COMESA COMPETITION COMMISSION TARGETS CARTELS IN SELECTED INDUSTRIES

Friday, September 27, 2019
  • SHARE THIS ARTICLE

The Competition Commission of the Common Market for Eastern and Southern Africa (COMESA) has opened cartel investigations in the pharmaceutical and construction sectors, with other investigations anticipated as part of a 'phase two' process in the banking, telecommunications, dairy, beverages and water sectors (Read more).

To date, the COMESA Competition Commission (Commission) has focused mainly on merger control and vertical restrictive practices.

A cartel that is implemented, or intended to be implemented, in COMESA, is prohibited and void. In terms of Article 19(4) of the COMESA Competition Regulations (Regulations), a cartel constitutes an agreement between undertakings to:

  • fix prices;
  • tender collusively;
  • allocate markets, customers or volumes (whether in production and/or sale);
  • collectively enforce arrangements;
  • collectively refuse to supply products or services to a potential purchaser, or to purchase products or services from a potential supplier; or
  • collectively deny access to an arrangement or association which is crucial to competition.

Types of agreements: Article 19 of the Regulations applies to formal, informal, written and unwritten agreements, arrangements and understandings.

'Single economic entity' exclusion: The Regulations are not contravened if the conduct occurs between firms under common control, or firms unable to act independently of each other.

Penalties: In terms of Rule 79 of the COMESA Competition Rules, the maximum penalty for a contravention of Article 19 is USD 750,000. A penalty may not exceed 10% of an undertaking’s annual turnover.

Application for exemption: Two processes are available to firms wishing to apply for exemption from the Regulations:

  • On the basis of efficiency gains: In terms of Article 16(4) of the Regulations, an anti-competitive agreement may be exempt by the Commission on the basis of efficiency gains. An agreement, decision or concerted practice contributes may be exempt if it contributes to the improvement of the production or distribution of products, or the promotion of technical or economic progress, while allowing consumers a fair share of the benefit. Notably, an exemption may only be granted if the agreement, decision or concerted practice (a) does not impose on the undertakings concerned restrictions which are not critical to the attainment of these objectives; and (b) does not afford such undertakings the possibility of eliminating competition in respect of a substantial market for the products or services in question.
     
  • On the basis of public benefit: In terms of Article 20 of the Regulations, an anti-competitive contract, agreement or understanding between undertakings may be authorised by the Commission if the public benefit resulting from the agreement will outweigh the anti-competitive detriment.

Involvement of national competition authorities: The Commission is collaborating with Member States’ ministries and competition authorities to gather information on firms that are suspected of being involved in prohibited conduct.

Member States: COMESA comprises 21 Member States, namely  Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Swaziland, Tunisia, Uganda, Zambia and Zimbabwe.