Overview of Competition Laws of some African Jurisdictions A Presentation by Manas Kumar Chaudhuri Additional Registrar Competition Commission of India

Overview of Competition Laws of some African Jurisdictions

A Presentation by

Manas Kumar ChaudhuriAdditional Registrar

Competition Commission of India

ICAI28 August, 2005

New Delhi

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Competition Law & PolicyAfrican Countries

39 countries studied7 countries have Competition Law in place6 more countries are about to haveRemaining 26 do not have as of now

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Countries which have the law

KenyaMauritiusNamibiaSouth AfricaTanzaniaZambiaZimbabwe

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Countries which are in the process of enacting the law

AngolaCameroonEgyptGhanaMalawiTogo

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Major objectives of Competition Policy

Maintenance of free competitionFreedom of trade, freedom of choice and

access to marketAchievement of economic efficiencyPrevention of abuse of economic powerLessening adverse effect of government

intervention in the marketplace

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Competition Policy vs Law

Competition policy aims at correcting market failure arising from imperfect competition

Whereas, Competition Law attempts to legally implement the competition policy in some cases by per se rule in others by rule of reason by non-enforcing mechanism of Competition

Advocacy

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Objective of the Law in Africa vis-à-vis Indian Law

Kenya To encourage

competition in the economy by prohibiting restrictive trade practices, controlling monopolies, concentrations of economic power and prices and for connected purposes

India To establish a

Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom to trade carried on by other participants in markets in India

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Objective of the Law in Africa vis-à-vis Indian Law (contd.)

Mauritius To establish legal framework

for the control of restrictive business practices with a view to enhancing competition through measures designed to promote efficiency, adaptability and competitiveness in the economy for the end purpose of widening the range of customer choice in obtaining goods and services at a fairer and more competitive price.



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Namibia To safeguard and

promote competition in the Namibian market; to establish the Namibian Competition Commission and make provision for its powers, duties and functions; and to provide for incidental matters



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South Africa To provide for the

establishment of a Competition Commission responsible for the investigation, control and evaluation of restrictive practices, abuse of dominant position, and mergers; and for the establishment of a Competition Tribunal responsible to adjudicate such matters; and for the establishment of a Competition Appeal Court; and for related matters



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Tanzania To promote and protect

effective competition in trade and commerce, to protect consumers from unfair and misleading market conduct and to provide for other related matters



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Zambia To encourage competition in

the economy by prohibiting anti-competitive trade practices; to regulate monopolies and concentrations of economic power; to protect consumer welfare; to strengthen the efficiency of production and distribution of services; to secure the best possible conditions for the freedom of trade, to expand the base of entrepreneurship



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Zimbabwe To promote and maintain

competition in the economy of Zimbabwe; to establish an Industry and Trade Competition Commission and to provide for its functions; to provide for the prevention and control of restrictive practices, the regulation of mergers, the prevention and control of monopoly situations and the prohibition of unfair trade practices; and to provide for matters connected therewith

India To establish a Commission to

prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom to trade carried on by other participants in markets in India

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Analysis of objectives

Indian Law

Prevention of adverse effect on Competition

Ensuring freedom of trade carried on by other participants in markets

[ Not available in the objectives of African Competition Laws ]

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Analysis of objectives (contd.)

Promotion of competition in the market/advocacy

Indian Law Kenyan Law Mauritian Law Namibian Law Tanzanian Law Zambian Law Zimbabwe Law

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Analysis of objectives (contd.)

Competition AdvocacySection 49 in Indian LawSection 16 (1) (a) to (d) and (g) in NamibiaSection 6(2) (d) (f) and (g) in ZambiaSection 9 in MauritiusSection 93 in TanzaniaSection 5(1) (a), (d), (e), (f) in Zimbabwe

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Unique feature

MauritiusCompetition Advisory Council

TanzaniaNational Consumer Advocacy Council

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Unique feature (contd.)

Mauritius Chairman of the Council and 12 other members Chairman and members are paid fees Council shall sit at least 4 times a year To advise Minister, to promote activities to raise

awareness, to maintain effective communication with business and consumers and to promote research in emerging trends

[ sections 8 and 9 of the Mauritian Act ]

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Unique feature (contd.)

Tanzania The Council shall have 5 to 10 members

appointed by Minister Minister shall appoint one of the members as

Chairman of the Council Shall sit at least 4 times in a calendar year of 12

months Primarily responsible to promote competition

issues[ sections 92 to 95 of Tanzanian Law ]

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Composition of Commission

India Chairperson and not less than two and not more than ten

other membersKenya One Commissioner and such other officers as may be

necessary [section 3(1)] Restrictive Trade Practices Tribunal (Tribunal) shall

consist of a Chairman, who shall be an advocate of not less than 7 years of standing and not less than two and not more than four other members appointed by the Minister [section 64]

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Composition of Commission (contd.)

Mauritius Office of Fair Trading – One Director [section 4] Competition Appeal Tribunal – a Chairperson

and a Vice Chairperson, each of whom shall be either a barrister or an attorney-at-law of not less than 10 years’ standing, appointed by the PM after consultation with the Leader of the Opposition;

4 other members who shall be persons knowledgeable in consumer affairs, business, finance, economics or management appointed by Minister of Commerce [section 6]

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Namibia Commission shall consist of a chairperson and

not less than two and not more than four other members all of whom to be appointed by the Minster of Trade and Industry [section 5(1)]

Members must have expertise in industry, commerce, economics, law, accountancy, public administration or consumer affairs

The Minister may appoint for each member a person to be the alternate of the member, who shall act only in the absence of regular members [section 6]

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South Africa Commission consists of a Commissioner and one or

more Deputy Commissioner, appointed by the Minister of Trade and Industry [section 19(2)]

Tribunal consists of a Chairperson and not less than three, but not more than ten other women and men appointed by the President, on a full-term or part-time basis, on the recommendation of the Minister [section 26 (2)]

Appeal Court – consists of at least three judges, appointed by the President on the advice of the Judicial Services Commission, each of whom must be a judge of the High Court [ section 36 (2)]

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Tanzania Commission - shall consist of five members – one

Chairman, who shall be a non-executive appointed by the President

3 non-executive members appointed by the Minister in-charge of Competition Commission

1 Director General [section 62 (6)] Tribunal – shall consist of a Chairman who shall be a

sitting judge of the High Court and 6 other members to serve on part-time basis [section 83(2)]

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Zambia Commission – shall consist of

One each from Ministries of Finance, Commerce & Industry = 3 One from the Zambian Bureau of Standards Two from Zambian Council of Commerce One from the Law Association One from the Federation of Employers One from the Congress of Trade Unions Two from Consumer groups One from the Engineering Institution One from the Accounting Profession Economics Association of ZambiaTotal = 14 [ Schedule to Section 4]

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ZimbabweCommission shall consist of not fewer than

five and not more than ten members appointed by the President [section 6(1)]

President shall designate one amongst the members as Chairman and vice-chairman of the Commission [section 12 (1)]

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Contours of Competition Law

Anti-Competitive AgreementAbuse of Dominant PositionMergers and AmalgamationUnfair Trade PracticesCompetition AdvocacyInternational co-operationEffects Doctrine

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Anti-competitive agreements

Horizontal – viz. cartel, bid-rigging, collusive bidding

Vertical – viz. tie in arrangement, resale price maintenance

Agreements mean any kind of understanding not necessarily written can also be action in concert

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Abuse of Dominant Position

Dominant position – market sharePredatory Pricing – aim to drive out

competitors from the marketDirectly or indirectly imposes unfair or

discriminatory condition or price in purchase or sale of goods and services

Limits or restricts production of goods/services

Denial of Market access

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Mergers and Amalgamations

A merger occurs when one or more firms directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another firm

Threshold limits – assets or turnoverNotification – compulsory or optionalCommission – either allows merger,

modifies or rejects merger

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Unfair Trade Practice

Indian Competition Act excludesIndian MRTP Act has thisAll 7 African jurisdictions have this as an

integral part of their functionIn India the UTP cases shall be within the

domain of the Consumer Protection Act and the Commission established thereunder after dissolution of MRTPC

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Competition Advocacy

Non-enforcing mechanism of compliance of Competition Policy

Exists in all jurisdictions of Africa as well as in India

Encompasses promotion of the law, undertaking market studies to understand business practices, imparting training of Commission manpower as well as that of stakeholders

Disseminating judgments/guidelines to general public for information and better compliance of the law

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International Co-operation & Effects Doctrine Indian Law specifically provides in proviso to

section 18 and section 32 of the Act Section 7 of the Tanzanian Law talks about

Extra-territorial operation Section 82(4) of the South African law provides

exchange of international information on competition issues

Namibia and Zimbabwe under sections 3 provide for ‘effects’ theory

Kenya, Mauritius and Zambia appear silent on these issues

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Consent Order

Section 49D of the South African Act provides for such order

Competition Commission and respondent agree on the terms of an appropriate order

Competition Tribunal, without hearing any evidence, may confirm but must make an order after hearing a motion for a consent order

Complainant however is eligible for award of civil damages, if any, as well enjoys a right to get the practice of the respondent being declared as void

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Consent Order (contd.)

Section 40 of the Namibian Act also provides for such order

Complainant however retains the right to be compensated by way of an award of damages

[ Indian Law does not provide expressly for such a provision but ‘out of court settlement’ is in vogue in India ]

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Confidentiality

Section 57 of the Indian Law imposes restriction on disclosure of information relating to an enterprise

Section 48 of the Tanzanian Act provides for similar protection to undertakings

Section 23 (1) of the Mauritian Act gives identical protection to respondents

Regulation 9 of the Zambian Act provides similar protection

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Confidentiality (contd.)

South AfricaSection 44 – Right of informants to claim

confidentialitySection 45 – Disclosure of information in a

prescribed mannerSection 45A – Commission to make

restricted use of confidential information

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Commission – vs – Sector Regulators

Section 19,20, 21 read with sections 29-31, Indian Commission shall have power to investigate matters that may arise out of a complaint, reference against any Statutory Authority including sector regulator

Section 21 specifically empowers the Commission to give an opinion on competition issues to statutory authority

Overlap jurisdiction may, with passage of time, have to be sorted out through co-operation and harmonization and Judicial review

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Commission – vs – Sector Regulators (contd.)

Section 21 (1)(h) read with section 82 of the South African law provides for co-ordination and harmonization between sector regulators and the Commission

Section 65 (2)(k) and (4) of the Tanzanian Law provides for consultation with and participation in the proceedings of regulatory authorities by the Commission

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Commission – vs – Sector Regulators (contd.)

Section 67 of the Namibian law provides for relationship with regulatory authority for co-ordination and harmonization of actions

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Intellectual Property Rights

Trade Marks Copyright Patent Geographical Indications Design Act Plant Breeder Protection Act Semi Conductor Act

[Are exempted from the purview of Competition Law]

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Summing up

Dominance is not frowned upon but its abuse Cartel, price-fixing, bid-rigging etc., are per se

void hence most pernicious forms of anti-competitive practices

Efficiency enhancing activities may not be bad e.g. JVs but JVs which are ‘mergers’ in disguise shall have to be investigated thoroughly

Indian Law under section 35 permits Chartered Accountants to appear before the Commission

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Summing up (contd.)

Mergers are ex post activities and mostly enhance economic growth – hence not always anti-competitive

South Africa – M & A statistics for three years Total P W A C 225 02 10 213 0 2001-02 202 01 07 194 5 2002-03 278 01 08 262 7 2003-04P : Prohibited, W : Withdrawn, A : Allowed, C : Conditional

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Important References

International Competition NetworkOECDUNCTADWorld Bank InstituteFederal Trade Commission, USADepartment of Justice, USACCI’s website :

www.competitioncommission.gov.in

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THANK YOU

[email protected]

Documents

Overview of Competition Laws of some African Jurisdictions A Presentation by Manas Kumar Chaudhuri Additional Registrar Competition Commission of India