South Africa: Webber Wentzel Competition Practice - Africa Quarterly - 26 July 2012

Last Updated: 7 August 2012
Article by Daryl Dingley

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

Angola

Portuguese

18 498 000

US$5 894

Botswana

English, Setswana

2 053 000

US$8 844

Democratic Republic on the Congo

French, Kikongo (Kituba), Lingala, Tshiluba and KiSwahili

71 712 867

US$216

Lesotho

Sesotho, English

2 067 000

US$1 959

Madagascar3

Malagasy, French, English

21 929 000

US$459

Malawi

English

15 883 000

US$351

Mauritius

English, Mauritian Creole, French

1 314 000

US$8 777

Mozambique

Portuguese

24 475 000

US$583

Namibia

English

2 364 000

US$5 828

Seychelles

Seychellois, Creole, French, English

87 000

US$11 117

South Africa

Afrikaans, English, Ndebele, Pedi, Shangaan, Sesotho, SiSwati, Setswana, Tshivenda, Xhosa, IsiZulu

50 738 000

US$8 066

Swaziland

SiSwati, English

1 220 000

US$3 358

Tanzania

English, KiSwahili

47 656 000

US$553

Zambia

English

13 884 000

US$1 355

Zimbabwe

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.

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