On 25 November 2009, the Mauritian Competition Act will come into full effect. An apparently enthusiastic and skilful Competition Commission has been waiting in the wings since June 2009 to implement this important legislation and is rearing to go. With powers to implement fines of up to ten percent of a company's annual turnover, multiplied the number of years that the restrictive agreement was in place (up to a maximum of five years), companies will need to urgently pay attention to this expansion in Mauritian law, or else soon realise the true meaning of "ignorance of the law is no excuse".
The Act deals with both merger activity and restrictive prohibited practices. A merger situation is described as the combining, under common ownership and control, of two or more entities of which at least one carries on its activities in Mauritius or through a company incorporated in Mauritius. In terms of prohibited practices, the guidelines issued by the Commission stipulate that the authority is concerned with competition in local markets and competition to supply those markets. Restrictive practices relating to exports will not generally be regarded as a concern. The implementation of this important piece of legislation is therefore relevant to all parties involved with a company registered or active in the popular Mauritius region, as well as those entities who are entering into merger transactions with such entities.
A merger situation is subject to scrutiny by the Commission where the parties to the merger together supply or purchase more than 30 percent of the goods or services in a relevant market. Furthermore, the authority is empowered to investigate any merger situation which it has reasonable grounds to believe has resulted in a substantial lessening of competition within any market for goods or services.
Unlike South Africa's Competition Act, the Mauritian legislation does not contain any specific provisions which call for the compulsory pre-notification of a merger. The closest resemblance to such a requirement is that an enterprise may obtain "guidance" from the Commission before proceeding with a merger. The benefit of this is that merging parties do not have to engage in the costly process of submitting a merger filing, and no filing fee is required to accompany such a filing to the competition authority. However, should a merger be found to be problematic after it has been implemented, the cost of complying with any remedies which may be imposed by the Commission (divestiture of assets, behaviour modification, price control, or informational remedies) could be substantial and it would therefore be advisable to approach the Commission for guidance prior to implementing a merger which may raise competition concerns.
The previous Chief Economist of the UK Commission, John Davies, is the first Executive Director of the Mauritian Competition. The Executive Director is empowered to enquire actively into merger activity or potential restrictive business practices. The Executive Director has the power to request specific information from any enterprise, to invite parties to provide information on a specific matter or business practice, to invite parties for an interview or to request written explanations relating to specific conduct or merger activity which is of concern to the authority.
Included in the Executive Director's arsenal of investigative powers is the ability to obtain a warrant to enter and search the premises and take possession of documents. This is similar to the South African "dawn raid" procedure and companies need to be aware of and prepared for the possible use of such a legislative weapon.
The Act also provides for complaint procedures and any person may call upon the Executive Director to conduct an investigation into alleged anti-competitive conduct. The Director then has a period of two years to deal with the complaint, whereafter he or she must either refer the matter to the Commission, or issue a notice of non-referral if no restrictive practice is found to exist.
The manner in which Mauritius has undergone its process of developing competition law is commendable. The Commission issued comprehensive guidelines on a range of relevant sections in the new legislation within six months of the body's formation and this is indicative of the proficiency of this new agency.
It is now only a matter of time before similar competition law agencies come to being in other African countries and companies can no longer think that they have free reign to engage in anti-competitive conduct on the continent. It is clear that the need to be compliant with any applicable competition law is becoming vital in order to avoid potentially costly fines and even jail time in certain jurisdictions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
