Authors: Nkonzo Hlatshwayo – Director, Phuti Mashalane – Senior Associate & Ave Ralarala – Associate
The much-anticipated amendments to Botswana’s competition law regime have come into operation. The most notable changes include the way in which the competition authority will function as well as its approach to cartel conduct, abuse of dominance and mergers. In addition, the Minister of Investment, Trade and Industry has introduced new Competition Regulations and Consumer Protection Regulations in order to strengthen the competition regime in Botswana.
Composition and Mandate The institutional changes are two-fold. Firstly, the powers of the authority have been extended to include the ability to hear and determine consumer complaints. Secondly, the previous competition authority has been renamed the Competition and Consumer Authority (the “Authority”). This Authority will be governed by the Competition and Consumer Board (the “Board”), which is the body responsible for the direction of its affairs. Importantly, the amendments also include the establishment of a Competition and Consumer Tribunal (the “Tribunal”) that will perform an adjudicative role in proceedings brought before it.
This is a significant departure from the way that the competition authority functioned under the 2009 Competition Act. The old regime made provision for the establishment of a body called the Competition Commission (the “Commission”). The Commission was responsible for, among others, the direction of the competition authority’s affairs and adjudicating any matters that were brought before it by the competition authority.
In terms of the new Competition Act, given that the Authority will report to a separate Board that does not give any policy direction regarding the affairs of the Authority and that a new Tribunal has been established to perform an adjudicative role, there will be complete independence between the institutions. Accordingly, it appears that any concerns regarding a lack of independence of the institutions have been successfully dealt with by the latest amendments to Botswana’s competition regime.
Criminal Liability and Financial Penalties
The new Competition Act introduces criminal liability for officers or directors of an enterprise who contravene section 25 (Prohibition of Horizontal Agreements) or section 27 (Prohibition of Vertical Agreements re: resale price maintenance) of the Competition Act. In this regard, an officer or a director who is found to have engaged in cartel conduct may be liable for a fine of up to BWP100 000 or a term of imprisonment not exceeding five years, or both. An officer or a director who is found to have engaged in resale price maintenance may be liable for a fine of up to BWP50 000.
Abuse of Dominance
While the 2009 Competition Act only made provision for a general “catch-all” prohibition of abuses of dominance, section 31 (Abuse of Dominance) of the new Competition Act introduces a list of specific types of conduct that could potentially constitute an abuse of dominance following an investigation by the Authority. The list includes: (i) predatory conduct, (ii) tying and bundling conduct, (iii) loyalty rebates, (iv) margin squeeze, (v) refusal to supply or deal with other enterprises, including refusal to access an essential facility, (vi) requiring or inducing any customer not to deal with competitors, (vii) discriminating in price or other trading conditions, and (viii) exclusive dealing. Going forward, it will be interesting to see the impact that this specific amendment might have on the Authority’s approach to enterprises that abuse their dominant position, and on the Authority’s ability to prove any of the types of conduct listed in this section of the new Act.
Merger Control
The new Competition Act introduces financial penalties for enterprises which, following an investigation, are found to have either failed to notify a merger or implemented a merger without obtaining the necessary clearance from the competition authorities. Enterprises that are found to have engaged in such conduct will be liable to a fine not exceeding 10% of the consideration or the combined turnover of the parties involved in the merger, whichever is greater.
Conclusion
It is clear that both enterprises and individuals involved in any transactions or business in Botswana will have to exercise a great amount of caution, as a failure to comply could attract enforcement action from the Authority, and possibly result in the enterprises or the individuals being liable for financial penalties, imprisonment or both.
For more information, please contact:
Nkonzo Hlatshwayo – Director
Phuti Mashalane – Associate
Ave Ralarala – Associate
Lawtons Africa is a South African law firm. With roots that grew out of seeds sown in down-town Johannesburg in 1892, our history features various changes and different names. Our team of lawyers, including directors, consultants, associates and candidate attorneys is highly qualified, market-recognised and skilled. For further information, visit www.lawtonsafrica.com