The Competition Authority has noted an increase in the reported instances of companies abusing their dominant market position, with 126 cases reported in the year to March 2014, against the organisation’s target of 77.
Abuse of a dominant position occurs when a dominant firm in a market, or a dominant group of firms, engages in conduct that is intended to eliminate or discipline a competitor or to deter future entry by new competitors, with the result that competition is prevented or lessened substantially.
According to the Authority’s 2014 annual report, among the abuse of dominance cases was one where a shopping mall restricted small grocery shops from entering the market.
“The Authority received a complaint from the landlord of Molapo Crossing in Gaborone against the anchor tenant,” reads the report. “The complaint was with respect to an exclusive lease agreement containing clauses which constituted anti-competitive conduct. The Authority was equally concerned about long term exclusive leases which have restrictive clauses as they may amount to contravention of the Competition Act, particularly where supermarkets have market power within the relevant local market.” In its enquiry, the Authority noted that supermarket chains and property developers enter into and enforce long term exclusive lease agreements through anchor tenancy to the exclusion of potential competitors at particular shopping malls.
Other cases of abuse of dominance include alleged excessive pricing by a housing service provider, alleged anti-competitive provision of pay TV services by MultiChoice, alleged abuse of dominance by commercial banks in estate valuation and others.
During the year ended March 2014, 61 cases of anti-competitive conduct were handled during the 2013/2014 financial year, with 28 brought forward from the previous period and 33 being new cases.
For the year, the Authority closed 25 cases of anticompetitive conduct without referral to the Competition Commission while six were referred.
The report indicated that 34 cases were carried over to the 2014/2015 financial year, as the investigations were still ongoing. Out of these cases, 14 involve cartels, 15 for abuse of dominance, three for restrictive practices and two for resale price maintenance. Commenting in the annual report, the Authority’s CEO, Thula Kaira said the parastatal dealt with its first cartel cases relating to bid rigging in a government tender for supply of food rations and several price-fixing cases in the car panel beating sector. Both cases were referred to the Commission.
“The referral of cases to the Commission is the best way of ensuring that the objectives of the National Competition Policy and the Act are realised in the market place,” he said. The Authority also carried out several raids as part of its investigations into anti-competitive behaviour.
The raids targeted price fixing and bid rigging cartels, with one saving government P3.6 million after documents confirmed the existence of a deal to exclude competitors from a tender. “Several raids were carried out resulting in outcries from the affected businesses who claimed that the Authority was excessive in the exercise of its powers by resorting to raiding premises,” Kaira said. “The complaints led to several meetings being held to sensitise the business community and policy makers on the powers of the Authority under the Act.” Going forward, the Authority plans to intensify enforcement and advocacy in order to address the country’s competitiveness globally.