherornottheemployeeswillberetainedbythemergedentity)andtechnologicalbenefits,whenconsideringwhetherornottoapproveamerger,withorwithoutconditions.


InPart4ofForm3,inwhichthepartiesarerequiredtosubmitanotificationofatransaction,theCommissionrequiresfromeachoftheparties,alistoftheirfivelargestcustomersandtheircontactdetails.TheCommissioncontactsthesecustomerstorequesttheirsubmissionsregardingtheproposedtransactionwhicharetakenintoconsiderationinsofarastheyarerelevanttoanycompetitionconcernsthattheCommissionmayneedtolookintoinassessingwhetherthetransactionshouldbeapprovedwithoutconditions,withconditions,orprohibitedaltogether.TheCommissionmayalsocontactcompetitorsormarketplayersforinformationwhichmayormaynotbetakenintoaccountdependingonitsnatureandrelevance.


Regulation22providesthatanyperson,includingapersonnotinvolvedasapartyinaproposedmerger,mayvoluntarilysubmitanydocument,affidavit,statementorotherrelevantinformation

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TheAct,atSection30(5),specificallyliststhefollowingasprohibitedconduct:

• pricefixing;• collusivetendering;• bid-rigging;• marketandcustomerallocationagreements;• salesorproductionquotaallocation

arrangements;and• anycollectiveactiontoenforcearrangements.

TheCommissionhasnotinthepastconductedanyinvestigationsoncartelconduct.ItsCartelConductandCorporateLeniencyPolicyhasbeenfinalisedandpublished.


TheActconfersbroadinvestigativepowersontheCommission,includingpowersofentryandinspection(dawnraid)tosearchforinformationinrelationtocartelconduct.TheCommissionmayalso,forthepurposesofcarryingoutitsfunctions,summonandexaminewitnessesandcallforandexaminedocuments,hearoralevidence,andcalluponanycompanytoprovideinformationinrelationtoanindustryunderinvestigation.Thishastobedoneunderanissuedsearchwarrant.Furthertothesepowers,thenewleniencypolicylaysoutconditionsprecedenttoagrantofimmunitytoapartyinvolvedincartelconductaswellasrequirementsthatmayqualifythatpartyforareducedpenalty.ThishasyettobeexercisedinSwaziland.


AnyconductthatisincontraventionoftheActattractscriminalandpenalliabilityofafineofSZL250000orimprisonmentnotexceedingfiveyears,orboth.Cartelconductfallswithinsuchprohibitedconduct.

TheActfurtherprovidesthatwheretheoffenceiscommittedbyabodycorporate,everydirectorandofficerofsuchbody

corporateor,ifthebodyofpersonsisafirm,everypartnerofthatfirm,shallbeguiltyofthatoffence,providedthatsuchdirector,officerorpartnershallnotbeguiltyoftheoffenceifhe/sheprovesonabalanceofprobabilitiesthatsuchoffencewascommittedwithouthis/herknowledgeorconsent,orthathe/sheexercisedallduediligencetopreventtheCommissionoftheoffence.TheCommissionhaspublishedaleniencypolicyonitswebsite.


TheCommissionisempoweredtoauthoriseanyactifitconsidersthattheadvantagestothecountryoutweighthedisadvantages.However,itisnotempoweredtoauthoriseconductwhichisprohibitedintermsoftheAct.


Yes,resalepricemaintenanceisspecificallyprohibitedinSection31(f)oftheAct.


ExclusiveagreementsarenotperseprohibitedundertheActunlesstheylimitaccesstomarketsorotherwiseundulyrestraincompetitioninthecountry.NeithertheActnortheRegulationsspecifythefactorstobeconsideredwhendeterminingthelawfulnessorunlawfulnessofexclusiveagreements.However,theCommissionconsiderspro-competitivefactorsandiftheseoutweightheanti-competitiveeffectstheagreementswillbeallowed.Section30(1)oftheActprohibits“anycategoryofagreements,decisions,concertedpracticeswhichhave,astheirobjectoreffect,theprevention,restrictionordistortionofcompetitiontoanappreciableextentinthecountryorinanypartofit…”.

TheCommissionhasinpracticeappliedandenforcedthisSectioninonematterinvolvingaleaseagreementbetweenTheGablesandHammondBrotherst/aeZulwiniPicknPaySupermarket.Theleaseagreementcontained


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anexclusivityclausebetweenthepartiesandtheCommissionconcludedinitsfindingsthatsuchaclausecontravenedSection30(1)andwasthusprohibited.Applyingtheruleofreasonprinciple,theCommissioninitsinvestigationsoughttoascertainwhetherthecompetitivegainoftheclauseoutweigheditsanti-competitiveeffectandconcludedthattheclausewasinvalidandofnoforceoreffectasitwasinconsistentwiththespiritoftheAct.


DominanceofafirmisnotperseprohibitedbuttheActprohibitstheabuseofadominantposition.Althoughtherearenothresholdsdeterminativeofdominance,theActdefinesadominantpositionasapositioninamarketinwhichanenterpriseasasupplieroranacquirerofgoodsandservices,eitheraloneortogetherwithanyinterconnectedbodycorporate,isinapositiontoactindependentlyofcompetitorsandconsumersovertheproduction,acquisition,supply,orpriceofgoodsorservicesinthatmarket.

Further,theActprohibitsafirmfromengaginginspecificactsiftheylimitaccesstomarketsorotherwiseundulyrestraincompetition,orhaveorarelikelytohave,adverseeffectsontradeortheeconomyingeneral,suchas:

• predatorybehaviourtowardscompetitors;• discriminatorypricinganddiscriminationin

thesupplyandpurchaseofgoods;• makingthesupplyofgoodsorservices

dependentupontheacceptanceofrestrictionsonthedistributionormanufactureofcompetingorothergoodsortheprovisionofcompetinggoodsorotherservices;

• makingthesupplyofparticulargoodsorservicesdependentuponthepurchaseofothergoodsorservicesfromthesupplier;

• imposingrestrictionsastowhereortowhomorinwhatformorquantitiesgoodssuppliedorothergoodsmaybesoldorexported;

• resalepricemaintenance;• tradeagreementsfixingprices

betweenpersons;• refusalstosupplygoodsorservicesto

potentialpurchasers;and• denialsofaccesstoarrangementsor

associationswhicharecrucialtocompetition.

Theseprohibitionsappeartoapplytoallfirms,notonlytofirmsholdingadominantposition.

TheActspecificallyprohibitsdominantfirmsfromengaginginconductwiththeobjectoreffectofpreventingorrestrictingcompetition,including:

• pricefixing;• collusivetenderingandbid-rigging;• marketorcustomerallocationagreements;• collectiveactiontoenforcearrangements;and• theallocationbyquotaofsalesorproduction,

subjecttoanylawtothecontrary.


Therearecurrentlynoongoinginvestigationsthatweareawareof,butitisonlyamatteroftimebeforethecompetitionauthoritiesturnthespotlightontothepositionofdominantplayersintheeconomy.


TheActgenerallycoversallconductthatisincontraventionoftheAct(anti-competitivetradepractice)andimposesapenalsanctionofuptoSZL250000orimprisonmentforaperiodnotexceedingfiveyears,orboth.

TheActfurtherprovidesthatwheretheoffenceiscommittedbyabodycorporate,everydirectorandofficerofsuchbodycorporateor,ifthebodyofpersonsisafirm,everypartnerofthatfirm,shallbeguiltyofthatoffence,providedthatsuchdirector,officerorpartnershallnotbeguiltyoftheoffenceifhe/sheproves,onabalanceofprobabilitiesthatsuchoffencewascommittedwithouthis/herknowledgeorconsentor,thathe/sheexercisedallduediligencetopreventtheCommissionoftheoffence.


Yes.Section31(b)oftheActcontainsprovisionswhichprohibitpricediscrimination.


TheCommissiondoesnotpublishitsdecisionsonitswebsite(www.compco.co.sz);however,other

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information,includingtheAct,Regulations,policiesandpressstatements,ispublishedthere.TheCommissionhasalsoestablishedanAdvocacydepartmentthroughwhichithopestointeractwiththepublicandstakeholders.Occasionally,thepresspublishestheoutcomesofapprovedtransactionstogetherwiththeconditionsattachedtothetransactionbytheCommission.

28. General Itisproposedthatthecurrentlegislationbeamendedtoprovideinteralia;

• tochangethemethodofcalculatingfilingfeetomovefromapercentagebasedtoasetamountratherthanaslidingscalebasedonturnover;

• specificexemptionsbesetoutfrompremergernotification,e.g.purchasesintheordinarycourseofbusiness,inheritancetransfersbespecificallyexempted;and

• thatthecriminalsanctionsprovidedforinthecurrentActberemovedandreplacedwithpenalsanctionstiedtoturnover.

TheseandotheramendmentsareintheprocessofbeingformulatedintoaBillwhichweexpectwillbecirculatedforcommentduringthecourseofthisyear.

HENWOOD & COMPANYMantambeHouseLot1/649,BenDunnStreetPOBoxA972SwaziPlaza,H101MbabaneSwazilandT:+26824050385

www.triplec.co.za


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BOWMANS Wilbert Kapinga

Tanzania

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TherelevantcompetitionlegislationincludestheFairCompetitionAct,2003(theFCA),theFairCompetitionProcedureRules,2013andtheFairCompetitionTribunalRules,2012.TheFCAdealswithbothcompetitionlawandconsumerprotectionlaw,andisenforcedbytheFairCompetitionCommission(theFCC).ThedecisionsoftheFCCmaybetakenonappealorreviewtotheFairCompetitionTribunal(FCT),establishedundertheFCA(althoughcertaindecisionsrelatingtotelecommunicationspectrummanagementandlicensingthereofmaybetakenonappealtotheHighCourtofTanzania).DecisionsbytheFCTmaybereviewedbytheCourtofAppealofTanzania(theCAT),whiledecisionsoftheHighCourtmaybetakenonappealorreviewtotheCAT.TheCATisthefinalappellatecourtinTanzania.

CompetitionandconsumerprotectionintheenergyandwatersectorsareregulatedbytheEnergyandWaterUtilitiesRegulatoryAuthority(EWURA)undertheEnergyandWaterUtilitiesRegulatoryAuthorityAct,2001.DecisionsoftheEWURAmayalsobetakenonappealtotheFCT.

TheSurfaceandMarineTransportRegulatoryAuthority(SUMATRA)dealswithcompetitionandconsumerprotectioninthesurfaceandmarinetransportsectorundertheSurfaceandMarineTransportRegulatoryAuthorityAct,2001.DecisionsoftheSUMATRAmayalsobetakenonappealtotheFCT.

MergersandacquisitionsinthebankingsectorarenotifiabletotheFCC.However,theprimaryregulatorandapprovingauthorityofmergersandacquisitionsofbankingandfinancialinstitutionsistheBankofTanzaniaintermsoftheBankingFinancialInstitutionsAct,2006.

Decisionsofotherregulators,suchastheTanzaniaCivilAviationAuthorityestablishedundertheCivilAviationAct,2006maybetakenonappealtotheFCT.

MergersandacquisitionsintheelectronicandpostalsectorarenotifiabletotheFCC.However,theprimaryregulatoroftheelectronicandpostalcommunicationssectoristheTanzaniaCommunicationsRegulatoryAuthorityas

establishedundertheElectronicandPostalCommunicationsAct,2010.


AdraftamendmentoftheFCAispendingparliamentaryprocess;ifpassedtheFCAwillberenamedastheFairCompetitionandConsumerProtectionAct.TheamendmentisintendedtoaddressinstitutionalweaknessesintheFCC,introduceagencyeffectivenessandstrengthenanti-competitivetradeclauses.Itisexpectedthatcriminalsanctionsforcartelbehaviourwillbeincludedandreferencestointentionandnegligenceindetermininganti-competitiveconductwillberemoved.


TheFCCisanactiveregulatorinrelationtothecontroloftransactionsrequiredtobenotifiedtoitundertheFCA’smergercontrolprovisions.Inrecentyears,theFCChasvigorouslypursuedinvestigationsofpotentiallyanti-competitivebehaviourandconsumercomplaints,andhasimposedvarioussanctionsforviolationsofthelaw.Somerecentinvestigationsincludethoseinthemining,beer,oilmarketing,andinsuranceindustries.


ThecurrentprioritiesofthecompetitionauthoritiesaretoensurealevelplayingfieldinthemarketandtoshowcaseTanzaniaasaviableinvestmentenvironmentwithanefficientregulatoryframeworkempoweredtorestraincounterfeittrade,cartelsandmonopolistictendencies.


AmergerisrequiredtobenotifiedtotheFCCifit(i)constitutesamerger;and(ii)meetstherelevantpecuniarythresholds.ForthepurposesoftheFCA,a‘merger’isdefinedasanacquisitionofshares,abusinessorotherassets,whetherinsideoroutsideTanzania,resultinginthechangeofcontrolofabusiness,partofabusinessoranassetofabusinessinTanzania.


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• formergingpartieswithanannualturnoverexceedingTZS25billionbutlessthanTZS100billion,thefeeisTZS50million;and

• formergingpartieswithanannualturnoverofTZS100billionorabove,thefeeisTZS100million.

ThefeeforfilinganapplicationforexemptionofanagreementissetatTZS8millionplusanannualfeeofTZS2millionmultipliedbythenumberofyearsrequestedforexemption.ThefeepayabletotheFCCforreviewinganagreementisTZS8million.ThefeeforfilingacomplaintundertheFCAisTZS500000.

Butnofeeischargeableto:

• apersonsubmittinginformationconcerninganallegedprohibitedpractice;or

• aconsumersubmittingacomplaintagainstanallegedprohibitedpractice.

ThereisafeeofTZS3millionforawithdrawalofacomplaint.Incaseanapplicationisrefused,thefilingfeepaidinfortheapplicationisnon-refundable.

Butnofeeischargeableto:

• apersonsubmittinginformationconcerninganallegedprohibitedpractice;or

• aconsumersubmittingacomplaintagainstanallegedprohibitedpractice.

ThereisafeeofTZS3millionforawithdrawalofacomplaint.Incaseanapplicationisrefused,thefilingfeepaidinfortheapplicationisnon-refundable.


Itisnecessarytoobtainapprovalforaforeign-to-foreignmergerifsuchamergerinvolvesanacquisitionofshares,abusinessorotherassets,resultinginthechangeofcontrolofabusiness,partofabusinessoranassetofabusinessinTanzania,anditmeetstheapplicablethreshold.


TheTanzanianfaircompetitionlegalregimedoesnotprovideforpre-notificationcontactswiththe


AccordingtotheFairCompetition(ThresholdforNotificationofaMerger)(Amendment)Order,2017(GNNo.222),whichcameintoeffecton2June2017,thecurrentpecuniarythresholdsareTZS3.5billiondeterminedfromthecombinedturnoverofthemergingparties.Theturnoverisbasedonthelatestauditedfinancialstatementsofthemergingparties.


ThemergerregimeinTanzaniaissuspensory.Anotifiablemergerisprohibitedunlessatleast14dayshavelapsedafteracertificateofcompletefilinghasbeengivenbytheFCCfollowingthefiling.TheFCChastodecidewithinthe14dayswhethertheproposedmergershouldbeinvestigated.Ifitisdeterminedthatthemergershouldbeexamined,suchmergeroracquisitionisnotpermittedtotakeplaceforaperiodof90daystoallowtheFCCtoconductandcompleteitsexaminationoftheproposedmerger.TheFCCmayextendtheperiodofinvestigationforafurther30daysafterthefirst90days.ItisanoffencetogiveeffecttoanotifiablemergerthathasnotbeennotifiedtotheFCCatleast14dayspriortoitsimplementation.

Thefailuretonotifyanotifiablemerger,orthepriorimplementationofanotifiablemerger,constitutesanoffenceintermsoftheFCA.TheFCAgrantstheFCCpowertoimposeafineofbetween5%and10%ofanentity’sannualturnoverforfailuretonotifyamerger.TheFCCRulesofProcedure,2013createanobligationontheacquiringfirmtonotifyanotifiablemerger.TheFCCmayimposeapenalty“whereapersoncommitsanoffenceagainsttheAct…”oris…“involvedinsuchanoffence”.


ThefeesforfilingmergernotificationsarecalculatedbasedonthecombinedturnoverofthemergingpartiesinTanzaniaassetoutintheirlatestauditedaccountsasfollows:

• formergingpartieswithanannualturnoverofTZS800milliontoTZS25billion,thefeeisTZS25million;

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competitionregulatoryauthorities.ButtheFCCmaybeapproachedforguidanceandconsultationincircumstanceswherethemergersareconsideredcomplex.


Non-competitionfactorssuchasmarketandlabourefficienciesofatransactionmaybetakenintoaccountbytheFCCintheassessmentofamerger.SuchconsiderationsmayleadtheFCCtoapprovemergerssubjecttoconditionsrelatingtothesefactors.


Thecompetitionauthoritiesprocuresubmissionsfromthepublic,andindustryandconsumerorganisationswhichtheauthoritiesmayconsidertohaveaninterestintheproposedtransaction.Theinterventionsofinterestedpersonsandotherstakeholdersaretakenintoconsiderationintheauthorities’decision-makingprocess.


Anyotherperson,includingcompetitors,consumers,employeesandsupplierswhodemonstratessufficientinterestinthemergermaymakesubmissionstothecompetitionauthorities.


InpracticetheFCC,ofitsownvolitionoruponrequest,givesmergingpartiesanopportunitytomakesubmissionsinsupportofthemergernotificationpriortoprohibitingamergerorapprovingamergerwithorwithoutconditions.


AnypartyaggrievedbythedecisionoftheFCCmaylodgeanappealwiththeFCT.


TheFCAappliestojointventuresthatarecaughtbythedefinitionofamergerandmeetthethresholdsformandatorynotificationtotheFCC.TheFCAprohibitsgivingeffecttoanagreementiftheobject,effectorlikelyeffectoftheagreementistoappreciablyprevent,restrictordistortcompetition.


TheFCAregulatesprohibitedpracticesandspecificallyprohibitscertainhorizontalrestrictivepractices(unlawfulconductbetweencompetitors).TheFCAprohibitsanyagreement(whetheranarrangementorunderstanding,formalorunwritten)thathastheobject,effectorlikelyeffectofappreciablypreventing,restrictingordistortingcompetition,including:

• pricefixingbetweencompetitors;• collectiveboycottbycompetitors;• restrictingoutputbetweencompetitors;or• collusivebiddingortendering.

ThereareexamplesofpendingproceedingsbeforeFCCpursuingfirmsforallegedcartelconduct.


Section71oftheFCAempowerstheFCCtosummonanypersonwhoitbelievesisabletoprovideinformation,produceadocumentorgiveevidencethatwillassistintheinvestigationandwillrequiretheperson(s):

• tofurnishtheinformationinwritingsignedbyhimorher,orinthecaseofabodycorporate,signedbyacompetentauthorisedofficeroralegalofficerofthebodycorporate;

• toproducethedocumenttotheFCC;or• toappearbeforetheFCCtogive

evidenceorally.

SearchesandseizuresmaybeconductedbytheauthoritiesuponobtainingawarrantfromtheFCT.Upongrantingofthewarrant,thepoliceandmembersoftheFCCareentitledtoentertherelevantpremisesandconductasearchandmakecopies,ortakeextractsofdocumentstherein.


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AnypersonwhocommitsanoffenceundertheFCAisliabletoafineofnotmorethan10%butnotlessthan5%oftheoffender’sannualturnover.TheFCAalsoempowerstheFCCtoissuecomplianceandcompensatoryorders.Inaddition,iftheFCCissatisfiedthatamonetaryvaluecanreasonablybeplacedonthedamageincludinglossofincomesufferedbyapersonasaresultofanoffenceundertheFCA,theconvictedpersonmaybeliabletoafineoftwicesuchmonetaryvalue,whichtheFCCmayordertobepaidtothepersonsufferingthedamage.WhereapersonchargedwithanoffenceundertheFCAisacorporateentity,everypersonwho,atthetimeofthecommissionoftheoffence,wasadirector,managerorofficerofthecorporateentity,maybechargedjointlyinthesameproceedingswithsuchcorporateentity;andwherethecorporateentityisconvictedoftheoffence,everysuchdirector,managerorofficershallbedeemedtobeguiltyofthatoffenceunlessheorsheprovesthattheoffencewascommittedwithouthisorherknowledgeorthatheorsheexercisedallduediligencetopreventthecommissionoftheoffence.

ThereisnoleniencypolicyinplaceinTanzania.


ThereisamechanismundertheFCAtoapplytotheFCCforanexemptionofanagreementormerger.Onapplicationbyapartytoagreementsaffectingcompetition,orapplicationbyapartytoamerger,theFCCmay,uponsatisfactionthattheagreementormergerresultsorislikelytoresultinbenefitstothepublic,grantaconditionalorunconditionalexemption.Butincaseofanexemptionforanagreement,theexemptionshallnotexceedaperiodoffiveyears.Asforapplicationsforamergerexemption,theperiodofexemptionsisnottoexceedoneyearfromthedatetheexemptionisgranted.


TheFCAdoesnotrefertominimumresalepricemaintenancespecifically.However,minimumresalepricemaintenancemayamounttopricefixing,pricerestricting,orthecontrolofprices,tariffs,surchargesorotherchargeswhichconstitutecontraventionsintermsoftheFCA.


Exclusiveagreementswhoseobject,effectorlikelyeffectistoappreciablyprevent,restrictordistortcompetitionareunlawful.Butsuchagreementswouldnotbeunlawfulif(i)noneofthepartiestotheagreementhasadominantpositioninamarketaffectedbytheagreement;and(ii)eitherthecombinedmarketsharesofthepartiestotheagreementofeachmarketaffectedbytheagreementislessthan35%ornoneofthepartiestotheagreementarecompetitors.IncircumstanceswhereanexclusiveagreementisunlawfulonaccountofviolatingtheFCA,theagreementwillstillbelegallyenforceableiftheclausesoftheagreementcreatingexclusivityareseverablefromtherestoftheagreement.


TheFCAprohibitstheabuseofadominantposition.Apersonisregardedasdominantinamarketif(i)actingalone,thatpersoncanprofitablyandmateriallyrestrainorreducecompetitioninthatmarketforasignificantperiodoftime;and(ii)thatperson’sshareoftherelevantmarketexceeds35%.

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Indeterminingwhetherapersonholdsadominantpositioninamarket,thefollowingfactorsaretakenintoaccount:

• competitionfromimportedgoodsorservicessuppliedbypersonsnotresidentorcarryingonbusinessinTanzania;and

• theeconomiccircumstancesoftherelevantmarket,including:• themarketsharesofpersonssupplyingor

acquiringgoodsorservicesinthemarket;• theabilityofthosepersonstoexpandtheir

marketshares;and• thepotentialfornewentriesintothemarket.

Adominantpersoninamarketisprohibitedfromusingthatpositionofdominanceiftheobject,effectorlikelyeffectoftheconductistoappreciablyprevent,restrictordistortcompetition.


TherearenopubliclyreportedcasesoftheFCCpursuinganyfirmsforallegedabuseofadominantposition.


TheFCAimposesfinesuponpersonswhocommitanoffenceundertheFCA.ThefineleviedundertheFCAisnotmorethan10%butnotlessthan5%ofthatperson’sannualturnover.WhereapersonchargedwithanoffenceundertheFCAisacorporateentityeverypersonwho,atthetimeofthecommissionoftheoffence,wasadirector,managerorofficerofthecorporateentity,maybechargedjointlyinthesameproceedingswithsuchcorporateentity;andwherethecorporateentityisconvictedoftheoffence,everysuchdirector,managerorofficershallbedeemedtobeguiltyofthatoffenceunlesshe/sheprovesthattheoffencewascommittedwithouthis/herknowledgeorthat

he/sheexercisedallduediligencetopreventthecommissionoftheoffence.


Therearenorulesrelatingtopricediscrimination.


TheFCCwebsitedoesnotcurrentlypublishtheauthorities’decisions.ButanypersoninterestedinadecisionoftheFCCmayrequestacopyofthedecisionfromthedirectorgeneraloftheFCC.

TheFCC’swebpageiswww.competition.or.tz


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Uganda

BOWMANS David FK Mpanga

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ThereisnogenerallawthatcurrentlyprescribesthresholdsformandatorymergernotificationinUganda.


Todate,nolegalregimehasbeenputinplacegoverningcompetitionlawinUganda.ThereistheCompetitionBill,2004,whichisyettobetabledbeforeParliament.However,specificlawsregulatecompetitioninparticularsectors.Examplesinclude:

SECTOR LAW REGULATOR

Banking FinancialInstitutionsAct,2004(FIA)CentralBankofUganda(CentralBank)

CapitalmarketsCapitalMarkets(TakeoverandMergers)Regulations,2012

CapitalMarketsAuthority

CommunicationsCommunicationsAct,2013,andtheCommunications(FairCompetition)Regulations,2005(collectively,theCommunicationsAct)

UgandaCommunicationsCommission

Energy/electricity ElectricityAct,1999(Cap.145)(ElectricityAct)ElectricityRegulatoryAuthority(ERA)

Insurance InsuranceActNo.6of2017InsuranceRegulatoryAuthority

Petroleum PetroleumSupplyAct,2003(PSA)MinistryofEnergyandMineralDevelopment

Pharmaceuticals NationalDrugPolicyAndAuthorityActCap.206 NationalDrugAuthority

Otherproducts TheUgandaNationalBureauofStandardsActCap.327TheUgandaNationalBureauofStandards


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• anti-competitivemergers,take-overs,consolidations,acquisitionsorsuchanti-competitivechangesinthemarketstructureresultingfromchangesinownership,control,compositionandstructureofoperators;and

• allotherpracticesandactswithaneffectonfaircompetitionincludingunfairmethodsofcompetition,unfairordeceptiveactsorpractices,thepurposeoreffectofwhichistodistortcompetitioninthecommunicationsmarket.


Generally,mostofthesectorspecificlawsestablisheswhatconstitutesamergerwithoutprejudicetothecommonlegalunderstandingorhallmarksofamergerbutdonotfocusonestablishingwhatconstitutesanotifiablemerger.

Wenotesomeconsiderationsofwhatconstitutesanotifiablemergerintheexistinglegalframeworks.Forinstance,Article23(5)oftheCOMESACompetitionRegulationsof2004providesthatanotifiablemergerisonewitharegionaldimensionwithavalueatorabovetheprescribedthreshold.

Thelawdoesnotspecificallysetoutwhichtransactionsconstituteanotifiablemerger.Mostlegislationstipulateactivitiesandtransactionsthatwillrequirescrutinyforanti-trustelementsbuthardlysetoutwhatconstitutesanotifiablemerger.


ThereisnogenerallawthatcurrentlyprescribesthresholdsformandatorymergernotificationinUganda.However,certainsectorspecificlegislationregulatesthis.

TheCapitalMarkets(TakeoversandMergers)Regulationsof2012prescribethethresholdforamergerbyprohibitingapersonfromexercisingeffectivecontrolinthelistedcompanytheyintendtotakeover.TheseRegulationsprohibitapersonfromacquiringvotingrightsofalistedcompanywhichtogetherwithvotingrightsalreadyheldbythatpersonwouldentitlethatpersontoexercise

Inadditiontosector-specificlegislation,tworegionaltreatiesarerelevanttocompetitionlawinUganda:

• theEastAfricanCommunityCompetitionAct,2006whichhastheforceoflawinUgandabyvirtueoftheEastAfricanCommunityAct,2002(includingtheEastAfricanCommunityCompetitionRegulations,2010);and

• theCOMESACompetitionRegulations,2004andtheCOMESACompetitionRules,2004.

TherearenoinstitutionsinplacecreatedundertheEastAfricanCommunityActtoenforcetheEastAfricancommunitycompetitionregime.

SeetheseparatesectiondealingwithCOMESA.


Therearenoproposedamendmentsornewregulationsthathavecomeintoforce.


No,thelawisnotactivelyenforcedandisstillundergoingseveraldevelopmentstocreateenforcementframeworks.

Thereisnodedicateddomesticcompetitionlawregimeinplace.Ourapplicationofanti-trustlawisrestrictedtosector-specificlawsandregulatorsliketheUgandaCommunicationsCommissionunderthecommunicationsindustry.


Ugandastillhasn’tdevelopedauniformdomesticcompetitionlegalregimeandassuch,thereisnoregulatorybodyinplace.Theanti-trustregulationfallsbacktosectorspecificregulatorswhichfocusonanyareathattriggersunfaircompetitionintheirrelevantindustries.

Forinstance,theUgandaCommunicationsCommissionfocuseson:

• anti-competitiveagreements,decisionsorconcertedpractices;

• abuseofadominantposition;

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effectivecontrolinthelistedcompanywithoutcomplyingwiththetakeoverprocedure.Effectivecontrolisexercisedwhereaperson:

• holdsmorethan15%butlessthan50%ofthevotingrightsofalistedcompany,andwhoacquiresinanyoneyearmorethan5%ofthevotingrightsofsuchcompany;

• holds50%ormoreofthevotingrightsofalistedcompanyandacquiresadditionalvotingrightsinthelistedcompany;

• acquiresacompanythatholdseffectivecontrolinthelistedcompanyortogetherwiththevotingrightsalreadyheldbyanassociatedpersonorrelatedcompany,resultinginacquiringeffectivecontrol;or

• acquiresashareholdingof20%ormoreinasubsidiaryofalistedcompanythathascontributed50%ormoretotheaverageannualturnoverinthelastthreefinancialyearsofthelistedcompanyprecedingtheacquisition.

ThisisenhancedbytheCapitalMarketsAuthority(Amendment)Actof2016,accordingtowhichtheCapitalMarketsAuthoritymaymonitortakeoversandmergersinrespectoflistedcompaniesinUgandaandadoptmeasuresforthesupervisionandregulationoftakeoversandmergersinordertoprotecttheinterestsofinvestorsandprovidefororderlyandwell-informedcapitalmarkets.Thesameauthoritymaymakeregulationsprovidingfortakeovers,mergersandacquisitionsofsecuritiesinlistedcompanies.

Additionally,regionallawsprovidespecificrulesinrelationtothresholdsformandatorymergernotification.Rule4oftheCOMESARulesontheDeterminationofMergerNotificationThreshold(asamended)providesthatthresholdsformergernotificationarethatthecombinedannualturnoverorcombinedvalueofassets(whicheverishigher)intheCommonMarketofallpartiestoamergershouldbeequaltoorexceed(COMESAdollars)COM$50million;andtheannualturnoverorvalueofassets(whicheverishigher)intheCommonMarketofeachofatleasttwoofthepartiestoamergershouldbeequaltoorexceedCOM$10million,unlesseachofthepartiestoamergerachievesatleasttwo-thirdsofitsaggregateturnoverorassetsintheCommonMarketwithinoneandthesamememberstate.


Exceptasrequiredbyparticularsectorlegislation,thereisnogenerallawinUgandathatprohibitsthepre-implementationofamerger.Forinstance;

• InsuranceRegulatoryAuthority–Section75and100ofthenewActrequiresnotificationtotheauthorityanditsapprovalbeforeanychangeincontrolandthisincludesmergers.

• UgandaCommunicationsCommission–Operatorsarenotallowedtoengageinactivitiesthatmayleadtounfaircompletionlikemergers.Regulation6(6)oftheFairCompetitionRegulationprohibitspre-implementationofmergerpriortoauthorisationbytheCommission.


ThereisnogenerallawinUgandathatprovidesforthepaymentoffilingfees.However,regionallegislationsuchastheCOMESACompetition(Amendment)Rules,2014requirenotificationofamergertobeaccompaniedbyafeecalculatedat0.1%ofthecombinedannualturnoverorcombinedvalueofassetsintheCommonMarketofthepartiestoamerger,whicheverishigher:providedthatthefeedoesnotexceedCOM$200000(COMESAdollars).


Wheretheoperationsofpartiesorownershipofalocallyoperatingcompanyareaffectedbyaforeign-to-foreignmerger,notificationwillberequired.Foraslongasthemergerwillaffecttheownership,structureandmanagementofacompanyoperatinginUganda,approvalisrequired.Byoperation,wefocusonlicensedsectorssuchasinsurance,communication,etc.Forinstance,asubstantialforeignshareholdermergingwithaforeignentitywilltriggernotificationrequirements,sincethatforeignpartyisacontrollingmemberofthelocallylicensedentity.


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competition.Wearenotawareoftheextenttowhichsectorregulatorshavecontactedcustomersorcompetitorsinmergerinvestigations.


NocompetitionauthorityisinplaceinUgandaasthereisnotyetagenerallawapplicabletocompetition.Wearenotawareoftheextenttowhichsectorregulatorshavecontactedotherthirdparties(includingemployees)inmergerinvestigations.


SavefortheUgandaCommunications(FairCompetition)Regulations2005,therearenoprovisionsinsector-specificlawsdetailingtheprocedureformakingrepresentationsbeforeadecisionisissuedininstanceswheretheauthorityintendstoprohibitamerger.Regulation2(2)(d)oftheUgandaCommunications(FairCompetition)Regulations2005providesfortheapplicationoftheCommunications(PracticeandProcedure)Regulations2005infaircompetitionproceedings.PursuanttoRegulation5oftheCommunications(PracticeandProcedure)Regulations2005,mergingpartiesaregiventheopportunitytomakerepresentationsbeforetheCommunicationsCommission.SuchpartiesmayappearbeforetheCommunicationsCommissioneitherinpersonorthroughanadvocate.


Whereamergerhasbeenprohibitedintermsofasector-specificlaw,anaggrievedpartycanchallengethedecisionoftherelevantauthoritybywayofappealtotheHighCourt.


Yes,anti-trustlegislationscoverjointventuressincetheychangethestructureofacompany.


Thevarioussector-specificlawsdonotprovideforpre-notificationmeetings.However,subjecttoconfidentialityagreementsthatmayrelatetotheproposedtransaction,itispossibletoapproachauthoritiestoholdapre-notificationmeetinginrespectofaproposedtransaction.


Mergerassessmentcriteriaarenotprovidedforinanygenerallaworsectorspecificlaws.Notwithstandingthis,competitionfactorsarerelevanttotheassessmentofamerger.Forinstance,theEastAfricanCommunityActof2006specificallyprohibitsanti-competitivemergersandacquisitionsbyprovidingthatamergeroracquisitionshallnotbeapprovedbytheAuthorityifthemergeroracquisitionleadstothecreation,orstrengtheningofanalreadysubsistingdominantposition,andtherebysubstantiallylesseningcompetitionintherelevantmarket.

Tothisend,therelevantcompetitivefactorstobeconsideredare:

• Thecompetitivestructureofallmarketsaffectedbythemergeroracquisition.

• Thenatureofthemarketsaffectedsuchastheirundertakings,controlofessentialfacilities,integrationandfinancialresources.

• Thecompetitorsandthealternativesavailabletosuppliersandconsumers.

• Anypro-competitiveeffectsofthemergeroracquisitionthatmayoutweightheharmfuleffectsoncompetition.

Noexpressprovisionhasbeenmadefornon-competitionfactors.


NocompetitionauthorityisinplaceinUgandaasthereisnotyetagenerallawapplicableto

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Ugandadoesnothavespecificlegislationdefiningwhatconstitutesacartelandsettingoutrestrictionsoncartels.However,somesectorspecificlegislationrestrictindustryoperatorsfromengaginginpracticesthatmayamounttocartelpractices.

WhilethePSAregulatesprohibitedpracticesandspecificallyprohibitscertainhorizontalrestrictivepractices(unlawfulconductbetweencompetitors),theCommunicationsActandElectricityActeachcontainanumbrellaprovisionwithinwhichhorizontalrestrictivepracticesmayfall.

ThePSAstipulatesthatparticipantsinthepetroleumsupplychainshallnotformcartelsorattempttocontrolpricesorcreateartificialshortagesofproductsorservices,orengageinanyotherrestrictivepracticesoranyotheractsoromissionswhicharecontrarytotheprinciplesoffaircompetitionorareintendedtoimpedethefunctioningofthefreemarketforpetroleumproductsinUganda.

TheCommunicationsActprovidesthatanoperatorshallnotengageinanyactivities,whetherbyactoromission,whichhave,orareintendedtoorlikelytohave,theeffectofunfairlypreventing,restrictingordistortingcompetitioninrelationtoanybusinessactivityrelatingtocommunicationservices,includingenteringintoanyagreementorengaginginanyconcertedpracticewithanyotherparty,whichunfairlyprevents,restrictsordistortscompetition.

TheElectricityActprovidesforabreachoffaircompetition.Alicenseeisinbreachoffaircompetitionifthelicenseeconductsanyactivity,aloneortogetherwithotherswhich,intheopinionoftheERA,isintendedtoorislikelytohavetheeffectofrestricting,distortingorotherwisepreventingcompetitioninconnectionwithanyactivitylicensedundertheElectricityActorisprejudicialtotheinterestsofconsumers.

WearenotawareofanyinstancesinUgandawheretheauthoritiesinagivensectorhavepursuedfirmsforengagingincartelconduct.Further,wearealso

notawareofanyspecificcomplaintsthatmayhavebeenmadetoauthoritiesinrespectofcartelconductbyoperatorsinregulatedindustries.


Thereisnogenerallawthatspecificallyconfersinvestigativepowersonanyauthoritytoinvestigatecartels.However,sector-specificlegislationconferssomepowersofinvestigationonofficialswithregardtoanti-competitiveconductingeneral.

IntermsoftheElectricityAct,theERAmayinvestigateanylicenseeorsystemsoperatorwhocommitsanyactoromissioninbreachoffaircompetition.UnderSection74(2)oftheElectricityAct,anypersonwithacomplaintofbreachoffaircompetitionagainstalicenseeshalllodgeacomplainttotheERAandtheERAshall,ifitappearsthatabreachofcompetitionhasbeencommitted,investigatetheactoromissionandwhereappropriateissueanordertoremedythebreach.

TheERAmayappointinspectorsforthepurposesofverifyingcompliancebyalicenseewiththeElectricityAct.Aninspectormay,interalia,enterandinspectatanyreasonabletimeanypremisesownedbyorunderthecontrolofalicenseeinwhichtheinspectorbelievesonreasonablegroundstheretobeadocumentorinformationrelevanttotheenforcementoftheElectricityActandexaminethedocumentorinformationorremovethedocumentorinformationforexaminationorreproduction,asthecasemaybe.

UnderSection8oftheFIA,theCentralBankmay,ifithasreasontobelievethatapersonistransactingorcarryingoutaprohibitedpractice,authoriseanofficeroftheCentralBankto:

• enterintoanypremiseswhichtheCentralBankhasreasontobelieveareoccupiedorusedbyanypersonforanunauthorisedpurpose;

• searchanybook,recordstatement,documentorotheritemused;

• seizeormakeacopyofanybook,recordorstatement;


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• questionanypersonwhoispresentonthepremises,auditors,directors,membersorpartnersofanypersonconductingbusinessonthepremises;

• examineanybook,record,statement,document;or

• requireanypersontoproducethebook,record,statement,documenttotheofficeroftheCentralBankissuingthenotice.

TheCommunicationsActempowerstheCommunicationsCommissiontoappointinspectorswhoarefurnishedwithpowersofsearchandseizureforthepurposesofverifyingcompliancewiththeprovisionsoftheCommunicationsAct.Aninspectormay,interalia,enterandinspectatanyreasonabletimeanyplaceownedbyorunderthecontrolofanoperatorinwhichtheinspectorbelievesonreasonablegroundstheretobeanydocument,information,orapparatusrelevanttotheenforcementoftheCommunicationsActandaninspectormayexaminethedocument,informationorapparatusorremoveitfromexaminationorreproduction,asthecasemaybe.


PSA

ThePSAimposescriminalsanctionsagainstanypersonwhobreachesitsfaircompetitionprovisions(seequestion17).ThePSAprescribesafinenotexceedingUGX2.4million,orimprisonmentnotexceedingfiveyears,orboth,uponconvictionforacontravention.ThelegislationalsoprovidesthatwhereapersonchargedwithanyoffenceunderthePSAisabodycorporate(althoughthedefinitionofabodycorporateisunclear),everypersonwho,atthetimetheoffencewascommitted,wasadirector,manager,secretaryorsimilarofficeroragentofthatbodycorporate,maybechargedjointlyorseverallyinthesameproceedingswiththebodycorporateandonconviction,isliabletothepenaltyprescribedfortheoffence.Inaddition,anypartnerinanunincorporatedenterprise,firmorjointventureshallbejointlyandseverallyliablefortheactsoromissionsofanyotherpartnerinsofarastheactsconcerntheenterprise,firmorjointventure.

Notwithstandingtheabove,adirector,manager,secretaryorsimilarofficer,partneroragent,willnotbeliableifheorsheprovestothesatisfaction

ofthecourtthattheactinquestionwascommittedwithouthis/herknowledge,consentorconnivance,andthathe/shetookallnecessarystepstopreventthecommissionofthatact,havingregardtoallthecircumstances.

Anemployerwhoemploysinorforhis/heroperationorplaceofbusinessanyagent,clerk,servantorotherperson,isanswerableandliableforanyactoromissionofanemployeewhichconstitutesacontraventionofthePSA,insofarasitconcernsthebusinessoftheemployer.Anyholderofapermitorlicence,anyconsumerofapetroleumproductoranyrecognisedconsumerorganisation,mayinitiatecivillegalproceedingsbeforeacourtofcompetentjurisdiction.

CAPITAL MARKETS (TAKEOVER AND MERGER) REGULATIONS 2012

Althoughnotspecificallypenalisingcartelconduct,intermsofRegulation35oftheCapitalMarkets(Takeover&Merger)Regulations2012,whereapersonrefusesorfailstofurnishanydocument,paperorinformationrequiredundertheRegulations,theCapitalMarketsAuthoritymay,ifitissatisfiedaftergivingthepersonanopportunitytobeheardthattherefusalorcontraventionwaswilful,imposeacivilpenaltyorsumofmoneynotexceeding200currencypointsasmaybespecifiedintheorder.AcurrencypointisworthUGX20000.

COMMUNICATIONS ACT

TheCommunicationsActdoesnotimposespecificpenaltiesonfirmsfortheirparticipationincartelactivities.However,itimposesageneralsanctionofafinenotexceedingUGX600000uponconvictionforacontravention.Inaddition,apersonwhosustainslossordamageasaresultofanyactoromissionthatiscontrarytotheCommunicationsActmay,inacourtofcompetentjurisdiction,sueforandrecoverthelossordamagesufferedfromanypersonwhoengagedin,directed,authorised,consentedtoand/orparticipatedintheactoromission.

ELECTRICITY ACT

TheElectricityActprovidesthatalicenseefoundtobeinbreachoffaircompetitionbytheERA

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shallpaysuchamountofcompensationastheERAmaydeterminetotheconsumerforanylosscausedtohimorher.

ThereiscurrentlynoleniencypolicyinplaceforcartelconductinUganda.


Thereiscurrentlynospecificlegislationinthisregard.However,sector-specificlegislationmakesprovisionforexemptionsoflimitedcircumstances:

• ThePSAprovidesforexemptionfromitsprovisionsinthecaseofadeclarationofapetroleumsupplyemergency.Saveforthis,pricesforpetroleumproductsthroughthesupplychainaregovernedbyforcesofsupplyanddemandinafreeandcompetitivemarket.

• TheCommunicationActprovidesforanexemptiontocarryoutcertainprohibitedactstotheextentthattheCommunicationsCommissionissatisfiedthattheActcontributestotheimprovementofgoodsandservicesinUgandaandgenerallypromotescommunicationsservicesasstipulatedintheCommunicationsAct.


Thereiscurrentlynospecificlegislationprovidingfortheprohibitionofminimumresalepricemaintenance.


Thereisnospecificlegislationprovidingfortheunlawfulnessorlawfulnessofexclusiveagreements.Wearenotawareofanyfactorsrelevanttoanyauthority’sdeterminationofthelegalityofanexclusiveagreement.

TheUgandaCommunicationsActunderthesectorrestrictpracticesandagreementsthatmayleadtoadistortionoftheindustry.Thatis,undersection53anyabusebyanoperator,independentlyor

withothers,ofadominantpositionwhichunfairlyexcludesorlimitscompetitionbetweentheoperatorandanyotherparty;orenteringintoanagreementorengaginginanyconcertedpracticewithanyotherparty,whichunfairlyprevents,restrictsordistortscompetition;oreffectinganti-competitivechangesinthemarketstructureand,inparticular,anti-competitivemergersandacquisitionsinthecommunicationssector.

Exclusivecontractsmaybeperceivedasagreementsthatdistortthemarketunfairly.


Sector-specificlawsregulateabusesofadominantposition:

• inthecommunicationssector,theCommunicationsActprohibitstheabuseofadominantposition.TheCommunicationsActstipulatesthatanoperatorshallnotengageinanyactivities,whetherbyactoromission,whichhave,orareintendedtoorarelikelytohave,theeffectofunfairlypreventing,restrictingordistortingcompetitioninrelationtoanybusinessactivityrelatingtocommunicationservices.Prohibitedactivitiesincludeanyabuseofadominantpositionbyanoperator,eitherindependentlyorwithothers,whichunfairlyexcludesorlimitscompetitionbetweensuchoperatorandanyotherparty.TheCommunicationsActdoesnotprovideathresholdfordominance;

• withoutexpressreferencetotheabuseofadominantposition,thePSAprovidesthatparticipantsinthepetroleumsupplychainshallnot,interalia,attempttocontrolpricesorcreateartificialshortagesofproductsorservices,orengageinanyotherrestrictivepracticesoranyotheractsoromissionswhicharecontrarytotheprinciplesoffaircompetitionorareintendedtoimpedethefunctioningofthefreemarketforpetroleumproductsinUganda;and

• inasimilarvein,withoutexpresslyreferringtotheabuseofadominantposition,theElectricityActstipulatesthatalicenseeisinbreachoffaircompetitioniftheyconductanyactivity,aloneortogetherwithothers,whichintheopinionoftheERAisintendedtohaveorislikelytohave


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theeffectofrestricting,distortingorotherwisepreventingcompetitioninconnectionwithanyactivitylicensedundertheElectricityAct.


Wearenotawareofanyinstanceinthisjurisdictionwheresectorregulatorshavepursuedfirmsforabusingadominantposition.However,weareawareofacasefiledintheCommercialDivisionoftheHighCourtofUganda,thegistofwhichwaswhetherornotamobiletelecommunicationsfirmwithadominantpositioninthetelecommunicationsmarketinUgandawasabusingthatdominantposition.

InEzeeMoney(Uganda)LtdvMTNUgandaLtdHighCourtCivilSuitNo.330of2013,theplaintiffhasinstitutedasuitagainstthedefendantallegingthatthedefendanthas:

• engagedinactivitiesintendedtohavetheeffectofrestrictingordistortingcompetitioninrelationtothebusinessactivityofcommunicationservicescontrarytoSection53(1)oftheUgandaCommunicationsAct,2013;and

• breachedthestatutorydutynottodenycustomersservicesunfairlycontrarytoSection56oftheUgandaCommunicationsAct,2013.

Tocountercompetition,amongotherthings,MTNforcedmobilemoneyagentstosignexclusivityagreementsprohibitingthemfromofferingEzeemoneyservices,itpunishedthosewhobreachedtheseagreementsbyconfiscatingtheirimplements,anditalsoinfluencedanaggregatortodeclineofferingaggregationservicestoEzeemoney.EzeemoneyclaimedthatthesebreachedseveralprovisionsundertheCommunicationsAct,2013thatprohibitedabuseofdominantpositionandalsoprohibitedunfaircompetition.TheCourtfoundinfavourofEzeemoneyandawardeditdamagesofUGX2.3billion.


Sector-specificlegislationdoesnotimposespecificpenaltiesonfirmsforabuseofadominantposition.However,thegeneralpenaltiesintheCommunicationsActandthePetroleumAct(describedinquestion19)mayapplytoactswhichconstituteabuseofadominantposition.


TheElectricityActprovidesthatalicenseeshallnot,infixingtariffsandtermsofsupply,showunduepreferenceordiscriminationamongcustomerssimilarlysituatedorinsimilarcircumstances.ThePSAalsoprovidesthatparticipantsinthesupplychainshallselltheirproductstoallpersonswithoutanyformofdeliberatediscriminationbymeansofquality,quantityandprice.

TheCommunicationsindustryrestrictspricediscriminationthroughtheFairCompetitionRegulationswhichshowwhatchangestopricearenotacceptableandconstituteunfairconduct.ThisissetoutintheScheduletotheRegulation.


Wearenotawareofanyspecificwebsitehostedbyanyofthevarioussectorregulatorsthatmaycontaintheirdecisions.

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Zambia

CORPUS LEGAL PRACTITIONERS Sydney Chisenga

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TherelevantlegislationistheCompetitionandConsumerProtectionActNo.24of2010,andvariousguidelines/regulationsissuedfromtimetotime,whichareenforcedbytheCompetitionandConsumerProtectionCommission(theCCPC).AlldisputesareadjudicateduponbytheCompetitionandConsumerProtectionTribunal,which,generally,hasjurisdictiontohearappealsfromapersonwho,oranenterprisewhich,isaggrieved,withanorder,decisionordirectionoftheCCPC.


TherearecurrentlynoproposedamendmentstotheAct,nortotheCompetitionandConsumerProtection(General)Regulations,2011.However,theCCPCrecentlyinvitedthepublictocommentonitsdraftGuidelinesonAbuseofDominance(whichwilloutlinetheCCPC’sgeneralapproachtoenforcingtheabuseofdominanceprovisionsintheAct)anddraftGuidelinesforIssuanceofFines(whichshalloutlinetheprinciplesandpracticesforissuanceoffinesundertheAct).

TheCCPCissuedtheCompetitionandConsumerProtectionCommissionSettlementProcedureGuidelinesin2016,whichsetouttheframeworkforrewardingco-operationintheconductofproceedingscommencedforcontraveningtheprovisionsoftheActconcerningabuseofdominanceandrestrictivebusinesspractices.Further,theleniencyprogrammehascomeintoeffect.


TheCCPCactivelyenforcestheAct.Sinceitsinceptionunderprecedinglegislation,theCCPChasconductedinvestigationsintoprohibitedrestrictiveandanti-competitivepractices,conducteddawn

raidsandfinedcompaniesforfailuretonotifymergers.TheActgivestheCCPCthepowertoundertakeaninvestigation,eitheruponreceiptofacomplaintoratitsowninstigation,wheretherearereasonablegroundstobelievethatthereisorislikelytobeacontraventionoftheAct.

In2013,theCCPCstatedbeforetheParliamentaryCommitteeonEconomicAffairs,EnergyandLabour,thatithademployednewstrategiesforinvestigatinganti-competitivetradepractices,includingcarryingoutunannouncedsearchestocollectevidence(i.e.dawnraids);introducingaleniencyprogramme;andappointinginspectorsfromlocalauthoritiesacrossthecountry.Furthermore,theCCPChassignedMemorandaofUnderstandingwithsectorregulatorswherethereisanelementofcompetitionandconsumerprotectioninthesectorallegislation.Thismeasureisaimedatenhancingthemonitoringofcompetitioninthedomesticeconomythroughco-ordinationandharmonisationofmattersrelatingtocompetitionwithsectorregulators.


ThecurrentfocusareasoftheCCPCarecartelregulation,mergercontrol,restrictivebusinesspracticesandabuseofdominancecases.TheCCPCisalsofocusingonthesensitisationtothegeneralpublicoftheirconsumerrightsundertheAct.


TheActessentiallydefinesamergerastheacquisitionofalegalinterestbyanenterpriseinanotherenterprise.Therefore,amergeroccurswhereanenterprisedirectlyorindirectlyacquiresorestablishesdirectorindirectcontroloverthewholeorpartofthebusinessofanotherenterprise,orwhentwoormoreenterprisesmutuallyagreetoadoptarrangementsforcommonownershiporcontroloverthewholeorpartoftheirrespectivebusinesses.


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AmergerascontemplatedundertheActoccursinthefollowinginstances:

• whereanenterprisepurchasessharesorleasesassetsin,oracquiresaninterestin,anysharesorassetsbelongingtoanotherenterprise;

• whereanenterpriseamalgamatesorcombineswithanotherenterprise;or

• whereajointventureoccursbetweentwoormoreindependententerprises.

Apersonorentitywillbeconsideredtohavecontroloveranenterpriseifthatperson:

• beneficiallyownsmorethanhalfoftheissuedsharecapitaloftheenterprise;

• isentitledtovoteamajorityofthevotesthatmaybecastatageneralmeetingoftheenterprise,orhastheabilitytocontrolthevotingofamajorityofthosevoteseitherdirectlyorthroughacontrolledentityofthatenterprise;

• isabletoappointorvetotheappointmentofamajorityofthedirectorsoftheenterprise;

• isaholdingcompanyandtheenterpriseisasubsidiaryofthatcompany;

• hastheabilitytomateriallyinfluencethepolicyoftheenterpriseinamannercomparabletoapersonwho,inordinarycommercialpractice,canexercisetheelementofcontrolreferredtointhefirstfourbulletpoints;or

• hastheabilitytovetostrategicdecisionsoftheenterprise,suchastheappointmentofdirectorsandotherstrategicdecisionswhichmayaffecttheoperationsoftheenterprise.

TheCompetitionandConsumerProtectionCommissionGuidelinesforMergersstatethattherearethreetypesofmergerstypicallyassessedbytheCommission,namelyhorizontal,verticalandconglomeratemergers.Horizontalmergersarethosebetweenenterprisesoperatinginthesamerelevantmarket(s)atthesamelevelofbusinessandareofconcernbecausetheyresultdirectlyintheeliminationofcompetition.VerticalmergerstakeplacebetweenenterprisesoperatingatdifferentlevelsoftheproductionorsupplychainofanindustryandmostlyconcerntheCommissionwhenoneofthemergingpartieshasadominantpositionofmarketpowerineithermarket.Conglomeratemergersarebetweenundertakingsindifferentmarkets,withnofunctionallink,butmayinsomecasesresultinreducedcompetition.


AmergertransactionrequiresauthorisationbytheCCPCinanyinstancewherethecombinedturnoverorassets(whicheverishigher)ofthemergingpartiesinZambiaisatleast50millionfeeunits(ZMW15000000)inthemergingparties’mostrecentfinancialyearinwhichthesefiguresareavailable.


EnterprisesmaynotimplementamergerbeforeobtainingtherequisiteapprovalfromtheCCPC.IfamergerisimplementedwithoutthepriorapprovaloftheCCPC,themergerisvoidandtheenterprisecommitsanoffence.Theenterprisemaybeliableforafinenotexceeding10%ofitsannualturnoverandthedirectorscanbeprosecuted.


AccordingtotheRegulations,theprescribedfeeforanapplicationforauthorisationis0.1%oftheturnover/assets(whicheverishigher)withamaximumcapof16666667feeunits(ZMW5000000).

ThecombinedturnoverorassetsreferstothecombinedannualturnoverorcombinedassetsoftheentitylocatedinZambiainwhichthetargetentityhasaninterest.ThenotificationfeeisbasedonthetotalvaluesoftheturnoverorassetsoftheeconomicentityinZambia,evenifproportionsoftheseamountsaregeneratedoutsidethemarket(s)forthemergerassessment.ForpartieswhollydomiciledoutsideZambia,thenotificationfeewillbebasedonthetotalvalueofturnovergeneratedinZambia.ItshouldfurtherbenotedthatitisthepositionoftheCCPCthatifamergingpartyhassubsidiarieslocatedinZambia,theyformasingleeconomicunit.

Further,theRegulationsprovidethatanapplicationfornegativeclearance(wherethevalueoftheapplicant’sturnoverorassetsislessthanorequalto100millionfeeunitsorZMW30million),isapproximatelyZMW21000.Iftheapplicant’sturnoverorassetsexceed100millionfeeunits

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(ZMW30million),thefilingfeeforanapplicationfornegativeclearanceisapproximatelyZMW45000.


Foreign-to-foreignmergersthathaveanindirectordirecteffectonthestructureoflocalmarketsarenotifiable.Theeffectsdoctrineappliesinthisrespectandtheforeign-to-foreignmergermustbenotified.

TheCCPCfocusesonforeign-to-foreignmergerswherethemergingforeignentitieshaveasubsidiaryorinterestinanundertakingoperatingorlocatedinZambia.AnenterpriseinZambiathatcomeswithinthecontrolofaforeignenterprisewillbesubjecttonotificationandreviewasfarastheoperationhasaneffectoncompetitioninZambia.Insuchacase,theturnoverorassetsthatwillbeassessedwillbethoseofanenterprisepresent(i.e.theenterpriseisdulyregisteredinaccordancewithZambianlawandgeneratesturnoverwithinZambia)orwithapresenceinZambia(i.e.theenterpriseisnotdulyregisteredinaccordancewithZambianlawbuthassalesinZambia).IntheeventthatthecontrolofaZambianenterprisecomesaboutpurelyasaresultofamergeroracquisitioninvolvingenterpriseswhollydomiciledoutsideZambia,theCCPCwillnonethelessassessthemergerifithasalocalnexus.TheCCPCwillassertjurisdictionoversuchtransactionsonlyiftheforeignenterprisehasalocalnexusofsufficientmateriality,suchashavingsubsidiariesinZambiaorhavingmade10%ofitssalesinZambiaoverthelastthreeyears.


AlthoughtheActdoesnotprovideforpre-notificationcontactwiththeCCPC,theCCPCdoes,inpractice,encouragesuchmeetings.ForpartiesapplyingtotheCCPCtoeitherauthoriseahorizontalorverticalagreementormerger,ortograntanexemptionornegativeclearanceforatransaction,theCCPCencouragespre-applicationmeetings.Duringsuchmeetings,theCCPCandthepartiestothetransactiondeterminetheprecise

amountofinformationrequiredinanotification,whichmayresultinasignificantreductionoftheinformationrequired.Itisnormalpracticetoholdpre-notificationmeetingswiththeCCPCformergersinordertoconcludethetransactionefficiently.


TheCCPCappliesthepublicinteresttest(weighingbothpublicbenefitandpublicdetriment)inalmostallmergerevaluations.However,thereisnodefinitionintheActnorintheRegulationsofwhat’publicinterest‘is.Thereisnoexhaustivelistoffactorsthatfallunderthepublicinteresttestbutfundamentallyissuessuchasemploymentandtheeffectoftheproposedmergerontheeconomyintherelevantmarketorregionaffectedbythemergerareofparamountconsideration.


Aspartofitsassessmentprocess,theCCPCtypicallyconductspublicconsultationsbyseekingcommentsfromrelevantindustryplayersandotherstakeholderswithrespecttoproposedmergers.Totheextentthatcompetitorsandcustomersmaybeconsulted,competitorsandcustomersplayaroleinthereviewprocess.TheActdoesnotdefinethemeaningof‘public’andthereforebothcustomersandcompetitorsareconsideredtofallwithintheambitofpublicascontainedintheAct.


Asindicatedabove,aspartofitsassessmentprocess,theCommissiontypicallyconductspublicconsultationsseekingcommentsfromthepublicwithrespecttoproposedmergers.TheActdoesnotdefinethemeaningofpublicandthereforeemployeesareconsideredtobepartofthepublicundertheActandcanaccordinglymakesubmissionsduringtheassessmentprocess.However,inpracticethisrarelyhappens.


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NeithertheActnortheRegulationsprovideforthemergingpartiestobeaffordedanopportunitytomakerepresentationsbeforeadecisionisissued.Insomeinstances,atthediscretionoftheCCPC,partiesmayberequestedtomakerepresentationsorclarifycertainaspectsofthemerger.


TheActprovidesforappealstotheTribunal.Therefore,anypersonoranenterprisethatisaggrievedbyanorderordirectionoftheCCPCmayappealtotheTribunalwithin30daysoftheorderordirection.AnypersonwishingtoappealagainstadecisionoftheTribunalmayappealtotheHighCourtwithin30daysoftheTribunal’sdetermination.


ThemergerprovisionsoftheActapplytojointventurearrangementswhereajointventureoccursbetweentwoormoreindependententerprisesandthejointventurefallswithinthedefinitionofamerger.TheMergerGuidelinesstatethatajointventureoccursbetweentwoormoreindependententerprises,witheachenterprisemakingasubstantialcontributiontotheimplementationofacommonprojectwhichisaseparatebusinessbutisjointlyownedandcontrolledbytheparententerprises.TheMergerGuidelinesdistinguishbetweenfullfunctionjointventures(whichrequiremergerapproval)andauxiliaryjointventures(whichdonotrequiremergerapproval).Afull-functionjointventureperformsonalastingbasisallthefunctionsofanautonomouseconomicentity,competingwithotherenterprisesinarelevantmarketwithsufficientresourcesandstafftooperateindependentlyontherelevantmarket.Auxiliaryjointventures,ontheotherhand,fulfilaspecificpurposefortheirparententerprises(e.g.insales,productionorresearchanddevelopment).


Section8oftheActprohibits,andviewsasanti-competitive,anycategoryofagreement,decisionorconcertedpracticewhichhasasitsobjectoreffect,theprevention,restrictionordistortionofcompetitiontoanappreciableextentinZambia.Section9oftheActspecificallyprohibitshorizontalagreementsbetweenenterpriseswhich:

• fix(directlyorindirectly),apurchaseorsellingprice,oranyothertradingcondition;

• dividemarketsbyallocatingcustomers,suppliersorterritories;

• involvebid-rigging;• setproductionquotas;or• provideforcollectiverefusaltodealin,or

supply,goodsorservices.

Inviewoftheforegoing,cartelconductisprohibited.

Forexample,in2013,theCCPC’sBoardofCommissionersfinedOmniaFertilizerZambiaLtdandNyiomboInvestmentsLtd,5%oftheirrespectiveannualturnoversforcontraveningSection9(3)oftheAct.TheBoardfoundthatOmniaandNyiomboparticipatedincartelisticbehaviourwhilesupplyingfertiliserundertheFarmerInputSupportProgramme(FISP)between2007and2011.TheBoardfurtherdecidedthatbothOmniaandNyiomboshouldbeprosecutedinaccordancewithSection9oftheAct,astheyhadenteredintoananti-competitiveagreementaimedatdividingthemarketsforthesupplyoffertiliserundertheFISP.TheBoardfurtherheldthatOmniaandNyiombo’sagreementhadexpresslystatedthattheywouldco-operateinthedistributionandsupplyoffertiliserinZambiaandthattheprimaryobjectivewasforeachcompanytofocusonsupplyinganddistributingfertiliserintheallocatedzoneswhereithadasustainablecompetitiveadvantage.

TheBoardnotedthatthetrendhadbeenthatwhereoneofthecompaniessubmittedatender,theotherdidnot,leadingtoonlyoneofthemwinningthetender.TheBoardalsoobservedthatthetwocompanieswereexchanginginformationrelatingtothepricesoffertiliserandappearedto

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haveengagedinbid-riggingduringthetenderingprocessforfertiliserundertheFISP.Thereafter,thecompaniesappealedandtheTribunalfoundtheCCPC’sdecisiontobenullandvoidandsetitasideforirregularity.InSeptember2014,theHighCourtforZambiaupheldtheTribunal’sdecision.


Section55oftheActpermitstheCCPCtoconductinvestigations,eitheratitsowninitiativeoruponreceiptofacomplaint,wheretherearereasonablegroundstobelievethatthereis,orislikelytobe,acontraventionofanyprovisionoftheAct.Uponcommencingtheinvestigation,theCCPCgiveswrittennoticetothepersonunderinvestigationandmayalsocarryoutpublicconsultationsduringtheinvestigation.Forpurposesofaninvestigation,theCCPCmay,bynoticeinwritingservedonanyperson,requirethatpersontoeither:

• furnishtotheCCPC,inastatementsignedbythatpersonordirector,memberorothercompetentofficer,employeeoragentofthebodycorporate(asthecasemaybe),anyinformationpertainingtoanymatterspecifiedinthenoticewhichtheCCPCconsidersrelevanttotheinvestigation;

• producetotheCCPC,orthepersonspecifiedinthenotice,anyotherdocumentorarticle,asspecifiedinthenotice,whichrelatestoanymatterwhichtheCCPCconsidersrelevanttotheinvestigation;or

• appearbeforetheCCPC,orthepersonspecifiedinthenotice,togiveevidenceorproduceanydocumentorarticlespecifiedinthenotice.

Uponcommencinganinvestigation,theBoardmay,pursuanttoSection7oftheAct,appointasuitablepersontobeaninspectoronsuchtermsandconditionsastheBoardmaydetermine.SuchinspectorhastheauthoritytoapplytotheHighCourtforawarrantthatwouldenablehimorhertoconductasearchandseizure.Section7(4)oftheActprovidesthataninspectormay,withawarrant,atanyreasonabletime:

• enterandsearchanypremisesoccupiedbyanenterpriseoranyotherpremises,includingaprivatedwelling,whereinformationor

documentswhichmayberelevanttoaninvestigationmaybekept;

• searchanypersononthepremisesiftherearereasonablegroundsforbelievingthatthepersonhaspersonalpossessionofanydocumentorarticlethathasabearingon

• theinvestigation;• examineanydocumentorarticlefoundonthe

premisesthathasabearingontheinvestigation;• requireinformationtobegivenaboutany

documentorarticleby:• theownerofthepremises;• thepersonincontrolofthepremises;• anypersonwhohascontrolofthe

documentorarticle;or• anyotherpersonwhomayhave

theinformation;• takeextractsfromormakecopiesofanybook

ordocumentfoundonthepremisesthathasabearingontheinvestigation;

• useanycomputersystemonthepremises,orrequireassistanceofanypersononthepremisestousethecomputersystem,to:• searchanydatacontainedin,oravailable

tothecomputersystem;• reproduceanyrecordfromthedata;• seizeanyoutputfromthecomputerfor

examinationandcopying;and• attachand,ifnecessary,removefromthe

premisesforexaminationandsafeguardinganydocumentorarticlethatappearstohaveabearingontheinvestigation.


TheActempowerstheCCPCtosetoutguidelineswithrespecttoaleniencyprogramme.TheCCPChasaleniencyprogrammepolicyinplace.Theleniencyprogrammeallowsforpartialortotalexemptionfromanyprescribedpenaltiesthatwouldotherwisebeapplicabletoaparticipantofaprohibitedagreement(i.e.anyagreementsdeemedasanti-competitiveorrestrictiveofcompetitionundertheAct)whichconfirmstheexistenceoftheprohibitedagreementandself-reportsitsparticipationthereintotheCCPC.

Anenterprisewhichisfoundtohaveengagedincartelactivitiesisliableforafinenotexceeding10%ofitsannualturnover.TheActalsoprovidesforcriminalsanctionsforcartelconduct.TheCCPCmayimposeafinenotexceeding500000penalty


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units(ZMW150000)orimprisonmentforaperiodnotexceedingfiveyears,orboth,onanydirectorormanagerofanenterprisethatisfoundtohaveengagedincartelactivities.

TheActfurtherprovidesthatwhereapenaltyisnotspecificallyprovidedfortheoffence,thepunishmentuponconvictioninrespectofapersonwhocommitsthatoffenceisafinenotexceeding100000penaltyunits(ZMW30000)orimprisonmentforaperiodnotexceedingoneyear,orboth.


TheActcontainsaprovisionforamechanismtoapplyforexemptionfromcertainpartsoftheAct.Forinstance,anenterprisethatwishestobeexemptedfromaprohibitionunderSection12(whichrelatestotheprohibitionofhorizontalagreements)mayapplytotheCCPCforexemptionintheprescribedmannerandformuponpaymentoftheprescribedfee.


TheActprohibitsresalepricemaintenancewithrespecttoverticalagreements.Itisaperseprohibition.However,asupplierorproducermayrecommendaminimumresalepricetothere-sellerofagoodorserviceif:

• thesupplierorproducermakesitcleartothere-sellerthattherecommendationisnotbinding;and

• theproducthasapricestatedonitandthewords‘recommendedprice’appearnexttothestatedprice.


Thereisnospecificprohibitionofexclusiveagreementsunlesstheagreementviolatesoneoftheprohibitionsintheverticalandhorizontal

provisions.TheActprohibitscertainhorizontalagreementsbetweenenterprises.Ahorizontalagreementbetweenenterprisesisprohibitedperse,andvoid,iftheagreement:• directlyorindirectlyfixesapurchaseorselling

priceoranyothertradingconditions;• dividesmarketsbyallocatingcustomers,

suppliersorterritories,specifictypesofgoodsorservices;

• involvesbid-rigging,unlessthepersonrequestingthebidisinformedofthetermsoftheagreementpriortothemakingofthebid;

• setsproductionquotas;or• providesforcollectiverefusaltodealin,or

supply,goodsorservices.

Further,theActprohibitsperseverticalagreementsthatprovideforminimumresalepricemaintenanceunlesstheagreementmakesitclearthatarecommendedpriceisnotbindingandistherecommendedpriceonly.


TheActprovidesthatanenterprisemustrefrainfromanyactorconductif,throughabuseoracquisitionofadominantpositionofmarketpower,theactorconductofthatenterpriselimitsaccesstomarketsorotherwiseundulyrestrainscompetition,orhasorislikelytohaveanadverseeffectontradeortheeconomyingeneral.

Thethresholdfordominancerelatestothesupplyofgoodsorservicesif30%ormoreofthosegoodsorservicesaresuppliedoracquiredbyoneenterpriseor60%ormoreofthosegoodsorservicesaresuppliedoracquiredbynotmorethanthreeenterprises.

Abuseofdominanceincludes:


• limitingorrestrictingproduction,marketoutletsormarketaccess,investment,technicaldevelopmentortechnologicalprogressinamannerthataffectscompetition;

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• applyingdissimilarconditionstoequivalenttransactionswithothertradingparties;

• makingtheconclusionofcontractssubjecttoacceptancebyotherpartiesofsupplementaryconditionswhichbytheirnatureoraccordingtocommercialusagehavenoconnectionwiththesubjectmatterofthecontracts;

• denyinganypersonaccesstoanessentialfacility;

• charginganexcessivepricetothedetrimentofconsumers;or

• sellinggoodsbelowtheirmarginalorvariablecost.


In2016,undertheAct,accordingtoamediaoutlet,theCCPCfinedtheZambiaAirportsCorporationLtd(ZACL)3%ofitsannualturnoverforabusingitsdominantpositionofmarketpower.ThemediaoutletfurtherreportedthattheCCPC’sexecutivedirector,ChilufyaSampa,statedthatZACLwasdominantandhadmarketpoweranditsabilitytoapplydifferentialratestoairlineclientsandgroundhandlersforequivalenttransactionswasaviolationofSection16(1)andSection16(2)(c)oftheAct.Accordingtothemediaoutlet,SampafurtherstatedthatZACL’sthreatstowithdrawconcessionstoZambeziAirlinesandtheapplicationofexcessivechargestoZEGALtdforwaterandthehandlingofEmiratesAirlinesconstitutedanabuseofdominance,asithadaneffectonhowtheseenterprisestradeandtheeconomyingeneral.ThismatterisnowbeforetheTribunal.


TheCCPCmayimposeafineonanenterprisefortheabuseofadominantposition.Thefineimposedmaynotexceed10%oftheenterprise’sannualturnover.


Theprovisionsinrelationtopricediscriminationrelatetotheabuseofdominancewheredirectlyorindirectlyimposingunfairpurchaseorsellingprices,orotherunfairtradingconditions,isunlawful.


BoarddecisionsrelatingtomergerreviewsissuedbytheCCPCaretypicallymadeavailableonlytothepartiesinvolvedandarenotpublishedontheCCPC’swebsite(www.ccpc.org.zm).However,theCCPChaspublishedcertainmergerdecisionsonitswebsite(www.ccpc.org.zm/press-releases/).MembersofthepublicmaysubmitwrittenrequestsforcopiesofBoarddecisionstotheCCPC’sexecutivedirector.

CORPUS LEGAL PRACTITIONERS ElundaOfficePark,ElundaII,GroundfloorStandNo.4645AddisAbabaRoundaboutRhodesparkPOBox32115LusakaZambiaT:+260211372303


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Zimbabwe

SCANLEN & HOLDERNESS Nellie Tiyago-Jinjika

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1. What is the relevant competition legislation and who are the enforcers? ThemainlegislationistheCompetitionAct(Chapter14:28)whichwasadoptedin1996andbecameoperationalin1998.ThisActappliestoalleconomicactivitieswithinorhavinganeffectwithinZimbabwe(includingtheactivitiesofthegovernmentandotherstatutorybodiesorparastatalorganisations).TheCompetitionAmendmentActNo.29of2002wasthenlaterenacted.Notably,theAmendmentActmadepre-mergernotificationofmergersmandatoryformergersoveracertainthreshold.

Thefollowingregulationshavealsobeenputinplace:Competition(NotificationofMergers)Regulations(StatutoryInstrument270of2002);Competition(AuthorisationofMergers)Regulations(StatutoryInstrument295/1999);Competition(FeesforApplicationforAuthorisationofMergersandRestrictivePractices)StatutoryInstrument97of2001;Competition(NotifiableMergerThresholds)Regulations(StatutoryInstrument195of2002);Competition(Anti-dumpingandCountervailingDuties)(Investigation)Regulations(StatutoryInstrument266of2002);Competition(FeesforInspectionandCopyingofDocuments)Regulations(StatutoryInstrument266of2001);Competition(Safeguards)(Investigation)Regulations(StatutoryInstrument217of2006);andCompetition(AdvisoryOpinion)Regulations(StatutoryInstrument26of2011).

EnforcementofthecompetitionlawsisbytheCompetitionCommission(theCommission),abodycorporateestablishedbytheAct.


ThedecisionthathasnowbeentakenistoamendthecurrentlegislationandisconsideringtheratificationoftheCOMESAcompetitionlawswhichwillthereafterbecomepartoftheZimbabwean

CompetitionLaws.AnamendmentratherthanarepealoftheActwillalsoresultinthemaintenanceofthepresenttradetariffsprovisions.


BelowisasummaryofthemattersthathavebeenattendedtobytheCommissionduringtheperiod2009to2016.


TheCommissionhasbeen,overtheyears,quiteactiveinitsmergerregulationfunction;however,thecurrentfocusareaisnowinvestigationofcartels.ThedraftamendmentActincludesdeterrentadministrativepenaltiesforengagingincartelconduct.


Mergersaredefinedasthedirectorindirectacquisitionorestablishmentofacontrollinginterestbyoneormorepersonsinthewholeorpartofthebusinessofacompetitor,supplier,customerorotherpersonwhetherthatcontrollinginterestisachievedasaresultofthepurchaseorleaseofthesharesorassetsofacompetitor,supplier,customerorotherperson;theamalgamationorcombinationwithacompetitor,supplier,customerorotherperson;oranyothermeans.Inorderforamergertobenotifiable,thetransactionmustmeettheprescribedthresholdwithcontrollinginteresttobevestedintheacquiringfirm.

YEAR 2009 2010 2011 2012 2013 2014 2015 2016

MERGERS/ACQUISITIONS

15 14 16 11 13 8 25 20

RESTRICTIVE PRACTICES (COMPLAINTS)

15 8 21 16 24 7 5 3


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ThecurrentthresholdfornotifiablemergersisUSD1.2million.Thisisdeterminedthrough(i)combiningtheannualturnoveroftheacquiringfirmandthetargetfirminrelationtoanyparty,whoisin,intoorfromZimbabwe;or(ii)combiningtheassetsinZimbabweoftheacquiringfirmandthetargetfirm.InternationalAccountingStandardsareusedforcomputation.


ApartytoanotifiablemergerisrequiredtonotifytheCommissioninwritingoftheproposedmergerwithin30daysofeithertheconclusionofthemergeragreementbetweenthemergingpartiesortheacquisitionbyanyoneofthepartiestothatmergerofacontrollinginterestinanother.ImplementationofamergerwithouttheapprovaloftheCommissionmayresultinapenaltyof10%ofeitherorbothofthemergingparties’annualturnoverinZimbabweasreflectedintheaccountsofanypartyconcernedfortheprecedingfinancialyear.Thereis,therefore,onlyacaponthepercentageapplicable.TheCommissionmayrecoverthispenaltythroughcivilproceedings.


Currentlythenotificationfilingfeeis0.5%ofthecombinedannualturnoverorcombinedvalueofassetsinZimbabweofthemergingpartieswhicheverishigher.TheminimumpayablebeingUSD10000andmaximumbeingUSD50000.Theannualturnoverofafirmatanygiventimeshallbebasedontheincomestatementfortheimmediatepreviousfinancialyear,andtheassetvalueofafirmatanytimeshallbebasedonthegrossvalueofthefirm'sassetsasrecordedonthefirm'sbalancesheetasattheendoftheimmediatepreviousfinancialyear.Wheretheacquiringfirmisasubsidiarycompany,thecombinedturnoverofthegroupofcompaniesinwhichtheacquiringfirmisasubsidiaryshallbeincluded.Wherethetargetfirmcontrolsanyotherfirmorbusinessthecombinedturnoverofsuchfirmshallbeincluded.Paymentofthefilingfee

shallbeinanyconvertiblecurrencycalculatedattheofficialexchangerateprevailingattheendoftheimmediatepreviousfinancialyear.


ThemergerthresholdappliestothecombinedannualturnoverorassetsinZimbabwewithnoqualificationwithregardtotheoriginoftheparticipants.IftwoforeigncompanieswhicharemerginghaveacombinedannualturnoverorassetsinZimbabweabovethethreshold,thensuchamergerrequirestheapprovaloftheCommission.


TheCommissionwelcomespre-notificationcontactandisevenwillingtoprepareawrittenopinionontheintendedmerger.


TheCommissionwilltakeaholisticviewoftheeffectofaproposedmerger.Theinformationsoughtfromthepartiesfocusesonmattersdirectlyorindirectlyrelatedtocompetition.Factorssuchastheimpactofamergeronemployment,branddevelopment,consumerprotectionandpricecontrolarealsoconsidered.


TheCommissionhasextensivepowerstoinvestigatewhetheranymergerhasbeen,isbeingorisproposedtobemadeand/orthenatureandextentofanycontrollinginterestthatisheldormaybeacquiredinanymergerorproposedmerger.Theinvestigationcanincludecallingforwrittensubmissionsandholdinganenquiryintothematter.Inthecourseofsuchaninvestigation,customersurveysmaybeconductedandcompetitorsmaybeinterviewed.TheextenttowhichthesecommentsandsubmissionswillbeinfluentialiswithinthediscretionoftheCommission.

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AnypersonwhomtheCommissiondeemsnecessarycanbeinterviewed.Additionally,unlessthemergerwillbeprejudicedorwhereitisunlikelythatinformationthatwillmateriallyassisttheCommissionwillbeobtained,theCommissionisrequiredtopublishanoticeinthegazetteandinsuchnewspaperastheCommissionconsidersappropriatecallinguponanyinterestedpersonwhowishestodosotosubmitwrittenrepresentationstotheCommissionwithregardtotheauthorisationsought.


Mergingpartiesmayberequiredtoprovideadditionalinformationwhichcouldbeusefulforasuccessfulapplication.


AnappealagainstthedecisionoftheCommissionmaybefiledbyanypersonaggrievedbythedecision.TheappealisfiledwithAdministrativeCourtatwhichpointtheAdministrativeCourtRulesapplywithrespecttotheformofthenoticeofappealandthemannerinwhichtheproceedingswillcontinuethereafter.


Thedefinitionofmergeriswideenoughtoincludejointventuresasitexpresslystatesthatmergerincludesamalgamationorcombinationwithacompetitor,supplier,customerorotherperson.


Certainpracticesthatareakintocartelswithinthefollowingbroadlydefinedcategoriesofunfairbusinesspracticeandrestrictivepracticeareprohibited;an‘unfairbusinesspractice’which

includescartel-likeactivitysuchaspredatorypricing,bid-riggingandcollusivearrangementsbetweencompetitors;a‘restrictivepractice’whichisdefinedinbroadtermsandistakentomeananyofthefollowingthatrestrictscompetitiondirectlyorindirectlytoamaterialdegree:(i)agreement,arrangementorunderstandingwhetherenforceableornotbetweentwoormorepersons;(ii)anybusinesspracticeormethodoftrading;(iii)anydeliberateactoromissiononthepartofanyperson,whetheractingindependentlyorinconcertwithanyotherperson;or(iv)anysituationarisingoutoftheactivitiesofanypersonorclassofpersons.

Collusivearrangementsbetweencompetitorsleadingtopricefixingand/ormarketdivisionandanti-competitivepracticeshavenotbeentolerated.Investigationsintocollusivearrangementshavebeenundertakeninanumberofindustriesandsectors,includingthecommercialbankingservicessector,thecementindustry,thedrycleaningservicessectorandtherealestateindustry.


TheCommissionhasthepowertoinvestigateanyrestrictivepractice,businessagreement,arrangement,understandingormethodoftradingwhichcreatesormaintainsarestrictivepractice.ApreliminaryinvestigationmaybeconductedbytheCommission'sinvestigatingofficerswhomayarriveatthepremisesofthepartieswithoutnotice.InvestigatingofficersandtheCommissionitselfarepermittedto,atreasonabletimes,enteranypremiseswherethereisareasonablesuspicionthatthereisabook,recordordocumentrelatingtoanyrestrictivepracticeorunfairtrade-practiceoranyactualorpotentialmergermonopolysituation.Anypersonwhodoesnotco-operateorhindersaninvestigation,commitsanoffenceforwhichafineand/orimprisonmentofsixmonthsmaybeimposed.

TheCommissionmayrequirethatduringtheprocessofinvestigation,therestrictivepracticeinquestionceasesandthatpersonsmakewrittensubmissiontoassistwiththeinvestigation.NoticeofthiswillbepublishedintheGovernmentGazetteandalocalnewspaper.Thenoticeremainsvaliduntilcompletionoftheinvestigationorsixmonths,whicheveristheshorter.


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Administrativepenaltiesofupto10%oftheannualturnoverofeitherorboththeacquiringandtargetundertakingsinZimbabwe,intheprecedingyear,maybeimposed.

Further,anyindividualwhoentersinto,engagesin,orotherwisegiveseffecttoanunfairtradepracticeshallbeguiltyofanoffenceandliabletoafinenotexceedinglevel12(USD2000)ortoimprisonmentforaperiodnotexceedingtwoyears,ortoboth;orinanyothercase,toafinenotexceedinglevel14(USD5000).


ThereisnoprovisionprovidingforexemptionfrompartsoftheAct.


Yes,asthisisanunfairbusinesspractice.


Theseareunlawfulwheretheyinclude(i)supplyingorofferingtosupplygoodsorservicesataparticularprice;or(ii)givingorallowing,orofferingtogiveorallow,adiscount,allowance,rebateorcreditontheconditionthattheotherpersonagreesnottoacquiregoodsorservicesofaparticularkindordescription,ornotacquirefromacompetitorofthesupplierornottore-supplyspecifiedpersonsorplaces.


Abuseofadominantpositionortheabuseofsubstantialmarketcontrolisprohibitedunlessitisprovedthatthereexistpro-competitive

features.Pro-competitivefeaturesincludethefactthatthepracticedoesnotinanywayrestrictordiscouragecompetitiontoamaterialdegreeinanybusiness,tradeorindustryandisunlikelytodoso;orthepracticeisreasonablynecessarytoprotectconsumersagainstinjuryorharm;orthattheterminationofthepracticewoulddenyconsumersotherspecificandsubstantialbenefitsoradvantagesenjoyedbythem.


IntheCigaretteDistributionCasetheCommissionreceivedcomplaintsfromBritishAmericanTobaccoZimbabwe(Holdings)Ltd(BAT)thatCutRagProcessors(Pvt)Ltd,anewentrantintothecigarettemanufacturinganddistributionindustry,wasdistributingitsnewcigarettebrandwithahealthwarningclausethatdidnotconformwiththeclausestipulatedbytheMinistryofHealthandChildWelfare,andthiswasharmingthesaleofBATproductsonthemarket.TheCommissionnotedthatBATdominatedtherelevantmanufacturedcigarettemarketwithamarketshareofabout96%,whileCutRagProcessors’shareofthemarketwasmarginalcomprisingofonly2.5%ofthemarketandtheremaining1.5%comprisingofimports.Interestingly,eventhoughBATwasthefirmthathadlaidthecomplaint,itwasBATthatwasfoundtobeabusingitsdominantpositioninthesensethatitwasengaginginpredatorybehaviourwhichhadtheeffectofdrivingCutRagProcessorsoutofthecigarettedistributionmarketorpreventingtheeffectiveentryofthecompanyintothecigarettemanufacturingindustry.


TheCommissionmaydeclarethemonopolytobeunlawful;requirethepersonexercisingcontroloverthebusinessoreconomicactivityconcernedtotakestepstoterminatethemonopolywithinaspecifiedperiod;prohibitorrestricttheacquisitionbythepersonofanyundertakingorassetswhichintheCommission’sopinionwillleadtoamonopolyormerger;requirethepersontosecuredissolutionofanyorganisationorterminationofanyassociation;andgenerallymakesuchprovisionthatis,intheopinionoftheCommission,reasonablynecessarytoterminateorpreventamonopolysituationoralleviateitseffects.

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Therearenospecificrulesrelatingtopricediscrimination.


OrdersthataremadebytheCommissionmaybepublishedintheGovernmentGazetteofZimbabwe.

SCANLEN & HOLDERNESS13thfloor,CABSCentre74JasonMoyoAvenueHarareZimbabweT:+2634799636/+263702561


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Key Contacts

ROBERT LEGHChairmanandSeniorPartnerJohannesburg,SouthAfrica T:+27116699352E: [email protected]

ASHLEIGH HALECo-HeadofCorporateJohannesburg,SouthAfrica

T: +27116699342E: [email protected]

CLAIRE REIDYPartnerJohannesburg,SouthAfrica


GOMOLEMO KEKESIPartnerJohannesburg,SouthAfrica


IONA DHLADHLAPartnerJohannesburg,SouthAfrica


WILLIAM KASOZIManagingPartner,UgandaKampala,Uganda T: +256414254540E: [email protected]

DEREK LÖTTERHeadofCompetitionJohannesburg,SouthAfrica


WILBERT KAPINGAManagingPartner,TanzaniaDaresSalaam,Tanzania


JUDD LURIEPartnerJohannesburg,SouthAfrica T: +27116699651E: [email protected]

JOYCE KARANJA-NG'ANG'APartnerNairobi,Kenya:CoulsonHarney

T:+254202899000E: [email protected]

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LUCINDA VERSTERPartnerJohannesburg,SouthAfrica

T: +27116699422E:[email protected]

MARYANNE ANGUMUTHOOPartnerJohannesburg,SouthAfrica


RUDOLPH LABUSCHAGNEPartnerCapeTown,SouthAfrica T: +27214807908E: [email protected]

TAMARA DINIPartnerCapeTown,SouthAfrica

T: +27214807910E:[email protected]

To view profiles of our lawyers, please visit www.bowmanslaw.com

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Cape TownT: +27214807800E:[email protected]

Dar es SalaamT: +255768988640E: [email protected]

DurbanT: +27312650651E:[email protected]

JohannesburgT: +27116699000E:[email protected]

KampalaT: +256414254540E:[email protected]

NairobiT: +254202899000E:[email protected]

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