Thursday, 6 September 2012

Who Doesn’t Love a Little Competition

This is perhaps a bit tangential to Intellectual Property.  However, knowing that these two areas of law do collide and being familiar with the wide array of practice areas covered by most attorneys in Africa, this little Leo thought it could prove helpful to report on a recent program on Antitrust Enforcement in Africa.

The program, put together by the International Section of the American Bar Association [hooray for the US finally paying attention to African law!] featured a panel of speakers from eastern and southern Africa.  Due to some poor phone connections and a too-long absence from Africa that made accents a bit challenging, some tasty morsels of information got away from Little Leo.  Here are some highlights of the bits that were caught and adequately devoured.

This Little Leo’s favorite type of competition. Photo: Ready to Hike cc-by Michael Heisel available on Flickr.


Kenya’s New Commission

Kenya has a fairly new Competition Act (2010, available via WIPO here). This act replaces, or at least takes some duties away from, the Monopolies and Prices Commission.  (Little Leo thought she heard replaces, but isn’t sure due to above mentioned glitches in the call.)  The Competition Act establishes a Competition Authority, which handles all the filings, investigations and etc.  Although its has a website [Kingsley will be pleased], Christine Mweti mentioned during the program that there are still some appointment slots needing to be filled.

Although the Commission isn’t fully up and running, it has already started work with a successful enforcement against MultiChoice Africa and several other investigations currently in progress.

Namibia’s Rules on the Way

Namibia is also developing more robust antirust laws.  With recommendations from consultants completed several months ago, the Namibian government is working on writing rules to give the Namibian Competition Commission, and those doing business in Namibia, more guidance on what is required for compliance with the Competition Act (presumably the Act of 2003, available here). 

The new rules will set monetary thresholds for notifying the Commission about mergers.  Currently, because there are no specified thresholds, the Commission must be notified of every merger.  The specificities of the new rules will likely be a welcome change for those doing business in Namibia as violating the competition laws can cost a company 10% of its global turnover.

South Africa’s Competition Amendment Act Expected to Languish

South Africa passed an amendment to its competition act in 2009.  The very controversial amendment is not in force yet and is not expected to be brought into force anytime soon.  The amendment would introduce criminal liability for directors and managing employees of companies involved in cartel conduct.  Other provisions detailing increased fines are speculated to be unconstitutional.  Tamara Dini believes we will see changes to the South African Competition Act, but not via this amendment.  (Act and amendment available here.)

The South African Competition Commission appears to be the most active in the region.  Focusing on four priority areas, the Commission investigates complaints, reaches settlement agreements and decides contested cases.  The Commission has also created a fast track option for leniency applications in the construction industry.  Most cases settle, so there is not a lot of case law on prohibited practices.

Zambia Introduces Thresholds

Like Kenya, Zambia also has a fairly new act, the Zambian Competition and Consumer Act 24 of 2010.  (Available for download from the Zambian parliament here.)  Zambia’s new act establishes thresholds for dominance and control and introduces a leniency program that encourages cartel members to come forward.

The Competition Authority has not been very active in the last year as businesses filed few applications, waiting to see if political stability would continue post-election.  When companies are considering a merger, they should meet with the authority for a pre-application meeting where they can gauge the acceptability of their merger plans.

Zimbabwe’s Competition Commission Highly Efficient

Zimbabwe may have had to amend its Competition Act more than usual due to hyper-inflation, but that hasn’t harmed its Competition Commission.  The Commission, which has 90 days under the Act to review filings, usually has that review done within 30 days.  And those are calendar days, not business days.

Bexley Chinake gave two examples of recent Commission enforcement successes.  One was against a medical services group with a specialist unit in dialysis. The medical services group was refusing to pay for services performed at any dialysis centers that it did not own. This was found to be in violation of the Competition Act.

The second case was against the national power company. When Zimbabwe officially switched to using US Dollars as an accepted currency, the power company changed its customers’ bills into US Dollars. However, since the Zimbabwean Dollar’s inflation had been so out-of-hand, there was no real exchange rate and the power company picked seemingly random US Dollar amounts for the bills. Thanks to the Commissions enforcement activities, those bills were set aside.

Regional Similarities and What’s Coming in COMESA

Nearly every country represented here has public interest or consumer welfare as a factor in its competition law.  Most common is a requirement for the governing body to look at the effect a merger will have on domestic employment.  While these terms aren’t always well defined and have even been challenged in Namibia’s High Court, they are still important.  Generally, these public interest factors are applied to mergers between companies already doing business within a country, but in its WalMart case, South Africa recently applied these factors to a company attempting to move into the South African market. (Wall Street Journal article on the case.)

COMESA, the Common Market for Eastern and Southern Africa, is also talking competition law.  Plans are in the work for a COMESA competition treaty.  This treaty is expected to create a new body, the COMESA Competition Authority, by 2014.  Rules and regulations for this new body are already being drafted.  The most likely outcome of this new body would be that all mergers happening in the COMESA countries would now need to be dually notified to both the local authority and the COMESA authority.

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