COVID-19: MERGER NOTIFICATION PROCESSES AND COMPETITION ENFORCEMENT ACTIVITY IN AFRICA

By Richard Bryce,Tamara Dini Friday, May 22, 2020
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We continue to monitor developments on the operations and priorities of competition regulators across Africa during the COVID-19 pandemic. Further to our newsflashes of 14 April 202030 March 2020 and 19 March 2020, our latest update is set out below.

Angola*

The President of Angola declared a state of emergency and a nationwide lockdown effective from 27 March 2020. This has been extended to 25 May 2020 and, as such, the Competition Regulatory Authority (CRA) is only engaging electronically with stakeholders. Face-to-face meetings remain suspended.

Botswana*

The President of Botswana declared a state of emergency and a 28-day lockdown effective from 2 April 2020. As such, the Botswana Competition and Consumer Authority (BCCA) had suspended all activities. However, Botswana’s COVID-19 Task Force announced the easing of restrictions from midnight 20 May 2020 and the BCCA is expected to resume all operations, including accepting new merger notifications.

The BCCA issued a notice on 1 April 2020 that it had received a number of complaints in relation to price increases of essential products (in particular, basic food items and healthcare and hygiene products), as well as the sale of dubious products. The notice also states that the BCCA will take appropriate action against any business or person found to be engaged in deceptive practices or any other trade malpractices in the supply of products intended to fight COVID-19.

The BCCA has also conducted several market surveys on the price of certain ‘essential’ or ‘basic’ goods in order to ‘help consumers make an informed consumer choice’ in light of restricted movement due to the lockdown. In this regard, the BCCA has published the results of its market surveys as at 25 April 2020 and 6 May 2020. The market surveys cover the price of products including (i) maize meal, (ii) flour, (iii) washing powder, (iv) bath soap, (v) sanitiser, (vi) gloves, and (vii) face masks.

CEMAC*

On 18 March 2020, the President of the CEMAC Commission announced the suspension of all meetings and workshops at CEMAC regional offices, including meetings relating to competition matters.

However, merger notifications may still be submitted to the CEMAC offices. Although CEMAC staff are working remotely, delays in the review of mergers should be expected.

Cameroon*

The National Competition Commission is operational and accepting merger notifications.  However, officials are working on a rotational basis and delays in assessments may be occasioned.

COMESA**

On 17 March 2020, the COMESA Competition Commission (CCC) issued a press release warning companies and individuals that the sale of products with the claim that they can 'treat' or 'prevent' COVID-19, without medical evidence, contravenes Article 27 of the COMESA Competition Regulations (Regulations) and attracts a penalty of up to USD 300 000.

On 31 March 2020, the CCC issued a press release setting out interim processes for merger review under the Regulations in light of COVID-19. These interim processes include:

  • Merger notifications are required to be submitted electronically and parties are not expected to submit hard copies to the CCC.
  • Pursuant to Article 24 (1) of the Regulations, merging parties are required to notify the CCC within 30 days of their decision to merge. The CCC notes that in light of the restrictions on movement and the lockdown in most countries, some merging parties may not be able to prepare a complete merger notification within 30 days from their decision to merge. In the circumstances, merging parties will not be penalized for failing to submit a complete notification to the CCC within 30 days of the parties’ decision to merge, provided that they notify the CCC of the merger.
  • The CCC has suspended onsite investigations and face-to-face meetings. However, consultations and meetings will continue to be held through teleconferencing facilities until the situation normalises.
  • Merger investigations may not be completed within the 120-day review period provided under Article 25(1) of the Regulations. As such, merger review periods may be extended in accordance with the Regulations.

Egypt*

The Egyptian Competition Authority (ECA) is operating on a skeletal staff basis, to receive complaints during specified hours. Merger notifications are being submitted electronically.

Following consultation with the ECA, the Prime Minister of Egypt issued a price list for certain essential products required to mitigate the effects of COVID-19, such as hand sanitizers. Failure to comply with the requirements of the price list attracts a fine ranging from EGP 100 000 to EGP 5 million.

The ECA has launched a new initiative through which it provides free legal and economic consultations to companies, market workers and their legal advisors on competition law compliance and exemption of certain practices during COVID-19. However, no formal decrees have been issued in terms of exempting and/ or regulating market conduct.

eSwatini*

eSwatini is on partial lockdown. However, the eSwatini Competition Commission staff are working on a rotational basis. They are accepting merger notifications and investigating restrictive practices. 

Ethiopia

Ethiopia is in its second month of a five-month nationwide declared emergency. The Trade Competition and Consumer Protection Authority (TCCPA) has suspended its merger review activities but it still investigating complaints (although delays are to be expected).

The TCCPA has publicly acknowledged that there may be a need for competitor collaboration in response to a COVID-19 shortage of essential goods and/ or services.  However no formal regulations or guidance notes have been issued.

Kenya

Officials of the Competition Authority of Kenya (CAK) are working off site, and meetings with external parties are taking place remotely via video or telephone conference.

Merging parties are encouraged to submit filings electronically.

On 16 March 2020, the CAK issued a press release noting that it had issued a remedial order to Cleanshelf Supermarkets (Cleanshelf) after investigations determined that the retailer 'unconscionably' adjusted prices of Tropikal brand hand sanitizers (500ml) in contravention of the Competition Act, No.12 of 2010.
The CAK found that 'the retailer therefore exploited its relative strength as a retailer to commercially detriment consumers whose bargaining position has been diminished following the pronouncement of existence of COVID-19 in Kenya'. The remedial order required Cleanshelf to contact and refund all consumers who purchased the 960 bottles of the Tropikal brand hand sanitizers above the usual selling price.

Malawi*

The Competition and Fair Trading Commission (CFTC) is functioning as usual.

The CFTC issued a press release on 23 March 2020 noting that it had ordered 11 pharmacy shops (six in Lilongwe and five in Blantyre) to immediately cease and desist from excessive pricing of products used for the treatment of COVID-19. These products were hand sanitisers, face masks and gloves.

The CFTC issued a press statement warning independent schools to guard against unfair trading and anticompetitive practices. The press statement notes that according to market intelligence received by the CFTC, some independent schools are engaged in discussions with each other and sharing information about the level of school fees to be applied for online learning programmes.

In this regard, the press statement notes that the practice of exchanging commercial information (such as pricing intentions or pricing formulae) among competitors constitutes collusion in contravention of section 33 of the Competition and Fair Trading Act.  The press statement also notes that it is an offence for competitors to agree on the level of discount or fee reduction to be applied.

Mauritius

On 23 March 2020, the Mauritian Government implemented a ‘curfew’ to last until 2 April 2020.  The curfew has subsequently been extended to 1 June 2020.  The office of the Competition Commission of Mauritius (CCM) is closed but staff are working remotely and are engaging electronically.

The CCM issued a press release on 9 April 2020 noting that in response to the COVID-19 crisis, some businesses may need to collaborate to ensure the supply of essential products and services.

In this regard, the CCM provides its ‘assurance’ that competition law enforcement will not ‘constrain’ or ‘impede’ ‘critical cooperation’, which is in the interest of consumers and the public and which does not last longer than is necessary.

The press release also notes that the Competition Act, 2007 (Law), does not prohibit suppliers from setting ‘maximum prices’ for their products with a view to limiting ‘unjustified price increases’ at retail level, nor does the Law prohibit suppliers from recommending retail prices and affixing recommended retail prices on their products as long as the words ‘recommended price’ appear alongside the stated price.

Namibia

In light of the state of emergency declared by the President of Namibia, the offices of the Namibian Competition Commission (NaCC) closed on 18 March 2020, although stakeholders are able to engage with the NaCC electronically.

Following the easing of certain restrictions during the state of emergency, the NaCC issued a press release on 6 May 2020 indicating that it would partially resume operations on 11 May 2020. The NaCC still encourages market participants to make use of electronic modes of communication in order to comply with the social distancing directives. Further, the press release notes that physical documentation, such as, merger filings, complaints and exemption applications, will now be accepted at the NaCC’s offices. 

In a further press release published on 18 May 2020, the NaCC notes that it has received numerous consumer complaints on price exploitation of food and basic consumer goods (amongst others) in an apparent response to the COVID-19 pandemic. The press release notes that the NaCC ‘does not possess direct consumer protection powers, however, due to the absence on an adequate consumer protection legislation framework in Namibia, remedies to the prevailing price gouging practices must be adopted under the Competition Act, where legally permissible’. 

However, the NaCC is engaging with stakeholders, including the Ministry of Industrialization & Trade, the Office of the Attorney General and the Ministry of Justice, in order to introduce a legal mechanism to address price exploitation during the COVID-19 pandemic. The intention seems to be the introduction of pricing regulations to complement the NaCC’s existing powers under the Competition Act, No. 2 of 2003 in relation to the abuse of dominance.

The press release notes that there has been a delay in the adoption of the proposed regulations due to a lack of consensus between stakeholders.  In the interim, the NaCC is informally investigating all complaints, prioritising those relating to essential products and/ or services.  The NaCC is still to decide whether it will conduct formal investigations.

Nigeria*

On 23 March 2020, the Head of Civil Service of Nigeria directed that all non-essential public servants at grade level 12 and below work from home with effect from 24 March 2020 until further notice. As such, the Federal Competition and Consumer Protection Commission (FCCPC) is not currently operating at full capacity.

The FCCPC issued a press release on 23 March 2020 advising against arbitrary, unreasonable, unconscionable, excessive and irrational pricing of critical hygiene products (‘price gouging’), noting that 'violators will be criminally prosecuted where the evidence sufficiently supports same'.

On 31 March 2020, the FCCPC issued a further press release stating that in light of capacity constraints it would prioritise COVID-19 related issues, although it would continue to accept 'sensitive and urgent' merger notifications. 

On 28 April 2020, the FCCPC issued guidelines on its operations during the COVID-19 pandemic. The guidelines reiterate that the FCCPC is prioritising COVID-19 related matters. With respect to merger review, the guidelines note that the FCCPC will prioritise the review of merger notifications in the following circumstances:

  • where there is a possibility of imminent failure of the business of a merging party if the transaction is not urgently considered;
  • where there are time limitations in a host jurisdiction (other than Nigeria) and notification to, and determination by, the FCCPC is required prior to conclusion of the underlying transaction; or
  • where the application is otherwise time-sensitive, for instance where other regulatory or similar approvals may expire or lapse, or such approvals were conditioned on presenting a notification to the FCCPC within a specific period.

Seychelles

The Fair Trading Commission (FTC) is functioning as usual.

On 29 April 2020, the FTC issued a statement indicating that it is investigating complaints relating to excessive prices, prices not being displayed, suppliers requiring consumers to pay the higher of two prices displayed and the sale of expired goods. The complaints implicate 20 retailers.

South Africa

South Africa remains in a partial lockdown since the President declared a national state of disaster and announced an initial 21-day lockdown effective from 26 March 2020.

On 24 March 2020, the South African Competition Commission (SACC) issued a press release noting that the SACC would scale down operations significantly but would prioritise all COVID-19 complaints and the enforcement of the regulations gazetted by the Minister of Trade and Industry, Minister Ebrahim Patel.

The SACC initially discouraged the filing of mergers other than those involving failing firms (read more here) or firms in financial distress. However, the SACC has since indicated that it is accepting the notification of all mergers and officials within the Mergers Division are working remotely.  However, the SACC has noted that:

  • Merger investigations which give rise to horizontal, vertical and/ or public interest issues or raises any other issues which require meaningful engagement with third party market participants, will occasion delays in merger approval.
  • The full 60 business day period may be used to investigate intermediate mergers.  
  • The investigation of large mergers could take 120 business days. 

Complaints related to abuses of dominance or exploitative practices relating to COVID-19 are being handled by a dedicated team comprising members of the SACC and the National Consumer Protection Commission (NCC) (read more on the NCC’s role here). 

On 3 April 2020, Competition Tribunal Rules regulating complaint referrals for alleged COVID-19 excessive pricing contraventions (Rules) were gazetted. The Rules set out the procedural steps applicable to the referral of an excessive pricing complaint to the Competition Tribunal (Tribunal).

These Rules will continue to apply for as long as COVID-19 remains a declared national disaster.

The Rules include expedited time periods for the treatment of excessive pricing complaints. They also empower the Tribunal to remedy an excessive pricing contravention by imposing a pricing order on the respondent.  Further details are available here.

The following regulations have been issued in response to COVID-19:

  • Regulations exempting certain categories of agreements and practices in the banking sector which are required to respond to the COVID-19 crisis (Banking Exemption). The scope of the Banking Exemption has since been expanded to include other types of financiers, specifically the Association for Savings and Investment South Africa, as well as financial institutions registered as such in terms of the Financial Sector Regulation Act, 2017. See further details here and here
  • Regulations that prohibit excessive pricing by dominant suppliers, restrict suppliers of all goods and services from charging prices which are unconscionable, unfair, unreasonable or unjust, and impose measures to facilitate the supply of goods and services during the period that COVID-19 is declared a national disaster. See further details here.
  • Regulations exempting certain categories of agreements and practices in the healthcare sector which are required to respond to the COVID-19 crisis. See further details here.
  • Regulations exempting certain categories of agreements and practices in the hotel industry which are required to respond to the COVID-19 crisis. See further details here.
  • Regulations exempting certain categories of agreements and practices in the retail property sector which are required to respond to the COVID-19 crisis. See further details here.

On 19 May 2020, the SACC briefed the South African Parliamentary Portfolio Committee on Trade and Industry (Committee) on the work that the SACC has been doing around COVID-19.

In the context of COVID-19 excessive pricing, the SACC has thus far received some 1 350 complaints and tip-offs, and some 35 firms are in various stages of settlement with the SACC. To date, 11 consent agreements have been concluded, administrative penalties of ZAR 7.5 million have been levied, and donations to the South African COVID-19 Solidarity Fund total ZAR 5.3 million have been made. The SACC also reported on the various block exemptions it has published and noted that it is monitoring food market pricing to understand retail level inflation.

The NCC briefed the Committee on the work that it has been doing in response to COVID-19.  The NCC reported having received 1 618 complaints of price gouging and confirmed that 127 investigations have been authorised. To date, 29 investigations have been completed, 11 of which were closed (either because no contravention could be established or a settlement was reached between the SACC and the respondent firms for the same product), while eight matters have been referred to the Consumer Tribunal for adjudication. 

Tanzania

The Tanzanian Fair Competition Commission (FCC) is functioning as usual.

On 19 March 2020, the FCC issued a notice warning importers, traders, manufacturers, and dealers of antiseptic products, face masks and gloves that price fixing, creating artificial shortages, and refusing to sell such products, is an offence under the Fair Competition Act, 2003.

Zambia

The Zambian Competition and Consumer Protection Commission is functioning as usual.

Zanzibar

The Zanzibar Fair Competition Commission is functioning as usual.

Zimbabwe*

Although Zimbabwe remains under lockdown, the Competition and Tariff Commission (CTC) has resumed limited operations. In this regard, the CTC will only accept notification of the following COVID-19 related cases: (i) trade and tariff relief applications; (ii) merger and acquisition transactions; (iii) requests for authorisation; and (iv) abuses of dominance or exploitative practices.
Staff of the CTC will be in office from 10:00 – 13:00 each business day.  Market participants may reach the CTC electronically.

For further information please contact one of the partners in our Competition Practice.

* Update provided with the assistance of: Rede De Servicos De Advocacia De Lingua Portuguesa (Angola), Bookbinder Business Law (Botswana), Besong & Co. (CEMAC and Cameroon), EAH Associates in association with Gide Loyrette Nouel (Egypt), Robinson Bertram (eSwatini), PFI Partnerships (Malawi), Udo Udoma & Belo-Osagie (Nigeria), and Scanlen & Holderness (Zimbabwe).

** COMESA comprises 21 member states: Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Eritrea, eSwatini, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Somalia, Tunisia, Uganda, Zambia and Zimbabwe.