Renewed focus on competition in African airspace

The second International Civil Aviation Organization Meeting on Air Cargo Development in Africa was held in Addis Ababa, Ethiopia in June this year. The ICAO Meeting appears to have served as a catalyst for renewed focus on the implementation of the 1999 Yamoussoukro Declaration. The Declaration aims to liberalise scheduled and non-scheduled air transport services on the African continent, partly in the interest of better consumer offerings, and includes express commitments by states to support fair competition in the aviation sector. Implementation has been slow with state aviation agencies in some parts of the continent continuing to support protectionist policies. While protectionism is, for some aviation authorities, seen as a necessary means of competing against international airlines, other stakeholders, including the Group CEO of Ethiopian Airlines, Tewolde Gebremariam, have been reported to attribute the lack of competitiveness of African airlines to the failure to liberalise African airspace. It appears that the ICAO Meeting has triggered renewed interest in implementation of the Declaration and a determination to lobby states to support fair and robust competition on intra-Africa airline routes.

Increased focus on pricing in the telecommunications sector in Africa

Moves to ensure fair competition and to examine pricing in the telecommunications sector have been seen, not only in Europe, but also in key mobile phone jurisdictions on the African continent.

The issue of high data costs has been under the spotlight in South Africa. Most recently, the Minister of Economic Development has asked the Competition Commission to investigate the cause of perceived high cost of data in South Africa. The Competition Commission has not yet launched any investigation or a market inquiry into this aspect, but is reported to be consulting with the telecommunications regulator, the Independent Communications Authority of South Africa and the regulator charged with enforcing South Africa’s consumer protection legislation, the National Consumer Commission. It is anticipated that an enquiry or investigation will get underway in the near future.

In May 2017, the Competition Authority of Kenya issued a directive requiring telecommunication companies and financial institutions that provide mobile money services to provide real time notifications of the cost of transactions to customers (before transactions are completed). The directive, which apparently responds to consumer complaints, is to be implemented in stages and will affect mobile money services offered through apps, USSD codes and SIM toolkits. The objective of the directive is to provide for consumer protection and fair pricing through a consumer-friendly and transparent system of tariff reporting.

Tariffs for voice calls have been the subject of intervention by the Posts and Telecommunications Regulatory Authority of Zimbabwe launching a cost analysis to assess the degree to which pricing in the telecommunications industry is fair and competitive.

In early July 2017, the Ugandan Communications Commission queried MTN’s recent tariff changes which were made without the regulator’s approval. While not directly a competition-related intervention, the purpose of the UCC’s powers to regulate tariffs is to prevent anti-competitive pricing.

These developments reflect an increasingly active role of telecommunications and competition regulators in regulating fair markets in a sector becoming increasingly significant on the continent.

Country Specific updates

Tanzania

New merger thresholds in Tanzania

During June 2017, the Government of Tanzania, published the Fair Competition Threshold for Notification of A Merger Amendment Order, 2017 (which revises the thresholds for the compulsory notification of mergers in Tanzania.

Previously, a transaction was notifiable to the Tanzanian Fair Competition Commission if the combined value of the assets held by the merging parties, globally exceeded, TZS800 million (approximately USD 36,000).

In terms of the Order, the merger notification threshold is now:

  • increased to TZS3,5 billion (approximately USD1.5 million; and
  • calculated with reference to the combined value of the assets of the merging parties or the turnover of the merging parties; and
  • still calculated with reference to the global asset value or turnover of the merging parties, although the Order does not specifically refer to global turnover.

This amendment to the merger notification regime in Tanzania is unlikely to have any far-reaching impact as the FCC insists in practice on the use of the global asset values and turnover of the merging parties for purposes of calculating whether the merger notification thresholds are met in Tanzania. Accordingly, multijurisdictional transactions are likely to still trigger the merger notification thresholds in Tanzania due to the relatively low value of the merger thresholds when compared to the global revenue of multinational corporations.

Egypt

Egyptian Court has fined the head of the legal department (in-house counsel) of a company subject to investigations

During a dawn raid related to an investigation by the Egyptian Competition Authority into alleged cartel conduct in the heart valves conduct one of the implicated companies, Ghelyongi, refused to cooperate with the ECA’s case handlers. The case handlers were refused entry and the company refused to cooperate with the case handlers in their requests during the dawn raid due to the instructions of their in-house counsel.

The ECA brought a non-cooperation case against the in-house legal counsel for obstructing the dawn raid and refusing to cooperate. The case was then referred to the Prosecutor’s Office and then to the Economic Criminal Court which fined him EGP 100 000.

This fine marks a very important development because in-house counsels may be found liable in their personal capacities if they give wrong advice which results in a similar obstruction to the ECA inspections.

Egyptian Competition Authority issues a cartel infringement finding decision against chicken brokers

On 1 August 2017, the Egyptian Competition Authority issued an infringement decision against a number of the main brokers of live chicken in Egypt.

In this case, the ECA revealed that the chicken brokers agreed to fix the purchase price of chicken at a level of 14% lower than the cost of chicken producers. This led to many chicken producers accumulating losses and, consequently, being foreclosed from the market.

The conduct resulted in the substantial decrease of chicken production in Egypt from 1.2 billion in 2010 to 700 million in 2016.

The ECA has highlighted that this case is one of the main cases where it has been able to delve into the informal (unregulated) market. This of course is a very important and positive development. On one hand, the ECA is sending a very strong message of the rule of law and that no one is immune from being prosecuted for engaging in anti-competitive conduct including those who are working in the unregulated market. On the other hand, this also sends a strong message to market players who are abiding to the rules of the regulated market, that they will be protected from the anti-competitive conduct of their unregulated rivals.

Egyptian Prosecutor’s Office refers price fixing case against chick producers to the Economic Criminal Court

The Egyptian Prosecutor’s Office has referred nine chick producers to the Economic Criminal Court for engaging in a price fixing cartel – an investigation that has been ongoing since 2013.

According to the Egyptian Competition Authority and Prosecutor’s Office, the nine producers have entered into a cartel to reduce the prices of chicks over a period of two weeks. This was done by the Trade Association of Chicken Production by sending daily SMS updates to the cartelists to monitor the daily prices offered by the cartelists for chicks.

The ECA was able to obtain a copy of the meeting minutes held by the trade association as well as the SMS database and the details of all those who have subscribed to this service at the trade association. As a result, the ECA has referred 11 parties (who attended and signed the meeting minutes) and 13 others who voluntarily subscribed to the SMS service.

It is not clear yet but it seems that the Prosecutor’s Office did not find compelling evidence (or evidence that prove cartel conduct beyond reasonable doubt) to prosecute the thirteen producers who did not attend but only subscribed to the SMS service. On the other hand, the Prosecutor’s Office chose not to refer the case against two other companies who appeared to be active in another market. As a result, the Prosecutor’s Office referred the case only against the nine producers who attended the meeting and signed the meeting minutes.

ECA announces that it is finalising its draft merger control

The Egyptian Competition Authority recently announced that it is finalising its pre-merger control regime. Baker McKenzie has been a member of the internal ECA committee preparing this draft law.

The draft law establishes a pre-merger control regime. According to the ECA, Egypt is one of the very few countries in the world that has a competition law but without having a merger control regime.

The draft law includes a worldwide turnover and a local nexus in Egypt. It also sets strict deadlines for merger clearance in order to avoid having unnecessary hurdles for investment and to address the concerns of the business community. The draft law also grants interested parties the right to contribute and to express their views to the ECA during its assessment period.

Burkina Faso

Burkina Faso passes New Competition Act

On April 27th, 2017 a new Competition Act modifying for Burkino Faso was passed. This new Competition Act modifies the provisions of the previous Competition Act that came into effect in 1994 – a piece of legislation that was last amended in 2001.

The new Competition Act, which was unanimously adopted by the National Assembly, aims to:

Harmonise national and regional rules (eg regarding state aids and subsidies) and clarifies the relationships between the national and regional competition authorities.

Significantly increase the penalties payable by transgressing firms for violations of competition laws with the hope of these increased penalties having a more dissuasive effect.

Increase the number of investigations into anti-competitive conduct by the competition authority.

Increase the protections offered to consumers through a more effective regulation of sales promotions.

The passing of this new law underscores the general trend in francophone Africa and at least in the WAEMU region to implement increasingly more effective regulation of competition laws.

Although the new Competition Act has been passed into law it has not yet been enacted.

Nigeria

Nigeria coming closer to enacting competition and consumer protection law

The Federal Competition and Consumer Protection Bill of 2017 was passed by the House of Representatives of Nigeria during March 2017 and during June 2017 the Bill was also passed by Nigeria’s Senate. The Bill is aimed at specifically regulating matters related to competition and consumer protection and will, among other things, establish the Federal Competition and Consumer Protection Commission and the Competition and Consumer Protection Tribunal. The Bill will become law once it is assented to by the President of Nigeria.

Tunisia

Tunisia joining COMESA as the 20th member state

The Common Market for Eastern and Southern Africa (is scheduled to hold its next summit during October 2017. During this summit, Tunisia will become the 20th Member State to the COMESA and the bilateral discussions between COMESA and the Tunisian Government is underway to facilitate Tunisia’s accession to the COMESA Treaty. This means that Tunisia will join the list of countries in which the COMESA Competition Regulations have application.

Previous articlePortugal: Retention of Data Resulting From Call Recording
Next articleHong Kong court: Trading while possessing price sensitive information not an offence if motivated by other reasons