Malawi Competition Policy and Law An overview

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Malawi Competition Policy and Law - An overview

• by
• Paul Kwengwere,
• Commissioner
• Malawi Competition Commission

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Outline of the presentation

• Overview of Competition Policy and Law in Malawi
• Background to Policy
• Focus of the Policy
• The Competition and Fair Trading Act
• Highlights of Cases
• Anti-competitive Practices
• Mergers and Acquisitions
• Benefits of Regional Interaction

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Overview Of Competition Policy and Law in
Malawi
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1. BACKGROUND

• Government adopted Competition Policy in
  September, 1997.
• Adoption of policy necessitated by globalisation
  and market oriented reforms i.e. deregulation,
  privatisation, and liberalisation of prices,
  trade, FDI.
• Major reason was to create an enabling
  environment for business and promote economic
  efficiency and consumer welfare

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SCOPE OF COVERAGE OF THE COMPETITION POLICY

• The Competition Policy covers three main areas
• reducing Restrictive Business Practices
• counter unfair business practices and afford the
  consumer protection
• establishment of an organ to lobby for change to
  legislation impeding competition and make
  appropriate recommendations to relevant
  institutions

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Focus of the Policy

• Business behaviour calculated to eliminate or
  reduce competition including price fixing,
  collusive tendering or customer allocation and
  tied sales
• Market structures which permit abuse by an entity
  in a position of market power
• Government legislation which may impact on the
  operation of the free market in Malawi and
• Unfair business practices which have an impact on
  consumers.

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THE COMPETITION AND FAIR TRADING ACT

• As one way of implementing the Competition
  Policy, Government passed the Competition and
  Fair Trading Act in 1998. The Act came into force
  on 1st April 2000. The Act seeks to
• encourage competition in the economy by
  prohibiting anti-competitive trade practices
• establish the Competition and Fair Trading
  Commission
• regulate and monitor monopolies and
  concentrations of economic power
• protect consumer welfare

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continued

• strengthen the efficiency of production and
  distribution of good and services
• secure the best possible conditions for the
  freedom of trade
• facilitate the expansion of the base of
  entrepreneurship and to provide for matters
  incidental thereto or connected therewith

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THE ACT

• The Act is in Six Parts
• Preliminary
• Competition and Fair Trading Commission
• The Secretariat
• Financial Provision
• Anti-Competitive Trade Practices, etc
• Miscellaneous Provisions

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Highlights of Some of the Cases Undertaken
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Vertical anti-competitive trade practices
Merger Control Regulation

• Section 32 (2) of the Act covers anti-competitive
  trade practices including Predatory conduct e.g.
  below-cost pricing method Discriminatory pricing
  and terms Exclusive dealing Tied-selling
  Market/quantity restrictions Resale price
  maintenance
• Section 35 of the Act - control of mergers and
  takeovers.
• A merger is present whenever a takeover (or a
  merger) is completed within Malawi (basically, an
  acquisition of the assets or the shares of a
  domestic enterprise)

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Related to Section 32.

• Exclusive Dealing Arrangement and Resale Price
  Maintenance by Portland Cement Company (1974)
  Limited.
• misuse of market power by Portland Cement Company
  (PCC)
• PCC restricted the distribution system of cement
  to selected individuals and that the number of
  distributors in any given area was deliberately
  restricted
• agent purchased cement at ex-factory prices and
  that PCC recommended selling price to agents as
  well as other distributors.

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Resolution by the Commission

• PCC to substantially increase the number and
  spread of its agents in both the geographic and
  ethnic dimensions to ensure equitable access to
  this product of national importance
• the determination of prices of cement on the
  market be left to market forces
• The Commission requested PCC to amend the
  Standard Agency Agreement and furnish the
  Commission with a copy of the amended version of
  the Agreement for verifications

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Cases Related to Section 35

• Cases that were of domestic effects, as both
  enterprises were already operating in Malawi
  before the merger either directly or through
  subsidiaries or branches. Two such cases that
  have been handled by the Commission are
• Takeover of SSI Holdings by G4S International
• Takeover of Mobil Malawi by Total  

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Related to Section 35 Contd

• Cases with domestic effects, as only one of the
  enterprises was operating in Malawi before the
  merger.
• Takeover of Dulux Malawi Limited by Ergon
  Investment International
• Takeover of Clark Cotton Malawi Limited By
  Cargill Incorporated

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Related to Section 35 Contd

• Cases that involved acquisition of the assets or
  shares of a domestic enterprise by an
  international firm or between two domestically
  operating enterprises
• Takeover of Baobab Pensions By AoN Malawi Limited
• Sale of Tobacco Processing Factory by Alliance
  One to Africaleaf Processors Limited
• Takeover of Malawi Distilleries Limited (MDL) by
  the Bottling and Brewing Group Limited (BBGL)
• Acquisition of 60 percent shareholding in Telekom
  Networks Malawi (TNM) by MTL Mobile Limited

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The Benefits of Regional Interaction
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Technical Expertise

• Development of the Policy and Act
• technical knowledge on how to handle some cases
  that came to the commission.
• Establishment of secretariat
• Rolling of certain programs (advocacy program

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Capacity Building

• Training of staff
• Induction of Commissioners
• General Establishment

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THANK YOU FOR YOUR ATTENTION