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Prospects and Challenges of Implementing Competition Law in Developing Countries: A Review of the Nigerian Federal Competition and Consumer Protection Act, 2019

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Abstract

The introduction of a comprehensive competition regime in a developing country comes with a lot of expectations, due to the idea and belief that it will help in fighting harmful practices in the economy and also be a panacea to economic development. However, this is not always the case because the adoption of competition law is neither an end nor magic for development, but a first step in the unending journey of competition regulation. This is due to other factors which could either positively or negatively influence the implementation of the law, for example, the wordings of the law, the capacity of the regulator, the efficiency of the judicial system, among others. This project mirrored the challenges of developing countries in the adoption of competition law, with a focus on Nigeria. It adopted the doctrinal approach to review the provisions of the 2019 Nigerian Federal Competition and Consumer Protection Act (FCCPA) and analyze its prospects and challenges, while the comparative approach was used to benchmark the South African competition regime with Nigeria to show lessons the latter could learn from the former in the course of its competition regulation. The project pointed out the prospect of the FCCPA but focused more on discussing the several areas of concerns in the Act which could pose challenges for its effective implementation and the attainment of its objectives. The project concluded with recommending and proffering solutions to the identified challenges. This project is divided into five chapters. Chapter 1 is a general introduction of the project, while Chapter 2 is the review of literature on competition law and developing countries. Chapter 3 reviews the South African competition regime, while Chapter 4 captures the Nigerian experience and the challenges therein. Chapter 5 concludes by highlighting the prospects of the FCCPA, and ended with recommendations for the challenges identified.
UNIVERSITY OF READING
SCHOOL OF LAW
Prospects and Challenges of Implementing Competition Law in Developing
Countries: A Review of the Nigerian Federal Competition and Consumer
Protection Act, 2019.
By
UWADI Enyinnaya C.
1
Word Count: 14470
This is a dissertation submitted to the School of Law as part of the requirements
for the award of an LLM
Statement of Original Authorship
I declare that I have read the notes on plagiarism including its definition and
cheating in the Postgraduate Programme Handbook and that this work is
entirely free from plagiarism. I understand the consequences of committing
plagiarism. I have acknowledged all quotations and ideas as advised in the
Handbook. Where I have been in doubt about how to acknowledge an idea or
quotation I have consulted my supervisor. Neither this piece of work nor any
part thereof has been submitted in connection with another assessment.
Signature: Date: 04/09/2019
2
ABSTRACT
The introduction of a comprehensive competition regime in a developing country comes with
a lot of expectation, due to the idea and belief that it will help in fighting harmful practices in
the economy and also be a panacea to economic development. However this is not always the
case because the adoption of a competition law is neither an end nor a magic for
development, but a first step in the unending journey of competition regulation. This is due to
other factors which could either positively or negatively influence the implementation of the
law for example, the wordings of the law, the capacity of the regulator, the efficiency of the
judicial system, among others.
This project mirrored the challenges of developing countries in the adoption of competition
law, with focus on Nigeria. It adopted the doctrinal approach to review the provisions of 2019
Nigerian Federal Competition and Consumer Protection Act (FCCPA) and analyse its
prospects and challenges, while the comparative approach was used to benchmark the South
African competition regime with Nigeria to show lessons the latter could learn from the
former in the course of its competition regulation.
The project pointed out the prospect of the FCCPA but focused more on discussing the
several areas of concerns in the Act which could pose challenges for its effective
implementation and the attainment of its objectives. The project concluded with
recommending and proffering solutions to the identified challenges.
This project is divided into five chapters. Chapter 1 is a general introduction of the project,
while Chapter 2 is the review of literature on competition law and developing countries.
Chapter 3 reviews the South African competition regime, while Chapter 4 captures the
Nigerian experience and the challenges therein. Chapter 5 concludes by highlighting the
prospects of the FCCPA, and ended with recommendations for the challenges identified.
3
ACKNOWLEDGMENTS
First of all, my praise belongs to God for making it possible for me to undertake a further
postgraduate study in Competition Law, an area of specialization dear to my heart.
My sincere appreciation goes to my supervisor and Competition Law teacher, Athanassios
Skourtis for his commitment and tireless effort in ensuring that this project was a success. His
invaluable ideas, suggestions and comments ensured that I stayed on the right track
throughout the project.
I am also grateful to my sponsor, the Niger Delta Development Commission (NDDC) for
awarding me a scholarship which funded the cost of my tuition fees.
I appreciate my former lecture and boss, Hon. Justice Nnamdi Dimgba (Ph.D.) of the Federal
High Court of Nigeria, for sowing the seed of competition law in me back in 2015, and being
the inspiration for me to pursue a further specialization in competition law.
My special thanks go to Mr Babatunde Irukera, the former Director General of the Consumer
Protection Council, now Federal Competition and Consumer Protection Commission, for
promptly availing me a copy of the Federal Competition and Consumer Protection Act when
I needed it most. Thank you sir for being an inspiration from a distance. Your passion in
protecting Nigerian consumers is commendable and makes me desire a career in public
service.
I also appreciate the Pastor of MFM Reading Transformation Centre, Mrs Mary Oduekun for
her support and encouragement throughout the course of my studies, and being a family far
away from home.
Finally, I am immensely grateful to my parents and siblings for their sacrifices, financial
support, prayers and encouragement which made it possible for me to commence and
complete my studies. I lack words to express the depth of my appreciation.
4
TABLE OF CONTENTS
Statement of Original Authorship 1
Abstract 2
Acknowledgements 3
Table of Contents 4
List of Abbreviations 6
Table of Cases 7
Table of Statutes 8
Chapter 1: General Introduction 9
1.1 Background of Study 9
1.2 Objective 10
1.3 Research Questions 11
1.4 Methodology 11
1.5 Significance of Study 12
1.6 Organization of Study 13
1.7 Study Limitations 13
Chapter 2: Literature Review 14
2.1 Characteristics of Developing Countries 14
2.1.1 Low per capita income 14
2.1.2 High population growth rate/size 15
2.1.3 High unemployment rate 15
2.1.4 Over dependence on the agricultural (primary) sector 16
2.1.5 Dependence on extracting and export of primary commodities 16
2.2 Competition Law and Developing Countries 16
2.2.1 Emergence of Competition Law in Developing Countries 16
2.2.2 Challenges to the adoption and implementation of competition 20
law in developing countries
2.2.2.1 Limited resources 20
2.2.2.2 Reform related challenges 21
2.2.2.3 Political interference in economic management 21
2.2.2.4 Highly concentrated and cartelized markets 22
5
2.2.2.5 Protection of limited foreign investment 23
2.3 Concluding thoughts 23
Chapter 3: Review of Competition Law Implementation in a Select
Developing Jurisdiction 25
3.1 South Africa 25
3.1.1 Cartel 26
3.1.2 Unilateral Conduct 27
3.1.3 Merger 29
Chapter 4: The Nigerian Experience 32
4.1 History of Competition Law in Nigeria 32
4.2 Overview of the Nigerian regime under the FCCPA 2019 33
4.2.1 Cartel 36
4.2.2 Unilateral Conduct 37
4.2.3 Merger 38
4.3 General issues of concern from the FCCPA. 40
4.4 Challenges to the implementation of FCCPA 46
Chapter 5: Conclusion 50
5.1 Prospects of implementing the FCCPA. 50
5.2 Recommendations 53
5.2.1 Law 53
5.2.2 Institutional 54
5.2.3 Procedural 55
5.3 Conclusion 56
Bibliography 58
6
LIST OF ABBREVIATIONS
CAA Civil Aviation Authority
CAC Competition Appeal Court
CCPT Competition and Consumer Protection Tribunal
CMA Competition and Markets Authority
CPC Consumer Protection Council
EU European Union
FCCPA Federal Competition and Consumer Protection Act
FCCPC Federal Competition and Consumer Protection Commission
ISA Investment and Securities Act
NCAA Nigerian Civil Aviation Authority
PIC Public Interest Considerations
SA South Africa
SEC Securities and Exchange Commission
WTO World Trade Organisation
7
TABLE OF CASES
Competition Commission v. Cobro Concrete 2009 (23) CR I (CT) 1 2.1 (S.Afr.).
Competition Commission v. Clover Indus. Ltd. et. al. 2006 (103) CR 1 (CT) 1 34 (S.Afr.)
Competition Commission v Media 24 (Pty) Limited (CCT90/18) [2019] ZACC 26
Competition Commission v. Pioneer Foods (Pry) Ltd. 2010 (15/CR/FebO7) (S. Afr.)
Competition Commission, Settlement Agreement, Case No. 2002Sep26
Harmony Gold Mining Co. v. Mittal Steel Corp., 13/CR/FEB04[2007] ZACT
SACCAWU v. Wal-Mart Stores Inc., 111/CAC/Jun11 [2012] ZACAC 6, para. 122 (2012)
Scott v. Stansfield, L. R. 3 Ex. 220, 223 (1868).
Wal-Mart Stores Inc v Massmart Holdings Ltd. 73/LM/Nov10.
Wal-Mart and Massmart case (73/LM/Dec10) [2011] ZACT 41
8
TABLE OF STATUTES
Civil Aviation Authority Act 2006 (Nig)
Competition Act, act no. 89 of 1998 (SA)
Competition Act, R.S.C. 1985, c. C-34 S 45(2) (Can.)
Constitution of the Federal Republic of Nigeria 1999
Constitution of the Federal Republic of Nigeria 1999 (Fourth Alteration No 21) Act 2018
Consumer Protection Act Cap C25 LFN 2004 (Nig)
Electric Power Sector Reforms Act 2005 (Nig)
Enterprise Act, 2002 (UK)
Federal Competition and Consumer Protection Act 2019 (Nig)
Insurance Act 2003 (Nig)
Investment and Securities Act 2007 (Nig)
Law No. 241/1959 (Egy)
Nigerian Communications Act 2003
Penal Code of 1937 (Egy)
Petroleum Products Pricing Regulatory Agency Act 2004 (Nig)
Sherman Antitrust Act of 1890, 15 U.S.C (US)
9
CHAPTER 1
GENERAL INTRODUCTION
1.1 Background of Study
The importance of a competition regime in a liberalized economy is to curtail and restrain
manipulative and unfair trade practices, guarantee market stability, encourage new business
entrants
1
as well as promoting clear business conduct, and creating a level playing field for
the benefit of all economic agents.
2
With the spread of competition regimes worldwide, as
well as the increased rate at which developing countries are adopting competition law,
3
one is
left to wonder if there is a correlation between the adoption of competition law and economic
development. This concern may not be unconnected to the view held by some scholars that
competition law played a key role in the economic development of several developed
nations.
4
An empirical research carried out in 2008 which studied competition regimes in 117
countries between 1995 and 2005 showed massive economic growth in countries with
competition regimes when compared with countries without competition regimes.
5
This could
be the reason why many developing countries are adopting competition law based on this
belief that it will lead to their economic development.
6
Although the core of the above view
on the role of competition in economic development is valid, it suffers from a flaw in its
application. This is because it overlooks the role of effective implementation of law and
1
Thomas K. Cheng, Ioannis Lianos, and Daniel D. Sokol (Eds), Competition and the State (Salford University
Press 2014)
2
Richard Posner, Antitrust Law (2nd edn University of Chicago Press 2001) 259.
3
Kathryn McMahon, ‘Competition Law and Developing Economies: Between “informed Divergence” and
International Convergence’ in Ariel Ezrachi (ed), Research Handbook on International Competition Law
(Edward Elgar Publishing 2012).
4
Lawrence White, ‘The Role of Competition Policy in the Promotion of Economic Growth’ (2008) Law &
Economic Research Paper Series Working Paper No. 08-23, New York University School of Law.
5
Kronthaler Franz, ‘Effectiveness of Competition Law: An Empirical Analysis’ (2008)
https://www.researchgate.net/publication/237250308 accessed 2 March 2019.
6
Bukola Akinbola and Enyinnaya Uwadi, ‘Antitrust as a Panacea for Economic Development in Nigeria’
(2017) 11 (2) Ife Juris Review; Simon J Evenett, ‘Links between Development and Competition Law in
Developing Countries’ (2003) < https://www.alexandria.unisg.ch/22161/1/dfidpaper.pdf > accessed 20 April
2019.
10
places much emphasis on its adoption only. Implementation of competition law comes with
several challenges which require high level of technical skill and expertise to address,
7
therefore a law that is neither properly implemented nor implemented at all will most likely
fail in achieving its purpose.
As a result of the solid background of most developed countries in competition law, many of
them have gone ahead of developing countries to address most of these challenges owing to
the abundance of technical skills and expertise in the developed countries.
8
The same cannot
be said of developing countries, many of which are yet to enact a competition law, while
some of them that have adopted one are still are still struggling with the procedural and
institutional challenges as well as the problem of balancing competition objectives with the
national developmental agenda and public interest considerations (PIC) in the implementation
of the law.
9
As such, it can be argued that the competition laws in these developing countries
are not effectively implemented to fully address the challenges that necessitated their
enactment.
1.2 Objective
The above being noted, and having regard to the recent adoption of competition law by
Nigeria in January 2019, my project will examine the experience of developing countries in
adopting competition law. I will also review the general provisions of the Nigerian
competition law, compare it with the South Africa (SA) regime where appropriate, identify
the challenges Nigeria may likely face in implementing its competition law, as well as the
prospects, and conclude by recommending the way forward.
7
Douglas Gale and Hamid Sabourian, ‘Complexity and Competition’ (2005) 73 Econometrica No. 3, 739.
8
Aditya Bhattacharjea, ‘Who Needs Antitrust? Or, Is Developing-Country Antitrust Different? A Historical-
Comparative Analysis’ in Daniel Sokol, Thomas Cheng and Ioannis Lianos (eds), Competition Law and
Development (Stanford University Press 2013).
9
Azza A. Raslan, ‘Public Policy Considerations in Competition Enforcement: Merger Control in South Africa’
(2016) Centre for Law, Economics and Society Research Paper Series 3/2016.
11
1.3 Research Questions
This research seeks to provide answers to the following questions:
i. What are the challenges to the implementation of competition law in developing
countries generally?
ii. Are any of these challenges in the Nigerian competition regime?
iii. Are there lessons Nigeria can learn from SA and other jurisdictions in overcoming
the identified challenges?
iv. Are there prospects in the implementation of competition law in Nigeria?
v. What reforms are needed in order to address the identified challenges to ensure
the attainment of the prospects?
1.4 Methodology
The doctrinal and comparative research methods were adopted in this research. The doctrinal
approach which seeks to find out the position of the law on a particular issue
10
was used in
the analysis of legal statutes like the Federal Competition and Consumer Protection Act
(FCCPA). The comparative approach is ideal for studying foreign legislative texts and legal
doctrines in order to provide an understanding of the application of the law in a different
jurisdiction, which is important in legal development process for the purposes of amendment
and modification.
11
This methodology was adopted in the appraisal of the competition law
regimes in Nigeria and SA. SA was chosen because since the adoption of competition law in
the country in 1998,
12
it stands out as a model of competition law implementation in
developing countries.
13
Its impact is felt regionally within the African country through
10
Amrit Kharel, ‘Doctrinal Legal Research’<https://ssrn.com/abstract=3130525> accessed 30 August 2019.
11
Marie-Luce Paris, ‘The Comparative Method in Legal Research: The Art of Justifying Choices’ in Laura
Cahillane and Jennifer Schweppe (eds), Legal Research Methods: Principles and Practicalities (Clarus Press
2016) Ch 3.
12
Competition Act, act no. 89 of 1998.
13
Azza Raslan, ‘Mixed Policy Objectives in Merger Control: What Can Developing Countries Learn from
South Africa?’ (2016) 4 World Competition 39, Kluwer Law International, 625.
12
emulation and diffusion by learning,
14
as well as internationally via its synergy with other
developing countries on the platform of BRICS
15
, and equally in the EU via the trade
agreements.
16
1.5 Significance of Study
This research is very significant for several reasons. First of all, the presence of competition
law in a developing economy like Nigeria comes with a lot of expectations which includes
the belief that it will help to fight harmful practices like monopoly, attract foreign direct
investment, fight poverty, promote corporate governance, and encourage a competition
culture.
17
The attainment of these expectations is dependent on the capacity of the
competition regulator to identify and address some of the peculiar challenges faced by
developing countries to wit; shortage or total absence of technical expertise to navigate the
murky waters of enforcement and procedural challenges, lack of independence and potential
for political interference with the decisions of the regulator, inadequate budgetary funding for
the competition authority, myriad of challenges bedeviling the judicial system, overzealous
approach by setting unrealistic targets.
Secondly, this project will undertake a critical review of the general provisions of the
FCCPA, in a bid to identify likely challenges that may likely arise therein. Thirdly, this
project will add to the existing literature on the implementation of competition law in
developing countries by presenting the Nigerian perspective, which has never been done
before now.
14
Azza Razlan ‘Public Policy Considerations in Competition Enforcement: Merger Control in South Africa’ (n
9).
15
Jim O’Neill, Dreaming with BRICs: The Path to 2050 (2005) Global Economics Paper no. 99
http://www.macropolis.org/oriente/BRICS.pd>f accessed 23 April, 2019; Natalya Mosunova, ‘Competition Law
Enforcement in the BRICS and in Developing Countries: Legal and Economic Aspects’ (2017) 4 BRICS L.J.
156.
16
Agreement on Trade Development and Cooperation, E.C.-S. Africa, Jul. 29, 1999, 142 O.L.J. 311.
17
Maher M. Dabbah, International and Comparative Competition Law (CUP 2010) Ch 6.
13
1.6 Organization of Study
This project is divided into five chapters. Chapter 1 is a general introduction of the project,
while Chapter 2 is the review of literature on competition law and developing countries.
Chapter 3 highlights the South African competition regime, while Chapter 4 captures the
Nigerian experience and the challenges therein. Chapter 5 concludes by assessing the
prospects of the FCCPA, and ended with recommendations for the challenges identified in
the penultimate chapter.
1.7 Study Limitations
This project drew some of its conclusion on the Nigerian situation from the extant provisions
of the FCCPA, as there has not been any visible and significant competition regulatory
activity by the Federal Competition and Consumer Protection Commission (FCCPC). This
may be due to the fact that as of the date of my submission of this project, neither the
substantive CEO of the FCCPC nor its board has not been appointed and constituted
respectively, while the Tribunal is yet to be constituted as well. A further research will be
necessary upon the full functioning of the above institutions which will herald the
commencement of competition law implementation in the real sense.
Further, some legislative texts which would have been desirable to be reproduced for ease of
reference were either referenced or kept brief due to the limit on 14,000 words.
14
CHAPTER 2
LITERATURE REVIEW
This chapter reviews the existing literature on competition law and developing countries. It
highlights the characteristics of developing countries, examines the debate on whether
developing countries need competition law, including the obstacles they face in adopting
competition law. This is necessary as it identifies the common characteristics and trends with
developing countries in their competition law processes, in order to lay the foundation upon
which this project is anchored.
2.1 Characteristics of Developing Countries
The term ‘developing countries’ is generally used to denote countries that are in the process
of attaining economic and social development, but however lacks some of the requisite
criteria usually common with developed countries.
18
Although they have diverse backgrounds
in terms of resources, demography, history, politics, to mention but a few, they share some
common characteristics.
19
Some of the basic characteristics which set them apart from the
developed countries will be discussed under this section.
20
2.1.1 Low per capita income
This is one of the most defining and common feature of developing countries.
21
They are
characterized by low per capita income, which leads to less savings and lower investment
levels when compared to developed counties. The implication of this is that the average
citizen or resident of a developing country does not earn enough money to invest or save,
18
ibid.
19
Prateek Agarwal, ‘Characteristics of Developing Economies’ (Intelligent Economist 10 April 2019)
<https://www.intelligenteconomist.com/characteristics-of-developing-economies/> accessed 21 April 2019.
20
The characteristics discussed in this chapter are not exhaustive, but are the common ones.
21
Agarwal (n 19).
15
because they spend whatever they make, creating a cycle of poverty which majority of the
population struggles year in year out to overcome.
22
2.1.2 High population growth rate/size
The natural growth rate of population in these countries is very high in recent times because
of constant or higher birth rates, and reduced death rates through improved health care.
23
The
often cause of high population and growth rate in developing nations may not be unrelated to
low awareness on family planning options, lack of sex education and the belief that a large
family size increases the family’s labour force and improves their ability to earn more
income.
24
2.1.3 High unemployment rate
This is usually caused by slow industrial growth rate which is unable to absorb a large
number of educated youths and migrating rural population, as well as the high population
growth rate of developing countries which exerts pressure on the available job
opportunities.
25
There is equally the challenge of creating more employment opportunities as
a result of the non development of secondary and tertiary sectors, which is specifically suited
to absorb the educated and trained graduates. This leaves a greater number of the youthful
population in search of gainful employment, absence of which the traditional primary sector
of agriculture and farming becomes a last resort.
26
This results in underemployment or
disguised unemployment.
22
ibid.
23
Natasha Kwat, ‘Characteristics of an Underdeveloped Countries: Top 14 Characteristics
<http://www.economicsdiscussion.net/underdeveloped-countries/characteristics-of-an-underdeveloped-
countries-top-14-characteristics/18971> accessed 16 July 2019
24
Ayesha J, ‘Common Characteristics of Developing Countries
<http://www.economicsdiscussion.net/developing-economy/characteristics-developing-economy/common-
characteristics-of-developing-countries-economics/29990> accessed 16 July 2019
25
ibid.
26
ibid.
16
2.1.4 Over dependence on the agricultural (primary) sector
Developing countries generally are predominantly dependent on agriculture. Research shows
that about 60 to 75 per cent of their population relies heavily on agriculture and its related
activities for their sustenance,
27
while for developed countries, the figure is between 2 to 5
percent.
28
Further, about 30 to 50 per cent of national income of these countries is obtained
from agriculture alone, while for developed countries, the figure is between 2 to 8 percent.
29
This excessive dependence on agriculture in developing countries is the result of low
productivity and backwardness of their agriculture and lack of modern industrial growth.
30
2.1.5 Dependence on extracting and export of primary commodities
Due to the high level of involvement and dependence on the primary sector by a larger
percentage of the population of developing countries, most of their export products are from
primary commodities gotten from the primary sector. Similarly, as a result of the low level of
technological advancement and technical knowhow, most of their extractive products are
exported in their primary state at lower prices than it would have been exported if they were
transformed to secondary or tertiary products.
31
2.2 Competition Law and Developing Countries
2.2.1 Emergence of Competition Law in Developing Countries
There is a general view by scholars that prior to the year 1990, little or no attention was paid
to competition law by developing countries. This leaves one to wonder why this was so at a
period when most developed countries had a competition law. Waked attributed this apathy to
27
ibid.
28
Ayesha (n 24).
29
ibid.
30
Agarwal (n 19).
31
UNCTAD, ‘Commodity Dependence Worsens For Developing Countries’ (UNCTAD/PRESS/PR/2017/034)
< https://unctad.org/en/pages/PressRelease.aspx?OriginalVersionID=435> accessed 16 July 2019.
17
the adoption of competition law by developing countries to the existence of general
competition law principles in the legislations of some of these developing countries,
32
therefore, they did not see the need to adopt a dedicated set of laws that dealt solely with
competition matters.
33
Dabbah on the other hand attributed this to the protectionist approach
adopted by most governments in developing countries where wealth was concentrated in the
hands of few powerful and influential individuals, hence due attention was not given to
competition law and competition was seen as something that is not worthy of protection,
because it will conflict with the protectionists state of affairs which guaranteed the
concentration of wealth in the hands of the ruling class.
34
Waked added to this protectionist
debate by arguing that the developing countries adopted this measure in order to protect
national champions, domestic industries and local producers.
35
The apathy to competition law by developing countries diminished gradually post 1990, as
most of them started introducing competition law in their domestic jurisprudence. Several
arguments have been put forward on the reason for the sudden interest of developing
countries in competition law. Waked’s position is that this sudden interest in competition law
was in compliance with international trade obligations with developed countries and
multinational organisations like the World Trade Organisation (WTO) and the European
Union (EU).
36
These organisations especially the EU made the adoption of competition law a
prerequisite for any country desirous of being a member or engaging in trade deal, and
equally put forward evidence and supporting arguments to the developing countries on the
32
Egypt’s Penal Code of 1937, Article 345 (prohibits raising or lowering prices to achieve illegal benefits); see
also Egypt’s Law No. 241/1959 which states that it is prohibited for any distributor to have a monopoly in
distributing any domestically produced good which is subject to an import ban.
33
Dina I. Waked, ‘Adoption of Antitrust Laws in Developing Countries: Reasons and Challenges’ (2016) 12.2
Journal of Law, Economics & Policy 193 at 197.
34
Dabbah (n 17) 289.
35
Waked, (n 33).
36
ibid
18
positive relationship between competition law and economic development.
37
These measures
as argued by Waked, led to the paving away of apathy towards competition law among
developing countries.
Similar to the position of Waked, Dabbah argued that the adoption of competition law by
developing countries was not domestically driven, but came about due to external forces like
compliance to international obligations,
38
encouragement by foreign countries and
international organisations, aspiration to belong to regional blocs, and the process of
globalisation.
39
He further submitted that the externally driven adoption of competition law
with borrowed elements among developing countries considerably affected the substantial
and legal components in most of these countries.
40
From the above positions of Waked and Dabbah, one can deduce two main reasons for the
adoption of competition law in developing countries post 1990 which includes; the influence
of foreign and supranational bodies, and the belief that the adoption of competition law is a
sine qua non for economic development, because competition laws appeared to be the
missing link needed to usher in prosperity and growth in these countries. This second reason
is one of the arguments usually put forward by proponents of the adoption of competition law
in developing countries. This brings us to the prolonged debate on whether developing
countries should adopt competition law or not.
The arguments put forward by the proponents in support of the adoption of competition law
includes that its introduction will; fight harmful business practices like abuse of market
37
Shyam Khemani, Competition Policy and Promotion of Investment, Economic Growth and Poverty
Alleviation in Least Developed Countries‘ (2007) FIAS Occasional Papers No. 19. <http://www.cuts-
ccier.org/pdf/IRPDF-02.pdf> accessed 16 July 2019.
38
For example, Syria’s membership of the WTO was predicated upon the fulfillment of come conditions which
includes the adoption of competition law.
39
Dabbah (n 17) 290.
40
ibid.
19
dominance;
41
attract foreign direct investment because opening up the local market to foreign
investors will bring about technological advancement and enhance the competitiveness of the
domestic market;
42
reduce poverty and create more jobs due to the efficiency gains of
competition and the proper functioning of the market; complement efforts in promoting
corporate governance because competition will propel the management of firms to adopt
innovative approaches in order to maintain their market space and customer base; and finally
lead to the creation and institutionalisation of a pro-competitive environment which is
essential for economic growth.
43
Conversely, the argument on the other side is that developing countries most times lack the
environment which is necessary for the implementation and flourishing of a competition
regime.
44
For example, some competition authorities and judicial bodies in developing
countries are tied to the aprons of political actors and hence, are subject to political control.
45
Consequently, the opponents argue that the introduction of competition law with the hope
that it will facilitate development may be an effort in futility.
46
This view further suggests that
the introduction of competition law in developing countries should not be a priority owing to
the several challenges in doing so. These challenges will be discussed next.
41
Akinbola and Uwadi (n 6).
42
ibid
43
Evenett (n 6).
44
Wendy Carlen, Jonathan Haskel and Paul Seabright, ‘Understanding the Essential Fact About Capitalism:
Markets, Competition and Creative Destruction’ (2001) National Institute Economic Review 67.
45
Nnamdi Dimgba, ‘The Changing Landscape: Federal Competition And Competition Protection Act’ (Keynote
Address Delivered at the Jackson, Etti & Edu in Partnership with Norton Rose Fulbright Conference On
Competition Law, 18 June 2019) 4.
46
See (n 44).
20
2.2.2 Challenges to the adoption and implementation of competition law in
developing countries
The challenges faced by developing countries in the adoption of competition law are
numerous. Some are country and location specific while others are generic. I will undertake a
discourse of the generic ones under this section as follows:
2.2.2.1 Limited resources
According to Paul Godek, ‘exporting antitrust to Eastern Europe is like giving a silk tie to a
starving man. It is superfluous; a starving man has much more immediate needs. And if the
tie is knotted too tightly, he will not be able to eat what little there is available to him.’
47
The
statement is true to the extent that it mirrors the reality of Eastern Europe in 1992 when it was
made, as most of the countries in that location were still in the process of development. The
cost of sustaining a competition regime may make it less attractive to developing countries
that may not have the finances to see through the process. For example, resources are needed
for the training and development of the members of staff of a new competition regulator and
other stakeholders in the competition process. This training is vital as a result of the technical
nature of competition law and the possibility of the shortage of technical skill as people
naturally may consider it not economical to acquire an expertise in a field of law which
hitherto was not applicable in their jurisdiction. Also, some developing countries may take
the view that investing their scarce resources in adopting a foreign ideology like competition
law, while neglecting other basic needs which have immediate impact to the ordinary citizens
on the street like poverty alleviation programmes, will be a misplaced priority. Therefore they
will prefer to channel the available resources to other reform-related policies like removal of
47
Paul E. Godek, ‘One U.S Export Eastern Europe Does Not Need’ (1992) 15 Regulation 20, 21.
21
trade barriers, which some see as a cheaper alternative to implement, as argued by Cooter
who was of the opinion that free trade is the best antitrust policy.
48
2.2.2.2 Reform related challenges
The adoption of competition law in any country is usually heralded by reforms in order to
accommodate the changing economic landscape. The truth of the matter is that the adoption
of competition law is not an end, but a means to an end; hence the best approach for
developing countries is to create a conducive environment that is needed to make the new law
to flourish, through the process of reforms in critical sectors in order to guarantee an
independent judiciary, good governance, separation of powers, independent media,
professional and well paid civil service,
49
as well as proper collation and documentation of
data which is essential in defining market shares.
50
Ordinarily, this should not be an issue,
except that the process of achieving these reforms in developing countries is not easy and
straight forward when compared to developed countries.
51
2.2.2.3 Political interference in economic management
This is usually counter-productive and comes in various forms like government
sponsored/owned monopolies, barriers set up by government for entry and exit of the market,
subsidies to businesses incurring losses in some key sectors. Using the Nigerian petroleum
subsidy for instance,
52
most of the beneficiaries of the subsidies paid by the federal
government are petroleum marketing firms owned by government officials and their
48
Robert D. Cooter, ‘The Theory of Market Modernization of Law’ (1996)16 Int’l Rev. L. & Econ. 141, 162.
49
Waked (n 33) 208.
50
Daniel Runde, ‘The Data Revolution in Developing Countries Has a Long Way to Go’ (Forbes February 25
2017). <https://www.forbes.com/sites/danielrunde/2017/02/25/the-data-revolution-in-developing-countries-has-
a-long-way-to-go/#85d3c771bfc1> accessed August 1 2019.
51
Bruce M. Owen, ‘Competition Policy in Emerging Economies’ (2005) 3 SIEPR Discussion Paper No. 04-10.
52
Subsidy was introduced to offset the difference between the landing cost and retail price of petroleum
products, in order to reduce the cost of petrol for the end users.
22
cronies.
53
The subsidy regime made these firms inefficient as there was no driving force for
them to explore innovative ideas. Thus the government was subsidizing inefficiency because
of their vested interest in these firms.
54
Despite the assumption that adopting competition law
in Nigeria will most likely put an end to this practice,
55
there is an inherent fear that the law
may be used selectively in favour of these firms where the government have vested
interests,
56
contrary to the purpose of the law.
2.2.2.4 Highly concentrated and cartelized markets
Closely related to the challenge above is a high level of concentration and cartelized
markets.
57
Few firms dominate the key sectors of the economy owing to the protectionist
approach in setting high barriers at their entry and exit points, which leads to lesser number
of firms operating in the domestic market.
58
These barriers in developing countries are
sometimes erected on purpose by political players in order to protect domestic firms who may
be unable to compete with the huge capital and technological advantage of foreign
multinationals.
59
With time, due to the strategic position they occupy in the economy, these
protected firms may start operating in a cartellike manner which is difficult to detect. This
poses a challenge to new competition agencies.
60
53
Channels Television, ‘We Are Paying For Inefficiency’: Peter Obi Blasts FG’s Subsidy Policy’ (Politics
Today 2 January 2019) <https://www.channelstv.com/2019/01/02/we-are-paying-for-inefficiency-peter-obi-
blasts-fgs-subsidy-policy/> accessed 17 July 2019
54
ibid.
55
Nnamdi Dimgba, ‘The Urgent Need for Antitrust Law’ ThisDay (Lagos, 3 February 2004).
56
Khemani (n 37).
57
Paul Cook, ‘Competition Policy, Market Power and Collusion in Developing Countries’ (2002) 33 Center on
Regulation and Competition Working Paper Series; 3.
58
Rijit Sengupta and Cornelius Dube, ‘Competition Policy Enforcement Experiences from Developing
Countries and Implications for Investment’ (2008) 7 Global Forum on International Investment. OECED. 9
59
Dani Rodrik, ‘Imperfect Competition, Scale Economies, and Trade Policy’ in Robert Baldwin (ed) Trade
Policy Issues and Empirical Analysis (University of Chicago Press 1988) 109, 111-112.
60
Frédéric Jenny, 'Cartels and Collusion in Developing Countries: Lessons from Empirical Evidence' (2006) 29
World Competition, Issue 1, pp. 109137.
23
2.2.2.5 Protection of limited foreign investment
The Chicago school of thought argues that an improper implementation of competition law
hinders the development of free markets which in turn hampers foreign direct investment.
61
Due to the high possibility of a wrong implementation of competition rules as a result of the
shortage of expertise within the new competition regulator, the opponents of competition law
adoption in developing countries rely on the above position by the Chicago school to argue
against its adoption. Another argument on this point is that the enforcement of competition
law in a developing country will scare away foreign investors as some of them prefer to
operate in climes where competition law enforcement is non-existent, so that they can escape
sanctions for their anticompetitive activities which would have been penalized in their home
countries.
62
2.3 Concluding thoughts
This chapter has looked at the characteristics of developing countries, and the arguments on
whether developing countries need competition law or not. Whatever position of the divide
one may prefer to align is permissible as there are valid arguments on both sides. However,
the dominant view over the years is that notwithstanding the challenges, the adoption of
competition law is very important for developing countries because of the advantages of
competition law for developing countries when properly implemented to wit; fighting of
harmful business practices and poverty via established pro competitive structures, attracting
61
Paul E. Godek, ‘A Chicago-school Approach to Antitrust for Developing Economies’ (1998) 43 Antitrust
Bull. 261, 274.
62
British Airways and Virgin Atlantic escaped being fined the sum of $235 million by the Nigerian Civil
Aviation Authority (NCAA) for price fixing between 2004 and 2006, due to the absence of a legal backing for
the fine, despite the fact that the panel found them guilty of the allegations. See Afolabi Ogunde, Panel
Dismisses NCAA’s $235 Million Fine Against British Airlines despite Evidence of Guilt’ (BusinessNews 10
February 2012)
<http://businessnews.com.ng/2012/02/10/panel-dismisses-ncaas-235-million-fine-against-british-airlines-
despite-evidence-of-guilt/> accessed 17 July 2019.
24
FDI, promotion of corporate governance.
63
Notwithstanding these benefits, several
developing countries with competition law are still facing some challenges in its
implementation.
64
The next chapter will review the experience of SA and how it has been
able to deal with these challenges so far.
63
Dabbah (n 17) 303.
64
Dina Waked, ‘Competition Law in the Developing World: The Why and How of Adoption and Its
Implications for International Competition Law’ (2008) 1 Global Antitrust Review 69.
25
CHAPTER 3
REVIEW OF COMPETITION LAW IMPLEMENTATION IN A SELECT
DEVELOPING JURISDICTION
3.1 South Africa
The institutions responsible for the implementation of competition law in SA are the
Competition Commission (Commission), the Competition Tribunal (Tribunal), and the
Competition Appeal Court (CAC) as established by the SA Competition Act.
65
The Commission which is independent of executive and political interference and subject
only to the SA constitution and legislations,
66
is headed by a Commissioner and at least one
Deputy Commissioner to be appointed by the Trade and Industry Minister.
67
The
enforcement powers of the Commission are wide, encompassing a broad range of
responsibilities geared towards the protection of consumers and promotion of a free market.
68
The Tribunal is composed of the Chairman and not less than three to a maximum of ten other
members, appointed by the President,
69
and has jurisdiction over any matter that is prohibited
under the Competition Act.
70
It equally hears appeal from and reviews the decision of the
Commission.
71
In a similar vein, the CAC is established under Section 36 of the Act, and has
a similar status as a High Court in SA.
72
It is composed of three judges appointed by the
President from the pool of High Court judges, of whom one of the three appointees is
65
Competition Act, act no. 89 of 1998 (amended in 2019 upon the presidential assent given on 13 February
2019); See also Eleanor Fox and Mor Bakhoum, Making Markets Work for Africa: Markets, Development and
Competition Law in Sub-Saharan Africa (OUP 2019) 92.
66
Competition Act s 20(1)(a).
67
Section 19.
68
Section 21; See also Competition Commission v. Pioneer Foods (Pty) Ltd. 2010 (91/CAC/FeblO) ZACAC 2
(S. Afr.).
69
Section 26 (2).
70
Section 27.
71
ibid.
72
Section 36 (1) (a).
26
designated as the Judge President.
73
The CAC reviews the decisions of the Tribunal referred
to it in terms of the Act also entertains appeals arising from the decisions of the Tribunal.
74
The above three enforcement bodies play key roles in the implementation of competition law
in SA generally, and also as it relates to cartels, unilateral conduct and mergers.
3.1.1 Cartel
The Competition Act does not provide a concise definition of cartel, but mentions restrictive
horizontal practices in Section 4 which is a form of cartel activity. The Commission holds a
strong anti-cartel position which they are very committed in enforcing.
75
Cartel behaviour
under the Act could lead to administrative sanction in the form of a fine of up to 10% of the
firm’s annual turnover,
76
or a criminal sanction of imprisonment or fine being imposed on the
offending company and directors,
77
similar to the cartel regime of the UK,
78
US
79
and
Canada
80
. The firm also faces the risk of damages claim by customers who may have suffered
harm as a result of the cartel activity.
81
Private enforcement of cartel is also permitted in SA
in the event that the commission decided not to prosecute a complaint. The original
complainant can prosecute the matter before the Tribunal at his own cost.
82
In SA, collusive bidding and price fixing are the key cartel offences being prosecuted by the
Commission, followed by market division cases.
83
The Commission recorded tremendous
success in cartel prosecution following the adoption of the Corporate Leniency Policy (CLP)
73
ibid Subsection 2.
74
Section 37.
75
Sasha-Lee Afrika and Sascha-Dominik Bachmann, 'Cartel Regulation in Three Emerging BRICS Economies:
Cartel and Competition Politics in South Africa, Brazil, and India - A Comparative Overview' (2011) 45 Int'l
Law 975.
76
Section 59 (2)
77
Section 74.
78
Enterprise Act, 2002, s 188.
79
Sherman Antitrust Act of 1890, 15 U.S.C. Section 1 (2004)
80
Competition Act, R.S.C. 1985, c. C-34 S 45(2) (Can.)
81
Section 65 of the Competition Act.
82
‘Cartels in South Africa’, Interview with Pieter Steyn (Getting the Deal Through July 2018)
<https://gettingthedealthrough.com/intelligence/172/article/6247/cartels-south-africa> accessed 25 July 2019.
83
ibid.
27
and dawn raids.
84
The CLP was first adopted in 2004
85
owing to the difficulty of investigating
and prosecuting cartels in developing countries of which SA is one. Its adoption led to the
successful prosecution of several key cartel cases of which the bread cartel
86
is chief among
them. The Bread Case which is a locus classicus in cartel investigation and prosecution,
equally helped in instilling a competition culture in SA.
87
Other cases where the leniency
program led to its success includes the Pipes and Construction Cartel
88
and the Milk Cartel
89
.
However, the successes recorded from the adoption of the CLP suffered a setback with the
criminalization of cartel conduct in May 2016, because the directors of a successful leniency
applicant firm were not certain of personal immunity from prosecution.
90
3.1.2 Unilateral Conduct
Unilateral conduct under the SA Competition Act is categorized under abuse of market
dominance and excessive pricing. Abuse of market dominance and price discrimination by
dominant firms are prohibited under Sections 8 and 9 of the SA Competition Act
respectively. A firm is said to be in a dominant position in a market if it has at 45% of market
share, or has market power even though it has less than 35% of the market share. A firm is
also presumed to have market power if it has at least 35% of market power, unless it can
prove otherwise.
91
The history of the SA competition regime shows a dearth of successful prosecution of abuse
of dominance cases when compared to cartel prosecutions.
92
The same can be said of
84
ibid.
85
Dennis Davis and Lara Granville, ‘South Africa: The Competition Law System and the Country’s Norms’ in
Eleanor Fox and Michael Trebilcock (eds), The Design of Competition Law Institutions (OUP 2013) Ch7.
86
Competition Commission v. Pioneer Foods (Pry) Ltd. 2010 (15/CR/FebO7) (S. Afr.)
87
Fox and Bakhoum, (n 65).
88
Competition Commission v. Cobro Concrete 2009 (23) CR I (CT) 1 2.1 (S.Afr.).
89
Competition Commission v. Clover Indus. Ltd. et. al. 2006 (103) CR 1 (CT) 1 34 (S.Afr.)
90
Steyn (n 82).
91
Competition Act, s 7.
92
Fox and Bakhoum, (n 65) 104.
28
excessive pricing cases where two
93
out of the three main cases were settled without giving
the Tribunal the opportunity to pronounce on the substance of the cases. On exclusionary
conduct, the principle in SA requires just a proof of exclusion without anything further,
94
unlike the US regime which requires a proof of harm to consumers which could be in the
payment of higher prices as a result of the exclusion.
95
The 2019 amendment of the Competition Act contains innovative provisions which addressed
some of the challenges faced by the Commission in the prosecution of abuse cases
96
to wit:
a reverse onus which requires the allegedly dominant firm to refute the prima facie
case against it by showing that prices charged are reasonable in relation to excessive
pricing prosecutions;
expanding the list of conducts deemed to be exclusionary abuses of dominance. For
example, the prohibition on refusing to supply scarce goods to a competitor now
includes a prohibition on refusing to supply scarce goods and services to a competitor
and customer.
97
prohibiting a dominant firm from requiring or imposing an unfair trading condition
from a small and medium-sized supplying firm controlled by historically
disadvantaged persons;
setting the cost benchmarks in relation to predatory pricing provisions to be average
avoidable cost or average variable cost;
98
introducing the concept of margin squeeze into the list of specific abuses of
dominance;
99
93
Competition Commission, Settlement Agreement, Case No. 2002Sep26; Harmony Gold Mining Co. v. Mittal
Steel Corp., 13/CR/FEB04[2007] ZACT.
94
Competition Act, s 9C .
95
Fox and Bakhoum, (n 65), 110.
96
Lerisha Naidu and Angelo Tzarevski, ‘Widespread Amendments to South Africa’s Competition Law Regime’
(Global Compliance News 25 March 2019).
97
Competition Act, s 8(1)(d)(ii).
98
Section 8(1)(d)(iv); This is in line with the Competition Appeal Court’s 2018 decision in the Competition
Commission v Media 24 (Pty) Limited (CCT90/18) [2019] ZACC 26.
99
Section 8(1)(d)(vi)
29
prohibiting a dominant firm from price discriminating where the price discrimination
will not only have a net anti-competitive effect but also where it impedes the ability of
small and medium businesses controlled by historically disadvantaged persons to
participate effectively in a market.
3.1.3 Merger
Section 12A(1)
100
prohibits any merger which have the likelihood of reducing or preventing
competition unless a greater technological, efficiency, pro-competitive or PIC benefit can be
derived from such a merger. Under the 2019 amendment, PIC which hitherto was a secondary
area of assessment in merger review became a core area for the Commission’s
consideration,
101
while a fifth PIC was added to the existing four under Section 12A(3) which
is the promotion of a greater spread of ownership, in particular to increase the levels of
ownership by historically disadvantaged persons and workers in firms in the market’.
102
Additionally, the amendment clarifies the role of the Commission in considering an existing
PIC which is the ability of medium businesses in addition to small businesses or firms
controlled by historically disadvantaged persons to effectively enter into, participate in or
expand within a market.
103
Furthermore, three additional factors have been added to the existing eight which must be
considered by the authorities in deciding whether a proposed merger transaction is to be
approved or prohibited to wit;
the extent of ownership by a party to a merger in other firms in a related market;
104
100
See also subsections 2 and 3
101
This is in reaction to the Wal-Mart and Massmart case (73/LM/Dec10) [2011] ZACT 41; See also Leana
Engelbrecht, ‘2019: The Future of Competition Law Reform in South Africa is Now’ (Lexology 11 January
2019). <https://www.lexology.com/library/detail.aspx?g=5c36612f-9dfd-42c4-8b33-b21b18b7b99e> accessed
25 July 2019.
102
Competition Act, s 12A (3)(e).
103
Section 12A (3) (c).
104
Section 12A (2) (h).
30
the extent to which a party to the merger is related to other firms in related markets,
including through common members or directors; and
105
any other mergers engaged in by a party to a merger for a period to be stipulated by
the Commission.
106
The import of the new amendment is that PIC has taken a central role under the SA
competition regime. That is to say that a merger can be prohibited solely on public interest
ground, notwithstanding whether it is competitive or not. Asides the role of the Commission,
the amendment also empowers the government to prohibit mergers on the grounds of national
security,
107
in line with the Section 198 of the SA Constitution. This national security ground
is similar to that of the UK regime where the Secretary of State is empowered to intervene
and prohibit mergers on grounds of national security.
108
In its merger control process, SA fashioned out a unique model worthy of emulation by
developing countries by involving and engaging relevant stakeholders, clear role definitions
and transparent multi-level approach in its judicial interpretation and application of the
Competition Act. For example, in the celebrated case of Wal-Mart’s acquisition of
Massmart
109
which posed no anti-competition challenge, the PIC of job security, treatment of
workers and fear of displacement of small suppliers took the front burner. The Tribunal
considered the PIC remedy packages offered by Wal-Mart which it found adequate, and
adopted a pro-competitive approach as a defender of competition in approving the merger.
110
The stakeholders were not satisfied with the remedies offered by Wal-Mart and appealed to
the Competition Appeal Court (CAC), which affirmed the Tribunals decision, but inclined
105
Section 12A (2) (i).
106
Section 12A (2) (j).
107
Fox and Bakhoum, (n 65).
108
Enterprise Act 2002, s 42 and 58.
109
Wal-Mart Stores Inc v Massmart Holdings Ltd. 73/LM/Nov10.
110
ibid, the Tribunal noted in page 34 as follows ‘we step carefully into shop floor issues lest we forget our
purpose as competition regulator’.
31
more to PIC by imposing more remedial obligations on Wal-Mart, having held that the initial
remedies were insufficient.
111
Before concluding this chapter, it is worthy to note that competition law in SA stands out rare
as a model, although it is of a relatively recent origin. It recognises the essence of a
competition regime in promoting a competitive economy while taking into consideration the
economic and social goals of the country and its citizens. Hence the general philosophy that
guides the SA Competition regime is in the idea of using the law as a vehicle towards the
attainment of national economic and social objectives, which Fox and Bakhoum put
succinctly as ‘harnessing markets to make them work for the people’
112
. It appears that the
core competition principles of the SA competition law make it attractive to the developed
countries, while its recognition of local realities via PIC makes it alluring to the developing
countries. This is captured in the purpose of the SA Competition Law
113
which recognizes the
need to balance both objectives. In all, it stands like a bridge between the ideals of
competition fundamentalism of the developed west and flexible approach of the developing
global south.
By and large, despite the challenges faced by developing countries, the three SA competition
institutions discussed in this chapter have been successful so far in the implementation of
competition law in SA, by diligently discharging their roles independently under the
Competition Act, thereby making it a model for developing countries both within and outside
Africa.
111
SACCAWU v. Wal-Mart Stores Inc., 111/CAC/Jun11 [2012] ZACAC 6, para. 122 (2012)
112
Fox and Bakhoum (n 65) 120.
113
Section 2, Competition Act, act no. 89 of 1998 (amended in 2019 upon the presidential assent given on 13
February 2019).
32
CHAPTER 4
THE NIGERIAN EXPERIENCE
4.1 History of Competition Law in Nigeria
Nigeria is the latest country to adopt a national competition law upon the enactment of the
FCCPA on January 30, 2019. This came 17 years after the first idea for a competition law in
Nigeria was touted in December 2002.
114
From that time till 2015 when the latest competition
bill that matured into the FCCPA was drafted, several versions of national competition Bills
were introduced for consideration and passage in the National Assembly, but all these efforts
yielded little or no results due to several factors which might not be unconnected with the
overbearing influence of vested interests like owners of vast business empires who enjoy
political patronage and saw the emergence of competition law as a threat to their
businesses.
115
However, it is worthy to note that despite the prolonged delay in the passage of the bill, a
handful of results were achieved via the subtle introduction of competition law and its
principles by empowering some sector-specific regulators, especially those which were
established post 2002 with competition regulatory functions.
116
These agencies include the
Nigerian Communications Commission which regulates competition in the communications
sector pursuant to Sections 4 and 90 of the Nigerian Communications Act 2003; the Nigerian
Civil Aviation Authority (NCAA) which regulates unfair business practices in the aviation
sector by virtue of Section 30(4) of the Civil Aviation Authority (CAA) Act 2006; the
National Insurance Commission which regulates mergers in the insurance sector under
114
Nnamdi Dimgba, ‘Nigeria’s Competition Law: The Egg that Never Hatches’, The Guardian (Lagos, 22
February 2004).
115
Akinbola and Uwadi (n 6).
116
Enyinnaya Uwadi, ‘An Appraisal of the Legal Framework for Antitrust Regulation in the Nigerian Energy
Sector’ (LLM Dissertation, University of Ibadan 2016).
33
Section 30 of the Insurance Act 2003; the Securities and Exchange Commission (SEC) which
is empowered under Sections 121 to 128 of the Investment and Securities Act (ISA) 2007 to
regulate and approve mergers; the Nigerian Electricity Regulatory Commission regulates
competition in the power sector pursuant to Sections 82 of the Electric Power Sector Reforms
Act 2005; the Petroleum Products Pricing Regulatory Agency which has the mandate to
prevent collusion and restrictive trade practices in the downstream petroleum sector, by virtue
of Section 7 (j) of the Petroleum Products Pricing Regulatory Agency Act 2004.
The delay in the passage of the Bill led to the clothing of these agencies with competition law
powers, being sectors of national and strategic importance that cannot be left totally
unregulated, competition-wise, especially in the wake of the massive surge towards
privatization and globalisation in the early 2000s.
117
Whether these agencies achieved their
competition regulation mandate or not is a topic open to debate. Howbeit, with the enactment
of the FCCPA, the nature and extent of the statutory powers of the above sector regulators as
it relates to competition law are now subject to the FCCPA.
118
4.2 Overview of the Nigerian regime under the FCCPA 2019
The FCCPA created two institutions for the purposes of enforcing its provisions namely; the
FCCPC and the Competition and Consumer Protection Tribunal (CCPT). It saddled them
with the responsibility of promoting competition in the Nigerian market by eliminating
monopolies, prohibiting abuse of a dominant position and penalizing other restrictive trade
and business practices.
119
117
Dimgba, ‘The Changing Landscape: (n 45).
118
Enyinnaya Uwadi, ‘Competition Law in Nigeria: A Brief Overview of the Federal Competition and
Consumer Protection Act 2019’ (Sound Counsel August 2019) 36.
119
Explanatory Memorandum, FCCPA.
34
The FCCPA repealed the Consumer Protection Council Act,
120
and established the FCCPC
121
in the place of the Consumer Protection Council (CPC). It also repealed Sections 118 to 127
of the Investments and Securities Act 2007 which hitherto empowered the SEC to regulate
and approve mergers, and assigned this role to the FCCPC.
122
The FCCPA is applicable to
all commercial activities within, or having effect in Nigeria.
123
Its provisions are also binding
on all government departments and state owned corporations, and indeed all commercial
activities aimed at making profit and targeted at satisfying demand from the public.
124
It
equally applies extraterritorially to any prohibited conduct by a Nigerian citizen or a person
ordinarily resident in Nigeria; a corporate body registered in Nigeria or carrying out business
within Nigeria; any person supplying or acquiring goods or services into or within Nigeria;
any person in relation to the acquisition of shares or assets outside Nigeria which results in
the change of control of the business, part of the business or any asset of the business in
Nigeria.
125
The FCCPC is composed of a Board made up of a Chairman, the Chief Executive of FCCPC
(Vice-Chairman of the Boards), two Executive Commissioners and four non-executive
Commissioners.
126
These Board members are to be appointed by the President subject to
confirmation by Senate.
127
Likewise, the CCPT is composed of a Chairman who shall be a
lawyer with 10 years post-qualification, and experienced in competition law, consumer
protection or commercial and industrial law; six other members with 10 years professional
experience in either of competition and consumer protection law, commerce and industry,
120
Cap C25 LFN 2004; See Section 165, FCCPA.
121
Section 3, FCCPA.
122
Section 93 of the FCCPA
123
Section 2.
124
ibid.
125
Section 3.
126
Section 4.
127
Section 5.
35
public affairs, economics, finance, or business administration.
128
The tenure of office of the
members of the CCPT is 5 years from the date of confirmation or upon the attainment of 70
years, whichever comes first.
129
The procedure for appointment of the members of CCPT is
the same with the FCCPC. The CCPT adjudicates over conducts prohibited by the FCCPA,
entertain appeals from and reviews any decision of the FCCPC,
130
hear appeals on the
decisions of sector-specific regulators on competition and consumer protection matters, after
the FCCPC had first considered the appeal.
131
The decision of the Tribunal is to be registered
at the Federal High Court for enforcement purposes only,
132
while appeals on the Tribunal’s
decision goes to the Nigerian Court of Appeal.
133
In the context of existing legal framework, the provisions of the FCCPA override that of any
other law in all matters relating to competition and consumer protection. This implies that the
FCCPC has precedence over and above any other sector-specific regulator in matters or
conducts which affect competition and consumer protection.
134
To ensure a cordial
relationship and guard against power tussle between sector-specific regulators and the
FCCPC, the FCCPC is mandated to negotiate agreements with sector specific regulators
having competition and consumer protection competence to co-ordinate and harmonize the
exercise of jurisdiction over competition and consumer protection matters within the relevant
industry or sector.
135
Having highlighted the above provisions of the FCCPA, it would be trite to also highlight its
provisions on cartels, unilateral conduct, and mergers, as these three main policy areas are
usually part of any typical competition legislation.
128
Section 40.
129
Section 41.
130
Section 47 (1)(a).
131
Section 47 (2).
132
Section 54.
133
Section 55 (1).
134
Section 104.
135
Section 105 (4) (5) (6).
36
4.2.1 Cartel
Cartel activities proscribed under the FCCPA includes price-fixing, conspiracy and bid-
rigging.
136
An undertaken is prohibited from conspiring directly or indirectly by agreement,
threat, promise or any other means to influence upwards or discourage the reduction of the
retail price of other undertakings, unless the undertakings are interconnected undertakings as
defined under the Act.
137
An interesting and important provision to note is that of sub-section
3 of the above section 107 which provides that a notice of advertisement by an undertaking
other than a retailer which mentions the resale price of any product constitutes an attempt to
upwardly influence the product’s price, unless the advert makes it clear to a reasonable
person that the product may be sold at a lower price. Furthermore, refusal to supply goods or
discriminating against another undertaking due to its pricing policy is equally caught up by
the above section.
Similarly, an undertaking is prohibited from conspiring with another undertaking to limit,
prevent or unduly reduce competition in the production, purchase, sale, supply, rent or
transportation of any product, except where such was made in relation to the provision of a
service via the practice of a profession, where the maintenance of standards of competence
are necessary in the protection of the public.
138
Likewise, where more than one undertaking agrees not to compete against each other in
response to a bid, or make a bid submission based on agreement with one another, except
where one of the undertakings is an affiliate or agent of the other, a case of bid-rigging will
be established.
139
136
Part XIV.
137
Section 107.
138
Section 108.
139
Section 108.
37
Cartel activities are criminalised by the FCCPA, and the penalty upon conviction is a fine not
exceeding 10% of the annual turnover in the preceding business year for a corporate body.
Where the violator is a natural person, the penalty upon conviction is a prison term not
exceeding 3 years and/or a fine not exceeding 10 million naira.
140
Also, each director of the
violating corporate body is liable to be proceeded against in person, and upon conviction, be
dealt with in accordance with the above penalty prescribed for a natural person.
The above provisions show that the FCCPA holds a very strong anti-cartel position and
criminalises cartel activities. Only time will tell if and how effective this will be on
implementation, having regards to the capacity of the FCCPC and the absence of a leniency
regime under the Act.
4.2.2 Unilateral Conduct
Under the FCCPA, a firm is considered to hold a dominant position if it holds a vantage
economic position and can act without taking into account the reaction of its consumers,
customers and competitors.
141
The FCCPA did not specify the percentage of market
shareholding that characterizes a dominant firm, rather it delegated this responsibility to the
FCCPC in Section 70(3). The Act does not forbid a dominant position, but the abuse of such
a position by charging excessive prices to the detriment of consumers; denying access of an
essential facility to a competitor when it is economically feasible to do so; engaging in any
exclusionary conducts
142
whose anti-competitive effect outweighs technological efficiency or
pro-competitive gains.
143
The exception to the above provision which may also be a form of
defence for the undertaking concerned is if it can show any technology efficiency or pro-
140
Sections 107-109.
141
Section 70.
142
For example, inducing a supplier not to deal with a competitor, tying, buying up scarce intermediate products
to foreclose a competitor, selling products below their marginal cost, refusing to supply a competitor when
economically feasible.
143
Section 72(2).
38
competitive gain to be enjoyed by the consumers, which outweighs the anticompetitive effect
of the abuse.
144
A related provision is one which empowers the FCCPC to investigate monopolies. Where an
abuse of monopoly position is established in accordance with the regulations made by the
FCCPC,
145
it refers its report to the CCPT which has a wide variety of powers to exercise,
including the power to order a breaking-up or winding up of the undertaking.
146
4.2.3 Merger
Under the FCCPA, a merger occurs when a firm directly or indirectly takes control over
another business in part or in full, through the purchase of shares, amalgamation or joint
venture.
147
Control is established when a firm owns more than half of the shares or assets of
the undertaking; or is entitled to cast a majority of votes or has the capacity to control the
voting pattern; or can appoint or veto the appointment of the majority of the
directors/trustees; or is a holding company and the other firm is the subsidiary.
148
The Act classifies mergers into small and large mergers. Section 93(1) of the FCCPA
provides that subject to the notification threshold guideline,
149
the FCCPC must be notified of
every large merger for consideration and subsequent approval, failure of which the merger is
deemed void.
150
On the other hand, parties to small mergers are not required to notify the
FCCPC unless they choose to.
151
144
Section 72(3).
145
Section 77.
146
Sections 84-85.
147
Section 92(1).
148
Section 92(2).
149
It is expected that the FCCPC should set the guidelines upon the enactment of the FCCPC, however, this has
not been done as at when this project was concluded.
150
Section 96(5).
151
Section 95(1).
39
When considering a proposed merger, the FCCPC has to first determine if the merger is
likely to substantially lessen competition by assessing the level of import competition, ease of
entry and doing business,
152
concentration trends, level and the history of collusion, among
other related factors in the relevant market.
153
If the FCCPC comes to the finding that the
merger is likely to substantially lessen competition, it will block the merger unless a greater
technological, efficiency, pro-competitive or PIC benefit can be derived from such a
merger,
154
a position which is similar to that of SA. The PIC in Nigerian merger review
considers the impact of the merger on a particular industrial sector, employment, ability of
national firms to compete in the global market, and the ability of small and medium firms to
become competitive.
155
Since the first introduction of merger regulation in the Nigerian legal system in 2007 under
the supervision of the SEC till 2019 when the FCCPC took over the mandate from SEC, there
was no reported case of a merger prohibition by the SEC. The reason for this according to
Dimgba
156
is because SEC being a traditional securities regulator struggled with competition
law competence and tended to focus more on its area of expertise in merger regulation (which
is to ensure that the shareholders were treated fairly) to the extent that some mergers which
appeared to have lessened competition were approved as long as the undertakings paid the
requisite application fees. It is therefore hoped that the same story will not be told of the
FCCPC in the near future.
152
Ease of doing business refers to the conducive regulatory environment for starting and operating a local firm.
153
Section 94(1)(a), and (2).
154
ibid.
155
Section 94(4).
156
Dimgba, ‘The Changing Landscape’ (n 45) 6.
40
4.3 General issues of concern from the FCCPA.
Although I may not have reproduced all the provisions of the FCCPA in this project due to
space constraint and the scope of the project, I came across some areas of concern which may
impede the implementation and attainment of the objectives of the FCCPA. I will address
them in this section.
First, there has been some concern about the overbearing political interference in the FCCPA
as exemplified by some powers granted to the executive in several provisions of the Act, a
feature that is considered to be antithetical to the independence of the FCCPC, and could
make the Commission an appendage of political actors. For example, sections 88 to 91 which
make up Part XI of the Act provide for price regulation of some select goods and services
upon an order of the President published in the Gazette. This power it is argued, ought to
reside with the FCCPC to guarantee its independence and insulate it from political
interference, and not with the President. The concern is that a power such as this, sitting in
the context of competition enforcement, ought to rest on the FCCPC itself without reference
to any political actor including the President, because of the high tendency to prioritize
political calculations over economic decisions. From experience, decisions by political actors
even in the economic sphere, tend to be driven by political considerations and undertones.
Most times, governments may shy away or backtrack from necessary economic decisions,
especially if unpalatable in the short term, for fear of an unfavourable reaction in the
polity.
157
157
For example, the reversal of the removal of subsidy on petroleum products by the administration of President
Jonathan in 2012 due to nationwide protests. This removal could have paved way for the deregulation of the
Nigerian petroleum sector and saved a lot of recurrent expenditure needed to fund capital projects.
Consequently, Nigeria pays over GBP 5 Million daily on subsidy. See The Guardian, ‘Nigeria restores fuel
subsidy to quell nationwide protests’ (16 January 2012)
< https://www.theguardian.com/world/2012/jan/16/nigeria-restores-fuel-subsidy-protests>;
Emmanuel Okogba, ‘Fuel subsidy hits 2.4bn daily’ (Vanguard 19 June 2018)
< https://www.vanguardngr.com/2018/06/fuel-subsidy-hits-n2-4bn-daily/> accessed August 28, 2019.
41
Secondly, some provisions of the FCCPA clash with the statutory powers of some regulatory
agencies like the Standards Organisation of Nigeria in Sections 17(m) (u) (w) (y) and
18(1)(d) and (e)(i); the National Agency for Food and Drug Administration and Control in
Section 18 (1)(b)(d) and (e); Nigerian Customs Service in Section 17(q). These other
agencies whose mandate also includes consumer protection may consider the FCCPA to be
encroaching into their statutory provinces, where they have developed considerable expertise.
This raises questions as to whether these agencies will respond favourably to any approaches
to be made by the FCCPC to them pursuant to the provisions of Section 105(4) Act.
Thirdly, the provision of Section 38 appears to subject the right of appeal on the decision of
the FCCPC to the regulations made by the same FCCPC, who will certainly be a respondent
at the CCPT. This provision which offends the natural justice principle of nemo judex in
causa sua, in my opinion is counter-productive and defeats the overall purpose of justice. The
regulations for appeals procedures to the CCPT ought not to be the responsibility of FCCPC
whose decision is being appealed against, but that of a neutral body like the CCPT. Retaining
this provision may lead to arbitrariness and misuse of power by the FCCPC as it may
intentionally adopt complex appeal procedures while drafting of the regulations, which may
systematically foreclose aggrieved parties from having recourse to appeal, thereby technically
rendering its decision on some matters final, which I believe contravenes the purpose of the
FCCPA.
Fourthly, there is confusion on whether the FCCPC is actually a supreme competition
regulator under the FCCPA. This confusion arises when comparing Section 104 which makes
the FCCPA supreme to any other law on competition and consumer protection, with Sections
47(2) and 105(4), (5) and (6) (a) (b) which recognizes sector-specific regulators established
under the relevant sectoral law. Irrespective of the fact that Sections 47(2) and 105(6) (c)
acknowledges the leadership position of the FCCPC when dealing with sector-specific
42
regulators, recognizing these sector-specific regulators established by other laws and
mandating the FCCPC to negotiate agreements with them
158
appears to contradict Section
104 which starts with the supremacy phrase, ‘Notwithstanding the provision of any other law
but subject to the Constitution of the Federal Republic of Nigeria…..” The problem here is
whether these sectoral regulators will perform their duties pursuant to their establishing Act,
the negotiated agreement or the FCCPA.
Fifthly, there is also some concern with a provision such as Section 156(2) of the Act which
appears to accommodate suits being brought against members of the CCPT for any act done
in pursuance or default in the execution of the provisions of the FCCPA, provided the normal
3 months notice under the Public Officers Protection Act is given. This appears to run
against the understanding that the CCPT is a court of law. If the CCPT is a court of law, then
its members ought to enjoy full judicial immunity from litigation connected with the
performance of their functions. By retaining that provision in the manner it appears in the
Act, concerns are that the FCCPA made away with the longstanding principle of judicial
immunity which protects judicial officers and employees from any liability resulting from the
performance of their statutory judicial functions.
159
The importance of this judicial immunity
is very critical in the administration of justice to the extent that even when a judicial officer is
accused of acting maliciously and corruptly in the performance of his judicial functions, he is
still immune to lawsuits because it is not for the protection or benefit of a malicious or
corrupt judge, but for the benefit of the public, whose interest it is that the judges should be at
liberty to exercise their functions with independence and without fear of consequences.
160
In my opinion, the responsibility of a judge is to decide all cases before her/him, which may
include contentious cases which stirs the most intense feelings among the parties. Her/his
158
Section 105
159
Scott v. Stansfield, L. R. 3 Ex. 220, 223 (1868).
160
ibid.
43
mistakes can be reversed on appeal, but (s)he ought not be scared that a party who is not
satisfied with the decision may pursue her/him with a law suit by claiming malice or
corruption. Such a burden being imposed on judges will not lead to sound and fearless
decisions, but add more pressure on the judge, as in the case of the FCCPA. This provision is
one which ought to be repealed immediately, because there is a process of dealing with an
alleged official misconduct as provided in Section 43 (2) and (3) of the FCCPA, which
empowers the President to remove such an officer upon the recommendation of the National
Judicial Council. This is equally in line with the 3rd Schedule of the 1999 Constitution of the
Federal Republic of Nigeria.
Another concern which is closely related to the one above is on the single 5 year tenured
appointment of the members of the CCPT.
161
This provision is equally similar to that of SA,
the jurisdiction from which I believe Nigeria adopted most of the provisions of the FCCPA
from. The reason why this is a problem for Nigeria is because the FCCPA seems to hold out a
position that the CCPT is a court of law,
162
unlike SA. If this is so, there is a problem in
subjecting its members to a short tenured appointment, especially for a new competition
regime in a developing country. From experience, the longer a judicial officer performs
her/his duties in interpreting the law, the more experienced (s)he becomes.
163
The implication
of this provision is that in every 5 years, new officers who may not have had any prior
judicial experience will be appointed into the CCPT. This does not guarantee the stability
much needed by a new competition regime, as the judicial philosophy of the new members
may differ from that of the previous ones. SA avoided this problem by stating clearly that the
161
Section 41.
162
Section 43(3).
163
Benjamin Iverson, and others, ‘Practice Makes Perfect: Judge Experience and Bankruptcy Outcomes’ (OBLB
22 December 2017). < https://www.law.ox.ac.uk/business-law-blog/blog/2017/12/practice-makes-perfect-judge-
experience-and-bankruptcy-outcomes> accessed 29 August 2019.
44
Tribunal is a juristic person (not a court of law)
164
and created the CAC, a division of the high
court which sits on appeal over the decisions of the Tribunal. The judges of the CAC are
appointed for a fixed unspecified term, until they either cease to be judges of the high court or
resign. A testament to this is Dennis Davis who was appointed in 2000 as the first President
of the CAC, and holds that position to date.
165
This longevity in office of the members of the
CAC could be a testament to the positive impact of competition law jurisprudence in SA. One
may argue on the other hand that the FCCPA addressed this concern by subjecting the CCPT
to the appellate authority of the Nigerian Appeal Court, whose judges have tenure longevity.
With all due respect to my lords, the Nigerian Court of Appeal cannot be equated to the CAC
in competition law context, because it is not a specialized court, and its judges as of today are
not competition law experts. The importance of judicial specialization is that the expertise of
judges in both legal and economic concepts enables them to hear and understand expert
evidence and argument, and make decisions that are legally and economically sound, having
regard to the impact upon the system as a whole.
Furthermore, inasmuch as I commend the strong anti-cartel position of the FCCPA in
criminalizing cartel activities, there is a high probability that if a leniency program is not
immediately adopted by the FCCPC, this will be an overambitious target. This is because the
FCCPC is not at a vantage position to discover, investigate and prosecute cartels, owing to
the challenges of it being a new agency with a shortage of technical skills, while operating in
a developing country with a weak competition culture.
166
Indeed, competition authorities
from developed countries with their expertise and funding still have some difficulties in
detecting cartels. This led to the adoption of the leniency programs in the fight against cartels.
164
Competition Act, s 26(b)
165
Fox and Bakhoum, (n 65) 96.
166
George Lipimile, CCC Leadership Perspective: Nudging Uganda And Nigeria Towards Competition
Enforcement’ < https://africanantitrust.com/category/nigeria/> accessed 29 August 2019.
45
As we saw in chapter 3, SA recorded tremendous success in cartel prosecution following the
adoption of the leniency program, but experienced a downward trend upon the
criminalization of cartel in 2016. This should be a lesson for the FCCPC.
Finally, there are some typographical errors, conflicting provisions, and wrong placement of
some sections of the act. This could have been an oversight or clerical error. Whatever the
case may be, it is expected that a legislation which took 17 years, and passed through several
review processes by the stakeholders, lawmakers and president before the latter appended his
signature should be error proof. These errors which will be highlighted below make one
wonder if the government really intended to enact the FCCPA or whether it was done out of
political calculations, having received presidential assent a few days prior to the 2019 general
elections, from an incumbent president who was seeking re-election.
i. Section 167(1)(b) in the interpretation section defines “Act” as Federal Competition
and Consumer Protection Act 2017, while Section 168 provides that “This Act may be
cited as the Federal Competition and Consumer Protection Act 2018.
ii. Part XII under the arrangement of sections reads “Price Mergers” instead of
“Mergers”. This may have been a result of copy and paste, as the preceding Part XI is
“Price Regulation”. Although this error does not reflect in the body of the FCCPA in
section 92, it is important for it to be corrected.
iii. The marginal note of section 9 talks about emoluments of the members of FCCPC,
however, the said section only talks about vacancy in the board of FCCPC.
Emolument is nevertheless found in Section 20(4). The same occurred in section
19(1) which talks about the Executive Vice-Chairman of FCCPC while the marginal
note refers to the Secretary of the FCCPC which is found in Section 19(3).
iv. Section 48(5)(a) made reference to subsection (4), however, having reviewed the Act
and compared it to that of SA from which Nigeria adopted most of its FCCPA
46
provisions, it is my humble view that the reference to subsection (4) is erroneous and
ought to be subsection (3).
167
Besides these concerns discussed above which may impact on the efficient implementation of
the FCCPA, there are other challenges to be faced by Nigeria as a developing country in
implementing the FCCPA. These challenges will be discussed in the next section.
4.4 Challenges to the implementation of FCCPA
First among the challenges is the shortage of local technical skill and expertise in competition
law. The enactment of the FCCPA which converts CPC, a consumer protector, to FCCPC, a
competition authority and consumer protector does not automatically bestow competition
competence on the members of staff, who may be rightly described as old wine in new skin.
There is an urgent need to employ experienced and trained competition law experts in order
to bridge the knowledge gap and build capacity amongst the staff of the FCCPC and CCPT,
for effective implementation of the FCCPA. For example in a bid to reposition competition
law and ensure effective implementation in the UK, the Enterprise and Regulatory Reform
Act 2013 was enacted, which merged the Office of Fair Trading (OFT) and Competition
Commission (CC) to create the Competition and Markets Authority (CMA). The UK
government appointed and equally recruited experts with many years of experience like Alex
Chisholm to drive the new agenda.
168
Furthermore, since lawyers are going to be involved in
resolving competition cases and representing their clients, it is needful for law firms to build
new capacities, hire experts trained in the field, and support their staff to acquire this
specialist knowledge.
167
Compare this provision with Section 31 of the SA Competition Act.
168
Bola Ajayi, 'The Competition and Markets Authority: A More Effective Merger Control Authority' (2014) 13
Competition LJ 223.
47
Secondly, there is the threat to the independence of the FCCPC, which is a government
agency under the supervision of the minister of trade, a political appointee. This potential for
political interference may be a challenge to the enforcement of the provisions of Section 2 (2)
(a) (b) of the FCCPA where a state owned institution engages in anti-competitive conduct
like abuse of dominance. Global best practices in competition regulation is that the
competition authority is established as an independent, non-ministerial department, subject
only to the law, like the SA Competition Commission and the CMA, in order to insulate it
from external influence of political actors, as well as powerful multinational firms, as the
latter may threaten the independence of the FCCPC via regulatory capture as is often the case
of new competition authorities in developing countries.
Thirdly, there is also the likely challenge of funding for the FCCPC. Efficient competition
regulation is time consuming and capital intensive. Funds are needed to attract competent and
skilled members of staff, collate and analyze market data, investigate international cartels and
also cross-border mergers. For a country like Nigeria where there is a low competition
awareness, and the government’s budgeting and spending priority is usually on ventures with
immediate results, there is a high possibility that the government may not see as a priority the
adequate funding of FCCPC which may bring no immediate financial returns.
Fourthly, the overzealous approach adopted by the FCCPA may prove counter-productive
with time. I have already discussed the issue of non adoption of the leniency program while
criminalizing cartel in the previous section. Another example is the provision of Section
2(3)(a) which provides that the FCCPA shall apply extraterritorially to a conduct by a
Nigerian citizen. This means that a Nigerian citizen resident and trading only in the UK for
example, could be investigated and prosecuted in Nigeria under this provision irrespective of
the fact that his/her business is solely within the UK and has no bearing on Nigeria.
Inasmuch as the other extraterritorial provisions under Section 2(3) are commendable, one is
48
left to wonder how this provision whose basis of application is the mere fact that the conduct
in question was committed by a Nigerian citizen, will be successfully implemented.
Another potential challenge is that of the slow judicial system in Nigeria. Competition law
cases are business related, and in business, time management is very important. I want to
assume that the CCPT will be efficient and decide cases at a faster pace than the regular
courts, however, the FCCPA ought to have considered the delays in the Nigerian court
system which can make a case linger for over 10 years and imposed timeframes for the
hearing of appeals and delivering of judgement on competition cases at the Appeal Court, in
the same manner provided in the 2018 amendment to the Nigerian Constitution for pre-
electoral cases which are time bound.
169
In the same vein, I do not understand the necessity of
parties dissatisfied with the decisions of sector regulators in competition and consumer
protection matters having to first appeal to the FCCPC for a decision before they can
approach the CCPT. In my opinion, this intermediate appeal procedure may not offer much
positive value because it appears more efficient to appeal directly to the CCPT to prevent
delays and save cost, rather than first having to appeal and wait for the decision of the
FCCPC.
Having said that, it is worth noting that the FCCPA is silent on whether the decision of the
Appeal Court on competition and consumer protection is final or can be further appealed to
the Supreme Court. This creates another challenge of interpretation as some cases in Nigeria
terminate at the Court of Appeal while others at the Supreme Court.
Other challenges include the likelihood of non-cooperation by sector-specific regulators due
to the reasons already discussed under Section 4.3 of this project. Having reviewed the
169
Constitution of the Federal Republic of Nigeria 1999 (Fourth Alteration No 21) Act 2018.
49
FCCPA and discussed the challenges to its implementation under this chapter, the next
chapter will examine its prospects and conclude with recommendations.
50
CHAPTER 5
CONCLUSION
5.1 Prospects of implementing the FCCPA.
An effective implementation of the FCCPA will guarantee a competitive environment in the
Nigerian economy and ultimately lead to the attainment of the following gains:
First is the promotion of corporate governance. Firms, especially dominant ones had hitherto
operated in a somewhat lawless market place, crushing upcoming and potential rivals. This
will no longer be the case because the FCCPA protects domestic small and medium firms
from unfair market practices of dominant firms like predatory pricing. With the enactment of
the FCCPA, one can say that the Riot Act has been passed, and the sheriff in the form of the
FCCPC is in town to enforce it, therefore everybody must fall in line accordingly Hence, in
order to remain relevant in a competitive environment, dominant firms must adopt acceptable
internal measures in line with corporate governance rules, to meet competition demands and
to steer clear of indulging in anti-competitive practices purposely or inadvertently, especially
as the FCCPA provides that directors of violating firms can be held liable in their personal
capacities.
170
A second prospect is the increase in efficiency
171
and productivity levels. Firms are
incessantly pressed to adopt efficient measures to become more productive when faced with
vigorous competition. This is because of the knowledge or suspicion that their competitors
are also adopting new measures to reduce costs and improve quality, so as to make more
profit and gain a competitive advantage. With this pressure, firms are in the know that they
may lose their market share if they do not quickly make efficiency and productivity
170
See Sections 69(2), 74(2), 107(4)(c), 108(3)(c), 109(3)(c), 111(2)(c), 112(c).
171
Efficiency is generally explained as using a minimum amount of input to achieve a maximum output.
51
improvements. The FCCPA heralding this process of healthy competition between
competitors will result to firms striving to offer better goods, quality services and lower
prices.
Thirdly, in the technology-driven world of today, innovation is central to business expansion
because it leads to new technologies and inventions. With technological innovations, new
companies can break into markets that are dominated by incumbents companies, while the
incumbents can maintain their market success by offering new products to satisfy consumer
demands. It is therefore safe to say that competition promotes innovation, without which
there would be little or no drive to introduce new products or develop new methods of
production. An economy will lose its ability to compete globally in the absence of this
pressure. FCCPC will therefore drive domestic firms to become innovative in order to
compete globally.
Another prospect is that competition helps in restructuring sectors that have lost
competitiveness.
172
Usually, political constraints and considerations makes it tough for
governments in developing countries to decide which sectors of the economy is in need of
restructuring, which firms should remain or cease operating in those sectors, and the best time
to engage in such restructuring activity. It is hoped that the competitive process brought about
by effective implementation of the FCCPA will make the restructuring process unbiased as
decisions will be based solely on market forces, instead of asymmetric information at the
disposal of government bureaucrats, who offer privileged information to firms that enjoy
government patronage. With the operation of competition values in Nigeria, restructuring the
economy will become a matter of course, because weak and uncompetitive firms will
naturally lose their market power to the strong and competitive ones.
172
Akinbola and Uwadi, (n 6).
52
Furthermore, the FCCPA could be a prospective source of revenue generation to the
government via fines handed down to firms engaging in anticompetitive practices.
173
I wish
to add a caveat at this juncture that the primary purpose of competition law enforcement is
not revenue generation, but to promote competition for the general benefit of the public.
However, fines can be imposed on anticompetitive conducts which robs an economy of the
potential benefits of competition. Recently, the EU fined Google a record 5 billion dollars in
2018 for anticompetitive conduct,
174
which is about 20% of the Nigerian 2019 budget.
175
Hitherto, Nigeria has been missing out from opportunities to generate revenue from
competition law sanctions. For instance, the 2006 NCAA’s fine of 235 million dollars on
both British Airways ($135 million dollars) and Virgin Atlantic Airways ($100 million
dollars) for anticompetitive practices, was dismissed by the Justice Oguntade led appeal
panel. Although the panel did not absolve the airlines of the wrongdoings, it was of the
opinion that the fine by the NCAA was retrospective, and held that the NCAA could not use
the CAA Act of 2006 to take action against the airlines for infractions committed between
August 2004 and March 2006.
176
It is therefore my belief that if the FCCPC and CCPT with
their wide powers and potential expertise are be able effectively implement the FCCPA to the
latter, they will be able to generate national revenue from fines over anti-competitive
conducts, which may be used as evidence to justify any request for increased funding of both
institutions before the Parliament.
Finally, the FCCPA will lead to the creation of more jobs both in the public and private
sectors. The FCCPC and CCPT will employ hundreds if not thousands of staff for the
173
ibid.
174
Ana Zarzalejos, ‘The 7 biggest fines the EU have ever imposed against giant companies’(Business Insider 19
July 2019 < https://www.businessinsider.com/the-7-biggest-fines-the-eu-has-ever-imposed-against-giant-
corporations-2018-7?r=US&IR=T#1-google-fined-5-billion-in-2018-1> accessed August 1 2019.
175
Andrew Heavens, Nigeria’s Buhari presents $28.8 billion budget for 2019, will it revive the country’s
economy?’ (Reuters 19 December 2018) < https://www.cnbcafrica.com/news/west-africa/2018/12/19/will-
buharis-28-8-billion-budget-for-2019-revive-nigerias-economy/> accessed August 1 2019.
176
Ogunde (n 62).
53
effective implementation of the FCCPA. Government agencies will equally need the services
of competition lawyers in the legal department. Universities will need the services of
competition law teachers, while private firms will require the services of competition
compliance officers. Similarly, a competitive environment will lead to business growth and
expansion which usually results in more job creation.
177
5.2 Recommendations
Having addressed the prospects and challenges of implementing the FCCPA, my
recommendation will come under three headings to wit:
5.2.1 Law
From the concerns raised and challenges discussed in this project, an amendment of the
FCCPA is imminent in order to address the raised concerns, correct the errors, as well as the
conflicting, superfluous and impracticable provisions for ease of enforcement, as done by SA
with their 2019 amendment. It is equally necessary to guarantee the independence of the
FCCPC and insulate it from political interference.
Also, following the example of the SA regime, institutional roles need to be clearly defined in
the FCCPA. It is my view that sector-specific regulators ought not to interfere with
competition matters and should focus on their areas of core competence pursuant to the
supremacy clause. This is to avoid jurisdictional clashes and more importantly under-
regulation of competition in those sectors, following from the experience of SEC as discussed
earlier on. If an amendment is not imminent in the near future, the FCCPC pursuant to its
177
Simon Roberts, ‘The Role for Competition Policy in Economic Development: The South African
Experience’ (2004) TIPS Working Paper Series (WP8-2004)
<https://www.researchgate.net/publication/227610905_The_Role_for_Competition_Policy_in_Economic_D
evelopment_The_South_African_Experience> accessed 30 August 2019.
54
powers under the FCCPA should collaborate with stakeholders to develop relevant guidelines
and address some of the issues which may not require legislative intervention.
5.2.2 Institutional
Strong and competent pro-competitive institutions should be established in order to safeguard
the competition process. I recommend the establishment of a specialised court to be called
Competition and Consumer Appeal Court (CCAC) as the appellate and final court in
competition and consumer protection matters. Any further appeal on its decision should be to
the Supreme Court only on point of law, and subject to the leave of the Supreme Court.
Timeframes on the duration of appeal should equally be imposed in order to ensure speedy
dispensation of justice.
Furthermore, in order to strengthen the institutions involved in competition regulation, there
is need for their budgetary allocation to be sufficient. Funds are needed by the FCCPC and
CCPT at this takeoff stage to attract qualified and skilled staff, train the existing ones,
collaborate with foreign competition authorities, carry out public advocacy and establish their
presence throughout the federation. This is necessary in order to insulate both institutions
from the influence of dominant local and multinational firms via regulatory capture.
There is equally the need to promote a pro-competitive culture in Nigeria. Every organisation
needs to establish a competition compliance unit which will be responsible for ensuring that
the organisation complies with competition law and standards, and promote compliance
among members of staff.
Lawyers and economists also need to develop expertise in competition law, in order to arm
themselves with sufficient expertise to represent their clients on competition cases, and also
to position themselves as potential members of staff of the FCCPC and CCPT. This creates a
55
need for the establishment of domestic institutions of competition law training. As argued in
a previous article,
178
faculties of law in Nigerian universities should introduce competition
law as a course of study both at undergraduate and postgraduate levels.
5.2.3 Procedural
With the powers to develop guidelines donated to FCCPC by FCCPA, it should ensure that
these guidelines are clear and unambiguous, so as not to create complications and confusion
in their application. Similarly, the rules on how the CCPT’s proceedings should be conducted
should be made by the CCPT in consultation with stakeholders and the FCCPC, and not the
other way round as provided by the FCCPA where the FCCPC is empowered to make the
rules for the CCPT proceedings. Otherwise CCPT’s decisions may be challenged on appeal
for violation the principle of nemo judex in causa sua.
On merger review, the FCCPC should follow the example of SA and give priority to PIC
owing to the prevalent poor economic situation in Nigeria. While implementing competition
law, it should equally consider other national developmental needs because competition law
in developing countries like Nigeria is not rooted in competition fundamentalism
179
but
rather, in utilizing it towards the attainment of national economic objectives.
180
On cartels, a leniency and whistle-blowing policy should be introduced in order to encourage
firms who are afraid of the criminalization of cartel provisions of the FCCPA, to take
advantage of the friendly gesture in return for a reduced penalty. This will save cost and time
178
Enyinnaya Uwadi and Adesuwa Omozusi, ‘The Need for the Introduction of Competition Law in the
Curriculum of Nigerian Universities’ (AL PACI University of Abuja Vol. 2 2015) p. 29.
179
Literal interpretation and strict adherence to competition law in all circumstances, notwithstanding the
prevailing local realities.
180
Enyinnaya Uwadi, A Case for Public Interest Considerations in Merger Control Analysis with reference to
Competition Law Enforcement in South Africa and other developing countries of Africa’ Manuscript
submitted to Transactional Dispute Management for publication in the Special Issue on International
Investment and Competition Law in AND with the Global South.
56
for the FCCPC, and equally make it easier for cartel cases to be prosecuted successfully like
the case in SA.
Finally, the FCCPC should adopt a one step at a time approach in implementing the FCCPA.
It should not succumb to the pressure of engaging in a wild goose chase by going after big
firms without investigation and gathering sufficient evidence, in order to gain public
acceptance and credibility. A single successful enforcement will send a strong signal to the
public, which is far better than hurriedly going after multiple firms at the same time and
failing to record a single success.
5.3 Conclusion
The introductory chapter of this project contains five research questions. The first research
question which talks about the challenges of implementing competition law in developing
countries was addressed in chapter two. The second question is answered in the affirmative as
discussed in chapter four, because political interference, reform-related challenges in the
judiciary, shortage of technical skills, and limited resources equally features in the Nigerian
regime. The lesson from SA and other jurisdictions is the third question and was addressed in
chapters four and five. This includes the need for the independence of the FCCPC,
recruitment of experienced experts to drive the new regime, clear definition of roles, cartel
leniency and prioritising PIC in merger reviews. The fourth and fifth research questions
which investigates the prospects of implementing competition law in Nigeria, and seeks to
know the reforms needed to address the identified challenges respectively, were addressed in
chapter five.
To conclude, I must emphasise the role of advocacy in the implementation of the FCCPA
because there is a probability that the law may just offer a false promise. Credence is lent to
this point by the non appointment of the substantive CEO of the Commission, non
57
constitution of the CCPT and the board members of the FCCPC from January 30 2019 when
the FCCPA was enacted till August 2019 when this project was concluded. In any event, the
enactment of the FCCPA is just the beginning, and continuous advocacy is needed to get the
buy in of key business players, and equally create the necessary public awareness amongst
the citizenry. It is one thing to have a law, and another for the citizens for whose interest the
law was enacted, to become aware of its existence and to utilise it for remedy. Advocacy may
also lead law reform needed to clarify or redress some provisions of the legislation.
Finally, with the enactment of the FCCPA, the focus and new agenda should be on how to
overcome the challenges identified and navigate the trajectory towards a successful and
efficient implementation of competition law in Nigeria. With the right approach, technical
expertise, effective and efficient implementation, continuous advocacy, and legislative
reforms, these challenges can be overcome.
58
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Article
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