Competition Law
Developments in Africa
Program
March 5, 2013
Overview
• Introduction
• The COMESA Competition Regulations (2004)
• Discussion
• African Developments
• Closing
THE COMESA COMPETITION
REGULATIONS (2004)
‘ISSUES OF OPERATIONALISATION ‘
George K. Lipimile
DIRECTOR & CHIEF EXECUTIVE OFFICER
COMESA Competition Commission
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COMESA Competition Law and Policy
COMESA Members States:
• 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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COMESA Competition Law and Policy
Why a regional Competition Law ?
• 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
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Need for the COMESA
Competition Regulations
• The globalisation of the economy impacts on the work of National
Competition Authorities
– Impact of anti-competitive behaviour often goes beyond national
borders, in particular in the case of international cartels ⇨ recent
example: Fertilizer, Bread and construction cartels
– Mergers & Acquisitions with a regional dimension and with
competition effects in the Common Market ⇨ recent examples:
Acquisition of Game Stores by Wal-Mart; BP Acquisition by PUMA
Energy; Acquisition of ZAIN by AIRTEL; Acquisition of CHOBE
AGRI VISION by CLAYTON AFRICA; Lafarge in cement sector;
Illovo Sugar; South African Breweries etc
• National Competition authorities face challenges to curb multinational anti-competitive behaviours given jurisdictional and
practical limitations of their enforcement powers.
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COMESA Competition Law and Policy
Challenges presented by the Proliferation of National
Competition Laws :
• 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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COMESA Competition Law and Policy
• 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 ?
8
Regulatory Frameworks
Most of the regulatory instruments for most sectoral cooperation
are in the form of regulations and some of the regulations include
the following:
• COMESA Competition Regulations – for levelling the playing field
in the Common Market;
• COMESA Public Procurement Regulations;
• COMESA Regulations on the Application of Sanitary and
Phytosanitary Measures ;
• COMESA Regulations on Non Tariff Barriers;
• COMESA Customs Management Regulations;
• Council Regulations on the COMESA Customs Union.
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COMESA Competition Law and Policy
COMESA Competition Regulations and Rules :
•
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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COMESA Competition Law and Policy
What is the effect of Regulations on Member
states?
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”.
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COMESA Competition Law and Policy
Major Elements of the COMESA Competition Regulation - :
• 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
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COMESA Competition Law and Policy
Institutional Arrangements -:
• The Regulations provide for three institutions namely - :
—
COMESA Court of Appeal : 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
Appeal cases it receives from the Committee of three Commissioners.
The Chairman shall assign three of the Commissioners to be full time
members of the Board.
—
Commission : 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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Competition Law and Policy
Application of the COMESA Regulations:
•
Application of the Regulations (Part 3,4,5) is limited to agreements , decisions, or
concerted practices which may affect trade between Member States.
•
The inter Member State trade clause is therefore of central importance in COMESA
Competition Law, since it defines ‘the boundary between areas respectively covered
by the COMESA Competition Regulations and the laws of Member States.
•
The effect on inter-state trade is satisfied where conduct brought about an alteration
in the structure of competition in the Common Market.
•
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.
•
Regulated Sector: shall have primary jurisdiction over regulatory entity,
unless conduct is expressly exempted by national legislation.
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Competition Law and Policy
• MERGER CONTROL PROCEDURE :
— Based on Article 23 (3) : Applies - :

Both the acquiring firm or target firm for either the acquiring firm or target firm
operate either in two or more Member States of COMESA (Regional Dimension)

The Prescribed Zero threshold makes all mergers notifiable under Article 23 (3)
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 24 (3) .

CAUTION : Any notifiable merger carried out in contravention of this part
shall have no legal effect and no rights or obligations imposed on the
participating parties by any agreement in respect of the merger shall be
legally enforceable in the Common Market.

Article 23 (6) Commission may require the parties to a non-notifiable merger to file
a notification.
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COMESA Competition Law and Policy
Obligations of Member States ( 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
fulfilment 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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COMESA Competition Law and Policy
The relationship between the COMESA Competition Regulations
and the National Law :
Positives -:
•
High degree of convergence between COMESA Competition Regulations and
domestic competition laws i.e. -:
— Most member states have systems of competition law modeled upon Article 16
and 18 of the COMESA Regulations.
— Article 7 calls upon the Commission to cooperate with NCA, exchange
information etc
— Rule 44 refers to the investigation Powers of the Commission and stipulates
instances for cooperation.
— Where there is a conflict between the COMESA and domestic competition
law, the COMESA Competition Regulations take precedence over
national law, so that where a clash occurs it is the former which
must be applied.
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COMESA Competition Law and Policy
Enforcement of the Competition Rules
•
The Commission shall apply the Regulations with regard to trade
between Member States and be responsible for promoting competition
within the Common Market.
•
The Regulations require national courts to give an adequate remedy to
those injured by breach of the regulations (Article21 (13) )
•
National Courts may request the COMESA Court of Justice for a ruling
on the interpretation of community law or the validity of subordinate
legislation.
•
The Commission operates formally through the decisions of its Board of
Commissioners which must be adopted collegiately.
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Dispute Resolution Mechanism
• 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.
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Challenges
•
Despite having a comprehensive legal framework, there are a number of
Challenges that are encountered in implementing the COMESA
Regional Economic Integration Agenda , the main one being the
transpositioning or domestication of the legal instruments made under
the Treaty at the National Level;
•
Some of the reasons behind this challenge are differences in legal
systems, lack of capacity, especially in the area of drafting, poor or lack
of engagement with legislative authorities and other stakeholders in
Member States;
•
Lack of effective enforcement mechanism at the national level.
•
Lack of appropriate structures for implementing decisions;
•
Lack of dedicated budgets in national budgets for implementation of
regional programmes
COMESA Competition Law and Policy
Changes to domestic law as a result of the COMESA
Competition Regulations - :
• The adoption of the COMESA Competition Regulations requires or
makes desirable a number of changes to domestic competition laws,
for the purpose of eliminating or reducing any differences.
• Article 7 (2) (c) of the Regulations : “ … objective of the
harmonization of those national laws with the regional Regulations
to achieve uniformity of interpretation and application of competition
law and policy within the Common Market”
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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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Discussion
• Nicholas Franczyk - FTC
• Nkonzo Hlatshwayo – Webber Wentzel
• Martin Versfeld – Webber Wentzel
African Developments
• Daryl Dingley – Webber Wentzel
Closing
• Lesley Morphet – Webber Wentzel
Questions
Lesley Morphet
Partner, Webber Wentzel
+2711 530 5359
lesley.morphet@webberwentzel.com
Nkonzo Hlatshwayo
Partner, Webber Wentzel
+2711 530 5295
nkonzo.hlatshwayo@webberwentzel.com
Martin Versfeld
Partner, Webber Wentzel
+2711 530 5322
martin.versfeld@webberwentzel.com
Daryl Dingley
Partner, Webber Wentzel
+2711 530 5285
daryl.dingley@webberwentzel.com