‘COMPETITION REGULATION IN THE COMON MARKET‘
George K. Lipimile
DIRECTOR & CHIEF EXECUTIVE OFFICER
COMESA Competition Commission
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General Remarks on what is Common Market
for Eastern and Southern Africa (COMESA).
Challenges presented by the proliferation of
National Competition Laws.
Need for the Regional Competition Policy under
COMESA.
COMESA Treaty Provisions.
Obligations of Member States under the
COMESA Treaty.
Merger Control Regulation and Challenges.
Conclusive Remarks.
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What is COMESA ?
 The Common Market for Eastern and Southern
Africa - promoting regional economic integration
through trade and investment.
With its 19 member states, population of 430
million (2008) and an annual import bill of
around US$ 152 billion (2008) and an export bill
of over US$ 157 billion (2008), COMESA forms a
major market place for both internal and external
trading. Its area is impressive on the map of the
African Continent covering a geographical area of
12 Million (sq km).
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Burundi*, Comoros, Djibouti*, DR Congo, Egypt*,
Ethiopia*, Eretria, Libya, Kenya*, Madagascar *,
Malawi*, Mauritius*, Rwanda*, Swaziland*,
Seychelles*, Sudan*, Uganda, Zambia*,
Zimbabwe*.
 8 COMESA Countries are part of SADC and
 4 part of EAC (Kenya, Uganda, Rwanda, Burundi).
 A tripartite Taskforce has been setup to
harmonize their programmes and the overall
regional integration process for the three
Regional Economic Communities.
*Member States with National Competition Laws.
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Conduct being examined in two (or more) jurisdictions
Conduct investigated by one authority that may have
effects in another jurisdiction
Investigations where witnesses or evidence located in
another jurisdiction
Remedies that may have impact in another jurisdiction
Knowledge of and compliance with complex filling rules;
Completion of an array of forms in accordance with
various national requirements;
Payment of substantial fees to the reviewing authorities
{often designed to subsidize the operation of the
Competition Authority}
Knowledge of and compliance with review schedules and
waiting periods.
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The globalisation of the world economy impacts on
the work of competition authorities
◦ Impact of anticompetitive behaviour often goes beyond
national borders, in particular in the case of international
cartels ⇨ recent example: Fertilizer, Bread and construction
cartels
◦ Mergers & transactions often have an international
dimension and produce effects in various markets ⇨ recent
example: acquisition of Game Stores by Wal-Mart; Lafarge in
cement sector; Illovo Sugar; South African Breweries etc
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National Competition authorities face challenges to
curb multinational anticompetitive behaviours
given jurisdictional and practical limitations of their
enforcement powers.
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Given the fact that the competition laws are national
but markets extent beyond national boundaries - :
Are the respective national competition laws of
Member States and their enforcement sufficient to
deal with the market problems of the regional
nature?
Is it prudent for the countries in the region to
continue relying on the domestic laws, yet at the
same time work towards the development of a more
seamless regional system that facilitates the
workings of regional markets?
What new tools, tasks and concepts will be needed
to address the competition issues that are emerging
on the horizon of the regional and global economy ?
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Having regard to Article 55 (1) of the COMESA
Treaty: “ … To this end, the Member States agree
to prohibit any agreement between undertakings
or concerted practice which has its objective or
effect the prevention, restriction or distortion of
competition within the Common Market”
 Article
55 (3): “The Council shall make
regulations to regulate competition within the
Member States”.
 The Regulations were ratified by the Council of
Ministers on 17th December, 2004 .
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Effect of Regulations
Article 10 (2) of the Treaty : “ A Regulation shall be
binding on all the Member States in its entirety “
Entry into Force of Regulations
Article 12 (1) of the Treaty : “ Regulations shall be
published in the Official Gazette of the Common
Market and shall enter into force on the date of
their publication or such later date as may be
specified in the Regulation”.
COMESA Gazette
Volume 9 No. 2; Decision No. 43 in Notice No.2 of
2004
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Polytol Paints & Adhesives Manufactures Co. Ltd V. The
Republic of Mauritius (CCJ – August, 2013 )
Effects of CCJ Decision with Respect to the COMESA
Competition Regulations
1. Failure by COMESA Member States to domesticate
the Regulations by giving them the force of law and
the necessary legal effect within their territories
constitutes a breach of the COMESA Treaty.
2. Member States can be taken to the CCJ by other
Member States or the Secretary General for
breaching the Treaty by failing to fulfill their
obligations under the Treaty.
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Polytol Paints & Adhesives Manufactures Co. Ltd V. The
Republic of Mauritius (CCJ – August, 2013 )
Effects of CCJ Decision with Respect to the COMESA
Competition Regulations
3. Legal or natural persons have enforceable rights to
take their Member State governments to the CCJ in
respect of conduct or measures that prejudices them
and constitutes a breach of the Treaty obligations.
4. That Member States cannot use their internal laws as
an explanation or defence for not implementing the
COMESA Treaty obligations.
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Article 5 of the Regulations: Pursuant to Article 5(2)(b) of the
Treaty , Member States shall take all appropriate measures,
whether general or particular, to ensure fulfillment of the
obligations arising out of these Regulations or resulting from
action taken by the Commission under these Regulations. They
shall facilitate the achievement of the objects of the Common
Market. Member States shall abstain from taking any measure
which could jeopardize the attainment of the objectives of
these Regulations.
Article 5 (2) (b) of the Treaty : “Each Member State shall take
steps to secure the enactment of and the continuation of such
legislation to give effect to this Treaty and in particular : to
confer upon the Regulations of the Council the force of law
and the necessary legal effect within its territory “.
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The supra – national merger control regime of
COMESA came into force on the 14th of January,
2013;
 It seeks to offer a “One – Stop Shop” for the
filings in the Common Market;
 This means all transactions with an appreciable
effect on trade between Member States must be
filed with the COMESA Competition Commission
– no need to file with individual Member States.
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There are now two separate legal regimes which
govern the enforcement of competition law and policy
in the COMESA Member States, namely;
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The National Competition laws: these are the national legal
orders comprising the respective bodies of legal rules
within each of the COMESA Member States {Enforcement of
anticompetitive practices emanating at national level}.
The Regional Legal Framework: these comprise the body of
legal rules created at COMESA level such as the COMESA
Competition Regulations and Rules.{Enforcement of
anticompetitive practices with cross – border impact}
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Anti-competitive Business Practices :
 Vertical Restraints { Rule of Reason
Approach}
Horizontal Restraints { Per se prohibition}
Abuse of Dominance
Mergers and Acquisitions
Pre- merger notification requirement
Consumer Protection/Welfare
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The Regulations provide for three institutions namely - :
 COMESA Court of Justice: Receives appeals against the
decisions of the Board of Commissioners.
 Board of Commissioners: A non- executive Board consisting
of 9/13 Members appointed by Council from the Member
States. Determines cases it receives from the Commission.
The Chairman shall assign three of the Commissioners to be
full time members of the Board to be carrying out initial
determination of the cases.
 Commission: Enjoys international legal personality and in the
territory of each Member State shall have the legal capacity
required for the performance of its functions; Headed by the
Director, responsible for the development of the regional
competition policy and its responsibility extends to factfinding, taking action against infringements of the law,
imposing penalties and granting exemptions under the
Regulations.
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Scope of Application (Art. 3) :
 “…apply
to all economic activities whether
conducted by private or public persons within, or
having an effect within, the Common Market…”
 “…apply to conduct covered by Parts 3, 4, and 5
which have an appreciable effect on trade between
Member States and restrict competition in the
Common Market”
 “…shall have primary jurisdiction over an industry
or a sector of an industry which is subject to the
jurisdiction of a separate regulatory entity…”
 “… does not apply to conduct expressly exempted
by national legislation”
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Scope of Application (Art. 3) :
Jurisdictional Limit :
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In order to come within the prohibition imposed by the
Regulations, the agreement practice must affect trade between
Member States and the free play of competition to an appreciable
extent.
Jurisdiction of the Regulations requires fulfillment of three
concepts namely:Appliciability: Quantitative element criterion – the Regulations
limit jurisdiction to agreements and practices capable of having
effects on trade of a certain magnitude.
Effect on trade Between Member States: The application of the
Regulations confined to agreements having a minimum level of
cross-border effects within the Common Market.
Restriction of Competition in the Common Market :
The concept of appreciability is thus distinct from but related to
the requirement that the practice should restrict competition.
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Who determines the Parameters under Article 3 (1)
 De minimis principle applies
 The Commission intends to issue a notice indicating when,
in its view, an agreement is likely to be considered to be of
minor importance.
 Such a notice is intended to enable undertakings to be able
to judge for themselves whether their agreements fall
outside the scope of the Regulations.
 As a result the CCC is currently working on a quantitative
criteria to be determined by reference to market share
threshold, what is not applicable*.
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Remember: Anti-competitive conduct confined to the
territory of a single Member State is capable of having
repercussions on patterns of trade and competition in
the Common Market. Hence, the fact that the parties to
an agreement are from the same Member State does not
mean that there can be no effect on trade between
Member States. The Regulations may apply to
agreements between undertakings in the same Member
State.
* The quantitative thresholds aim to free up the
Commission’s resources to allow it to concentrate on
serious infringement of the regulations.
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Articles 23 – 26 of the Regulations set out the treatment of Mergers.
 Based on Article 23 (3) : Applies - :
 Definition of a Merger : Article 23 (1) A Merger means a direct or
indirect acquisition or establishment of a controlling interest by
one or more persons in the whole or part of business of a
competitor , supplier, customer or other person whether …’
 Article 23 (2) : ‘Controlling Interest means ‘any interest which
enables the holder thereof to exercise, directly or indirectly, any
control whatsoever over the activities or assets of the undertaking’
 Article 23 (3) ;Both the acquiring firm or target firm or either the
acquiring firm or target firm operate either in two or more Member
States of COMESA (Regional Dimension)
 Article 23 (4) :The Zero threshold makes all mergers notifiable
under Article 23 (4) of the Regulations.
 Article 24 (1) Obligation to notify the Commission of the proposed
merger within 30 days of the decision to merger – fine under
Article 23 (5) (a).
 Article 23 (6) Commission may require the parties to a nonnotifiable merger to file a notification.
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Notification of a Merger with a Regional Dimension – Article 24
A party to a notifiable merger shall notify the Commission no later
than 30 days of the parties’ decision to merger.
 Failure to notify a merger is penalized – a fine of maximum 10%
merging parties’ annual turnover in the Common Market
(Article 24 (4) )
 A Merger implemented without the Commission approval shall
have no legal effect and no rights or obligations shall be legally
enforceable in the Common Market.
 NOTE: Article 25 foresees a one phase merger control
assessment within 120 days: Based on Article 23 the CCC will
first have to examine if the transaction falls under the CCR.
Then in light of Article 26 the CCC will undertake a substantive
assessment test and investigate:- (1) If the merger leads or
threatens to lead to a SLC and, in the case of anticompetitive
effects, (11) If there are any factors (i,e efficiency gains, public
interests) to offset the harmful effects.
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Positives: High degree of convergence between COMESA Competition
Regulations and domestic competition laws i.e. -:
 Concurrent
competence and cooperation between the
Commission and National Authorities during investigations
provided for under the Regulations and Rules.
 Most member states have systems of competition law
modeled upon Article 16 and 18 of the Regulations; and to
some greater extent the national Merger Control
Regulations.
 Where there is a conflict between the COMESA and domestic
competition law, it is likely that the COMESA Competition
Regulations may take precedence over national law, so that
where a clash occurs it is the former which must be applied.
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The main dispute resolution mechanism under the
COMESA Treaty is the COMESA Court of Justice.
The Court Consists of two chambers these being
the Court of First Instance and the Appellate
Division;
The main function of the COMESA Court of Justice
is to ensure adherence to law in the interpretation
and application of the Treaty;
Its jurisdiction is to adjudicate upon all matters
referred to it under the COMESA Treaty;
References to the Court can be by Member States,
the Secretary General, legal and natural persons.
The Commission can refer a matter to the CCJ for
either guidance or interpretation of the law.
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Commencement Of Operations
New law always comes with a catalog of challenges: Announcement : 16 . .6 . 13
 Commission ACTIVELY dealing with two main issues, namely
– (1) Guidelines on the ‘scope of application, and (2)
establishment
of quantifiable thresholds in respect of
mergers and dominance.
 Commission flooded with inquiries (Positive and Negative)
 Commission to carryout an advocacy strategy
 Resistance by same Member States to accept the supremacy
of the Regulations over national law
 General ignorance of the COMESA Treaty obligations by the
Member States;
 Lack of political will by Member States to support the
Regional Economic Integration Agenda.
 Goodwill and availability of technical assistance
from the
FTC, ICN, EU, WB, Experts, Regional and International Law
Firms
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Various Procedural Issues :
 Notification : Article 24 (1) “a party to a merger shall notify
the Commission in writing of the proposed merger as soon
as it is practicable but not later than 30 days of the parties’
decision to merger”.
 Article 3 : the interpretation is not clear when read together
with Article 23 (3) vis a vis notifiable mergers.
 The question is – Given the Zero threshold : Who
determines whether a conduct has ‘an appreciable effect on
trade’. Is it the parties or the Commission ? At what stage
should such a determination be made?
 Recommendation:
 Consider describing the triggering event for notification.
 Consider defining the scope of application of the
Regulations according to the geographical area of activity of
the undertakings concerned and be set through quantitative
thresholds in order to cover those transactions which impact
on the ‘region’.
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Review period: Article 24 establishes time frame of 120
Working days for one phase investigation which can be
extended by the CCC if necessary.
Merger Filing Fees : Maximum of 500000USD .
Recommendation
 Introduce a shorter initial review period ( about 4 to 6
weeks) to see if the merger falls under Art. 3 and if there
are doubts as to the compatibility and followed by a
longer phase for any further investigation,
 Consider
options to expedite the review of nonproblematic mergers, perhaps by allowing for the early
termination.
 Consider introducing a timeframe for the review of nonnotifiable mergers as outlined in Art. 23 (6).
 Consider reviewing the merger notification fees based on
objective criterion.
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Article 23 (1) and 23 (2) address the issue of
“controlling interest” in defining what transactions will
be covered by the merger legislation.
Recommendations
Consider formulating the “controlling interest” standard
in an easily understandable way that offers merging
parties adequate guidance as to their notification
obligations. Efforts to provide such guidance include,
e.g., the EUC’s notice, the UK Office of Fair-trading
Merger – Procedural guidance publication, and the
Bundeskarllamt’s Information leaflet on the Germany
Control of concentrations.
Consider including explicitly the formation of
permanent joint ventures as qualifying merger
transactions.
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Article 24 (3) :Authorizes the CCC to “impose a penalty if the
parties to a merger fail to give notice of the Merger”.
Recommendations:
Consider introducing the wording similar to ECMR Article 14: The
Commission may by decision impose fines not
exceeding 10% of the aggregate turnover of any party to a
merger where, either intentionally or negligently, they - :
 Fail to notify a concentration in accordance with article 24
prior to its implementation, unless they are
expressly
authorized to do so by the CCC;
 Implement the concentration in breach of Article x
 Implement a concentration declared incompatible with the
Common Market by decision pursuant to Article x, or do not
comply with any measure ordered by decision pursuant to
Article x
 Fail to comply with a condition or an obligation imposed by
decision pursuant to Article x
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Notification Thresholds :
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Article 23 (4): The Board with the approval of the Council has prescribed the threshold at
Zero.
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There is a risk that transactions where the target has no activity in the COMESA jurisdiction
whilst the buyer only has very limited activity but in more two Member States, would need to
be notified to the Commission.
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The choice of zero threshold renders even extremely small transactions notifiable.
Recommendation:
The ICN recommends that thresholds should be designed to screen out mergers that fail to
have an appropriate “nexus” with the investigating jurisdiction.
 The threshold should pursue the objective of providing a simple and objective mechanism
that can be easily handled by the firms involved in a merger in order to determine if their
transaction is notifiable to the CCC or not.
 Article 23 (4) should be read as granting the Board the discretion to set the threshold to the
extent that only mergers which have an appreciable effect on trade … should be deemed
notifiable.
 Consultations with the ICN in its Recommended Practices and the EU in the ECMR have
dealt with the question of thresholds.
 Consider explaining that Art. 23 (4)(a), while presented as a combined test, requires that a
specified amount of local business operations of at least two parties to the merger as a
predicate for notification. A combined t/o indicator, which may be satisfied only by the
acquiring party irrespective of any local operations by the target business, can result in
notifications where the transaction does not have an effect within the investigating
jurisdiction.
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Notion of Public Interest :
The term public interest is included in several
provisions of the Regulations dealing with Mergers
e.g. : Article 26 (1); 26(3); 26 (4); 26(7).
Recommendation
 Consider clarifying the relationship between Art. 26
(1) and Art. 26 (3). Under Art. 26(!) a merger that is
likely to SLC may be cleared if it can be justified on
substantial public interest grounds. Whereas Att.26
(3) a merger shall be contrary to public interest if it
has SLC.
 The CCC shall assess public interest as it affects
the Common Market and not the individual Member
State.
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Ratification/Domestication of the COMESA Treaty
Nothing can be done as long as a Member State has not
RATIFIED the COMESA Treaty. That is a prerequisite,
both for a dualist and for a monist country, in order
to be bound by the COMESA Legal framework.
For Monist Member States, as soon as the ratification
instrument has been deposited with the COMESA
Secretariat normaly,
both the Treaty and any
subsequent Regulation should become enforceable in
those countries.
For dualist countries, there is a second prerequisite
namely, the COMESA Treaty must be domesticated
into the national law by a special incorporation act. As
long as this is not done, neither the COMESA Treaty
nor the CCR are enforceable.
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“In 1974, in one of the first cases to come before the
English courts which questions of Community law
were raised, Lord Denning described the implications
of Community law for the English legal system as ‘an
incoming tide. It flows into the estuaries and up the
rivers. It cannot be held back’”.
The 1985 Commission’s white paper “’completing the
internal market’, suggest that even Lord Denning may
not have foreseen the full force of the oncoming tide
of Community law. UK businesses that fail to take
account of its implications, as part of their business
strategy to remain competitive in the single market,
do so at their own peril”.
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THANK YOU
Any comments to:George K Lipimile
Director and Chief Executive Officer
COMESA Competition Commission
Lilongwe, Malawi
glipimile@comesa.int
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