Tuesday, May 30, 2023
Global AddisA decade of combating anti-competitive practices in Africa

A decade of combating anti-competitive practices in Africa

By Samuel Bogale (Lilongwe, Malawi)

Nicknamed “the Warm Heart of Africa”, the landlocked country and home to over 10 ethnic groups, Malawi is believed to be one of the safest places in Africa. With a population of about 19 million people, most of them share ethnicity with neighboring countries such as Zambia and Mozambique.

Malawians often receive compliments for being the kindest people, which is why their country is called the “warm heart of the continent.”

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Like most nations in Africa, agriculture is the dominant sector in Malawi. Tobacco and tea production are major sources of the country’s export earnings. Having South Africa as the major origin of its imports, commodities such as gas, fertilizer, and coal make up the lion’s share of its import bill.

Air transport and conference tourism have not been the best-performing sectors for Malawi. Malawian Airlines, in which Ethiopian Airlines owns a 49 percent stake, has a fleet of only two aircraft and operates to seven destinations.

However, the Kamuzu International Airport has this week been busy since May 1, 2023, receiving guests from about 21 African countries and development partners globally for the commemoration of a decade of service for one of the 10 institutions under the Common Market for Eastern and Southern Africa (COMESA).

As the first regional authority safeguarding citizens of 21 nations in Eastern and Southern Africa from anti-competitive practices, the COMESA Competition Commission (CCC) turns 10 years old. Under the auspices of the COMESA Secretariat, the Commission is mandated to inspect and monitor anti-competitive practices in the 21 member states, including Ethiopia.

Two days before its 10-year anniversary, which took place on May 4–5, 2023, in Lilongwe, Malawi, the CCC also conducted a workshop for business reporters in the COMESA region at the same venue.

Presenting recent developments of regional integration in the COMESA bloc, Christopher Onyango (PhD), director of Trade and Customs and Monetary Affairs Division at the COMESA Secretariat, briefed reporters on the data from 2021, which showed how the member states trade in a meager amount within the bloc.

Intra-COMESA trade was below 10 percent of the trade between member countries in the reporting period, although exports within the bloc increased from USD 10 billion in 2020 to USD 13 billion the next year, as the Director explained. Trade potential among COMESA member countries is believed to be over USD 100 billion. The GDP of the member countries together stands at USD 805 billion.

Export of commodities from COMESA to the rest of the world increased by USD 56 billion from USD 100 billion in 2020. And the import of commodities from other countries to the COMESA region was USD 227 billion in 2021, about a 26 percent increase from the previous year.

Ethiopia is one of the few countries buying from non-COMESA member countries worldwide and contributing to the growth of importing bills in the region.

“We have come to realize that movement of persons and connectivity are key, and to tell you the truth, they are constraining the growth of continental integration. Let alone if you’re doing business, it is very difficult for people to move due to a lot of requirements that make it difficult for movements,” he said, explaining how intra-COMESA trade couldn’t prosper. “It is difficult even for COMESA secretariat staff.”

In light of these trade activities within the COMESA member states, the Commission has been functioning as a watchdog for the welfare of consumers. Since it began operation in January 2013, the CCC has been reviewing and approving mergers and acquisitions of companies to ensure fair competition in the Common Market.

Based in Lilongwe, Malawi, the Commission has also been overseeing business activities in the member countries, which together have over 660 million people, half the population of the 55 countries in Africa. Among the member countries, Ethiopia and Egypt alone cover about 35 percent of the whole population.

Addressing the opening remarks at the business reporters’ workshop on behalf of Willard Mwemba (PhD), the director and chief executive officer (CEO) of the Commission, Mary Gurure, manager for the legal department, said that her office was involved in several investigation cases.

Among the cases mentioned as examples include Ethiopian Airlines not compensating passengers for their lost property and Malawian Airlines failing to transport passengers to their destination after a flight was rerouted due to bad weather.

Involved in several high-profile antitrust cases in its attempt to assure competition enforcement and consumers welfare, the CCC reviewed and approved 369 merger cases in industries that vary from beverage companies to food processing, airlines, telecom, to chemical companies.

Beside the merger cases, stats presented by the CCC revealed that about 44 consumer protection cases were handled, over 40 restrictive business practices were assessed, and three businesses got fined for non-compliance with the regulations of COMESA.

Ethiopia could be involved in 156 of the merger cases from the total of 369 mergers the Commission reviewed, either through indirect relations or with companies functioning in Ethiopia directly, according to Sandya Booluck, senior analyst at the Merger and Acquisitions department of the Commission.

So far, the CCC has reviewed and approved five major mergers happening in Ethiopia, with the BGI Ethiopia and Meta Abo Brewery mergers being the latest, which the CCC approved with conditions in 2022, she told The Reporter.

“The 369 mergers since inception are as of March 2023, and in terms of the operations of the merging parties, they have a turnover of USD 210 billion in the common markets,” Sandya said. “In 31 of these transactions, we approved the transactions with conditions in order to address certain competition and public interest concerns that were likely to arise.”

The Commission is currently undergoing some reforms and is engaged in the preparation of upcoming projects, which include policy changes, according to Sandya. Reviewing their regulations, the forthcoming changes “will see a complete overhaul of the COMESA merger control regime,” which entails shifting from a non-suspensory to a suspensory regime.

“Specifically in relation to mergers, the proposed changes are going to be a complete overhaul. We want to shift from a non-suspensory to a suspensory regime. A suspensory regime means the parties have to notify, and the parties have to wait for approval or a decision from the authority before proceeding,” Sanday explained.

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