Introduction
Welcome to the first edition of our quarterly newsletter focusing on African competition matters.
Our focus will initially be on providing useful insights and general information on competition law in specific African jurisdictions. Later editions will focus on competition law developments, cases and events throughout the continent.
In this edition we conclude that the Common Market for Eastern and Southern Africa (COMESA) is, for now, the only relevant regional trade arrangement that governs competition in southern Africa. (This is in addition to the steadily increasing number of jurisdictions with national competition legislation.) It does appear, however, that the SADC is poised to create its own regional competition authority in the near future.
Southern African Development Community (SADC)
According to the UN Conference on Trade and Development
(UNCTAD), over the past five years the region has been the
recipient of most of the foreign direct investment (FDI) into
Africa. The flow of FDI into Africa is furthermore increasing
rapidly - USD 415 million over the last ten years, which is more
than five times the amount in the previous
decade1.
Regulatory reforms are required to facilitate investment and
improve the business environment in the region. These include,
amongst other things, the enforcement of competition laws.
All southern African countries besides Kenya are members of the
Southern African Development Community (SADC). The SADC is an
inter-governmental organisation headquartered in Gaborone,
Botswana, that represents 15 member states in southern Africa. The
organisation's purpose is the promotion of sustainable and
equitable economic growth and socio-economic development. This is
so that the region emerges as a competitive and effective player in
the world arena2.
SADC MEMBERS |
|||
Country |
Official language |
Estimated population |
GDP / Capita |
Portuguese |
18 498 000 |
US$5 894 |
|
English, Setswana |
2 053 000 |
US$8 844 |
|
French, Kikongo (Kituba), Lingala, Tshiluba and KiSwahili |
71 712 867 |
US$216 |
|
Sesotho, English |
2 067 000 |
US$1 959 |
|
Malagasy, French, English |
21 929 000 |
US$459 |
|
English |
15 883 000 |
US$351 |
|
English, Mauritian Creole, French |
1 314 000 |
US$8 777 |
|
Portuguese |
24 475 000 |
US$583 |
|
English |
2 364 000 |
US$5 828 |
|
Seychelles |
Seychellois, Creole, French, English |
87 000 |
US$11 117 |
Afrikaans, English, Ndebele, Pedi, Shangaan, Sesotho, SiSwati, Setswana, Tshivenda, Xhosa, IsiZulu |
50 738 000 |
US$8 066 |
|
SiSwati, English |
1 220 000 |
US$3 358 |
|
English, KiSwahili |
47 656 000 |
US$553 |
|
English |
13 884 000 |
US$1 355 |
|
English, Shona and Ndebele |
13 014 000 |
US$741 |
As a result of the increased investment over the last decade, most SADC members have adopted national competition laws; the most recent of which was Botswana in 2011. However, SADC members with no national competition legislation include Angola, Lesotho, Mozambique and the Democratic Republic of Congo.
SADC COUNTRIES WITH SPECIFIC COMPETITION LEGISLATION |
|||||
Country |
Legislation name |
Effective date |
Regulatory body |
Merger control regime? |
Laws on prohibited practices? |
Botswana |
Competition Act, 17 of 2009 |
14 October 2011 |
The Botswana Competition Commission |
Yes |
Yes |
Madagascar |
Competition Law No 2005-020 of 17 October 2005 and its implementing decree No 2008-771 of 28 July 2008 |
28 July 2008 |
Conseil de la Concurrence |
Yes |
Yes |
Malawi |
Competition and Fair Trading Act, 43 of 1998 |
1 April 2000 |
The Competition and Fair Trading Commission |
Yes |
Yes |
Mauritius |
Competition Act 2007 |
25 November 2009 |
The Competition Commission |
Yes |
Yes |
Namibia |
Competition Act, 2 of 2003 |
15 February 2008 |
The Namibian Competition Commission and the High Court of Namibia |
Yes |
Yes |
Seychelles |
Fair Competition Act, 18 of 2009 |
5 April 2010 |
The Fair Trading Commission (established under the Fair Trading Commission Act 2009) |
Yes |
Yes |
South Africa |
Competition Act, 89 of 1998 (as amended) |
1 September 1998 |
The Competition Commission, the Competition Tribunal and the Competition Appeal Court |
Yes |
Yes |
Swaziland |
Competition Act, 8 of 2007 and the Competition Commission Regulations of 2010 |
7 December 2007. |
The Swaziland Competition Commission and the High Court of Swaziland |
Yes |
Yes |
Tanzania |
Fair Competition Act, 8 of 2003 |
23 May 2003. |
The Fair Competition Commission, the Fair Competition Tribunal and the Court of Appeal |
Yes |
Yes |
Zambia |
Competition and Consumer Protection Act No 24 of 2010 |
4 October 2010 |
The Competition and Consumer Protection Commission and the Competition and Consumer Protection Tribunal |
Yes |
Yes |
Zimbabwe |
Competition Act (Chapter 14:28) of 1996 |
9 February 1999 |
The Competition and Tariffs Commission |
Yes |
Yes |
Members of SADC adopted the SADC Declaration (Declaration) on
regional co-operation in competition and consumer protocols in
2009.
The Declaration deals with, amongst other things:
- co-operation in relation to cross-border anti-competitive practices;
- safeguards to protect confidential information; and
- the harmonisation of national competition laws.
The SADC facilitates and encourages competition laws to be adopted in member states, but does not have competition legislation itself. However, it now appears that the organisation is working towards the adoption of a regional competition framework.
The Common Market For Eastern And Southern Africa (COMESA)
A number of SADC member states are also members of the Common
Market for Eastern and Southern Africa (COMESA).
COMESA is a regional co-operation organisation that, like the
SADC, has the goal4 of ensuring fair competition and
transparency among 19 member states5 in the south and
east of Africa. In order to achieve this objective, COMESA has
adopted a regional policy on competition law, namely the COMESA
Competition Regulations and Rules6 that came into effect
in 2004 (the COMESA Competition Rules).
SADC MEMBERS THAT ARE COMESA MEMBERS |
|||
Country |
National competition legislation? |
Member of COMESA? |
Other regional trade arrangements |
Angola |
No |
No |
CEMAC7 |
Botswana |
Yes |
No |
SACU |
Democratic Republic of the Congo |
No |
Yes |
CEMAC |
Lesotho |
No |
No |
SACU |
Madagascar (suspended) |
Yes |
Yes |
|
Malawi |
Yes |
Yes |
|
Mauritius |
Yes |
Yes |
|
Mozambique |
No |
No |
|
Namibia |
Yes |
No |
SACU |
Republic of South Africa |
Yes |
No |
SACU |
Seychelles |
Yes |
Yes |
|
Swaziland |
Yes |
Yes |
SACU |
Tanzania |
Yes |
No |
EAC8 |
Zambia |
Yes |
Yes |
|
Zimbabwe |
Yes |
Yes |
|
Although COMESA adopted its competition policy in 2004, it was not
implemented due to the lack of the institutional framework
necessary for its enforcement. It did however appoint its first
Board of Commissioners in 2008.
At the beginning of 2011, the COMESA Competition Commission
(Commission) appointed its first director and CEO who have been
working towards making the organisation fully operational. It also
appointed its second board in the course of 2011.
The Commission, based in Lilongwe, Malawi, is responsible for the
enforcement of the COMESA Competition Rules. As it is a new
institution, enforcement is most likely to be initially felt in the
area of merger notifications as transactions in the COMESA region
with a regional dimension are notifiable to the Commission.
Certain SADC countries are also members of the Southern African
Customs Union (SACU), which is comprised of five member states -
Botswana, Lesotho, Namibia, South Africa and Swaziland. Established
in 1910, the SACU Secretariat is located in Windhoek, Namibia, and
is the world's oldest customs union.
Besides being a customs union, SACU's main purpose has been to
promote economic development through the regional coordination of
trade. The SACU Trade Agreement (Agreement) stipulates that one of
its key objectives is to promote conditions of fair competition in
the common customs area.
The Agreement provides for the enactment of national competition
legislation by each member state and cooperation on the enforcement
of competition law in the region. Thus far, cooperation between
SACU members has been informal (as between agencies), technical in
nature and capacity-orientated. No regional competition legislation
has, however, been enacted to influence transactions and the
conduct of firms in these member states.
SADC MEMBERS THAT ARE SACU AND COMESA MEMBERS |
|||
Country |
National competition legislation? |
Member of COMESA? |
Member of SACU? |
Angola |
No |
No |
No |
Botswana |
Yes |
No |
Yes |
Democratic Republic of the Congo |
No |
Yes |
No |
Lesotho |
No |
No |
Yes |
Madagascar (suspended) |
Yes |
Yes |
No |
Malawi |
Yes |
Yes |
No |
Mauritius |
Yes |
Yes |
No |
Mozambique |
No |
No |
No |
Namibia |
Yes |
No |
Yes |
South Africa |
Yes |
No |
Yes |
Seychelles |
Yes |
Yes |
No |
Swaziland |
Yes |
Yes |
Yes |
Tanzania |
Yes |
No |
No |
Zambia |
Yes |
Yes |
No |
Zimbabwe |
Yes |
Yes |
No |
Note: transactions falling within the jurisdiction of countries in the shaded area are therefore subject to competition legislation.
Conclusion
As investment opportunities in southern Africa continue to
steadily grow and the number of national competition authorities
increases, firms doing business in the region will need to
carefully consider the implications of their investments from a
competition law perspective at both a national and regional
level.
Questions will need to be raised as to whether a proposed
transaction triggers merger notifications requirements in different
jurisdictions (particularly when the merging parties have
activities in a number of jurisdictions). As the substantive and
procedural aspects of merger regulation in these jurisdictions may
vary considerably, merging parties would be wise to take account of
these differences in analysing risk.
Although there is some commitment to increased co-ordination and
co-operation among authorities in the region, there appears to be
doubt over to the efficacy of this co-operation. This is because
COMESA and SADC both appear to be intent on operating regional
competition bodies. Without any formal mechanisms for reviewing
mergers of companies operating in various countries in the region,
parties may furthermore face the onerous task of notifying
transactions in many different jurisdictions at both a regional and
national level.
Footnotes
1. UNCTAD World Investment Report 2012
2. As one of its key objectives, SADC is intending to establish a free trade area.
3. Madagascar is currently suspended from SADC as a result of political turmoil in that country.
4. COMESA, like the SADC, intends to establish a free trade area and to become a customs union.
5. COMESA's 19 member states include Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, Zimbabwe and the Republics of Egypt and Malawi.
6. The policy is based on the United Nations Set of Principles and Rules on Competition and the development of policy is in line with the provisions of Article 55 of the Treaty Establishing the Common Market for Eastern and Southern Africa.
7. The Economic and Monetary Community of Central Africa (or CEMAC) is an organisation of states of Central Africa established by Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea and Gabon CEMAC will be considered in more detail in a forthcoming newsletter.
8. The East African Community (EAC) is the regional intergovernmental organisation of the United Republic of Tanzania and the Republics of Kenya, Uganda, Rwanda and Burundi; with its headquarters in Arusha, Tanzania.
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.