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Building Social Capital in a Hard-Knock Regulatory Terrain: Lessons for New Competition Authorities

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Abstract

This article examines the efforts of the Nigerian Competition Authority, the FCCPC in building social capital in a difficult regulatory environment, and lessons new competition authorities can learn from the strides of the FCCPC.
International Committee | ABA Antitrust Law Section
March 2022
AMERICAN BAR ASSOCIATION 1
LEGAL_38525205.2
Established in January 2019, the Federal Competition and Consumer Protection Commission
(FCCPC) succeeded the defunct Consumer Protection Council (CPC)
1
and assumed wider regulatory powers
over anti-competitive business practices in Nigeria. The new regulator faced a lot of challenges, top of which
includes enforcing laws that appeared fairly inconsistent with the prevalent social norms. Some of these
laws include the criminalisation of cartel provisions.
2
Social norms within the Nigerian context oppose the
idea of cartel criminalisation because in developing countries like Nigeria, close family ties are prevalent,
and in several cases, family relatives and close friends control a number of related businesses. Indeed, this
close relationship and cooperation between business rivals rarely attract any stigma and some sections of
the general public view the camaraderie with admiration. The FCCPC faced an uphill task to change the
status quo and gain public support.
In a previous publication,
3
I discussed the challenges faced by new competition authorities like the
FCCPC, operating in emerging economies like Nigeria. The publication suggested optimal enforcement
options and made a case for new competition authorities to build their social capital by prioritising
enforcement actions towards public interest cases which attract positive media coverage. Such a strategy,
it is argued, helps to build the credibility of a competition regulator, especially in hard-knock regulatory
terrains. However, the danger in this strategy is the likelihood of sending the competition authority on a
wild goose chase by going after big firms without proper investigation and sufficient evidence, all in a bid
to gain public acceptance.
4
This article seeks to appraise the efforts of the Nigerian Competition Authority,
the FCCPC, in gaining public acceptance and support.
One of the measures adopted by the FCCPC in building social capital is in the building of capacity.
Competition law is a complex area of law that demands a high level of skill and expertise to navigate the
murky waters. Having absorbed staff from the defunct CPC, most of whom had little or no knowledge of
competition law, the FCCPC invested in capacity building by engaging experienced competition experts in
training the staff of the commission across board.
5
Relatedly, the FCCPC was introspective and
acknowledged the need for capacity building. It proactively reached out to more experienced regulators like
the U.S. Federal Trade Commission (FTC) to train some of its staff under the FTC’s International Fellows
Program.
6
Also, the FCCPC did well in collaborating with regional competition regulators within the
African continent, as evidenced by the 18 February 2022 “Joint Statement of the Heads of Competition
Authorities Dialogue on Regulation of Digital Markets”,
7
made by the competition authorities of
Nigeria, South Africa, Mauritius, Kenya and Egypt. This effort paves way for greater collaboration in digital
1
Enyinnaya Uwadi, The Nigerian Federal Competition and Consumer Protection Act repeals the Consumer Protection
Council Act in place of the Consumer Protection Council, Concurrences, Art. No. 91886, E-Competitions (Jan. 30, 2019,
https://www.concurrences.com/fr/enyinnayauwadi.
2
Sections 107-109 of the Federal Competition and Consumer Protection Act (FCCPA) 2019.
3
Enyinnaya Uwadi, Regulation of Cartels in Emerging Economies: Optimal Enforcement Options for Nigeria, 5(3) MIYETTI
QUARTERLY L. REV. 11 (2020), available at https://ssrn.com/abstract=3865652.
4
Enyinnaya Uwadi, Prospects and Challenges of Implementing Competition Law in Developing Countries: A Review of the
Nigerian Federal Competition and Consumer Protection Act, 2019 (Sept. 04, 2019), https://ssrn.com/abstract=3863955.
5
FCCPC Nigeria (@fccpcnigeria), Twitter (Aug 26, 2019, 11:53 AM),
https://twitter.com/fccpcnigeria/status/1166015925860163585.
6
International Fellows Program, FED. TRADE COMMN, https://www.ftc.gov/policy/international/international-fellows-
program.
7
Joint Statement of the Heads of Competition Authorities Dialogue on Regulation of Digital Markets (Feb. 18, 2022),
https://competitioncommission.mu/wp-content/uploads/2022/02/Joint-Statement-Final-18_02_final-version.pdf.
Building Social Capital in a Hard-Knock Regulatory Terrain: Lessons for
New Competition Authorities
Enyinnaya Uwadi
University of East Anglia; Centre for Competition Policy (United Kingdom)
International Committee | ABA Antitrust Law Section
March 2022
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LEGAL_38525205.2
markets and ensures that the FCCPC will benefit from cross-fertilisation of ideas and regulatory
competence of more advanced African competition regimes like South Africa.
Through developing capacity, the FCCPC has been able to enforce the provisions of the FCCPA for
the benefit of Nigerian consumers. The improved expertise has proved essential in helping the FCCPC to
detect, investigate and successfully sanction or prosecute anticompetitive conduct. It has also given the
FCCPC the confidence to open investigations against powerful undertakings, where the former has a
probable cause to believe that the latter’s actions deserve closer scrutiny. Evidence of successful
enforcement or investigations against big businesses will earn the FCCPC good press and public acclaim,
as occurred in the alleged collusion investigations into Nigeria’s shipping
8
and aviation
9
industries.
In the shipping industry, the FCCPC regulatory antenna was triggered by the over 250% increase
in the cost of shipping from China to Nigeria over 13 months.
10
The significant increase over a short period
of time warranted a closer review by the competition authority. Upon conducting a court-sanctioned dawn
raid on five shipping companies, the FCCPC discovered some concerted practices and prohibited
behaviours, like exclusive arrangements and restrictive understandings, among competitors which were
anti-competitive and limited the ability of smaller players to enter the market.
11
Relatedly, in February 2022, Nigerian domestic airline passengers were greeted with a new pricing
regime. According to CNBC Africa, following a meeting of the Airline Operators of Nigeria (AON), domestic
airlines increased fares by 63% and attributed the increase to the rising cost of aviation fuel and overall
cost of operation.
12
The argument in support of the price increase is that the cost of operation is in dollars
while their revenue is in the local naira currency, which is highly volatile. A top airline official argued that
the naira was devalued at least three times over the past three years, yet, the airlines maintained their
baseline fares and never increased prices within the same period. Therefore, the recent increase was
essential for the survival of domestic carriers. In response, the FCCPC and the Nigerian Civil Aviation
Authority (NCAA) jointly opened an investigation over the concurrent increase. As the investigation
progressed, the FCCPC issued an interim order
13
prohibiting the airlines from performing the agreement
reached at the AON’s meeting regarding a price increase, as the market cannot be left in its current state
and required an urgent regulatory intervention to correct the distortion pending the conclusion of the
investigation.
The FCCPC’s interim action against the airlines was welcomed by a huge section of the public and
made headline news on the major local and international press. Airline passengers had complained bitterly
about the hike in prices and urged the government to intervene.
14
Through these regulatory interventions that challenged the heart of anti-competitive market
practices in Nigeria, the relatively unknown FCCPC has within three years become the toast of the town,
with Nigerian consumers looking up to it as a prince in shining armour set to rescue them from the clutches
of hard-knock business environments. However, as cartel cases are criminal in nature and evidence-based,
8
Press Release, Fed. Competition & Cons. Prot. Commn, Federal Competition & Consumer Protection Commission
Launches Cartel and other Anti-Competitive Conduct Investigation into Shipping and Freight forwarding Industry (Oct. 24, 2021),
https://www.fccpc.gov.ng/news-events/releases/2021/10/24/federal-competition-and-consumer-protection-commission-launches-
cartel-and-other-anti-competitive-conduct-investigation-into-shipping-and-freight-forwarding-industry/.
9
Press Release, Fed. Competition & Cons. Prot. Commn, Interim Statement Regarding Coordinated Increase in Air Fares
by Certain Scheduled Domestic Airline Operators (Mar. 3, 2022), https://www.fccpc.gov.ng/news-
events/releases/2022/03/03/interim-statement-regarding-coodinated-increase-in-air-fares-by-certain-scheduled-domestic-airline-
operators/.
10
Arise News, Arise Exclusive on 3-Years of FCCPC Under Babatunde Irukera, YouTube (Dec. 23, 2021),
https://www.youtube.com/watch?v=tkRk-A58Q_A.
11
Id.
12
Nigerian airlines hike fares by 63%, CNBC AFRICA (Feb. 21, 2022), https://www.cnbcafrica.com/media/6298381370001/.
13
Supra note 9.
14
Jerry Uwah, The Blame Game In Airfare Hike, BLUEPRINT (Feb. 28, 2022), https://www.blueprint.ng/the-blame-game-in-
airfare-hike/.
International Committee | ABA Antitrust Law Section
March 2022
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LEGAL_38525205.2
it remains to be seen whether the ongoing investigations will lead to successful prosecutions. In any event,
with the current strides recorded by the FCCPC in key industries of shipping and aviation, it is believed
that the nature and manner of operations within these sectors and other related industries will change
significantly during and upon the conclusion of this investigation.
Enyinnaya Uwadi is Commonwealth Doctoral
Scholar in Competition Law and Emerging Market,
University of East Anglia and a member of the
Centre for Competition Policy, UK.
Email: enyinnayauwadi@gmail.com
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