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Developments in Competition Law in Africa

African States are increasingly implementing and enforcing competition laws both on a national and a regional basis. This has important implications for foreign and local businesses operating in Africa.

At LEX Africa’s June seminar on developments in competition law in Africa, speakers discussed the increasing trend of governments to try and use competition law as an important part of their industrial policy.

Chairing LEX Africa’s seven-member panel on the topic, Pieter Steyn – Director at South African LEX Africa member Werksmans and Chairperson of LEX Africa – started off the session with insight into South Africa’s competition law developments.

Mr. Steyn said competition law in South Africa was very developed and the country has had a very active Competition Commission since 1999. The authority, he said, has handled cases concerning mergers, but also increasingly focused on investigating conduct, especially cartels and abuses of dominance. Cartel conduct was criminalised from 1 May 2016.  Proposed amendments to the South African Competition Act would increase both penalties for contraventions and the Commission’s powers.

“There is also an increasing focus on competition law in other African countries. Kenya and Zambia have got quite established competition authorities, Mozambique has a relatively new law, in Botswana, they just had recent changes to their Act and in Angola and Nigeria new competition laws are being introduced.”

Peter Njeru, a partner at Kenyan LEX Africa member Kaplan & Stratton said: “In 2000 only 13 countries (in Africa) had competition laws in place. As of 2015 this figure had nearly doubled to 32 countries of which 25 jurisdictions have operational competition authorities.”

He said that regional competition regulation and authorities is also increasing including the Common Market for Eastern and Southern Africa (COMESA) Competition Commission and the East African Community Competition Authority (EACCA) as well as in the Central African Monetary and Economic Community (CEMAC), the West African Economic and Monetary Union (WAEMU) and Economic Community of West African States (ECOWAS).

A recent research report conducted by Deloitte, titled: Competition Law in Africa: Maximising Competitor Advantage, stated: “[The] recent trend in merger regulation in Africa suggests that broader welfare imperatives are playing a far more significant role than ever before, particularly in those jurisdictions where public interest considerations are sewn into the legislative framework.”

This is certainly the case in Kenya where competition law enforcement is covered by three parties: the Competition Authority of Kenya (which operates at a national level) and the East African Community Competition Authority and the COMESA Competition Commission at a regional level.

Mr. Njeru added that in the near future, cooperation agreements between regional and national authorities would likely see an increase in enforcement activity. He said organisations like the Comesa Competition Commission and the Competition Authority of Kenya were resolving issues resulting from their overlapping jurisdictions.

On future trends in competition law in East Africa, he said the East African Community Competition Authority could be fully operationalised by 2019 and that regulatory bodies could increase the number of dawn raids to root out anti-competitive practices like cartels. This is currently the case in countries like South Africa, Kenya, Zambia and Namibia, said Mr. Njeru.

He said there was also likely to be an increase in civil suits by persons affected by a competition authorities’ decision.

In the report by Deloitte, it was noted that: “There are both similarities and contrasts in the competition law regimes across Africa” and that in Sub-Saharan Africa, similarities exist between prohibited practices “particularly with regard to the abuse of a dominant position.”

“If we look at cartel conduct, the legislation in Kenya, Malawi, Tanzania and Zambia contains similar provisions. Similarly, the merger control provisions under the Malawian, South African and Zambian competition legislation include the consideration of the impact of a merger on employment and the promotion of exports.”

Neuza Dias, a partner at LEX Africa’s Angolan member FBL said the government had accepted the need to implement principles and rules which safeguard healthy competition. She said this was “definitively mandatory to the improvement of Angola’s business environment.”

Ms. Dias said the Angolan economy had since 1975 developed from a socialist state dominated system with no competition rules and principles to a more free market based system following a process of trade liberalisation, privatisation and other reforms. Angola joined the World Trade Organisation and the Southern African Development Community (SADC),  a regional trade body.  These developments helped changes in competition law to gain momentum.

In 2015, under the oversight of the Minister of Finance, the Competition and Prices Institute was created and the recent creation of the Competition Regulatory Authority has had a positive effect. Ms. Dias said the body is independent from political influence and that the government was focused on removing legal obstacles that prevent the establishment of a healthy and safe competition environment while simultaneously expanding the process of opening its economy to private investors. She said while severe distortions to competition rules and principles remained, headway was being made at ensuring fair competition in the economy.

In Mozambique, competition law is relatively new and undeveloped. Célia Francisco, lawyer at Mozambican LEX Africa member CGA said legislation regarding the issue was enacted in 2013 and 2014 and in August 2014, the government created the Regulatory Authority of Competition.

The country’s competition law applies to all activities and focuses on prohibited acts that are considered anti-competitive. Ms. Francisco said attention is also paid to “enterprise concentration in order to avoid anti-competitive conducts that result in distortions or restrictions of healthy and fair competition.”

She added that while the legal framework was in force, the Regulatory Authority of Competition was not yet functional which means that law effectively has little or no practical consequence at the moment. “Because the Authority is not yet functioning, there are procedures contemplated under the Competition Law and its Regulation that cannot be implemented or complied with.”  This includes the filing obligation for merger transactions and requests for exemptions from filing obligation.

In contrast to Mozambique, Zambia’s competition law has been in existence since 1994. Sydney Chisenga, partner and specialist in dispute resolution and competition at LEX Africa member Corpus, advised that the government had replaced the 1994 competition law by the 2010 Competition and Consumer Protection Act.

Under this Act – which is enforced by the Competition and Consumer Protection Commission (CCPC) – mergers and cartel conduct is regulated, raids are conducted and penalties are issued.

Mr. Chisenga noted that in 2017, a leniency programme was prepared.  “The effectiveness of the leniency programme is yet to be tested. There are still questions as to whether the Director of Public Prosecutions has powers to cloth enterprises with immunity through consultation.”

In terms of recent trends in abuse of dominance, Mr. Chisenga said a firm is considered to be dominant if it has 30 percent market share. “The concept of collective dominance also exists if not more than two enterprises have a market share of 60 percent.”

He said while being dominant was not illegal, there were clearly defined parameters which constituted an abuse of dominance. This included applying dissimilar conditions to equivalent transactions, excessive, unfair and/or discriminatory pricing, denying any person access to an essential facility and selling goods below their marginal or variable cost.

“The CCPC has in the recent past fined dominant firms in the cement and sugar industry on allegations of excessive pricing, price discrimination and these cases are before the Competition and Consumer Protection Tribunal.”

Mr. Chisenga said the CCPC, while proactive in its duties, has also faced criticism. “The biggest complaint by firms is that the fines by the CCPC are disproportionate.”

He said the CCPC planned on continuing to increase its staffing levels “so there will be more enforcement of the Act” which would force compliance levels to improve.

“Dominant firms will be under more scrutiny as the economy grows.” The advantage of the CCPC’s expansion, said Mr. Chisenga is that due to the good business environment in Zambia, there will be an increase in mergers. He added that consumer confidence was likely to improve “due to increased awareness of consumer rights” through the use of modern communication tools like social media networks.

In Africa’s largest economy, Nigeria, nine Bills have previously been submitted before the National Assembly to establish a legal framework for competition law in the country.  Yemi Kehinde from Nigerian LEX Africa member Giwa-Osagie & Co, said the Federal Competition and Consumer Protection Bill was passed by the National Assembly in December 2017 and was with the President to be signed into law.  If signed, this will supplement and in certain circumstances override existing sector-specific legislation regulating competition and anti-competitive conduct.

The Bill establishes two bodies, the Federal Competition and Consumer Protection Commission and the Federal Competition and Consumer Protection Tribunal. Tribunal decisions may be appealed to the Federal High Court.  Mergers, Price fixing, bid rigging and other anticompetitive conduct is regulated. Fines of up to 10% of annual turnover may be imposed. Controversial provisions include a tax payable to the Commission by companies of 0.5% of after tax profits, the power of the Federal President to regulate prices on the recommendation of the Commission and jail terms and/or fines for directors of companies found to have abused a dominant position.

Mr. Kehinde said possible challenges for the new competition regime includes maintaining the independence of the Commission from political influence, a lack of trained man power, proper administration of the whistle blower policy, opening up monopolised sectors like cement manufacturing, power and agriculture and informing the public about their rights under the law.

Mr Steyn concluded by noting the landscape of competition law in Africa is fast changing and must be monitored by business.  African competition law is combining internationally accepted precedent with local factors like public interest issues in an effort to use competition enforcement as a developmental tool.   The significant penalties (including personal liability for directors and managers) makes it essential for business to ensure compliance.


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