Introduction
The Competition law in Nigeria serves as a vital instrument for maintaining a fair and thriving economy. It has undergone significant changes over the years, with the enactment of the Federal Competition and Consumer Protection Act (the "FCCPA") of 2018 as the primary legislation for regulating competition and consumer protection in Nigeria.
This article provides a summarised overview of the competition landscape in Nigeria, focusing on market dominance and the limitations to the authority of the Federal Competition and Consumer Protection Commission (the "FCCPC").
General Overview of Competition Laws in Nigeria
The FCCPA is the primary legislation for the regulation of competition, anti-trust, merger control, and protection of consumers in Nigeria. Prior to the FCCPA, Nigeria operated sector-specific competition regimes (mostly merger control), with the relevant regulators enforcing competition regulations contained in their respective enabling legislation and subsidiary enactments. The FCCPA established the FCCPC as the independent and primary regulator for the exercise of the functions and powers granted under the FCCPA, including but not limited to, the promotion of competition in the Nigerian market by eliminating monopolies, prohibiting the abuse of dominant market positions, and penalising other restrictive trade and business practices.1
Concept of Market Dominance
The Constitution of the Federal Republic of Nigeria, 1999 (as amended),2 mandates that Nigeria direct its policies towards ensuring its economic system is not operated in any manner as to allow for the concentration of wealth, or means of production and exchange in the hands of few individuals or a group. Consequently, Nigeria's competition law regime seeks to ensure that there are sufficient sellers and buyers that offer quality goods and services at affordable prices.
The FCCPA provides for the principle of market dominance and, the abuse of such dominant position(s). In this instance, a person or company is said to be in a dominant position where it is in an economic position that allows it act or take decisions without considering the reaction of customers, competitors, and ultimately, its consumers.3 This term is technical and is based upon actual analysis undertaken by the FCCPA to make final determinations.
In determining market dominance, the FCCPC will assess the entity's ability to increase prices unilaterally above competition level, its position in the relevant markets as defined under relevant FCCPA regulations4 in Nigeria and finally, based on a number of competitive factors such as market shares, financial strength,5 bargaining strength of the entity's customers versus buying power, threat of future expansion by competitors, or entry by potential competitors.
While holding a dominant position is not in itself prohibited, the position confers a special responsibility on the company not to engage in acts that breach the provisions of the FCCPA.6 It is for this reason that the FCCPA expressly prohibits the abuse of a dominant position in a market.7
An abuse of dominance includes scenarios where one or more undertakings in a dominant position:
- charges an excessive price to the detriment of consumers;
- refuses to give a competitor access to an essential facility when it is economically feasible to do so;
- engages in an exclusionary act where the anti-competitive effect of that act outweighs its technological efficiency and order pro-competitive gains; or
- engages in the following, unless it can show technological
efficiency and other pro-competitive gains which outweigh the
anti-competitive effects of its acts:
- requiring or inducing its supplier or customer not to deal with a competitor;
- refusing to supply scarce goods to a competitor when supplying those goods is economically feasible;
- selling goods or services on the condition that the buyer purchases separate goods or services unrelated to the object of a contract;
- selling goods or services below their marginal or average costs; or
- buying up a scarce supply of intermediate goods or resources required by a competitor.8
Each of the above metrics are generally considered objectively by the FCCPC based on specific factors and perimeters. Where it is determined by the FCCPC that an organisation has abused its dominant position, the FCCPC will prepare a report with the details of such abuse and shall notify the relevant entity, directing that it ceases the abuse detailed in the report. An entity that fails to comply with such directions is liable upon conviction to a fine not exceeding 10% of its turnover in the preceding business year, or such higher fine as may be determined. Its directors may also be imprisoned, fined, or both.
Limitations to the Powers of the FCCPC: A Case Study of Financial Institutions
The Banks and Other Financial Institutions Act, 2020 (the "BOFIA") is the primary regulation for financial institutions in Nigeria. The BOFIA provides that, as it relates to banking business, and licenced banks and other financial institutions, the provisions of the FCCPA shall not apply to any function, act, financial product, or financial service issued, and carried out by a bank or other financial institution licensed by the Central Bank of Nigeria (the "CBN"). As it relates to merger controls and approvals, the CBN has acted and continues to act as the sole approving body for transactions involving its licensees since the enactment of the BOFIA.
Although the FCCPA9 provides for its supremacy in all matters relating to competition and consumer protection, the law, as enforced by a multitude of case law, remains that when there are two or more statutes that appear to address the same subject matter, and there is a conflict between them, the statute enacted later in time will prevail over the statute enacted earlier.
Conclusion
While the FCCPC is vested with significant powers to oversee and enforce competition and consumer protection laws, these powers are not without limitations. The interplay between the FCCPA and other regulatory frameworks, such as the BOFIA, demonstrates the complexities inherent in jurisdictional overlaps. As a result, organizations operating in sectors regulated by multiple authorities must navigate these legal intersections carefully. The precedence of more recent statutes underscores the need for entities to stay informed about evolving legislative landscapes to ensure compliance and mitigate risks effectively.
Footnotes
1 Section 17 and 18 (3) of the FCCPA.
2 Section 16 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended).
3 Section 70 (1) of the FCCPA.
4 Regulation 4 (1) and (2) of the FCCPC Abuse of Dominance Regulation
5 Section 70 (2) of the FCCPA
6 Regulation 3 (1) of the FCCPC Abuse of Dominance Regulation.
7 Section 72 (1) of the FCCPA.
8 Section 72 (2) of the FCCPA,
9 Section 104 of the FCCPA.
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.
