Setting the New Benchmark in Africa

Africa's approach to enforcing competition law is experiencing a transformative shift, highlighted by  the  Federal   Competition  and  Consumer  Protection  Commission  (FCCPC)  of  Nigeria's landmark USD 110  million  fine  on  British  American Tobacco Nigeria  Limited and  affiliated companies (BAT). This penalty is not just a substantial financial imposition; it also indicates that African competition authorities are elevating their enforcement actions to align with international norms of competition law and are placing a heightened emphasis on corporate accountability.

Expanding the Horizon of Enforcement - Playing by the Rules

Such  momentum in competition law enforcement is not isolated to Nigeria. Just recently, the Confederation of African Football  (CAF) and beIN Media Group faced  USD 300,000  fines each from the Common Market for Eastern and Southern Africa (COMESA) Competition Commission. These  fines,  issued on  January  25,  2024  were  for anti-competitive practices related to  the awarding of television rights for CAF-organized tournaments. It is noteworthy that this is the first time the Commission has  levied such  a fine, coinciding  with the Africa Cup of Nations, CAF's flagship event.  This marks  a proactive stance by COMESA in monitoring and penalising actions that compromise fair competition.

Expanding the Horizon of Enforcement - Playing by the Rules

Prior to the BAT case, the most substantial competition law enforcement fine in Africa stemmed from the Maize Cartel Investigation. Over a period stretching from 2010 to 2020, the South African Competition  Tribunal  issued  fines   that   collectively   reached  R648,603,135.45 against  14 companies for engaging  in price-fixing activities. These  fines  equate to an estimated USD 45 million. The case was  marked  by a systematic collaboration among  companies, sometimes coordinated under  the  guise  of an  industry  trade  organisation, to manipulate the  prices  and trading conditions of maize products. Such actions were in direct contravention of the provisions set out in the South African Competition Act.

The significant  USD 110 million fine levied  against BAT by Nigerian  authorities for abuse  of dominance  and   consumer  rights  violations   signifies  a  new  direction   in  competition  law enforcement  across  Africa.  This  action   demonstrates  a   rising   commitment  by  African competition authorities to hold individual corporations responsible for engaging in anti- competitive behavior.

This trend  reflects a broader global movement towards individual accountability in corporate conduct. The early 2000s  brought  to light a significant  legal scandal involving LG, Sharp,  and Chunghwa Picture  Tubes, which were implicated in a price-fixing conspiracy that  contravened antitrust laws.  Beyond  the  hefty  corporate fines  (in billions  of dollars),  this  scandal gained prominence for the imprisonment of individual executives, reinforcing the concept of personal responsibility and the consequences of corporate malfeasance.

Investigations spanning multiple  continents revealed deliberate actions by these companies to undermine fair market competition. This scandal was crucial in driving a global reassessment of business practices, highlighting the essential nature of adherence to competition laws and the upholding of ethical standards in business operations.

Internationally, the European Union's imposition of fines on Google (€4.34 billion) and Intel (€1.06 billion) for anti-competitive practices signifies  a  zero-tolerance to  anticompetitive maintain competitive fairness. Likewise, the United States has consistently enforced its antitrust laws, as evidenced by cases against companies like Microsoft and the scrutiny over the AT&T-Time Warner merger.

A Broader Movement Toward Compliance and Enforcement

The FCCPC’s recent actions in Nigeria,  under  the  auspices of the  Federal  Competition and Consumer Protection Act (FCCPA), signify a broader movement within African competition law enforcement. With the  FCCPC initiating investigations into anti-competitive practices beyond just  mergers—employing tactics  such  as  dawn  raids—there is a clear  alignment with similar proactive regulatory approaches in Zambia and Namibia. Additionally, the adoption of Leniency Programmes in Mauritius, Botswana, Zambia, and Kenya reflects a continental shift toward more rigorous enforcement.

This  proactive  stance  heralds  a  new  era  of  compliance and  enforcement,  where  African regulatory  bodies are  actively  pursuing  cartels and  investigating  abuse of dominance. These areas were  traditionally  the  focus  of longer-established bodies such  as  the  South  African Competition Commission, which  has  imposed over R4 billion in fines  across a spectrum  of industries. The evolving landscape indicates an increased capacity and resolve  among  African competition authorities to uphold  the  law and  ensure fair market  practices. This shift is not merely about imposing  fines but about fostering  a culture of compliance and ethical  business practice, which is crucial for sustainable business strategy.

Legal Framework and Compliance Imperatives

Competition law  ensures fair competition among  businesses while  safeguarding consumer welfare.  In Nigeria, this legal framework  is upheld by the  Federal  Competition and  Consumer Protection Act (FCCPA), which mirrors global standards by tackling abuse of market dominance, restrictive agreements, and  scrutinizing  mergers and acquisitions to prevent  excessive market concentration. A  thorough  grasp  of these areas is  indispensable for businesses within  the Nigerian marketplace.

Competition policy operates on a three-pillared framework  addressing key market  concerns: concerted actions, unilateral conduct, and  prospective combinations or integrations through mergers or acquisitions. Among these, the most  severe  violations typically involve coordination or restrictive agreements. These agreements may include practices such  as price-fixing, market division, production limitation,  or collusive  tendering, all of which significantly disrupt  market fairness and competition.

Dominance in the  market, per se,  is not deemed wrongful. However,  when  an entity holds  a dominant position—defined as having the ability to act independently of suppliers, customers, and competitors, particularly if it controls 40% or more of the market share under conditions like significant entry barriers, substantial financial power, or absence of countervailing buyer power— it must not abuse this advantage. Abuse of dominance can take various forms, including but not

limited  to,  predatory pricing,  setting  excessive prices, imposing  unfair  contractual terms, or employing exclusionary strategies designed to impede competitive forces.

The third  pillar focuses on  the  scrutiny  of mergers and  acquisitions to  avert  undue market concentration. The Federal Competition and Consumer Protection Commission (FCCPC) plays a crucial  role here,  evaluating  mergers to ensure they do not confer or amplify market  power in a way that  could  detrimentally impact competition. Mergers leading  to excessive market concentration pose  risks such  as stifling competition, curbing innovation,  elevating prices, and limiting choices for consumers.

The FCCPA outlines fines and administrative penalties tied to a percentage of annual turnover or revenue and  introduces the  notion  of criminal  liability for directors in specific  scenarios. This highlights  the  importance of personal responsibility among  corporate leaders to  cultivate a business environment that  is both  competitive and  compliant. The 2018  Code  of Corporate Governance further mandates continuous risk assessment by boards, thereby  elevating competition compliance to a critical concern. This perspective is particularly  relevant in sectors or markets vulnerable to certain risks or dominated by companies with a significant market share. Boards must now prioritize proactively identifying and mitigating potential competition law risks.

The Strategic Necessity of Compliance

Adhering to competition law is more  than  just  fulfilling a legal  requirement; it is a strategic necessity vital for a company's positioning  in the market  and its enduring  success. Companies with significant  market  power  or those engaged in substantial market-facing activities  must integrate competition law compliance into their risk management strategies. Developing robust internal  compliance programs is essential to avoid legal issues, uphold  ethical  standards, and potentially mitigate the impact of regulatory inquiries.

Supporting Businesses Through Legal Complexities

At SimmonsCooper Partners, we understand the challenges businesses face  with the evolving competition law landscape. We offer the “SCP Comp  Bootcamp,” a complimentary advisory service,  to provide businesses with the necessary knowledge and tools for effective compliance with competition laws. Our commitment is to deepen the understanding of these laws, promote a  culture of compliance, and  uphold  ethical  business practices. In a  time  when  corporate accountability is more critical than ever, our guidance is essential for leaders aiming to manage risks and steer through the complexities of competition law compliance.

For further  details on the  SCP Comp  Bootcamp or to inquire  about competition compliance, please contact: