Nigeria: The Federal Competitors and Shopper Safety Fee Talks to Primerio in Relation to Competitors Regulation Enforcement Tendencies and Coverage


*Compiled by Jemma Muller and Tyla Lee Coertzen

Introduction

On 25 November 2021, Primerio Worldwide hosted an internet “fireplace chat” with representatives from the newly established Nigerian Federal Competitors and Shopper Safety Fee (the “FCCPC”). The dialogue, led by Michael-James Currie (Director at Primerio Worldwide), make clear the FCCPC’s practices and focus factors which had been highlighted by Eme David-Ojugo (Chief Authorized Officer on the FCCPC) and Yemisi Oluyode (FCCPC merger’s analyst).

[If you would like to access the full discussion, click here]

The significance of the newly established FCCPC in Nigeria is undisputed. Nigeria’s GDP is the most important economic system on the African continent. As such, good competitors regulation coverage is of great significance not solely regionally however throughout the continent extra usually. Because the African Continental Free Commerce Settlement and competitors coverage in Africa is being negotiated, it’s crucial that there are sturdy voices from a wide range of nationwide territories and businesses, significantly from these economies that are extra developed. This may guarantee balanced coverage and efficient competitors enforcement which prioritises free commerce.

This Primerio fireplace dialogue with the FCCPC supplied nice perception into the present state of play with regards to coverage and enforcement tendencies in Nigeria.

The Standing of the Companies

The FCCPC and the Competitors and Shopper Safety Tribunal (the “CCPT”) had been established by the Federal Competitors and Shopper Safety Act, 2018 (the “FCCPA”) in March 2021 and are the  competitors and client safety authorities in Nigeria. The authorities had been established as a way to promote truthful, environment friendly and aggressive markets within the Nigerian economic system.

The FCCPA is, in lots of respects, just like the South African Competitors Act,1998 (as amended) (the “SACA”). Moreover, Ojugo famous that the FCCPC is lucky to have expertise from the world over to make the most of and that worldwide antitrust precedent serves as a information to the FCCPC.

Presently, the FCCPC is energetic in each merger management and within the enforcement of restrictive practices and has performed a proactive function in pursuing its goals. Ojugo described the FCCPC as having an “open door coverage” whereby it encourages events to interact immediately with the FCCPC to help the FCCPC in growing and bettering its practices accordingly.

In 2021, The FCCPC revealed numerous Draft Rules and Tips which it’s within the strategy of finalising. Amongst these are the:

Restrictive Practices Enforcement – the FCCPC’s use of Daybreak Raids

Throughout the “fireplace chat”, the FCCPC emphasised using daybreak raids in its investigative processes in accordance with part 27 of the FCCPA. Daybreak raids are usually unannounced and supply the authority with numerous powers to examine, search and make seizures. On this regard, the FCCPC has acquired specialist coaching from the Federal Commerce Fee (the “FTC”). The FCCPC has made use of daybreak raids, significantly within the freight forwarding business.

Previous to conducting daybreak raids, the FCCPC is required to acquire a warrant from the Decide of the Nigerian Federal Courtroom of Attraction. Beneath part 29 of the FCCPA, such a warrant permits the FCCPC to:

  • enter and search the place or premises specified on one event inside 30 days of subject at an affordable time;
  • use affordable help to take action;
  • use as a lot power as is critical to achieve entry or breaking open any article or factor;
  • search and take away paperwork or something which may be thought of related to the investigation;
  • make copies of paperwork which may be thought of related to the investigation; and
  • to require any particular person to breed or help in offering related data.

The FCCPC is barely permitted to conduct a search with out a warrant if it has motive to consider that an entity has contravened the FCCPA or any associated Rules. On this occasion, a sworn affidavit from the Government Vice Chairman shall be required.

Throughout the “fireplace chat”, Currie explored the FCCPC’s due course of and procedural equity requirements that will ordinarily be adopted by the FCCPC throughout such investigations. In response, Ojugo talked about how the FCCPC will both institute investigations by itself initiative or following receipts of third celebration complaints. As regards to the latter, Ojugo famous that the FCCPC will normally perform surveillance as a way to confirm the intel they obtain. Ojugo defined that the FCCPC makes use of a lot of these procedures, versus requesting data or paperwork, because the FCCPC is effectively conscious that market individuals won’t usually be prepared to offer related supplies that will help the FCCPC in its investigations.

Ojugo famous that whereas the FCCPC is given broad investigative powers, it should acquire authorisation by a Decide of the Federal Excessive Courtroom, and furthermore that industries and companies might be assured that the FCCPC won’t are available in as a “bull in a China store”. Fairly, the FCCPC is intent on growing its capability and understanding related markets earlier than taking drastic interventionist measures. The FCCPC goals to keep up order, inform companies of their rights (significantly to authorized illustration) and goals to keep up coordination and cooperation in executing a search warrant. Moreover, whereas the FCCPC is entitled to go looking private gadgets, it would solely utilise data that’s related to its investigations. On this regard, Ojugo identified that it’s a legal offence to hinder the FCCPC’s investigation and the FCCPC could select to prosecute on this occasion. Furthermore, refusal to cooperate with the FCCPC will function an aggravating issue when the FCCPC considers and calculates any resultant administrative penalties.

General, the strategy the FCCPC has adopted in relation to restrictive practices enforcement encapsulates subtle investigative instruments and is commendable. One potential danger foreseen on this regard is that the FCCPC retains possession of all data versus a 3rd celebration.

Leniency Coverage, Penalty Tips, Prison Sanctions

An vital dialogue level through the fireplace chat associated to the FCCPC’s strategy in relation to leniency, penalties and legal sanctions.

In response to regulation 26 of the FCCPC Restrictive Agreements and Commerce Practices Rules (the “RATPR”), any celebration which is concerned in a restrictive settlement or commerce follow which is in contravention of the FCCPA could apply for immunity from sanctions or for lowered sanctions below the FCCPC’s Leniency Guidelines. Whereas the RATPR check with Leniency Guidelines, it’s to be famous that these should not but obtainable. It’s anticipated that the FCCPC will introduce a proper algorithm close to leniency in the end. Presently, the FCCPA does cater for leniency albeit on an off-the-cuff foundation. On this regard, the FCCPC has the discretion to grant immunity and does so to a celebration who’s the primary to submit proof that may help the FCCPC in its investigation. Furthermore, cooperation with the FCCPC could end in it deciding to reduce the executive penalty which is in the end levied in opposition to the infringing however disclosing celebration. Moreover, the FCCPC requires an infringing celebration to make a full disclosure and admit their legal responsibility by means of a written endeavor. Nevertheless, Ojugo notes that even when a celebration enters into cooperation with the FCCPC, it doesn’t essentially imply that such a celebration is free from prosecution. Ojugo advised that the FCCPC would require an act of contrition and full disclosure from alleged offenders to ensure that the FCCPC to contemplate offering such an offender with leniency. Nevertheless, the FCCPC retains discretion in deciding whether or not leniency is supplied. There’s a foreseen danger on this regard. Events who allegedly contravene the FCCPA must present a full disclosure of their conduct in the event that they want to be granted immunity however immunity isn’t assured and events should still be answerable for legal prosecution.

As regards to penalties, the FCCPA contains penalties for particular offences, particularly price-fixing, conspiracy and bid-rigging. As talked about above, the FCCPC lately revealed Rules concerning the calculation of administrative penalties. Oluyode confirmed that the components for calculating administrative penalties is sophisticated and can’t be achieved by events alone. When deciding on a penalty, the FCCPC will utilise mitigating and aggravating elements as a way to decide a celebration’s legal responsibility, and in the end retains the discretion when deciding on the last word administrative penalty to be levied. As such, it’s crucial that events cooperate absolutely with the FCCPC as this can possible work of their favour, relying on the character of the offence. Oluyode additionally famous that whether or not a worldwide agency or a neighborhood agency is fined will rely on the circumstances of every case and which agency has brought about the violation. The FCCPC will possible wonderful a agency on its worldwide turnover in an occasion the place it’s the world agency who engages in or causes contraventions of the FCCPA. Native turnover is for use when the native agency engages in or causes a violation.

The FPPCA does make provision for legal offences for competitors associated violations. On this regard, the FCCPC will train its discretion in deciding whether or not to prosecute legal offences per part 113(2) of the FFCPA whereby the FCCPC is given powers to prosecute or to refer violations of legal offences below the FCCPA to the Lawyer-Common of the Federation and the Minister for Justice. It’s, nonetheless, the Nigerian courts who’re tasked with convicting the crime.

Merger Management

The FCCPC is chargeable for analysing merger transactions to forestall any detrimental impacts on competitors arising in consequence thereof. It has carried out a suspensory merger regime. Presently, the FCCPC has not rejected any mergers however has accepted numerous mergers topic to structural and behavioural situations. Currie counseled the FCCPC on the implementation of its on-line merger notification portal which it carried out on account of the Covid-19 pandemic. It permits events to inform their mergers and participate in pre-consultation notifications with the FCCPC in an environment friendly and complicated method. Oluyode famous that since its implementation, the operating of the portal has been easy and merger notifications have been acquired by means of the portal.

Prior to now yr, the FCCPC has made vital improvement in merger management by publishing the varied Rules and Tips, that are accessible right here on the FCCPC web site. The FCCPC has additionally catered for a Destructive Clearance process permits merger events to determine readability on whether or not their transaction will meet the definition of a merger and whether or not it have to be notified to the FCCPC. The FCCPC recognises that client safety requires a joint accountability by totally different regulators and businesses. It supposed to offer for regulatory overlap as a way to guarantee full protection and safety of customers. As such, whereas the FCCPC bears the accountability of general oversight over client safety, it intends to develop strategic alliances and encourages collaboration with totally different sector regulators.

 Part 92 of the FCCPA offers {that a} merger happens when “a number of undertakings immediately or not directly purchase or set up direct or oblique management over the entire or a part of the enterprise of one other endeavor” and will happen by means of the acquisition or lease of shares; an curiosity in belongings of an endeavor; the amalgamation or different mixture with the endeavor; or a three way partnership. Notifiable mergers should meet the above talked about definition of a merger in addition to meet the related merger thresholds set by the FCCPC. Mergers shall be notifiable both the place the events to the merger in Nigeria have an annual turnover of above NGN 1 billion within the yr previous the merger; or the place the annual turnover of the Nigerian goal agency was greater than NGN 500 million within the yr previous the merger. Mergers which don’t meet the above threshold are labeled as small mergers and needn’t notify their transaction, though part 95(3) of the FCCPC offers that inside six months of the implementation of the merger, the FCCPC could require notification whether it is of the opinion that the merger could considerably stop or reduce competitors available in the market.

Mergers that meet the thresholds should acquire the FCCPC’s permission previous to implementation of the merger. As talked about above, small mergers could also be carried out with out prior permission until in any other case stipulated by the FCCPC. Oluyode clarified that whereas beforehand there was some confusion concerning the submitting charges of foreign-to-foreign mergers, the FCCPC requires solely the Nigerian native turnover for use to calculate a submitting price.

On this regard, foreign-to-foreign merger approval is required by the FCCPC the place a transaction happening exterior of Nigeria may have the impact of altering the management of a enterprise, any a part of a enterprise or any asset of a enterprise present in Nigeria.

Of accelerating significance in African antitrust regulation is the consideration of public curiosity elements in merger notifications. Whereas the FCCPC representatives famous that the situations the FCCPC has already imposed have associated primarily to competition-based issues, versus public curiosity issues, this doesn’t imply that the FCCPC doesn’t regard public curiosity issues as vital. The FCCPA prescribes that the FCCPC will think about whether or not a transaction might be justified on substantial public curiosity grounds. On this regard, the FCCPC will think about the elements in part 94(4) of the FCCPA, particularly: the impact on a specific industrial sector or area; employment; the power of nationwide industries to compete in worldwide markets; in addition to the power of small and medium scale enterprises to turn out to be aggressive. Oluyode confirmed that the Minister of Commerce, Trade and Funding could, at any cut-off date throughout a merger evaluation, make his personal representations regarding substantial and merger-specific public curiosity issues which shall be thought of by the FCCPC.

Presently, the FCCPC has not revealed any of its choices, nonetheless, it intends to start publishing  its choices on its web site in the middle of 2022 for public entry.

What to anticipate going ahead:

The FCCPC is ready out for fulfillment, significantly having regard to the big selection of precedent obtainable to it. As beforehand talked about, the FCCPA was modeled off of South African competitors laws and the FCCPC intends to make use of the precedent of well-established jurisdictions similar to these in Europe, the US and South Africa. Presently, the FCCPC is engaged on finalising its draft laws and it’s important that that is achieved timeously for the needs of achieving readability.

As regards to the extent to which events who need to attain immunity from the FCCPC should admit their legal responsibility,  Currie famous that in lots of jurisdictions there may be query on whether or not an act of contrition is required or whether or not events needs to be permitted to pay a penalty with out a formal act of contrition of their settlement. Typically, the latter is a most popular possibility as events normally want to pay a penalty to keep away from the prices of litigation and civil follow-on damages. In response, Ojugo famous that because it stands, the FCCPC presently insists that events take absolute accountability for his or her actions. Consequently, admission is an absolute requirement if a violating celebration needs to learn from the FCCPC’s leniency program. It stays to be seen whether or not an act of contrition will proceed to stay an absolute requirement. This may possible be addressed within the FCCPC’s Leniency Guidelines as soon as they’re revealed.

[Michael-James Currie is a competition lawyer and Director at Primerio. He serves as the Global Law Expert for Competition Law in Nigeria and is considered a leading competition lawyer across Africa including Best Lawyers for Competition Law in South Africa. He can be contacted at [email protected]]

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