The Competition and Consumer Protection Act, No. 24 of 2010 (the "Competition Act") governs competition and protection against unfair trade practices in the country. The Competition and Consumer Protection Commission (the "CCPC") is responsible for safeguarding and promoting a competitive business environment and enhancing consumer welfare.
A merger occurs where an enterprise, directly or indirectly, acquires or establishes, direct or indirect, control over the whole or part of the business of another enterprise, or when two (2) or more enterprises mutually agree to adopt arrangements for common ownership or control over the whole or part of their respective businesses. Mergers include various types of transactions, such as the purchase and/or acquisition of shares, amalgamations and joint ventures. A merger that meets the prescribed threshold is notifiable and must be approved by the CCPC before implementation. A merger in which the combined turnover or assets of the merging entities, whichever is higher, is at least ZMW30,000,000, is a notifiable merger. A notifiable merger that is implemented without CCPC approval is void. The CCPC can also review mergers that may result in dominance in a market or that may prevent or lessen competition.
Sector specific mergers may face additional regulatory controls. For example, mergers involving listed companies may be subject to further controls under the Securities Act, No. 41 of 2016.
Abuse of dominance
The Competition Act prohibits the abuse of dominant positions in the market. An entity is considered to have a dominant position if it has such economic strength in a market that allows it to adjust prices or output without effective constraint from competitors or potential competitors. The Competition Act considers an entity that supplies thirty (30) per cent or more of goods or services in Zambia as having a dominant position. Similarly, where sixty (60) per cent or more of the goods and services are supplied by not more than three (3) entities, then such entities are considered to have a dominant position. The Competition Act prohibits engaging in any act or conduct that limits access to markets or restrains competition or conduct that is likely to have an adverse effect on trade or the economy in general. Prohibited conduct includes the following:
(a) imposing direct or indirect unfair selling prices or trading conditions;
(b) limiting or restricting production, market outlets or access;
(c) applying dissimilar conditions to equivalent transactions with other trading parties;
(d) charging excessive prices to the detriment of consumers; and
(e) selling goods below their marginal or variable cost.
Abuse of dominance is an offence for which an entity may be liable to pay a fine of up to ten (10) percent of its annual turnover.
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.