DealMakers AFRICA Q1 2021

Recent developments in competition law on the African continent

by Tamara Dini and Nazeera Mia

Competition law on the African continent is ever evolving. Developments over the past year include the promulgation of new competition laws, operationalisation of a new competition regulator, amendments to existing legislation and merger notification thresholds, issuing of new regulations and guidelines, and developments in policy. Below are some notable highlights. 

Towards increased regulation and enforcement

 

  • In Angola, the Autoridade Reguladora da Concorrência (ARC) has completed its second year of operations and, in this short period, has concluded two protocols with international regulators; investigated five restrictive practice matters; and conducted six market inquiries. All this, in addition to reviewing mergers, issuing multiple regulations and guides, and hosting 12 competition law events, open to the public. 

  • In Botswana, the Competition and Consumer Tribunal issued its maiden decision since becoming operational in December 2019. This was in relation to an abuse of dominance complaint involving Gaborone Container Terminal.  

  • In the second half of last year, the CEMAC Competition Commission published regulations which determined that merger filing fees would now become payable. The new regulations also established the legal framework for the organisation and functioning of the Community Competition Commission, a technical advisory body for competition matters within the CEMAC Competition Commission.  

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  • In the Common Market for Eastern and Southern Africa, the COMESA Competition Commission (CCC) issued a Cautionary Note on Restrictive Business Agreements, explaining that it had in its possession anecdotal evidence of certain sectors operating in the Common Market that had engaged, and continue to engage, in agreements that include restrictive territorial clauses and market allocation, contributing to the forming of barriers to trade in the Common Market. The CCC explained that, until now, it had engaged in soft enforcement by requesting undertakings to notify such agreements and apply for exemptions, if needed. However, the CCC would now, in light of the ample time given to undertakings operating in the Common Market to sanitise their arrangements, be focusing on hard enforcement through screening, detection, investigation and punishment of offenders. 

  • At a regional level, the East African Community Competition Authority (EACCA) is expected to introduce merger notification thresholds via amendments to its existing competition law. Although the EACCA was formally established in January 2015, it has focused its efforts on combatting restrictive practices and has not yet commenced the assessment of merger transactions. It is expected that during this year, there will be more certainty around the EACCA enforcing merger control within its five member states, namely Burundi, Kenya, Rwanda, Tanzania and Uganda. A Competition Bill and Regulations have been published and are currently being commented on by certain stakeholders.

  • In May 2020, Kenya’s Competition Tribunal (Kenya Tribunal) handed down its first judgment since its establishment in 2017, in relation to a merger review application brought by Telkom Kenya Ltd and Airtel Networks Kenya Ltd, in respect of the Competition Authority of Kenya’s (CAK) conditional approval of the proposed merger. The Kenya Tribunal overturned six of the seven conditions originally imposed by the CAK. Although, ultimately, this merger was abandoned, going forward, it will be interesting to see how the Kenya Tribunal develops, and the extent to which it furthers Kenya’s competition law. Another interesting development in Kenya is that, in January 2021, the CAK launched an Informants Reward Scheme, financially incentivising persons and companies to blow the whistle on cartel conduct. Informants who provide credible intelligence, leading to the closure of an investigation and the levying of an administrative penalty against offending firms, will become entitled to up to 1% of the value of the administrative penalty, capped at KES 1 million (ZAR 130,000 / US$9,000 / €7,500). 

  • Mozambique’s competition law framework was adopted in 2013, and various pieces of legislation have since been enacted. Nevertheless, operationalisation of the Competition Regulatory Authority (CRA) had, for some years, lagged behind. As at March 2021, however, it is understood that the CRA is operational and receiving notification of mergers, albeit no prescribed merger notification forms are available as yet. 

  • In South Africa, a significant amount of focus continues to be placed on public interest aspects, and on opening markets for greater participation by small-and-medium sized enterprises (SMEs) and firms owned and controlled by historically disadvantaged persons (HDPs). Looking back at the large mergers approved by the Competition Tribunal over its 2019/2020 financial year, of the 19 conditional approvals, 13 of these were approved subject to public interest conditions, and it is expected that the competition regulators will continue to focus on public interest aspects, including those which would create a more inclusive economy for SMEs and HDPs in the future. It is also anticipated that the foreign investment provisions contemplated in the Competition Amendment Act, 2018, relating to the acquisition by foreign firms of the country’s national security interests, will come into effect. Another key expectation is that following some of the Competition Commission’s seminal wins in abuse of dominance cases last year, we are likely to see more of these matters prosecuted in the near future. 

  • In November 2020, Nigeria’s Federal Competition and Consumer Protection Commission published Merger Review Regulations, Merger Review Guidelines, and several ancillary instruments which provide the substantive framework for merger notification. Notably, the merger filing fee is calculated on a sliding scale, and as a percentage of either the combined annual turnover of the merger parties in, into or from Nigeria, or the transaction consideration, whichever is the higher. In the context of international mergers, the transaction consideration is far likely to outweigh turnover in, into or from Nigeria, and the merger filing fee payable may be astronomical and out of kilter with the actual effects of the merger in Nigeria, which may be limited.

  • In Zambia, the Competition and Consumer Protection Commission (CCPC) put in place several measures to clamp down on cartel activity, including offering to discount penalties, and introducing a temporary amnesty programme. The CCPC called upon persons/enterprises engaged in or having knowledge of anti-competitive behaviour to come forward and disclose such behaviour, in exchange for immunity from possible civil and criminal prosecution. The programme ran for a period of six months, beginning in October 2019 and ending in February 2020. Regrettably, the CCPC advised that the amnesty programme yielded zero results, with no market players coming forward. Following this, the CCPC remarked: “Let the cartel members out there know that it’s a matter of time before their conduct is uncovered. In 2019 alone, the Commission uncovered 55 suspected cartel cases and once investigations are concluded, the Commission will send a strong signal by prosecuting both the companies involved and their directors in their individual capacities”.

  • Perhaps the most significant development last year took place in Zimbabwe.  In June 2020, the Minister of Trade and Commerce, in consultation with the Competition and Tariff Commission, issued regulations amending the financial thresholds for mandatory merger notification (Regulations). Previously, a merger would be notifiable if at the end of the immediately preceding financial year, the merging parties’ combined annual turnover in or from Zimbabwe, or combined gross assets in Zimbabwe (whichever was the higher), equalled or exceeded US$1,2 million. However, in terms of the Regulations, a merger is now notifiable if the combined value of the merging parties is ZWL 10 million, equivalent to some US$27,632, which is significantly lower than the earlier threshold.

Enhancing existing laws 

  • In Egypt, the Egyptian Council of Ministers approved a draft proposal to amend Egypt's competition legislation, but the amendments have yet to be enacted. Notable is that Egypt will adopt a new merger control regime which would transform it from one which requires a post-closing filing, to one which will require a suspensory pre-closing filing.  

  • In 2020, a new Competition Bill was published in eSwatini, which will repeal the current Competition Act, 2007 in its entirety. Significant from a merger control perspective is that the definition of a merger is to be made clearer, and it appears that eSwatini may finally impose thresholds (financial or otherwise) for mandatory merger notification. 

  • Also in 2020, the Namibian Competition Commission (NaCC) published the Namibian Competition Bill in August, which proposes a repeal of the existing Competition Act and introduces sweeping changes to the competition law regime in Namibia. Some notable provisions include the establishment of a new level of regulatory authority, namely the Competition Adjudicative Panel (CAP), which is to function as the adjudicative arm of the NaCC. Whereas, currently, complaints are adjudicated by the Namibian High Court, the introduction of the CAP will result in swifter adjudication of competition law complaints. The most significant development, however, is the NaCC’s intention to per se prohibit all abuses of dominance (i.e. by object, rather than by effect), which, no doubt, will have a chilling effect on competition. For the first time since becoming operational in 2009, the NaCC also launched its National Competition Policy in 2020, which underpins the new Competition Bill.

Towards increased clarity and practicality 

 

  • In Mauritius, after having identified certain shortcomings in the application of its Merger Guidelines (Guidelines), the Competition Commission amended the Guidelines to bring clarity to certain provisions and to ensure proper alignment with the Competition Act 25 of 2007. Meaningfully, the Guidelines introduce a new section on the concept of control, and explain precisely which transactions may constitute a merger situation for the purposes of the Competition Act.

  • Most welcome in Tanzania is that during the past year, Tanzania’s Parliament passed the Finance Act, 2020, which, among other things, amends the Fair Competition Act, 2003, by clarifying that firms found by the Fair Competition Commission to have engaged in restrictive business practices or prior implementation of notifiable mergers, would be liable to a fine of between 5% and 10% of annual turnover, but limited to turnover which has a source in mainland Tanzania. The earlier position was that the penalty would be calculated with reference to the global turnover of the merging ‘groups’. In practice, this is indeed a most welcome development.

Dini is Co-Head of Competition, and Mia is a Knowledge and Learning Lawyer | Bowmans South Africa.