ZAMBIAN COMPETITION AND CONSUMER PROTECTION COMMISSION OFFERS AMNESTY FOR A LIMITED PERIOD

Wednesday, October 02, 2019
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Between 1 September 2019 and 28 February 2020, the Zambian Competition and Consumer Protection Commission (Commission) is running an amnesty programme, encouraging persons or enterprises to approach the Commission with information that will help demonstrate the existence of prohibited agreements in the form of cartel conduct or other restrictive business practices referred to in Part III of the Competition and Consumer Protection Act, 24 of 2010 (the Act).

Applicants may seek immunity from penalties and prosecution. The amnesty programme seeks to raise awareness of, and encourage compliance with, the Act.

It applies to all sectors of the economy. Persons or enterprises who are unsure as to whether an agreement or conduct contravenes the Act may engage with the Commission in person, or anonymously, or through their legal representatives.

Part III of the Act addresses horizontal and vertical agreements and the abuse of a dominant position.

Horizontal agreements

Section 8 of the Act prohibits any category of agreement, decision or concerted practice, which has as its object or effect the prevention, restriction or distortion of competition to an appreciable extent in Zambia.

Section 9(1) of the Act prohibits horizontal agreements between enterprises which:

  • fix a purchase or selling price, or any other trading conditions, directly or indirectly;
  • divide markets by allocating customers, suppliers or territories, or specific types of products or services;
  • tender collusively, unless the person requesting the bid is informed of the terms of the agreement prior to the making of the bid;
  • set production quotas;
  • collectively refuse to deal in, or supply, products or services. 

Vertical agreements

Section 10 of the Act prohibits minimum resale price maintenance, by providing that a vertical agreement between enterprises is prohibited if it involves resale price maintenance. A resale price may be recommended to a reseller if the supplier makes it clear that the recommendation is non-binding, and the product has a price stated on it and the words “recommended price” appear next to the stated price.

Section 12(a) provides a general prohibition against vertical agreements which have the effect of preventing, distorting or restricting competition or substantially lessening competition in a market for any products or services in Zambia.

Horizontal or vertical agreements between interconnected bodies corporate falling under a single economic unit are not prohibited. 

Abuse of a dominant position 

In terms of section 15 of the Act, a dominant position exists in relation to the supply of products and services in Zambia if (a) at least 30% of the products or services are supplied or acquired by one enterprise; or (b) at least 60% of the products or services are supplied or acquired by up to three enterprises.

Section 16(1) of the Act prohibits any act or conduct if, through the abuse or acquisition of a dominant position of market power, it limits access to markets or unduly restrains competition, or has or is likely to have an adverse effect on trade or the economy in general.

Section 16(2) provides that the abuse of a dominant position includes:

  • imposing unfair purchase or selling prices or other unfair trading conditions, directly or indirectly;
  •  limiting or restricting production, market outlets or market access, investment, technical development or technological progress in a manner that affects competition;
  • applying dissimilar conditions to equivalent transactions with other trading parties;
  • making the conclusion of contracts subject to acceptance by other parties of supplementary conditions which by their nature or according to commercial usage have no connection with the subject matter of the contracts;
  • denying any person access to an essential facility;
  • charging an excessive price to the detriment of consumers; or
  • selling products below their marginal or average variable cost.

Penalties and criminal prosecution 

In the ordinary course, a contravention of Part III of the Act exposes an enterprise to a penalty of up to 10% of its annual turnover.

The Act also provides for criminal sanctions for cartel conduct.  The Commission may impose a fine of up to 500 000 penalty units (ZMW 150 000 or USD 11 385) or imprisonment for a period not exceeding five years, or both, on any director or manager of an enterprise that is found to have engaged in cartel conduct.

In 2016, the Commission and the National Prosecuting Authority signed a Memorandum of Understanding aimed at the effective prosecution of cartels. 

Regional enforcement 

Zambia is a COMESA Member State and the Commission has launched its amnesty programme at a time when the COMESA Competition Commission has announced its intention to target cartels in a number of industries (read here) [https://www.bowmanslaw.com/insights/competition/comesa-competition-commission-targets-cartels-in-selected-industries/] . The position that the COMESA Competition Commission (as a regional regulator) will take against firms benefitting from amnesty under the Zambian (national) amnesty programme will need to be clarified, as immunity from prosecution at a national level may not necessarily extend to immunity at a regional level.