Economy, politics: error in development projects
By Lerisha Naidu, Angelo Tzarevski, Sphesihle Nxumalo and Zareenah Rasool
Baker McKenzie’s latest Africa Competition Report 2022 provides detailed analysis and insight into recent developments in competition law enforcement and policy across 32 African jurisdictions and regional bodies.
The report describes how, over the past two years, African competition regulators have actively engaged in efforts to address pandemic-related challenges, but there has also been a general upward trend in enforcement. competition policies across the continent.
This trend is evidenced by a number of important recent developments in the regulation of competition law across the continent. Countries and regions where competition law has recently evolved include the Common Market for Eastern and Southern Africa (COMESA), Egypt, Ethiopia, Ghana, Kenya, Mauritius, Mozambique, Namibia, Nigeria and South Africa.
There have been various developments regarding COMESA in 2021. In February 2021, the COMESA Competition Commission issued a Practice Note in which it amended the interpretation of the term “exploit”. Previously, a party “operated” in a COMESA member state if its turnover or assets in that member state exceeded $5 million. This requirement has now been removed, effective 11 February 2021, and a party will “operate” in a COMESA member state only if it is active there (with no minimum turnover or asset threshold). This will have the effect of facilitating the entry of a transaction into the scope of the COMESA merger control regime.
The COMESA Commission has also recently issued Draft Guidelines on Fines and Sanctions, Draft Guidelines on Settlement Procedures and Draft Guidelines on Hearing Procedures.
In September 2021, the COMESA Commission imposed its first sanction for failure to notify a transaction within the required timeframe, which sanction amounted to 0.05% of the parties’ combined turnover in the Common Market during for the 2020 financial year. This was imposed as part of the planned acquisition by Helios Towers Limited of the shares of Madagascar Towers SA and Malawi Towers Limited.
In December 2021, the COMESA Commission imposed a fine for breach of a commitment contained in a merger clearance decision.
The COMESA Commission also conducted eight investigations into restrictive business practices in 2021.
There have been many recent developments in Egypt, including in November 2020, when the Competition Authority announced that the Egyptian Prime Ministry had approved the Prime Minister’s Bill amending certain provisions of the Egyptian Competition Law 3 /2005.
In February 2021, the Economic Affairs Committee of the Egyptian parliament began discussions on the new amendments. The Autorité de la concurrence has also recently launched market investigations concerning several sectors, including health, food, electronic and electrical appliances, automotive, real estate, media and the oil sectors.
In April 2021, the Cairo Economic Court issued a decision in a criminal case brought in March 2020 by the Competition Authority, against five individual poultry brokers for colluding to fix the price of chicken to the detriment of consumers and chicken farmers. The court fined each broker 30 million Egyptian pounds (about $1.6 million) for agreeing to fix the price of one kilogram of chicken.
In July 2021, the Competition Authority initiated criminal proceedings against two companies that agreed to submit identical offers in one of the offices of the General Authority for Veterinary Services, in violation of Egyptian competition law.
The head of the Competition Authority has announced plans for the creation of an Arab Competition Network to strengthen cross-border cooperation between antitrust authorities in the Middle East. The ACN would be the first to provide Arab competition authorities with a formal platform to meet and discuss important issues and impending changes in antitrust laws. The network would be led by the 22 members of the League of Arab States, which includes Egypt, Syria, Lebanon, Iraq, Jordan and Saudi Arabia, among others.
In Ethiopia, the Business Competition and Consumer Protection Authority is working on a regulation to provide guidance on the application of the Business Competition and Consumer Protection Proclamation (No. 813/2013). Proclamation No. 1263/2021, which is expected to be enacted and enter into force in 2022, transfers the powers of the Trade Competition and Consumer Protection Authority to the Ministry of Commerce and Regional Integration.
In Ghana, a Competition and Fair Trading Bill is before parliament for consideration.
The Competition of Authority in Kenya finalized its study on the regulated and unregulated credit markets in the country and released its report in May 2021. The Authority continued to develop the Retail Code of Practice 2021, in consultation with stakeholders in the retail sector, for issues of abuse of purchasing power arising from the sector. Also in 2021, the Competition Authority conducted a search of the steel industry and published draft joint venture guidelines, to clarify the rules and filing requirements for joint venture agreements.
The Competition Commission of Mauritius concluded a market study in the pharmaceutical sector on June 8, 2021.
There have been many developments in competition law in Mozambique in 2021, including the fact that the Competition Regulatory Authority became operational in January 2021. The Merger Notification Forms Regulation was enacted by Resolution No. 1/2021 of April 22, 2021. The regulation prescribes the various forms to be completed for merger notifications, as well as details of the information and documents required. The filing fee regulation was promulgated by Ministerial Order No. 77/2021 of August 16, 2021. The filing fee is currently set at 0.11% of the parties’ turnover for the year previous year, up to a maximum of MZN 2,250,000 (approx. $35,000). Amendments to the Contest Rules were promulgated by Decree No. 101/2021 of December 31, 2021.
A competition bill is being drafted in Namibia, and the Competition Commission plans to submit the final version of the competition bill to the Ministry of Industrialization and Trade by the end of June. 2022.
On August 2, 2021, Nigeria enacted the Merger Review (Amendment) Regulations 2021 which establishes new fees applicable to merger applications. The Federal Competition and Consumer Protection Commission launched and made public an investigation into the alleged anti-competitive behavior of five companies in the shipping and freight industry in October 2021.
There have been various developments in South Africa in 2021, notably in May 2021 when the Competition Commission launched the investigation into the online intermediation platform market, focusing on four major platforms. forms of online intermediation and market dynamics that specifically affect business users – e-commerce marketplaces, online classifieds marketplaces, software application stores, and intermediary services (such as accommodation, travel, transportation and food delivery). The investigation is continuing with an interim report scheduled for release on June 10, 2022 and the final report scheduled for release in November 2022.
In April 2021, the Commission published its investigation reports on the land public transport market. In addition, in April 2021, the Commission published its final report on an impact study it carried out in relation to COVID-19. The report presents the Competition Commission’s findings regarding the impact of the COVID-19 block exemptions and the enforcement work carried out by the Competition Commission during the pandemic. The Competition Commission’s fifth Essential Food Price Monitoring Report, which is published quarterly, focused on tracking the impact of the COVID-19 pandemic and the economic crisis that has caused it. resulted in food markets.
In May 2021, the Commission published for comment draft guidelines on small merger notifications, which contain specific guidance applicable to the assessment of numerical mergers.
Notably, 2021 was the year the Commission prohibited a merger solely on public interest grounds, making it the first transaction to be prohibited on non-competitive grounds. Ultimately, however, the merger was conditionally approved in the Competition Tribunal.
In November 2021, the Commission released its Economic Concentration Report, which highlighted patterns of concentration and participation in the South African economy. The report includes details of the Commission’s power to launch market investigations in highly concentrated industries, as well as its increased power to impose structural remedies on companies in these sectors.
In March 2022, the Commission published guidelines on collaboration between competitors on localization initiatives, which aim to provide guidance to industry and government on how industry players can collaborate to identify localization opportunities and implement commitments related to localization initiatives in a manner that does not raise competition concerns.
In March 2022, the Commission launched a market investigation into the South African fresh produce market, which will examine whether there are features of the fresh produce value chain that reduce, prevent or distort market competitiveness.
The Commission has entered into various settlement agreements with market participants (eg food retailers and laboratories) to reduce the prices of goods and services.
Lerisha Naidu, Partner, Angelo Tzarevski, Associate Director, Sphesihle Nxumalo, Partner and Zareenah Rasool, Partner, Competition and Antitrust Practices, Baker McKenzie Johannesburg