Competition law in the Central African Economic and Monetary Community (CEMAC) was recently revised, with the introduction of a new regulation that took effect on 7 April 2019. This regulation replaces the previous 1999 regulation adopted soon after CEMAC’s creation. As healthy competition is essential to the Community’s economic development, the 2019 regulation establishes a modern framework of uniform rules covering anti-competitive practices and concentrations, which businesses can ill afford to ignore. It also deals with the risks posed to free competition by state subsidies.
Businesses should be aware that the new regulation is far-reaching in its scope. It applies to all activities of production, distribution and service provision, no matter whether they are performed continuously or intermittently, in the private or public sectors, or by companies or individuals. It also extends to anti-competitive conduct by businesses outside the CEMAC area that could distort competition within it. On the other hand, the regulation does not override any special rules applicable to certain sectors, including agriculture, the audiovisual industry, banking, civil aviation, energy, forests, insurance, oil, ports, telecommunications, transport and water. The CEMAC Commission can propose measures to ensure coordination between the regulation and the rules applying to these sectors.
As far as anti-competitive practices are concerned, the regulation prohibits any express or tacit agreements or collusion whose purpose or effect is to prevent, restrict or distort free competition within the CEMAC area. As examples of such practices, the regulation cites the following:
- limiting competition or market access for competitors
- obstructing free price setting through artificial price hikes or dips
- restricting or controlling production, markets, investments and technical development and progress
- concerted refusals to deal
- sharing markets or sources of supply
- collusive bidding.
The agreements and decisions underlying such practices are deemed null and void.
The regulation provides, however, for certain exceptions to these prohibitions. For example, anti-competitive practices that bring economic progress (e.g. by creating or preserving jobs), allow users a fair share of the resulting benefit, and enable competition to continue for a substantial part of the products in question will escape prohibition, provided the practices are indispensable to attaining such progress. Also exempt from the prohibition are anti-competitive practices approved by the CEMAC Commission on the grounds that they lower the cost price for consumers, rationalise production and distribution, raise profitability, encourage research and innovation, improve product quality, or enhance the competitiveness of CEMAC businesses especially in international markets.
Another practice outlawed by the regulation is the abuse of a dominant position. The regulation lists the following as examples of such conduct:
- imposing unfair pricing or trading conditions
- limiting innovation, production, markets or technical development to the detriment of consumers
- applying dissimilar conditions to equivalent services, thereby putting the suppliers of certain services at a competitive disadvantage
- making the conclusion of contracts subject to the acceptance of unrelated additional services
- refusing the sale of products or services
- preventing another business from accessing the market
- severing commercial relations simply because the other party refuses to accept unjustified commercial terms
- imposing limitations on the resale or exportation of the products supplied
- setting prices abnormally high or low in order to block market access for a particular business or product.
Mergers and concentrations between companies will be considered to have an impact at Community level, and therefore to fall under the exclusive competence of the Community, when the combined turnover of the parties involved within the CEMAC common market exceeds 10 billion CFA francs or, together, the parties hold more than 30 per cent of the market. Community authorities will also be competent if the member state in which the merger or concentration occurs does not have a competition authority or if the operation is likely to have an impact in more than one CEMAC member state. Mergers and concentrations will be deemed unacceptable if they significantly reduce competition and thereby restrict choices for market participants or limit access to markets and sources of supply.
The new regulation gives the Community competition authorities wide-ranging powers to ensure that businesses comply with its provisions. Matters of policy come within the competence of the CEMAC Commission, while technical matters fall within that of the newly created Community Competition Council (CCC). The CCC has both consultative and investigatory powers. It may issue opinions of its own accord or at the request of Community bodies, governments and parliaments of CEMAC member states, and Community-wide professional and consumer organisations. It also examines all anti-competitive practices referred to it by the Commission, national competition authorities, or any professional and consumer organisations or businesses affected by such practices, as well as any mergers and concentrations that have an impact on the Community. To this end, it may initiate proceedings and carry out investigations.
The investigations may be of two kinds, referred to as simple or in-depth. In a simple investigation, the investigators are authorised to access business premises, to ask for any relevant information, and to take away documents that are voluntarily produced. In-depth investigations involve searches, during which the investigators may demand that documents be handed over and may themselves seize the documents. They are intended for serious infringements of competition law or where there is a risk of loss of evidence, and they can only be carried out on the basis of a reasoned decision of the executive director of the CCC and are overseen by the courts in CEMAC member states that provide for such oversight. In both types of investigation, a written record is drawn up detailing the information communicated orally and any documents seized. The provisional findings of investigations into anti-competitive practices and any resulting complaints are set out in a report, to which the parties concerned may reply. The report and the parties’ replies are then forwarded to the executive director and members of the CCC and a decision is taken on the matter at a future session of the CCC, which the parties are invited to attend.
The authorities’ investigatory powers are subject to certain checks designed to protect the rights of businesses. For instance, businesses must be allowed to be present and be heard, they may be assisted by lawyers and other advisers, and due attention must be paid to the preservation of trade secrets. The warrant authorising the CCC to intervene must state the purpose of the investigation and the sanctions that will be applicable in the event of obstruction or the presentation of incomplete or false documentation.
Given the growing recourse to dawn raids in competition law enforcement elsewhere in the world, the possibility of surprise inspections by competition authorities should be considered a real possibility in CEMAC countries, too. Businesses therefore need to have a strategy in place to deal with them.
Before a dawn raid happens:
- Brief relevant staff on the practice of dawn raids and train them to respond appropriately.
- Devise an action plan for implementation in the event of a raid.
When an investigation is initiated:
- Immediately inform all relevant persons as defined in the action plan, including legal advisers.
- If necessary, make a general announcement to staff.
- Check the identity of the investigators and their authorisation to carry out the investigation.
- Read their mandate to ascertain the purpose and scope of the investigation and the penalties applicable in the event of obstruction, and make copies of the mandate.
- Request any further information that may be appropriate, such as the company departments and periods concerned by the investigation, its likely duration and the investigators’ modus operandi.
- Ask that business secrets be treated confidentially and, if necessary, apply to the executive director of the CCC for any evidence that qualifies as a business secret to be removed from the file.
- Take appropriate measures to protect privileged documents.
- Accompany the investigators at all times, record in writing what happens during the investigation, and keep copies of any documents handed over or seized.
- When answering questions, be precise, objective and to the point; avoid speculation and don’t be afraid to say ‘I don’t know’.
- Alert IT staff to the possible need for access to computer files and make sure that access can be provided quickly and efficiently.
- Consider setting aside a room for the inspection of documents by the investigators.
After the investigation:
- Hold a debriefing meeting with staff who were involved in the investigation.
- Consult legal advisers on follow-up action, including responding to the findings of the investigation, taking measures to comply with the decision of the competition authorities, or ultimately challenging the decision in the Community Court of Justice.
- Consider whether wider communications (e.g. to the market or suppliers) are necessary to protect the company’s reputation and brand image.
The importance of the new CEMAC competition regulation should not be underestimated. Although at national level competition law may be underdeveloped or even non-existent, the regulation evidences a determination at Community level to create a fair competitive environment across all CEMAC countries. There is no reason to think that Africa will not follow the example of jurisdictions in other regions where dawn raids have become a regular component of competition law enforcement. Always a daunting experience, dawn raids are best weathered with appropriate legal advice and support, which John W Ffooks & Co.’s team of experienced lawyers are well placed to provide.
- Droit Afrique, Règlement relatif à la concurrence [CEMAC Regulation Relating to Competition], Regulation No. 06/19‐UEAC‐639‐CM‐33
- Droit Afrique, Cameroun/Documentation/Concurrence, consommation
- Droit Afrique, Congo/Documentation/Concurrence, consommation
- Droit Afrique, Gabon/Documentation/Concurrence, consommation
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- Gabon Review, Concurrence: Le Gabon s’arrime aux normes de la CEMAC
- International Competition Network, Dawn Raids
- IR Society, Mitigating Risk in Dawn Raids: Advice for IROs