Competition law

Competition law

Do sector-specific or general competition rules apply to aviation?

Yes, there are sector-specific and general competition rules that apply to aviation. Pursuant to Part 18.15 of the NCARs 2015, the NCAA guards against anticompetitive practices that include, but are not limited to, price-fixing, predatory pricing, restraint of competition, restrictive and concerted practices, collusion or deceptive and unethical advertising. Part 18.15 of the NCARs sets the prohibited restrictive practices for airlines, airports and air navigation service providers and agents and tour operators. It further provides for exempted agreements and makes provision for notifications in respect of mergers, acquisitions, combinations and joint ventures.

By virtue of section 30(4)(i) of the CAA, the NCAA is empowered to investigate and determine upon its own initiative or upon receipt of complaint from any carrier or relevant person, whether any air carrier or entity in the aviation sector has been or is engaged in unfair or deceptive practices or unfair methods of competition in air transport. In conducting its investigations, the NCAA may request relevant documents and hold hearings and obtain testimony from parties, as may be required. Whistle-blower protections are also provided for persons who are cooperative and assist in detecting and proving anticompetitive conduct.

Any infraction by operators attracts a fine of 1 million naira or suspension of the operating authorisation, or a complete revocation of the operating authorisation in the case of a persistent violator. In addition, the NCAA may prescribe the payment of compensation to any person adversely affected by the violation or direct the violator to take appropriate corrective measures.

With respect to general competition rules, the Federal Competition and Consumer Protection Act (FCCPA), which came into force on 23 February 2019, applies to all undertakings and commercial activities taking place or having effect In Nigeria. The FCCPA establishes the Federal Competition and Consumer Protection Council (FCCPC) to have concurrent jurisdiction with sector-specific regulators on competition and consumer protection matters, with the FCCPC taking precedence over the relevant regulator. The FCCPC mandates the sector-specific regulators to negotiate the rules to its sector with the FCCPC within a year of the act coming into force.

The FCCPA prohibits and voids restrictive agreements between business entities. Restrictive arrangements are those that are likely to prevent, restrict or distort trade. The scope is very wide-ranging, and includes direct or indirect price-fixing, collusive tendering, withholding supply of goods and services from a dealer, exclusionary contractual provisions, etc.

Regulator

Is there a sector-specific regulator, or are competition rules applied by the general competition authority?

The FCCPC acts as the regulator on all competition and consumer protection matters in Nigeria. The NCAA, however, acts as the specific sector regulator for air transport in Nigeria. By virtue of section 30(4)(i) of the CAA, the NCAA is empowered to investigate and determine upon its own initiative whether any air carrier has been, or is engaged in, unfair or deceptive practices or unfair methods of competition in air transport, the sale of tickets thereof or the provision of other allied aviation services. The NCAA carries out this function through the fares and tariffs unit of its Department of Commercial and Statistics. The decision of the NCAA Is liable to review by the Tribunal established under the FCCPA.

Market definition

How is the relevant market for the purposes of a competition assessment in the aviation sector defined by the competition authorities?

‘Relevant market’ is defined under the interpretation paragraph, Part 18 of the NCAR 2015, as the area of effective competition within which an airline or service provider operates and includes geographic area, route, substitutability, close competitors and such other factors that may affect consumer choice. The FCCPA does not define relevant market but we expect this will be defined in the rules that will be published at the conclusion of negotiations between the FCCPC and the NCAA discussed in question 29.

Code-sharing and joint ventures

How have the competition authorities regulated code-sharing and air-carrier joint ventures?

Neither the NCAA nor the FCCPC regulate code-sharing in Nigeria. Most air services agreements signed by Nigeria include code-sharing terms but there are no code-share agreements between foreign and domestic airlines in Nigeria. Air-carrier joint ventures are prohibited where they substantially increase the ability to exercise market power either by giving the ability to a company or group of companies acting jointly to profitably maintain prices above competitive levels for a significant period of time or by any other anticompetitive means.

Assessing competitive effect

What are the main standards for assessing the competitive effect of a transaction?

The NCAA and FCCPC are primarily concerned with identifying whether a transaction will constitute a restraint of competition in the relevant market.

Remedies

What types of remedies have been imposed to remedy concerns identified by the competition authorities?

Not applicable.

Financial support and state aid

Rules and principles

Are there sector-specific rules regulating direct or indirect financial support to companies by the government or government-controlled agencies or companies (state aid) in the aviation sector? Is state aid regulated generally?

There are no sector-specific rules regulating any form of financial support by governments or government-controlled agencies or companies in Nigeria and there are also no general state aid rules.

What are the main principles of the state aid rules applicable to the aviation sector?

Nigeria has no state aid rules for the aviation sector.

Exemptions

Are there exemptions from the state aid rules or situations in which they do not apply?

Not applicable.

Clearance of state aid

Must clearance from the competition authorities be obtained before state aid may be granted? What are the main procedural steps for doing so?

Not applicable.

Recovery of unlawful state aid

If no clearance is obtained, what procedures apply to recover unlawfully granted state aid?

Not applicable.