Most African countries recognize that competition regulation is an important policy tool to assist in the realisation of inclusive growth and sustainable development despite economic challenges. As a result, the number of countries with competition regimes has grown rapidly in recent years in Africa, from just over 10 in 2000 to more than 30 in 2018. A number of supranational, regional African competition regimes have also been formed.
Various African countries, among them Nigeria, Angola and South Africa, the three largest economies in the Sub-Saharan region, have had significant competition developments in the past year.
In the last year, both Angola and Nigeria adopted new competition legislation which provides for the establishment of new competition regulators. The regional competition authorities for ECOWAS and East African Community (EAC) were also established. In South Africa an amendment act, which introduces significant and far-reaching changes to the existing Competition Act (which has been in force since the late 1990s) was promulgated and has partially come into effect. Changes to the existing competition regimes in Botswana and Mauritius also seem to be on the cards in the near future.
New competition regimes in Angola and Nigeria
Angola has in recent times implemented various policy reforms aimed at making Angola’s economy more competitive and dynamic, including the introduction of competition legislation. In late 2018, the Competition Act of Angola entered into force followed, shortly thereafter, by the establishment of the Angolan Competition Regulatory Authority (CRA).
The CRA has administrative, financial and regulatory autonomy and is empowered to investigate, regulate, supervise and sanction. It has the power to request documents and carry out searches and seizures.
The Angolan Competition Act introduces a mandatory merger control regime if the following thresholds are met:
- The acquisition, creation or reinforcement of a market share of 50 percent or more in the Angolan market or a substantial part of it or
- The acquisition, creation or reinforcement of a market share of 30 percent to 50 percent in the Angolan market or a substantial part of it, if at least two of the undertakings concerned individually achieved turnover in Angola of more than AOA450 million (US$ 1.3 million or €1.15 million) in the last financial year or
- The combined turnover in Angola of all undertakings participating in the merger exceeded AOA3.5 billion (US$10 million or €9million) in the last financial year.
Prior implementation and failure to notify are prohibited. The Angolan Competition Act also prohibits certain anticompetitive horizontal and vertical agreements as well as the abuse of a dominant position. Undertakings that contravene the provisions of the Competition Act face potential penalties of up to 10 percent of annual turnover.
Shortly after the Angolan Competition Act came into force, the Nigerian Federal Competition and Consumer Protection Act (FCCPA) was also signed into law, at the beginning of 2019. The FCCPA establishes a comprehensive, consolidated legal framework for the regulation of competition matters in Nigeria. The FCCPC is now the primary competition legislation in Nigeria. Previously the regulation of competition in Nigeria was provided for in various sector-specific pieces of legislation and the Securities and Exchange Commission (SEC) had regulatory oversight over mergers.
Nigeria’s FCCPA, like many of its African counterparts, includes public interest considerations in its competition regime. Other countries which consider public interest effects (other than the effects on competition) in their competition regimes, albeit with different nuances, are South Africa, Zambia, Zimbabwe, Botswana, Namibia, Cameroon and Kenya. Some of the other notable provisions of the FCCPA include those dealing with merger control, restrictive agreements, abuses of dominance and price regulation:
Merger control – The FCCPC replaces the SEC as the primary regulator of mergers in Nigeria. The thresholds notification have not as yet been published. In May 2019, the SEC and FCCPC issued a joint advisory notice providing guidance on how mergers should be dealt with during a transaction period (which commenced on May 3, 2019 and remains in force until further notice). During this transaction period, notifications are to be submitted to the FCCPC and will be jointly reviewed by the SEC and FCCPC (under the SEC rules). The filing fees (determined under the SEC filing fees rules) are payable to the FCCPC and the FCCPC will convey any decision made regarding a notification.
Restrictive agreements – The FCCPA prohibits and voids agreements if their purpose or effect is the preventing, or lessening, or distorting of competition. Price-fixing, market allocation, restricting production or distribution, collusive tendering, tying and resale price maintenance are specifically listed as types of restrictive arrangements which are likely to prevent, restrict or distort competition.
Price regulation – The FCCPA empowers the President of Nigeria to regulate, by order, the price of goods or services specified in the order. Before making such order the FCCPC is required to furnish the President with a report assessing the state of competition in a relevant market and providing recommendations of the desirability and likely effect of regulating prices in such market.
Abuse of dominance – The abuse of a dominant position is prohibited. Examples of such an abuse are specifically listed in the FCCPA and include excessive pricing, predatory pricing, requiring or inducing a supplier or customer not to deal with a competitor, selling good or service on condition that the buyer purchases unrelated good or services, buying up scare supply of intermediate goods or resources, and refusing access to an essential facility.
Extensive changes made to the South African Competition Act
Certain provisions of the South African Competition Amendment Act 18 of 2018 came into effect on July 12, 2019. The amendments have a strong public interest focus and are expected to have a significant impact on market participants and the regulation of competition in South Africa.
Various provisions of the amendment act have not yet commenced but are expected to come into effect towards the end of this year. These include those relating to (i) the proposed dual notification process for mergers involving foreign acquiring firms; (ii) buyer power; (iii) price discrimination; (iv) the powers of the Minister to make regulations regarding restrictive horizontal and vertical practices; and (v) the protection and disclosure of confidential information.
Some of the most notable amendments that have come into force relate to merger control, abuse of dominance, market inquiries, administrative penalties and exemptions:
Exemptions from the application of the prohibited practices provisions – New grounds, including (i) the promotion of market participation, entry or expansion by small and medium businesses, or firms controlled or owned by historically disadvantaged persons; (ii) changes in productive capacity; (iii) economic development, growth, transformation or stability of designated industries; and (iv) competitiveness and efficiency gains that promote employment or industrial expansion are introduced on which a firm may apply to the Commission to be exempt from the application of the prohibited practices provisions of the Competition Act.
Merger control – Additional grounds are introduced for the Commission and Tribunal to consider when analysing mergers, namely:
- the extent of ownership of merger parties in, or the extent to which merger parties are related to other firms in related markets, including through common members or directors
- other merger engaged in by merger parties for a period to be situated by the Commission
- the ability of small and medium businesses, or firms controlled or owned by historically disadvantaged persons, to effectively enter into, participate in or expand within the market
- the ability of national industries to compete in international markets and
- the promotion of a greater spread of ownership, in particular to increase levels of ownership by historically disadvantaged persons and workers in firms in the market.
Abuse of dominance – The amendments to the abuse of dominance provisions include changing the test for predatory pricing, introducing margin squeeze as a specific exclusionary act and significant changes the excessive pricing provisions.
Market inquiries – Market inquiries in respect of the general state of competition, levels of concentration and structure of a market, without referring to any specific conduct by market participants may now be initiated by the Commission or the Minister responsible for the administration of the Competition Act. The Commission must decide, having regard to the impact on competition on small and medium businesses, or firms controlled or owned by historically disadvantaged persons, whether any feature of a market impedes, restricts or distorts competition within that market. If so, an adverse effect on competition is deemed to exist which empowers the Commission to take any remedial actions that it considers to be reasonable and practicable, with the exception of divestiture, which can only be imposed by the Tribunal.
Administrative penalties – Previously, certain contraventions of the Competition Act did not attract a penalty for a first time offence. Now all contraventions carry a potential first offence penalty of up to 10 percent of turnover and a penalty of up to 25 percent is introduced for repeat offences. These penalties may now also be increased to include the turnover of firms that control a contravening firm, if the controlling firms knew, or should reasonably have known that the contravening firm was engaging in prohibited conduct.
Establishment of regional competition authorities
Economic Community of West African States (ECOWAS) constitutes a regional economic block of 15 West African member states, namely Benin, Burkina Faso, Cape Verde, Cote d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo. On May 31, 2019 ECOWAS launched its regional competition authority (ERCA) in Banjul, Gambia. The ERCA has been established to implement the regional competition rules adopted by ECOWAS in 2008.
Similarly, the competition authority (EACCA) of the East African Community (EAC) commenced operations in March 2018. Its activities are currently limited to industry investigation and analyses. The EACCA is mandated to promote and protect fair trade and to ensure consumer welfare in the community and includes five partner states comprising of Burundi, Kenya, Rwanda, Tanzania and Uganda.
Likely imminent changes to the existing competition regimes in Botswana and Mauritius
The President of Botswana assented to a new Competition Act last year. The new act (which is not yet in force) will repeal the current competition legislation and will introduce various changes, including the introduction of criminal liability, changes to the merger control regime and abuse of dominance provisions:
Merger control – The current competition legislation makes no provision for financial penalties for failing to notify a merger. The new act will introduce financial penalties for failing to notify a merger or for prior implementation of a merger. A penalty of up to 10 percent of the consideration or the combined turnover of the parties involved in the merger (whichever is greater) may be imposed. The new act also provides for the Minister of Investment, Trade and Industry to provide comments to the competition authority where a merger “raises paramount issues of public interest”.
Abuse of dominance – The current competition act only provides a general prohibition against the abuse of dominance, without specifying types of conduct that are regarded as abusive. The new act identifies specific conduct which constitutes abuses of dominance, namely, 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.
Criminal liability and sanctions for engaging in restrictive practices – The new act introduces criminal sanction, applicable to any officer or director of an enterprise who contravenes the horizontal restrictive practice provisions of the new act. An officer or director may be liable for a fine of up to BWP100,000 (US$ 10 000) or imprisonment for up to five years, or both. Personal liability may also apply to any director or officer contravening the resale price maintenance provisions of the new act. A fine of up to BWP50,000 (US$5,000) may be imposed. The competition authority will be required to report the investigation of criminal matters under the new act to the Botswana Police Service.
Last year, the Competition Commission of Mauritius announced in its newsletter that it was looking to review its current competition legislation (the Competition Act of 2007) in order to “adequately cater for emerging competition issues as well as to be in line with international good practices and other regional commitments.”
Of particular interest is the proposed change to the existing merger control regime in Mauritius. At present, unlike most other African jurisdictions, which have a mandatory and suspensory merger control regime, in Mauritius merger notification is voluntary. Indications are that it is probable that Mauritius will transition to a mandatory merger notification system in the near future. Despite the fact that notifications are not mandatory, the Competition Commission of Mauritius may, under the current regime, review any merger if it is of the view that the parties meet a market share threshold of 30 percent (either together or individually) and the merger situation results or is likely to result in a “substantial lessening of competition within any market for goods or services.”
Final notes
It is clear that the competition pots of Africa are simmering with change. The competition landscape on the African continent is evolving and developing. This is, in part, due the fact that many African competition regimes are relatively young and are continuously being tested and improved. Public interest factors are playing an increasingly prominent role in the competition regimes of African countries and further changes to competition regimes, aimed at creating more inclusive economies can be expected. The levels of enforcement are also increasing as the competition regulators become more experienced. Keeping a finger on the pulse of these developments and understanding the legal requirements is therefore crucial as a lack of knowledge and understanding could bring about significant legal and reputational consequences.