11 Feb 2013

Corporate & Commercial Department, Competition Law Update

by Jennifer Finnigan, Partner, Durban,

South African businesses have been expanding into Africa for a while.  With effect from 14 January 2013, businesses operating in those African countries that are members of the Common Market for Eastern and Southern Africa (COMESA) have to comply with COMESA’s competition regulations (the Regulations).  COMESA’s current members are Burundi, Comoros, DRC, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar,  Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.

The Regulations deal with anti-competitive business practices and conduct, mergers and acquisitions and consumer protection.  They apply to all the economic activities of both private and public persons within, or having an effect within, COMESA member countries. The only exceptions are collective bargaining and the activities of trade unions and some professional associations.  The Regulations are enforced by the COMESA Competition Commission (the Commission) which is based in Malawi.  The Commission may order anybody to appear before it, require the production of any documents or take any other action necessary to enable it to conduct investigations.  If the Commission finds that an enterprise has breached the Regulations it may, amongst other things, impose fines, order payment of compensation to an affected party or terminate an agreement.  What remains to be seen how the Commission will interact with COMESA member states and what its role will be in circumstances where the Regulations differ from a member country’s own competition laws.  Members are supposed to ensure that their national laws are consistent with the Regulations.

For now, perhaps the merger provisions of the Regulations will affect many businesses and should be the focus of particular attention.  Much like in South Africa, a “merger” is defined widely to include any direct or indirect acquisition of a controlling interest in another firm by an enterprise.  All mergers, regardless of the size of the firms involved or the value of the transaction, must be notified to the Commission if either the acquiring firm or target firm (or both) operate in 2 or more of COMESA’s member countries.  Notifiable mergers must be reported to the Commission within 30 days after the decision to merge has been made, failing which the Commission may impose a fine on the merging parties. 

Written by:

Jennifer Finnigan, Partner

Contact: 031 575 7406 and finnigan@wylie.co.za

Louise McLachlan, Associate

Contact: 011 292 2547 and mclachlan@wylie.co.za