Comesa competition commission regional sensitisation workshop in Livingstone, Zambia |13 October 2014

Journalists urged to enhance competition culture in markets

The Common Market for Eastern and Southern Africa (Comesa) competition commission recently organised a regional sensitisation workshop for business reporters.

The aim of the workshop, held in Livingstone, Zambia, was to enhance the role of the media in exposing anti-competitive business practices and promoting a competition culture in markets.

The media was explained the role of good reporting on the competition policy within the Comesa, whose prime objective is to promote consumer welfare through encouraging competition among businesses. This objective is achieved by instituting a legal framework aimed at preventing restrictive business practices and other restrictions that deter the efficient operation of the market, thereby enhancing the welfare of consumers in the common market.

Comesa is a regional economic grouping composed of 19 member states namely; Republic of Burundi, Union of Comoros, Democratic Republic of Congo, Republic of Djibouti, Arab Republic of Egypt, State of Eritrea, Federal Democratic Republic of Ethiopia, Republic of Kenya, Libya, Republic of Madagascar, Republic of Malawi, Republic of Mauritius, Republic of Rwanda, Republic of Seychelles, Republic of Sudan, Kingdom of Swaziland, Republic of Uganda, Republic of Zambia and Republic of Zimbabwe.  The grouping’s objective is for a full free trade area guaranteeing the free movement of goods and services produced within Comesa and the removal of all tariffs and non-tariff barriers.

But only journalists from Kenya, Malawi, Mauritius, Seychelles, Rwanda, Swaziland, Uganda, Zambia and Zimbabwe were present at the workshop. Seychelles was represented by journalist Marylene Julie from the Seychelles NATION newspaper.

The Comesa competition law is, in this regard, a legal framework enforced with the sole aim of enabling the common market attain the full benefits of the regional economic integration agenda by affording a legal platform for promoting fair competition among businesses involved in trade in the common market and protecting consumers from the adverse effects of monopolisation and related business malpractices.

Among the topics discussed at the meeting were the definition and scope of competitive policy;  the relevance of competition policy in ensuring market efficiency and the protection of consumer welfare; overview of the Comesa competition regulations, its legal basis and implementation modalities.

Mergers and acquisitions were also explained and why competition authorities regulate them.

The media representatives also learned about their role in ensuring businesses notify transactions with competition authorities to avoid the dangers of anti-competitive business.

Hosting the workshop were the director and chief executive of the Comesa competition commission, George K. Lipimile; the manager for enforcement and exemptions Vincent Nkhoma and Willard Mwemba, manager (mergers & acquisitions).

In a message from the secretary general of Comesa Sindiso Ngwenya which was read by Mr Lipimile, Mr Ngwenya welcomed all media guests in Livingstone for the sensitisation workshop.
 
He said the gathering means that Comesa is reaching out to one of the most important key stakeholders in the region – the media.

He also said the media plays a great role in advancing the group’s advocacies in the regions and through it Comesa is creating awareness surrounding the current regional trade order and the need for a competition policy for the region.

“Today our specific governments as well as other economic operators and the general public are appreciating that competition policy has a key role to play in creating conditions of governance for the national, regional and global market place,” read the message.

Explaining why the competition policy is an important instrument, Mr Lipimile said it forces companies to run themselves efficiently, ensures a level playing field, forces economic operators to adjust changes and encourages innovation. Competitions lead to lower prices, greater dynamism in industry and most important of all greater job creation.

He added that competitive markets are needed to provide strong incentives for achieving economic efficiency and goods that consumers want in the quantities they want.

Regarding mergers and acquisitions and why competition authorities should regulate mergers, Mr Mwemba said the regulation of mergers is one of the most important components of any competition legislation and policy.

He explained that sometimes mergers are effected to eliminate competition.
“Therefore mergers need to be regulated so as not to injure the process of competition and harm consumers,” said Mr Mwemba.  

He highlighted that firms merging just to eliminate competition is detrimental to consumers as it results in poor quality goods, high prices, and fewer choices to them.

He also stressed the media’s role in ensuring firms notify their mergers so that they do not merge for ulterior motives.

The media can also avoid situations where firms  keep the merger a secret as they are mindful competition authority may reject their application.
“The media should act as watchdog by reporting mergers that have happened in the country,” said Mr Mwemba.

As for Mr Nkhoma, he said there are several ways in which anti-competitive business practices can harm consumer welfare and derail the gains of intra regional trade.

He said this during his presentation on anti-competitive business practices and the role of the media in enhancing the competition culture.

He gave examples of two well established firms in a country or region which are engaged in fierce competition with each other. Such competition leads them to independently introduce innovations aimed at outwitting each other on the market such as offering lower prices, discounts, rebates, etc.  The consumer benefits from this rivalry in terms of low prices, high quality, etc.

He explained the scenario where two firms decide that rather than compete, they agree on what quantities to supply on the market and at what price and quality.  The two firms will end up maximising profits at the expense of consumer welfare.

“This is what is described as a cartel, a situation where businesses rather than compete, seek to collude to exploit high prices from the market. Markets dominated by cartels will ultimately become complacent in their business decisions and as a result, consumers lose out by way of poor quality products, high prices, etc.,” said Mr Nkhoma.

He also said consumers may also have experienced scenarios where a firm or a collection of firms become so dominant in the market to the extent of behaving without effective constraints from existing competitors or potential competitors. Such dominant firms have an incentive to charge excessive prices knowing that consumers have no alternative of getting similar goods or services anywhere feasible.

In Seychelles the competition regulator is the Fair Trading Commission (FTC). In a recent press release, FTC said it is setting up a National Competition Policy which comes at a time when Comesa is seeking to harmonise the Comesa competition regulations with domestic competition law.

The National Competition Policy aims at guiding governments on applying laws, regulations, rules of policies that will allow businesses to compete fairly with one another in order to foster entrepreneurship activity and innovation.

The policy will also guide the commission in the enforcement of the Fair Competition Act 2009 and will provide a platform upon which national policies can be harmonised with the existing competition law.

M. Julie