COMESA COMPETITION COMMISSION
A GUIDE TO CONSUMERS
Informed and involved consumers are a cornerstone to enhancing the competition culture
in the Common Market
SEPTEMBER, 2013
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Disclaimer
The guide aims to enhance the understanding of consumers about the provisions of the COMESA Competition Regulations of 2004
referred to in this guide as “the Regulations”. This guide does not constitute legal advice and should not be relied upon as a statement
of law relating to the Regulations. Stakeholders are encouraged to seek legal advice should they have any doubt about whether any
conduct may breach the Regulations.
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1. Objective of the Regulations
The Regulations have as their prime objective, to promote and encourage
competition by preventing restrictive business practices and other restrictions that
deter the efficient operation of the market thereby enhancing the welfare of
consumers in the Common Market, and to protect consumers against offensive
conduct by market actors.
The Regulations were promulgated to enable the Common Market attain the full
benefits of the regional economic integration agenda by affording a legal platform
for promoting fair competition among business undertakings involved in trade in the
Common Market and protecting consumers from the adverse effects of
monopolization and related business malpractices.
The COMESA Competition Commission (“the Commission”) was established by
article 6 of the Regulations with the powers to monitor, investigate, detect, make
determinations or take action to prevent, inhibit and/or penalize firms whose
business activities appreciably restrains competition within the Common Market.
The enforcement of the Regulations aim at building the competition culture which
benefits consumers with wider product/service choice at competitive prices. The role
of the Commission should, therefore, be understood as that of a referee in the field of
commercial activities by firms with the powers to penalize those firms which are not
competing fairly as per the stipulated rules.
2. Negative Effects of Anti-Competitive Practices
Consumers may have witnessed market scenarios where competing firms agree to
fix prices or to allocate markets among themselves or to rig bids. This entails that
firms which are supposed to be fierce competitors on the market agree to become
passive followers of collective actions. The ultimate loser in all this happens to be
the consumer because colluding firms end up compromising on quality i.e. there is
little incentive to innovate, and at the same time, the collusive outcome happens to
be higher prices to consumers than would be if the firms were in competition with
one another.
Consumers may also have experienced scenarios where a firm or a collection of
firms become so dominant in the market to the extent of behaving without effective
constraints from existing competitors or potential competitors. Such dominant firms
have an incentive to charge excessive prices knowing that consumers have no
alternative of getting similar goods or services. The dominant firm may also price
below cost for a short period of time (predation) with the view of driving
competitors out of the market and then charge excessive prices to recoup the
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temporary loses once the competitors have been kicked out of the market.
Consumers would normally celebrate below cost pricing by a dominant firm but may
not be aware that it’s a temporary strategy (trap) which will expose them to
excessive pricing in the near future. It is important to appreciate, though, that not all
below cost pricing constitute predation as similar strategies are commonly employed
by firms especially when they are launching a new product or when they intent to
clear stock.
Consumers may further have experienced scenarios where the sellers of goods and
services on the market engage in practices such as false or misleading representation
of goods or services in relation to their standard, price, value, grade, sponsorship,
year of make and/or expiry, place of origin, warranty, etc. Sellers may also engage in
unconscionable conduct in relation to consumer or business transactions and non
disclosure of product information standards; among others. Such practices pose a
health risk to consumers besides exposing consumers to goods and services which
are of less quality.
The Commission, therefore, takes a keen interest to monitor the market for
concentration and anti competitive business practices which are potential breeding
grounds for market monopolization and harm to consumers.
3. How the Regulations Enhance Consumer Welfare
As elaborated in the preceding sections, the Regulations have as their prime
objective, to promote and encourage competition by preventing restrictive business
practices and other restrictions that deter the efficient operation of the market
thereby enhancing the welfare of consumers in the Common Market, and to protect
consumers against offensive conduct by market actors, prevention of the abuse of
market monopolization by firms as well as anti competitive practices arising from
collusion to maximize profits by the firms.
The Regulations gives powers to the Commission to monitor, investigate, detect,
make determinations or take action to prevent, inhibit and/or penalise undertakings
whose business activities appreciably restrains competition within the Common
Market. The Commission also has powers to remedy or penalise anti-competitive
activity by ordering the termination or nullification of agreements prohibited under
Part 3 of the Regulations; direct the enterprise to cease and desist from anticompetitive conduct and to take such steps as it believes may be necessary to
overcome the effects of abuse of its dominant position in the market, or any other
business conduct inconsistent with the principles as set out in the Regulations; order
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payment of compensation to persons affected; and impose fines for breaches of the
provisions of these Regulations.
4. The Role of Consumers in Eradicating Anti-Competitive Conduct
We have noted in the foregoing discussion that the ultimate loser in this whole
pursuit of monopolization and profit maximization by firms is the consumer.
Realizing that anti-competitive practices are detrimental to consumer welfare, it is
imperative that consumers take the lead in eradicating these business malpractices.
Consumers must become reliable partners of the Commission in identifying business
practices that are harmful to their interests. Other than whistle blowing, consumers
are at liberty to request for investigation of the conduct considered harmful to
consumer welfare, make written representations to the Commission on any
investigations being carried out, and may participate in the public hearing arranged
by the Commission as interested parties.
5. Lodging a Complaint
Any person can lodge a complaint whether directly or indirectly affected by the anticompetitive conduct. A complaint can be lodged by providing information through
completion of Form 1 (Complaint Form) and sending it to the Commission through
e-mail to glipimile@comesa.int or vnkhoma@comesa.int or deliver by post to the
following address:
The Director/Chief Executive Officer
COMESA Competition Commission
5th Floor Kang’ombe House
P.O Box 30742
Lilongwe 3
MALAWI
Tel. +265 1 772 466/ 525.
The complainant must provide comprehensive information/ statement as regards
the nature of the complaint and any supporting documents to assist the
Commission in its investigations.
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