Presentation to
CUTS Training Workshop on the Role of Trade Unions in Promoting
Competition in Zambia
Patrick Chengo
Research Analyst
CCPC
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Introduction
Key Interpretations
Establishment
◦ Scope of Application of CCPA
◦ Regulatory Relations
◦ Institutional Arrangement
◦ RBPs
◦ Consumer Protection
CCPA and Labour Unions
Conclusion
The Competition and Consumer
Protection Act No. 24 of 2010 was
passed by the National Assembly and
subsequently assented to on 14th
August 2010.
 The Act came into operation on 8th
October 2010 when a Statutory
Instrument was signed by Minister.
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Preamble to the “Act” states that it is an Act:
(i)
to continue the existence of the Zambia Competition
Commission and re-name it as the Competition and
Consumer Protection Commission;
(ii)
safeguard and promote competition;
(iii)
protect consumers against unfair trade practices;
(iv)
provide for the establishment of the Competition and
Consumer Protection Tribunal;
(v)
Repeal and replace the Competition and Fair Trading Act,
1994; and
(vi)
provide for matters connected with, or incidental to the
foregoing
These are contained under Section 2, of which key
novel definitions are:
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Acquired
Agreement
Assets
Bid-rigging
Concerted Practice
Enterprise
Essential Facility
Market
Merger
Negative Clearance
Per se offences
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The Act applies to all economic activity within, or
having an effect within, Zambia – Section 3(1). The
previous Act did not specify the scope of operation in
this manner but just outlined the exemptions.
The Act applies to all economic activity within, or
having an effect within, Zambia
The meaning of “having an effect within” may connote
that an anti-competitive conduct may be exercised
outside Zambia but if it has an effect in Zambia, then
the CCPC can actually intervene.
The practicality of this has been tested in other
jurisdictions.
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Unlike in the previous CAP 417, CCPA under
Section 3(2) binds the State in so far as the State
is engaged in commercial activity. While this
participation was interpreted by the High Court in
CAP 417 as applying to “all economic activities of
the State”, the new Section 3(2) has reversed this
by limiting the application only to a market that
is open to participation by other enterprises
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Under Section 5, the CCPC’s functions are to be
expanded from the current nine functions to 12.
Other than retaining or rearranging the previous
functions, the new inclusions are substantially Section
5(f) which proposes the CCPC to “act as a primary
advocate for competition and effective consumer
protection in Zambia”
Under Section 5(g), the CCPC shall advise Government
on laws effecting competition and consumer
protection and (j) advise the Minister on agreements
relevant to competition and consumer protection and
on any other matter relating to competition and
consumer protection.
The advocacy role of the Commission has clearly
come up.
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Section 7 grants power to Board to appoint
inspectors to assist with some of the CCPC’s
functions
The appointment of inspectors shall assist the
Commission to co-opt either experts such as
those from DEC or ACC as well as other suitable
persons in areas where the Commission does not
have presence
SECTION 8 is a general provision prohibiting
agreements, decisions and concerted practices
that prevent, restrict or distort competition
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SECTION 9 prohibits horizontal agreements (i.e.
agreements between competitors commonly
referred to as ‘cartels’) i.e. Agreements of such a
nature are void by mere intention or presence of
conduct.
 E.g. Price Fixing, Market/Customer Allocation,
Bid-rigging
 Leniency Programme
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Setting production quotas
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Collective refusal to deal in or supply goods or
services. This expands the previous provision under
CAP 417 which only limited to “supply” while Current
Act has included refusal to “deal in”.
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Section 10 makes a vertical agreement in
the form of “resale price maintenance” to be
per se prohibited unless
(a) the resale price is not binding
(b) The product price label merely states
“recommended price”
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Here liability is limited to the enterprise and
not a person – does this mean a person
would get away? See definition of enterprise
in S2.
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Section 12 appears to give the CCPC a blank cheque
that an agreement may be considered anticompetitive by the Commission even if it is not
specified in the law?????
It is important to note that Sections 9-10 and 12 shall
not apply to enterprises operating under a single
economic unit e.g. Zambeef, Zamchick, Zamleather,
Zamegg, etc. – Section 13
For horizontal or vertical agreements not per se
prohibited, parties may apply for authorisation to
the CCPC following which the Commission is to
carry out a competition assessment – Section 13
Under Section 14, there is a threshold for firms
to seek the Commission’s authorisation when
(independent) enterprises propose to enter into:
Section 15 - DOMINANT FIRM has been defined as a
form with 30% market share or a combined market
share of 60% of not more than three enterprises
This is a major shift from the previous 50% in CAP 417
However, Section 16 of CCPA takes the issue further
and requires CCPC to show the existence of and
exercise of “market power”
While dominance is not prohibited, “abuse of
dominance” is under Section 16 and instances of this
are outlined as:
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Imposing unfair prices or trading conditions
Limiting market access, production, etc.
Applying discriminatory conditions
Unfair contractual obligations
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Denying any person access to an essential facility
Charging excessive prices to the detriment of consumers or
Selling goods below their marginal or variable cost
Enterprises (and not persons) shall be liable to pay 10% of their
annual turnover if found wanting.
Under Section 17, the Commission is required to
recommend to the Minister on determination and
procedure thereto of “relevant market”
Under Section 18, an enterprise may apply for
exemption for conduct that is not per se
prohibited
under
Section
12,
and
the
Commission may allow such where there is a
justification e.g. small farmers with a common
price selling to an out-grower dominant firm.
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The previous CAP 417 arguably exempted the
application of competition law to professional
associations (PAs).
Under the CCPA, there is no express
exemptions for PAs as under Section 22 a PA
whose rules contain a restriction that has the
effect of lessening competition in a market
may apply to the CCPC for an exemption.
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UNDER Section 22(5), the CCPC may exempt
all, or part, of the rules of the PA from
prohibitions in the Act having regard to
internationally applied norms, any restriction
contained in those rules that has the effect of
preventing or substantially lessening
competition in a market is reasonably
required to maintain—
(a) professional standards; or
(b) the ordinary function of the PA
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The new law on Competition and Consumer
Protection is more detailed and has also
enhanced the Commission’s enforcement powers
on Consumer Protection.
The effective and reasonable implementation of
the law by the CCPC would be greatly assisted if
there is a well-informed business and legal
community
CCPC is clothed with admin. powers to fine both
individuals and business.
The Commission anticipates more intense
interaction with the business houses, legal &
consumer groups.
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The CCPA shall expressly not apply to
employers activities in relation to terms and
conditions of employment (Section 3(3)(b)
This means that Employers, e.g. under the
Zambia Employers Federation, can actually
choose to agree and fix that every graduate
starting salary shall be fixed at K5m gross
across all member organisations
Equally, Trade Unions and other associations
dealing with terms and conditions of their
members are expressly exempted.
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The worker
Commission
is expected to inform the
in the event there are
“suspicions” about the agreement their
employer(s) is entering into with other
Competitors.
Cartels are considered as a criminal matter(
Jail awaits if convicted)
Leniency Programme is available to parties
that voluntarily discloses information on
existence of an agreement.
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Issues of public interest arise here. Thus a
worker should be able to understand what
the implications of the merger could be in
relation to employment
CCPC
conducts
market
assessment,
competition assessment, public interest
assessment (section 31)
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Workers have a responsibility to report any
abuse of dominance by any firm.
Issues of predatory behaviour need to be
reported so that job losses for example are
avoided.
CCPC will protect whistle blowers. It is
important for any worker with information to
come forward and submit\disclose such
practices.
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Thus trade unions can decide to have collective
bargaining, form mergers or alliances, collude or
proceed on a national strike across the whole
economy and set a common negotiating platform
without offending the CCPA
Thus in terms of CCPA and Labour Movements,
among the key areas of interest would be;
◦ Regulating abuse of Dominance e.g. Case of ZB and Metro
Wholesalers handled by CCPC (in 2001)
◦ Mergers and Acquisitions i.e. issues of public interest are
important
◦ Vertical Agreements e.g. Case of Hybrid Poultry and
Galuania Holdings handled by CCPC (in 1998)
◦ Cartelisation – may lead to high prices which then would
affect workers disposable income/wages.
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Thus Labour/Trade Unions have a key role to play
in the Enforcement of the CCPC such as;
◦ Being Watchdogs monitoring RBPs/Anti-Competitive
Practices.
◦ Helping CCPC’ awareness on Competition and Consumer
Protection through their Union structures in Provinces
where CCPC faces challenges reaching them.
◦ Ensuring that Mergers & Acquisitions do no escalate job
losses
◦ Using the Unions platform when engaging businesses to
register displeasure of any spots of Anti-Competitive
practices
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The new law on Competition and Consumer
Protection is perhaps at face value, clearer than
the previous Competition and Fair Trading Act
The effective and reasonable implementation of
the law by the CCPC would be greatly assisted if
there is a well-informed labour Union, business
and legal community
CCPC is clothed with admin. powers to fine both
individuals and business.
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Intense interaction with the CCPC and the
business, labour unions, legal & consumer
groups are greatly anticipated.
It is Important (trite) that there is a fine balance
between the reasonable, fair, transparent and
accountable exercise of power by the CCPC to
ensure that business growth and development is
not threatened
Ultimately, CCPC’s role is to ensure the “peaceful”
and “gainful” co-existence of both business and
consumer interests.