Keeping up with competition law: Key developments across Africa in the first half of 2019

Although we are only halfway through the year, there have already been significant competition law developments across Africa. A number of new authorities have become operational and various legislative changes have been effected, impacting the competition law landscape in several jurisdictions. All these changes are a reflection of the need for developing countries to not only have competition law but to also ensure that competition law is effective for competition regulation in a globalised economy. Keeping abreast of these developments is essential in mitigating regulatory risks.

Mergers

In relation to newly established authorities, the Moroccan Competition Council and the Competition Regulatory Authority in Angola are now effective and fully operational. New competition laws have been enacted in Botswana and Nigeria. In 2018, the president of Botswana assented to the Competition Act, 17 of 2018 ("the New Act"), however, the effective date is yet to be announced. In terms of the New Act, cartel conduct has been criminalised and implicated directors and employees may face up to five years in prison or pecuniary fines. Prior implementation of mergers may now also be punished by the imposition of a fine of up to 10% of the purchase consideration or the combined turnover of the merger parties (whichever is higher). In Nigeria, the Federal Competition and Consumer Protection Act ("the FCCPA") was passed into law in January 2019. The FCCPA establishes the Federal Competition and Consumer Protection Commission ("the FCCPC") (which is responsible for merger review, consumer protection and investigations in relation to anti-competitive practices). The Securities and Exchange Commission ("the SEC") was the body previously tasked with merger control. A transition period was established from 3 May 2019, until the issuance of further advisory or guidance by the FCCPC, during which all applications relating to mergers will be received jointly by the SEC and the FCCPC, while the application fees will be paid to the FCCPC, which will also be responsible for conveying the decision on the filing.

Without prejudice to the investigatory activities that these new competition authorities are likely to undertake in the future, it is expected that the most immediate enforcement of the competition laws in the different jurisdictions will, in all likelihood, relate to merger control.

A significant amount of focus continues to be placed on public interest considerations, not only in South Africa but across the African continent resulting in a number of mergers being approved subject to public interest conditions. Whilst most public interest conditions relate to employment, there is a shift towards the imposition of other public interest conditions such as promoting localisation. In Botswana, the Competition Authority approved the proposed acquisition of 50% of the issued shares in Dennis Service Station from Gavin Blackbeard by Ngami Motors on condition that the shareholding in the business of Dennis Caltex Service Station is allocated as 51% for citizen(s) and 49% for non-citizen(s).

In Kenya, the Competition Authority of Kenya ("CAK") is also beginning to look beyond the impact of mergers on employment. In the transaction involving Total Kenya and Gulf Africa Petroleum Company, the CAK imposed a condition requiring Total Kenya to strike out anti-competitive clauses in agreements with dealers.

In South Africa, there is a continued trend towards supporting the growth of small and medium enterprises - the South African Competition Commission ("the SACC") recently approved the proposed merger between Experian SA and the CSH Group subject to conditions requiring Experian SA to provide technical support and set up a Technical Support Fund that will empower smaller bureaus to provide consumer credit services to banks and recommended that the entities should make an investment commitment to introduce new innovative products.

Regional authorities

There have also been developments in relation to regional competition bodies. The East African Community Competition Authority has appointed Dr. John K. Mduma as its Commissioner with effect from 13 June 2019.

In addition, on 31 May 2019, the Commission of the Economic Community of West African States ("ECOWAS") launched the ECOWAS Regional Competition Authority ("ERCA"), in Banjul, The Gambia. The ERCA is established to implement the ECOWAS Regional Competition Rules ("the Rules") adopted in 2008. The purpose of the Rules is essentially to promote, maintain and encourage competition and enhance economic efficiency in production, trade and commerce in the region. Speaking during the launch, the Vice President of the ERCA indicated that the authority will focus on four major areas of anti-competitive conduct: agreements and concerted practices in restraint of trade, monopolisation practices, mergers and acquisitions as well as ‘State induced’ competition distortions.

It will be interesting to see the effect that these regional bodies will have on competition law in East and West Africa and whether they will contribute to promoting effective competition in these regions, particularly in instances where regions are already covered by strong regulators such as the CAK, the Fair Competition Commission of Tanzania and the Common Market for Eastern and Southern Africa (COMESA) Competition Commission.

Market inquiries

There are several market inquiries that have been initiated / completed in the first half of 2019. In Zimbabwe, owing to an increased number of consumer complaints related to high charges, Parliament commenced an inquiry into mobile data costs in February 2019. In addition, the Competition and Tariff Commission announced the commissioning of a market inquiry into the school uniforms sector after it became aware of allegations of anti-competitive practices in the supply and distribution of school uniforms, including, among others, compelling parents / guardians to buy from a specific supplier, tying and bundling.

In South Africa, the SACC released a provisional report on its Data Services Market Inquiry, in April 2019 and also recently released its provisional findings of its inquiry into South Africa’s grocery retail market. The final report in relation to the data inquiry is expected in December 2019, while the final report in relation to the grocery retail market inquiry is expected at the end of September 2019. The SACC is also in the process of conducting a market inquiry into the land based public passenger transport sector which is expected to be completed by the end of September 2019. A key challenge for the authorities will be to propose appropriate recommendations and policies in an attempt to address concerns identified in the respective markets.

Conclusion

As the world is shifting towards liberalised economies, countries across the continent may need to embrace competition law as a key tool to their economic development. With an increase in M&A activity and the development of various economies, we anticipate that there will be a continuing increase in the enforcement of competition laws in an attempt to promote effective competition and regularise markets in the region. As we enter into the second half of 2019, it is inevitable that there will be several other developments to monitor.