African countries are increasingly recognising competition regulation as an important policy tool to realise inclusive growth and sustainable development. As a result, the number of both domestic and supranational competition regimes on the continent has grown rapidly in recent years. Janine Simpson, Caleb Kipa and Jeanne-Mari McDonald provide what businesses need to know.
In the past year, Angola and Nigeria have adopted legislation providing for the establishment of new regulators. Meanwhile in South Africa, an amendment act – which introduces significant changes to the existing Competition Act – was promulgated and has partially come into effect. Regional competition authorities for the Economic Community of West African States (ECOWAS) and the East African Community (EAC) have also been established and changes to the existing competition regimes in Botswana and Mauritius are on the cards.
New competition regimes in Angola and Nigeria
In late 2018, the Competition Act of Angola came into force and was followed shortly thereafter by the establishment of the Angolan Competition Regulatory Authority (CRA).
The Angolan Competition Act introduces a mandatory merger control regime if certain thresholds are met. Prior implementation and failure to notify are prohibited as are certain anti-competitive agreements as well as the abuse of a dominant position, with contraventions triggering penalties of up to 10% of a firm’s annual turnover.
The Nigerian Federal Competition and Consumer Protection Act (FCCPA) – which establishes a legal framework for the regulation of competition – was also signed into law this year and is now the primary competition legislation in Nigeria. Previously, competition was regulated by various sector-specific pieces of legislation, with the Securities and Exchange Commission having regulatory oversight over mergers.
Nigeria’s new FCCPA includes public interest considerations as well as various other provisions relating to merger control, restrictive agreements, price regulation and abuse of dominance.
Extensive changes made to the South African Competition Act
The South African Competition Amendment Act 18 of 2018 has a strong public interest focus and is expected to significantly impact market participants and the regulation of competition in South Africa.
Some of the provisions which have recently come into force relate to exemptions from the application of the prohibited practices provisions; merger control; abuse of dominance; market inquiries; and administrative penalties.
Others – including those relating to the proposed dual notification process for mergers involving foreign acquiring firms; buyer power; price discrimination; the powers of the Minister to make regulations regarding restrictive practices; and the protection and disclosure of confidential information – have not yet commenced but are expected to come into effect towards the end of the year.
Establishment of regional competition authorities
The ECOWAS constitutes a regional economic block of 15 West African member states and in May launched its regional competition authority (ERCA) in Banjul, Gambia. The ERCA has been established to implement the regional competition rules adopted by the ECOWAS in 2008.
Similarly, the competition authority (EACCA) of the EAC commenced operations in March 2018. Its activities are currently limited to industry investigation and analyses. The EACCA is mandated to promote and protect fair trade as well as to ensure consumer welfare in the community and includes five partner states.
Likely imminent changes to the existing competition regimes in Botswana and Mauritius
The President of Botswana last year assented to a new Competition Act which will repeal the current competition legislation and introduce various changes, including the introduction of criminal liability, changes to the merger control regime and abuse of dominance provisions.
And last year, the Competition Commission of Mauritius announced in its newsletter that it was looking to review its current competition legislation in order to “adequately cater for emerging competition issues as well as to be in line with international good practices and other regional commitments.”
At present, merger notification in Mauritius is voluntary. Indications are that Mauritius will transition to a mandatory merger notification system in the near future.
It is clear that the competition pots of Africa are simmering with change. This is, in part, because many African competition regimes are relatively young and continuously being tested and improved. Public interest factors are playing an increasingly prominent role in the competition regimes of African countries and further changes to competition regimes, aimed at creating more inclusive economies, can be expected.
Enforcement levels are also increasing as the competition regulators become more experienced. Keeping a finger on the pulse of these developments and understanding the legal requirements is therefore crucial as a lack of knowledge and understanding could bring about significant legal and reputational consequences.