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Overview of key developments brought by the Competition Act Pt II

CORRESPONDENT
Shoppers PIC: PHATSIMO KAPENG
In an article entitled ‘Understanding the Concept of Abuse of Dominant Position’ (available online in the Mmegi newspaper of September, Wednesday 26, 2012), Dr Mokubung Ndala Mokubung rightly defined “dominance” and “abuse of a dominant position”.

In respect of the latter, one may appreciate from Mokubung’s article and indeed from the literature in European Union (EU) and South Africa that, the abuse of a dominant position is whereby, an enterprise which is dominant in the market, behaves in a way which lessens or impedes or prevents maintenance of effective competition in a relevant market.

In the US, the abuse of a dominant position is dealt with as monopolisation under Section 2 of the Sherman Act.

The 2009 Act dealt with abuse of dominance under Section 30. The equivalent provision under the 2018 Act is Section 31. Section 30 of the 2009 Act provided for a general prohibition of abuse of dominance without an indication of what conducts by a dominant enterprise amounts to abuse of dominance (this is probably influenced by Australian competition legislation). This has been developed under the 2018 Act in that Section 31 not only prohibits abuse of dominance but also sets out conducts by a dominant enterprise which will constitute abuse of dominance. These include predatory conduct, tying, loyalty rebates and others (Section 31(a)-(h)).

There are a number of points to note regarding this development. Firstly, Section 31 lists ‘loyalty rebates’, ‘requiring or inducing a customer to not deal with other competitors’ and ‘exclusive dealing’ as separate conducts which amount to abuse of dominance. In my view, it was not necessary to split these conducts because they all fall under exclusive dealing.

Put differently, global competition law seems to indicate that once there is a provision for exclusive dealing, this will cover rebates and requiring or inducing a customer not to deal with other competitors. The rationale for separating these conducts is not apparent from the Act.

Secondly, the conducts listed under Section 31(1)(a)-(h) are known in competition law as exclusionary conducts except one (i.e. refusal of access to an essential facility). Thus, refusal of access to an essential facility provided under Section 31(1)(e) of the Act seems to be falling under exploitative conduct.

One point to note regarding abuse of dominance is that, it may become a debatable point whether the 2018 Act prohibits what is known in competition law as excessive pricing which falls under exploitative conduct. In terms of case law in SA, excessive pricing (which is explicitly provided under Section 8(1)(a) as amended by the SA 2018 Act) and refusal of access to an essential facility (provided under Section 8(1)(a) of the SA 2018 amendment Act) fall under exploitative abuse.

Without the explicit reference to excessive pricing like under Section 8(1)(a) of the SA Competition Act (as amended by the Competition amendment Act No. 18 of 2018) or unfair purchase or selling price under article 102(a) of the Treaty on the Functioning of the EU and Section 26 of the Namibian legislation for instance, one may wonder whether in Botswana, excessive pricing is not considered abuse of dominance like in the US antitrust law. In view of this, it remains to be seen how the CCT will deal with a case of excessive pricing as and when it arises.

It seems there are already complaints relating to excessive pricing in public procurement and in the poultry industry (for ease of reference see and search ‘document library’ under the Competition Authority website). Despite this, there appears to be no cases of excessive pricing which the Competition Authority prosecuted before the Commission. One hopes that in future, the CCA will have occasion to prosecute such cases before the CCT.

 

Remedies

Significant developments have been made in so far as remedies are concerned. As has been discussed above, the 2018 Act has introduced criminal sanctions against any officer or director of the enterprise, which engages in per se prohibited horizontal practices and vertical practices. Moreover, imposing an administrative financial penalty in respect of the said prohibited practices does not require intention or negligence. The 2018 Act has also introduced the remedy for

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judicial review, which did not exist under the 2009 Act.

Besides these developments, there is one other important development. Thus initially under Section 76(3) of the 2009 Act, a person who failed to comply with an order of the Commission committed an offence and was liable to a fine not exceeding P500,000 or to an imprisonment for a term not exceeding 10 years or to both (this seems to be an import part of Section 74(a) of the SA Competition Act).

This has been changed under the 2018 Act. In terms of Section 81 of the latter Act, a person who fails to comply with a decision of the CCT commits an offence and is liable to a fine not exceeding P50,000 or to imprisonment for a term not exceeding three years or to both.

Mergers occur when two or more enterprises, which previously operated independently of one another, combine into one in such a way that their decision making is unified. In competition law, there are three types of mergers. These are horizontal mergers (mergers between enterprises which are competitors), vertical mergers (mergers between an upstream enterprise and a downstream enterprise) and conglomerate mergers (which involves enterprises which are not in a horizontal or vertical relationship).

There is one notable development with regards to the control of mergers. Thus in addition to dealing with mergers like the way they were dealt with under Part X of the 2009 Act, the 2018 Act has introduced a further development. Thus in terms of Section 55(1) of the 2018 Act, where the CCA has rejected a merger, the parties to the rejected merger may apply within 14 days to the CCA requesting it to reconsider its decision. This was not provided for under part X of the 2009 Act.

In conclusion, the above constitute an overview of key developments brought by the 2018 Act. There may be other developments like “settlement agreements”, which is provided under Section 40 of the 2018 Act and which one may argue was not prominent under Section 47 of the 2009 Act as it is under the 2018 Act.

Going forward, one hopes that Botswana’s competition law will keep developing and growing.

As jurisdictions around the world keep progressing, one is hopeful that Botswana will keep developing its legal framework in order to align it with best practices. There are notable areas, which may be considered for possible developments. For example, looking at the constitution of the CCT (Section 62(2), this may raise the question whether competition matters should keep going to the High Court or whether the creation of the CCT warrants an establishment of the Competition Appeal Court therefore adopting a system, which is similar to that of South Africa.

Another example may be that, perhaps in controlling mergers, a distinction must be made between ‘a small merger’, ‘an intermediate merger’ and ‘a large merger’ like it is done under chapter 3 of the SA Competition Act. The issue of excessive pricing, if it is indeed part of Section 31 may need to be relooked at and made prominent in the Act.

Further developments may in future be made in respect of the remedies. In this regard, the other known remedies in global competition law including divestiture similar to Section 60 of the SA Competition Act, disgorgement similar to Section 34 under the German legislation, whistleblowing similar to Section 66.1 of the Canadian legislation and adverse publicity similar to Section 86D of the Australian legislation may be considered.

All these, in addition to the very complex nature of competition law matters are what the competition law authorities will have to grapple with going forward.

*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 mosweubg@gmail.com. This is the last of a two part series.

 

BOINEELO MOSWEU*

 

 



Opinion & Analysis