Compared to other leading jurisdictions like the US, Europe, South Africa and Australia, Botswana’s competition law is at its infant stage.
Unlike these jurisdictions whose competition law has been in operation for many years, Botswana’s first legal framework of competition law started with the national competition policy of July 2005.
This policy, amongst other things, sets out the goals of competition law in Botswana. These goals include enhancing economic efficiency, promotion of consumer welfare, supporting economic growth and diversification, preventing and redressing anticompetitive practices, which harm consumers and competition between enterprises.
Pursuant to this policy, Parliament enacted the Competition Act, No. 17 of 2009 (the 2009 Act). This Act has been amended. The amendment led to the Competition Act, No. 4 of 2018 (the 2018 Act), which was assented to on March 27, 2018 and commenced on December 2, 2019. It should also be noted that before the promulgation of the 2009 Act, there has been in existence laws, which impacted on competition issues.
For example, the Consumer Protection Act 21 of 1998 (which has been amended and the new Act commenced on December 2, 2019) established the consumer protection office which amongst other things, is charged with the responsibility to investigate unfair business practices and presides over disputes of unfair business practices (see Section 3 read with Section 5 of the said Act).
The Telecommunication Act No 15 of 1996 promotes the interests of consumers and ensures competition and efficiency in telecommunication services (see Section 17(2)(b) & (c)). There is also the Public Procurement and Asset Disposal Act which amongst other things ensures fairness and equal treatment of contractors in the interest of efficiency and maintenance of a level playing field (see Section 26(d) &(e) for example).
Be that as it may, the advent of the 2018 Act has inspired the discussion herein and the writer aims to give an overview of key developments regarding the competition law of Botswana. The discussion will cover the institutions, which have been set up and designed to enforce competition law, horizontal practices, vertical practices and abuse of dominance amongst others.
Every jurisdiction has institutions, which are responsible for the enforcement of competition law. In the case of Botswana, the 2009 Act established three important institutions, which had different roles.
Firstly, this Act created the Competition Authority (CA) under Section 4, which amongst other things investigated anti-competitive practices and prosecuted them before the Competition Commission (Commission) in terms of Section 5(o).
Secondly, Section 9(1) of the 2009 Act established the Commission, which amongst other things presided over matters lodged before it and gave decisions in respect thereto in terms of Section 9(2).
Finally, competition matters could find their way to the High Court either as appeals against decisions made by the Commission (see part XI of the Act) or as applications for enforcement of decisions of the Commission (see Section 43(6) & Section 48(3) for example). It appears to the writer that the establishment of the institutions under the 2009 Act was influenced by the European competition law (in brief, under EU legislation, the Commission amongst other things presides over and decides on competition matters, there is reference to competition authorities of member states, and decisions of the Commission may be challenged in civil courts – see Articles 4, 5, 6, 7 and others of the Council Regulation (EC) No 1/2003).
The 2018 Act has brought developments in so far as institutional competition law of Botswana is concerned. Firstly, this Act created the Competition and Consumer Authority (CCA) under Section 4(1). The CCA operates the same way as the CA under the 2009 Act.
However, unlike the CA, the CCA, in addition, shall report the investigation of all criminal matters to the Botswana Police Service in terms of Section 5(r). Secondly, Section 6(1) of the 2018 Act established the Competition and Consumer Board (CCB).
In terms of Sections 6(1) and 6(2), the CCB is the governing body of the CCA and it is responsible for the direction of the affairs of the CCA.
It should be observed that, these two roles were bestowed on the Commission under the 2009 Act (see Section 9(1). Thirdly, the 2018 Act, created the Competition and Consumer Tribunal (CCT) (see Section 62), which is responsible for presiding over disputes relating to competition matters (Section 63). Finally, just like the 2009 Act, the 2018 Act allows for competition matters to find their way to the High Court either as appeals against decisions of the CCT (Section 83) or as applications for judicial review aimed at setting aside the decisions of the CCT (Section 84).
The latter (i.e. judicial review) is another key development brought by the 2018 Act, which did not exist under the 2009 Act. Under Section 71(3) of the 2009 Act, decisions of the High Court with regards to points of law and the amount of penalty appealable at the Court of Appeal. This has not been provided for under part XIII of the 2018 Act.
This has opened the door to argue (although the argument may not succeed) that such decisions (regarding points of law and the amount of penalty as it was under Section 71(3) of the 2009 Act) of the High Court are now not appealable to the Court of Appeal. One of the important developments is that, in terms of the 2018 Act, one can observe that the Commission established under the 2009 Act has been dealt away with. The roles of the Commission are now bestowed
Both the 2009 Act and the 2018 Act (under Section 25) prohibits horizontal agreements. These are agreements between competitors who are in the same market. It is important to note that, in competition law, horizontal agreements are classified into “per se prohibitions” and the “rule of reason prohibitions”.
It suffices for present purposes to posit that, “per se prohibitions” are those practices which the legislature has deemed to be inexcusable in that they are outright harmful to the competition process. On the other hand, in respect of the “rule of reason prohibitions”, a detailed factual and legal analysis has to be made in order to determine if such practices contravene the Act.
There are key developments which one can note regarding the per se horizontal prohibitions dealt with under Section 25 of the two Acts. Firstly, Section 25 of the 2009 Act listed about six practices, which amounted to per se prohibitions.
However, Section 25 of the 2018 Act, unlike the 2009 Act, lists about three of such practices, namely price fixing, markets allocation and bid rigging (sometimes referred to as collusive tendering).
The reason for the focus on these three practices could be that, cartel conduct (i.e. price fixing, markets allocation & bid rigging) is considered one of the most egregious contraventions of the competition process and consequently the eradication thereof is a priority to Botswana just like it is in other jurisdictions.
Secondly, unlike the 2009 Act, Section 26 of the 2018 Act has introduced criminal sanctions for contravention of Section 25, which outlaws per se horizontal practices. Pausing for reflection, there seem to be one thing, which may be troubling when one reads these two provisions (i.e. 25 and 26).
Thus under Section 25, enterprises are prohibited from engaging in price fixing, collusive tendering and market allocation.
Under Section 26, any officer or director of an enterprise, which contravenes Section 25 commits an offence and is liable for a fine not exceeding P100,000 or to imprisonment or both.
It is not clear from Section 26 whether any officer or director of the concerned enterprise commits an offence simply because the enterprise has contravened Section 25 of the Act or whether such officer or director must have conducted himself or herself in such a way that criminal liability should be imputed.
In my view, the right approach is to look at the conduct of such an officer or director and make a determination whether a criminal offence has been committed. This is not apparent from the reading of Section 26. For clear guidance, Section 73A of the South African Competition Act 89 of 1998 puts the point home.
In short, under Section 73A of the SA Act, a person commits an offence when he or she causes the firm to engage in price fixing, market allocation and collusive tendering. One may suggest that, it may be necessary to develop Section 26 of the 2018 Act to mirror the language similar to Section 73A of the SA Competition Act.
The third notable development is that, in terms of Section 43(2) read with Section 43(3) of the 2009 Act, the Commission might in addition to giving an administrative direction or in instead thereof, impose a financial penalty where it was satisfied that the committal of a prohibited horizontal practice by an enterprise was done either negligently or intentionally.
This has been changed under the 2018 Act. Under Section 76(2) of the new Act, there is no requirement for negligence or intention in order for the CCT to impose a financial penalty.
Similar to horizontal practices, Botswana’s legislation recognises per se prohibition of vertical agreements (Section 26 of the 2009 Act and Section 27 of the 2018 Act) and prohibition of vertical agreements on the basis of the rule of reason (Section 27 of the 2009 Act and Section 28 of the 2018 Act).
Vertical agreements concern agreements between enterprises which operate at different levels of the supply chain like the manufacturer of goods and services and the distributor of such goods and services (known as the upstream market and downstream market in competition law).
There are two key developments, which can be noted relating to vertical agreements, which are per se prohibited. Firstly, Section 27(3) of the 2018 Act provides that any officer or director of an enterprise, which engages in prohibited vertical agreements commits an offence and is liable to pay a fine not exceeding P50,000.
As has been discussed above regarding Section 26, it is suggested that this Section needs to be developed to bring on board and set out an issue around the conduct of an officer or director of an enterprise in determining whether an offence has been committed.
Secondly, just like horizontals discussed above, Section 76(2) of the 2018 Act does not require intention or negligence in order for the CCT to impose a financial penalty where enterprises have committed a prohibited vertical practice. This is in stark contrast to Section 43(2) read with Section 43(2) of the 2009 Act.
*Boineelo Mosweu is a practising attorney at civil litigation division, Attorney General’s Chambers and a holder of LLM, Mercantile Law from the University of Stellenbosch and may be contacted at firstname.lastname@example.org. This is Part 1 of a two part series. The second part continues in our next edition.