Competition Law Developments in Africa
| Competition law is continuing to gain traction in Africa, and it is also developing as countries update their competition legislation. We set out below some developments across Sub-Saharan Africa. New Competition Legislation Pursuant to the enactment of Angola’s Competition Act in 2018, Angola’s Competition Law Regulation was approved in October 2019. The Act prohibits various restrictive practices, including abuse of dominance; abuse of economic dependence; and agreements between undertakings, including concerted practices or decisions, that have as their object or effect, the restriction of competition. The Act also regulates mergers, requiring notification prior to implementation of transactions involving undertakings which have a turnover above a certain level, or where the combined entity will have a market share of 50% or more. Parties found to have contravened the Act will be liable for a penalty of up to 10% of their annual turnover for the preceding year for prohibited conduct, and up to 5% for failure to notify a merger. Nigeria has also introduced competition legislation by way of the Federal Competition and Consumer Protection Act (“FCCPA”) which was signed into law in February last year. The regulatory body is the Federal Competition and Consumer Protection Commission (“FCCPC”), which will review all mergers and business arrangements to ensure that these arrangements do not distort or impede the markets. Guidelines regarding merger thresholds are yet to be set by the FCCPC. On 13 November 2019, guidelines were introduced to provide for merger filing procedures in relation to foreign to foreign mergers having a Nigerian component. The FCCPC will also monitor prohibited conduct such as abuse of dominance and restrictive agreements which have the effect of preventing, restricting or distorting competition. The penalty for contravening these provisions is up to 10% of a company’s annual turnover, as well as imprisonment and/or a fine for individuals of up to 10 million Nigerian Naira for particularly egregious offences such as cartel conduct. From a regional perspective, on 31 May 2019, ECOWAS launched its regional competition authority in Gambia. The regional competition authority has been established to implement the regional competition rules which were adopted in 2008 but which had not until now been enforced. It is our understanding that the core mandate of the regional authority will extend to keeping under review, commercial activities in the Community market to identify practices which may distort competition or which may adversely affect the economic interest of consumers. There are a number of countries in Africa with plans to introduce competition legislation, including Ghana, Uganda and South Sudan. Amendments to Competition Legislation South Africa has enacted an Amendment Act which was signed into law in February 2019, introducing wide ranging amendments to its competition legislation. The Amendment Act seeks, among others, to address the issue of economic concentration and to drive transformation in the South African economy. Some important amendments include: the enhancement of the market inquiry process; and amendments to the abuse of dominance provisions, aimed at protecting small businesses and those controlled by historically disadvantaged persons; including the introduction of buyer power provisions. From a merger control perspective, an important change is the proposed introduction of a committee of cabinet members and public officials which will, in parallel with the analysis by the competition authorities, consider proposed acquisitions by foreign firms which may adversely affect South Africa’s national security interests. The Amendment Act also does away with the so-called “yellow card” for certain first-time offences, and penalties of up to 10% of the firm’s annual turnover or exports in South Africa may now be imposed for all first-time offences. The maximum penalty for repeat offenders has increased to up to 25% of the firm’s annual turnover or exports. Some provisions are yet to be brought into effect, but Regulations regarding Price Discrimination and Buyer Power have been published, as have draft Guidelines on these issues. Botswana has also amended its competition legislation, with the President of Botswana having assented to new legislation in April 2018, which came into effect on 2 December 2019. Of significance is that the new legislation prohibits restrictive horizontal practices such as price fixing, market division and bid rigging. It also introduces the concept of personal liability, with directors of companies engaged in cartel conduct facing the risk of a fine of up to BWP 100 000 (approximately USD 10 000) or imprisonment for up to five years or both. In addition, the new legislation has expanded the abuse of dominance provisions to include; predatory conduct, tying and bundling, loyalty rebates, margin squeeze, refusal to supply or deal with other enterprises, including refusal of access to an essential facility, requiring or inducing any customer to not deal with other competitors, discriminating in price or other trading conditions and exclusive dealing. In instances where an enterprise has failed to notify a merger or implemented a merger before approval, the enterprise may attract a penalty of up to 10% of the purchase consideration or the combined turnover of the merging parties. Public interest is also given more prominence. Kenya also introduced amendments to its competition legislation relatively recently, in December 2016. Like South Africa, the abuse of buyer power has been recognized as a restrictive trade practice and is prohibited. Guidelines on this topic were recently issued, and the CAK has also formed a specific Buyer Power Unit to monitor compliance, with contraventions attracting financial penalties and the possibility of imprisonment not exceeding five years. As regards mergers, while previously all mergers required some form of notification to the CAK, in 2018, Kenya introduced thresholds below which firms would be exempt from filing a merger notification, although these are still quite low – 500 million Kenyan Shillings (“KSH”) (approximately US$ 4, 947, 000) combined assets or turnover of the parties in Kenya. Where mergers fall above that threshold but below KSH 1 billion, a somewhat simplified process is applied. Zimbabwe is also in the process of amending its legislation, although this has been in the pipeline for a while but has not yet been finalized. Corporate Leniency Policies A number of countries have introduced a leniency policy in an attempt to encourage whistleblowing of competition law contraventions. One recent example is Namibia, which launched its Corporate Leniency Policy (“CLP”) in respect of cartel activity in October 2018. Although a leniency applicant will not be subject to adjudication in the High Court, the CLP states that the granting of leniency will not protect the applicant from criminal or civil liability as result of participating in the cartel conduct. Mauritius recently made changes to its leniency programme. In January 2018, the CCM amended its CLP, which now affords initiators amnesty by allowing them to approach the CCM for leniency in return for a 50% reduction in the penalty. Conclusion It can be seen that competition law is a focus of many African jurisdictions. Companies doing business in Africa would do well to take note of these developments, and ensure that they comply with the various laws in place across the continent, to avoid the costly consequences of having been found to have contravened the provisions of the legislation. |
This article was written by Lesley Morphet, Partner, Johannesburg, Hogan Lovells
