1 Legal and enforcement framework
1.1 Which legislative and regulatory provisions regulate dominance in your jurisdiction?
Part IX of the Federal Competition and Consumer Protection Act, 2018 regulates abuse of dominance in Nigeria.
The Federal Competition and Consumer Protection Commission (FCCPC) has released Draft Regulations on Abuse of Dominance which are not currently in force, but which are expected to be finalised during the course of 2022.
1.2 Do any special regimes apply in specific sectors?
The Federal Competition and Consumer Protection Act applies to all undertakings and commercial activities within or having an effect within Nigeria. Currently, there are no special regimes that apply in any specific sectors.
The act maintains supremacy over all matters relating to competition and consumer protection. However, where the act applies to an industry or sector under the jurisdiction of a separate government agency through the provisions of any other law, the act provides the FCCPC with concurrent jurisdiction with the relevant government agency. In this regard, the FCCPC will take precedence over the relevant government agency.
1.3 Is the legislation intended purely to protect economic interests or does it have other aims?
The objectives of the Federal Competition and Consumer Protection Act are to:
- promote and maintain competitive markets in the Nigerian economy;
- promote economic efficiency;
- protect and promote the interests and welfare of consumers by providing consumers with wider variety of quality products at competitive prices;
- prohibit restrictive or unfair business practices which prevent, restrict or distort competition or constitute an abuse of a dominant position of market power in Nigeria; and
- contribute to the sustainable development of the Nigerian economy.
Thus, the competition legislation in Nigeria seeks primarily to protect economic interests as well as the interests and welfare of consumers.
1.4 Which authorities are responsible for enforcing the legislation?
The FCCPC is responsible for the enforcement of competition legislation in Nigeria. The FCCPC is an agency under the portfolio of the Federal Ministry of Industry, Trade and Investment. While its mandate permits it to intervene in any sector which involves products and services, the FCCPC may, where appropriate, defer to sector-specific regulators for determination.
The Federal Competition and Consumer Protection Act has also established the Competition and Consumer Protection Tribunal, which is responsible for adjudicating conduct prohibited by the act. The FCCPC and the tribunal are newly established. The tribunal can hear any appeals or reviews of decisions taken by the FCCPC.
1.5 How active are the enforcement authorities in taking action against abuse of dominance in your jurisdiction? What key decisions have the enforcement authorities adopted most recently?
At the time of writing, there are not yet any findings or decisions published in relation to abuse of dominance cases. The FCCPC has, however, been increasingly active in the enforcement of cartel conduct as well as merger control.
The FCCPC is contemplating investigations in relation to several instances of alleged abuse of dominance and hence we anticipate increased enforcement in the coming period.
2 Definitions and scope of application
2.1 What parties are covered by the dominance legislation? Are any exemptions available?
Any undertaking which meets the requirements for dominance under the Federal Competition and Consumer Protection Act, subject to certain exceptions, and which is considered to be abusing that dominant position will be covered by the abuse of dominance provisions as delineated in the act.
The act will apply to conduct outside Nigeria by:
- a citizen of Nigeria or person ordinarily resident in Nigeria;
- a body corporate incorporated in Nigeria or carrying on business in Nigeria;
- any person in relation to the supply or acquisition of goods or services by that person into or within Nigeria; or
- any person in relation to the acquisition of shares or other assets outside Nigeria resulting in a change or control of a business, part of a business or any asset of a business in Nigeria.
Furthermore, the act provides that the consequences of finding an abuse of dominance will not apply to exclusive dealing arrangements or market restrictions between or among affiliated or interconnected undertakings. Therefore, such an undertaking will be covered by the abuse of dominance legislation, but may argue an exclusive dealing arrangement or market restriction as a defence to the consequences of such a finding.
2.2 How is ‘dominance' defined in your jurisdiction?
An undertaking is considered to be in a dominant position if it is "able to act without taking account of the reaction of its customers, consumers or competitors". Furthermore, the Federal Competition and Consumer Protection Act provides that an undertaking will possess a dominant position where it enjoys a position of "economic strength enabling it to prevent effective competition being maintained on the relevant market and having the power to behave to an appreciable extent independently of its competitors, customers and ultimately consumers".
2.3 How important is market share in assessing dominance in your jurisdiction? Do specific thresholds apply in this regard?
There are currently no market share thresholds published, although market share thresholds are to be published imminently.
2.4 What other factors are considered when assessing dominance?
In the Federal Competition and Consumer Protection Commission's (FCCPC) assessment of dominance, it will consider the factors listed in the Federal Competition and Consumer Protection Act as follows:
- the market share of the undertaking or undertakings concerned in the relevant market;
- its or their financial power;
- its or their access to supplies or markets;
- its or their links with other undertakings;
- legal or factual barriers to market entry by other undertakings;
- actual or potential competition by undertakings established within or outside the scope of application of the act;
- its or their ability to shift supply or demand to other goods or services; and
- the ability of the opposite market side to resort to other undertakings.
2.5 How are the product and geographic markets defined in your jurisdiction?
The draft Notice on Market Definition states that:
The relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products' characteristics, their prices, brand and their intended use.
The relevant geographic market is defined in terms of the location of suppliers, and it includes those suppliers that customers consider to be feasible substitutes, which may be local, statewide, regional, national or wider (transcending national boundaries).
2.6 Does the dominance legislation make any distinction between dominant purchasers and suppliers?
There is no formal distinction between dominant purchasers and suppliers.
2.7 Is collective dominance recognised in your jurisdiction? If so, how is it defined?
While the Federal Competition and Consumer Protection Act does not make provision for collective dominance, collective dominance is catered for in the current draft regulations, which provide that a dominant position may be held by "two or more undertakings otherwise referred to as collective dominance".
2.8 What is the statute of limitations to prosecute abuse of dominance cases in your jurisdiction?
Neither the Federal Competition and Consumer Protection Act nor the draft regulations currently provide for limitation periods with respect to prosecuting abuse of dominance.
3 Abuse of dominance
3.1 How is ‘abuse of dominance' defined in your jurisdiction?
While the Federal Competition and Consumer Protection Act does not expressly define ‘abuse of dominance', the act does provide a list of specific conduct by an undertaking in a dominant position which constitutes an abuse of dominance. A firm will possess a dominant position in the market where it can:
- prevent effective competition in the relevant market; and
- behave appreciably independently of its competitors, customers and consumers.
Importantly, firms which are dominant will be shown to have abused their dominance only where they engage in any of the conduct prohibited specifically set out in the act.
3.2 What specific types of conduct constitute an abuse of dominance in your jurisdiction?
The Federal Competition and Consumer Protection Act provides for the following specific types of conduct which constitute an abuse of dominance:
- charging excessive prices; and
- refusing access to a competitor of an essential facility where it is economically feasible to grant access.
Furthermore, unless a firm can show technological efficiency or other pro-competitive gains outweighing the anti-competitive effect of any of the following acts, the act will constitute an abuse of dominance:
- requiring or inducing a supplier or customer not to deal with a competitor;
- refusing to supply scarce goods to a competitor when supplying those goods would be economically feasible;
- selling goods or services on condition that the buyer purchases separate goods or services unrelated to the object of a contract, or forcing a buyer to accept a condition unrelated to the object of a contract;
- selling goods or services below their marginal or average cost; or
- buying up a scarce supply of intermediate goods or resources required by a competitor.
3.3 On what grounds may the enforcement authorities commence an abuse of dominance investigation?
A consumer may file a complaint alleging that an undertaking has embarked on activities in contravention of the Federal Competition and Consumer Protection Act. The Federal Competition and Consumer Protection Commission (FCCPC) may also self-initiate complaints on its own volition or following concerns from industry sector regulators or an accredited consumer protection group.
3.4 What powers do the enforcement authorities have in conducting their investigation?
In conducting investigations, the FCCPC is empowered to:
- summon and examine witnesses;
- call for and examine documents;
- administer oaths;
- require documentation submitted to it to be verified by affidavit;
- require the furnishing of returns or information as it may require; and
- adjourn any investigation.
Furthermore, the FCCPC is empowered to enter and search any premises, and inspect and remove from premises any article, document or extract in the possession or control of any person, if it believes that an undertaking has engaged, is engaging in or is likely to engage in conduct in contravention of the Federal Competition and Consumer Protection Act. Notably, the FCCPC must obtain a warrant from a judge in order to conduct such investigation.
Following an investigation, the FCCPC has the power to:
- issue a notice of non-referral to the complainant; and
- make an order or issue a compliance order to the relevant undertaking acting in contravention of the act.
3.5 Is there an opportunity for third parties to participate in the investigation?
Third parties may file a complaint with the FCCPC in order to bring a potential abuse of dominance to the FCCPC's attention. In this regard, it is important that the complainant first engages the target firm. Thereafter, a complaint may be filed with the FCCPC. Complaints may be delivered in hard copy or through the FCCPC's website portal or by email.
The Draft Regulations on Abuse of Dominance provide for third-party participation in the following ways:
- The FCCPC may gather information through its investigation into abusive conduct by requesting information from appropriate third parties; and
- Through oral hearings with the concerned undertaking and relevant third parties, the FCCPC may hear evidence in furtherance of the undertaking's rights of defence.
Furthermore, accredited consumer protection groups can commence or undertake an act to protect consumer interests in any manner of forum contemplated by the Federal Competition and Consumer Protection Act. Accredited consumer protection groups are also entitled to intervene in any matter before any forum contemplated by the act where consumer interests represented by such group are not otherwise adequately represented in the forum.
3.6 What are the general rights and obligations of the enforcement authorities during the investigation?
Rights of the enforcement authority: See question 3.4.
The Draft Regulations on Abuse of Dominance provide the FCCPC with the right to request information and documents from the undertaking which may be required for its investigations. In doing so, the FCCPC may gather information through:
- requests for further information or clarification from the undertaking concerned;
- requests for further information from competitors, suppliers, customers and/or any other relevant third parties;
- the undertaking's internal documents or economic data;
- company inspections; and/or
- witness interviews conducted during the investigation process.
Obligations of the enforcement authority: The Federal Competition and Consumer Protection Act provides that upon finding that an undertaking has abused its dominant position, the FCCPC will:
- prepare a report which outlines the abuse;
- inform the undertaking of the FCCPC's findings and provide the undertaking with a copy of the report; and
- direct the undertaking to immediately cease the abusive practice.
The above provisions are not applicable to exclusive dealing arrangements or market restrictions between or among affiliated or interconnected undertakings.
The FCCPC is obliged to obtain a warrant in order to exercise its power to enter and search premises, and to inspect and remove items from such premises. The warrant must be obtained from a judge of the Court of Appeal and will be granted where the judge is satisfied that reasonable grounds exist that an undertaking has engaged or is likely to engage in conduct in contravention of the act.
3.7 What are the general rights and obligations of the target company during the investigation? What are the general rights and obligations of individuals targeted during the investigation?
Obligations of target company and targeted individuals: It is an offence for persons, without sufficient cause, to:
- fail or refuse to appear before the FCCPC in compliance with a summons;
- fail or refuse to produce a document required by the summons; or
- wilfully obstruct or interrupt the proceedings of the FCCPC.
Persons who destroy any record required by the FCCPC for investigations with the intent to mislead the FCCPC or to prevent or impede the FCCPC's investigation will be guilty of a criminal offence.
An individual who impedes, prevents or obstructs any investigation by the FCCPC will be guilty of an offence.
Furthermore, undertakings and individuals who knowingly provide the FCCPC with false or misleading information commit an offence and will be guilty of an offence and liable to imprisonment, a fine or both. Where persons who have been required to appear before the FCCPC do not do so without reasonable excuse or refuse to take an oath, make an affirmation as a witness or answer a question put to them, they will be guilty of an offence.
3.8 What factors will the enforcement authorities consider in assessing whether an abuse of dominance has taken place?
The FCCPC will first assess whether the firm is dominant in accordance with the provisions of the Federal Competition and Consumer Protection Act. Thereafter, the FCCPC will assess whether the dominant firm engaged in any of the conduct listed in the act. The FCCPC will then consider whether the conduct allows for any technological, efficiency or pro-competitive gains to outweigh the effect of the abusive conduct.
3.9 In case of a finding of abuse of dominance, can the company seek to negotiate a settlement or similar resolution? If so, what is the process for doing so?
The FCCPC may provide settlement options to a firm that complies with the Investigative Cooperation/Assistance Rules & Procedures, 2021 (ICARP). In this regard, the firm must:
- accept liability and admit guilt;
- make full disclosure of its conduct and provide the FCCPC with all relevant facts and information;
- cease the conduct in violation of the Federal Competition and Consumer Protection Act;
- provide continuous and full cooperation with the FCCPC; and
- not tamper with evidence relevant to the investigation.
4.1 What defences are available to companies in response to enforcement?
Primarily, a firm may show that it does not possess market power and hence is not dominant.
Where a firm has a dominant position in the market, it can dispute the abuse of its dominance by showing that its conduct:
- contributes towards the improvement of production or distribution of goods or services or the promotion of technological or economic progress, while allowing consumers a fair share of the resulting benefit;
- is indispensable to the attainment of the objectives referred to in paragraph (a); and
- does not afford the undertaking the possibility of eliminating competition of a substantial part of the goods or services concerned.
The Federal Competition and Consumer Protection Commission (FCCPC) will determine that a firm has not abused its dominant position if it is satisfied that the firm's activities:
- do not have the effect of lessening competition in the market; and
- do not impede the transfer or dissemination of technology.
4.2 Can companies avail of leniency in abuse of dominance cases?
While there is no formal leniency policy currently in place which parties may avail of in cases of abuse of dominance, parties may apply for informal leniency under the Investigative Cooperation/Assistance Rules & Procedures, 2021 (ICARP). Importantly, the FCCPC retains the discretion to waive, defer or refer prosecution to the relevant prosecuting authority; or it may prosecute itself.
The ICARP covers all conduct under the Federal Competition and Consumer Protection Act and allows candidates to cooperate with the FCCPC in order to benefit from reduced monetary penalties. The ICARP further provides that in the case of bodies corporate, undertakings, associations, groups or other entities, the FCCPC will provide protection from director disqualification should the party sufficiently cooperate with the FCCPC.
5 Remedies and sanctions
5.1 What remedies and sanctions may be imposed for abuse of dominance? Can sanctions be imposed on individuals?
Sanctions may be imposed in respect of both enterprises and individuals.
An undertaking which is found to be guilty of abusing its dominance commits an offence and is liable to a fine of:
- not less than 10% of its annual turnover in the preceding business year; or
- such higher percentage as the court may determine with regard to the circumstances of the case.
In addition, directors of such an undertaking who do not cease the abusive conduct will be liable on conviction to:
- imprisonment for a term of up to three years;
- payment of a fine of up to N50 million; or
- both imprisonment and a fine.
5.2 How are the remedies and sanctions in abuse of dominance cases determined?
The Federal Competition and Consumer Protection Commission (FCCPC) has provided clarity on the process it follows in relation to the determination of sanctions in the Administrative Penalties Regulations. The Administrative Penalties Regulations provide for the following methodology that will be applied when imposing administrative penalties:
- First, the FCCPC will consider the nature and type of conduct that is contravening the Federal Competition and Consumer Protection Act, the law, regulation or order of the FCCPC;
- Second, the FCCPC will determine the base amount (as set out in Schedule 1 of the Administrative Penalties Regulations);
- Third, the FCCPC will consider the duration of the violation;
- Fourth, the FCCPC will consider any mitigating and/or aggravating circumstances; and
- Finally, the FCCPC will round off any amount that exceeds the cap provided for by the Act.
Importantly, the Administrative Penalties Guidelines provide that a base amount for abuse of a dominant position in a market will result in a base amount of 1% of the undertakings' annual turnover.
Administrative penalties imposed by the Competition Tribunal may not exceed 10% of the relevant firm's annual turnover in Nigeria and its exports from Nigeria in the preceding financial year.
5.3 Can the enforcement authorities impose remedies and sanctions directly or is court action required?
The Competition Tribunal may impose remedies and sanctions directly without court action.
6.1 Can the defendant company appeal the enforcement authorities' decision? If so, in what forum and what is the process for appeal?
Parties may appeal any decision of the Federal Competition and Consumer Protection Commission (FCCPC) to the Competition Tribunal, subject to regulations made by the FCCPC in this regard. The Federal Competition and Consumer Protection Act further prescribes that the FCCPC is to adopt regulations specifying the procedure and requirements for appeal. As of the date of this publication, such regulations have not been adopted.
The Restrictive Agreements and Trade Practices Regulations provide that persons or undertakings that are aggrieved by a decision of the FCCPC may appeal to the Competition Tribunal within 30 business days of being notified of the FCCPC's decision. While the draft regulations refer to the same timeframe of 30 business days in relation to decisions on abuse of dominance, it is not yet clear whether this is the position to be adopted.
Parties to a proceeding which are not satisfied with a ruling, award or judgment of the Competition Tribunal may file an appeal with the Court of Appeal upon written notice to the tribunal within 30 days of the date of the ruling, award or judgment. The written notice must set out all grounds on which review/appeal is sought.
6.2 Can third parties appeal the enforcement authorities' decision, and if so, in what circumstances?
There are no provisions in the Federal Competition and Consumer Protection Act which provide for third-party appeals.
7 Private enforcement
7.1 Are private enforcement actions against abuse of dominance available in your jurisdiction? If so, where can they be brought?
Where a Federal Competition and Consumer Protection Commission (FCCPC) investigation of a consumer's complaint finds that the consumer's rights have been violated or that the conduct has caused injury or loss to the consumer, the consumer shall have a right of civil action for compensation or restriction in a court of competent jurisdiction. Furthermore, the FCCPC may award a complainant civil damages in a consent order as a result of settlement between a target company and the FCCPC.
7.2 Are class actions or other forms of collective action available in your jurisdiction?
Class action litigation is recognised generally in Nigeria and may be instituted against a party where a class of persons has been aggrieved or damaged by that party's conduct. There is no principal preclusion in pursuing a class action in respect of a contravention of the Federal Competition and Consumer Protection Act.
7.3 What process do private enforcement actions follow?
Where an individual institutes a civil action for compensation or restitution, the procedure set out in the Nigerian civil courts will be followed.
7.4 What types of relief may be sought and what types of relief are most commonly awarded? How is the relief awarded determined?
Damages are the primary remedy, although parties can also seek behavioural or structural remedies.
7.5 Can the decision in a private enforcement action be appealed? If so, to which reviewing authority?
Decisions in private enforcement actions may be appealed in terms of the rules for appeal under the civil courts.
8 Trends and predictions
8.1 How would you describe the current dominance enforcement landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
The Federal Competition and Consumer Protection Act is newly established and the Federal Competition and Consumer Protection Commission (FCCPC) has not yet published any decisions regarding investigations into undertakings which have abused their dominance. The FCCPC has maintained its focus on the freight-forwarding industry; and while it is expected that abuse of dominance may be investigated in this regard, no final decisions have as yet published by the FCCPC.
It is expected that the FCCPC will issue various regulations and guidelines in 2022, including the Draft Regulations on Abuse of Dominance in their final form. The Leniency Rules are also expected to be published in due course, which may provide clarity on whether leniency is available to undertakings which have abused their dominance or whether such undertakings may instead rely on the Investigative Cooperation/Assistance Rules & Procedures. Furthermore, one can expect the FCCPC's decisions to be published on its website for public access.
Notably, the Nigerian antitrust regime has been modelled on the South African antitrust legislation and the FCCPC intends to draw on international best practices and case law from well-established jurisdictions such as those in Europe, the United States and South Africa.
9 Tips and traps
9.1 What would be your recommendations to companies to avoid an abuse of dominance charge and what potential pitfalls would you highlight?
As Nigeria's competition law regime is new and many of the regulations and guidelines have only recently been promulgated or remain in draft form (soon to be finalised), many companies doing business in Nigeria are unlikely to have conducted any meaningful assessment of their market position and business practices from a competition law perspective. Given that the Federal Competition and Consumer Protection Commission has started to actively conduct robust investigations into alleged anti-competitive practices, companies should consider implementing an internal review of their market position and practices as soon as possible. There are often easily identifiable areas which might significantly mitigate the risk of falling foul of the competition laws. Dominant firms should also be cognisant that it is possible to consult the commission to obtain an exemption in circumstances where the conduct:
- contributes towards or amounts to an improvement of production or distribution of goods or services or the promotion of technological or economic progress; and
- does not afford the undertaking an opportunity to eliminate competition in respect of a substantial part of the relevant goods or services.
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.