RSA Competition Conference
September 2009
Malawi Competition Policy
and Law - An overview
by
Paul Kwengwere,
Commissioner
Malawi Competition Commission
1
Outline of the presentation
Overview of Competition Policy and Law
in Malawi
– Background to Policy
– Focus of the Policy
– The Competition and Fair Trading Act
Highlights of Cases
– Anti-competitive Practices
– Mergers and Acquisitions
Benefits of Regional Interaction
2
1. BACKGROUND
Government adopted Competition Policy
in September, 1997.
Adoption of policy necessitated by
globalisation and market oriented reforms
i.e. deregulation, privatisation, and
liberalisation of prices, trade, FDI.
Major reason was to create an enabling
environment for business and promote
economic efficiency and consumer welfare
SCOPE OF COVERAGE OF THE
COMPETITION POLICY
The Competition Policy covers three
main areas:
– reducing Restrictive Business Practices
– counter unfair business practices and
afford the consumer protection
– establishment of an organ to lobby for
change to legislation impeding
competition and make appropriate
recommendations to relevant institutions
Focus of the Policy
–
–
–
–
Business behaviour calculated to eliminate or
reduce competition including price fixing,
collusive tendering or customer allocation and
tied sales;
Market structures which permit abuse by an
entity in a position of market power;
Government legislation which may impact on
the operation of the free market in Malawi;
and
Unfair business practices which have an
impact on consumers.
THE COMPETITION AND FAIR TRADING
ACT
As one way of implementing the Competition
Policy, Government passed the Competition and
Fair Trading Act in 1998. The Act came into force
on 1st April 2000. The Act seeks to:
 encourage competition in the economy by
prohibiting anti-competitive trade practices;
 establish the Competition and Fair Trading
Commission;
 regulate and monitor monopolies and
concentrations of economic power;
 protect consumer welfare;
continued’
 strengthen the efficiency of
production and distribution of good
and services;
 secure the best possible conditions
for the freedom of trade;
 facilitate the expansion of the base
of entrepreneurship and to provide
for matters incidental thereto or
connected therewith
THE ACT
The Act is in Six Parts:
–
–
–
–
–
–
Preliminary
Competition and Fair Trading Commission
The Secretariat
Financial Provision
Anti-Competitive Trade Practices, etc
Miscellaneous Provisions
Vertical anti-competitive trade practices
& Merger Control Regulation
 Section 32 (2) of the Act covers anti-competitive
trade practices including: Predatory conduct e.g.
below-cost pricing method; Discriminatory
pricing and terms; Exclusive dealing; Tiedselling; Market/quantity restrictions; Resale price
maintenance
 Section 35 of the Act - control of mergers and
takeovers.
– A merger is present whenever a takeover (or a merger)
is completed within Malawi (basically, an acquisition
of the assets or the shares of a domestic enterprise)
Related to Section 32….
 Exclusive Dealing Arrangement and Resale Price
Maintenance by Portland Cement Company
(1974) Limited.
– misuse of market power by Portland Cement Company
(PCC)
– PCC restricted the distribution system of cement to
selected individuals and that the number of distributors
in any given area was deliberately restricted
– agent purchased cement at ex-factory prices and that
PCC recommended selling price to agents as well as
other distributors.
Resolution by the Commission:
 PCC to substantially increase the number and
spread of its agents in both the geographic and
ethnic dimensions to ensure equitable access to
this product of national importance
 the determination of prices of cement on the
market be left to market forces
 The Commission requested PCC to amend the
Standard Agency Agreement and furnish the
Commission with a copy of the amended version
of the Agreement for verifications
Cases Related to Section 35
Cases that were of domestic effects, as
both enterprises were already operating in
Malawi before the merger either directly or
through subsidiaries or branches. Two
such cases that have been handled by the
Commission are:
– Takeover of SSI Holdings by G4S
International
– Takeover of Mobil Malawi by Total
Related to Section 35 …Contd
Cases with domestic effects, as only one of
the enterprises was operating in Malawi
before the merger.
– Takeover of Dulux Malawi Limited by Ergon
Investment International
– Takeover of Clark Cotton Malawi Limited By
Cargill Incorporated
Related to Section 35 …Contd
 Cases that involved acquisition of the assets or
shares of a domestic enterprise by an
international firm or between two domestically
operating enterprises:
– Takeover of Baobab Pensions By AoN Malawi
Limited
– Sale of Tobacco Processing Factory by Alliance One
to Africaleaf Processors Limited
– Takeover of Malawi Distilleries Limited (MDL) by
the Bottling and Brewing Group Limited (BBGL)
– Acquisition of 60 percent shareholding in Telekom
Networks Malawi (TNM) by MTL Mobile Limited
Technical Expertise
Development of the Policy and Act
technical knowledge on how to handle
some cases that were came to the
commission.
Establishment of secretariat
Rolling of certain programs (advocacy
program
Capacity Building
Training of staff
Induction of Commissioners
General Establishment
THANK YOU FOR YOUR
ATTENTION