312022Mar
Competition laws proliferating across the African continent

Competition laws proliferating across the African continent

An increasing number of African countries are strengthening their competition legislation by introducing new laws or amending existing ones.

A number of regional competition regulators have also been established.

These include the West African Economic Monetary Union, the East African Community, the Common Market for Eastern and Southern Africa, the Economic Community of West African States, and the Economic and Monetary Community of Central Africa.

Competition incentivises companies to excel and differentiate themselves in the market. It fosters innovation, diversity of supply, attractive prices for customers and stimulates economic growth.

According to the Bertelsmann Transformation Index, comprehensive competition laws have been enforced to a greater or lesser extent in at least 46 African jurisdictions.

Judging by the feedback from LEX Africa members from across the continent who participated in this article it is apparent that some African countries are further ahead than others in establishing and implementing competition laws.

The Competition Authority of Kenya has mainly been focused on merger control and investigation of restrictive trade practices, including abuse of buyer power, says Joseph Ng’ang’ira, partner at Kaplan & Stratton in Nairobi.

“Between 2020 and 2021, the Authority investigated 50 cases of alleged abuse of buyer power in eight sectors: retail, manufacturing, insurance, agriculture, telecommunications, construction, distribution, and art,” he says.

In April 2021, the Competition Tribunal in Kenya issued its first decision on the abuse of buyer power, involving the Carrefour supermarket.

The case involved an appeal of a decision of the Authority where it had found the appellant guilty of abuse of buyer power, and the Tribunal affirmed its decision.

The Tribunal ordered Carrefour to revise all its agreements with its approximately 700 suppliers within a month, to expunge all provisions that amounted to abuse of buyer power and refund the rebate deducted.

“Additionally, the Tribunal imposed a financial penalty of 10% against Carrefour’s gross annual turnover in Kenya from its sale of the subject products in the preceding year,” says Ng’ang’ira.

“We expect new rules on regulation of buyer power to be issued by the Authority in the course of the year,” he added.

In the area of merger approvals, he says in May 2020, the Tribunal overturned the majority of the conditions imposed by the Authority on a contemplated merger between Airtel and Telkom Kenya.

Raimund Strzelecki, associate at Koep Attorneys in Windhoek says the Namibian Competition Commission has investigated and acted against anti-competitive practices in various industries.

He says the Commission has been involved in a number of such cases before the High Court of Namibia.

In 2018 the Commission initiated an investigation for alleged price fixing against the Pharmaceutical Society of Namibia (PSN) and its member pharmacies (collectively, the respondents).

“The Commission’s investigation, the submissions received, and the evidence uncovered, allegedly indicated that PSN had a long-standing mandatory rule that required its member pharmacies to impose a 50% mark-up on the dispensing of medicine to its customers,” says Strzelecki.

In 2021/2022, following the investigation, the Commission resolved to institute proceedings in the High Court of Namibia against the respondents for an order declaring, among other things, that they had contravened the Competition Act, 2003. The case is on-going.

On new laws and amendments, Strzelecki says in 2020, the Commission proposed a draft bill, which will repeal the existing Act in its entirety and introduces several important amendments to competition/antitrust law in Namibia.

These include a reconfiguration of the competition authority’s structure and power and will enhance its power, particularly in relation to market inquiries.

“The Bill remains in draft form and no timelines for its implementation have yet been determined,” he says.

Hilarie Kanga, corporate lawyer at FDKA Advocats in Abidjan says it would appear that Côte d’Ivoire’s Competition Commission has already issued three opinions since the beginning of 2022, although these have not been made public.

She says the competition regulators have been active in Côte d’Ivoire particularly in the area of price fixing and an ordinance has been adopted in the Council of Ministers.

“This ordinance allows the Government to regulate the prices of essential goods, products and services or those for mass consumption, particularly in sectors of economic activity or in localities of the territory where price competition is limited due to a monopoly situation or legislative or regulatory provisions, or supply difficulties.

“Also, a decree establishing the list of products and services subject to competition and price regulation and a decree capping the prices of certain consumer products have been adopted,” says Kanga.

In Angola, the Competition Regulatory Authority (ARC) was created in December 2018, according to Paulette Lopes, senior partner at FBL Advogados in Luanda.

After the initial impact of the pandemic in 2021 ARC took measures to educate the public on its activities relating to various sectors, she says.

In the M&A area, the ARC imposed conditions on the merger between Sonangola and Total, as well as the acquisition by Sonnagol of Trafigura´s Group.

“Subsequently, in terms of restrictive practices, the complaint form, the guidelines for the methodology to be adopted in the application of fines, the competition guide for company associations, the competition compliance guide and the guide to combat collusion in public procurement were approved,” says Lopes.

She says the transformation of ARC into an independent administrative entity was announced in December, and a complaint portal was recently opened.

Merna Osama, associate at Marghany Advocates in Cairo, says in recent years, the Egyptian Competition Authority (ECA) has been active in preventing monopolistic activities to maintain economic stability.

Such activities include detecting cartels, price fixing, market allocation, collusive tendering and the limitation on production or distribution of products.

To encourage market players to report cartels in the market, in June 2020 the ECA issued its Leniency Policy Guidelines whereby the first whistle-blower is exempt from any sanctions.

“Examples of competition/antitrust cases in Egypt, include complaints received by the ECA against Al-Ahram Beverages Group in November 2017, October 2019, and March 2019 regarding its alleged abuse of dominance of the alcoholic beverages market,” says Osama.

The ECA’s subsequent investigation revealed that Al-Ahram had infringed the competition law, among other things by granting retroactive loyalty rebates to its clients to maintain exclusivity and exclude competitors from the market.

The Authority issued an administrative decision in December 2020, which imposed on al-Ahram measures for ceasing the infringements and to remedy the harm incurred in the market, says Osama.

In November 2020, the Egyptian cabinet of ministers approved amendments to the Competition Law that will grant the ECA broader supervisory powers on mergers and acquisitions to limit monopolistic and anti-competitive practices.

The amendments would also put in place an official pre-merger control system for the first time in Egypt under the Competition Law.

“The amendments are yet to be referred to the Egyptian parliament. Once discussed, and if approved, the amendments will be enacted into law,” says Osama.

The principal competition regulator in Nigeria is the Federal Competition and Consumer Protection Commission (FCCPC), which is empowered, among other things, to prevent and punish anti-competitive practices, according to Bosede Giwa-Osagie, partner at Giwa-Osagie & Co in Lagos.

During the pandemic, the FCCPC issued a warning to those engaged in price gouging and arbitrary increases in prices of protective and hygiene products.

“In response to this regulatory action, a leading online retail marketer, decided to sweep off from its platform and delist over 300 products belonging to several sellers of protective and hygiene products for price gouging,” says Giwa-Osagie.

This regulatory action on the part of FCCPC earned Nigeria a commendation from the United Nations Conference on Trade and Development (UNCTAD).

“Also, the FCCPC has recently moved to sanction airline operators in Nigeria for alleged conspiracy in price-fixing by increasing air fares by at least 66%,” says Giwa-Osagie.

In 2021 the Commission published several draft regulations, which are in the process of being finalised and include Abuse of Dominance Regulation, Restrictive Agreement and Trade Practices Regulation, and Notice on Market Definition, says Giwa-Osagie.

“On a similar note, the FCCPC recently launched a cartel and other anti-competitive conduct investigation into the shipping and freight forwarding industry in Nigeria in breach of the Federal Competition and Consumer Protection Act (FCCPA),” says Ivy Osiobe, executive associate at Giwa-Osagie

With regard to legislative changes, there has been an amendment to merger control in the finance sector, which is regulated by the Central Bank of Nigeria and the governing law is the Bank and other Financial Institutions Act. (BOFI Act).

“The BOFI ACT, which was recently amended in 2020 stipulates that the provisions of the FCCPA will no longer apply to transactions involving banks and other financial institutions save sections 92 (1)(2)(3), 94 and 98,” says Osiobe.

Dev Erriah, managing partner at Erriah Chambers Mauritius, says the active regulator in Mauritius is the Competition Commission, which is regulated and mandated under the Competition Act 2007.

“Collusion is tackled in section 41 of the Competition Act 2007. The Rules of Procedure 2009 (CC1) also apply to collusive agreements.  The Guidelines CC3 – Collusive Agreements deal with collusive agreements and price fixing,” he says.

The case of Visa Worldwide Pte Limited & ORS v The Competition Commission of Mauritius & ORS (2020) SCJ 117 established that the court can exercise its discretion and order a stay of execution of the decision and directions of the Competition Commission.

He says the latest amendment to the Competition Commission Rules of Procedure was implemented in 2021.

The amendment deleted a rule which stipulated that “A copy of the report shall be published on the Commission’s website”.

Alice Namuli Blazevic, partner at Katende Ssempebwa Advocates (KATS) in Kampala says Uganda does not have a general national competition legal regime.

“There is, however, a draft Competition Bill of 2004 that has yet to be debated by the Parliament of Uganda and enacted into law,” she says.

On the other hand, Uganda does have competition regulatory bodies for specific sectors such as telecommunications, electricity, pharmaceuticals, capital markets, financial services and banking, and insurance sector.

“These regulatory bodies through statutory instruments and policies have set the yardstick for competitive practices in Uganda,” says Blazevic.

It is also worth noting that Uganda is a member of two supranational entities with their own competition law regimes, which by virtue of Uganda’s membership apply to Ugandan businesses, says Sim Katende, another partner at KATS.

These are the East African Community (EAC) and Common Market of Eastern and Southern Africa (COMESA), “the latter of which is active in regulating regional competition law and practice,” says Katende.

In Uganda, the Ministry of Trade notified the public in January 2022 that it would fast track the passing of the Competition Bill which first came before the Parliament in 1998. Should this hold true, then the bill could be enacted in the current session of Parliament.

At a high level, the Bill proposes the establishment of a Competition Commission of Uganda that will ensure that the law is well enforced and applied.

And the Electricity (Amendment) Bill 2021 seeks to eliminate the monopoly of government entities with licence and approval to purchase all electricity generated. “This is pending in Parliament,” says Katende.

In Mozambique, competition law regulation was recently Amended through Decree no. 101/2021, of 31 of December, according to Daisy Nogueira, corporate lawyer at CGA in Maputo.

Under this decree the thresholds previously established, and which trigger the prior notification to the Competition Regulatory Authority in Mozambique, have been increased.

It has also been established that the simplified assessment procedure shall apply to the concentration operations which are below the notification thresholds.

That is, as long as the turnover generated individually in Mozambique by at least two of the companies that partake in the concentration is superior to 105 million Meticais, net of taxes directly related thereto.

She says, “in the past, there was no reference to the minimum threshold of 105 million Meticais.”

As to whether any further amendments to competition legislation are planned, she says the competition sector in Mozambique is new “and the Competition Regulatory Authority in Mozambique only started operating and receiving merger control notifications in 2021.”

In this light, she says, “we can foresee a growth of this sector, which, ultimately, also entails a development of the competition laws that regulate this sector.”

Ibrahim Sory Berthe, advocate at Satis Partners in Bamako, Mali, says the country provides for the organisational framework of competition through Act No. 2016-006.

And its implementing decree No. 2018-0332 sets the terms of application of the Act on the organisation of competition.

“In addition, over the last eight years we have witnessed the establishment of national competition authorities by the legislator,” says Berthe.

He says the Court of Appeal of Bamako recently ruled that the cellphone operators Orange-Mali and Moov-Malitel must pay damages to Malian consumers.

This was due to a scam involving the management of the answering machine system.

In Algeria, the Competition Council regulator has not been operational since 2021, says Rym Loucif, partner at Loucif & Co a business law boutique in Algiers.

“Five out of eight members of the college, including the president, have not been reappointed since January 2021. As a result, the Competition Council cannot validly take decisions.”

In Algeria, the competition law is governed by Ordinance No. 03-03 of 19 July 2003, as amended and supplemented, says Loucif.

“A new competition law is in preparation, scheduled for the second half of 2022,” she says.

Abdourahim Bodeen Diallo, lawyer at Thiam Associates in Guinea, says there is no competition/antitrust regulator in the country.

Furthermore, he says, “We are not aware of any project that intends to adopt a new competition/antitrust law.”

James Grundlingh, partner at Webber Newdigate in Maseru, says Lesotho does not have any specific legislation aimed at regulating anti-competitive practices.

“That being said, the Trading Enterprises Board has used its discretion to suspend and cancel trading licenses where there is considered to be anti-competitive behaviour taking place.”

He says an example is the High Court case of Professional Logistics International Pty Ltd v The Minister of Trade and Industry and four others.

The case confirmed a decision of the Trading Enterprises Board to cancel a trading licence on the basis of anti-competitive behaviour, where the appellant was using its dominant position to exclude its competitors in the transport industry.

On whether any new competition/antitrust laws are planned, he says, “There was a potential anti-competition bill being discussed in 2018, however, nothing has come of it.”

Pieter Steyn, Chairperson of LEX Africa and director at Werksmans says “South Africa has had a competition regime since 1999 and the competition authorities have been active in prosecuting cartels especially by means of a leniency policy.  During the covid era, the Commission has been active in prosecuting excessive pricing cases and recently referred Roche Holding AG to the Competition Tribunal for alleged excessive pricing of a breast cancer treatment drug, Trastuzumab.

Steyn notes that in merger control, certain recent amendments to the Competition Act have resulted in several mergers (which did not raise competition concerns) being approved subject to conditions relating to increasing or maintaining the shareholding of historically disadvantaged persons (“HDP”) in the target.  “The most controversial recent decision by the Commission was to prohibit the Burger King merger because the HDP shareholding would decrease from 68% to 0%.  Although the merger was subsequently approved subject to several conditions including a condition that an employee share ownership program acquire an “effective 5% interest” in the target, the issue of HDP ownership is a key issue to be taken into account by merging parties today”.

In conclusion, Steyn says “African competition law is developing rapidly and it is essential for both local and foreign business fully to understand the implications for them and to take proactive steps (including internal compliance programs) to ensure compliance.  Prevention is always better than cure especially given the serious consequences of competition contraventions which may include criminal prosecution, fines and reputational damage”.

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