Written by Yusto Habiye, Consultant
Competition laws foster the competitiveness of markets and businesses and also assist in consumer protection where consumers get the best products for the least prices, they do condition and heal market failures i.e. the private sector sometimes not doing what it ought to do in terms of proper and orderly competitive conduct in the marketplace.
In that regard governments apply competition laws to assist in fostering innovation by nudging businesses to constantly improve, bringing in new equipment and producing products that are competitive, and offering a wide range of choices for consumers. The competitive dynamics ensure that new firms come into the market and prosper if they perform well in the marketplace and less efficient firms become unprofitable and are forced out or closed down. These have implications for the industrialization and small business development efforts in an economy and industrial growth in general for Africa.
Correspondingly, Competition laws change the business landscape through Mergers and Acquisitions in the African economies because they inadvertently reduce the number of market players, they also assist in securing gains from trade liberalization and market opening. The reduction of barriers to trade and the removal of barriers to entry for
domestic and foreign investment can actually assist African economies to access its regional and continental markets and can spur competition for the production of goods and services unique to Africa through free trade, efficient production and industrial processes and proper market access.
Respectively, perfect competition refers to a free market in which all the players operate on a level playing field. Businesses base their competitive practices on price, quality, and customer service rather than, for example, predatory pricing. If a company engages in competitor bashing or the abuse of near-monopoly powers, it is not competing fairly. Perfect competition in businesses is characterized by; a Large Number of Buyers and Sellers: in this first condition, normally in perfect competition the number of buyers and sellers must be so large that none of them individually is in a position to influence the price and output of the industry as a whole.
In the market the position of a purchaser or a seller is just like a drop of water in an ocean, also, Homogeneity of the Product, where each firm should produce and sell a homogeneous product so that no buyer has any preference for the product of any individual seller over others. If goods will be homogeneous then prices will also be uniform everywhere, as well, Free Entry and Exit of Firms; in which firms should be free
to enter or leave the firm. If there is the hope of profit the firm will enter into business and if there is the profitability of loss, the firm will leave the business. Similarly, Perfect Knowledge of the Market; which buyers and sellers must possess complete knowledge about the prices at which goods are being bought and sold and of the prices at which others are prepared to buy and sell. This will help in having uniformity in prices, there is the issue of Perfect Mobility of the Factors of Production and Goods, where goods should be free to move to those places where they can fetch the highest price, similarly, Absence of Price Control: There should be complete openness in buying and selling of goods. Here prices are liable to change freely in response to demand and supply conditions.
Recently, Legal Efforts have been made by African governments to the attainment of perfect competition scenario that boosts economic growth in African countries; these initiatives include the development of laws and regulatory schemes that control competition in businesses, one can note,
Enactment of New competition legislations Since 2018, domestic competition legislation has been enacted in Angola and Nigeria. In Angola, these legislative developments have been bolstered by the establishment of the Angolan Competition Regulatory Authority,
which recently became operational. In Nigeria, the Federal Competition and Consumer Protection Act was signed into law in 2019. Madagascar adopted a new law, which modifies certain aspects of its competition laws. This is yet to be published in the official gazette.
Amendments to existing legislation There have been significant amendments to existing legislative regimes in a number of countries, including Egypt, Ethiopia, The Gambia, Morocco, Mozambique, South Africa, Zambia, and Zimbabwe. Egypt In 2018, a new merger notification form and guidelines were introduced by the Egyptian Competition Authority. Ethiopia Certain provisions of the competition law are currently being reviewed. The Gambia Guidelines regarding the interpretation of the Competition Act were published on 1 April 2019. Mozambique’s Regulations on competition in the air transport industry, which govern competition in this sector, were published in 2018.
The regulators; in April 2019, the COMESA Competition Commission approved three new guidelines, including the Guidelines on Market Definition, the Guidelines on Restrictive Business Practices, and the Guidelines on Abuse of Dominance. In May 2019, ECOWAS announced a new competition regulator with the launch of the ECOWAS Regional Competition Authority (“ERCA”). In June 2019, the East African Competition
Authority (“EACA”) finalized the EACA Outreach and Advocacy Strategy (“Strategy”), which aims to facilitate and promote awareness of competition policy across the region.
The article is written by Yusto Habiye, Consultant – at Linex Attorneys.