This commentary follows the presentation by Joyce Karanja, a partner at Bowmans Kenya and specialist in competition law. It contains some of the key points for competition rules in COMESA and the EAC.

Competition Law under COMESA and the EAC

What is COMESA

COMESA stands for the Common Market for Eastern and Southern Africa. It is created under the Treaty Establishing the Common Market for Eastern and Southern Africa.

COMESA comprises 21 Member States namely: Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Eswatini, Ethiopia, Libya, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Tunisia, Seychelles, Sudan, Somalia, Uganda. Zambia and Zimbabwe. Notably, some Member States have active domestic competition regulators, or are at various stages of implementing or drafting competition legislation.

COMESA Competition Commission

The COMESA Competition Commission (CCC) was formulated in 2004, but only started active enforcement from 14th January 2013. The CCC has jurisdiction on “all economic activities whether conducted by private or public persons, within or having an effect within, the Common Market”.

Merger Regulation

For a transaction to be notifiable to the CCC it must meet the following two tests:
i) Firstly: the test of a merger, as defined in the COMESA Competition Regulations, 2004. Essentially, the transaction must result in the direct or indirect change of control of a business in COMESA; and
ii) Secondly: the merger notification thresholds prescribed by the CCC (which are cumulative), namely:
a) Regional dimension test – the merger must have a regional dimension, that is, at least one of the merging parties must operate in two or more COMESA member states; and
b) Financial threshold test – the merger must meet the financial thresholds, which are:
• the combined turnover or assets (whichever is higher) of the merger parties in the Common Market must be at least USD 50 million; and
• at least 2 of the merging parties must have turnover or assets in the Common Market of at least USD 10 million; unless
• more than two thirds of each merging parties’ annual turnover or assets (whichever is higher) in the Common Market is achieved or held within one and the same COMESA Member State (in which case, a COMESA filing will not be required, and national notification obligations will apply instead).

Timelines

If a CCC merger filing is required, the parties must notify CCC within 30 days of the merging parties’ decision to merge (typically deemed to be the date of the merger agreement). The CCC is required to make a determination within 120 calendar days after receiving a complete merger notification. The CCC’s determination can either be to:
• approve the merger unconditionally or conditionally; or
• reject the merger.

Filing Fees

The merger filing fee is 0.1% of the merging parties’ combined annual turnover or value of assets (whichever is higher) in the Common Market, subject to a maximum of USD 200,000.

Penalty for Failure to Notify

If parties to a notifiable merger fail to notify it to the CCC, they may face financial penalties of up to 10% of either or both merging parties’ annual turnover in COMESA in the immediately preceding financial year. Further, the merger will have no any legal effect within COMESA.

COMESA Competition Commission: Anti-competitive Business Practices

Anti-competitive Business Practices (ABPs) are practices that would, as their object or effect, cause the prevention, restriction or distortion of competition in the Common Market. In enforcing ABP’s, the CCC has power to investigate potential infringements, issue public notices in the Member States, engage with potential offenders and take views from 3rd parties.

If found guilty, the CCC may issue appropriate orders, such as requiring the involved parties to:
• cease the offending conduct;
• pay a fine as determined by the CCC of up to 10% of their annual turnover in the Common Market; and/or
• take any other remedial action required by CCC.
There is also the possibility of consequent civil action against such a guilty party by affected consumers across the various Member States.
COMESA Competition Commission: Consumer Protection
The CCC’s mandate also includes the enforcement of consumer protection standards – in the supply of goods or provision of services within the Common Market. This includes:
• false or misleading information – such as relates to price, quality, history, place of origin etc;
• product safety standards – requiring compliance with prescribed safety standards;
• unsafe goods or other unconscionable conduct.
The CCC may order various remedial actions if a breach is identified, including ordering:
• payment of compensation to affected persons;
• a ban or recall of dangerous goods;
• the repair or replacement of defective goods.

East African Community Competition Commission (EACCC)

The EACCC, which was formed following the commencement of the East Africa Competition Act (the EACA) in 2014, is based in Arusha, Tanzania. However, the EACCC is not yet operational, but this is ongoing, with various Commissioners having been sworn in and procedural regulations being under development.

Member States

The EAC currently comprises 6 Member States namely: Kenya, Tanzania, Rwanda, Uganda, South Sudan and Burundi. It is noteworthy that the East African Community Member States are at various stages of competition law development namely:
• Kenya and Tanzania – which have very active competition regulators in the form of the Competition Authority of Kenya and the Fair Competition Commission respectively;
• Rwanda – which has a competition law and regulator established but it is not yet fully operational;
• Uganda, South Sudan and Burundi – which are at various early stages of developing their competition law regimes.
Scope

The EACCC is intended to be a “one-stop shop” for competition matters with a regional effect amongst East African Community Member States. Similar to the scope of the COMESA competition regime, the EACCC covers (i) merger regulation; (ii) restrictive business practices; and (iii) consumer welfare.

Commentary: Competition law in E. Africa Sept 2021