The formal adoption of competition laws by African states is on a steady increase, most likely due to the continent’s growing attractiveness as an investment destination. Unfortunately for investors, this trend is also adding to the cost of investing on the continent as the number of laws with which investors are required to comply (often at considerable cost) continues to increase.
In the last eight months alone, there have been a number of significant competition law developments on the continent. Namibia, for example, published notification thresholds for application to its merger regulation regime. These became effective as from 7 December 2012. Another recent development relates to the commencement of Mozambique’s Competition Law which was scheduled to come into operation with effect from 10 July 2013.
Perhaps the most significant development however, relates to the Common Market for Eastern and Southern African States (COMESA) and the commencement of its Competition Commission’s operations on the 14th of January this year. More recently, the COMESA authority published comprehensive Guidelines aimed at providing much needed clarity on various aspects of the COMESA Regulations.
Subsequent to the publishing of the Guidelines, the COMESA authority also called for the public to provide comments. Aside from the clarification anticipated to result from the comment-provision process, the process also highlighted the fact that while many strides are being made in Africa’s implementation of competition laws, there still remains some work to be done to ensure that these regimes function optimally.
Other less noteworthy developments (either related or unrelated to those already mentioned) have also occurred during the last few months.
In addition to the series of developments mentioned, a number of further developments are also anticipated on the African competition law horizon. One such anticipated development relates to the East African Community (EAC). Despite having competition legislation, the EAC currently does not have an operational competition authority. However, in light of the COMESA developments, the EAC is likely to be seriously considering implementing its own regional competition authority. Thus, it could be only a matter of time before this region develops a fully-fledged competition regime.
As may have been gleaned from the above, Africa has a tendency of organizing itself into regional blocs consisting of free trade areas arranged on a geographic basis. Aside from COMESA and the EAC, other noteworthy economic blocs – none of which currently have operational competition authorities in place, include:
- The Economic Community of West African States (ECOWAS);
- The Southern African Development Community (SADC), and
- The Economic Community of Central African States (ECCAS).
Consequently, COMESA’s recent competition law developments are likely to pave the way for other regional blocks to follow and in so doing, trigger the activation of other regional competition authorities. While COMESA may be viewed by many as a pioneer of regional competition regulation whose steps should be replicated, other regional authorities would be well advised to carefully examine the COMESA experience in order to avoid replicating some of the incoherent and unhelpful steps taken by the COMESA authority.
Notwithstanding the challenges faced by both existing and anticipated authorities, there are strong indications that the continent is moving in the right direction in its adoption and implementation of competition policy and the recent series of developments attest to this fact. It is thus hoped that the continent will continue on its positive trajectory.
It is especially hoped however, that in taking steps towards implementing appropriate competition regimes, other authorities will not only implement regimes that protect the welfare of African consumers, but in so doing, will also implement such regimes in a manner that is sensitive to investor sentiment and cements the much needed investor confidence necessary to ensure the continent’s overall recovery and future prosperity.
More importantly for companies operating within these regions (and prospective investors), ongoing compliance with developing competition laws will continue to be a strong feature of companies’ activities well into the future. A solid understanding of such laws and an ability to adequately navigate them is thus essential to the optimal functioning of any company currently operating (or seeking to operate) within any of these regions.