THE NEW NIGERIAN COMPETITION LAW REGIME

Thursday, March 07, 2019
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The Nigerian Federal Competition and Consumer Protection Act, 2018 (Act) was signed into law by President Muhammadu Buhari in February 2019. The Act repeals the Consumer Protection Act, Cap C25, 1992 (the Consumer Protection Act) and introduces a dedicated competition law regime to Nigeria. 

The Act applies to all commercial activities carried out or having an effect in Nigeria and includes provisions dealing with merger control, restrictive agreements, abuse of dominance, monopolies, price regulation and consumer protection.

Current status: The Act became effective when it was signed into law. However, as far as mergers are concerned, thresholds for mandatory notification under the Act have not yet been published and, as such, are not being notified to the Federal Competition and Consumer Protection Commission (Commission) at this stage.

The Commission: The Commission replaces the Nigerian Consumer Protection Council (Council) and will take over the merger control function previously performed by the Securities and Exchange Commission (SEC) under the Investments and Securities Act, 2007 (the ISA). Former head of the Council, Babatunde Irukera, has been appointed as the chief executive officer of the Commission. 

Merger thresholds: While the Act provides for thresholds for small and large mergers to be determined, no thresholds have been published at this stage. In terms of the Act, proposed threshold values must be published for public comment, and must be finalised within two months of such publication. We understand that the Commission and the SEC are consulting on appropriate thresholds.
  
Merger notification obligations: It will be mandatory to notify and obtain approval for large mergers before they are implemented. Small mergers will not be notifiable unless the Commission requires the parties to a small merger to notify. This provision may be invoked by the Commission within six months of a small merger being implemented.  

The Act provides that a ‘merger’ occurs when one or more undertakings directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another undertaking. The Act includes examples of how a ‘merger’ may be achieved and in this regard specific reference is made to joint ventures. The Act makes provision for penalties of up to 10% of annual turnover for pre-implementation.

Supremacy of the Act: The Act provides that, notwithstanding the provisions of any other law, but subject to the provisions of the Constitution, the Act overrides the provisions of any other law in all matters relating to competition and consumer protection. While the Act repeals the Consumer Protection Act, it does not explicitly repeal the merger-related provisions of the ISA and it is unclear whether notification obligations in terms of the ISA fall away in the period prior to the Commission publishing the thresholds.

Restrictive agreements: The Act prohibits restrictive agreements which have the purpose or effect of preventing, restricting or distorting competition. This includes price-fixing, collusive tendering and, under certain conditions, resale price maintenance. Such conduct is prohibited under Part 8 of the Act, dealing with 'Restrictive agreements'. Provision is also made for firms to apply for exemption from these provisions. Part 14 of the Act, dealing with 'Specific offences against competition', provides a broad ‘catch-all’ prohibition in respect of unlawful 'price-fixing' through attempting or conspiring to influence the price at which any other undertaking supplies, offers or advertises goods or services.

Contraventions under Part 8 attract penalties of up to 10% of annual turnover (for companies) and imprisonment of up to five years and/ or a fine of up to
NGN 5 million (for individuals). Contraventions under Part 14 of the Act attract penalties of up to 10% of annual turnover (for companies) and imprisonment of up to three years and/ or a fine of up to NGN 10 million (for individuals). 

Abuse of dominance: The Act prohibits the abuse of a dominant position and certain specific conduct is identified as being unlawful in this regard, including the charging of an excessive price; refusing a competitor access to an essential facility; refusing to supply scarce products when it is economically feasible to do so; and predatory pricing. Contraventions of the abuse of dominance provisions of the Act expose companies to penalties of up to 10% of annual turnover, although the Court of Appeal may determine a higher percentage fine. A director of an undertaking that commits an offence may be liable on conviction to imprisonment for a period of up to three years and/ or a fine of up to
NGN 50 million.

Price regulation: A novel feature of the Act is the powers given to the President to regulate prices for purposes of facilitating competition. The President may make an order to regulate prices after having considered a report by the Commission on the state of competition in the specific market and the appropriateness of price regulation in this market and where the President is satisfied that:

  • The market under consideration features limited competition;
  • Price regulation is in the interest of users, consumers or suppliers; or
  • The regulation will apply to a narrow list of products and services, for a limited time only, to remedy the effect of a lack of competition in the particular market.

Regulated industries: To the extent that the Act applies to a sector or industry that is subject to the jurisdiction of another government agency in terms of the provisions of any other law, the Act establishes concurrent jurisdiction between the Commission and the relevant government agency in matters affecting competition or consumer protection. The Act provides that the Commission shall have precedence over the relevant government agency.