FEEDBACK FROM BOWMANS’ 10TH AFRICAN COMPETITION LAW CONFERENCE
Last month we hosted our 10th African Competition Law Conference, bringing together competition law experts, clients and representatives of regional and national competition regulators from across the continent. Some of the topics covered are set out below.
Keynote speech by retired Judge Dennis Davis: Merger control should not be used as a ‘bargaining chip’
A worrying trend is becoming entrenched in South African merger control – the apparent use of merger control as a bargaining chip to exact public interest concessions without any comprehensive analysis.
‘In the public interest domain in South Africa, there is no integrated approach at all; it seems to be a sort of bargaining without looking at the broader issues,’ said Judge Dennis Davis, former Judge President of the Competition Appeal Court.
He expressed concern that public interest was being dealt with as a standalone issue in merger control.
‘In merger control, we are interested in what impact a merger will have on a market, looking at the merger as a whole. We must be careful about tacking on a series of short-term concessions,’ he said, adding that this could amount to ‘just rearranging the deck chairs’ if public interest concessions were negotiated without integrated analyses being done.
Judge Davis also expressed concern over the impact of an October 2021 Constitutional Court judgment in Competition Commission of South Africa v Mediclinic South Africa (Pty) Ltd and Another.
This judgment may have put competition law into ‘catastrophic uncertainty’, he said, observing that it seemed section 27 of the Constitution (the right to access to healthcare) was now being used as the competition authorities’ ‘trump card’ in healthcare mergers.
A recording of Judge Davis’s presentation is available here.
Competition law developments across Africa: African regulators show little tolerance for competition law breaches
African competition regulators have teeth and are willing to use them.
From Egypt in the north, Nigeria in the west, Kenya in the east and Malawi, Mauritius, Mozambique, Zambia and Zimbabwe in the south, national competition regulators are signalling a stronger focus on enforcement. So too are regional regulators such as the COMESA Competition Commission and the ECOWAS Regional Competition Authority.
The COMESA Competition Commission imposed its first penalty for failure to notify a merger and there has been an uptick in the enforcement activity of the Competition Authority of Kenya and its sister agency in Mauritius, which has prosecuted companies for anti-competitive practices.
Still others are actively investigating anti-competitive practices from cartel conduct to abuse of dominance and, in some cases, using search-and-seizure powers and conducting dawn raids. In this regard, the Fair Competition and Consumer Protection Commission of Nigeria conducted a dawn raid in the freight-forwarding sector and has recently commenced a cartel investigation in the domestic airline sector when it became aware of the base price for airline tickets on certain routes seemingly going up at the same time.
Regulators say they are using their powers with purpose – the interests of consumers.
‘It is about compliance, not penalties. Is the consumer benefiting from lower prices and innovation? The whole idea is consumer benefit,’ said Raphael Mburu, Manager: Mergers and Acquisitions at the Competition Authority of Kenya, during a panel discussion on competition law developments across Africa.
Since competition law in Kenya is now 10 years old, companies could not ‘plead ignorance’ on competition matters, he said. The new Director and CEO of the COMESA Competition Commission, Dr Willard Mwemba, agreed and noted that enforcement will be a key focus of the COMESA Competition Commission going forward.
To that extent, the institutional architecture of the COMESA competition regime is set for a fundamental shake-up in proposals to be made public later this year. On this new approach, and in relation to the timely notification of mergers, Dr Mwemba said, ‘As long as you have engaged the COMESA Competition Commission, we are very relaxed and lenient, and if you still fail to file a merger, in blatant disregard, you will be fined.’
The full panel discussion on competition law developments across Africa can be found here.
Continental and domestic trade imperatives - navigating the tension: Are free trade and localisation conflicting themes?
Now that the African Continental Free Trade Area (AfCFTA) agreement is being implemented, the benefits of free trade flows across the continent are widely – and eagerly – anticipated. Yet at the same time, some African countries, notably South Africa, are being seen to be stepping up protective trade measures and support for localisation requirements.
The Minister of Trade, Industry and Competition’s 2021 policy statement on the role of competition law in promoting localisation raised eyebrows among competition law experts – and may give rise to some unintended consequences, according to panellists discussing how continental and domestic trade objectives may at times be at odds with each other.
‘The Competition Commission of South Africa is already asking merged firms what they can do to contribute to localisation. At the same time, there has been an increase in protective trade measures,’ said Bowmans’ partner Heather Irvine, adding that new restrictions in the Competition Act could inhibit the ability of foreign investors to compete.
Against this backdrop, there is potential for tension between free trade and competition enforcement, Irvine said.
The growing emphasis on localisation could have unintended consequences, according to Lebohang Mabidikane, also a partner at Bowmans. She referred to certain difficulties encountered after the competition authorities insisted on certain localisation requirements in a transaction where the target firm was in financial distress.
‘We are not seeing enough collaboration between the competition authorities and the trade authorities,’ Mabidikane said.
The full panel discussion, titled ‘Continental and domestic trade imperatives - navigating the tension’, is available here.
Africa Competition Law Guide published
We are also very pleased to let you know that our annual Africa Competition Law Guide has been published and is available here.